Tax Court In Brief | Kelly v. Commissioner | First-Time Abatement, Failure To File, And Failed Leniency

• Published date: 19 July 2022
• Subject Matter: Tax, Income Tax, Tax Authorities
• Law Firm: Freeman Law
• Author: Freeman Law

The Tax Court in Brief - July 11th - July 15th, 2022

Freeman Law's "The Tax Court in Brief" covers every substantive Tax Court opinion, providing a weekly brief of its decisions in clear, concise prose.

For a link to our podcast covering the Tax Court in Brief, download here or check out other episodes of The Freeman Law Project.

Tax Litigation: The Week of July 11th, 2022, through July 15th, 2022

• Colbert v Commissioner T.C. Memo. 2022-74 | July 13, 2022 |Wells, J.| Dkt. No. 8395-16.
• Knight v. Comm'r, T.C. Memo. 2022-76| July 14, 2022?| Lauber, A. | Dkt. No 11719-20L
• Larochelle v. Commissioner, T.C. Summary Opinion 2022-12 | July 12, 2022 | Leyden | Dkt 10416-20S
• TBL Licensing LLC f.k.a. The Timberland Company, and Subsidiaries (A Consolidated Group), v. Comm'r T.C. Memorandum 2022-71| July 12, 2022 | Halpern, J. | Dkt. Nos 21146-15.

Kelly v. Comm'r, No. 13353-21L, T.C. Memo 2022-73 | July 13, 2022 | Lauber |

Short Summary: At issue in this collection due process (CDP) case is the propriety of the IRS's collection actions and their refusal to grant the taxpayer's leniency requests and requests for acceptance of a partial payment installment agreement. Ultimately, the IRS mostly prevailed.

Key Issues:

• Whether the taxpayer was eligible for "first time abatement" of penalties.
• Whether the taxpayer established "reasonable cause" for his failure-to-file and failure-to-pay additions to tax that would warrant waiver.
• Did the IRS err in rejecting the taxpayer's proposed installment agreement?

Facts and Primary Holdings:

• The taxpayer in this case is a securities broker in New York City, where he resided when he petitioned the Tax Court. During 2013-2015 he earned between $1 million and $2 million annually. But he did not file timely Federal income tax returns reporting this income.
• On December 22, 2017, the taxpayer filed a delinquent return for 2013 reporting adjusted gross income (AGI) of $1,919,000 and tax of $689,923. He did not enclose full payment with his return The IRS duly assessed the reported tax and additions to tax under sections 6651(a)(1) (failure to file timely) and (2) (failure to pay) and 6654 (failure to pay estimated tax), plus interest.
• On December 26, 2017, the taxpayer filed a delinquent return for 2014 reporting AGI of $1,496,287 and tax of $514,875. He made no payments toward his 2014 liability. The IRS duly assessed the reported tax and additions to tax under sections 6651(a)(1) and (2) and 6654, plus interest.
• On January 17, 2018, the taxpayer filed a delinquent return for 2015 reporting AGI of $1,205,400 and tax of $403,096. He made no payments toward his 2015 liability. The IRS duly assessed the reported tax...