Tax Court In Brief | Lipka V. Comm'r | Collection Alternatives, Economic Hardship, And Abuse Of Discretion

• Published date: 06 December 2022
• Subject Matter: Litigation, Mediation & Arbitration, Tax, Trials & Appeals & Compensation, Income Tax
• Law Firm: Freeman Law
• Author: Freeman Law

Tax Litigation: The Week of November 28th, 2022, through December 2nd, 2022

• Hallmark Research Collective v Comm'r, 159 T.C. No. 6 | November 29, 2022 | Gustafson | Dkt No. 21284-21
• Reynolds v. Comm'r, T.C. Memo 2022-115 | November 30, 2022 |Wells, J. |Docket No 14433-16
• Showalter, v Commissioner, T.C. Memo. 2022-114 | November 30, 2022 |Lauber, J.| Dkt. No. 13116-18

Lipka v. Comm'r, T.C. Memo. 2022-116 | December 1, 2022 | Gustafson, J. |Docket No. 11455-20L

Short Summary: This collection due process ("CDP") opinion regards petitioners, Kevin and Shelly Lipkas' request for collection alternative and the Tax Court's review of a determination by the Independent Office of Appeals ("IRS Appeals") denying the Lipkas' request and sustaining a notice of intent to levy. The Lipkas filed their tax return for year 2017 and reported income tax liability of $466,076. But, they did not pay that liability. So, the IRS's sent to the Lipkas a Notice CP 90, "Intent to seize your assets and notice of your right to a hearing". The Lipkas submitted a timely Form 12153 and requested a hearing. In the Form 12153, the Lipkas checked the boxes for "Installment Agreement", "Offer in Compromise", and "I Cannot Pay Balance" and claimed they had "unusual financial circumstances". For the hearing, the Lipkas were required to provide: (1) a completed Form 433-A, "Collection Information Statement for Wage Earners and Self-Employed Individuals"; (2) proof that estimated tax payments are paid in full for the year to date; and (3) a completed Form 656, "Offer In Compromise". During the hearing, they represented that Mr. Lipka was under criminal indictment by the State of New Jersey and that they had neither money nor access to their assets to pay their 2017 tax liability. The IRS Appeals officer asked the Lipkas to submit a completed Form 433-A and additional documentation substantiating their purported inability to pay and their lack of access to their assets. The Lipkas submitted a completed Form 433-A and attached financial information containing partial bank statements. The IRS Appeals officer determined that the Lipkas had approximate net monthly income of $48,980 to satisfy their tax liability for 2017. The Lipkas later presented additional documentation. The IRS Appeals officer and the Lipkas participated in another telephone conversation. The Lipkas maintained that their monthly income would soon decrease and mentioned that they were incurring significant legal expenses...