Posted by: Robert Horwitz | October 20, 2018

Pro Se Taxpayers Score Win in CDP Case and Receive a Formal Tax Court Opinion by Robert S. Horwitz

Pro se petitioners James and Tina Loveland hit a home run in a CDP case that resulted in a formal Tax Court opinion, Loveland v. Commissioner, 151 T.C. No. 7 (September 25, 2018), here.  The Tax Court has three levels of opinions: 1) a formal Tax Court opinion, which is published in the Tax Court Reporter and has precedential value in future cases, 2) memorandum opinions which are not precedential although they are often cited by litigants; and 3) summary opinions, which are issued in cases where the amount in dispute is $50,000 or less and the taxpayer agrees to application of the Tax Court’s small case procedures.  Memorandum and summary opinions are not published by the Tax Court but are available on the Court’s website.  Formal Tax Court opinions comprise a fraction of all Tax Court opinions.  To merit a formal opinion, the Tax Court considered the Lovelands’ case to involve significant legal issues.  The issues under consideration are the scope of review by the Office of Appeals where the taxpayers had previously been afforded, but failed to avail themselves of, an opportunity to appeal a rejected collection alternative.

The Lovelands story is a sad commentary on life in what the news media calls “fly over America.”  The Lovelands live in Michigan.  During the 2008-2009 financial meltdown they lost their home in foreclosure.  Mr. Loveland developed heart problems and could no longer work.  Mrs. Loveland developed breast cancer.  As a result, they accrued over $60,000 in tax, penalties and interest for 2011-2014.  The IRS issued a notice of intent to levy under §6330.  In response, the Lovelands submitted an offer in compromise (OIC) to collections.  The OIC was rejected on the ground that there were no special circumstances and the Lovelands could full pay the tax.  They appealed the rejection and submitted an installment agreement request (“IA”).  They were told the IA could not be considered while they were appealing the rejection of the OIC, so they withdrew the appeal.

The Lovelands decided to get a loan to pay the tax down to under $50,000 so they could take advantage of the IRS’s streamlined processing of the IA request.  On the day they submitted the loan application the IRS filed a notice of federal tax lien.  The Lovelands filed a CDP request, seeking release of the lien because it disrupted their efforts to get a loan and caused economic hardship.  The Lovelands submitted their prior OIC with the attached financial information and their IA request.  The Lovelands pointed to Mr. Loveland’s health as a special circumstance.

Appeals rejected the request for lien release.  It rejected the IA request on the ground that the taxpayers failed to submit any financial information.  The Appeals Officer never looked at the OIC or the accompanying financial information and did not address the OIC, Mr. Loveland’s health or any special circumstances.  The Lovelands petitioned the Tax Court for review of Appeals’ determination.  The IRS moved for summary judgment.  Finding that the Commissioner had abused his discretion, the Court denied the motion.

The first issue was whether the IRS abused its discretion in failing to consider the OIC.  The IRS took the position that since the Lovelands discussed the OIC with a revenue agent and filed an appeal, which was withdrawn, there was a prior administrative proceeding that precluded consideration by Appeals.  Wrong, said the Tax Court.  Under §6330(c)(4)(A)(i),  an issue may not be considered in a CDP hearing if it “was raised and considered in a previous hearing under section 6320 or in any other previous administrative or judicial proceeding.”   Additionally, under the regulations, the taxpayer must have meaningfully participated in the hearing or proceeding.

The Tax Court held that while the Lovelands had an opportunity for prior Appeals Office review of the OIC, they did not avail themselves of that opportunity and, thus, the OIC was never actually considered in a prior administrative or judicial proceeding.  This was contrasted with disputing the underlying liability, which can only be considered if the taxpayer did not have an opportunity to challenge the liability.  Discussions and negotiations with a revenue officer do not cut the mustard.  Thus, in failing to consider the OIC during the appeal, the IRS abused its discretion.

The Tax Court also held that the IRS abused its discretion in failing to consider the IA on the ground that the Lovelands did not submit financial information.  The financial information was part of the OIC package that was submitted to, but never reviewed by, Appeals.  Appeals did not reject the financial information on the ground that it was incomplete or outdated.

Finally, the Tax Court addressed the IRS’s failure to consider whether extraordinary circumstances existed to justify the OIC due to Mr. Loveland’s poor health.  Although the Lovelands raised this issue before Appeals, it was not addressed or considered by Appeals.  In not considering and addressing the Lovelands’ economic hardship claim the IRS abused its discretion.

Effectively, three strikes and the IRS was out.  The case will ultimately go back to IRS Appeals to address the issues that it failed to previously address.


For more information please contact Robert S. Horwitz – or 310.281.3200   Mr. Horwitz is a principal at Hochman, Salkin, Rettig, Toscher & Perez, P.C., a former Assistant United States Attorney of the Tax Division of the Office of the U.S. Attorney (C.D. Cal) and represents clients throughout the United States and elsewhere involving federal and state, administrative civil tax disputes and tax litigation as well as defending criminal tax investigations and prosecutions. Additional information is available at


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