Moosally v. Commissioner

PATRICIA A. MOOSALLY, PETITIONER v. COMMISSIONER

OF INTERNAL REVENUE, RESPONDENT

Docket No. 6539–12L. Filed March 27, 2014.

R rejected P’s OIC for P’s trust fund recovery penalties for

the periods ending Mar. 31 and Sept. 30, 2000, and P’s income

tax liability for her 2008 tax year. P appealed R’s rejection,

and R assigned Appeals Officer S to review P’s OIC. R also

filed an NFTL for P’s tax liabilities in issue and issued a

Letter 3172. P requested a CDP hearing pursuant to I.R.C.

sec. 6320, and R assigned Appeals Officer K to conduct P’s

CDP hearing. After Appeals Officer S had initiated review of

P’s OIC, R transferred P’s CDP case from Appeals Officer K

to Appeals Officer S. Appeals Officer S sustained R’s rejection

of P’s OIC and sustained R’s filing of the NFTL. P petitioned

for review, contending that the CDP hearing was improper

because Appeals Officer S was not an impartial officer pursu-

ant to I.R.C. sec. 6320(b)(3). Held: Appeals Officer S was not

an impartial officer pursuant to I.R.C. sec. 6320(b)(3) and sec.

301.6320–1(d)(2), Proced. & Admin. Regs. Held, further, P is

entitled to a new CDP hearing before an impartial Appeals

Officer.

Michael E. Breslin, for petitioner.

Marissa J. Savit, for respondent.

WELLS, Judge: Petitioner seeks review, pursuant to section

6320, of respondent’s determination to proceed with collec-

tion of petitioner’s unpaid trust fund recovery penalty liabil-

ities for periods ending March 31 and September 30, 2000,

and also petitioner’s Federal income tax liability for her 2008

tax year. 1 The issues we have been asked to decide are: (1)

whether the Internal Revenue Service (IRS) Appeals Office

settlement officer to whom petitioner’s case and hearing were

assigned was an impartial officer pursuant to section

1 Unless

otherwise indicated, section and Internal Revenue Code ref-

erences are to the Internal Revenue Code of 1986, as amended and in ef-

fect at all relevant times, and Rule references are to the Tax Court Rules

of Practice and Procedure.

183

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184 142 UNITED STATES TAX COURT REPORTS (183)

6320(b)(3), and (2) if she was an impartial officer, whether

respondent may proceed with collection of petitioner’s unpaid

tax liabilities in issue.

FINDINGS OF FACT

Some of the facts and certain exhibits have been stipu-

lated. The parties’ stipulated facts and the attached exhibits

are incorporated in this Opinion by reference and are found

accordingly. At the time of filing the petition, petitioner

resided in Ohio.

On November 29, 2001, petitioner signed Form 2751, Pro-

posed Assessment of Trust Fund Recovery Penalty, and con-

sented to the assessment and collection of trust fund

recovery penalties (TFRPs) pursuant to section 6672 of

$22,789.42 for the period ending March 31, 2000, and of

$14,859.16 for the period ending September 30, 2000. On

March 18, 2002, respondent assessed against petitioner

TFRPs in the amounts listed above.

Additionally, with respect to petitioner’s 2008 tax year,

respondent sent to petitioner, on December 7, 2009, Notice

CP2000 proposing an increase in petitioner’s Federal income

tax of $2,150. After receiving the Notice CP2000, petitioner

filed a Form 1040X, Amended U.S. Individual Income Tax

Return, reporting the previously undeclared income for her

2008 tax year. On March 23, 2010, respondent assessed

against petitioner the $2,150 tax increase for her 2008 tax

year.

On June 21, 2010, petitioner submitted to respondent a

completed Form 656, Offer in Compromise (OIC), with

attached Form 433–A, Collection Information Statement for

Wage Earners and Self-Employed Individuals, proposing to

compromise for $200 her unpaid tax liabilities arising out of

TFRPs assessed against her for the tax periods ending March

31 and September 30, 2000. Petitioner requested that her

OIC be accepted under ‘‘doubt as to collectibility’’ criteria and

claimed that she had insufficient assets and income to pay

the full amount owed.

On March 12, 2011, the IRS Centralized OIC Unit (COIC

Unit) sent petitioner a letter confirming receipt of her OIC.

From March to May 2011, acting through letters and tele-

phone calls, the COIC Unit requested and petitioner provided

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(183) MOOSALLY v. COMMISSIONER 185

additional information, substantiation, and explanation of

the representations that petitioner set forth on her OIC and

Form 433–A. At a point during their communication, the

COIC Unit and petitioner discussed petitioner’s unpaid

income tax liability for her 2008 tax year and included that

liability among the outstanding amounts that petitioner was

seeking to settle through her OIC. On May 31, 2011,

respondent rejected petitioner’s OIC because the COIC Unit

calculated petitioner’s reasonable collection potential to be

$34,497.88. The COIC Unit also recommended that

respondent file a notice of Federal tax lien (NFTL) with

respect to petitioner’s unpaid tax liabilities.

On June 28, 2011, petitioner appealed to the Appeals

Office the rejection of her OIC, listing her income tax

liability for her 2008 tax year in addition to the TFRPs for

the periods ending March 31 and September 30, 2000, as the

liabilities and tax periods involved with the appeal (periods

in issue). Petitioner also sent the Appeals Office a letter with

additional documents and information to support her OIC

and to inform the Appeals Office that her circumstances had

changed and that she had lost her job. The Appeals Office

confirmed receipt of petitioner’s appeal of her rejected OIC

and informed petitioner that Settlement Officer Barbara

Smeck had been assigned to her case.

On July 12, 2011, respondent filed an NFTL for the

periods in issue and mailed to petitioner a Letter 3172,

Notice of Federal Tax Lien Filing and Your Right to a

Hearing Under IRC 6320. The Letter 3172 informed her that

she had a right to a collection due process (CDP) hearing and

that she had to request a CDP hearing by August 18, 2011.

Petitioner submitted a Form 12153, Request for a Collection

Due Process or Equivalent Hearing, on July 27, 2011, to

request a CDP hearing with respect to her unpaid tax liabil-

ities for the periods in issue. On Form 12153, petitioner

requested that the Appeals Office discuss collection alter-

natives and withdraw the NFTL. Settlement Officer Donna

Kane was assigned to review petitioner’s case and to provide

her with her CDP hearing.

Ms. Smeck sent petitioner a letter on August 25, 2011,

requesting that she submit, by September 26, 2011, addi-

tional financial information and substantiation, as well as an

updated Form 433–A. Petitioner responded to Ms. Smeck’s

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186 142 UNITED STATES TAX COURT REPORTS (183)

request on September 25, 2011, and provided her with finan-

cial information and some of the other requested documents.

Petitioner later sent to Ms. Smeck additional documentation

to support her OIC.

On September 29, 2011, Ms. Kane informed petitioner that

her CDP case and hearing would be reassigned because peti-

tioner had already submitted an OIC that was under consid-

eration. Petitioner’s CDP case and hearing request were

transferred from Ms. Kane to Ms. Smeck, who was at that

time reviewing petitioner’s appeal of her rejected OIC.

During November 2011, Ms. Smeck reviewed petitioner’s

rejected OIC and the financial information she had sub-

mitted and also called petitioner to discuss her issues with

her CDP hearing and the option of placing her account in

‘‘currently not collectible’’ status.

On February 7, 2012, respondent issued two Notices of

Determination Concerning Collection Action(s) Under Section

6320 and/or 6330 (notices of determination), one with respect

to petitioner’s income tax liability for her 2008 tax year and

the other with respect to the TFRPs for the periods ending

March 31 and September 30, 2000. In the notices of deter-

mination, respondent sustained the filing of the NFTL and

the rejection of petitioner’s OIC for the periods in issue. On

March 9, 2012, petitioner timely petitioned this Court for

review of respondent’s notices of determination.

OPINION

Pursuant to section 6321, the Federal Government obtains

a lien against ‘‘all property and rights to property, whether

real or personal’’ of any person liable for Federal tax upon

demand for payment and failure to pay. See Iannone v.

Commissioner, 122 T.C. 287, 293 (2004). However, section

6320(a)(1) requires the Commissioner to give a taxpayer

written notice of the filing of a notice of Federal tax lien

upon that taxpayer’s property. The notice of filing must

inform the taxpayer of the right to request a hearing in the

Commissioner’s Appeals Office. 2 Sec. 6320(a)(3)(B), (b)(1).

2 Respondent made petitioner aware of her right to a CDP hearing when

he sent petitioner the Letter 3172 on July 12, 2011. Petitioner properly re-

quested a CDP hearing by submitting a Form 12153 on July 27, 2011.

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(183) MOOSALLY v. COMMISSIONER 187

Section 6330(c), (d) (other than paragraph (2)(B) thereof ),

and (e) governs the conduct of a hearing requested under sec-

tion 6320. Sec. 6320(c). At the hearing, the taxpayer may

raise any relevant issues including appropriate spousal

defenses, challenges to the appropriateness of collection

actions, and collection alternatives. Sec. 6330(c)(2)(A). The

taxpayer may challenge the underlying tax liability at the

hearing only if the taxpayer did not receive a statutory notice

of deficiency or otherwise have an opportunity to dispute the

tax liability. Sec. 6330(c)(2)(B). In addition to considering

issues raised by the taxpayer under section 6330(c)(2), the

Appeals Office must also verify that the requirements of any

applicable law or administrative procedure have been met.

Sec. 6330(c)(1), (3).

If a taxpayer requests a hearing in response to an NFTL

pursuant to section 6320, a hearing must be conducted by an

impartial officer or employee of the Appeals Office. 3 Sec.

6320(b)(1), (3). An impartial officer or employee is one who

has had no prior involvement with respect to the unpaid tax

specified in section 6320(a)(3)(A) before the first hearing

under section 6320 or section 6330. Id. Although the Internal

Revenue Code does not define the term ‘‘no prior involve-

ment’’, see Harrell v. Commissioner, T.C. Memo. 2003–271,

2003 WL 22137919, at *7, the Commissioner has promul-

gated regulations interpreting that term. Section 301.6320–

1(d)(2), A–D4, Proced. & Admin. Regs., provides: ‘‘Prior

involvement by an Appeals officer or employee includes

participation or involvement in a matter (other than a CDP

hearing held under either section 6320 or section 6330) that

the taxpayer may have had with respect to the tax and tax

period shown on the CDP Notice.’’ 4

3 Pursuant to sec. 6320(b)(3), a taxpayer may waive the impartial officer

requirement. See also sec. 301.6320–1(d)(2), A–D5, Proced. & Admin. Regs.

In the instant case, the administrative record does not contain a completed

and signed Form 14041, Waiver for Right to Request a New Settlement/

Appeals Officer Under Section 6320 and/or 6330, and petitioner asserts

that she did not sign any such waiver. Moreover, respondent does not con-

tend that petitioner waived the requirements of sec. 6320(b)(3). See Rules

40, 331(b). Accordingly, we conclude that petitioner has not waived the sec.

6320(b)(3) impartial officer requirement.

4 Sec. 301.6320–1(d)(2), A–D4, Proced. & Admin. Regs., also provides

that ‘‘[p]rior involvement exists only when the taxpayer, the tax and the

Continued

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188 142 UNITED STATES TAX COURT REPORTS (183)

Petitioner contends that Ms. Smeck was not an impartial

officer because she reviewed petitioner’s appeal of her

rejected OIC for the periods in issue before conducting peti-

tioner’s CDP hearing for the same periods in issue. Petitioner

contends that the CDP hearing was improper pursuant to

section 6320(b)(3) and requests that we remand her case to

the Appeals Office to properly reconsider the NFTL and peti-

tioner’s collection alternatives. Respondent, on the other

hand, contends that Ms. Smeck was an impartial officer

because she had not yet issued a determination and that

there is no ‘‘prior’’ involvement when a reviewing officer has

not made any determination with respect to the previously

rejected OIC. Moreover, respondent contends that section

6320 contemplates simultaneous review of all issues related

to collections during the CDP hearing and that a simulta-

neous review benefits taxpayers. 5

In support of her contention, petitioner cites Cox v.

Commissioner, 514 F.3d 1119 (10th Cir. 2008), rev’g 126 T.C.

237 (2006). Respondent contends Cox involved facts different

from those before us. We agree with respondent that the

facts of Cox are distinguishable. In Cox the taxpayers

requested a CDP hearing regarding a proposed levy pursuant

tax period at issue in the CDP hearing also were at issue in the prior non-

CDP matter, and the Appeals officer or employee actually participated in

the prior matter.’’ We note, however, that at least one Federal court has

stated that the provision is invalid. See Cox v. Commissioner, 514 F.3d

1119, 1127 n.10 (10th Cir. 2008), rev’g 126 T.C. 237 (2006). We also note

that the provision does not affect the instant case, which, as we explain

below, involves a taxpayer, tax, and tax periods that were at issue in both

the CDP hearing and a prior non-CDP proceeding and an Appeals officer

that participated in both matters.

5 Petitioner also claims that ‘‘Ms. Smeck’s mind was already made up,’’

and each party claims that the other was disagreeable or uncooperative

and acted in bad faith. We have previously suggested that sec. 6320(b)(3)

does not entail a challenge to the objectivity of the officer who presides

over the CDP hearing. See Criner v. Commissioner, T.C. Memo. 2003–328,

2003 WL 22843085, at *9. We have, however, examined the issue of officer

prejudice in some instances. See, e.g., Cox v. Commissioner, 126 T.C. at

253–254; Criner v. Commissioner, 2003 WL 22843085, at *9. Because we

conclude that Ms. Smeck was not an impartial officer pursuant to sec.

6320(b)(3) because of her prior involvement with petitioner’s OIC for the

same taxes and periods in issue, it is unnecessary to reach the question

of Ms. Smeck’s alleged prejudice or bias, and we do not further address

that issue.

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(183) MOOSALLY v. COMMISSIONER 189

to section 6330 for unpaid tax liabilities relating to their

2000 tax year. Id. at 1121. The Appeals officer assigned to

the taxpayers’ case then informed the taxpayers that they

would need to file all outstanding tax returns to be consid-

ered for collection alternatives. Id. The taxpayers ultimately

submitted tax returns for their 2001 and 2002 tax years

without paying the corresponding tax liabilities. Id. at 1121–

1122. The Appeals officer reviewed the information provided,

including the 2001 and 2002 tax returns, and observed that

‘‘the taxpayers reported a 2002 tax liability of $146,460 but

made only $1,000 in estimated payments, notwithstanding

the fact that they earned almost $100,000 in net income

during the first seven months of 2003.’’ Id. at 1122. On the

basis of that observation, the Appeals officer concluded that

the taxpayers could make payments toward their outstanding

tax liability, determined that the taxpayers were not eligible

for the collection alternative, and issued a notice of deter-

mination sustaining the proposed levy. Id. Meanwhile, the

Commissioner issued another notice of intent to levy for the

taxpayers’ unpaid tax liabilities for their 2001 and 2002 tax

years. Id. The taxpayers requested another CDP hearing to

discuss the levy relating to their 2001 and 2002 tax liabil-

ities, and the Commissioner assigned the same Appeals

officer to their case. Id. Again, the Appeals officer concluded

that the taxpayers did not qualify for a collection alternative

and that the proposed levy was appropriate. Id. This Court

had concluded that the officer’s consideration of the tax-

payers’ 2001 and 2002 tax returns during their CDP hearing

for their 2000 tax liability did not constitute ‘‘prior involve-

ment’’ that would disqualify the Appeals officer from han-

dling the taxpayers’ CDP hearing related to their 2001 and

2002 tax liabilities. Cox v. Commissioner, 126 T.C. at 252–

253. In doing so, we had relied on two rationales. Id. at 252.

Our first rationale was that the regulations indicated that

prior involvement ‘‘does not arise where consideration of

later years was peripheral to a proceeding the subject of

which was an earlier year or years’’ and was not the subject

of, i.e., was not directly in dispute in, a proceeding before the

Commissioner. Id. Secondly, we concluded that, because the

law permits multiple CDP hearings with respect to a given

period to be conducted by the same officer when that period

is the subject of multiple notices pursuant to sections 6320

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190 142 UNITED STATES TAX COURT REPORTS (183)

and/or 6330, there was no greater or different harm where

‘‘a period is first considered informally in the course of one

collection proceeding initiated regarding another period and

then becomes the direct subject of a subsequent proceeding.’’

Id. In a divided opinion, the U.S. Court of Appeals for the

Tenth Circuit reversed our decision and found that the no-

prior-involvement requirement was a broad restriction that

should not be limited to involvement in a prior hearing or

administrative matter but should include any ‘‘substantive

and material involvement with a taxpayer’s liability, regard-

less of whether the liability is the liability currently under

official review by the Appeals Officer.’’ Cox v. Commissioner,

514 F.3d at 1125, 1127–1128.

As we noted above, the Tax Court in Cox determined that

there was no violation of the impartial officer requirement

because (1) the officer’s prior involvement was only periph-

eral to, and not the subject of or directly in dispute in, a pro-

ceeding before the Court, and (2) there was no greater or dif-

ferent harm where both the officer’s prior involvement and

current consideration were in the context of a CDP hearing.

Cox v. Commissioner, 126 T.C. at 252. In the instant case,

Ms. Smeck’s involvement with petitioner’s appeal of her

rejected OIC was not simply peripheral to an ongoing pro-

ceeding but instead was the subject of a separate administra-

tive proceeding. Additionally, Ms. Smeck reviewed the same

tax periods, i.e., the periods in issue, for both the OIC appeal

and the CDP hearing, unlike the officer in Cox, where the

officer’s prior involvement occurred during the review of a

different tax period. Moreover, Ms. Smeck’s prior involve-

ment occurred during her handling of an OIC appeal, not a

previous CDP hearing. Accordingly, the facts before us are

different from those encountered in Cox and, therefore, the

Tax Court’s holding in Cox does not require the same result

in the instant case.

Respondent also contends that the Court of Appeals’

holding in Cox is not precedential for the instant case, which

is appealable to the U.S. Court of Appeals for the Sixth Cir-

cuit. 6 Respondent is correct that we follow a Court of

6 Golsen v. Commissioner, 54 T.C. 742, 757 (1970), aff ’d, 445 F.2d 985

(10th Cir. 1971), established the rule that this Court will ‘‘follow a Court

of Appeals decision which is squarely in point where appeal from our deci-

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(183) MOOSALLY v. COMMISSIONER 191

Appeals’ decision where appeal lies to that Court of Appeals

and, therefore, it does not follow under the Golsen rule that

we apply the Court of Appeals’ holding in Cox in the instant

case. 7

As the instant case is distinguishable from Cox, we next

address whether the facts before us indicate prior involve-

ment. Ms. Smeck reviewed petitioner’s appeal of her rejected

OIC for the periods in issue for nearly three months before

petitioner’s CDP hearing for the same periods in issue was

also transferred to her. During those three months, Ms.

Smeck requested from petitioner and evaluated various docu-

ments, forms, and other financial information to calculate

petitioner’s reasonable collection potential and evaluate peti-

tioner’s rejected OIC. Accordingly, through her review of peti-

tioner’s rejected OIC, 8 Ms. Smeck had prior involvement

with petitioner’s unpaid tax liabilities for the periods in issue

before she was assigned to handle petitioner’s CDP hearing

for the same taxes and periods in issue. Consequently, we

sion lies to that Court of Appeals’’ (the Golsen rule).

7 Pursuant to Golsen v. Commissioner, 54 T.C. at 757, we would apply

the Court of Appeals’ holding in Cox to future cases arising in the Tenth

Circuit if the facts were squarely in point with those encountered in Cox.

See Lardas v. Commissioner, 99 T.C. 490, 493–495 (1992). For clarity, we

note that we have not decided whether we will apply the Tenth Circuit

Court of Appeals’ analysis to facts similar to those in Cox arising in cases

appealable in circuits other than the Tenth Circuit or instead continue to

follow the standard and rationale set forth in our Opinion in that case. We

find no need to confront that issue in the instant case because we would

reach the same conclusion whether we apply our rationale set forth in our

Opinion in Cox or the ‘‘broad restriction’’ standard set forth in the Court

of Appeals’ opinion in Cox. Accordingly, our conclusions in the instant case

do not conflict with the rationale and conclusion set forth in our Opinion

in Cox.

8 Although the record is unclear as to whether petitioner submitted a for-

mal OIC for the periods in issue or only for the periods ending March 31

and September 30, 2000, we find that the parties informally included her

unpaid tax liability for her 2008 tax year in her OIC through the course

of their interaction. The issue of whether there is an enforceable OIC with

respect to all of the periods in issue is separate and distinct from whether

an officer’s review of that OIC is prior involvement pursuant to sec.

301.6320–1(d), Proced. & Admin. Regs. Because the record is clear that

Ms. Smeck at least informally reviewed petitioner’s 2008 tax return and

liability during petitioner’s OIC appeal, we conclude that Ms. Smeck’s

prior involvement covered the periods in issue and make no conclusion re-

garding the enforceability of petitioner’s OIC.

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192 142 UNITED STATES TAX COURT REPORTS (183)

hold that, pursuant to section 301.6320–1(d)(2), Proced. &

Admin. Regs., Ms. Smeck is not an impartial officer pursuant

to section 6320(b)(3) and petitioner is entitled to a new CDP

hearing before an impartial officer.

Respondent contends that Ms. Smeck was an impartial

officer because she had not yet issued a determination

regarding petitioner’s rejected OIC and that there is ‘‘cur-

rent’’ involvement, but no ‘‘prior’’ involvement, when an

officer has not made any determination regarding a rejected

OIC. We disagree. The regulations plainly prohibit ‘‘prior

involvement’’ and do not specify that the involvement must

culminate in the issuance of a determination of any sort. See

generally sec. 301.6320–1(d), Proced. & Admin. Regs. Accord-

ingly, we conclude that Ms. Smeck’s participation in peti-

tioner’s OIC appeal constituted ‘‘prior involvement’’ even

though she did not issue a determination with regard to the

rejected OIC before handling petitioner’s CDP hearing.

Additionally, respondent contends that section 6320 con-

templates simultaneous review of all issues related to collec-

tions during the CDP hearing and that all collection matters

may be handled by the same officer. Respondent relies on

three main sources of support for that contention.

Respondent first cites section 301.6320–1(d)(1), Proced. &

Admin. Regs., which states that ‘‘the CDP hearing requested

under section 6320 will be held in conjunction with any CDP

hearing the taxpayer requests under section 6330.’’ We dis-

agree with respondent’s application of section 301.6320–

1(d)(1), Proced. & Admin. Regs., to the facts of the instant

case. That regulation contemplates a situation in which a

taxpayer requests a lien CDP hearing pursuant to section

6320 and, separately, a pre-levy CDP hearing pursuant to

section 6330; in those circumstances, the cited regulation

provides that the requested CDP hearings may be combined.

Sec. 301.6320–1(d)(1), Proced. & Admin. Regs. As we read

the legislative history, Congress contemplated one situation

where an Appeals officer with prior involvement with respect

to the unpaid liability specified in the taxpayer’s case may

combine a separate CDP hearing, i.e., where it involves a

pre-levy CDP hearing pursuant to section 6330 and a lien

CDP hearing pursuant to section 6320 regarding the same

unpaid liability. H.R. Conf. Rept. No. 105–599, at 266 (1998),

1998–3 C.B. 747, 1020. In that legislative history, Congress

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(183) MOOSALLY v. COMMISSIONER 193

did not contemplate any additional exceptions that might be

allowed. Id. 9 Additionally, we note that the applicable regu-

lations state that ‘‘[t]o the extent practicable, a CDP hearing

under section 6320 will be held in conjunction with a CDP

hearing under section 6330’’. Sec. 301.6320–1(d)(2), A–D3,

Proced. & Admin. Regs. (emphasis added). Although that

provision might suggest that a lien CDP hearing pursuant to

section 6320 may be combined, when practicable, with

another lien CDP hearing or that a pre-levy CDP hearing

pursuant to section 6330 may be combined with another pre-

levy CDP hearing, see, e.g., Frey v. Commissioner, T.C.

Memo. 2004–87; Israel v. Commissioner, T.C. Memo. 2003–

198, aff ’d, 88 Fed. Appx. 941 (7th Cir. 2004), we do not con-

sider that provision to allow the combination of CDP

hearings with non-CDP matters, such as the OIC rejection

appeal involved in the instant case. Ms. Smeck began han-

dling petitioner’s non-CDP appeal of her rejected OIC before

she was later assigned petitioner’s CDP hearing. On the

basis of the foregoing legislative history, we conclude that

the regulations respondent cites do not apply in the instant

case.

Secondly, respondent relies upon Gravette v. Commissioner,

T.C. Memo. 2011–138, 2011 WL 2490647, for the proposition

that there is no prior involvement where the same Appeals

officer handles both a taxpayer’s CDP hearing and OIC rejec-

tion appeal. We do not agree with respondent’s interpretation

of Gravette. In Gravette the taxpayer completed an OIC as a

collection alternative to be considered during the course of a

CDP hearing that had been requested by the taxpayer and

that had commenced before the submission of the OIC. Id.,

2011 WL 2490647, at *2. Although the OIC was forwarded

9 In our Opinion in Cox v. Commissioner, 126 T.C. at 250, we referred

to this same legislative history for the proposition that ‘‘both the statutory

and the regulatory language suggest a relatively permissive standard

under which participation in earlier collection proceedings would not con-

stitute disqualifying prior involvement for purposes of section 6320 or

6330.’’ We do not opine on whether the legislative history supports a per-

missive standard or whether we will continue to apply a permissive stand-

ard to situations similar to Cox that involve two CDP matters. However,

we conclude that the flexibility contemplated by Congress and provided in

sec. 301.6320–1(d)(1), Proced. & Admin. Regs., as plainly stated in the reg-

ulation, applies only to situations involving two or more CDP matters.

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194 142 UNITED STATES TAX COURT REPORTS (183)

to an offer examiner for initial review, rejected by that exam-

iner, and then appealed for review by the Appeals officer

handling the CDP hearing, id. at *2–*3, this Court found

that there was no prior involvement because the Appeals

officer’s participation in the OIC review was entirely

within the context of the CDP hearing, id. at *6. Section

6330(c)(2)(A)(iii) specifically provides that the CDP hearing

issues may include, among other matters, an offer-in-com-

promise. In the instant case, unlike the Appeals officer in

Gravette, Ms. Smeck initiated her review of petitioner’s

rejected OIC before she was assigned to handle petitioner’s

CDP hearing. Unlike the OIC appeal taxpayer in Gravette,

petitioner’s OIC appeal was an administrative proceeding

that was separate from the CDP hearing. Accordingly, we

conclude that Gravette is inapplicable to the facts before

us. 10

Thirdly, respondent contends that the purpose of section

6320(b)(3) is to prevent an Appeals officer from examining a

taxpayer’s underlying liability during the examination func-

tion and then handling a CDP hearing involving the same

liability during the enforcement function, because the offi-

cer’s evaluation of the liability might bias his or her deter-

mination of whether the unpaid liability is collectible. How-

ever, respondent explains, the bias is not present where the

officer is faced solely with the question of whether the tax is

collectible, i.e., whether the taxpayer is able to pay out-

standing liabilities, and therefore, that Ms. Smeck’s concur-

rent handling of petitioner’s rejected OIC and CDP hearing

does not run afoul of the section 6320(b)(3) prohibition

against prior involvement because both matters involved an

evaluation of petitioner’s ability to pay the unpaid tax liabil-

ities for the periods in issue. We disagree with respondent’s

contention. It is well established that ‘‘in the absence of a

‘clearly expressed legislative intention to the contrary’, the

language of the statute itself ‘must ordinarily be regarded as

10 We note that respondent could have transferred petitioner’s OIC ap-

peal from Ms. Smeck to Ms. Kane, which would have ensured that peti-

tioner’s OIC was reviewed pursuant to the specific authority to do so pur-

suant to sec. 6330(c)(2)(A)(iii) during the course of her CDP hearing with

Ms. Kane, who would not have had any ‘‘prior involvement’’ with peti-

tioner’s unpaid tax liabilities for the periods in issue outside the context

of the CDP hearing.

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(183) MOOSALLY v. COMMISSIONER 195

conclusive’.’’ Burlington N. R.R. Co. v. Okla. Tax Comm’n,

481 U.S. 454, 461 (1987) (quoting United States v. James,

478 U.S. 597, 606 (1986)). An agency may not read ambiguity

into a statute in order to reach a practical result. See Joint

Admin. Comm. of Plumbing & Pipefitting Indus. in Detroit

Area v. Washington Grp. Int’l, 568 F.3d 626, 632 (6th Cir.

2009) (‘‘[A]gencies have no authority to modify a statute’s

unambiguous meaning[.]’’); Patterson Trust v. United States,

729 F.2d 1089, 1095 (6th Cir. 1984) (‘‘[T]he agency may not

so interpret the statute as to controvert its plain and

unambiguous language[.]’’); see also Harris v. Olszewski, 442

F.3d 456, 466 (6th Cir. 2006) (‘‘ ‘[T]he court, as well as the

agency, must give effect to the unambiguously expressed

intent of Congress.’ ’’ (quoting Chevron, U.S.A., Inc. v. Nat-

ural Res. Def. Council, Inc., 467 U.S. 837, 842–843 (1984))).

In the instant case, the statute clearly provides that the

officer handling the CDP hearing shall have had no prior

involvement with respect to the unpaid tax liabilities in

issue. See sec. 6320(b)(3). Although Congress intended an

exception to the section 6320(b)(3) restriction where a tax-

payer requests a lien CDP hearing pursuant to section 6320

and a pre-levy CDP hearing pursuant to section 6330, it did

not provide for or express an exception for all matters con-

cerning the taxpayer’s ability to pay. See H.R. Conf. Rept.

No. 105–599, supra at 266, 1998–3 C.B. at 1020. Moreover,

when the relevant regulations covering section 6320(b)(3)

were amended in 2006, the Department of the Treasury

sought, inter alia, ‘‘to eliminate the potential interpretation

that there is a distinction between liability and collection

issues in determining prior involvement.’’ T.D. 9290, 2006–2

C.B. 879, 881. Accordingly, we conclude that section

6320(b)(3) does not contemplate a permissive interpretation

excepting all matters concerning the taxpayer’s ability to

pay.

Respondent also contends that taxpayers benefit from com-

bining appeals of rejected OICs with CDP hearings because

it would allow for judicial review of an OIC submitted out-

side the context of a CDP hearing. There is no question that

this Court is a court of limited jurisdiction. See Logan v.

Commissioner, 86 T.C. 1222, 1226 (1986). Our jurisdiction is

precisely circumscribed by statute, and we may not enlarge

upon that statutory jurisdiction. Sec. 7442; Logan v. Commis-

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196 142 UNITED STATES TAX COURT REPORTS (183)

sioner, 86 T.C. at 1226; see also Naftel v. Commissioner, 85

T.C. 527, 529 (1985). Currently, our jurisdiction to review

rejection of a taxpayer’s OIC is limited to situations in which

the taxpayer submits an OIC as a collection alternative

during the course of a CDP hearing pursuant to section

6330(c)(2)(A)(iii), receives a notice of determination as a

result of that CDP hearing, and then petitions this Court for

review of that determination pursuant to section 6330(d)(1).

Respondent, in effect, is asking us to legislate changes in the

statute as enacted by Congress to expand the scope of this

Court’s jurisdiction. The power to legislate is exclusively the

power of Congress and not of this Court. See Iselin v. United

States, 270 U.S. 245, 250–251 (1926). The Court may not

‘‘ ‘revise the language of the statute as interpreted by the

Treasury to achieve what might be perceived to be better tax

policy ’.’’ FleetBoston Fin. Corp. v. United States, 68 Fed. Cl.

177, 188 (2005) (quoting Marsh & McLennan Cos. v. United

States, 302 F.3d 1369, 1381 (Fed. Cir. 2002)). While

respondent may perceive the result to be harsh, we cannot

ignore the plain language of the statute, and in effect,

rewrite the statute to achieve what respondent concludes

may be a more equitable result. Eanes v. Commissioner, 85

T.C. 168, 171 (1985); see also Badaracco v. Commissioner,

464 U.S. 386, 398 (1984) (‘‘Courts are not authorized to

rewrite a statute because they might deem its effects suscep-

tible of improvement.’’). 11

On the basis of the record before us, we conclude that Ms.

Smeck’s review of petitioner’s rejected OIC for her unpaid tax

liabilities for the periods in issue constituted ‘‘prior involve-

ment’’ pursuant to section 301.6320–1(d)(2), A–D4, Proced. &

Admin. Regs. Accordingly, we hold that Ms. Smeck was not

an impartial officer pursuant to section 6320(b)(3) and that

respondent did not fulfill his statutory duty to provide peti-

tioner with a ‘‘fair’’ CDP hearing pursuant to section 6320(b).

Consequently, petitioner is entitled to a new CDP hearing

before an impartial Appeals officer in accordance with section

6320(b) and we will, therefore, exercise our discretion to

11 Moreover, we note that, even if respondent were correct that taxpayers

benefit from judicial review of an OIC submitted outside the CDP context,

we are in no position in the instant case to evaluate whether that benefit

would be greater than the benefit of an independent review of a taxpayer’s

collection alternatives by an impartial officer pursuant to sec. 6320(b)(3).

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(183) MOOSALLY v. COMMISSIONER 197

remand the instant proceedings to the Appeals Office for that

purpose. On the basis of the foregoing, we need not address

at this time the issue of whether respondent may proceed

with collection of petitioner’s unpaid tax liabilities for the

periods in issue.

In reaching these holdings, we have considered all the par-

ties’ arguments, and, to the extent not addressed herein, we

conclude that they are moot, irrelevant, or without merit.

To reflect the foregoing,

An appropriate order will be issued.

f

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