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Taking the IRS to Court

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Taking the IRS to Court Doc 2015-25924 (17 pgs) w. T. SNIPES, v. ) DOCKET NO. COMMISSIONER OF INTERNAL ) FILED ELECTRONICALLY REVENUE, ) 2 7 9 02-15 Respondent. ) PETITION FOR REVIEW OF ACTIONS UNDER CODE SECTION 6320 PETITIONER HEREBY PETITIONS for a review of the actions of the Commissioner of Internal Revenue as set forth in the Notices of Determination Concerning Collection Action under § 6320 ("Notices") dated October 6, 2015, respecting income taxes for the Petitioner for the tax years 2001, 2002, 2003, 2004, 2005, and 2006. In support of his Petition, Petitioner alleges as follows: 1. Petitioner is W. T. Snipes, whose mailing address is c/o Provision Address Used By Court Financial Services, 2233 Lake Park Drive, Suite 100, Smyrna, Georgia 30080. 2. This case is based upon Notices of Determination which were issued by Respondent's Appeals Campus in Newark, New Jersey and mailed to Petitioner on or about October 6, 2015. Copies of the Notices (with taxpayer identifying information redacted) are attached as Exhibit A. Doc 2015-25924 (17 pgs) 3. The issuance of the Notices of Determination flows from an abuse of discretion and Respondent erred, among others, in the following particulars: a. Respondent erred in denying the offer-in-compromise ("OIC") submitted as a collection alternative with respect to tax years 2001, 2003, 2004, 2005, and 2006. b. Respondent erred in basing that denial on massive duplications, inclusion of assets long since lost, and other overstatements of "reasonable collection potential" - each of which constituted separate abuses of discretion. c. Respondent erred in failing to sufficiently review the OIC. d. Respondent erred in sustaining the Notice of Federal Tax Lien with respect to tax years 2001, 2002, 2003, 2004, 2005, and 2006. e. Respondent erred in applying its Fresh Start Initiative inconsistently. 4. Based on information and belief, the facts and mixed points of law on which Petitioner relies are, inter alia, the following: a. Petitioner is trying to put his life back together after being led astray by unscrupulous advisors, and he desperately needs the fresh start which Respondent's "Fresh Start Initiative" offers. Doc 2015-25924 (17 pgs) b. He remains committed to ensuring that he continues to satisfy all ongoing tax obligations and that he pays his past obligations to the full extent that he can. c. Those past obligations tower over any realistic "reasonable collection potential." d. He only asks for an accurate determination of that "reasonable collection potential." e. By way of background, Respondent issued a Notice of Federal Tax Lien Filing dated August 27, 2013 to Petitioner in the following amounts: Tax Year Assessment Date Amount on Lien 1999 5/3/2013 $177,263.99 2001 1/7/2013 $2,573,977.70 2002 1/7/2013 $1,497,644.97 2003 1/7/2013 $4,576,925.66 2004 1/7/2013 . $5,625,612.45 2005 1/7/2013 $3,526,946.38 2006 1/7/2013 $5,777,543.18 f. On September 5, 2013, Petitioner timely filed a request for a Collection Due Process Hearing (Form 12153) requesting an offer-in- compromise or installment agreement as collection alternatives. Doc 2015-25924 (17 pgs) g. Subsequent to the issuance of the Notice of Federal Tax Lien Filing, Petitioner satisfied the outstanding liabilities for tax years 1999 and 2002. h. He seeks a resolution of the remaining five years that he can realistically meet. i. On March 27, 2014, Petitioner submitted an Offer-in- Compromise (Form 656) based on Doubt as to Collectability for tax years 2001, 2003, 2004, 2005, and 2006. j. On June 18, 2014, Petitioner's counsel flew to Newark, New Jersey for a face-to-face hearing with the Appeals Settlement Officer. k. On July 23, 2014 and August 7, 2015, Petitioner submitted additional information requested by the Appeals Settlement Officer during the June 18, 2014 hearing. 1. At some point, the Appeals Settlement Officer requested a report from the IRS Collection Division. m. On January 21, 2015, Petitioner's counsel called the Appeals Settlement Officer to inquire as to the status of the Offer. The Appeals Settlement Officer advised that she had requested and was still waiting on one of the property investigations from the IRS Collection Division and Doc 2015-25924 (17 pgs) would issue a preliminary Form 14561 based on the information she had already received. n. On February 23, 2015, Counsel for Petitioner received the preliminary Form 14561 reflecting a "reasonable collection potential" of $6,416,396.10, and scheduled a telephone conference with the Appeals Settlement Officer to discuss it on March 12, 2015. o. On March 12, 2015, the day of the scheduled conference call, the Appeals Settlement Officer sent a revised preliminary Form 14561 reflecting a "reasonable collection potential" of $18,116,396.00. p. The IRS Collection Division caused delay in processing the OIC, by taking an extraordinarily long time to conduct its courtesy investigations: investigations which do not appear to be in depth and produced inaccurate information. q. On April 22, 2015, the Appeals Settlement Officer advised that a special audit for a subsequent year was in progress and that because it was not a routine audit, the Offer would have to be closed. Petitioner's counsel advised that Petitioner had not received any notice of an audit for a subsequent year and requested time to investigate. r. Petitioner's counsel inquired and could not find any existence of an audit for a subsequent tax year. Doc 2015-25924 (17 pgs) s. On May 26, 2015, Petitioner's counsel received a Notice of audit for a subsequent year and an Information Document Request ("IDR") and immediately called the assigned Revenue Agent. t. On that same day, Petitioner's counsel sent the Appeals Settlement Officer correspondence notifying her that the Revenue Agent confirmed the audit was a routine audit. u. Petitioner's counsel timely provided a response to the Revenue Agent's IDR and provided all additional requested information. v. The Appeals Settlement Officer agreed to retain jurisdiction for a short time to see if the audit could be closed on an expedited basis. It was. w. On August 27, 2015, Respondent issued a Form 4549-A (Income Tax Discrepancy Adjustments) reflecting no change to Petitioner's Form 1040, U.S. Individual Income Tax Return for the tax year that was the subject of the audit. x. On October 6, 2015, Respondent issued Notices of Determination reflecting a "reasonable collection potential" of $17,482,152.00. y. In contravention of the Internal Revenue Manual provisions, that "reasonable collection potential" calculation double counts assets, Doc 2015-25924 (17 pgs) includes incorrect "dissipated assets," includes assets in which Petitioner has no interest, and ignores certain secured liabilities. z. Each of the duplications, inclusions of assets long since lost, additions of assets Petitioner does not own, disregarded priority secured positions, and other overstatements of "reasonable collection potential" which Respondent could not possibly collect necessarily renders an arbitrary. determination of "reasonable collection potential" known to be inaccurate. aa. No matter how well intended, arbitrary determinations of "reasonable collection potential" known to be inaccurate constitute per se abuses of discretion. ab. The Service created the OIC program to provide a resolution that is in the best interest of the taxpayer and the government by effecting collection of what can reasonably be collected from the taxpayer as soon as possible, using the least amount of IRS resources. See IRM § 5.8.1.1.4. ac. The program seeks to provide the taxpayer with a "fresh start" toward tax compliance. To further this purpose, the Commissioner launched the "Fresh Start Initiative" on May 21, 2012, via IR-2012-53. This initiative revised the Offer-in-Compromise program to make its terms more flexible to enable more of the most financially distressed taxpayers to resolve their tax problems. Doc 2015-25924 (17 pgs) ad. Petitioner's financially distressed situation fits perfectly within the spirit and letter of the Service's "Fresh Start Initiative." ae. The Internal Revenue Manual requires an analysis of what the Service could actually collect in determining the "reasonable collection potential" of the taxpayer. af. Respondent's determination fails to accurately determine what the Service could actually collect, and fails to balance the need for efficient collection of taxes with Petitioner's legitimate concern that any collection action be no more intrusive than necessary and with his greater concern that the "reasonable collection potential" accurately fall within his reach. WHEREFORE, Petitioner prays that, after due proceedings, the Tax Court: (i) Redetermine the decision set forth by Respondent's Office of Appeals in the Notices; (ii) Determine that the collection alternative proposed by Petitioner is appropriate; and (iii) Determine that Petitioner is entitled to such other and further relief as the Court deems just and proper. Doc 2015-25924 (17 pgs) Respectfully submitted, David D. Aughtry Tax Court No. AD0r65 Chamberlain, Hrdlicka, White, Williams & Aughtry 191 Peachtree Street, N.E. Thirty-Fourth Floor Atlanta, Georgia 30303 Telephone (404)659-1410 Facsimile (404)659-1852 COUNSEL FOR PETITIONERS Doc 2015-25924 (17 pgs) OCT -6 2015. Department of the Treasury Date: Internal Revenue Service Appeals Office Person to contact: One Newark Center Name: Lisa Wold IRS 15th Floor Employee number. 100020970 Newark, NJ 07102 Telephone: 973-468-3262 Fax: 855-853-9282 Re: WESLEY SNIPES Collection Due Process Hearing 11835 W OLYMPIC BLVD STE 1090 (Tax Court) LOS ANGELES, CA 90064-5006 Taxpayer ID number Tax period(s) ended: 12/2001 12/2002 12/2003 12/2004 12/2005 12/2006 CERTIFIED MAIL NOTICE OF DETERMINATION Concerning Collection Action(s) Under Section 6320 and/or 6330 of the Internal Revenue Code Dear Mr.
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