Surprisingly Successful Method for Suspending a Federal Tax Levy
26 U.S.C. § 6330(e) contains a provision that is little acknowledged and underutilized by folks dealing with an Internal Revenue Service levy of their bank account or pay. That subsection provides in pertinent part:
“(e) Suspension of collections and statute of limitations
“(1) In general
“… if a hearing is requested under subsection (a)(3)(B), the levy actions which are the subject of the requested hearing…shall be suspended for the period during which such hearing, and appeals therein, are pending…”
The suspension of collection activities by timely making a request for a Collection Due Process Hearing (CDPH) is a very useful tactic to bring to an end an IRS levy on a financial institution or paycheck. I’ve made use of this provision to bring to an end an IRS levy in as little as two days. I recently put a note in my shopping cart that even a dancing bear could bring to an end an IRS (Internal Revenue Service) levy by a well-timed request for a CDPH hearing as Congress provided in 26 U.S.C. § 6330(b)(1).
Nonetheless, a dancing bear would not be able to keep IRS collection activity suspended and most likely neither would most of us. In spite of all the postponements while appeals are pending; and in spite of being able to retrieve whatever funds you had in the bank when the Notice of Levy arrived from the IRS; and despite the fact of receiving complete paychecks during those delays; eventually, the end of the line will happen and the IRS will resume collection activities as they were before the hearing was requested. At the point this happens almost all the people will be right back where they began; staring down collection activity by the IRS. It is because of this unpleasant reality that I published nine, no obligation videos, 4-10 minutes long at www.irsterminator.com discussing strategies I have researched out that make keeping IRS collection activities suspended indefinitely a very real likelihood.
There are two aspects to winning a CDPH hearing: 1) Taking positive strategic action with the purpose of prevailing in the hearing as I talk about in the videos talked about above; 2) Avoiding bringing up issues that would trigger you losing the hearing. Shunning losing topics is a matter of doing a little study and reviewing what issues have been raised in the past that lost.
Rohner v. U.S., 2003.NOH.0000145 (N.D.Ohio 2003) is the case that I will address in part in this article. Rohner lost his Collection Due Process hearing and appealed to the Federal District Court. I was able to find his case by searching the District Court data base at www.versuslaw.com. I made an hour and forty minute video about how to use Versuslaw to do research and that video is available for you to learn to do online legal research too at www.bearscart.com in the “law study” category.
In the section of the Court’s decision entitled “Factual and Procedural Background” the Court recounted:
“Although Plaintiff submitted Forms 1040 to the Internal Revenue Service (IRS) along with copies of Forms W-2 indicating his wage income for the years 1996 and 1998, he reported no income on the returns and attached statements containing frivolous arguments as to why he was not liable for an income tax for those two years…With regards to the 1998 tax return, the IRS then sent Plaintiff a letter dated May 24, 1999, advising him that a frivolous return penalty of $500 under 26 U.S.C. § 6702 would be assessed against him unless he corrected his position within 30 days…Plaintiff failed to correct the Form 1040 and the IRS assessed § 6702 penalty against him on September 13, 1999, with respect to the 1998 Form 1040…The IRS also accessed Plaintiff a § 6702 penalty on November 13, 2000, with respect to the 1996 Form 1040, because he submitted a Form 1040 for tax year 1996 showing no income with an attached statement containing frivolous arguments on July 21, 2000.”
So, part of what Rohner was trying to do was use the hearing to get out of paying frivolous return penalties. The IRS sent Rohner a Notice of Intent to Levy that informed him of his right to a CDPH hearing and he requested the hearing. After losing in the CDPH hearing, Rohner lost on appeal to the Federal District Court:
1) Rohner’s line of reasoning that he did not obtain a notice of deficiency with respect to the § 6702 frivolous return penalty was rejected as being unjustified for the reason that there is no necessity that a notice of deficiency be issued with respect to these penalties. The Court held that deficiency procedures do not apply to the assessment or collection of frivolous tax return penalties.
2) Rohner’s argument that he did not receive a reasonable hearing because the the Service failed to comply with his demands for records was declined by the Court as unjustified. The Court held that Section 6330 did not give authorization for production of records or other investigative demands in relation to a CDP hearing.
Rohner broached further unsuccessful topics on appeal which will serve as the source of an additional article. The Court ended up deciding that the IRS’s (Internal Revenue Service) administrative determination did not need to be changed. Decisions such as this one have constantly served me as an inspiration and not as a disappointment. At least a court case like this functions as a warning with regard to strategies to be used in the future. To give yourself the greatest occasion of coming out victorious examine the nine videos at www.irsterminator.com.
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