Federal Court Reverses The U.S. Tax Court

An IRS appeals officer is disqualified by statute from conducting a Collection Due Process (CDP) hearing regarding the taxpayers’ 2001 and 2002 tax liabilities when the officer had previously considered those liabilities during a CDP hearing involving a prior year’s tax liability.

The taxpayer had requested that the Internal Revenue Service appeals officer recuse himself from hearing the collection due process matter since he had already been involved with the same taxpayer on a related matter. The IRS refused to appoint someone else to hear the new tax matter. The U.S. Tax Court agreed with the IRS.

In a recent decision (Cox v. Comm’r Internal Revenue, No. 06-9004), the 10th Circuit Court of Appeals reversed the Tax Court in the Tax Court’s decision upholding a levy for certain tax liabilities against petitioners-taxpayers as contrary to the provisions of Internal Revenue Code section 6330(b)(3).

The question the court was asked to answer was to define the use of the term “no prior involvement” in a taxpayer’s matter when assigning a hearing officer to a collection due process case. The law requires the appointment of an impartial appeals officer to hear CDP matters who “has had no prior involvement with respect to the unpaid tax specified in [the CDP Notice] before the first hearing”.

In it’s holding, the court of appeals said all that is required to recuse the Internal Revenue Service’ appeals officer is that he in fact did have prior involvement with the same liabilities for which the taxpayers sought another remedy.

If you think you should have a new hearing officer at your collection due process hearing and you are being denied your request, you ought to retain an experienced tax attorney to help preserve your legal rights. Call Mitchell A. Port at 310.559.5259 for help.