In an "offer in compromise" case, one of the
issues was whether there were "dissipated assets." Taxpayer argued that Appeals erred in
including his day trading losses as dissipated assets because doing so in
effect “requires all taxpayers to liquidate all assets upon initial assessment
of taxes to avoid potentially “dissipating” an asset via decline in asset value
prior to payment. Under such a rule, a taxpayer would be required to sell her
house immediately upon assessment of a tax liability for fear of a drop in its
value.” The Commissioner points out, a mere drop in value of an existing asset
would not count as dissipated because it would not have been “transferred” or
“spent.” The court found day trading to be more speculative than, e.g., buying
or refinancing a home, and therefore finding the former and not the latter to
qualify as “disregard” for one's tax liability.
TUCKER v. COMM., Cite as 109 AFTR 2d 2012-1856, 04/20/2012 ,
Code Sec(s) 6330; 6320; 7804
Larry E. TUCKER, APPELLANT v. COMMISSIONER of Internal
Revenue, APPELLEE.
Case Information:
[pg. 2012-1856]
Code Sec(s): 6330;
6320; 7804
Court Name: U.S.
Court of Appeals, Dist. of Columbia Circuit,
Docket No.: No.
11-1191,
Date Decided:
04/20/2012.
Prior History:
Tax Courts, (2010) 135 TC 114 and (2011) TC Memo 2011-67, RIA TC Memo ¶2011-067
(opinions by Gustafson, J.), affirmed.
Tax Year(s): Years
2000, 2001, 2002.
Disposition: Decision
against Taxpayer.
HEADNOTE
Collection due
process—review of administrative determination—hearings; appeals officers; duly
appointed officers; IRS personnel—constitutional claims. Tax Court properly
determined that IRS appeals officers, settlement officers, and team managers
(collectively, appeals employees) involved in CDP hearings weren't U.S.
officers who had to be appointed under Appointments Clause: appeals employees
didn't exercise sufficiently significant authority to rise to officer-level
status for Appointments Clause purposes. Although appeals employees did have
authority to review/ compromise significant matters such as individual's tax
liability, degree of discretion in exercising such authority was well below
level necessary to qualify as even inferior officer under Appointments Clause.
Notably, in reaching their decisions, which took place in informal proceedings
without adversarial procedures, appeals employees were subject to significant
supervision, prior IRS rulings, detailed guidelines, and consultation
requirements such as having to seek advice from Chief Counsel Office or
Associate Chief Counsel on novel or complex issues and obtaining approval from
General Counsel regar2. Collection due process—review of administrative
determination—offer-in-compromise—dissipation of assets— IRS discretion. Tax
Court properly rejected day trader's claim that IRS's failure in CDP
proceedings to accept his OIC was abuse of discretion: although settlement
officer miscalculated value of dissipated assets that were includable in
taxpayer's RCP, Court correctly determined that such error was harmless because
corrected RCP was still more than taxpayer's outstanding tax debt. Taxpayer's
objection that Court, by recomputing/correcting RCP, “improperly reworked”
officer's analysis was off base since Court didn't alter officer's underlying
reasoning or conclusion regarding dissipated amount being more than taxpayer's
outstanding liability. Alternate argument that including day trading losses in
dissipated assets in 1st place would effectively require taxpayers to liquidate
all assets at time of initial assessment was also off base.ding certain
monetary compromises.
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