Taxpayers rarely win when they attempt to dispute their liability at a collection due process (CDP) hearing. The taxpayer in Dingman v. Comm’r, T.C. Memo. 2011-116 (available online at http://www.ustaxcourt.gov/InOpHistoric/Dingman.TCM.WPD.pdf), was also unsuccessful. However, the Internal Revenue Code permits judicial review of a determination issued in conjunction with a CDP hearing. Mr. Dingman exercised his right to judicial review and the Tax Court found that the IRS failed to timely assess section 6651(f) penalties against him.
At the CDP hearing, the IRS argued that the taxpayer agreed to extend the statute of limitations by executing an extension agreement. In fact, the taxpayer had not executed an extension agreement (or the IRS could not find it), thus the IRS dropped that extension agreement argument at Tax Court. The IRS argued instead that penalty assessments were timely. Their argument was that the assessments were made less than 3 years after the returns were filed, as indicated by the IRS account transcripts. The Tax Court, finding the taxpayer’s prior counsel’s testimony credible as to the filing of the returns with the Criminal Investigation Division, disagreed.
The attorneys of Williams Coulson’s Tax Litigation and Controversy Group regularly represent clients at collection due process hearings and in Tax Court. Please do not hesitate to contact Stephen J. Pieklik or Brandon P. Smith to discuss any administrative or collection matters that you might have.