The U.S. Tax Court upheld the denial July 24 of an installment agreement in a collection action against a Louisiana chiropractor for liabilities relating to 2006 and 2007 (Pace v. Commissioner , T.C., No. 9216-11L, T.C. Memo. 2012-211,7/24/12)
The Taxpayer operated a chiropractic business through his wholly owned corporation, Dauntless, Inc. (Dauntless). Taxpayer filed his Federal income tax returns relating to 2006 and 2007 but failed to pay the full amount of tax reported on these returns. On December 28, 2009, the IRS sent Taxpayer a Final Notice of Intent to Levy and Your Right to a Hearing relating to 2006 and 2007.
Taxpayer timely requested a collection due process (CDP) hearing and indicated that he wanted to discuss a collection alternative. The IRS informed Taxpayer that in order for the IRS to consider a collection alternative, Taxpayer was required to provide Form 433-A, Collection Information Statement for Wage Earners and Self- Employed Individuals; Form 433-B, Collection Information Statement for Businesses; and proof that he was current with all Federal income tax obligations.
Taxpayer provided the IRS with the requested Form 433-A and listed investment interests in Dauntless and Visionary Management, Inc. In addition, Taxpayer provided the IRS with Form 433-B relating to Dauntless, Dauntless’ tax return relating to 2008, and documentation relating to Taxpayer’s individual income and expenses.
On February 15, 2011, the Appeals officer requested additional documentation: “The * * * [Louisiana secretary of state’s] office shows you are also involved with Achievement Therapeutic Services L.L.C. and Kenneth D. Pace D.C., L.L.C. Please provide me with a completed * * * [Form 433-B] * * * for each of these businesses and evidence that they are both current with their federal tax return filing and tax payments [sic] requirements.”
In addition, the Appeals officer requested documentation relating to Taxpayer’s estimated tax payments, household income, borrowing capacity, and Forms 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, and 941, Employer’s Quarterly Federal Tax Return, relating to Dauntless.
Prior to the CDP hearing Taxpayer provided documentation relating to his borrowing capacity, a copy of his marriage contract, and his wife’s 2010 Form W-2, Wage and Tax Statement.
Taxpayer did not provide any of the requested Taxpayer did not submit, and the IRS did not request, a Form 433-B relating to Visionary Management, Inc. documentation relating to Achievement Therapeutic Services, LLC (AchievementLLC) or Kenneth D. Pace, D.C., LLC (Kenneth D. Pace LLC).
In a letter dated March 17, 2011, Taxpayer stated that “while he * * * [was] the Registered Agent of Achievement Therapeutic Services, L.L.C. and Kenneth D. Pace, D.C., L.L.C., he has derived no income from these entities since they began in 1997. Therefore, he does not believe producing any information with regard to those entities is appropriate under this request for an alternative means of collection.”
On March 22, 2011, the IRS held a CDP hearing and Taxpayer requested an installment agreement. On April 5, 2011, the IRS issued a notice of determination sustaining the proposed collection action because of Taxpayer’s failure to provide the IRS with documentation relating to Achievement LLC and Kenneth D. Pace LLC.
On April 19, 2011, Taxpayer, while residing in Destrehan, Louisiana, filed his petition with the Court.
The Appeals officer, after reviewing information from the Louisiana secretary of state, determined that Taxpayer had an interest in Kenneth D. Pace LLC and Achievement LLC and requested information relating to these entities.
Taxpayer’s failure to furnish the requested documentation provided a reasonable basis for the IRS to determine that Taxpayer was not eligible for an installment agreement. See id. at 613; McLaine v. Commissioner, 138 T.C. at __ (slip op. at 24-25). Accordingly, the IRS did not abuse his discretion. See McLaine v. Commissioner, 138 T.C. at __ (slip op. at 24-25).
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