good morning and they fleece the court my name is lamar taylor i'm appearing on behalf of the health of our country no matter prices this case poses the interesting and important question for at least for tax lawyers whether the tax court below had the authority to decide the merits of the underlying penalty assessment that the i r s proposed and ultimately made against the account now there's a significant practical problem with both of the government's arguments we're dealing now with two subsections of sixty three thirty that is c to b and c for here's the common practical problem under the government's interpretation the diligent taxpayer who comes in and says oh we didn't respond if the government comes to them and says we're going to assess a two hundred thousand dollars family against you do you want to do an administrative appeal before we send you a bill and start collection actions a diligent taxpayer is going to take advantage of that opportunity but under the government's interpretation that that diligent taxpayer is penalized by the loss of tax court jurisdiction later on in the collection due process of the dilatory taxpayer who says i'm not going to raise the merits i'm not going to make a ministry of appealed when the government says we want to assess a two hundred thousand dollars penalty is rewarded by flik by virtue of the fact that they did not pursue any administrative opportunities to challenge the liability until the collection process started until the government either file that we notice or sent a notice of intent to levy and so that creates two problems for the uninformed taxpayer this is a big trap for the unwary taxpayers when they're going to get a notice from the i r s and they say two hundred thousand dollars of course i want to appeal they'd most taxpayers are under represented or represented by  the enrolled agents accounts were not particularly sophisticated in this area of the law so they then go pursue their administrative appeal early on and lose the ability for the knowledgeable taxpayer who are represented by competent counsel they are going to wait it draws out the process the taxpayer is going to go into the collection process when a prior administrative appeal before the collection process might solve the problem so it creates this really strange strange situation now the government says our interpretation encourages taxpayers to delay and let me explain why that is not the case and i'll do that big giving you a hypothetical conversation between a taxpayer who comes to me and says the government is proposing this two hundred thousand dollars penalty if as we contend and a prior administrative appeal before collection does not deprive the tax court of jurisdiction later on what i'm going to tell my client is that well we can pursue the administrative appeal now and you'll still have the ability to go to tax court later if that appeals not successful but but if you want to forego that administrative appeal you can go into the collection process you can get a bill you can fill out financial forms and pay me more money to do that and get a lien filed against you that's going to ruin your credit what do you want to do if you want to take advantage of the administrative appeal what i've been doing this in private practice for twenty seven years i've never had a client say that they want to want to have only notice filed against them that simply doesn't happen i'll now turn to the individual subsections and i'll start with c four c four maybe two years ago they changed their mind and say oh well we think this does apply to liability determination now c four is worded in a very particular manner and it uses the word issues and it says if you raised an issue in a prior administrative proceeding then you can't raise it later in the collection due process case and the use of the word issues is crucial here because a liability considered can and very often does consist of multiple issues and so the government's a target taishan of correct could end up with this bizarre situation where if you raised an issue in a earlier administrative proceeding involving the liability and then later in the collection due process they say oh i have another issue i can race but then you can litigate in the tax for only part of the issues that affect the liability again that makes no sense whatsoever also the exam not why not why doesn't that make sense fact of not raising an issue that you could have raised the government is saying we'll give you a second bite at the apple in case you forgot to raise something the first time around here but this is not race you to kind of this is in minutes not i'm not i'm so i'm saying that the government could say look if you either raise it or could have raised it you're precluded earlier you're precluded from raising it later the government is actually taking the pro taxpayer position of well if you forgot to raise the first time around we'll hear you the second time around what's wrong with that well it leads to both of the city of proceedings because in the second if you have an issue in the government if if you go and pursue an administrative appeal and issue one and the government says sorry we rule against you and later on you have you in a collection process appeal you say i want to race issues one and two both of them affect the liability and the iraqis in the tax court says sorry we can only consider issues to well now now issue t reason we don't torture not go go there is because we want to have one lawsuit one in texas work where we live we get the liability not this weird situation where i can only litigate one issue in the tax court and then i have to go to get a second issue in the district so is it your position that the word issue in subsection c for a roman at wind it does not does not include liability issues that is correct that only it only deals with collection issues so for example and how does how do you get that from the tax because issues because because sixty three thirty two c to be the other section deals with liability you get that from the tax so issues deals with things like i can't pay everything i can't pay in full now in my years i have seven hundred dollars a month of disposable income if you have a copy of the statute there the whole sixty two three thirty c because i'm going to i'm going to propose a reading and i want to add love to for you to tell me why i'm wrong ok well let's put aside the fact that issues is not the word issue is not modified in c for a roman at one it just says issue doesn't say non life village issues it says issue let's put that aside so what this issue mean if you look at subsection c three b it also refers to the word issues it says the issues raised in paragraph two right got that yes ok and among the issues raised in paragraph two if you look at to be it's the underlying liability so we have the word issue in sub paragraph for the same word issue is used in some paragraph three that refers to paragraph two and paragraph two refers to liability so when you kind of link all that up isn't that further confirmation that the word issues in sub paragraph or includes not just non liability issues but also liability issues no but cut for the rate first for the reason i articulated before it could because that construction wards the dilatory taxpayer  penalizes the diligent taxpayer for raising the liability early on second when you look at the exception to this provision it deals with changed circumstances that isn't de choose if you look at the steps to be in says collection when somebody loses a job or the income goes up or go down or the inherent as a baptist so the exception to the statute this see for is change in circumstances changing circumstances has no effect whatsoever on a liability because a liability  if you say if you say this any time the government comes along and says you owe something you can later challenge it in collection due process and so it reads the exception out of this you know if it reads that europe it eliminates your ability to challenge the liability under sea to be now if you focus on c to be the issue is what is a prior opportunity we say it's a prior to dish a lot of the government has this funny interpretation they say well it's a prior administrative opportunity but it's not every opportunity it's just the ones we think should apply and we can say you know we can say though that just appeals is covered  and we can ignore the original opportunity to submit an offer in compromise based on data so liability one key point that out o reserve the rest of my time for above is that the government does not dispute that every single taxpayer who has a disputable liability that's why we say if it's an administrative liability that disqualifies you from raising the liability later yet suctioned small is the group so without hours of the rest my t so see for any ties to those issues which would seem include sixty three thirty see to be underlined tax liability issues and you notice that much of what they're arguing here in terms of trying to challenge or analysis a sixty three thirty six for our policy arguments but those policy arguments cannot justify going against the plain language of the statute and this is the plain language analysis now they suggest that there may be some ambiguity as to what in that ministry proceeding is that's whether it should count just and just appeals hearings for an audit and i think that's really what the hampton software case that was cited the reply brief is talking about they're saying hey we think we should you should not try to use c for a to get around the limitations put by the regulation as to sixty three thirty c to be so the same sort of hearings that would be not be included in sixty three thirty c t v would hearing and so you're not tell him being faced with a difficult question as to what should and examinations proceeding gerald or or anything along those lines now as as far the questions as to whether of this is a problem she could only you know do with a particular issue or this might lead to multiplicity of litigation in mind that this is basically a form of issue preclusion that is being specific specific to collections to and the case you have right now they were very clear on that and i think that's generally true in coral style but specifically with the tax area and i give an example where if the law or the facts are changed now that's significant because we cite two cases in proceeding was race in a prior tax years proceeding and the court said oh under sixty three thirty c for a you can't raise it so that's where that changed circumstances exceptionally it's a little bit less clear in the kalar protest hearing what precisely was raised that it was in our country i'm sorry i misspoke if you look at the appeals case memorandum here that was issued it second it you know if the levy didn't actually work to collect the money then the government would have had to have done that action to reduce the assessment to to to a judgment and at that subject you're saying that it was subject to judicial review one way or the other that's right that's right it may not be that the writ judicial review that are coming home says that he should have been able to get but that's the gist but it is a judicial review that has been in place see for that is contained in the to be ok that is the changed circumstances and that could apply to liability cases if for example the liability issue was addr in a prior tax year so that's going to be that's the rouge here on the schaefer cases those are prior tax year so they challenged it particular liability issue in a prior tax year and they're trying to raise it again which if you if you think about it that's really why issue preclusion is so important here otherwise you could have a taxpayer does every year after year oh i know that i challenge that liability last year in my collections due process hearing you have to address it again now can't do that you can't do that you get one bite at the apple even appeals or a judicial proceeding and that's it anderson laurie but the tax court did not rely on c for a did it did not the argument made by the commissioner to the tax court regarding see where it was made yes or it was made in the supplement to the most and for separate judgement and the our country home had the opportunity cases sixty three thirty c t v is an easier law to apply under the interpretation of the regulations that often you know litigants in the text would have only relied on sixty three thirty c to b because you don't have to show that the issues raised you don't have to show that it was considered and you don't have to show meaningful participation all you have to show that the opportunity to dispute was provided and so it's not terribly surprising to me that the tax for mark relied only on sixty three thirty see to be but that doesn't mean sixty there's really no plain language basis to say that it doesn't you know there's a lot of contortions being done in the appellant's brief particularly with the no sitter associates argument but given that this is an ambiguous phra there's no examinations and appeals are different the appeals hearings are done before an independent person who is not involved in assessing the tax in the first place and deficiency proceedings have traditionally been language in the case that it's important to there was a deficiency notice received so we say that this regulation is very consistent but the other thing that's important here is we also think that this regulation is consistent with the statute as a whole you know looks particularly good at sixty three thirty c for a there's no reason why congress would have felt that an administrative proceeding was sufficient for purposes of c four a but was somehow inadequate for purposes of c t v especially given the in the final thing i would like to point out is something that the tax court really focused on in the luas decision that we focused on which is this what is happening here is that our country home is attempting to  use very it baby language she achieved very significant change in taxes which is basically that the full payment rule that requires you to pay your taxes and then go do a refund that action would just be eviscerated at this point it's very rare outside of the deficiency context that you have the opportunity to do a prepayment she dishes challenge to you to your taxes and it shouldn't have to use contortions such as the distinction that the regulation draws between appeals hearings that precede a notice deficiency in appeals hearing set following notice of deficiency how to what's the basis for have to station it really follow that the text of sixty three thirty see to be which treats the receipt of the deficiency notice a significant and it also follows from the particular place deficiency notice really place and the deficiency proceedings in general court jurisdiction so that in this important event and this treats that is that a significant it is a creates a bright line in a you could potentially have a situation where somebody says well i thought i challenge liability because i never received a deficiency notice and purchase deficiency that you've asserted against me they say oh but you had a prior attempt opportunities people for that efficiency notice was issued that she never received so here it also has the plus of creating an upright life in all of us we tend to thing it is it's a it's a reasonable distinction and the fact that the taxpayer here believes that there are some  in the regulation which deserves much deference in the city of arlington it maintains the focus on collection it treats collections to process hearings really is a stopgap for considering liability issues thank you what the court did not hear the government counsel say is that under see for an audit is not an administrative proceeding they didn't say that it is a ministry of procedure and if you would say if you look at c four and say that  single additional where they're coming after you and saying you're a liability you're precluded from raising the merits that that simply does not make sense so if you're saying that a proceeding in comp you're saying that a proceeding encompasses an audit yes it's a mystery to proceed absolutely it's an interaction with an agency where they're asserting a liability you're saying we don't know if that's what or not it is that's why we have liabilities because they  judge i don't i don't think that's a proper reading of the statute i don't like to briefly talk about how they say that there should be deference to the regulation  applies in the regulation is wrong i don't see how you could when the government saying that the regulation deserves deference and they're arguing over here the c four applies that by what they're saying or regulation is wrong that distinction between pre and post a p who you know  income taxes and process and appeals and other types that's a distinction that simply doesn't apply if the four applies and what if the court were to say that seeks to be gives the government the ability to change the regulations and that in this regulation in its current form is changed from the louis case ok this is not the precisely the same if they can change the tax court's authority to decide text liabilities by changing the encroachment on the court on the judicial the cases are very clear that the executive branch cannot by regulation limit the court's ability to decide issues now whether it's the the statute talks about a prior opportunity and doesn't say only opportunities i read the taxpayers are only opportunities at the first level or the second level it deals with all opportunities there is no basis in the statute for drawing the distinctions that the regulation draws there's no basis for drawing any type of the stink sions and there are five if i may yes it is the thought that not no sitter associates there were a half a dozen other types of proceedings where the taxpayer gets a notice from the from the i r s that allows them to go other than a notice of deficiency that allows them to go to tax court and that's where you know the word is not by the company he keeps it says if you you you have received a notice of deficiency or otherwise have an opportunity and the otherwise can argue means you received one of these other half a dozen notices other than the notice a deficiency that allows you to go to tax court and so that's why we believe in addition to the fact that if it's an administrative opportunity the exception swallows the rule we believe that the tax court below got it wrong if there's no further questions thank you thank