1 5 2 T.C. No . 1 4

UNITED STATES TAX COURT
DAF CHARTERS, LLC, Pet it i o n er v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo . 2 1 3 17 -1 4 L. Fi l edM ay 9 , 2 0 1 9
.

P i s a Fl o ri d a l i m it edl i ab i l i ty co m p an y th at i s wh o l l y

o wn edb y a Caym anIs lan d s co rp o rat i o n . As s u ch an d n o tel ect i ng o therwi s e, i t i s d i s reg ard ed as an en t i ty s ep arat e fro m

i t s o wn er fo r m o s tFed eral t ax p u rp o s es . See s ec. 3 0 1 .7 7 0 1-2 (c)(2 )(i ), Pro ced . & Ad m i n . Reg s . Ho wev er, i ti s n o td i s reg ard edas an en t i ty s ep arat e fro m

i t s o wner an di n s t ead i s treat ed as a co rp o rat i on fo r Fed eral em p l oym en tt ax p u rp o s es . See i d . s ubd i v . (i v )(A) an d(B). Du ri n g th e t ax ab le p eri o d en d i n g Dec. 3 1 , 2 0 1 2 , P o perat eda ch art er y ach t , reg i s t eredi n th e Caym an Is l an d s , th attrav el edi n an d o u to f t he Un i t edSt at es an di t s t erri t o ri al wat ers , an dP em p l o y ed U.S. ci t i zen s as crewm en fo r th e y ach t . P fi l eda t i m el y em p l oym en t t ax retu rn fo r t h e p eri o db u td i dn o tp ay em pl o y m en tt ax es o n th e wag es i tp ai dt o th o s e em p l o y ees , cl ai m i n g t h atth o s e wag es were ex em p tfro m em p lo ym en tt ax es u n der t h e “ crewm en ’ s ex em p t i o n” o f I.R.C. s ec. 3 1 2 1 (b )(4 ) b ecau s e P was n o tan “ Am eri can em p l oy er” u n d er I.R.C. s ec. 3 1 2 1 (h ). Th e d efi n i t i o n o f an “ Am eri can em p l o y er”, h o wev er, i n cl u d es “ a co rp o rat i o n o rg an izedu n d er t h e- 2
-

l aws o f th e Un i t edSt at es o r o f an y St at e.” I.R.C. s ec. 3 1 2 1 (h )(5 ). R as s es s edth e ap p l i cab l e am o u n to f em p l o ym en tt ax es an dn o t i fi edP th ath e i n t en dedt o l ev y

t o co l l ect th e o u t s tan d i n g l i ab i l i ty . In res p on s e P req u es t edan d recei veda co l l ect i o n du e p ro ces s h eari n g u n d er I.R.C. s ec. 6 3 3 0 , fo l l o wi n g wh i ch R up h el d th e p ro p o sedl ev y . Hel d : Becau s e P i s treat edas a co rp o rat i o n fo r em p l o y m en t t ax p u rp o s es , s ec. 3 01 .7 7 0 1 -2 (c)(2 )(i v )(B), Pro ced . & Ad m i n . Reg s ., an d was o rg an i zedu n d er t he l aws o f a St at e, P was an Am eri can em p lo y er u n d er I.R.C. s ec. 3 1 2 1 (h ) an dth u s was n o ten t i t l ed t o th e crewm en ’ s ex em p t i o n o f I.R.C. s ec. 3 1 2 1 (b )(4 ). Hen ce, P i s l i ab l e fo r em p l o ym en t t ax es o n wag es p ai dduri n g th e t ax ab l e p eri o d en di n g Dec. 3 1 , 2 0 12 , an dR m ay p ro ceed wi th th e p ro po s edco l l ect i o n act i o n ag ai n s tP wi th res p ectt o th i s l i ab i li ty .

Gl en A. St an kee, fo r p et i t i o n er. Bran d o n S. Cl i n e an d Ken n et h A. Ho ch m an , fo r res p o nd en t
.

OPINION ASHFORD, J u d g e: Th i s co l l ect i on du e p ro ces s (CDP) cas e b ro u g h t u n d er
s ect i on 6 3 3 0 (d )(1 ) 1 i s b efo re t he Co u rto n cro s s -m o t io n s fo r s u m m ary ju d gm en t
.

1 Un l es s o th erwi s e i nd i cat ed , al l s ect i o n referen ces are t o th e In t ern al Rev enu e Co de (Co d e) i n effect atal l rel ev an t t im es , an d al l Ru l e referen ces are t o th e Tax Co u rt Ru l es o f Pract ice an dPro cedu re. M on et ary am o u n t s are ro u n d edt o th e n eares td o l l ar.- 3
-

As ex pl ai n edb el ow, we wi l l d en y s u m m ary ju d g m en tfo r p et i t io n er an dg ran t
res p o n d en t’ s cro s s-m o t i o n. Back gro u n d Th e fact s s etfo rt h h erei n are n o t i n d i sp u t e an dare d eri v edfro m th e p art i es ’ p l ead i n g s , m o t i o n p ap ers , an ds up p o rt i n g m at eri al s at t ach edt o the m ot i o n p ap ers . See Ru l e 1 2 1 (b ). Atth e t i m e t h e p et i t i o n was fi l ed , p et i ti o n er’ s p ri n ci p al p l ace o f b u s i n es s was i n Fl o ri da. Pet i t i o ner i s a l i m i t edl i ab i l it y co m p an y o rg an i zedi n th e St at e o f Fl o ri d a wh o s e s o l e m em

b er i s a co rp o rat i o n , DAF Ch art ers , Lt d ., o rg an i zed i n t h e Caym an Is l an ds . Pet it i o n er was fo rm edo n Au g u s t1 5 , 2 0 1 1, at wh i ch t i m e i t s s o l e m em b er
an d m an ag er was J o h n St al up p i , a U.S. ci t izen . M r. St al upp i tran s ferredh i s
m em b ers h i p i n t eres tt o DAF Ch art ers , Lt d ., o n M ay 8 , 2 0 1 2 , b utrem ai ns p et i t i o n er’ s m an ag er. 2 Du ri n g th e t ax ab le p eri o den d i n g Decem b er 3 1 , 2 01 2 (p eri o d ati s s u e), p et i t i o n er o wn edan do p erat eda ch art er y ach t , ch ri s t en edDi am o n d s Are Fo rev er,

2 Pet i t i on er fi ledan an n u al rep o rtwi th th e Fl o ri d a s ecret ary o f s tat e o n J an u ary 2 , 2 0 1 3 , s t i l l l is t i ng M r. St al up p i as i t s s o l e m em b er an dd i dn o tfi l e an am en d edrep ort l i s t i n g DAF Ch art ers , Lt d ., as i ts s ol e m em b er u n t i l J u l y 1 0, 2 0 1 3
. Pet i t io n er d o es n o tad dres s thi s d i s crep an cy , b u tth e p art i es ag ree t h at M r. St al up p i actu al l y tran s ferred h i s m em

b ers h i p i n t eres to n M ay

8 , 2 0 1 2
.- 4
-

th attrav el edi n an do u to f t h e Un i t edSt at es an di t s t erri t o ri al wat ers . 3 Th e y ach t
was reg i s t eredi n th e Caym an Is l an ds o n J an u ary 5 , 2 0 12 , b efo re wh i ch i twas reg i s tered i n th e Un i t ed St at es . Pet i t i o n er em p lo y edcrewm en fo r t h e y ach t , al l o f wh o m w ere U.S. ci t i zen s. Pet i t i o ner t i m el y

fi l edFo rm

9 4 1 , Em p l o y er’ s Qu art erl y

Fed eral Tax Retu rn , fo r t h e p eri o d ati s s ue, o n wh i ch i t cl ai m edth atth e wag es i tp ai dt o i t s crewm en
were ex em

p tfro m em p l o ym en t t ax es . 4 OnM arch 1 8 , 2 0 1 3 , th e In t ern al Rev en u e Serv i ce (IRS) s en tp et i t i o n er a No t ice CP1 0 2 ad vi si n g t h atch an g es h ad b een m ad e t o i t s Fo rm 9 41 fo r t h e p eri od ati ss u e b ecau s e o f a “ m i s cal cu l at i o n ” o n t h e fo rm , res u l t i n g i n t ax due o f $ 6 ,8 7 2 p l u s i n t eres t
. 5 Inres po n s e t o th i s n ot i ce p et i ti o n er fi l edFo rm 9 4 1 -X, Ad ju s t ed Em p l o y er’ s Qu art erl y

Fed eral Tax Retu rno r Cl ai m fo r Refu n d , s eek i n g ab at em en t
o f t h e res u lt i n g as ses s m en to n t h e g ro u n d s thati t was en t i t ledt o th e “ crewm en ’ s

3 Pet i t i on er s o l dth e y ach tats o m e p o i n t i n 2 0 1 3
. 4 Th e Co de (s peci fi cal l y , th e Fed eral In s u ran ce Co n tri b u t i o n s Act , s ecs . 3 1 0 1 -3 1 2 8 ) i m

p o ses t ax es o n b o t h em

p l o y ees an dem

p l o y ers fo r wag es recei v ed an d p ai d , b u t em

p lo y ers co l l ectan drem ital l o f t hes e t ax es . See i nfra p . 1 2 . W e refer t o th es e t ax es co l l ect i v el y as “ em p lo ym en tt ax es ” t h ro ug h ou tth i s Op i n i o n . 5 Th e IRS i m

m ed i at el y as s es s edthi s am o u nt . Th e IRS i s au th o ri zedt o d o th i s b ecau s e t h e em

pl o ym en tt ax es ati s s u e h ere, i .e., em p l oym en tt ax es i m

p o s ed b y s ub t i t l e C o f t h e Co d e, are n o ts ub jectt o d efi ci en cy

p ro cedu res u n d er s ecs . 6 2 1 1 -6 2 1 6 . See s ec. 6 2 0 1
.- 5
-

ex em p t i o n ” o f s ect i o n 3 1 21 (b )(4 ), u nd er wh i ch wag es p ai db y a fo rei g n em p l o y er t o U.S. crewm en s erv i n g o n a fo rei g n v es s el wh en th e v es sel i s o ut s i d e t h e Un i t ed St at es are n o ts ub

j ectt o em

p l o ym en tt ax es . Th e IRS d en i edp et i t i o ner’ s ab at em en t cl ai m , an dth ereaft er p et i t i o n er fi l eda p ro t es twi th th e IRS Offi ce o f Ap p eal s (Ap peal s ) req u es t i ng reco n s i d erat i o n. OnJ u ne 1 2 , 2 01 3 , wh i l e p et i t i o n er’ s p ro t es t was p en d i n g , th e IRS s en t p et i t i o n er a Let t er 1 0 5 8 , Fi n al No t i ce o f In ten t t o Lev y an dNo t i ce o f Yo u r Ri g h t t o a Heari n g (l ev y

n o t i ce). Th e l ev y

n o t i ce ad v i s edp et i t i o n er t h atth e IRS i n t en d edt o l ev y

t o co l lectthe o u t s t an d i n g l i ab il i ty fo r t h e p eri o dat i s s ue. In
res p o n s e t o th e l ev y

n o t i ce p et it i o n er t i m el y

s ub m i t t ed Fo rm

1 2 1 53 , Reques tfo r a Co l lect i on Du e Pro ces s o r Equ i v al en tHeari n g (CDP h eari n g req u es t). In i t s CDP h eari n g req u es tp et i t i o ner d i dn o ti n d i cat e t hati t was s eek i n g an y co ll ect i o n al t ern at i v es ; i n s t ead , as s etfo rt h i n a d o cu m en tat t ach ed t o i t s CDP h eari n g req u es t , p et i t io n er as s ert edth ati twas ch al l en gi n g th e u n d erl y i n g l i ab i l i ty o n th e g ro u nd s th ati twas en ti t l edt o th e crewm en ’ s ex em p t i o n an dn o t edth at i ts p ro t es t
o f t h e d en i al o f i t s ab at em en tcl ai m rem ai n edp en di n g wi th Ap p eal s . Pet i t i o n er req u es t edth at a CDP h eari n g b e h el dwi th i t s au th o ri zedrep res en tat i ve. OnFeb ru ary 2 6 , 2 0 1 4, Ap p eal s h el da t el ep h o ne CDP h eari n g wi th p et i t i o n er’ s au th o ri zedrep res en t at i v e. Du ri n g th e h eari n g p et i t i o n er’ s au th o ri zed- 6
-

rep res en t at i v e d i s p u t edp et i t i o n er’ s u nd erl y in g t ax l i ab i l i ty fo r t he p eri o dati s s u e, rei t erat i ng i t s l eg al arg u m en tth ati t was en t i t ledt o th e crewm en ’ s ex em p t io n . Pet i t io n er’ s au tho ri zedrep res en t at i v e al s o ad vi s edth e Ap p eal s s et t l em en to ffi cer
co n du ct in g th e h eari n g th atp et i t i o n er was n o ti n t eres t edi n s eek i n g a co l l ect i o n al t ern at i v e an dthati f i t recei v edan ad vers e ru li n g o n i t s p ro tes t , i two u l dp refer a p ro m p t ly i ss u edn ot i ce o f d et erm i n at i o n fo r wh i ch i tco u l ds eekrev i ew i n th i s Co u rt
. OnJ u ly

2 1 , 2 0 14 , th e Ap p eal s o ffi cer h an d l i n g p et i t i on er’ s p ro t es tem ai l ed th e Ap p eal s s et t lem en to ffi cer h an d l i n g p et i t io n er’ s CDP h eari n g req u es t i n fo rm i n g h er t h ats h e was cl os i n g p et i t i o ner’ s cas e an ds u s t ai n i ng th e d en i al o f p et i t i o n er’ s ab at em en t cl ai m o n the b as i s th ati td i d n o t qual i fy fo r t h e crewm en ’ s
ex em p t i o n b ecau s e p et i ti o n er, a s i n g l e-m em b er l im i t edl i ab i l i ty

co m p an y
o rg an i zedu n d er t h e l aws o f t h e St at e o f Fl o ri d a, was reg ard edas an en t i ty an d treat ed as a co rp o rat i o n fo r em p l o ym en t t ax p u rp o ses an dth us m etth e d efi n i t i o n
o f “ Am eri can em

pl o y er” u n d er s ect io n 3 1 2 1 (h ). OnAu gu s t1 3 , 2 0 1 4, the Ap p eal s s et t l em en to ffi cer an dp et i t i on er’ s
au th o ri zedrep res en t at i v e s p o k e b y t el ep h on e. Th e s et t l em en to ffi cer i nfo rm ed h i m o f Ap p eal s’ d i s p o s i t i o n o f p et i t i o n er’ s p ro t es t an di n qui redwh et h er p et i t i o ner wi s h edt o p u rs u e an y

co l l ect i o n al t ern at i v es . Pet i ti o n er’ s au th o ri zed- 7
-

rep res en t at i v e rei t erat ed th at p et i t i o n er d i dn ot wi s h t o p u rs u e an y co l l ect i o n al t ern at i v es an d t h ata n o t i ce o f d et erm i n at io n s h o u ldb e i s s u edfo r wh i ch p et i t i o n er co u l ds eekrev i ew i n th i s Co urt
. Th e s et t l em en to ffi cer d et erm i n ed th atth e p ro p o s edl ev y s h o u ld b e
s u s t ai n ed , an d o n Au g u s t2 6, 2 0 1 4 , Ap p eal s s en tp et i t i o ner (wi th a co p y t o i t s
au th o ri zedrep res en t at i v e) a No t i ce o f Det erm in at io n Co n cern i ng Co l l ect io n Act i o n (s ) Un d er Sect i o n 6 3 2 0 an d/ o r 6 3 3 0 t o thateffect (n o t i ce o f d et erm i n at i o n). A s u m m ary d et ai li n g th e m at t ers co n s i d eredb y Ap peal s an di t s co n cl us i o n s was at t ach edt o th e n o ti ce o f d et erm i n at i on an di n cl u d edth e fo l l o wi n g ex p l an at i o n s :

SUMMARY AND RECOMMENDATI ON Th e Fi n al No t i ce, No t i ce o f In t en tt o Lev y , was p ro p erl y i s s u edan d p ro p o s ed l ev y

act io n i s s u s t ai n edb ecau s e y o uwere n oti n t eres t edi n n eg o t i at i n g co ll ect i o n al t ern at i v es an dd i s ag ree wi th th e t ax due. Yo u r requ es t fo r ab at em en to f t h e t ax as s es sm en ti s d en i ed
. * * * * * * *

LEGAL AND ADMI NI STRATI VE REVI EW
* * * [Th e s et t lem en to ffi cer] v eri fi edth e req u i rem en t s o f an y ap p l icab l e l aw o r ad m i n i s trat i v e p ro cedu re were m et . * * *

* * * * * * *- 8
- I SSUES YOU RAI SED Co l l ecti o n Al terna ti v es Reques ted Yo u o ffered n o al t ern at i v es t o co l l ect i o n . Cha l l eng es to the Li a bi l i ty Yo u d i s ag ree wi th y o u r l i ab i li ty b ecau se y o ucl ai m n ott o b e an Am eri can em

p l o y er s ub

jectt o em

p l o ym en tt ax es . Yo u r ch al l en g e t o th e ex is t en ce o r am ou n to f t h e u nd erl y in g l i ab i l it y was as s i g n edt o Ap p eal s Offi ce [s i c] G. Ro dri g o wh o d et erm i n edy o u are l i ab l e fo r t he em p l o ym en t t ax . Reg u lat i o n § 3 0 1 .7 70 1 -2 (c)(i v) t reat s s i n gl e m em b er Li m i t edLi ab i l i ty

Co m p an i es (SM LLCs ) as co rp o rat i o n s fo r al l em p l o y m en tt ax p urp o s es . Sect i o n 3 1 2 1 (h ) o f th e Co d e d efi n es an “ Am eri can Em

p lo y er” t o i n cl u d e a co rp o rat i o n o rg an i zedu nd er t h e l aws o f th e Un i t edSt at es o r o f an y St at e. Sect i o n 3 1 2 1 (h ) fal l s u n d er th e reg u l at i on s t o d et erm i n e wh et h er t h e em p l o y er i s an Am eri can em p l o y er. Yo uare a SM LLC creat ed i n t h e St at e o f Fl ori d a; th erefo re, y o u are an Am eri can Em p l o y er u n d er Sect i o n 3 1 2 1 (h )(5 ) an ds ub jectt o em

p lo ym en tt ax es . Yo u ra i s ed no o ther i s s ues .

BALANCI NG ANALYSI S Su s t ai n i n g p ro p o sed l ev y act io n b al an ces th e n eed fo r effi ci en t co l l ect i o n o f t ax wi th y o u r co n cern th at co ll ect i o n i s n o m o re i n tru s i v e b ecau s e y o u wo u l dn o tco n s i d er co l l ect i o n al t ern at i v es an d we h av e d et erm i n edy o uare l iab l e fo r t h e em p l o ym en tt ax s ub

jectt o th es e p ro ceed i ng s . Pet i t i o ner t i m el y

fi l eda p et i t i o n wi th t h i s Co u rtfo r rev iew o f t h e n o t i ce o f d et erm i n at i o n .- 9
- Di s cu ss i o n I. St an dardo f Rev i ew Th e p u rp os e o f s u m

m ary ju d g m en t i s t o ex p ed it e l i t i g at i o n an d av o i d
u n n eces saryan dex p en s iv e t ri al s . Fl a. Peach Co rp . v . Co m m is s i o n er, 9 0 T.C. 6 78 , 6 8 1 (1 98 8 ). Su m

m ary ju dg m en tm ay

b e g ran t edwh ere t he m o v i n g p art y s h o ws , th ro u g h “ th e p lead i n g s * * * an dan y o th er accep t ab l e m at eri al s , t o g et h er wi th th e affi d av i ts o r d ecl arat i o ns , i f an y , * * * th atth ere i s n o g enu i n e d is p u t e as t o an y
m at eri al factan dth ata d eci s i o n m ay b e ren d ered as a m at t er o f l aw.” Ru l e 1 2 1 (b );
s ee Su n d s tran dCo rp . v . Co m m i s s i o n er, 9 8 T.C. 5 18 , 5 2 0 (1 9 9 2 ), aff’ d , 1 7 F.3 d 9 6 5 (7 th Ci r. 1 9 94 ). Th e p art i es ag ree o n al l m at eri al fact s n eces s ary t o res o l v e th e p u rel y

l eg al qu es t i o n s th atth i s cas e p res en t s . Co ns equ en t l y , thi s cas e i s ap p ro p ri at e fo r s u m

m ary ad ju d i cat i on . Un d er s ect i o n 6 33 1 (a), i f an y p ers o n l i ab l e t o p ay an y

t ax n eg l ect s o r refu ses t o d o s o aft er n o ti ce an dd em an d , th e Co m m i s s i o n er i s au th o ri zedt o
co l l ectth e u np ai dam o u n t b y way o f a l ev y up o n al l p ro p ert y

an dri g h ts t o p ro p erty b el o n g i n g t o s u ch p ers o n o r up on wh i ch th ere i s a l i en . Pu rs u an tt o
s ect i on 6 3 3 0 (a), t h e Co m m i s s i on er m

u s tp ro v id e t h e p ers o n wi th wri t t enn o t i ce o f
an d an o p p o rtu n it y

fo r an ad m i n i s trat i v e h eari n g t o rev i ew t h e p ro po s ed l ev y .- 1 0 -

If an ad m i n i s trat i v e h eari n g i s req u es t edi n a l ev y cas e, t h e h eari n g i s t o b e
co n du ct ed b y

Ap p eal s . Sec. 6 3 3 0 (b )(1 ). Atth e h eari n g the Ap p eal s o ffi cer
co n du ct in g i tm

u s to b t ai n v eri fi cat i o n th atth e req u irem en t s o f ap p l i cab l e l aw an d ad m i n is trat i v e p ro cedu re h av e b een m et . Sec. 6 3 3 0 (c)(1 ). Th e t ax p ay er m ay rai s e atthe h eari n g an y

rel ev an ti s su e rel at i n g t o th e u np ai dt ax o r th e p ro p o s ed
co l l ect i o n act i on i n cl u d i n g s po u s al d efen s es , ch al l en g es t o th e ap pro p ri at en es s o f th e p ro p o s edco l l ect i o n act i o n , an dco l l ect i o n al tern at i v es . Sec. 6 3 30 (c)(2 )(A). Fo l l o wi ng th e h eari n g th e Ap p eal s o ffi cer m u s t d et erm i n e am o n g o th er t h i ng s wh et h er t h e p ro p o s edco l l ect i o n act i o n i s ap p ro pri at e. In reach in g th e d et erm i n at i o n th e Ap p eal s o ffi cer m u s tt ak e i n t o co n s i d erat i o n: (1 ) wh eth er t h e req u i rem en t s o f ap p l icab l e l aw an dad m i n i st rat i v e p ro cedu re h av e b een m et , (2 ) al l rel ev an t i s s u es rai s edb y

th e t ax p ay er i n cl ud i n g o ffers o f co l lect i o n al t ern at i v es , an d (3 ) wh et h er an y pro po s edco l l ect i o n act i o n b al an ces th e n eedfo r t h e effi ci en t
co l l ect i o n o f t ax es wi th th e l eg i t i m at e co n cern o f t h e t ax p ay er th atco l l ect i o n b e n o
m o re i n tru s i v e t h ann eces sary . Sec. 6 3 30 (c)(3 ); s ee al s o Lu ns fo rd v . Co m m i s s i o n er, 1 1 7 T.C. 1 8 3 , 1 8 4 (2 0 0 1). Sect io n 6 3 3 0 (d )(1 ) g ran t s th i s Co u rtjuri s d ict i o n t o rev i ew t h e d et erm i n at i o n
m ad e b y Ap p eal s i n a l ev y

cas e. See al s o Cal l ah an v . Co m m i s s i o n er, 1 3 0 T.C. 4 4 , 4 8 (2 00 8 ). If t h e t ax p ay er fi les a t im el y p et i t i o n fo r s u ch ju di ci al rev i ew, th e- 1 1 -

ap p li cab l e s tan d ardo f rev i ew d ep en d s o n wh et h er t h e u nd erl y i n g t ax l iab i li ty i s at i s su e. Wh ere t h e t ax p ay er’ s u n d erl y i n g t ax l i ab i l i ty i s p ro p erl y at i s s ue, t h e Co u rt
rev i ews th e l i ab il i ty

d et erm i n at i o n d e n o v o . Seg o v . Co m m i s s io n er, 1 1 4 T.C. 6 0 4 , 6 1 0 (2 00 0 ); Go za v . Co m m is s i o n er, 1 1 4 T.C. 1 7 6 , 1 8 1 -1 8 2 (2 0 0 0). Th e Co u rt
rev i ews ad m i n i s trat i v e d et erm in at i o n s m ad e b y Ap p eal s reg ard i n g n o n l i ab i l i ty i s su es fo r ab u s e o f d i s cret io n . Seg o v . Co m m i s si o n er, 1 1 4 T.C. at6 10 ; Go za v . Co m m i s s i o n er, 1 1 4 T.C. at1 8 2. A t ax p ay er m ay

ch al l en g e h i s u n d erl y i n g t ax l iab i l i ty du ri n g a CDP h eari n g (an dth ereaft er i n th i s Co u rt ) i f h e d i dn o trecei v e a n o ti ce o f d efi ci en cy wi th
res p ectt o t h e l i ab il i ty

o r d i dn o to th erwi s e h av e an earl i er o p p o rtu n i ty t o d i s p u t e th e l i ab i l i ty . See s ec. 6 3 3 0 (c)(2 )(B); s ec. 3 0 1 .6 3 3 0 -1 (e)(3 ), Q&A-E2 , Pro ced . & Ad m i n . Reg s.; s ee al s o Ku yk en d al l v . Co m m i s s i o ner, 1 2 9 T.C. 7 7 , 8 0 (2 0 0 7 ); Seg o v . Co m

m i s s io n er, 1 1 4 T.C. at6 0 9 ; Sh ere v . Co m m i s s i o n er, T.C. M em o . 2 0 0 8 -8 , s l i p o p . at1 0 . Pet i t i o n er’ s u n d erl y i n g l i ab i li ty fo r t h e p eri o d ati s s u e was
n o ts ub jectt o th e IRS’ d efi ci en cy p ro cedu res , an di td i dn o th av e a p ri o r
o p p o rtu ni ty

t o ch al l en ge t h e l i ab i l i ty . 6 Acco rd i ng l y , t o th e ex ten tthe u n d erl y i n g

6 W e n ot e thatp et it i o n er’ s p en d i n g p ro t es twi th Ap peal s d i dn o tp recl u d e i t fro m d i s p u t i ng i t s u n derl y i n g l i ab il i ty fo r t h e p eri o dat i s s ue i n t h e co n cu rren tCDP h eari n g (an dacco rd i n g l y , n o w i n th i s Co u rt ). See Perk i n s v . Co m m i s s i o n er, 1 2 9 T.C. 5 8 , 6 5 -6 7 (2 00 7 ).- 1 2 -

l i ab i l i ty is ati s s u e, we wi l l rev i ew Ap p eal s ’ d et erm i n at io n d e n ov o ; we wi ll
rev i ew Ap p eal s ’ ad m i n i s trat i v e d et erm i n at i o n s us t ai n i n g th e p ro p o sedl ev y fo r ab u se o f d i s cret i o n . II. Ch al l en g e t o Un d erl y i n g Li ab i l i ty Th i s cas e p res en t s a qu es t i o n o f s tatu t o ry i n t erp ret at i o n (wh i ch i s an i s s u e o f fi rs ti m p res s i o n i n th is Co u rt ), s o we b eg in as we al w ay s m u s twi th th e rel ev an t
s t atu to ry t ex t. A. Em p lo ym en t Tax es Th e Fed eral In su ran ce Co n tri bu t io n s Act(FICA), co di fi edi n s ub t i t le C o f th e Co d e, s ect i o n s 3 1 0 1-3 1 2 8 , i m p o s es em p l o ym en tt ax es (s p eci fi cal l y , fo r “ [o ] l d

ag e, s u rv i v o rs , an dd is ab i l i ty i n s u ran ce” an d fo r “ [h ] os p it al i n su ran ce”) o n al l wag es recei v edb y in d i v i du al s wi th res p ectt o em p l oym en tan dreq u i res em p l o y ers t o co l l ectan drem i tthes e am o un t s o n th ei r em p l o y ees ’ b eh al f. Secs
. 3 10 1 (a) an d (b ), 3 1 0 2(a). FICA al s o i m p o ses em p l o y m en tt ax es (t ech ni cal l y , as ex ci s e t ax es ) i n equ al am o u nt s o n al l wag es p ai db y em p l o y ers wi th res p ectt o em p l o ym en t
. Sec. 3 1 11 (a) an d(b ). Em p lo y ers s ub

jectt o th es e t ax es rep o rtan dp ay them qu art erl y . See s ec. 3 1
. 6 0 1 1(a)-1 (a)(1 ), Em p l o y m en t Tax Reg s .- 1 3 -

Th e Co d e d efi nes “ em

p lo ym en t” s ub

jectt o th es e t ax es as fo l l o ws : SEC. 3 1 21 (b ). Em

p l o y m en t .-- Fo r p u rp os es o f t h i s ch ap t er, t h e t erm “ em p l o y m en t ” m ean s an y

s erv i ce, o f wh at ev er n atu re, p erfo rm ed (A) b y an em p lo y ee fo r t h e p ers on em

p l o y in g h im , i rres pect i v e o f t h e ci t i zen s h i p o r res i d en ce o f ei th er, (i ) wi th in th e Un i t ed St at es , o r (i i) o n o r i n co n n ect i o n wi t h an Am eri can v es s el o r Am eri can ai rcraft u n d er a co n tract o f s erv ice wh ich i s en t eredi n t o wi th i n th e Un i t ed St at es o r du ri n g the p erfo rm an ce o f wh i ch an d wh i l e t h e em p l o y ee i s em p l o y edo n the v es s el o r ai rcraft i tt o u ch es ata p o rti n t h e Un i t ed St at es , i f t h e em

p l o y ee i s em

p l o y edo n an di n co n n ect i o n wi th s u ch v es s el o r ai rcraft wh en o u t s id e t h e Un i t edSt at es , o r (B) o u t s i d e th e Un i t edSt at es b y

a ci t i zen o r res i d en to f th e Un i t edSt at es as an em p l o y ee fo r an Am eri can em pl o y er (as d efi n edi n s ub sect i o n (h )) * * * Ho wev er, s ect i o n 3 1 2 1(b )(4 ) s p eci fi cal l y ex cep t s fro m

th is d efi n i t io n
s erv ice p erfo rm edb y

an i n d i v i du al o n o r i n co nn ect i o n wi th a v es s el n o tan Am eri can v es s el , o r o n o r i n co nn ect i o n wi th an ai rcraft n o tan Am eri can ai rcraft , i f (A) t h e i n d iv i du al i s em p lo y edo n an di n co n n ect i o n wi th s u ch v es s el o r ai rcraft , wh eno u t s i d e t he Un i t ed St at es an d(B)(i ) s u ch i n d i v i du al i s n o ta ci t i zen o f t he Un i t edSt at es o r (i i ) t h e em

p l o y er i s n otan Am eri can em p l oy er. Th i s ex cep t i on i s kn o wnas th e “ crewm en ’ s ex em p t io n ”. Th e p art i es ag ree t h atduri n g t h e p eri o dati ss u e (1 ) p et i t i o ner p ai d wag es t o i t s em p l o y ees fo r s erv i ces p erfo rm ed o n o r i n co n n ect i o n wi th p et i t i o n er’ s v es s el , (2 ) p et i t i o n er’ s v es s el was n o tan Am eri can v es s el , 7 (3 ) p et i t i o ner’ s em p lo y ees

7 Th e Co de d efi n es th e t erm “ Am eri can v es sel ” as fo l l o ws : SEC. 3 1 21 (f). Am eri can Ves s el an d Ai rcraft .--Fo r p u rp o s es o f (co n ti n u ed ...)- 1 4 -

were em p l o y edo n an di n co n n ect i o n wi th p et i t i o n er’ s v es s el wh en i t was o u t s i d e th e Un i t edSt at es , an d(4 ) p et i t i o n er’ s em p l o y ees were ci t i zen s o f t h e Un i t ed St at es . Th e p art i es ’ s o le d i sp u t e i s wh et h er p et i t i o n er was an “ Am eri can
em pl o y er” du ri n g th e p eri o d ati s s u e. If i t was , th en s ect io n 3 1 2 1 (b ) ap p l i es an d th e s ect i o n 3 1 2 1 (b )(4 ) crewm en ’ s ex em pt i o n d o es n ot , an d p et i t io n er i s l iab l e fo r
em pl o y m en tt ax es o n al l wag es i tp ai dt o i ts em pl o y ees , reg ard l es s o f wh ere
s erv i ces were p erfo rm ed . If i twas n o t , th enth e s ect i on 3 1 2 1(b )(4 ) crewm en ’ s
ex em p t i o n d o es ap p l y , an d p et i t i o n er i s n o t l iab l e fo r em p l o y m en tt ax es o n an y wag es i tp ai dt o i t s em

p l o y ees , reg ard les s o f wh ere s erv i ces were p erfo rm ed
. Th e Co d e d efi nes an “ Am eri can em p l o y er” as an em

p l o y er wh i ch i s:

“ (1 ) th e Un i tedSt at es o r an y i n s t ru m en t al i ty

th ereo f, (2 ) an i n d i vi du al wh o i s a
res i den t o f t h e Un i t edSt at es , (3 ) a p art n ers h i p , i f t wo -t h i rd s o r m o re o f t h e p art n ers are res i d en t s o f t h e Un i t edSt at es , (4 ) a t ru s t , i f al l o f th e t ru s t ees are

7 (...co n t in u ed ) th i s ch ap t er, t h e t erm “ Am eri can Ves s el ” m ean s an y v es s el d o cu m en t edo r n u m

b eredu n d er t h e l aws o f t h e Un i tedSt at es ; an di n cl ud es an y

v es s el wh i ch i s n ei th er d o cu m en t edo r n u m b ered u n d er t h e l aws o f t h e Un i t edSt at es n o r d ocu m en t edu n der t he l aws o f an y fo rei g n co u n try , i f i t s crew i s em p lo y eds o l el y

b y o n e o r m o re ci t i zen s o r res i d en t s o f t h e Un i t edSt at es o r co rp o rat i o n s o rg an i zed u n d er t h e l aws o f t h e Un i t edSt at es o r o f an y St at e * * * Becau s e p et i t i o n er’ s v es s el was reg i s tered u n d er t h e l aws o f t he Cay m an Is l an d s du ri n g th e p eri o dati s s u e, i td idn o tfal l u n d er t h i s d efi n i t i o n .- 1 5 -

res i den t s o f t he Un i t edSt at es , o r (5 ) a co rp o rat i o n o rg an i zedu n d er t h e l aws o f t h e Un i ted St at es o r o f an y

St at e.” Sec. 3 1 21 (h ); s ee al s o s ec. 3 1 .3 1 2 1 (h )-1 , Em p l o ym en t Tax Reg s . (rei t erat i n g s t atu t ory ru l e). 8 Nei th er s ect i on 3 1 2 1 n o r an y
o th er p ro v i s i o n i n s ub t i t l e C o f t h e Co d e s ep arat el y d efi n es “ co rp o rat i o n ”. B. En t i ty

Cl as s i fi cat i o n Sect io n 7 7 0 1 (a) p ro v i d es th at“ [w] h en u s edi n t h i s t i t l e, wh ere n o to th erwi s e d i s t i n ct l y ex pres s edo r m an i fes t l y i n co m p at i bl e wi th th e i n t en t th ereo f * * * [t ] h e t erm ‘ co rp o rat i o n ’ i n cl u des as s o ci at i on s , jo in t -s t o ckco m p an i es , an di ns u ran ce
co m p an i es .” Sec. 7 7 0 1(a)(3 ). Th i s d efi n i t io n i s ex pl i ci t l y n o n ex cl u s i v e, h o wev er, p u rs u an t t o s ect io n 7 70 1 (c), wh i ch p ro vi d es th at“ [t ] h e t erm s ‘ i n cl u d es ’ an d

‘ in cl u d i ng ’ wh en u s edi n a d efi n i t i o n co nt ai n edi n t h i s t i t l e s h al l n o t b e d eem edt o
ex cl u d e o th er t h in g s o th erwi s e wi th in th e m ean i n g o f t h e t erm d efi n ed .” See al s o M cNam ee v . Dep ’ to f t h e Treas u ry , 4 8 8 F.3 d1 00 , 1 0 6 -1 0 7 (2 dCi r. 2 0 0 7 ) (n o t i n g th atl i m i t edl i ab il i ty

co m p an ies are n o tl is tedi n s ect i o n 7 7 0 1 ).

8 Th e Co de d oes n o ts ep arat el y d efi n e “ em

pl o y er” fo r p u rp o s es o f em pl o y m en tt ax es b u td oes d efi n e i tb ro ad ly fo r p u rp o s es o f u n em

p l o ym en t i n s u ran ce p aym en t s , s ec. 3 30 6 (a), an dFed eral i n co m e t ax wi thh o l d i n g res p o n s i b i l i t ies , s ec. 3 4 0 1 (d ), as an y p ers o n wh o p ay s wag es o r o th erwi s e en g ag es i n d i v i du al s i n em

p l oym en t
. Th e Suprem e Co u rth as i n t erp ret ed th e t erm i n th e em pl o y m en tt ax co n t ex ts i m i l arl y b ro ad l y . See Ot te v . Un i t edSt at es , 4 1 9 U.S. 4 3, 5 1 (1 97 4 ). In an y

ev en tn ei th er p art y

h ere d i s p u t es th atp et i t i o n er was an em pl o y er fo r em

p l o ym en t t ax pu rp o s es , o nl y wh et h er i twas an “ Am eri can em pl o y er” fo r p urp os es o f s ec. 3 1 2 1
.- 1 6 -

Th e Dep art m en to f t he Treas u ry h as p ro m u lg at edreg u l at i o ns u n d er s ect i o n 7 7 0 1 thatel ab o rat e o n t h e d efi n i t i on s o f s ect i o n 7 7 0 1 (a) t o p ro v i d e cl ear g u i d el i n es fo r cl as s i fy i n g v ari o u s fo rm s o f b u s i n es s en t i t i es . See T.D. 8 6 9 7 , 1 9 9 7
- 1 C.B. 2 1 5 ; s ee al s o Li t tri el l o v . Un i t ed St at es , 4 84 F.3 d 3 7 2 , 3 7 5 -3 7 6 (6 th Ci r. 2 0 0 7 ); Pi erre v . Co m

m i s s io n er, 1 3 3 T.C. 2 4 , 3 0-3 2 (2 0 0 9) (d is cu s s i n g h i s to ry o f
en t i ty cl as s i fi cat i o n an d earl i er reg u l at io n s ), s up p l em en t edb y T.C. M em o . 2 0 1 0
- 1 0 6 . Kn own as th e “ ch eck -t he-b ox ” reg u l at i on s , th es e reg u lat i on s g en eral l y g ran t b ro add i s cret i o n t o b us i nes s o wn ers , wh o can o ft en el ect (b y “ ch eck i n g the b o x ” fo r a cert ai n en t i ty

ty p e o n a fo rm

fi l edwi th th e IRS, h en ce t h e n am e) wh et h er an
en t i ty th ro u g h wh i ch th ey

co n du ctb u s i n es s i s t reat edas an as s o ci at io n (i
. e., a
co rp o rat i o n), a p art n ers h i p , o r a “ d i s reg ard ed ” en t it y fo r Fed eral t ax p u rp o s es . Sec. 3 0 1.7 7 0 1 -3 (a), Pro ced . & Ad m i n . Reg s.; s ee M cNam ee, 4 8 8 F.3 dat1 0 9 (up h ol d in g th e ch eck -t h e-b o x reg u l at i o n s as a v al idex erci s e o f t h e IRS’
au th o ri ty ); Li t tri el l o , 4 8 4 F.3 dat3 7 8 (s am e); M ed . Pract i ce So l s ., LLC v
. Co m m i s s i o n er, 1 3 2 T.C. 1 2 5 , 1 2 9 -1 3 0 (2 0 0 9) (s am e), aff’ dwi th o utp ub l i s h ed
o p i n i o n s ub n o m . Bri t t o n v . Sh u l m an , 1 0 6 A.F.T.R.2 d (RIA) 2 0 1 0 -6 0 4 8 (1 s tCi r. 2 0 1 0 ). Th e ch eck -t h e-b o x reg u l at i o n s d o n o t al way s g ran t en ti ty o wn ers a ch o i ce, th o u g h , l i s t i n g s o m e t y

p es o f en t i t i es (m

u ch m o re ex t en s iv el y th an i n s ect i o n- 1 7 -

7 7 0 1 (a)(3 ) i ts el f) t h atare i rrev o cab l y co n s id eredco rp o rat i o n s . See s ec. 3 0 1 .7 7 0 1
- 2 (b ), Pro ced . & Ad m in . Reg s . En ti t i es n o ti n t h i s l i s tm ay el ectth ei r t reat m en t , an d th e reg u l at i on s p ro v i d e d efau l to p t i o n s fo r en t i t i es th atfai l t o ch o o s e. See s ec. 3 0 1 .7 7 0 1 -3 (b ), Pro ced . & Ad m i n . Reg s . In p art i cu l ar, a d o m es t i c en t i ty th ati s n o t
a co rp o rat i o n an dh as a s in gl e o wn er i s d i sreg ard edas an en t i ty s ep arat edfro m

i t s
o wn er u n l es s t h e o wn er el ect s o th erwi s e. See s ecs . 3 0 1.7 7 0 1 -2 (c)(2 )(i ) an d 3 0 1 .7 7 0 1 -3 (b )(1 )(i i ), Pro ced . & Ad m i n . Reg s . Th e reg u l at i o n s d efi n e anen t i ty as d o m es t ic “ if i t i s creat edo r o rg an i zedas an y ty p e o f en t i ty

(i n cl u d in g , b u tn o t l i m i ted t o , a co rp o rat i o n , u ni nco rp o rat edas s o ci at i on , g en eral p art n ers h ip , l i m i t ed p art n ers hi p , an d l i m i t ed l i ab i li ty co m p an y ) i n th e Un i t edSt at es , o r u n d er t h e l aw
o f t h e Un i t edSt at es o r o f an y St at e.” Sec. 3 0 1.7 7 0 1 -5 (a), Pro ced . & Ad m i n . Reg s . Th e effect o f b ei n g d i s reg ard edi s th at , i n g en eral , th e en ti ty i s treat edas a
s o l e p ro p ri et o rs h i p o r b ran ch o f i t s o wn er. See s ec. 3 01 .7 7 0 1 -2 (a), Pro ced . & Ad m i n . Reg s. Al th o u g h t h e en t i ty m ay b e reco g n i zeds ep arat el y fro m i t s o wn er
u n d er St at e o r o th er Fed eral l aw, an y i t em s o f i n co m e an d l o s s g en erat edb y th e
en t i ty are d i rect l y at tri b u t ab l e t o an drep ort edb y th e en t i ty ’ s o wn er fo r Fed eral t ax p u rp os es , an dth e en t i ty

i s n o ts ub

jectt o co rp o rat e i n co m e t ax o r an y p art ners h i p
o r S co rp o rat i o n i nco m e al l o cat i o n ru l es , al l o f wh ich are co d ifi edu n d er s ub t i t l e A
o f t h e Co d e.- 1 8 -

Ho wev er, t h e ch eck -t h e-b o x reg u l at io n s p ro v i d e a s p eci fi c ex cep t i o n fo r Fed eral em

p l o ym en tt ax p u rp o ses . In s t eado f at tri b ut i n g em p l o ym en tt ax l i ab i l i t y t o a d i s reg ard ed en t i ty ’ s o wn er, t h e reg u l at i o n s s t at e t h at“p arag rap h (c)(2 )(i ) o f th i s s ect i o n (rel at i n g t o cert ai n wh ol l y o wn eden t i t i es ) d o es n o tap p l y t o t ax es i m p o s edu n d er Sub t i t l e C--Em p l o ym en t Tax es an dCo l l ect io n o f In co m e Tax ” an d th at“ an en t i ty

th ati s d is reg ard edas an en t i ty s ep arat e fro m

i t s o wn er fo r an y p u rp os e u n d er t hi s s ect i o n i s treat edas a co rp o rat i o n wi th res p ectt o t ax es i m p o s ed
u n d er Su b t i t l e C--Em

p l o ym en tTax es an dCo l l ect io n o f In co m e Tax ”. Sec. 3 0 1 .7 7 0 1 -2 (c)(2 )(i v )(A) an d(B), Pro ced . & Ad m in . Reg s . Ino th er wo rd s, a d i s reg ard eden t i ty

i s treat edas a s ep arat e en ti ty fo r p u rp os es o f em

p l o ym en tt ax es i m p o s edu n d er s ubt i t l e C an d , i n ad di t i o n , th e s ep arat e en t i ty i s t reat edas a
co rp o rat i o n fo r p u rp o s es o f em p l o ym en tt ax es i m

po s edu n der s ub t i t l e C an d rel at ed rep o rt i n g req u i rem en t s . Th i s ex cep t i o n was ad d edt o th e ch eck -t h e-b o x reg ul at i o n s i n 2 0 0 7 , s ee T.D. 9 3 5 6 , 2 0 0 7 -2 C.B. 6 75 , an ds ect i o n 3 0 1
. 7 70 1 -2 (c)(2 )(i v)(A), Pro ced . & Ad m i n . Reg s., i s ap p l icab l e t o wag es p ai do n o r aft er J an u ary 1 , 2 0 0 9 , an ds ect i on 3 0 1 .7 7 0 1 -2 (c)(2 )(i v )(B), Pro ced . & Ad m i n . Reg s., i s ap p l i cab l e t o wag es p ai do n- 1 9 -

o r aft er Sep t em

b er 1 4, 2 0 09 , 9 s ee s ec. 3 0 1 .7 7 01 -2 (e)(5 ), Pro ced . & Ad m i n . Reg s . Befo re t h en , th e o wn er o f a d i s reg ard eden t i ty was u l t i m at el y

l i ab le fo r
em pl o y m en tt ax es o n wag es p ai db y th e en t i ty

b utco u l d ch o os e wh et h er t h e o wn er
o r t h e en t i ty

wo ul db e res po n s ib l e fo r cal cu l at i o n , rep o rt i n g, an dp aym en t o f t h at l i ab i l i ty . No t i ce 9 9 -6 , 1 99 9 -1 C.B. 3 2 1. Th e Dep art m en t o f t h e Treas u ry ’ s

9 OnNo v em

b er 1 , 2 0 11 , i n o rd er t o ex t en d t h e FICA an dFed eral Un em p l o ym en tTax Actex cep t i o n s fo r fam i l y m em b ers an drel i gi o us s ect m em b ers t o cert ai n en t i ti es th atare d i s reg ard edas s ep arat e fro m thei r o wn ers fo r Fed eral t ax p u rp o s es u n d er s ec. 3 0 1 .7 7 0 1 -2 (c), Pro ced . & Ad m i n . Reg s ., an dt o cl ari fy the ex i s t i n g ru l e t h atth e o wn er o f a d i s reg ard ed en t it y fo r Fed eral t ax p u rp os es u n d er s ec. 3 0 1 .7 7 0 1 -2 (c), Pro ced . & Ad m i n . Reg s ., i s s ub ject t o b ackup wi th h o l d i n g (i
. e., th e wi th h o ld i n g req u i rem en t s i m p o s edu n d er s ec. 3 4 0 6 ), th e Dep art m en to f th e Treas u ry am en d ed , am o n g o th er reg u l at i o ns , s ec. 3 0 1 .7 7 0 1 -2 , Pro ced
. & Ad m i n . Reg s . See T.D. 9 5 5 4 , 2 0 1 1 -5 0 I.R.B. 8 4 3
. Itrev i s ed (an dm ad e “ [r] es erv ed ”) s ec. 3 0 1.7 7 01 -2 (c)(2 )(i v )(A), Pro ced . & Ad m i n . Reg s ., an d ad d ed s ec. 3 0 1.7 7 0 1 -2 T(c)(2 )(i v )(A), Tem p o rary Pro ced . & Ad m i n. Reg s ., 7 6 Fed . Reg
. 6 7 3 6 6 (No v . 1 , 2 0 1 1 ). T.D. 9 5 5 4 , 2 0 11 -5 0 I.R.B. at8 4 6. Ho wev er, t h e fi rs t s en t en ce o f s ec. 3 01 .7 70 1 -2 (c)(2 )(i v )(A), Pro ced . & Ad m in . Reg s ., was ret ai n edi n s ec. 3 0 1.7 7 0 1 -2 T(c)(2 )(i v )(A), Tem p o rary Pro ced . & Ad m i n. Reg s ., s up ra. T.D. 9 5 5 4 , 2 0 1 1 -5 0 I.R.B. at8 4 6. OnJ u l y 1 4 , 2 0 1 4 , th e Dep art m en to f t h e Treas u ry fi nal izedth e No v em

ber 1 , 2 0 1 1 , am en d m en t s wi th o u ts ub s t an t i v e ch an g e an d ret ai n i n g th e 2 0 09 ap p l i cab i l it y d at es . T.D. 9 6 7 0 , 2 0 1 4 -2 9 I.R.B. 1 2 1
. Th e p ream bl e t o th es e fi n al reg u l at io n s n o t es th at [s ] ect i o n 3 0 1 .7 7 0 1 -2 (c)(2 )(i v )(A) co n ti n u es t o p ro v i d e th at § 3 0 1
. 7 7 0 1 -2 (c)(2 )(i ) (rel at i n g t o cert ai n wh o l l y o wn eden t i t i es ) d o es n o tap p l y t o t ax es i m

po s edu n d er Su b t i t l e C. Sect i o n 3 0 1 .7 7 0 1
- 2 (c)(2 )(i v )(B) al s o co n t i n u es t o p ro v i d e t h at an en t i ty thati s d i s reg ard edas an en t i ty

s ep arat e fro m

i ts o wn er fo r an y

p u rp os e u n d er § 3 01 .7 7 0 1 -2 i s treat edas a co rp o rat i o n fo r p urp o s es o f t ax es i m p o s edu n d er Sub t i t l e C. [Id . at1 22 .]- 2 0 -

ru l em ak i n g el i m i n at ed th i s ch o i ce an d el i m i n at ed a d i s reg ard eden t i ty ’ s o wn er’ s l i ab i l i ty fo r em

p l o ym en tt ax es ; n o w, th e en t i ty al o n e i s l iab l e. T.D. 9 3 56 , 2 0 0 7 -2 C.B. at6 7 6
. C. An al y s i s Ap p ly i n g th e ch eck -t h e-b o x reg u l at i o n s t o p et i t i o n er i s rel at i vel y
s trai g h t fo rward . As a l i m i tedl i ab i l i ty co m p an y wi th a s i n g le o wn er t h ath as n o t el ect edo th erwi s e, p et i t i o n er i s au t o m at ical ly d is reg ard edas an en t i ty

s ep arat e fro m i t s o wn er fo r m o stFed eral t ax p u rp o s es . See s ec. 3 0 1 .7 7 01 -2 (c)(2 )(i ), Pro ced
. & Ad m i n Reg s. As a res u l t , p et i t i o ner n eedn o t wo rry ab o utFed eral i n co m e t ax , as an y

i n co m e o r l o s s i tg en erat es fro m i t s o p erat i on s i s at tri b u t edt o i t s o wn er. Ho w ev er, fo r em pl oym en t t ax p urp o s es , th i s d efau l tcl as s i fi cat i o n d o es
n o tap pl y , i d . s ubd i v . (i v )(A); p et i ti o n er m u s td et erm i n e t h e ex t en t o f i t s p ot en t i al l i ab i l i ty fo r em

p l o ym en tt ax es u n d er FICA, s ep arat el y res ol v in g an y

i s s u es o f
en t i ty cl as s i fi cat i o n th atm ay ari s e u n d er t h e ap p l i cab l e p ro v i s i o n s . Pet i t i o ner co n ten d s th ati ti s n o tl i ab l e fo r em p lo ym en tt ax es fo r t h e p eri od ati ss u e. It s co n t en t i on h i ng es o n wh et h er i t i s an “ Am eri can em p l o y er” as d efi n ed i n s ect io n 3 1 2 1 (h ), an di n p art i cu l ar wh et h er i ti s an em p l o y er wh ich i s a

“ co rp o rat i o n o rg an i zedu n d er t h e l aws o f t he Un i t edSt at es o r o f an y St at e.” See
s up ra p p . 1 4 -1 5. If p et i t i o n er i s a “ co rp o rat io n ” fo r p u rp os es o f s ect i on- 2 1 -

3 1 2 1 (h )(5 ), then i t i s an Am eri can em p l o y er an ds ect i o n 3 1 21 (b ) ap p l ies an dth e
s ect i on 3 1 2 1 (b )(4 ) crewm en ’ s ex em p t i o n d o es n o t
. Becau s e n ei th er s ect io n 3 1 2 1 n o r an y o th er p ro v i s i o n i n s ub ti t le C o f t h e Co d e g i v es a s p eci fi c d efi n i t io n o f “ co rp orat io n”, we refer t o th e d efi ni t i o n p ro v id edi n s ect i o n 7 7 0 1 (wh i ch , s ee s up ra p . 1 5 , ap p l i es th ro u g h ou tth e Co d e wh en n o t s peci fi cal l y

p reem p t ed ) an d , i m

p o rt an t ly , i t s el ab o rat i o n i n th e reg u l at i o n s p ro m

u l g at edu n d er t h ats ect i o n , i .e., th e ch eck -t h e-b o x reg u l at i o n s . In th i s reg ardth e ch eck -th e-b ox reg u l at i o n s ex pl i ci t l y p ro v i d e t hatp et i t i on er,
n o twi th s t an d i n g i tb ei n g a d is reg ard ed en t i ty u n d er s ect i o n 3 0 1 .7 7 01 -2 (c)(2 )(i ), Pro ced
. & Ad m i n . Reg s . , i s treat edas a co rp o rat i o n wi th res p ect t o em p l o ym en t t ax es . 1 0 Sec. 3 0 1.7 7 0 1 -2 (c)(2 )(i v )(B), Pro ced
. & Ad m i n . Reg s . Iti s u n d i s p u t ed

1 0 W e fi n dad d i t io nal s up p o rtfo r o u r an al y s i s i n th ati tg iv es s p eci fi c effect t o b o th s ub d i v i s i o n s A an dB o f s ec. 3 01 .7 7 0 1 -2 (c)(2 )(i v), Pro ced . & Ad m i n . Reg s., ev en th o u g h th ey

co ul db e eas i l y

readas redu n d an t . Un d er o u r i n t erp ret at io n , s ub d i v i s i o n A as s u res th ata d i s reg ard eden t i ty , i n fo rm edth ati t s d i s reg ard eds t atu s d o es n o tap p l y fo r em p lo ym en tt ax es , wi l l at l eas tu n d ert ak e an i n i t i al i nqu i ry

u nd er FICA t o d et erm i n e i f i t h as an y l i ab i l it y , wh il e s ub d i v i s i o n B p ro v id es th ati f, du ri n g th i s i n qu i ry , th e en ti ty faces a qu es t i o n o f cl as si fi cat i o n (s u ch as u n d er s ec. 3 1 21 (h )), i t wi l l kn o w th ati t i s u n equ i v o cal ly a co rp orat i o n fo r s u ch pu rp o s es . Fo r ex am p l e, a d i s reg ard ed en ti ty

th aten g ag es o n l y

s el f-em p l o y ed i n d ep en den tco n tract o rs fo r i t s s erv i ces wo u l dn eedo nl y t o co n s i der s ub d iv i s i o n A t o reach th e d et erm in at i o n th ati ti s n o tl iab l e fo r em p lo ym en tt ax es , wh ereas th e s i tu at i o n i n th i s cas e wo u l db e s i g n i fi can t l y m o re d i ffi cu l t t o res o l v e i n t h e ab s en ce o f s ub d iv i s i o n B; al th ou g h p et i t i o n er wo u l dn o tb e d i s reg ard edfro m i t s o wn er fo r em

p l o ym en tt ax p u rp o s es , th e reg u l at i o ns wo u l dn o tp ro v i de an y (co n ti n u ed ...)- 2 2 -

th atp et i t i o n er was o rg an i zedu n d er th e l aws o f t h e St at e o f Fl o ri d a. Th erefo re, p et i t i o n er was an Am eri can em p l o y er u n d er s ect i on 3 1 2 1(h ) fo r t h e p eri o dati s s ue
an d as su ch , i ti s s ubjectt o s ect i o n 3 1 2 1 (b ) an dth e s ect i o n 3 1 2 1 (b )(4 ) crewm en ’ s
ex em p t i o n d o es n otap p ly
. 1 1 Pet i t i o ner co n ten d s th ats ect i o n 3 12 1 (h ) d o es n o td ep en dd i rect ly o n an
en t i ty ’ s cl as s i fi cat i on u nd er th e ch eck -t h e-b o x reg u l at i o n s b u ti n s t eadfi rs t i m p o s es i t s o wnt es tb as edo n t h e res i d en ce(s ) o f t h e en ti ty ’ s o wn er(s ). Becau s e p et i t i o n er’ s s o l e o wn er duri n g th e p eri o dat i s su e was a fo rei g n co rp o rat i o n ,

1 0 (...co n t i nu ed ) s p eci fi c g u i d an ce as t o i t s actu al cl as s i fi cat i o n fo r p u rp o s es o f s ec. 3 1 2 1 (h ), an d we wo u ldres o rtt o th e co m m o n l aw an do th er co n s i d erat i o n s. Cf. Pi erre v . Co m m i s s i o n er, 1 3 3 T.C. 2 4 , 3 5 (2 0 0 9 ), s up pl em en t edb y T.C. M em o . 2 0 1 0 -1 0 6
. 1 1 Reach i n g th i s res u l tth ro u g h reg ul at o ry m an i p u l at i on o f a s t atu t o ry d efi n i t i o n s o th ata wo rdu s edi n d ifferen tp art s o f t h e Co d e h as d i fferen t m ean in g s i s ad m i t t ed l y awkwardb u th ard l y u np reced en t ed
. Ini n t erp ret i n g th e Co d e we h av e ro u t i n el y

h el dthatth e s am e wo rdu s edi n d i fferen tco n t ex t s m ay h av e d i fferen t m ean i n g s s o as t o b es teffect th e i n t en ti o n s o f t h e l eg i sl at iv e an d reg u l at o ry

draft ers , s ee, e.g . , Es t at e o f Ni en h u y s v . Co m m is s i o n er, 1 7 T.C. 1 1 4 9 , 1 1 6 1 (1 9 5 2 ); Om anv . Co m m i ss i o n er, T.C. M em o . 2 0 1 0 -2 76 , s l i p o p . at 2 3 (ci t i n g Co n fo rt e v . Co m

m i s s i o n er, 6 9 2 F.2 d5 8 7 , 5 9 1 (9 th Ci r. 1 98 2 ), aff’ g i n p art , rev ’ g i n p art an d rem an d in g 7 4 T.C. 1 1 6 0 (1 9 80 )), an dwe fi n dth ato u r i n t erp ret at i o n i n arg u ab l y d o es s o i n th i s cas e. Su ch s itu at i o n s are p reci s el y th e reas o n wh y

th e Dep art m en to f th e Treas u ry ad d ed s ec. 3 0 1 .7 7 01 -2 (c)(2 )(i v ), Pro ced . & Ad m i n . Reg s., t o th e ch eck -t h e-b o x reg u l at i o n s ; b ecau s e t h ere wo u l d b e n o qu es t io n as t o wh et h er p et i ti o n er i s l i ab l e fo r em p l o ym en tt ax es i f i twere act u al l y a co rp o rat i o n , th e reg u l at i o n s treat i tas a co rp o rat i o n s o as n o t t o al l o w i tt o av o idp ay i n g em pl o y m en tt ax es s o l el y

th ro u gh i t s d i s reg ard eden t i ty s t atu s .- 2 3 -

p et i t i o n er co n t en d s th ati t th u s co u l d n otl o g ical l y h av e b een an “ Am eri can
em pl o y er”. Pet i t i on er d raws s up p o rtfo r t h i s i n t erp ret at i on fro m s ect i o n 3 1 2 1 (h )(3 ) an d(4 ), wh i ch ap p li es s u ch res i den ce t es t s t o p art n ers h ip s an dtru s t s . Bu t th is arg u m en to n l y

draws at t en t i o n t o t h es e t es t s ’ d i s t i n ct i o n fro m s ect io n 3 1 2 1 (h )(5 ), wh i ch l o ok s i n s t eado n l y atth e ju ri s d i ct i o n i n wh i ch a co rp o rat i o n i s
o rg an i zed , wi th o ut reg ardt o i t s o wn er(s ). W h i l e t he p l ai n t ex t o f t h e s t atu t e al o n e i s s uffi ci en tt o reach th i s co n cl u s i o n , we al s o fi n dg o o dreas o n s fo r drawi ng s u ch a d i s t i n ct i o n ; al m o s t al l en t i t ies th atth e Co d e an dreg u l at i o n s treat as co rp o rat i o n s (o r t h atel ectt o be t reat edas co rp o rat i o n s ) are s p eci fi cal l y o rg an i zedu n d er t h e l aws o f s o m e juri sd i ct io n , b u tp art ners h i p s an dtru s ts can ex i s tat co m m o n l aw o r
s i m p l y i n fact as an o n g o i ng en t erp ri s e wi th m u l t i p le i n t eres t ed p art i es an dn o
ex p li ci tl eg al fo rm . See s ec. 3 01 .7 7 0 1 -1 (a)(2 ), Pro ced . & Ad m i n . Reg s . As a
res u l t i ti s reas on ab l e t o p res u m e t h atCo n g res s d et erm i n edth at fo r s ect i o n 3 1 2 1 (h ) t h e m os t rel ev an t an d accu rat e b as i s o n wh i ch t o ju d g e a co rp o rat i o n i s i t s l eg al n ex u s , wh il e fo r p art n ers hi p s an dtru s t s i ti s th ei r o wn ers ’ res i d en ti al
n ex us es . Pet i t i o ner fu rt her arg u es th atd ecl i n in g t o reada res id en ce t es ti nt o s ect i o n 3 1 2 1 (h )(5 ) l ead s t o i ll o g i cal res u lt s , s u g ges t i n g thati two u l d n oth av e b een an Am eri can em

p l o y er i f i twere o wn edh al f b y a U.S. res i d en t(s ay , M r. St al up p i )- 2 4 -

an d h al f b y

a fo rei g n en t i ty

(s ay , DAF Ch art ers , Lt d .) b ecau s e u nd er t h e ch eck -t h eb o x reg u l at i o n s i two u l db e t reat edas a p art n ers h i p , y etu nd er o u r read i n g i twas
an Am eri can em

p l o y er d es p i t e b ei n g fu l l y fo rei g n o wned . Pet i ti o n er s i m i l arl y
n o t es a rev ers al o f i t s s i tu at i o n (i .e., i f i twere a fo rei g n d i s reg ard ed en t i ty wh o l l y
o wn edb y a d o m es t i c co rp o rat i o n , th en i two u l d n oth av e b een an Am eri can
em pl o y er) an d h o w thi s p o s s i b il i ty p ro v i d es an o p p o rtu n i ty

fo r d o m es t i c
co rp o rat i o ns i n i t s l i n e o f b u s i n es s t o av o i d em p l o ym en t t ax l i ab i l it y . Wh i l e t h es e
m ay o r m ay n ot b e accu rat e i n t erp ret at io n s o f t he l aw, th ey s i m p l y are n o tth e
s i tu at i o n th atwe face i n th i s cas e. Pet i t i o n er i s en t i t l edt o ch o o s e t h e en ti ty fo rm i n wh ich i t co n du ct s b us i nes s, an dth e ch eck -t h e-b o x reg u l at i o ns g i v e i t b ro ad l at i tu d e i n d o i n g s o . Pet i ti o n er p res u m ab l y h adg oo dreas o ns fo r ch o o s i n g th e fo rm th ati td id , b u tn o w i tm

u stl i v e wi th th e t ax co n s equ en ces ev eni f i tcan
en v is i o n b et t er p o s s i bi l i t i es i n ret ro s p ect
. Co m m i s s i o n er v . Nat ’ l Al fal fa Deh y drat i n g & M i l l i ng Co ., 4 1 7 U.S. 1 34 , 1 49 (1 9 7 4 ); Sel fe v
. Un i t edSt at es , 7 7 8 F.2 d7 6 9 , 7 7 3 (1 1 th Ci r. 1 9 8 5 ). Pet i t i o ner al s o n ot es th atth ere are cert ai n ex cep t i o n s u n d er wh i ch en t i t i es th atare d i s reg ard edu nd er th e ch eck -t h e-b o x reg u l at i o n s rem ai n d i s reg ard edfo r cert ai n em

pl o ym en tt ax p u rp o s es (fo r ex am p l e, ani n d i v i du al o wn er o f a d i s reg ard eden t i ty

i s i ns t eadtreat edas s el f-em p l o y ed , s ec. 3 0 1 .7 7 01
-- 2 5 -

2 T(c)(2 )(i v )(C)(2 ), Tem

p oraryPro ced . & Ad m i n . Reg s ., 8 1 Fed . Reg . 2 6 69 4 (M ay 4 , 2 01 6 ); s ee al s o s ec. 3 01 .7 7 0 1 -2 T(c)(2 )(i v )(A), 7 6 Fed . Reg . 6 7 3 6 6 (No v . 1 , 2 0 1 1 ), 1 2 an dan o wn er o f a d i s reg ard eden t i ty th atqu al ifi es fo r t h e fam il y
em pl o y m en to r rel i g i o us fai th ex em p t i on s fro m

FICA i s al s o ex em

p tfro m
em pl o y m en tt ax es , s ecs . 3 1
. 3 1 2 1 (b )(3 )-1 (d ), 3 1 .3 1 2 7-1 (b ), Em p l oym en tTax Reg s.). 1 3 Bu tp et i t i o n er d o es n o tco h eren t l y i n di cat e h o w th es e ex cep t i o n s ap p l y t o thi s cas e. In s t ead , th ey actu al l y b u tt res s res p o nd en t’ s p o s it i on ; b ecau se p et i t i o n er can n o ti d en ti fy an ex cep t i o n i n th e ch eck -t h e-b o x reg u l at i o n s th at ap p li es s p eci fi cal ly

t o i t s s i tu at i o n o r fo r p u rp o s es o f s ect i o n 3 1 2 1(h ), th e m ai n
ru l e o f s ect i o n 3 0 1 .7 7 0 1 -2 (c)(2 )(i v )(B), Pro ced . & Ad m i n . Reg s., ap p l i es ,

1 2 In i t s m ot io n p ap ers p et i t i o n er ci t es s ec. 3 0 1 .7 7 01 -2 (c)(2 )(i v )(C)(2 ), Pro ced
. & Ad m i n . Reg s . , b u tthi s s ect i o n i s “ [r] es erv ed ” i n th e ch eck -t he-b o x reg u l at i o n s an d refers t o s ec. 3 0 1 .7 7 0 1 -2 T(c)(2 )(i v)(C)(2 ), Tem po raryPro ced . & Ad m i n . Reg s., 8 1 Fed
. Reg . 2 6 6 9 4 (M ay 4 , 2 0 1 6 ), “ [f] o r fu rt h er g u i dan ce”.
1 3 Pet i t i o ner al s o n o tes th atan o wn er o f a d is reg ard eden t i ty th atqu al i fi es fo r th e ex em p ti o n fro m

Fed eral i n co m e t ax u nd er s ec. 5 01 (c)(3 ) i s al s o ex em p tfro m Fed eral u n em

pl oym en ti n s u ran ce p aym en t s , ci ti n g th e Dep art m en t o f t h e Treas u ry ’ s ex p l an at i o n o f t h e 2 0 0 7 reg u lat i o n s . See T.D. 9 3 5 6 , 2 0 0 7 -2 C.B. 6 7 5 , 6 7 6 (ci t i n g s ec. 3 3 0 6 (c)(8 )). No t ab ly th o u g h, thatex p l an at io n al s o ex p l i ci t l y s t at es th ats u ch a d is reg ard eden t i ty i s n o t ex em

p tfro m em p l o ym en tt ax es , wh i ch i s o n l y l o g ical , s i n ce o rg an i zat io n s th atare ex em ptfro m Fed eral i n co m e t ax u n d er s ec. 5 0 1 are n o tth em s el v es ex em ptfro m em p l oym en tt ax es o n wag es o v er $ 1 0 0 p er y ear p ai dt o an y

em p l o y ee. See s ec. 3 1 2 1 (a)(1 6). Pet i t i o n er, as a fo r-p ro fi t en t erp ri se, fai l s t o cl earl y i n d i cat e h o wth i s s o m eh o w affect s i t s em pl o ym en tt ax l i ab i l i ty .- 2 6 -

cl as s ify i n g p et i ti o ner as a co rp o rat i o n fo r em pl o ym en t t ax p u rp o s es , i n cl u d i n g th e ap p li cat io n o f s ect i on 3 12 1 (h ). Fi n al l y , p et i t i o n er s u gg es t s th atb ecau s e s ect i o n 3 0 1.7 7 0 1 -2 (c)(2 )(i v ), Pro ced
. & Ad m i n . Reg s . , d i dn o tex is twh en Co n g res s en act eds ect i o n 3 12 1 (h ) i n i t s cu rren tfo rm

as p arto f t he 1 9 5 4 Co d e, ch . 7 3 6, s ec. 3 1 2 1 (h ), 6 8 A St at . at4 2 5 , we s h ou l du s e t h e s am e m ean i ng o f “ co rp o rat i o n ” as i n th e 1 9 5 4 v ers i o n o f s ect i o n 3 1 2 1 (h ); i n p et i t i o n er’ s v i ew Co n g res s “ was cl earl y referri n g t o an en t i ty

th ati s reg ard edas a co rp o rat i o n fo r i nco m e t ax p u rp o s es ”, wh i ch i ti s n ot . Th i s arg u m en t h ard l y n eed s ad dres s in g ; i f Co n g res s wan t edth e t erm “ co rp o rat i o n ” i n s ect i o n 3 1 2 1 (h ) t o h av e a s tat i c m ean i n g , Co n g res s wo ul d h av e s ai ds o . Becau s e p et i t i o n er i s treat edas a co rp o rat i o n fo r em p lo ym en tt ax p u rp o s es
an d was o rg an izedu n d er t h e l aws o f t h e St at e o f Fl ori d a, we h ol d th ati twas an Am eri can em

p l o y er u n d er s ect i o n 3 1 2 1 (h )(5 ), s ect i on 3 1 2 1 (b ) ap p l i es , an dth e
s ect i on 3 1 2 1 (b )(4 ) crewm en ’ s ex em p t i o n d o es n o t . Pet i t i o n er i s therefo re l i ab l e fo r em p lo ym en t t ax es o n al l wag es i t p ai dt o i t s em p lo y ees du ri n g t h e p eri o dat i s su e. III. Ch al l en g e t o Ap p ro p ri at en es s o f Pro po s edLev y As i n d i cat eds up ra p . 1 0 , i n d et erm in i n g wh et h er t o s u s tai n a p ro p o sedl ev y , Ap p eal s m

us t t ak e i n t o co n si d erat io n : (1 ) wh ether t h e req ui rem en t s o f ap p l i cab l e- 2 7 -

l aw an dad m i n i s trat i v e p ro cedu re h av e b een m et , (2 ) al l i s s u es rai s edb y th e t ax p ay er, i n cl u d i n g o ffers o f co l l ect i o n al t ern at i v es , an d (3 ) wh et h er an y p ro p o s ed
co l l ect i o n act i on b al an ces the n eedfo r t h e effi ci en tco l l ect io n o f t ax es wi th th e l eg i t i m at e co n cern o f t h e t ax p ay er t h atco l l ect i o n b e n o m o re i n tru s iv e t h an
n eces s ary . Sec. 6 33 0 (c)(3 ); s ee al s o Lu n s fo rd v . Co m m i s s i o n er, 1 1 7 T.C. at1 8 4
. Un d er t h e ab u s e o f d is cret i o n s t an d ard , th e Co urtex am i n es wh ether an Ap p eal s d et erm i n at i o n was arb i trary , cap ri ci o u s , o r wi th o u ts o u n db as is i n facto r l aw. See M u rp h y v . Co m m i s s i o n er, 1 2 5 T.C. 3 0 1 , 3 2 0 (2 0 05 ), aff’ d , 4 6 9 F.3 d2 7 (1 s tCi r. 2 0 0 6 ); s ee al so Seg o v . Co m m i s s i o n er, 1 1 4 T.C. at6 1 0 ; Go za v . Co m m i s si o n er, 1 1 4 T.C. at1 82 . W e d o n o tco n du ctan i n d ep en den trev i ew o r s ub s t i tut e o u r o wn ju d g m en tfo r t h at o f t h e Ap p eal s o ffi cer. M u rp hy v . Co m m i ss i o n er, 1 2 5 T.C. at 3 2 0 . If th e Ap p eal s o ffi cer fo l l o ws al l s t atut o ry an d ad m in i s trat i ve g u i d el i n es an d p ro v id es a reas o n ed , b al an cedd eci s io n , th e Co u rt wi ll n otrewei g h th e eq u i t i es . Th o m p s o n v . Co m

m i s s i o n er, 1 4 0 T.C. 1 7 3 , 1 7 9 (2 01 3 ); Li n kv . Co m m is s i o n er, T.C. M em o . 2 01 3 -5 3 , at* 1 2
. Pet i t i o ner’ s p et it i on fai l edt o rai s e an y i s s ues o th er th an i t s u n d erl y i n g l i ab i l i ty fo r t h e p eri o d ati s su e. Th erefo re, an y i s s u es p ert ai n in g t o Ap p eal s ’ ad m i n is trat i v e d et erm i nat i o n are d eem edco n ced ed . See Ru l e 3 3 1 (b )(4 ). In an y
ev en t, p et i ti o ner’ s au th o ri zedrep res en tat i v e i n d i cat edo n s ev eral o ccas i o n s t o th e- 2 8 -

Ap p eal s s et t lem en t o ffi cer t h atp et i t i o n er d id n o t wi s h t o p u rs ue an y co l l ect i o n al t ern at i v es . Iti s n o t an ab u s e o f d i s cret i o n fo r an Ap p eal s o ffi cer t o s us t ai n a
co l l ect i o n act i on an dn o t co n s i d er co l l ect i o n al t ern at i v es wh en th e t ax p ay er h as p ro p os edn o n e. See M cLai n e v . Co m m i s si on er, 1 3 8 T.C. 2 2 8 , 2 4 3 (2 0 1 2 ); Ken dri ck s v . Co m

m i s s i on er, 1 24 T.C. 6 9 , 7 9 (2 0 0 5 ); s ee al s o s ec. 3 0 1 .7 12 2
- 1 (d )(1 ), Pro ced . & Ad m i n . Reg s . (req u i ri n g th ato ffers t o co m p ro m i se a t ax l i ab i l i ty m

us tb e m ad e i n wri t i n g an dco n t ai n al l the i n fo rm at i on p res cri b edo r req u es t edb y

th e IRS). Ad d i t i on al l y , th e reco rdes t ab l i s h es th atthe Ap p eal s
s et t l em en to ffi cer v eri fi edth atal l l eg al an dp ro cedural req u i rem en t s h adb een m et , s ee Cred it Gu ardo f Am ., In c. v . Co m m i s s i on er, 1 4 9 T.C. 3 7 0 , 3 7 9 (2 0 1 7 ), an d d et erm i n edth atth e p ro p o s edl ev y ap p ro p ri at el y b al an ces th e n eedfo r t h e effi ci en t
co l l ect i o n o f t ax es wi th p et i t i o n er’ s l eg it im at e co n cern thatth e act i o n b e n o m o re i n tru si v e t h an n eces s ary . Thus , i ti s ap p aren tth atth e Ap peal s s et t l em en to ffi cer
co m m i t t edn o ab u s e o f d i s cret i o n i n s u s t ai n i n g the p ro po s edl ev y . IV. Co n cl u si o n Pet i t i o ner h as n otg i v en u s a s u ffi ci en tb as i s t o d en y s u m m ary ad ju d i cat i o n i n res p o n d en t ’ s fav or an dt o g ran ts u m m ary ad ju d i cat i o n i n i t s fav o r p urs u an tt o Ru l e 1 2 1 . Acco rd i n gl y , we wi l l d en y p et i t i o n er’ s m o ti o n an dg ran tres p o n d en t ’ s
cro s s -m o t i o n .- 2 9 -

W e h av e co n s id eredal l o f t h e arg um en t s m ad e b y th e p art i es an d , t o th e
ex t en tth ey

are n o tad dres s edh erei n , we fi n dth em t o b e m o o t , i rrel ev an t, o r wi th o u tm eri t
. To refl ectthe fo reg o i n g , Anap p ro p ri at e o rd er an dd eci s i o n wi l l b e en t ered
.