T.C. M em o . 2 0 2 1 -6 4

UNITED STATES TAX COURT

KATHERINE M ASON, ET AL., 1 Pet i t i o n ers v . COM M ISSIONER OF INTERNAL REVENUE, Res po n d en t

Do ck etNo s . 6 9 1 9 -1 6 L, 7 0 0 7 -1 6 L , Fi l edM ay 2 0 , 2 0 2 1
. 7 0 0 9 -1 6 L.

Eri c W i l l iam

J o h n s o n , fo r p et i t io n ers . Bet h A. Nun n i n k, fo r res p o n den t .

1 W e co n s o l i d at edtwo cas es wi t h th i s o n e: Kat h eri n e M as o n , d o ck et n u m b er 7 0 0 9 -1 6 L; an dVi ct o r M as o n , Deceas ed , Kat h eri n e M as o n , Su cces s o r i n In t eres t, d o ck etn u m

b er 7 0 0 7 -1 6 L.

Served 05/20/21- 2
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[* 2 ] M EM ORANDUM OPINION
HOLM ES, J u d g e: Vi ct o r an d Kat h eri n e M as o n o w edb ack t ax es . Th ey d i d n ’ td en y

i t , b u tthey

s ai d t h ey d i d n ’ t h av e t he m o n ey

t o p ay . Th ey

s ubm i t t edan
o ffer t o co m

pro m i s e th e d eb t, an dth e IRS ro u t edi t t o t he p art o f t h e b u reau cracy -- t h e Cen t ral i zed O ffer In Co m p ro m i s e Un it --t hatrev i ews thes e o ffers
. Bu tan o t h er p arto f t he IRS b eg an s en d i n g co l l ect i o n n o ti ces t o t h e M as o n s . Th e M as o n s
as k edfo r a h eari n g wi t h th e IRS Ap p eal s Offi ce. IRS Ap peal s i s s up p o sedt o
co n si d er al t ern at i ves t o fo rced co l l ect i o n atth es e h eari n g s , i n cl u d in g o ffers l i k e t h e o n e th atth e M as o n s wan t ed
. Wh ath ap p en edth en i s t h atth e Cen t ral i zedUn i t d i d n ’ t co n s i d er t h e M as o n s’ o ffer, b u tretu rn edi t t o th em . IRS Ap p eal s d i d n ’ t co n s i d er t h e m eri t s o f t h ei r o ffer ei t h er, b u ti n s t eadrev i ewedthe d eci s i o n b y the Cen t ral i zedUn i tt o ret u rn i t . Th e qu es ti o n p res en t edi s wh et her IRS Ap peal s ab u sedi t s d i s cret i on b y
rev i ewi n g th e Cen t ral i zedUn i t’ s d eci s i o n fo r ab u s e o f d i s cret i o n i ns t ead o f
rev i ewi n g th e M as o n s ’ o ffer o n i t s m eri ts . W e’ v e h ad s om e s i m i l ar cas es , b u t n ev er o n e qu i te l i k e t h is
.- 3
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[* 3 ] Back gro u n d A. Th e M as o n s Th e M as o n s ’ t ro ub l es aro s e wi t h t h ei r 2 0 0 9 jo i n ti n co m e-t ax retu rn . Th ey h ad rep o rt edad

ju s t edg ro s s i n co m e o f $ 1 3 2 , 7 03 b u tfi ledth e ret u rn al m o s ta y ear l at e, an d d i d n o t m ak e a s i n g le p aym en tt o ward s th ei r l i ab i l i t y u n t i l J u l y

2 0 1 2 , wh en th ey reach edan i n s t al l m en tag reem en twi t h th e Co m m i s s i o n er. Th ey

s tu ck t o thi s ag reem en tu nt i l M arch 2 0 1 4 , an dp ai d a t o t al o f ab o u t $ 8 ,0 0 0 t o p ay d o wn a $ 3 3 ,4 6 5 l i ab i l i t y

(n o t i n cl ud i n g p en al ti es an di nt eres t ). Th i n g s g ot wo rs e wi t h th ei r 2 0 1 0 t ax y ear. Th ey ag ai n fi l edth ei r ret u rn l at e, an d p ai d n o t h i n g o n a t ax b i l l o f n earl y $ 1 6 ,0 0 0
. M rs . M as o n b eg an wi t h t ax y ear 2 01 1 t o fi l e h er i nd i vi du al i nco m e-t ax ret u rn s s ep arat el y

fro m h er h us b an d , b u t t h es e were al s o l at e an ds h e ag ai n d i dn o t p ay an y t ax du e. M rs . M as o n fi l edh er 2 0 1 2 retu rn i n M ay 2 0 1 4 , an di ts h o weda t ax l i ab i l i t y

o f $ 2 1 ,6 6 7 . Sh e fi l edh er 2 01 3 ret u rni n Oct o b er 2 0 1 4 , an d i t s h o wed a t ax l i ab i l i t y

o f $ 2 3,6 5 6
. M rs . M as o n al s o fai l edt o p ay tru s tfu n dam ou n t s th ath er co m p an y o wed
. Here’ s a t ab le o f t h es e as s es s m en t s ag ai n sth er:- 4
- Peri o d Am o u n t D ec. 3 1, 2 0 1 1 $ 9 9 5 D ec. 3 1, 2 0 1 2 1 , 3 0 5 M ar. 3 1 , 2 0 1 3 7 , 3 8 5 D ec. 3 1, 2 0 1 3 4 , 9 4 4 M ar. 3 1 , 2 0 1 4 6 ,7 6 7 To t al 2 1 , 3 9 7 Th e g ran dt o t al o f t h ei r fo u r y ears o f d el i n quen cy an dfai l ure t o p ay

was a l i ab i l i t y of m o re t h an$ 1 55 ,0 00 . Th is co m pri s edu np ai d jo i ntt ax l i ab i l i t i es fo r 2 0 0 9 an d2 0 1 0 , fo r M rs . M as o n ’ s i n d i v i du al i n co m e-t ax l i ab i l i t i es fo r 2 0 1 2 an d 2 0 1 3 , an dfo r M rs . M as o n ’ s l i ab i l i t i es fo r t ru st -fu n d -reco v ery p en al t i es fo r 2 0 1 1 , 2 0 1 2 , 2 0 1 3 , an d 2 0 1 4. 2 [* 4 ]

2 Tax es th atem

p l o y ers wi t h h o l d fro m t hei r em p lo y ees ’ wag es are k n o wn as “ t ru s tfu n dt ax es ” b ecau s e th ey are d eem edt o b e h el di n tru s tfo r t he Un i t edSt at es u n d er s ect i o n 7 5 0 1 (a). Sl o d o v v . Un i t edSt at es , 4 3 6 U.S. 2 3 8 , 2 4 3 (1 9 7 8). M rs . M as o n , i n h er ro l e as o wn er o f a s m al l b u s in es s n am edVi n t ag e M o m en t s , LLC, was a “ res p o n s i b l e p ers o n ” wi t h i n t h e co m p an y , wh i ch m ean s th e Co m m i ss i o n er m ay co ll ectu np ai dem

p l o ym en tt ax es fro m

h er fo r h er fai lu re t o p ay o v er t ax . An y am o u n to f m o ney

co l l ect edo n th i s l i ab i li t y i s cal l eda t ru s t -fu n d -reco v ery p en al t y t ax . Sec. 6 6 7 2 . (Un l es s o t h erwi s e i n d icat edal l s ect i o n referen ces are t o t h e In t ern al Rev en u e Co d e fo r t h e y ears ati s su e.) W e n o t e th atfo r 2 0 1 3 , M rs . M as o n h as p en al ty

l i ab i li t i es fo r t wo d i fferen tquart ers : o n e en d i n g M arch 3 1 an d o n e en d i n g Decem

b er 3 1
.- 5
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[* 5 ] B. Fro m

Co l lect i o n t o Pet i t i o n Th e Co m m is s i o n er b eg an fi li n g l i en s ag ai n s tth e M as o ns ’ p ro p ert y atth e
en d o f 2 0 1 4 an dth e b eg in n i n g o f 2 0 1 5 aft er th e M as o n s s t o p p edp ay i n g u n d er t h ei r i n s t al l m en t ag reem en t . An d , as th e s u m m er o f 2 0 1 5 n eared , th e Co m m i s s i o n er’ s co l l ect io n effo rt s ag ai n stth e M as o n s b eg an t o h eatup . In M ay 20 1 5 Rev en u e Offi cer (RO) J acq u el yn J aco b s o n m ad e a fi el dcal l t o t h e M as o n s ’ h o m e i n Sh o rev i ew, M in n es ot a, s o th ats h e “ co u l d ad v i s e BOTH t ax p ay ers ” o f t he eq u i t y

i n th ei r h o m e. 3 RO J aco b s o n t o l dth e M as o n s th atth e eq u it y i n t h ei r h o m e was en o u g h t o co v er t h ei r jo i n t l i ab il i t i es i n fu ll , p l u s s o m e o f t h e s ep arat e l i ab i l i t ies , an d t h at“ t h ey wo u l d n eedt o s el l th e h o m e t o p ay o ff t ax es .” Sh e al so t o l dthe M as o n s th ati f t h ey “ [were] n o twi l l i n g t o p l ace t he h o u s e
o n th e m ark et , [t h e] IRS wo u lds ei ze t h e h o m e as th e n ex tact io n .” 4 Fo ll o wi n g th i s
n i ce-l i t t le-h o m e-y o u -g o t-h ere-s h am e-i f-s om et h i n g -h ap pen ed -t o -i tfi el dcal l , RO

3 W e n o t e t hatatth e t i m e o f t h i s fi el dcal l , M rs . M as o n h ad fi l eda Fo rm 2 8 4 8 , Po wer o f At t o rn ey an dDecl arat i o n o f Rep res en t at i v e, wi t h t h e IRS au t h o ri zi n g h er at t o rn ey

t o rep res en th er. M r. M as o n h adn o t . RO J aco bs o n was t ry i n g t o m ak e co n t act wi t h ju stM r. M as o n, b u t en d edup m eet i ng wi t h b o t h o f t h e M as o n s as “ Kat h eri n e h ap p en edt o b e h o m e wh en th e fi el d cal l was m ad e.”

4 RO J aco b s o n ap p aren t ly d i d n ’ tm en t i on th atth e IRS can no ts ei ze a t ax p ay er’ s res i d en ce wi t h o utfi rs t g et t i n g th e ap pro v al o f a Fed eral Di s t ri ctCo u rt ju d g e. See s ec. 6 3 3 4 (e)(1 ). In t ern al IRS g u id an ce req u ires th atth e area d i rect o r an d area co u n sel fo r t h e IRS al s o g i v e t h ei r ap p ro v al . In tern al Rev en u e M an u al (IRM ) p t . 5 .1 7 .3 .5 .5 (Au g . 2 9 , 2 0 1 7 ).- 6
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[* 6 ] J aco b s o n co n t act edth e M as o n s ’ at t o rn ey t o arran g e an o t h er m eet i n g wi t h th e M as o n s--t h i s t i m e wi t h co u n s el p res en t --at s o m e l at er d at e. On th e s am e d ay

as t h e fi el dcal l , th e IRS s en tth e M as o n s a n o t i ce t h ati t i n t en d edt o l ev y

up o n th ei r p ro p ert y t o co l l ectth ei r u np ai d2 0 0 9 an d2 0 10 jo i n tt ax l i ab i l i t i es . Th e IRS i n cl ud edwi t h thi s n ot i ce o f i n t en tt o l ev y (NIL) an o t h er n o t i ce t h ati n fo rm edth e M as on s o f t h ei r ri g h tt o a co l l ect i on du e p ro ces s (CDP) h eari n g. Th e M as on s s pared l i t t l e t i m e, an dwi t hi n two week s co m p l et edan o ffer-i nco m p ro m i s e (OIC) an ds en ti t o ff t o th e Co m m i s s io n er’ s Cen t ral i zedOIC Un i t . Th e M as on s o ffered t o s et t le al l o f t h ei r t ax d eb t s --i n cl u d i n g t h e t ru s t-fu n d
reco v ery p en al t i es ag ai n s tM rs . M as o n --fro m 2 0 0 9 t o 2 0 1 4 fo r $ 4 ,8 0 0, ci t in g b o t h

“ Do ub tas t o Co ll ect i b il it y ” an d“ Ex cep t i o n al Ci rcu m s t an ces (Effect i v e Tax Ad m i n i s t rat i o n)” as th ei r reas o n s fo r t h e o ffer. In a co v er l et ter t h atth ey s en twi t h t h e OIC, t h e M as on s arg u edth atwh i l e t h ey h ad“ s ubs t an ti al h om e eq u it y ,” t h i s eq u it y was th ei r “ fu n ct i o n al ret i rem en t s av i n g s t h at t hey wi ll n eedt o t ap i n t o i n th e
co m i n g y ears ” b ecau s e o f M r. M as o n ’ s cu rren t , an d M rs . M as o n ’ s fas t ap p ro ach i n g , ret i rem en t . Th ei r Fo rm 4 3 3 -A, Co l l ect i o n In fo rm at i o n St at em en tfo r W ag e Earn ers an dSel f-Em p lo y edIn d i v i du al s , l ai d o utthe s p eci fi cs o f t h ei r fi nan ci al ci rcu m st an ces , i ncl u d i n g m o n t h l y i n co m e ju s t s l i g h t l y ab o ve t hei r
ex p en s es , t o t al equi t y of ap p ro x i m at el y $ 9 5 ,0 0 0 i n al l thei r real p ro p ert y , an d- 7
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[* 7 ] cred i t -card d eb to f n earl y $ 1 7 ,0 0 0 . Th e M as o n s cert i fi edth atthey h ad“ fi l ed al l req ui redt ax return s ” up t o th e d at e t h e o ffer was m ad e. Th e Cen t ral i zed Un i trecei v ed t h e OIC o n M ay 2 2 , 2 0 1 5 , th e s am e d ay

th at t h e M as o n s t im el y reques teda CDP h eari n g fo r th ei r 2 0 0 9 an d 2 0 1 0 jo i n ti n co m et ax l i ab i l i t i es . Inth ei r req u es tfo r a CDP h eari n g, t he M as on s cl ai m edth ey co u l d
n o tp ay th e t ax an dth ey

ch eck edth e b o x es o n t h e fo rm t h ats t at edth ey wan t edan OIC o r an o t h er i n s tal l m en tag reem en t . Th e Co m m i s s i o n er recei v edth ei r CDP req u es t s o n M ay

2 6
. Wh en RO J aco b s o n cau g h twi n dth atthe M as o n s h ads en t an o ffer t o t h e Cen tral i zedUn i t , s he d raft eda Fo rm 6 5 7 , Offer i n Co m

p ro m i s e Rev en u e Offi cer Rep ort , i n wh i ch s h e co n cl u dedth atth e M as o n s s ub m i t t edth ei r o ffer “ t o d el ay
co l l ect i o n act i on ,” an dch eck ed“ y es ” n ex tt o the q u es t io n “ [d ] o es th e o ffer ap p ear t o h av e b een s ub m i t t ed‘ s o l el y t o d el ay ’ co l l ect i o n ? ” In reach i n g t h i s co n cl u s i on , s h e n ot edth e fo l l owi ng :

1
. “ Kat heri n e h adn o tfi l ed2 0 1 4 an di t [’ ] s ex p ect eds h e wi l l o we ad d i t i o n al t ax o n ce t h e ret u rn i s as ses s ed ; ” 2
. Th ei r “ h o m e o n Can n o n Dri v e i s i n d ecen t s h ap e, i t [’ ] s o l d er, [an d ] m ay n eeda n ew ro o f.” Iti s “ v al u edatap p ro x. $ 1 7 0 kan d t h e m o rt g ag e b al an ce i s ap p ro x . $ 3 0 k ; ”- 8
-

[* 8 ] 3
. “ Th e t ax p ay ers co u l dfi n dan daffo rdren tal h o u si ng i n t h e s am e

ci t y / co u nt y fo r t he s am e am ou n tth ey are p ay i n g o n th ei r m o rt g ag e (ap p ro x i m at el y $ 1 4 0 0 / m o n t h ); ” 4
. Th ei r “ [o ] ffer was s ub m it t edd i rect ly t o OIC u ni twi t h i n two week s o f t h e t ax p ay ers [’ ] b ei n g ad v i s ed ” t o s el l th ei r h o m e o r t h e “ IRS wo u l ds ei ze [i t] ” t o p ay th ei r t ax l i ab i li t i es ; 5
. “ [F] ro m

Au g u s t2 0 1 3 t o Sep t em

b er 2 0 1 4 , [M rs . M as o n ] wi t h drew a t o t al o f $ 8 ,8 0 0 d i rect l y atcas i no [] s * * * . Had Kat h eri ne n o t b een g am

b l i n g , s h e wo u l d h av e fu n ds n eed edt o m ak e es t i m at edp aym en ts an dp ay h er fed eral t ax es each y ear; ” an d 6
. Th e M as o n s i n co rrect l y i n cl u dedal l o f t h e m arri ed -fi l i n g jo i n t l y an d m arri ed -fi l i n g -s ep arat el y l iab i l i t i es o n th e s am e OIC, “ wh i ch i s i n co rrect , two OIC p ack ag es , fees an dd o wn p aym en t s n eed edt o b e s ub m it t ed .” RO J aco b s o n al s o n o t ed t h at M rs . M as o n h ad“ at t em p t edt o s ecu re fi n an ci n g ” t o b o rro w ag ai n s t t h e M as o ns ’ h o m e b u t“ was d en i edatthree d i fferen tb an ks .” Th e rep o rtwas ap p ro v ed b y

RO J aco b so n ’ s m an ag er an dth en s en tt o the Cen t ral i zed Un i t. Th e rep o rth ada p red i ct ab l e effect . Th e Cen t ral i zedUn i tretu rn edth e M as o n s’ OIC o n J u ne 1 2, t he d ay aft er i twas recei v ed . Th e co v er l et ter s t at edth e
reas on , “ W e h av e d et erm i n edth aty o u r o ffer was s ub m i t t eds o l el y t o h i nd er o r d el ay o u r co l l ect i o n act i o n s wh i ch are ex p ect edt o co l l ects i g n i fi can tl y m o re th an t h e am o un ty o u h av e o ffered .”- 9
-

[* 9 ] Les s than three week s l at er, a d i fferen tp art o f t h e IRS recei v edth ei r req u es t fo r a CDP h eari n g ab o u t t h ei r 2 0 0 9 an d2 0 10 jo i n tt ax l i ab i l i t i es . Th e M as o n s ’ req u es tfo r a CDP h eari ng p l od d edo n i ts o wn way th ro u g h th e IRS an dwas
as s i g n edt o Set t lem en tOffi cer (SO) Pat ri ci a Ru s h o n J u n e 3 0 , 2 0 1 5
. 5 Th e M as o n s h ad al read y

tri edt o reach SO Ru s h (o r wh oev er wo u l d b e as s i g ned t o th ei r cas e) b efo re t h i s t i m e t o d i scu s s th ei r retu rn edo ffer. SO Ru sh co n tact edth e M as o n s o n J u l y 1 0 , an dth ey

co m m u ni cat edb ack an dfo rt h th ro u g h Au g us t . SO Ru s h s h ared t h e Cen t ral i zed U ni t ’ s reas o n i n g fo r i t s retu rn o f t he M as o n s ’ OIC, an dex p l ai n ed wh y retu rn i n g th e OIC was p ro p er u n d er t h e IRM
. 6 Fo r t hei r p artth e M as o n s ag ai n d es cri bedth ei r fi n an ci al s i tu at i o n an dco n ti n u edt o qu es t i o n h o w th ei r OIC

5 SO Ru s h ’ s cas e act i v i ty reco rds h o ws th atth e M as o n s ’ CDP h eari n g req u es twas “ req u es t ed ” o n M ay 2 6 , “ recei v ed ” o n J u n e 1 6 , “ creat ed ” o n J u n e 1 7 , an d “ as s i g n ed ” o n J u n e 3 0 . Th o u g h th e fo rm s ay s th e req u es t was “ recei v ed ” o n J u n e 1 6, t h ere i s n o d i sp u te t h atth e Co m m i s s io n er p h y s i cal ly

recei vedth e M as o n s’ Fo rm

1 2 1 5 3 , Req u es tfo r a Co l l ect i o n Du e Pro ces s o r Equ i val en t Heari n g , o n M ay

2 6. W e t h erefo re fi n d t h at“ req u es t ed ” m u stm ean th e d at e t h e act u al req u es t s were recei v ed , an d“ recei ved ” co u l d b e a d at e wh en Ap p eal s o r a s p eci fi c d i v i s i o n o f Ap p eal s fi rs ti np u tth e req u es ts i n the s y s t em . Th e reco rd s eem s t o s h o w atl eas ts o m e at t em p tt o s l o w th e p ro ces s i n g o f t he M as on s ’ CDP req u es tb efo re th ei r OIC (wh i ch was s ub m i t t edd ay s b efo re) was d eal twi th
.

6 SO Ru s h wro t e t h atth e Co m m i s s io n er h adfo l l o wedIRM p t . 5 .8 .4
. 2 0 (1 ) (M ay 1 0 , 2 0 1 3 ), wh i ch o ut li n es th e p ro cedu res fo r ret u rn i n g an “ Offer Su b m i t t ed So l el y t o Del ay Co l l ect i o n .” Sh e al s o n o tedi n h er cas e act i v i t y reco rdth at , u n d er IRM p t . 8 .2 2 .7 .1 0 .1 .1 (Sep t . 2 3 , 2 0 1 4 ), i ti s Co l l ect i o n wh i ch i n ves t i g at es th e o ffer, an dth enAp p eal s m ak es a fi n al d et erm i n at i o n b y rev i ewi n g wh et h er Co l lect i on ’ s d eci s i o n t o return an o ffer was co rrect .- 1 0 -

[* 1 0 ] co ul dh av e b een return edas “ s o l el y t o d el ay ” co l l ect io n act i o n . Th ey k ep t
as k i n g fo r s o m eo n e t o co n s i d er t h ei r OIC o n t h e m eri ts . Th ei r l awy er ev en o ffered t o res ub m i ti n t wo p art s --o ne fo r t h e jo i n t t ax l i ab i l it i es an d o n e fo r M rs . M as o n ’ s l i ab i l i t i es . On J u ly 2 1 M rs . M as o n recei veda s eco n dNIL fro m the Co m m i ss i o n er. Th i s o ne t o l dh er o f h is i n ten tt o l ev y up o n h er p ro p ert y t o co l l ect h er u np ai d i n co m e-t ax l i ab i l i t ies fo r 2 0 1 2 an d2 0 1 3 an d h er t ru st -fu n d -reco v ery -p en al t y l i ab i l i t i es fo r 2 0 11 , 2 0 1 2 , 2 0 1 3 , an d2 0 1 4
. Sh e ag ai n as k edfo r a CDP h eari n g , an d t h e Co m

m i s s i o n er recei v edh er req ues to n J u l y 2 4 , 2 01 5 . Inth i s req ues t , M rs . M as o n ag ai n cl ai m eds h e co u l d n otp ay th e t ax , d i s p u t edth e t ax l i ab il i t i es , an d al s o as k edfo r an OIC o r i n st al l m en tag reem en t . Al l th e wh i le, t h e IRS b eg an try i n g t o t ak e t h e M as o n s ’ p ro p ert y . Th e
reco rds h o ws co n fu s i o n am o ng IRS em p lo y ees ab o utwh et h er l ev y was ap p ro p ri at e--an dfo r wh i ch y ears an d l iab i li t ies --g i v en th e M as o n s ’ p en d i n g OIC
an d CDP h eari ng . SO Ru s h co n t act edth e M as o n s ag ai n o n Au g u s t1 7 , an d s h e
ex p lai n edth at t h e o ffer’ s retu rnwi t ho u t co ns i d erat i o n o f i ts m eri t s was ap p ro p ri at e b ecau s e t h e o ffer d i dn o ti n d i cat e an y “ il l nes s o r s p eci al ci rcu m s t an ces t h atwo u l dwarran tth e eq u it y i n as s et s n o tb ei n g co n si dered ” ag ai n s tth e M as o n s ’
o ffer o f $ 4 , 8 0 0
.- 1 1 -

[* 1 1 ] On Sep t em

b er 8 , SO Ru sh h el da h eari n g wi t h th e M as o n s o n b o t h rel at ed CDP req u es t s
–t he o n e reg ard i n g th ei r jo i n ti n co m e-t ax l i ab i l it i es , as wel l as th e
m o re recen treq ues tfo r M rs . M as on ’ s i n di v i du al i n co m e-t ax an dtru st -fu n d
reco v ery -p en al t y

l i ab i li t i es . Du ri n g th e h eari n g th e M as on s m ad e cl ear t o SO Ru s h thatth ey wan t ed h er t o co n s i d er t h e m eri t s o f t h e OIC t h atth ey h ads en tt o t h e Cen t ral i zed U ni t . SO Ru s h d i dn o td o s o , b utag ai n rev i ewed t h e IRM an dt ol d t h e M as o n s thatthe ret u rn o f t h ei r OIC was p ro p er an dth atth ei r ci rcu m st an ces h a d b een co n s i d ered
. 7 Sh e d idn o t i n d ep en den t l y rev i ew t he o ffer o n i t s m eri t s h ers el f an ds u s t ai n edth e co l l ect i o n act i on ag ai n stth e M as o n s. Th ere are s ev eral i m p o rt an tth in gs th atwe n o t e ab o u tthe cas e fi l e atth i s p o i n t :

7 Th e Co m

m i s si o ner arg u es thatSO Ru sh “ st at edthatth e p et i t i o n ers h adn o t p ro v id edan y

i nfo rm at i o n t h atth e eq ui t y i n th e real p ro p ert y

was n eed edfo r h eal t h an d wel fare o f t he t ax p ay er an dthe m ere fact th atthey were o l d en o u g h [t o ] ret i re was n ota s p eci al ci rcu m s t an ce.” SO Ru s h ’ s cas e act i v i t y reco rd n ot es are u n cl ear, h o wev er, ab o u twh eth er s h e act u al l y ev er ev enas k edfo r t h i s i n fo rm at i o n o r m ad e cl ear t h ati t was n eces s ary fo r h er t o co ns i d er the M as o n s ’ o ffer. See Uri b e v . Co m m i s s i o n er, T.C. M em o . 2 0 1 4 -1 1 6 , at* 8 -* 9 . Th e reco rdd o es s ho w th atth e M as o n s’ at t o rn ey

s t at ed cl earl y

t o SO Ru s h t h at“ [M rs . M as o n ] wi l l h av e t o ret i re s o o n --h er d ai l y

wo rki s ex h au st i n g , an dreq u i res rep eat edl i ft i n g/ m o v i n g o f p at i en t s . Sh e h as n o fo rm al edu cat i o n o r o t h er m ean s o f s up p o rt .” He al so rev eal edM rs . M as o n ’ s g am b l i n g ad d i ct io n an dh o wi th as affect edth e M as o n s ’ fi nan ces . No n e o f th i s h ad an y effect , an d SO Ru s h “ s u st ai nedco l l ect i o n ” o n th e s am e d ay th atth e M as on s m o re cl earl y as kedfo r h er t o co n s i der t h ei r ret urn ed o ffer. Th i s fo recl o s edth e M as o n s fro m p ro v i d i n g m o re i n fo rm at i o n .- 1 2 -

[* 1 2 ] ! SO Ru sh h adth e fu l l p ack ag e o f t h e M as o ns ’ OIC, i ncl u d i n g al l th ei r

fi n an ci al reco rd s wh en s h e m ad e h er d eci s i o n --i twas al l at t ach edt o RO J aco b s o n ’ s o wn rep o rt ; ! t h i s fi n an ci al i n fo rm at i o n was atth atp o i n tl es s t han th ree m on t h s o l d ; an d
! n owh ere i n th e fi l e i s t h ere a n y m en t io n o f a n

yreq u es tb y

SO Ru s h fo r m o re i n fo rm at i o n fro m t he M as o n s t o h el p h er ev al u at e t h ei r o ffer o n t h e m eri ts . M o n t h s p as s ed
. On M arch 3 , 2 01 6 , th e M as o n s recei v edn o ti ces o f d et erm i n at i o n u n d er
s ect i on 6 3 3 0 . Th e n o ti ces m ad e cl ear t h atdu ri n g th e h eari n g th e M as o ns ’ “ o n l y
co n cern w as t o h av e [th ei r] o ffer wh i ch was return edb y Co l l ect i on i n ves t i g at edas
a co l l ect io n al t ern at i v e.” Th e n o t i ces wen t o n t o co n cl u d e t h at t h e Cen t ral ized Un i t d idn o terr b y

n o t co n si d eri n g th e m eri t s o f th e M as o ns ’ o ffer, b ecau s e “ [y ] o u
s ub m i t t edan o ffer i n th e am o u n to f $ 4 ,8 0 0 an dh av e ap p ro x i m at el y $ 1 40 ,0 0 0 eq u it y i n real p ro p ert y ,” an db ecau s e “ [w] it h i n two week s o f b ei n g i n fo rm edb y t h e * * * RO as s i g n ed t o y o u r cas e t o s [el l ] y ou r real p ro pert y t o p ay th e eq u i t y t o ward y o u r l i ab i l i t i es , y o u s ub m i t t edy o u r OIC d i rect l y t o th e cen t ral i zedOIC
u n i t .” 8 SO Ru s h ro u nd edo u th er n o t i ces b y rem i n d i ng th e M as o n s th atth ey o n l y

8 IRM p t . 5 .8 .4 .2 0 (Offer Su b m it t edSo l el y t o Del ay Co l l ect i o n ); IRM p t . 5 .8
. 7.2 .2 (Oct . 7 , 2 01 6 ) (Pro ces s ab l e Ret u rn s ). Th e IRM h as s i nce b een up d at ed t o req u i re t h atan Ap p eal s o ffi cer co n fi rm t hatth e o ri g i n al d et erm i n at i o n th atan (co n ti n u ed ...)- 1 3 -

[* 1 3 ] wan t edAp p eal s t o co n s i d er t h ei r o ri g i n al o ffer “ wh ich ha d b een r et u rn ed

b y
co l l ect i o n ” an d h ad o ffered n o o t h er co l l ect i o n al t ern at i v es . (Em ph as i s ad d ed .) Th e M as o n s t i m el y p et i ti o n edo u r co urt . W e h el d a v ery s h o rttri al i n St . Pau l 9 t o ad d res s d i s p u t ed i t em s i n th e ad m i n i s t rat i v e reco rd . Th e Co m m i s s i o n er h o p edt o i nt ro du ce SO Ru sh ’ s d ecl arat io n i d en t i fy i n g cert ai n cas e act i vi t y reco rd s , as wel l as th e reco rd s th em s el v es , wh i ch s u rfaced atth e el ev en t h h o u r. W e ru l edi n th e M as o n s ’ fav o r an d ex cl ud ed t h e d o cu m en t s fro m th e ad m i n is t rat i v e reco rd
. Di s cu ss i o n Wh en s o m eo n e fai ls t o p ay t ax , th e IRS wi l l as s es s th e l i ab i l i t y ag ai n s th er
an d s en da n ot ice an dd em an dl et t er. Secs . 6 2 0 1 , 6 3 0 3 (a). Aft er t h at , th i n g s o n ly g etwo rs e fo r t h e t ax p ay er: Her t ax l i ab i l i t y wi ll b eco m e a l ien i n fav o r o f t h e IRS ag ai n s tal l o f h er p ro p ert y , s ee s ec. 6 3 2 1 , an dth en s he’ l l recei v e a n o t i ce o f i n t en t t o l ev y (a p o l i t el y

p h ras edl et t er t h ati s n ev ert h el es s a t h reat t o s ei ze p ro p ert y t o
co l l ectth e t ax o wed ). Fo r m o re th an twen ty y ears , th es e t hreat s h av e b een

8 (...co n t in u ed ) OIC was s ub m i tt eds o l el y t o d el ay co ll ect i o n was co rrect . IRM p t . 8 .2 2 .7 .1 0 .5 .9 (Au g. 9 , 2 0 1 7 ).

9 Th e M as o n s l i v edi n M i n n es o ta atal l rel ev an tt i m es , wh ich m ean s th es e cas es are p res u m

p t i v el y ap peal ab l e t o th e Ei gh t h Ci rcu i t . See s ec. 7 4 82 (b )(1 )(A).- 1 4 -

[* 1 4 ] acco m

p an iedb y n o ti ces th ata d el i n qu en t t ax p ay er i s en t i t l edt o an i n fo rm al ad m i n is t rat i v e h eari n g , cal l eda CDP h eari n g . Secs . 6 3 3 0 (a), 6 33 1 (d ). CDP was creat ed as p art o f a b ro ad er effo rtt o ad d res s the co n cern t h at“ t ax p ay ers wh o g et
cau g hti n th e IRS h al l o f m i rro rs h a[d ] n o p l ace t o tu rnthat[wa] s tru l y i n d ep en den tan ds t ru ctu redt o rep res en tthei r co n cern s .” See Lewi s v . Co m m i s s i o n er, 1 2 8 T.C. 4 8 , 6 0 (2 0 0 7 ) (q u o ti ng 1 4 4 Co n g . Rec. 1 4 6 89 (1 9 9 8 ) (St at em en to f Sen at o r Ro t h )). To h el p b reakth os e m i rro rs , a CDP h eari n g m u s tb e
co n du ct ed b y

an “ i m p art i al o ffi cer” wh o “ h as h ad n o p ri o r i n v o l v em en ti n t h e d et erm i n at i o n an das ses s m en to f t h e u n d erl y in g t ax l i ab i l i t y th ati s th e s ubjecto f t h e h eari n g .” Co x v . Co m m i s s i o n er, 1 26 T.C. 2 3 7 , 2 5 1 (2 0 0 6 ) (q u o ti ng Cri n er v . Co m m i s s i o n er, T.C. M em o . 2 0 0 3 -3 2 8 , 2 0 03 W L 2 2 8 4 3 08 5 , at* 8 ), rev ’ d , 5 1 4 F.3 d1 1 1 9 (1 0 t h Ci r. 2 00 8 ). Th ato ffi cer m ay al so “ n o ten g ag e i n ex p art e d i s cu s s i o n s o f t he s t ren g t h an dweakn es s o f th e i s s u es o f a cas e t h atwo ul dap p ear t o co m p ro m i s e t h e Ap p eal s o ffi cer’ s i n d ep en d en ce.” Ho y l e v . Co m m i ss i o ner, 1 3 6 T.C. 4 6 3 , 4 7 0 (2 0 1 1 ), s up p l em en t i n g 1 31 T.C. 1 9 7 (2 0 0 8 ). As o u r cas el aw h as
reco g n ized , CDP i s “ m o re t h an ju s ta rub b er s t am p fo r t h e Co m

m i s s i o n er’ s d et erm i n at i o n s,” s ee Lewi s , 1 28 T.C. at6 0 ; i to ffers t ax p ay ers th e p ro t ect i o n o f a fres h l oo katth e ci rcu m st an ces o f t hei r cas es t o en su re t h atthe req ui rem en t s o f al l ap p li cab l e l aws an dp ro cedures h av e b een m et , th atth e i s s ues th ey rai s edh av e- 1 5 -

[* 1 5 ] b een co n s id ered an dad d res sed , an dthatan y p ro p os edco l lect i o n act io n s b al an ce t h e g o v ern m en t ’ s n eedfo r effi ci en tco l l ect i o n o f t ax es wi th th e t ax p ay er’ s
co n cern th at co l lect i o n b e n o m o re i n t ru s i v e th an n eces s ary , s ee Co x , 1 2 6 T.C. at2 4 8 (ci t i n g s ect io n 6 3 3 0 (c)(3 )). 1 0 Th e Co m m is s i o n er h adreach edth e “ we’ re t ak i n g y o u r s tuff” s t ag e wi t h th e M as o n s, an dwh ath ap p en edn ex ti s wh at l edt o t h e u n us u al ci rcu m s t an ces o f t h es e
cas es . Tax p ay ers u s u al l y as kfo r a CDP h eari ng o n a fo rm th atal l o w s th em

t o ch ecka b o x i f t h ey

wan tan al t ern at i v e t o fo rced co ll ect i on , s u ch as an i n s t al l m en t ag reem en to r an OIC. Th e reco rds h o ws t h atth e IRS p u tth e M as o ns i n fear o f l o s i n g th ei r h o m e; th ey

res p o n dedqu i ck l y wi t h an o ffer s en td i rect l y t o th e IRS, b u to u ts i d e t h e CDP p ro ces s . J u s td ay s l at er th ey as k edth e IRS ag en twh o was i n ch arg e o f g i v i n g them

a CDP h eari n g t o al s o co n s i d er th ei r o ffer. Nei t her p arto f the IRS co n s i d ered t h e o ffer o n i t s m eri t s . A. Sect io n 7 1 2 2 Th e Co d e p erm it s a t ax p ay er t o m ak e an OIC, an d s ect i o n 7 1 2 2 (a) g i v es th e Co m m i s s i o n er v ery

wi d e d i s cret i o n t o co m

p ro m i s e t ax l iab i l i t i es . Sec. 7 1 2 2 (c)(1 );
s ec. 3 0 1.7 1 2 2 -1 (c)(1 ), Pro ced . & Ad m i n . Reg s . Inan effo rtt o “ t reat [] al l

1 0 Dri v i n g h o m e t h i s p o i nti s IRS Ap p eal s ’ s recen tn am e ch an g e t o “ In dep en d en t Offi ce o f Ap peal s .” See Tax p ay er Fi rs t Act , Pub . L. No . 1 1 6 -2 5 , s ec. 1 0 01 (a), 1 3 3 St at . at9 83 (2 0 1 9 ) (em p h as i s ad d ed ).- 1 6 -

[* 1 6 ] t ax p ay ers acco rd i n g t o p ub l i s h eds t an dard s o f g en eral ap p l icab i l it y , ” t h e Co m m i s s i o n er h as d el eg at edd eci s i o n s o n wh et h er t o accep tt ax p ay ers ’ o ffers t o

“ IRS em p l o y ees , wh o are s up p o s edt o fo l l o w reg u lat i o n s an dp o li ci es * * * b u t wi t h a b i to f d is cret i o n t o * * * t i n ker at th e ed ges i f [t h ey ] fi n d [] s p eci al ci rcu m s t an ces . ” Bro m

b ach v . Co m

m i s si o n er, T.C. M em o . 2 0 1 2 -2 6 5 , at* 5 ;
s ee al so s ec. 3 0 1 .7 1 2 2 -1 (f)(3 ), Pro ced . & Ad m i n . Reg s . Tax p ay ers can o ffer t o co m p ro m i s e t h ei r t ax d eb t atm an y d i fferen t p o i n ts du ri n g th e ret u rn -t o -au d i t -t o-as s es s m en t -t o -co l l ect i on l i fecy cl e o f th ei r t ax y ear. An dthe IRS’ s s y st em

h as d ev el o p edi n a way

th atd irect s OICs t o d ifferen tIRS l o cat io n s atd i fferen ts t ag es o f co l l ect i o n. Th e M as o n s ’ cas e i s a g o o dex am p l e o f t h i s , as th ey

n o to n ly s en tth ei r o ffer d i rect l y

t o th e Cen t ral i zedUn i t, s ee IRM p t . 5 .8
. 3.3 (No v . 5 , 2 0 2 0 ), wh i ch i s p erm it ted , b u tth en wan t edSO Ru s h t o
co n si d er i tdu ri n g th ei r CDP h eari n g, wh i ch i s al s o p erm it t ed . If t he M as o n s fel t
s o i n cl i n ed , th ey

co u l dal s o h av e ch o s en t o s ub m itth e o ffer d i rect l y t o th e RO o n t h ei r cas es . Th e IRS reco g ni zes th ree b ro adcl as s es o f OICs : th o s e b as edo n d o ub tas t o l i ab i l i t y , t h o s e b as edo n d o ub tas t o co l l ect i b i l i t y , an d(a cat ch al l t h i rdcat eg o ry ) t h o s e m ad e fo r the s ak e o f effect i v e t ax ad m i n i s t rat i o n . Sec. 3 0 1 .7 1 22 -1 (b ), Pro ced
. & Ad m i n . Reg s . Th e Co m m i s s i o n er’ s reg ul at i o n s an dp o l i ci es i n s t ru ct- 1 7 -

[* 1 7 ] IRS em

p l o y ees t o l oo katd i fferen tfact o rs fo r each o f t h es e t h ree d i fferen t k i n d s o f o ffers . Th e M as o n s ’ o ffer was b as ed o n b ot h d oub t as t o co l l ect ib i l i t y
an d fo r th e s ak e o f effect i ve t ax ad m i n i s t rat i o n . Th e IRS an al y zes d o ub t -as -t o co l l ect i b i l i t y

OICs b y cal cu l at i n g h o w m

u ch i t t hi nk s a t ax p ay er can p ay , wh ati t cal l s h er RCP--reas o nab l e co l l ect i o n p o ten t i al . Th i s cal cu l at i o n i s fai rl y
co m p l icat ed , b uti t s g o al i s eas y t o u n d ers t an d : It ’ s th e IRS’ s b es t es ti m at e o f wh ati tco u l dg etb y

s ei zi ng an ds el l i n g a t ax pay er’ s p ro p ert y an dth en g arn i s h i n g h er i n co m e. See IRM p t . 5 .8 .4 .3 .1 (Ap r. 3 0 , 2 0 1 5). Th e IRS g en eral l y wi l l n o t accep tan OIC t hati s l es s than th e RCP wi t h o u tp ro o f o f s p eci al ci rcu m s t an ces . J o h n so n v . Co m

m i s s i o ner, 1 36 T.C. 4 7 5 , 4 8 6 (2 0 11 ), aff’ d , 5 0 2 F. Ap p ’ x 1 (D.C. Ci r. 2 0 13 ); Rev
. Pro c. 2 0 0 3 -7 1 , s ec. 4 .0 2 (2 ), 2 0 0 3 -2 C.B. 5 1 7 , 5 1 7
. An OIC m ad e fo r t he s ak e o f effect i v e t ax ad m i n i s t rat io n req u ires th e IRS t o p red i ctwh et her co l l ect i o n i n fu l l wo u l d creat e eco n o m i c h ard s h i p fo r t h e t ax p ay er. See s ec. 3 0 1 .7 12 2 -1 (b )(3 )(i ), (i i i ), Pro ced . & Ad m i n . Reg s . Th e reg ul at i o n g i v es
as an ex am

p le o f eco n o m ic h ard s h i p a s i tu at i o n wh ere, “ [a] l t h ou g h t ax p ay er h as cert ai n as s et s, t he t ax p ay er i s u n ab l e t o b orro w ag ai n s t t h e eq u i t y i n t h o s e as s et s
an d l i qu i d at i o n o f t h os e as s et s t o p ay o u t st an d in g t ax l i ab i li t i es wo u l dren d er t h e t ax p ay er u n ab l e t o m eetb as i c l i v i ng ex p en s es .” Id . p ara. (c)(3 )(i )(C). If co l l ect i o n
wo u l dn o tcau s e eco n om i c h ard s h i p , th e IRS m ay s t i l l co m p ro m is e a t ax l iab i l i t y- 1 8 -

[* 1 8 ] t o p ro m o t e effect i v e t ax ad m i n i s t rat i o n wh en th e t ax p ay er i d en t i fi es
co m p el l i n g p ub li c p ol icy

o r eq u i t y co n s i d erat i o ns . See i d . p ara. (b )(3 )(i i ). Th e IRS wi l l accep t an OIC fo r t h es e reas o n s i f t h e t ax p ay er d em o n s t rat es th at

“ ex cep t i o n al ci rcu m s t an ces ” ex i s ti n h er s i tuat i o n an dm eet s t h ree req u i rem en t s:

! t h e t ax p ay er m

u s th av e rem ai n edi n co m p li an ce s i n ce i n cu rri n g t h e l i ab i li t y

an dm us tn o t h av e an o v eral l co m p l ian ce h i s t o ry t h atwei g hs ag ai n s t co m

pro m i s e; ! t h e t ax p ay er m

u s tal s o s h o w th ats h e act edreas o n ab l y an d res p o n s i b l y

i n i n cu rri n g th e l i ab i l i t y ; an d
! t h e Co m

m i ss i o n er m

u s td et erm in e t h ato t h er t ax p ay ers wo u l d v iew t h e co m

p ro m i s e as fai r an dequ i t ab l e. Sec. 3 0 1.7 1 2 2 -1 (b )(3 )(i i ), (c)(3 )(i i ), Pro ced . & Ad m i n. Reg s .; Bo g artv . Co m m i s s i o n er, T.C. M em o . 2 0 1 4 -4 6 , at* 1 0
. Th e Co m m is s i o n er m

u s tco n s i d er a t ax p ay er’ s i n d iv i dual fact s an d ci rcu m s t an ces i n l i g h to f th es e p ri n ci p l es , b u th e d o es h av e b ro add i s cret i o n i n d eci d i n g wh eth er t o accep tan OIC. See Bo gart , at* 1 1. Th e IRS al s o ch eck s t o
s ee t h atan o ffer was s ub m i t t edo n th e p ro p er fo rm --Fo rm 6 5 6 --an dwi t h t h e
co rrect i n fo rm at io n an dacco m p an y i n g d o cu m en t at i o n . Th e IRS d o es n ’ tco ns i der al l t h e OICs i trecei v es th e s am e way . See s ec. 3 0 1 .7 1 2 2 -1 (d )(2 ), (g )(4 ), Pro ced . & Ad m i n . Reg s. So m e o ffers i treject s o n th ei r
m eri t s . A t ax p ay er m ay

ch o o s e t o ap p eal a reject i o n wi t h i n th e IRS. Sec.- 1 9 -

[* 1 9 ] 7 1 2 2 (d )(3 )(A) an d(B). Bu tth ere i s an i m p o rt an td i s t i n ct i o n h ere--a r ej ect ed
o ffer i s o n e t h atth e IRS h as co n s i d ered . Th e IRS h as an o t h er cat eg o ry o f OICs t h ati t r et u rn s . See s ec. 7 12 2 (d )(3 ), (g ). Wh en an OIC i s retu rn ed , th e IRS h as n o t
co n si d ered i to n the m eri t s b ecau s e t h e Co m m i s s io n er h as fo u ndi tt o b e

“ s ub m i t t eds o l el y

t o d el ay co ll ect io n ,” o r b ecau s e i ti s “ o t herwi s e
n o np ro ces sab l e,” o r b ecau s e th e t ax pay er fai l edt o s ub m i t i n fo rm at io n t h atth e IRS req u es t edb efo re i two u l dco n s i d er t h e OIC. Sec. 3 01 .7 1 2 2 -1 (d )(2 ), Pro ced . & Ad m i n . Reg s. Th e reg ul at i o ns s ay th at a d eci s io n t o r et ur n an OIC i s fi n al an d
u n ap peal ab l e: “ [T] h e retu rn o f th e o ffer d o es n o t co ns t i tu te a reject i o n o f t h e o ffer fo r p u rp o s es o f t h is p ro v i s i on an dd o es n o ten t i t l e t h e t ax p ay er t o ap p eal th e m at t er t o Ap peal s .” Id . p ara. (f)(5 )(i i ). 1 1 Th e M as o n s ’ o ffer was retu rn ed , n o t reject ed . Th e IRS n ev er rev i ewedi t fo r d o ub tas t o co l l ect i b i l it y o r effect iv e t ax ad m i n is t rat i o n b ecau s e th e Cen t ral i zed Un i t co n cl u d edth ati t h adb een “ s ub m it t eds o l el y t o d el ay co l l ect i o n .” Atth i s p o i n twe wan tt o s t res s th at we are n o td et erm in i n g wh et h er we t hi n kthe M as o n s ’

1 1 Th e IRM p ro v i des fo r o n e n arro w ex cep t i o n t o th i s ru le: If an OIC i s ret u rn edas “ s ub m i tt eds o l el y t o d el ay co l l ect io n ,” t h e t ax p ay er m ay “ req u es tfo r a rev i ew o f th e d eci s i o n t o return th e o ffer wi t h th e i m m ed iat e m an ag er” o f th e em pl o y ee wh o m ad e t he d eci s io n i n it i al l y . IRM p t . 5 .8
. 4 .2 0 . Th i s rev i ew i s i n fo rm al an dn otp ro v id edfo r i n an y s t atu te o r reg u lat i o n . Id . Th ere i s n o t h i n g i n t h e reco rdo f t h es e cas es t o s ho w wh eth er t h e M as o ns ei t her as k edfo r o r g o tev en t h i s l ev el o f rev i ew.- 2 0 -

[* 2 0 ] o ffer was s ub m i t t ed s ol el y t o cau s e d el ay . Bu twe d o th i n kth e M as o n s
m ak e a g o o dp o i n th ere: Wh atd o es i tm ean fo r an o ffer t o b e return edas

“ s ub m i t t eds o l el y

t o d el ay co ll ect io n ? ” W e d o n ’ th av e m u ch t o g o o n , b utth e IRS’ s o wn IRM cau t i o n s --p res u m ab l y b ecau s e t he co n s eq u en ce i s u n ap p eal ab i l i t y --t h ata “ d et erm in at i o n th atan o ffer i s s ub m i t t eds o l el y fo r th e p urp o s e o f d el ay i n g
co l l ect i o n s h o u l d b e ap p aren tt o an i m p art i al o b s erv er” 1 2 an dthatth e t eam
m an ag er at the Cen t ral i zedUn i tm u s t al s o i n d ep en d en t l y d et erm i n e t hatth e ret u rn i s ap p ro p ri at e. IRM p t . 5 .8
. 4 .2 0 (1 ) (M ay 1 0 , 2 0 1 3). Th e IRM al s o g i v es a co up l e h el p fu l ex am

pl es o f wh en an OIC s h o u l db e retu rn ed : an OIC i n wh i ch “ [t ] h e t ax p ay er fai l s t o ad dres s th e i s su es o r d efect s o f t h e p rev i o u s l y s ub m i t t ed o ffer,” i d . at(4 ), o r a s eco n dOIC n o tm at eri al ly d i fferen tfro m

a p rev i o us o n e, i d . p t . 5 .8
. 4.2 0 .1 (1 ), Ex am

p l e (2 ) (M ay

1 0 , 2 0 1 3 ): “ Th e t ax p ay er s ub m i tt ed an o ffer fo r $ 1 0 ,0 0 0 . Th e [Co m

m i s si o ner] co m

p u t edthe RCP t o b e $ 2 0 ,0 0 0. Th e t axp a yer
r ef u s ed t o i n cr ea s e th e o

f f er t o th e co m

p u t ed RCP. A reject i o n l et ter was i s s u ed , an d t h e t ax p ay er d i d n o t ap p eal . On e m o n th l at er, th e t ax p ay er res ub m i t t edan
o ffer fo r $ 1 0 ,1 0 0 ” (em

p has is ad d ed ). Th is l ead s u s t o b el iev e t hatu s i n g thi s

1 2 Th e IRM , wh il e i tp ro v i d es h el pfu l i ns i g h ti n t o i n n er IRS wo rk i n g s , d o es n o th av e t h e fo rce o f l aw an dg i v es n o ri g h ts t o t ax p ay ers . Farg o v . Co m m i s s i o n er, 4 4 7 F.3 d7 0 6 , 7 1 3 (9 t h Ci r. 2 0 0 6 ), aff’ g T.C. M em o . 2 0 0 4 -1 3 , 2 0 0 4 W L 6 8 3 9 8 ; Th o b u rn v . Co m m i ss i o ner, 9 5 T.C. 1 3 2 , 1 4 1 (1 9 9 0 ).- 2 1 -

[* 2 1 ] reas o n t o return an o ffer s h o u l dp l ace a h i gh b u rd en o n t h e rev i ewi n g IRS
em pl o y ee t o p ro v e th atth ere was , as th e M as o n s arg u e, “ n o o th er co ncei v ab l e
m o ti v e i n s ub m i t t i n g t h e o ffer”--ev en g i ven th e Co m m i s s i o n er’ s wi d e d i s cret i o n i n t h i s area. M o re i n t eres t i n g i s the M as o n s ’ arg u m en tth at (ap artfro m s u ch ex t rem e
ex am p l es ) t h e Co m

m i s s i o ner’ s reas on i n g i s d i s i n gen u o u s , b ecau s e t h e CDP p ro ces s i s ai m edv ery

d el ib erat el y

t o g i v e m o s tt ax p ay ers an o p po rtu ni t y t o d el ay
co l l ect i o n b y

h av in g t h e IRS t ak e an o th er l oo kath ow t o co l l ectt ax d eb t o r, i n
s o m e cas es , wh et her t h o s e d eb t s are ev en o wed
. B. Th e In t erp l ay

Bet w een Sect io n s 6 3 3 0 an d7 1 2 2 W e n o rm al ly

d o n’ ts ee ap p eal s fro m

th e IRS’ s reject i o n o r ret u rn s o f OICs
-- we d o n ’ t h av e ju ri s d i ct i o n t o rev i ew t h em , an d aft er a t ax p ay er ex h au s ts h er
rem ed ies wi t hi n the IRS, t h at ’ s t h e en d o f t h e m at ter. Cf. As em an i v . IRS, 1 6 3 F. Ap p ’ x 1 0 2 , 1 0 5 (3 dCi r. 2 0 0 6 ). Bu tth ere i s o n e ex cep t i o n --Co ng res s g av e u s ju ri s d i ct i o n t o rev i ew t h e Co m m i s s i on er’ s d et erm in at io n aft er a CDP h eari n g , an d t o l dt ax p ay ers th atth ey

co u l drai s e co l l ect i o n al t ern at i v es s uch as OICs atth o s e h eari n g s . Sec. 6 3 3 0 (c); Reed v . Co m m is s i o n er, 1 41 T.C. 2 4 8, 2 5 4 (2 0 1 3),
s up p lem en t ed b y

T.C. M em o . 2 0 1 4 -4 1 . Th e Co de s p eci fi cal l y t el ls a s et t l em en t
o ffi cer wh o co n duct s a CDP h eari n g t o ad d res s an y rel ev an ti s su es th e t ax p ay er rai s es . Sec. 6 3 3 0 (c)(2 ). Th atd o es n ’ tm ean thata t ax p ay er i n a CDP h eari n g g et s- 2 2 -

[* 2 2 ] an y d i fferen ts t an d ardfo r t h e Co m m i ss i o ner’ s co n s i d erat i o n o f t h e m eri t s o f h er OIC--t h e s et t l em en to ffi cer i s g o v ern ed b y s ect i o n 7 1 2 2 an d i t s reg u lat i o n s ju s t
as m uch as th e Cen t ral i zed Un i ti s . See Ol s en v . Un i t edSt at es , 4 1 4 F.3 d 1 4 4 , 1 50 (1 s tCi r. 2 0 0 5 ). Bu ti td o es m ean we can rev i ew a d et erm in at i o n t o reject an OIC
o n g ro un d s th atwo u ldh av e t ri g g ered a r et u rn i f th e OIC h adb een s ubm i t t ed
o u t s i d e t h e CDP h eari ng p ro ces s --fo r ex am pl e, OICs fro m

t ax p ay ers wh o d o n ’ t
s ub m i tfi nan ci al i n fo rm at i o n aft er b ei n g as k edt o d o s o, s ec. 3 0 1 .7 1 2 2 -1 (d )(2 ), Pro ced
. & Ad m i n . Reg s . ; cf. Lo v el an d v . Co m m is s i o n er, 1 5 1 T.C. 7 8 , 8 8 (2 0 1 8 ),
o r OICs fro m

t ax pay ers wh o aren ’ tcu rren twi t h t h ei r fi l i n g o b li g at i o n s, Reed , 1 4 1 T.C. at2 5 6 -5 7 . Th e M as on s are wi t h i n th i s ex cep t i o n b ecau s e t h ey req u es t eda CDP h eari n g 1 3 ju s td ay s aft er s ub m i t t i n g th ei r o ffer t o th e Cen t ral i zed Un i t . In t h ei r req ues tfo r a h eari n g , an dag ai n atth e h eari n g , th ey as kedth atSO Ru s h
co n si d er t h ei r o ffer. SO Ru s h m ad e cl ear i n h er n o t i ces o f d et erm i n at i o n thats h e d i dn o t d o s o . W e h av e ju ri s d i ct i o n t o rev i ew t h i s d et erm i n at i o n. Becau s e t he M as o n s aren ’ tch al l en g in g th ei r u n d erl y i ng t ax l i ab il i t i es , we
rev i ew t h e Co m

m i s si o ner’ s d et erm i n at i o n fo r ab u s e o f d i s cret i o n . See Seg o v . Co m m i s s i o n er, 1 1 4 T.C. 6 0 4 , 6 1 0 (2 0 0 0). Th i s m ean s t h at , i n s t eado f d eci d i n g

1 3 Th ei r fi rs tCDP req u es t s co n cern ed t h ei r jo i nti n co m e-t ax l i ab i l i t i es fo r 2 0 0 9 an d2 0 1 0 , wh il e t h ei r o ffer was m ad e fo r al l t hei r o u t s t an di n g t ax l i ab i l i t i es fro m 2 0 09 th ro u g h 2 0 14 . See s up ra p . 6
.- 2 3 -

[* 2 3 ] wh et h er we t hi n kth e o ffer s ho u l dh av e b een accep t ed , we l o o k t o s ee wh et h er t h e Co m

m i s s i on er’ s d eci s i o n was g ro u n d ed i n an erro r o f l aw o r res t ed o n a cl earl y erro n eo u s fi n d i n g o f fact , o r wh et h er h e ru l edi rrat i o n al ly . Farg o , 2 0 0 4 W L 6 8 3 9 8 , at* 2 . Ou r rev i ew i s al so g o v ern edb y th e Ch en ery

d o ct ri n e. 1 4 See J o n es v . Co m

m i s si o ner, T.C. M em o . 2 01 2 -2 7 4, at * 15 ; Sal ah u d di n v . Co m m i s s i o n er, T.C. M em o . 2 0 1 2 -1 4 1 , 2 0 12 W L 1 7 5 8 6 28 , at* 7 . Ap pl y in g Ch en ery i n a CDP cas e m ean s th at we can ’ t up h ol da n o ti ce o f d et erm i n at i o n o n g ro u nd s o t h er t h an th o s e actual l y rel i edup o n b y

the IRS o ffi cer wh o m ad e t h e d et erm i n at i o n . See Ch en ery I, 3 1 8 U.S. at8 7 -8 8 ; Sp i v a v . As t ru e, 6 2 8 F.3 d3 4 6 , 3 5 3 (7 th Ci r. 2 0 10 ) (ag en cy h as th e res p on s ib i li t y

t o art i cu l at e i t s reas o n i n g); Sal ah u dd i n , 2 0 1 2 W L 1 75 8 6 2 8 , at * 7 (“ [O] u r ro l e u n d er s ect i o n 6 3 3 0 (d ) i s t o
rev i ew act i o ns thatth e IRS t oo k , n o t[t h e] act i o ns th ati tco u l d h av e t ak en ”). Th o se g ro u n d s m

us t b e cl earl y

s etfo rt h s o th atwe d o n o th av e t o g u es s ab o u twh y
an o ffi cer d eci dedwh ats h e d i d . See Ch en ery II, 3 3 2 U.S. at1 9 6
. Th e Co m m is s i o n er arg u es th atth e qu es ti o n we s h o u l das ki s wh et h er th e SO ab u sedh er d i s cret i on wh en s he d et erm i n edth atthe Cen t ral i zedUn i t fo l l o wedth e

1 4 Th e Ch en ery

d o ct ri n e i s an ad m i n i s t rat i v e-l aw p ri n ci p le t h ats ay s a co u rt , i n rev i ewi n g a d et erm i nat i o n wh i ch an “ ad m in is t rat iv e ag en cy al o n e i s au th o ri zed t o m ak e, m

u s tju d g e th e p ro p ri et y o f s u ch act i o n s o l el y b y th e g ro u n d s i nv o k edb y t h e ag en cy .” See SEC v . Ch en ery Co rp . (Ch en ery II), 3 32 U.S. 1 9 4, 1 9 6 (1 9 4 7 ); SEC v . Ch en ery

Co rp . (Ch en ery

I), 3 1 8 U.S. 8 0 (1 9 4 3 ).- 2 4 -

[* 2 4 ] IRM i n retu rn i ng th e M as o n s ’ OIC. W e ag ree a b i twi t h t h e Co m m i s s i o n er: Tax pay ers h av e n o ri g h tt o ap p eal th e r et u rn o f an OIC. Reed , 1 4 1 T.C. at2 5 5
. Bu t t h is al so m ean s thatSO Ru s h tri p p edo n a t h res h o ld qu es t i on o f l aw. By
res earch i n g th e IRM o n wh et h er th e Cen t ral i zedUn i twas co rrect i n retu rn i n g th e M as o n s’ OIC an d t h en d et erm i n i ng th at i twas , s h e was as k i ng an dan s weri n g a qu es ti o n th ati s n ’ ts upp o s edt o b e t h e s ubjecto f a CDP h eari n g atal l . Sh e was al s o m ak i n g a d et erm i n at i o n t h atwe wo u l d n ’ tb e ab l e t o rev i ew--wh en a
s et t l em en to ffi cer m ak es a d eci s i o n o n a p recl u dedi s s u e, t h atd eci s i on i s n ot p ro p erl y p arto f t h e CDP h eari n g . See s ec. 3 0 1 .6 3 30 -1 (e)(3 ), Pro ced
. & Ad m i n . Reg s. 1 5 Th i s d o es n ’ t m ean , h o wev er, t hatth e Co m m i s s io n er wi n s . Sect i o n 6 3 3 0 (c)(3 )(B) req u i res th e s et t lem en t o ffi cer t o t ak e i n t o co n s i derat i o n i s s u es th at a t ax p ay er rai s es , wh i ch s ect i o n 6 3 3 0 (c)(2 )(A)(i ii ) s p eci fi cal l y s ay s i n cl u d e
co l l ect i o n al t ern at i v es l i k e an OIC. An d we can b e s u re t h atth e M as o n s rai s edth e i s su e o f an OIC b ecau s e t hey ch eck edth atb o x o n Fo rm 6 56 t o as kfo r a CDP

1 5 W e wan tt o b e as cl ear as p o s s i b l e t h atth i s d o es n o tm ean we’ dl ack j u r is di ct i o n t o rev i ew a n o t i ce o f d et erm i n at i on th ats ai ds u ch a t h i n g . In Reed we reject edth e Co m

m i s s i on er’ s arg u m en t s thatwe l ack edjuri s d i ct io n t o rev i ew t h e ret u rn o f an OIC. W e h el dth at“ iti s fu n d am en tal th at we h av e ju ri s d i ct i o n i n co l l ect i o n m at t ers i f t h e Co m m i s s i o n er i s s u es a d et erm i n at i o n n o ti ce an d a t ax p ay er t i m el y

fi l es a p et it i o n .” Reed , 1 4 1 T.C. at2 5 3
.- 2 5 -

[* 2 5 ] h eari n g an db ecau s e SO Ru s h ack n o wl ed g edi n th e n o t i ces o f d et erm i n at i o n t h atth ey wan t edth ei r “ o ffer wh i ch was retu rn edb y Co l l ect i o n i nv es t i g at edas a
co l l ect i o n al t ern at i v e.” Th i s d o es n ’ t m ean th atthe M as o n s n eces s ari l y wi n ei t h er, b ecau s e i ti s n ’ t
en o ug h fo r t ax p ay ers t o s ay thatth ey wan t a co l l ect i o n al tern at i v e t o h av e o n e
co n si d ered . A s et t l em en to ffi cer m u s tactual l y

h av e an OIC i n fro n to f h er fo r i tt o b e “ a rel ev an ti s su e” rai s edb y a t ax p ay er. Reed , 1 4 1 T.C. at2 5 4 -5 5; Ken d ri ck s v . Co m m i s s i o n er, 1 2 4 T.C. 6 9 , 7 9 (2 0 0 5 ); s ee al s o Su l l i v an v . Co m m i ss i o n er, T.C. M em o. 2 0 0 9 -4 ; Sch arri n g hau s en v . Co m m is s i o n er, T.C. M em o . 2 0 0 8-2 6 , 2 0 0 8 W L 3 8 2 3 3 7 , at* 1 . Th i s m ean s we m us tfi g u re o utwh atth e reco rds h o ws ab o u t wh et h er t h e M as o n s actu al l y p l aced an o ffer o n t h e t ab l e fo r SO Ru s h t o co n s i d er. W e kn ow t h at t h e M as o n s d i d n ’ t s ub m i tth e OIC p ack ag e t o th e s et t l em en t
o ffi cer ag ai n . Bu t t h ey

d i d kn o w s h e al read y

h adi t , an ds h e referred t o i t i n cal l s wi t h th ei r l awy er. Is thatg o o den o u g h ? Fo r th is , we n eedt o l o o k cl o s er at o u r
cas el aw. In Ken d ri ck s , 1 2 4 T.C. at7 3 -7 4 , th e t ax p ay ers arg u edth atal th o u g h th ey d i dn o t p res en tan OIC d i rect l y t o th e s et t l em en to ffi cer d uri n g t h ei r CDP h eari n g , t h ey h ads t i l l m ad e an OIC wh i l e t h at h eari n g was p en d i n g . Th ey arg u edthatth i s
m ean ti ts h o u l dh av e b een co n s i d ered . Th ey co n ced edth atth ey

d i d n otrai s e an y
co l l ect i o n al t ern at i v es atth e CDP s tag e, b u t s t i l l b el i ev edth ey ’ dm ad e an- 2 6 -

[* 2 6 ] accep t ab l e OIC an di t was ju s t p en d i n g el s ewh ere wi th th e IRS. Id
. at7 6
. W e h el dth atth e Co m

m i s s i o n er h adn o t ab u s ed h i s d i s cret i o n b y n o tco n s i d eri n g
an “ o ffer i n co m

p ro m i s e [t h at w as n o t ] b efo re Ap p eal s .” Id . at7 9. Bu ti n Ken dri ck s th e s et t l em en to ffi cer s p eci fi cal ly as k edth e t ax p ay ers atthei r CDP h eari n g wh et h er th ey wo u l dl i k e t o s ub m i t an OIC, an dth ey d ecl i n ed . Id . at7 3
. On l y aft er t h e h eari n g d i dth ey s ub m i tan OIC t o th e Cen t ral i zedUn i t, an dth ey
n ev er b o t h ered t o t el l the s et t l em en to ffi cer t h atth ey h ad d o n e s o . Id
. at7 3 -7 4
. Ou r d eci s io n i n Ki p p v . Co m m i s si o n er, T.C. M em o . 2 0 1 5 -7 , was s i m i l ar. W e h el dth ere t h atth e s et tl em en to ffi cer d i dn o tab u s e h i s d i s cret i o n b y fai l i n g t o
co n si d er t wo OICs th ath adb een retu rn edm o re t h an a y ear b efo re, an dth atth e t ax p ay ers h adn o t req u es t edb e reco ns i d ered
. Id . at * 9 . Th at s et t l em en to ffi cer h ad i n vi t edth e t ax p ay ers t o s ubm i tan OIC, b u tal l h e g o ti n ret u rn was up d at ed fi nan ci al i n fo rm at i on , an dev en th atwas i n co m p l et e. Id . at* 4 . Th e s et t l em en t
o ffi cer s p eci fi cal l y

req u es t edth e m i s s i n g fi nan ci al i n fo rm at i o n , an ds ai dh e’ d
co n si d er an OIC i f h e recei v edi t . Id . at* 3 . W e ag ai n h el di t was n o tan ab u s e o f d i s cret i o n fo r t h e s et tl em en t offi cer t o s us t ai n th e co l lect i o n act io n aft er t h e t ax p ay ers fai l ed t o res p o n d t o hi s req u es t s fo r ad d i t i o n al i n fo rm at i on . Id . at* 9
. Wh atwe t ak e fro m

th es e cas es i s th ata s et t l em en to ffi cer i s n o treq u i redt o
co n si d er a co l l ect i o n al t ern at i v e t h atthe t ax p ay er d o es n o tp res en t t o h er. Bu t- 2 7 -

[* 2 7 ] wh ati f a t ax p ay er s erv es up an OIC t h at ’ s al read y b een ret u rn ed ? W e’ v e
s een th i s b efo re i n Reed v . Co m m i s s i o n er, 1 4 1 T.C. 2 4 8 , Cro s s wh i t e v . Co m m i s s i o n er, T.C. M em o . 2 0 1 4 -1 7 9 , an dm o s trecen t l y i n Gal l o w ay

v . Co m m i s s i o n er, T.C. M em o . 2 0 2 1 -2 4 . Reedwas a cas e o f fi rs ti m p res s i o n , wh ere t h e t ax p ay ers d ecl i n edan i nv i t at i o n t o s ub m i ta n ew OIC du ri n g t h ei r CDP h eari n g
an d i n st eadwan t ed “ u s t o ad op tth e th eo ry th at res p on d en tcan b e requ i red ” t o

“ reo p en ” an OIC b as edo n d o ub tas t o co l lect i b i l i t y t h atwas retu rn ed yea r s b efo re a CDP h eari n g . Reed , 1 4 1 T.C. at2 5 4 (em p h as i s ad ded ). W e h el d i twas n o tan ab u se o f d i s cret i o n fo r a s et t l em en to ffi cer t o refu s e t o rev i ew a 2 0 0 8 OIC i n 2 0 1 1
. Id . at2 5 5 . W e reas o n edth atfi n d i n g o th erwi se wo u l d“ i m p erm i s s i b l y

ex pan dth e Co m m i s s i o n er’ s au t h o ri t y

b y al l o wi n g [h i m ] t o ev al u at e an OIC b as edo n d o ub tas t o co l l ect i b i l i t y

u s i n g a t ax p ay er’ s p as tfi nan ci al ci rcu m s t an ces .” Id
. Th e Co d e t el l s u s t h atan y OIC rai sedi n a CDP h eari n g i s t o b e co n s i d ered i n d ep en den t l y

(n o tju s t rev i ewed ) b y

a s et t l em en to ffi cer. An dth e cas es t el l u s t h att ax p ay ers h av e t h e b u rd en o f p l aci n g an OIC b efo re t h e s et t l em en t o ffi cer an d
m ak i n g i t cl ear t hat --ev en i f th ere i s an o ffer fl oat i n g el sewh ere i n the IRS ab y s s -- t h ey wan ti tco n s i d ered i n CDP as wel l . In d eed , th e IRM reco m m en d s
co n so l i d at i n g p en d in g req u es t s fro m th e s am e t ax p ay er fo r an OIC wi t h th e CDP p ro ces s . Inb o t h Sch arri n g h au sen an d Ken dri ck s, t he o n l y reas o n a p en d i n g OIC- 2 8 -

[* 2 8 ] was n ’ tal s o co n s i d ered i n CDP was t h atth e t ax p ay er d i d n ’ t as kfo r i tt o b e. A t ax pay er s h o u l d n ’ t b e d ep ri v edo f h er fu l l CDP ri g h t s m erel y b ecau se s h e ju s t s o h ap pen edt o fi rs t s ub m i tan OIC t o th e Cen t ral i zedUn i t an dth en al s o s ub m i ti t wi t h i n CDP. Ou r d eci s io n i n Cro s swh i t e v . Co m m i s s i o n er, T.C. M em o . 2 0 1 4 -1 7 9 , was
s i m i l ar. In th atcas e, t h e t ax p ay er h ads ubm i t t edan OIC t o t h e Cen t ral i zedUn i t , b u ti twas retu rn edb ecau s e h e was n otcu rren t o n h i s t ax o b l i g at io n s . Id . at* 7
. Du ri n g a CDP h eari n g m o re t h an fi v e y ears l at er, t he t ax p ay er req u es t ed t h ath is
o l dOIC b e reco n s i d ered . Id . at* 9 -* 1 0 . Th e s et t l em en t o ffi cer res p on d edth ati t
co u ldn o tb e, b u t i n v it edh i m t o s ub m i ta n ew o n e. Id . at* 1 0 . Th e t ax p ay er d i d
s o , b uti n s i s t edth atth e ret u rn o f t h e o ri gi n al OIC b e rev i ewed . Id . at* 1 1 -* 1 2
. Th e s et t l em en to ffi cer rel en t edan dt o o k a s eco n dl o ok , b u taffi rm edth e Cen tral i zedUn i t ’ s d eci s i o n t o ret u rn th e OIC. Id . at* 1 5
. W e h el dth ath e was n o t req u i redt o reo p enth e y ears -o l dOIC, b u th av i n g d eci dedt o d o s o , h e d idn o t ab u se h i s d i s cret i o n i n d et erm i n i n g th atthe Cen t ral i zedUn i t ’ s d eci s io n t o retu rn t h e OIC was co rrect . Id . at* 2 5 -* 2 6
. Th e s i tu at i o n i n a recen to p i n i o n , Gal l o way v . Co m m i s s i o ner, T.C. M em o . 2 0 2 1 -2 4 , was a v ari at i on o n th i s th em e. Gal l o way h ads ub m i t t edan OIC i n 2 0 1 7 t h atwas reject ed . Id . at* 5 . He ad m i n i s t rat i v el y ap p eal edth at reject i o n t o IRS- 2 9 -

[* 2 9 ] Ap p eal s , wh i ch th en s u s tai n edth e reject i o n . Id . at * 6. In 2 0 1 8 t h e Co m m i s s i o n er b eg an t o try t o co l l ectth e t ax , an dGal l o way as k edfo r a CDP h eari n g . Id . Atth e h eari n g h e u rg edth e Ap p eal s o ffi cer t o reco n s i d er t h e o l dOIC t h atth e IRS h adal read y co n si d ered an dreject ed . Id . at* 7 . Th e Ap p eal s o ffi cer d ecl i nedt o d o s o , b u tg av e Gal l o way y etan ot h er o p p o rtu n i t y

t o p ro p os e an OIC b as edo n h is cu rren tfi n an ci al i n fo rm at i o n ; Gal l o way reject edth e ch an ce. See i d
. at* 7 -* 8 . W e fo u n d n o ab u s e o f d i s cret i o n i n n o tg i v i n g t h e t ax p ay er wh o s e OIC h ad b een ad m i ni s trat iv el y ap p eal edan dreject ed , an dwh i ch h adal s o g ro wn o l d , an o th er ch an ce t o arg u e i t s m eri t s . See i d . at* 1 1 -* 12
. W e d raw a co up l e o f co n cl u si o ns fro m t h es e cas es . On e i s th ata s et t l em en t
o ffi cer d oes n o tn eedt o co n s i d er an o u t d at edOIC t hath as b een reject edo r ret u rn edb ecau s e t h e fi n an ci al i n fo rm at io n th ats upp o rt edi ti s n o l o n g er cu rren t . A s eco n dco n cl u s i o n we draw fro m th es e fo u r cas es i s th ata s et t l em en to ffi cer i s b et t er o ff i f s h e as k s the t ax p ay er wh eth er s h e wan t s t o req u es tco l l ect i o n al t ern at i v es as p art o f t h e CDP h eari n g . Inth ree o f t h es e cas es the t ax p ay er
res p o n d ed wi t h an OIC, t h o u g h an i n co m p l et e o ne. Th e s et t l em en t o ffi cers th en
as k edfo r ad d i t i on al i n fo rm at i o n b efo re fi n al ly reject i ng th e OICs . It ’ s n o tu n u s u al fo r a t ax p ay er t o m ak e an OIC t h at ’ s i n co m p let e o r t h atl ack s i n fo rm at i o n t o
s up p orti t . Bu tth atd o es n ’ tm ean t h atth e t ax p ay er h as n ’ t“ rai s ed ” t h e i s s u e o f- 3 0 -

[* 3 0 ] wh et h er an OIC i s an ap p ro p ri at e al t ern at i v e t o fo rced co l l ect i o n . See Cav an au g h v . Un i t edSt at es , No . 0 3 -2 5 0, 2 0 0 4 U.S. Di s t . LEXIS 1 6 8 9 6, at* 1 8 (D.N.J . M ar. 2 3 , 2 0 0 4 ). An d , o n ce an i s s u e i s “ rai s ed ”, s ect i o n 6 3 3 0 req u i res th at t h e o ffi cer wh o ’ s co n du ct in g th e h eari n g “ co n s id er” i t . Sec. 3 0 1 .6 3 3 0-1 (e)(3 ), Pro ced
. & Ad m i n . Reg s . Pro p er co n s i d erat i o n al s o m ean s th ata s et t l em en to ffi cer
s h o u ldas kfo r m o re i n fo rm at i o n i f facedwi t h a req u es tfo r a co l l ect io n al t ern at i v e t h atn eed s ad d i t io n al i n fo rm at io n o r d o cu m en tat i o n . See Uri b e v . Co m m i s s i o n er, T.C. M em o . 2 01 4 -1 1 6 , at* 9 (“ Th i s i l l u s t rat es th e i m p ort an ce o f kn o w i n g a t ax p ay er’ s ab i l i t y

t o p ay wh en ev al u at i n g wh et h er h e i s el ig i b l e fo r a co l l ect i o n al t ern at i v e”); Cav an au g h , 2 0 0 4 U.S. Di s t . LEXIS 1 6 8 96 , at* 2 9 . Bu twh en a t ax p ay er fai l s t o p ro v i de t h e i n fo rm at i o n n eed edt o co n s i d er an OIC, as d o zen s -- p erh ap s h u n d red s --o f cas es h av e h el d , i ti s n o tan ab u se o f d i s cret i o n fo r a
s et t l em en to ffi cer t o rejecta co l l ect i o n al t ern at iv e. See, e.g ., Hu n t res s v . Co m m i s s i o n er, T.C. M em o . 2 0 0 9 -1 6 1 ; Nel s o n v . Co m m i s s i on er, T.C. M em o . 2 0 0 9 -1 0 8
. So wh ere d o th e M as on s ’ cas es fi ti n th i s web o f l aw? Wh atwe h o ld i s t h at t h e M as o n s d i dm ak e an o ffer t h at s ho u ldh av e b een
co n si d ered o n i t s m eri t s b y SO Ru s h . See s ec. 3 0 1 .6 3 3 0-1 (e)(3 ), Q&A-E1 , Pro ced
. & Ad m i n . Reg s . (Ap p eal s wi l l co ns i d er “ [ a] ny offers b y

th e t ax p ay er fo r- 3 1 -

[* 3 1 ] co ll ect i o n al t ern at i v es ” (em p h as i s ad ded )). No t o n l y were t h e CDP p ro ceed in g s cl os e i n t i m e t o wh en th e M as o ns m ad e t h ei r o ffer t o th e Cen t ral i zed Un i t, b utth ei r o ffer was p h y s i cal l y i n fro nto f SO Ru sh , an di twas s upp o rt edb y fi nan ci al i n fo rm at i on th at was cu rren tb y th e Co m m i s s i o n er’ s o wn s tan d ard s . See IRM p t . 5 .8 .5 .3 (2 ) (M ar. 2 3, 2 0 1 8 ) (fi n an ci al d at a s h o u ldb e n o m o re t h an 1 2
m o nt h s o l d ). SO Ru s h h adthe fu l l o ffer p ack et , Fo rm 6 56 an dal l , s ubm i t t edb y t h e M as o n s ju std ay s b efo re t h ey req u es t eda CDP h eari n g . Th e M as o n s al s o ex p l ai n edt o SO Ru s h wh atth ey co ns i d ered s peci al ci rcu m s t an ces --t h atM r. M as on h adret i red , 1 6 an dthatM rs . M as o n was ret i ri n g
s o o n b ecau s e h er wo rkh adb eco m e l ab o ri o us , th ats h e l ack ed t h e s k i l l s an d edu cat i o n t o fi n d an o t h er jo b , an dth at s h e was d eal i n g wi t h a g am bl i n g ad d i ct i o n . On t o p o f t h is , th e M as o n s t ri edan dfai l edth ree s ep arat e t i m es t o b o rro wag ai n s t t h ei r h om e s o th atth ey

co u l d p ay

d o wn thei r t ax l i ab i l it i es . Wh et h er o r n o tth es e
reas on s wo u ld h av e h el p edthe M as o n s p rev ai l wi t h th e IRS i s an y o ne’ s g u es s , b u t

1 6 A recen t l y up d at edp ro v i s i o n o f t he IRM s h o ws th e Co m m is s i o n er t ak es s ub s t an t i at ed , i m

m i n en t ret i rem en ti nt o co n s i d erat i o n wh en cal cu l at i n g a t ax p ay er’ s cu rren tan dfu ture earn i n g p o t en ti al . See IRM p t . 5 .8 .5 .2 0 (4 ) (M ar. 2 3 , 2 0 1 8 ). Wh i l e we aren ’ ts u re i f a s i m i l ar p ro v i s i o n p reced ed t hi s o n e, we d o kn o w t h atRO J aco b s o n d i d n ’ tfi nd t h e cu rren tret i rem en to f M r. M as o n an dn eari n g ret i rem en tM rs . M as on t o b e a v al idco n s i d erat i o n o r s p eci al ci rcu m s tan ce wh en s h e s en ti n h er RO rep ort reco m m en d in g th atth e t h ey

b e fo u ndt o h av e s ubm i t t ed t h ei r OIC “ s ol el y

t o cau s e d el ay .”- 3 2 -

[* 3 2 ] th ey

d i d n ’ tev en m ak e i ti n to SO Ru sh ’ s n ot i ces o f d et erm i n at i o n o r cas e
reco rd s , b ecau se s h e s i m

p l y d i dn o ti nd ep en d en t l y

rev iew t h e M as o n s ’ o ffer o r t h ei r fi n an ci al s itu at i o n. If SO Ru s h fel tthats h e was l i m i t edb y a l acko f i n fo rm at i o n o r o u td at edi n fo rm at i o n , al l s h e h adt o d o was as k fo r i t . See s ec. 3 0 1 .6 3 3 0 -1 (e), Pro ced . & Ad m i n . Reg s . (“ Tax p ay ers wi l l b e ex p ect edt o p ro v i d e al l rel ev an ti n fo rm at i o n r eq u es t ed b y Ap p eal s ” (em

p h as is ad d ed )); Uri b e, at* 8
- * 9 ; Ll o y dv . Co m

m i s s i o n er, T.C. M em o . 2 0 0 8 -1 5 (Ap p eal s o ffi cer d i dn o tab u s e h i s d i s cret i o n b y

req u iri n g t ax p ay ers t o s ub m i tn ew OIC i n s t ead o f rei n s t at i n g
o l d er o n e). Bu ts h e d i d n o t d o th i s ei t h er. W e can ’ tg u aran t ee t h att ax p ay ers l ik e t h e M as on s wi ll h av e t hei r o ffer accep t edo r t h ei r t ax l i ab i l i t i es co m p ro m i s ed , b u t we can en s ure t h atth ey g eta fai r
s h ak e an dth atth e d eci s i o n s m ad e b y the Co m m i s s i o n er’ s em

p l o y ees aren ’ t

“ g ro u n d edi n an erro r o f l aw.” W e t h erefo re co n cl u d e t h atSO Ru s h ab u s edh er d i s cret i o n b y

s u st ai ni n g th e p ro p o s edco l l ect i o n act i o n wi t h o u tfi rs t i n dep en d en t l y
rev i ewi n g th e M as o n s ’ o ffer.
An ap p ro p ri at e o rd er wi ll b e i s s u ed
.