tcmemo_2011_140 united_states tax_court mark l rosenbloom petitioner v commissioner of internal revenue respondent docket no 8055-05l filed date jonathan p decatorsmith1 and alan f segal for petitioner mark j miller and james e schacht for respondent memorandum findings_of_fact and opinion holmes judge in the summer of an irs agent visited the office of a down-on-his-luck chicago lawyer named mark rosenbloom rosenbloom knew he owed back taxes--he had signed the court acknowledges the outstanding pro bono effort of mr decatorsmith and the chicago-kent college of law low-income taxpayer clinic in this case installment agreements with the irs in and but his severe personal problems had caused him to delay sending in updated financial information and to miss a couple months’ payments the agent squeezed hard threatening to shut down rosenbloom’s office and put him out of business unless he consented to waive the statute_of_limitations until for overdue taxes dating back to a month later the agent returned to try to seize rosenbloom’s office furniture and a few weeks after that tried to seal the elevator to rosenbloom’s office in congress put an end to such aggressive collection tactics the commissioner announced that he would no longer rely on long-term waivers of the statute_of_limitations obtained some might say coerced while an installment_agreement was in effect he also promised to cancel any such waivers that he had already obtained and refund_or_credit any payments that he had received the question in this case is whether rosenbloom had an installment_agreement in place when he signed that waiver of the statute_of_limitations back in rosenbloom and the commissioner agree that the irs had sent him a notice of default before getting the waiver the commissioner argues that this means there was no longer a valid installment_agreement see the internal_revenue_service restructuring and reform act of rra publaw_105_206 secs stat rosenbloom argues that the notice of default wasn’t by itself enough to terminate his installment_agreement both parties agree that if an installment_agreement was in effect when the commissioner persuaded rosenbloom to sign the waiver the commissioner may no longer collect findings_of_fact rosenbloom practiced law in chicago for more than two decades and recognizes now that he was an alcoholic for most of that time especially after when his stepson died from a long and painful illness he nevertheless managed for a while to make a good living from his practice where he did a little of everything from real-estate closings to criminal defense to tax by the late ’90s he had even become a bit of a rainmaker but as his drinking grew worse he started to rely more heavily on several of his employees to do most of the work leaning on them he was able to try and partly win a case in our court as late as throughout much of this time rosenbloom was haunted by tax trouble many many years ago he had incurred an enormous tax debt--dollar_figure in unpaid income_tax interest and penalties from plus two quarters of trust-fund-recovery penaltie sec_3 taxes that employers withhold from their employees’ wages are known as trust_fund_taxes because they are held by the employer essentially in trust for the united_states under sec_7501 436_us_238 the continued from which he has never been able to pay rosenbloom signed two installment agreements to deal with this problem the first in which covered tax debts from and and the second in which increased his monthly payment and added his debts for tax years and it’s the second agreement that concerns us here it called on him to pay dollar_figure per month to shave down his debt one of the important terms of these agreements was rosenbloom’s promise to provide updated financial information whenever the irs asked for it rosenbloom knew he had a good deal and the irs’s agreement to accept payments so small relative to the total_tax debt would get even better for him over time as the statute_of_limitations for collecting each year’s debt expired rosenbloom neverthele sec_3 continued commissioner may collect unpaid employment_taxes from a responsible_person within the company ie someone who was required to pay over the tax the money that’s assessed and collected this way is called trust-fund-recovery penalties sec_6672 unless otherwise indicated references to sections in this opinion are to the internal_revenue_code and all references to rules are to the tax court’s rules_of_practice and procedure rosenbloom testified that he vastly overreported his income some years--because he was in a fog before he became sober far too much time has passed to challenge any of these liabilities of course but this part of his story does seem to be borne out account transcripts for some of the years show exceptionally high adjusted_gross_income nearly equal to taxable_income an unusual result for high-income taxpayers who typically have personal deductions and exemptions in excess of those rosenbloom seems to have claimed where the assessment of federal_income_tax is made within continued acquiesced when an agent visited him in and got him to extend until the end of the statute_of_limitations for tax years and no one disputes that the installment_agreement covered these years and was in effect when rosenbloom signed this waiver the commissioner long ago revoked this waiver and stopped trying to collect these taxes this case focuses on it was a terrible time for rosenbloom drinking led to his divorce that year and he credibly testified that a brief reconciliation with his wife ended when his tax troubles erupted with the appearance in his life of revenue_officer h as we’ll call him since he was not present at trial in july but the trend had been downhill for some time he was losing clients referrals were drying up and he had been hit by several malpractice cases to add to his woes he received a letter do or defaulted installment continued the prescribed time under the code ie sec_6501 the irs in general has ten years to collect the assessed tax by levy sec_6502 see also sec_6503 tolling of the statute_of_limitations under sec_6501 and sec_6502 134_tc_1 n discussing the change to the statute_of_limitations under sec_6502 the government however cannot levy on property for a debt covered by an installment_agreement that is still in effect e g sec_301_6159-1 proced admin regs fed reg as in effect date sec_6331 because the statute_of_limitations continues to run while a taxpayer is making payments under the agreement once the time for levying has run out for a particular year he is off the hook for that year’s tax_liability agreement - notice_of_intent_to_levy dated may the letter threatened to cancel the installment_agreement if he didn’t provide updated financial information within days rosenbloom panicked misconstrued the letter more as a notice that his giant tax debt was crashing back on him than a warning that it might if he didn’t update his financial information and stopped making his installment payments about a week after rosenbloom got the letter he was referred to an attorney alan segal segal called revenue_officer h and asked for a very brief extension to get him the updated financial information segal said he needed more time because he had three trials on our court’s trial calendar in chicago for the week that the information was due review officer h extended the deadline to provide the updated financial information and it was sent to him on date segal’s we found segal to be an entirely credible witness but checked our records on this minor point and found they corroborated his testimony see drnovsek v commissioner docket no hearing held date stipulated decision entered date karnatz v commissioner docket nos and set for trial date stipulated decision entered date weiner v commissioner docket no set for trial date stipulated decision entered date the commissioner objected to segal’s testimony on which we largely base this finding as hearsay on reflection we regard it as evidence of a verbal act or proof of an act of independent legal significance--here the agreement between h and segal to extend the 30-day period to provide updated financial information see mccormick on evidence sec_249 6th ed continued june letter obliquely refers to the oral agreement to extend the 30-day deadline e nclosed as promised are the financial information forms emphasis added segal also credibly testified that he always followed up on his promises to revenue officers to comply with deadlines because when you’re dealing with a revenue_officer the only thing you have primarily is your credibility it’s worth noting that other than objecting to segal’s testimony the commissioner provided no evidence not even a cross-examination of segal to show that h did not extend the 30-day deadline having found segal credible we find that h did extend the deadline for rosenbloom to provide updated financial information rosenbloom by then had missed a couple of his dollar_figure monthly payments officer h did not send another letter but instead continued supp 199_f3d_947 7th cir treating performative utterances illustrated by promise offer or demand as nonhearsay because they do not make any truth claims 825_f2d_124 7th cir testimony of investors as to statements by salesmen admissible to show existence of fraudulent scheme the commissioner often extends nonstatutory deadlines so there is nothing extraordinary about segal’s explanation see eg dinino v commissioner tcmemo_2009_284 policy of office of appeals to consider financial information submitted past the deadline and up until a notice_of_determination is issued judge v commissioner tcmemo_2009_135 settlement officer abused his discretion in denying taxpayer a brief extension to correct his financial information mills v commissioner tcmemo_2004_164 revenue_officer grants deadline extension to submit financial information for an offer_in_compromise showed up at rosenbloom’s office on date by this time h had segal’s name on file as being rosenbloom’s attorney and so should have contacted segal instead see sec_601_506 statement of procedural rules rosenbloom though inebriated at the time still had enough wit to ask to speak to his lawyer h however told him that the irs would close him down and put him out of business if he didn’t extend the statute rosenbloom called segal we believe segal’s testimony that rosenbloom’s words were slurred we also believe segal when he said that he told rosenbloom to just sign the waiver that h presented this second waiver--giving the irs until date to collect rosenbloom’s and tax debts--is the waiver on which this case turnsdollar_figure rosenbloom’s signature on the waiver form isn’t the end of this part of the story sometime in date rosenbloom again called segal in a panic because h had again visited his office this time to try to seize the furniture he also levied on rosenbloom’s bank account that month segal took rosenbloom in the rra congress added sec_6304 to the code prohibiting the irs from communicating directly with a taxpayer known to be represented by an attorney see publaw_105_206 sec a 112_stat_768 as a result of rra sec a 112_stat_764 waivers executed after are invalid if not agreed to at the time the installment_agreement is entered into see sec_6502 but because rosenbloom’s waiver was given in that limitation does not apply see joy v commissioner tcmemo_2008_197 to meet with h in late august or early september to try to work things out they gave him a check for the four missed installment payments and one for september which wasn’t yet due rosenbloom resumed his payments for october november and december of segal also sent in a check for dollar_figure--150 percent of the supposed forced-sale value of the office furniture which he noted was generous given the state of the furniture to forestall a levy that would have shut down what was left of rosenbloom’s practice h nevertheless continued to seek a writ of entry to seize the furniture and on the morning of date rosenbloom got a call from his office building’s landlord telling him that someone from the irs was trying to get permission to seal off his elevator believing that h seemed more interested in retribution than collection the office furniture he was trying to seize had already been preredeemed segal filed an application_for taxpayer assistance on the appropriately named form with the irs problem resolution office in chicago this form requires a description of the hardship that will occur if the office doesn’t intervene segal described rosenbloom’s history of alcoholism his recent breakdown and entry into an eight-week outpatient program and even his trichotillomania a compulsive disorder whose victims pull out their hair segal appealed to the commissioner’s reason rosenbloom had already more than made up the missed payments as well as tendered a check for more than the forced-sale value of the office furniture rosenbloom was trying to recover from alcoholism segal wrote and trying simultaneously to settle several malpractice suits if the commissioner closed him down the debt would likely become completely uncollectible the irs problem resolution office intervened and stopped the seizure but rosenbloom was getting worse in date he was hospitalized at the mayo clinic which recommended that he detox at the hazelden addiction treatment center segal oversaw rosenbloom’s purchase of money orders for the november and december installment payments but then things completely fell apart rosenbloom ended up checking into more than six rehabilitation centers in the next few years while in treatment rosenbloom abandoned his law practice and stopped making installment payments the commissioner moved the tax debts into currently-not-collectible status cases like rosenbloom’s led to the internal_revenue_service restructuring and reform act of rra publaw_105_206 112_stat_685 which created the system of pre-levy hearing and judicial review that we have today but by then many abusive irs policies and procedures had come to light the commissioner had learned about a particularly bad one if there was an installment_agreement in which the tax_liability would not be paid off before the expiration of the statute_of_limitations some irs service centers would terminate or default the installment_agreement or threaten to do so if the taxpayer didn’t agree to extend the statutedollar_figure this was a problem--no code section regulation or internal_revenue_manual irm provision allows the irs to terminate an installment_agreement and then presumably proceed with a levy solely because the taxpayer refused to extend the collection statute see generally sec_6159 therefore the irs was exposed to potential civil liability as well as negative press see sec_7433 service_center advice date discussing the problem statute-of-limitations waivers that the irs procured this way were also possibly invalid as a product of duress or otherwise unenforceable on equitable groundsdollar_figure it came as no surprise then when on date the irs publicly apologized and said that it had implemented a recovery in the rra sec_3401 and 112_stat_750 congress amended sec_6159 sec_6331 sec_6502 sec_7443 etc to make sure that the irs stopped these offensive practices as well as some others see eg 126_f3d_433 3d cir equitable_estoppel overcomes waiver of statute revg tcmemo_1996_222 124_tc_223 shireman v commissioner tcmemo_2004_155 waiver signed under duress invalid but threats to take legally authorized action if taxpayer doesn’t sign generally not duress robertson v commissioner tcmemo_1973_205 taxpayer’s consent to extend the statute under duress program to provide relief to taxpayers who were harmed by the improper terminations of installment agreements or improper requests for a waiver of the statute_of_limitations see irs news_release ir-98-44 date this is what the parties call the collection statute expiration date csed recovery project they claim that the commissioner established the project to correct irs records identify unreasonably extended statutes of limitation and either refund_or_credit payments made the parties also claim that the commissioner implemented a new policy where he would no longer rely on waivers solicited from taxpayers who had an installment_agreement in placedollar_figure the parties fail to cite to any source documenting the existence of such a policy as they describe it and even though we looked long and hard we couldn’t find one either enforcing policy rather than law is also problematic--some courts have ruled that policies contained in the irm and the like do not have the force of law and aren’t binding on the commissioner e g 447_f3d_706 9th cir affg tcmemo_2004_13 126_f3d_915 7th cir but see sec_6330 the appeals officer shall at the hearing obtain verification from the secretary that the requirements of any applicable law or administrative procedure have been met the commissioner made our job a bit easier by initially taking the position that although the code did not foreclose his actions at the time if the consent was obtained by a threatened termination of an installment_agreement he would agree that the statute has expired in this case this position was not refuted at trial or on brief instead the parties chose to focus on the validity of the installment_agreement the commissioner’s position is that the decision was not an abuse_of_discretion because the policy did not apply the installment_agreement was terminated before the waiver was signed the taxpayer_advocate_service successor to the irs problem resolution office as part of this csed project got the job of figuring out which waivers the irs had unreasonably obtained the taxpayer_advocate sent rosenbloom three letters the first sent in date told rosenbloom that the commissioner may have made a mistake in handling his installment_agreement it stated t he law permits the irs to ask for an extension of the collection time limit before not after the installment_plan begins our records indicate that we may have improperly asked you to extend the legal time limit for collection of the taxes covered by this installment_agreement it even went on to tell him that he might be entitled to a refund of amounts improperly collected a couple of months later the commissioner fully abated rosenbloom’s taxes for and ie years not at issue in this case dollar_figure some of the installment payments that the irs credited to the earlier years’ tax_liabilities were credited instead to the second letter sent in date told rosenbloom that the irs needed more time to research his case it seemed to acknowledge that the installment_agreement was still in effect telling him that if you are making monthly payments to the rosenbloom’s first installment_agreement covered and his second covered the tax debts that the irs abated did not match the years covered by either internal_revenue_service irs under your installment_agreement you should continue the last letter dated date told rosenbloom that w e have determined that we did make a mistake according to this letter the commissioner admitted that the irs should not have asked rosenbloom to extend the statute_of_limitations for collection of the taxes covered by this installment_agreement he concluded that the time limit for collecting the taxes you were paying under your installment_agreement has expired you are no longer required to make payments for these taxes and the irs will take no further action to collect them you may consider this matter closed emphasis is in the original in contrast to the first letter nothing happened administratively--either a refund or credit-- after this last letter the ambiguity in these letters is obvious rosenbloom had signed two waivers covering two different sets of tax years the letters from the taxpayer_advocate were imprecise in describing which waiver--and thus which tax debts--they were referring to the commissioner argues that they refer only to rosenbloom’s waiver of the statute for and rosenbloom argues that the letters referred to a single installment_agreement and draw no distinction between the tax debts covered by each waiver he does admit to being confused and wrote the service asking which years were involved he never heard back and segal contacted the philadelphia service_center which told him that their review showed only the year was still open though neither rosenbloom nor segal received anything in writing to confirm this more time passed when rosenbloom had recovered enough to get back to work the irs noticed and sent him an unexpected letter in date--a final notice_of_intent_to_levy to collect his still unpaid and taxes plus a couple later years that became moot or that rosenbloom does not challenge rosenbloom timely asked for a collection-due-process cdp hearing he claimed that the assessments are barred by the expiration of the statute_of_limitations under the commissioner’s own csed policy revenue_officer h died in and the commissioner has either lost or destroyed the irs collection files the problem resolution files and the taxpayer_advocate files for this case after settlement officer ursula wastian pondered the resulting mess she was in charge of the cdp hearing the irs appeals_office issued a notice_of_determination rejecting rosenbloom’s challenge and sustaining the proposed levy officer wastian concluded without explanation that the statute had expired only for tax years and but not for and because the letter from the taxpayer_advocate regarding the collection statutes related to earlier assessments and an agreement taken in the year she looked into irs records and concluded that the signed waiver for the extension for and did not coincide with the dates installment agreements were entered into with the service the notice_of_determination upheld the levy for the following unpaid tax_liabilities year liability dollar_figure dollar_figure dollar_figure dollar_figure total dollar_figure rosenbloom though currently a resident of texas where he works as a paralegal and investigator for a small law firm was a resident of illinois when he petitioned our court we tried the case in chicago opinion sec_6502 generally gives the irs ten years from the date of assessment to collect unpaid taxes but there are the notice_of_determination also included a trust-fund- recovery penalty for not included in rosenbloom’s petition to this court and liabilities for and on brief the commissioner recognized that the liability had been satisfied before trial and rosenbloom conceded the commissioner’s determination for exceptions and one is for taxpayers who voluntarily consent to extend the statute sec_6502 the csed recovery project rested on the irs leadership’s conclusion that some revenue officers were systematically engaging in unfair collection and in some districts these practices were routine entrenched and condoned by management in this case the commissioner is arguing that the csed recovery project’s policy doesn’t apply to rosenbloom’s second installment_agreement because that agreement was lawfully terminated before he signed the date waiver sec_6159 states that the commissioner may terminate an agreement if the taxpayer fails to provide financial information as requested the secretary may alter modify or terminate an agreement entered into by the secretary under subsection a in the case of the failure of the taxpayer-- a to pay any installment at the time such installment_payment is due under such agreement b to pay any other tax_liability at the time such liability is due or c to provide a financial condition update as requested by the secretary sec_6159 however requires the commissioner to send a notice and explanation days before he terminates an agreement notice requirements --the secretary may not take any_action under paragraph or unless-- a a notice of such action is provided to the taxpayer not later than the day days before the date of such action and b such notice includes an explanation why the secretary intends to take such action the preceding sentence shall not apply in any case in which the secretary believes that collection of any_tax to which an agreement under this section relates is in jeopardy none of this made it into the notice_of_determination instead officer wastian noted that she secured rosenbloom’s case history which according to her began in date she acknowledged that the relevant facts all occurred before then but concluded that t here is no way to validate the statements made by the now-deceased field representative she also undertook to examine the relevant tax transcripts but found nothing in them to upset her decision to sustain the notice_of_levy we review her decision for abuse_of_discretion since rosenbloom isn’t challenging his underlying tax_liabilities see 114_tc_604 114_tc_176 a decisionmaker abuses his discretion when he makes an error of law or rests his determination on a clearly erroneous finding of fact or ‘applies the correct law to facts which are not clearly erroneous but rules in an irrational manner ’ 249_f3d_1121 9th cir quoting 85_f3d_1400 9th cir see also 496_us_384 same and both parties agree that if the installment_agreement was still in place when rosenbloom signed the second waiver in the commissioner’s csed policy dictates a conclusion that the statute has expired for the years at issue as to the scope of our review we held in 123_tc_85 revd 439_f3d_455 8th cir that we are not limited to the administrative record in reviewing cdp determinations the courts of appeals for the first eighth and ninth circuits disagree and have told us to apply the record rule when we try cases within their jurisdiction but this case would go to the seventh circuit our court’s holding in robinette is thus what we follow here and we will consider evidence not produced at the cdp hearing if it is relevant to issues raised during the hearing and is admissible under the federal rules of evidence see kovacevich v commissioner tcmemo_2009_160 see 568_f3d_710 9th cir affg tcmemo_2006_166 affg and vacating on another ground decisions in related cases 469_f3d_27 1st cir affg 125_tc_301 439_f3d_455 8th cir revg 123_tc_85 the commissioner however can object to evidence that a taxpayer introduces for the first time in tax_court on the ground that evidence not introduced at the cdp hearing is irrelevant to the question of whether that officer abused her discretion 125_tc_301 affd 469_f3d_27 1st cir but in this case the commissioner didn’t make that type of relevancy objection we therefore move on--an evidentiary objection unmade at trial is waiveddollar_figure fed r evid a kovacevich tcmemo_2009_160 the settlement officer based her determination at least in part by concluding that rosenbloom had only one installment_agreement the one signed in the taxpayer had entered into a payment agreement in the agreement was for taxes that were assessed due and owing at that time the settlement officer conducted research and determined the collection statutes had expired for the years and she discovered that full abatements of all taxes due for these years was made in the sum of dollar_figure we also note that neither party raised the chenery doctrine as an issue for us to consider chenery in the cdp context would say that we can’t uphold the notice_of_determination on grounds other than those actually relied upon by the appeals officer in making her determination see 318_us_80 628_f3d_346 7th cir agency has the responsibility to articulate its reasoning but we haven’t yet addressed the applicability of chenery in cdp cases and we are not going to start in a case where neither party made the argument the court notes that settlement officers like judges sometimes refer to themselves in the third person the letter regarding the collection statutes related to earlier assessments and an agreement taken in the year not the tax periods and assessments listed on the notice_of_intent_to_levy this is an odd conclusion as segal pointed out to her in the commissioner had assessed rosenbloom’s giant tax debts for and only in date and his debt for only in date accumulating such debts would have defaulted the installment_agreement which required rosenbloom to stay current on his taxesdollar_figure this should have set off the settlement officer’s internal alarm that she might be overlooking or misinterpreting relevant evidence because rosenbloom responded to wastian’s assertion that the years at issue weren’t covered by an installment_agreement by explaining that he had signed two installment agreements the neither the irs nor rosenbloom still had a copy of the installment_agreement but under sec_6159 a failure to pay taxes on time would be considered a default of the installment_agreement rosenbloom’s agreement expressly states conditions of this agreement all federal tax returns and federal taxes that become due while this agreement is in effect must be filed and paid on time if the conditions of this agreement are not met it will be terminated and the entire tax_liability may be collected by levy commissioner says that wastian didn’t look at the installment_agreement simply because she didn’t have it--it was part of the files that the commissioner lost and although she asked rosenbloom for a copy of the agreement he didn’t give her one rosenbloom and segal finally found a copy of the missing installment_agreement after the cdp hearing and it was stipulated into evidence at trial the agreement is on an irs form and has a box labeled tax periods the periods listed in the box include all the tax years from through the body of the agreement contains rosenbloom’s promise to pay dollar_figure each month beginning on date it is clear from this document that there was only one installment_agreement in effect in and that it covered all the tax years covered by both waivers that rosenbloom had signed we have a definite and firm conviction that on this key point the settlement officer clearly erred that might leave us with some tricky questions of whether it is legitimate for us to consider evidence outside the administrative record but we don’t think these questions need answering here the settlement officer knew or should have been able to tell that the payments that rosenbloom was making under some installment_agreement were dollar_figure each month even the surviving irs records--accounts of rosenbloom’s tax debts organized by year--show that the irs credited the dollar_figure to several different tax years mostly to but eighteen months’ worth to four months’ worth to and ten months’ worth to the record also shows that rosenbloom had been making monthly payments of dollar_figure for years--right up to date when they begin to show the start of dollar_figure payments there really is only one reasonable conclusion--whatever installment_agreement rosenbloom had been under since was superseded by the agreement which covered all the years for which rosenbloom owed back taxes as of the date he signed it the taxpayer advocate’s date letter admitted that the commissioner made a mistake by referring to only one installment_agreement not two but the irs’s abatement of rosenbloom’s tax debt for only some of the years covered by the installment_agreement raises a serious question is there some reason to cancel the waivers of the statute_of_limitations for and and not the waivers for the years at issue in this case the commissioner argues that there is--that the irs must have terminated rosenbloom’s installment_agreement between the time that he signed the first waiver in and the time that he signed the second waiver in date why else he argues would even an aggressive revenue_officer levy on a bank account or try to seize used office furniture when he must have known that that would be contrary to the code’s prohibition on levies while an installment_agreement is in effect see sec_301_6159-1 proced admin regs fed reg date the solution to this puzzle lies in the tax transcripts that the parties produced at trial these were the same tax transcripts that the settlement officer had access to before making her determination these transcripts are troves of information but they are also almost completely incomprehensible to one not skilled at interpreting the various numerical codes they use see roberts v commissioner tcmemo_2004_100 admitting evidence that helped identify entries in a transcript whether or not our scope of review is limited to the administrative record taking testimony to explain that record is alloweddollar_figure and after careful review we conclude that the transcripts show no termination of the installment agreementdollar_figure at trial even the commissioner’s expert witness conceded that code defaulted installment_agreement is e g 470_f3d_71 2d cir courts may consider extrarecord evidence to illuminate agency’s record 934_f2d_1127 10th cir discussing exceptions to record rule 572_f2d_1286 9th cir courts can go beyond the administrative record to explain technical terms or complex subject matter because we find the installment_agreement was still in effect at the time rosenbloom signed the waivers we also find that h ’s abusive tactics also constituted a clear threat to the continuance of the installment_agreement when rosenbloom gave the waivers nowhere to be found in them the code statu sec_26 dated date is an entry for all the years covered by both sets of waivers the commissioner’s expert wrote in his report that this indicates that the installment_agreement was no longer in effect but at trial he conceded that in this case code meant that the case had been transferred to the local chicago office by itself this would be an ambiguous bit of information--simply evidence that control_over the installment_agreement had passed into local hands but evidence of neither its continuation nor its terminationdollar_figure his concession on this point ties into a distinction made in the irm from that era that distinguishes between installment agreements monitored by the irs computer system and those monitored manually administration irm cch pt sec pincite date according to the irm only taxpayers with manually monitored agreements would get the letter do that set rosenbloom off in date id the entries record rosenbloom’s continuing to make dollar_figure monthly payments before and after he signed the date waiver the irs transcript of rosenbloom’s account for those years confirm this if the expert had stood by his report he’d have been in the odd position of saying that something happened to default the installment_agreement between date when rosenbloom signed the first set of waivers and may of the same year yet the records show no correspondence and no interruption of payments from rosenbloom in that short time and would make no sense if code meant there was no installment_agreement in place the additional fact that there is no code on any transcript for any year is consistent with rosenbloom’s story--that he received a notice of default which stated that his installment_agreement might be terminated not that it was terminated we therefore conclude that the settlement officer clearly erred in her implicit conclusion that there was no installment_agreement in effect when rosenbloom signed the second set of waivers the commissioner next argues that the taxpayer advocate’s letter was sent in error or alternatively that it refers to the earlier years rather than the later years or the ones at issue in this case he points to several clues first he says the letter suggests that rosenbloom was still making payments on the installment_agreement when he hadn’t made any payments for nine months it does not it is instead phrased in the conditional-- if you are making monthly payments second he says the letter states that the time limits for collecting the taxes covered by the installment_agreement had expired but even without considering the waivers to extend the statute he argues the statute hadn’t expired for and because the irs hadn’t actually assessed the tax for those years until late or date we acknowledge this point but do note that the irs letters appear to be forms and do not think the taxpayer_advocate put much effort into customizing them to rosenbloom’s situation correspondence in a case this complicated is likely to have some infelicities of phrase but they can’t obscure the fact that the irs’s own transcripts show that rosenbloom and his lawyer both reacted in that summer as if the installment_agreement were tottering on the edge of default not that it had already toppled over the commissioner’s final argument relies on the flush language of sec_6159 --the language that authorizes the commissioner to terminate an agreement without notice if he believes that tax collection is in jeopardy he argues that this must have been what triggered the bank levy in date and is proof that the installment_agreement was terminated by that time the actions referred to in this flush language however require notice to the taxpayer before the commissioner terminates an installment_agreement the argument that the bank levy is evidence of a jeopardy termination might be convincing if the levy had occurred in june or july but segal had sent rosenbloom’s updated financial information to h well before the levy that the levy occurred close to two months after rosenbloom sent the missing information to the irs isn’t consistent with a jeopardy termination we find instead that the bank levy is better explained as another example of the heavy-handed manner in which that particular revenue_officer was pursuing rosenbloom we conclude that the bank levy in august was not evidence that the installment_agreement had been terminated we therefore conclude that the determination to sustain the levy was an abuse_of_discretion for the years included in the set of waivers that rosenbloom signed in an appropriate decision will be entered


internal_revenue_service department of the treasury number release date index number re washington dc person to contact telephone number refer reply to cc psi 4-plr-152873-01 date date legend year date date date date husband wife trust trust child child law firm state dear this is in response to your letter dated date requesting an extension of time under sec_301_9100-3 of the procedure and administration regulations to make an allocation of the generation-skipping_transfer gst_exemption this letter responds to your request the facts and representations submitted are summarized as follows on date husband and wife the taxpayers established an irrevocable_trust trust for the benefit of child and child 1’s descendants and an irrevocable_trust trust for the benefit of child and child 2’s descendants the assets transferred to trust and trust collectively referred to as trusts constituted the separate_property of husband under state law a community_property_state wife consented to split the gift and signified so on her form_709 united_states gift and generation-skipping_transfer_tax return paragraph c of article iii of trusts provides that trusts are to terminate upon the date of termination that is twenty-one years after the death of the last survivor of taxpayers child and child 1’s lineal_descendants living on the date of the execution of trust or the death of the last survivor of taxpayers child and child 2’s lineal_descendants living on the plr-152873-01 date of the execution of trust thereupon the trustee is to distribute the remaining properties of trusts as follows to the lineal_descendants per stirpes of child who are living on the date of termination of trust or to the lineal_descendants per stirpes of child who are living on the date of termination of trust or if there are none to the lineal_descendants per stirpes of taxpayers who are living on the date of termination of trusts notwithstanding the foregoing if at the time of a distribution in accordance with this paragraph any such distributee is a beneficiary of a_trust created under trusts then the distribution which but for this sentence would have been made to such distributee instead is to be transferred into and become a part of that trust held for the benefit of such person paragraph aa of article vi of trusts provides that the trustee of trusts has the full power and authority to divide the property of any trust created by trust with an inclusion_ratio as defined in sec_2642 of neither one nor zero into two separate trusts representing two fractional shares one with an inclusion_ratio of one and the other with an inclusion_ratio of zero it is represented that the value of the transferred assets to trusts when added to prior taxable_gifts of taxpayers was less than the applicable gift and estate_tax exemption for taxpayers and also less than the gst_exemption of taxpayers for many years law firm advised taxpayers on estate_planning issues by signed affidavit a partner in law firm stated that the issue of the allocation of gst_exemption to the gift of the transferred assets to the trusts was discussed with taxpayers the partner further stated that law firm advised taxpayers that the gifts of the transferred assets would qualify for the gst_exemption if the appropriate allocation of exemption was made on a timely filed gift_tax_return taxpayers relied upon law firm to prepare and file timely gift_tax returns and to make timely gst allocations in year taxpayers provided law firm with an appraisal establishing the value of the transferred assets on date a partner in law firm received a letter from a representative of taxpayers inquiring as to the status of form sec_709 and notices of allocations on date law firm discovered that due to an oversight it had not filed the form sec_709 and notices of allocations for taxpayers law firm proceeded to contact accountants for taxpayers to determine the basis of the transferred assets and allocations of the appraised value to specific assets so that this information could be set forth correctly on the gift_tax returns of taxpayers law firm filed gift_tax returns for taxpayers with the service on date the gst allocations were not made at that time because of the uncertainty as to the proper procedure for making late allocations taxpayers have requested the following rulings an extension of time under sec_2642 of the internal_revenue_code and sec_301_9100-1 and sec_301_9100-3 of the procedure and administration regulations to make an allocations of taxpayers’ gst exemptions and that such allocations are to be made based on the value of the transferred assets to trusts as of date the date of the original transfers sec_2601 imposes a tax on every generation-skipping_transfer gst a gst is defined under sec_2611 as a taxable_distribution a taxable_termination and a direct_skip sec_2631 provides that for purposes of determining the inclusion_ratio every individual shall be allowed a gst_exemption of dollar_figure adjusted for inflation under sec_2631 which may be allocated by such individual or his executor to any property with respect to which such individual is the transferor sec_2631 provides that any allocation under sec_2631 once made shall be irrevocable plr-152873-01 sec_2632 provides that any allocation by an individual of his or her gst_exemption under sec_2631 may be made at any time on or before the date prescribed for filing the estate_tax_return for such individual’s estate determined with regard to extensions regardless of whether such a return is required to be filed sec_26_2632-1 of the estate_tax regulations provides that an allocation of gst_exemption to property transferred during the transferor’s lifetime other than in a direct_skip is made on form_709 sec_2642 provides that except as provided in sec_2642 if the allocation of the gst_exemption to any transfers of property is made on a gift_tax_return filed on or before the date prescribed by sec_6075 for such transfer or is deemed to be made under sec_2632 or c the value of such property for purposes of sec_2642 shall be its value as finally determined for purposes of chapter within the meaning of sec_2001 or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period its value at the time of the close of the estate_tax_inclusion_period and such allocation shall be effective on and after the date of such transfer or in the case of an allocation deemed to have been made at the close of an estate_tax_inclusion_period on and after the close of such estate_tax_inclusion_period sec_2642 provides generally that the secretary shall by regulation prescribe such circumstances and procedures under which extensions of time will be granted to make an allocation of gst_exemption described in sec_2642 or and an election under sec_2632 or c such regulations shall include procedures for requesting comparable relief with respect to transfers made before the date of the enactment of this paragraph sec_2642 provides that in determining whether to grant relief under this paragraph the secretary shall take into account all relevant circumstances including evidence of intent contained in the trust instrument or instrument of transfer and such other factors as the secretary deems relevant for purposes of determining whether to grant relief under this paragraph the time for making the allocation or election shall be treated as if not expressly prescribed by statute sec_301_9100-1 of the procedure and administration regulations provides that the commissioner has discretion to grant a reasonable extension of time under the rules set forth in sec_301_9100-2 and sec_301_9100-3 to make a regulatory election or a statutory election but no more than months except in the case of a taxpayer who is abroad under all subtitles of the internal_revenue_code except subtitles e g h and i sec_301_9100-3 provides the standards used to determine whether to grant an extension of time to make an election whose due_date is prescribed by a regulation and not expressly provided by statute under sec_301_9100-1 a regulatory election includes an election whose due_date is prescribed by a notice published in the internal_revenue_bulletin in accordance with sec_2642 the time for allocating the gst_exemption to lifetime transfers and transfers at death the time for electing out of the automatic allocation rules and the time for electing to treat any trust as a gst_trust are to be treated as if not expressly prescribed by statute accordingly taxpayers may seek an extension of time to make an allocation described in sec_2642 or b or an election described in sec_2632 or c under the provisions of sec_301_9100-3 requests for relief under sec_301_9100-3 will be granted when the taxpayer provides the evidence to establish to the satisfaction of the commissioner that the taxpayer acted plr-152873-01 reasonably and in good_faith and that granting relief will not prejudice the interests of the government sec_301_9100-3 provides that a taxpayer is deemed to have acted reasonably and in good_faith if the taxpayer reasonably relied on a qualified_tax professional including a tax professional employed by the taxpayer and the tax professional failed to make or advise the taxpayer to make the election based on the facts submitted and the representations made we conclude that the requirements of sec_301_9100-3 have been satisfied therefore taxpayers are granted an extension of time of days from the date of this letter to make allocations of taxpayers’ available gst exemptions with respect to taxpayers’ transfers to trusts the allocations will be effective as of date the date of the transfers to trusts and the gift_tax value of the transfers to trusts will be used in determining the amount of gst_exemption to be allocated to trusts the rulings contained in this letter are based upon information and representations submitted by the taxpayer and accompanied by a penalty of perjury statement executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination except as specifically ruled herein we express or imply no opinion on the federal tax consequences of the transaction under the cited provisions or under any other provisions of the code this rulings are directed only to the taxpayers requesting it sec_6110 provides that it may not be used or cited as precedent this election should be made on a supplemental form_709 united_states gift and generation-skipping_transfer_tax return and filed with the dallas service_center a copy of this letter should be attached to the supplemental form_709 a copy is enclosed for this purpose sincerely paul f kugler associate chief_counsel passthroughs and special industries enclosures cc copy for sec_6110 purposes copy of this letter


internal_revenue_service department of the treasury index number washington dc number release date person to contact telephone number refer reply to cc intl br1-plr-115064-97 date date a country b date c dear this is in response to your letter dated date requesting a ruling under sec_877 of the internal_revenue_code_of_1986 code that a’s surrender of his u s alien registration card green card will not have for one of its principal purposes the avoidance of u s taxes under subtitle a or subtitle b of the code additional information was submitted in a letter dated date the information submitted for consideration is substantially as set forth below the ruling contained in this letter is based upon information and representations submitted by the taxpayer and accompanied by penalty of perjury statements executed by an appropriate party while this office has not verified any of the material submitted in support of the request for rulings it is subject_to verification on examination a has been a citizen of country b since his birth in country b a is not a citizen of any other country he came to the united_states in to begin working in his profession his employment position has now ended and he has returned to country b accordingly he surrendered his green card expatriated on date c on the date of a’s expatriation his net_worth exceeded dollar_figure plr-115064-97 sec_877 generally provides that a citizen who loses u s citizenship or a u s long-term_resident who ceases to be taxed as a lawful permanent resident individuals who expatriate within the 10-year period immediately preceding the close of the taxable_year will be taxed on u s source income as modified by sec_877 for such taxable_year unless such loss did not have for one of its principal purposes the avoidance of u s taxes sec_2107 and sec_2501 provide special estate and gift_tax regimes respectively for individuals who expatriate with a principal purpose to avoid u s taxes a former citizen or former long term-resident will be treated as having expatriated with a principal purpose to avoid u s taxes for purposes of sec_877 sec_2107 and sec_2501 if the individual’s average income_tax_liability or the individual’s net_worth on the date of expatriation exceed certain thresholds see sec_877 sec_2107 and sec_2501 a former u s citizen whose net_worth or average tax_liability exceeds these thresholds however will not be presumed to have a principal purpose of tax_avoidance if that former citizen is described within certain statutory categories and submits a request for a ruling within one year of the date of loss of u s citizenship for the secretary’s determination as to whether such loss had for one of its principal purposes the avoidance of u s taxes see sec_877 sec_2107 and sec_2501 under notice_98_34 1998_27_irb_30 modifying notice_97_19 1997_1_cb_394 an eligible former long-term_resident will not be presumed to have a principal purpose of tax_avoidance if that former long-term_resident submits a complete and good_faith request for a ruling as to whether such loss had for one of its principal purposes the avoidance of u s taxes a is eligible to request a ruling pursuant to notice_98_34 because he became fully liable to tax in country b the country in which he was born notice_97_19 as modified by notice_98_34 requires that certain information be submitted with a request for a ruling that an individual’s expatriation did not have for one of its principal purposes the avoidance of u s taxes a has submitted all of the information required by notice_97_19 as modified by notice_98_34 accordingly based solely on the information submitted and the representations made it is held that a has made a complete and good_faith submission in accordance with sec_877 and notice_98_34 and therefore a will not be presumed to have expatriated with a principal purpose of tax_avoidance plr-115064-97 however because the information submitted does not clearly establish the existence or lack of a principal purpose to avoid taxes under subtitle a or b of the code no opinion is expressed as to whether a’s expatriation had for one of its principal purposes the avoidance of such taxes while this ruling rebuts the presumption of tax_avoidance under sec_877 it is not conclusive as to whether a subsequently may be found to have a principal purpose of tax_avoidance under sec_877 sec_2107 and sec_2501 based on all the facts and circumstances see sec_877 except as expressly provided herein no opinion is expressed or implied concerning the tax consequences of any aspect of any transaction or item discussed or referenced in this letter in addition no opinion is expressed as to a’s u s tax_liability for the taxable years prior to expatriation or his u s tax_liability for periods after his expatriation under sections of the code other than sec_877 sec_2107 and sec_2501 a copy of this letter must be attached to a’s u s income_tax return for the year in which a obtained the ruling whether or not a is otherwise required to file a return this ruling is directed only to the taxpayer requesting it sec_6110 of the code provides that it may not be used or cited as precedent in accordance with the power_of_attorney on file with this office a copy of this letter is being sent to a sincerely allen goldstein reviewer office of associate chief_counsel international


t c memo united_states tax_court gary m dashiell and frances j dashiell petitioners v commissioner of internal revenue respondent docket no 19118-02l filed date gary m dashiell and frances j dashiell pro sese shirley m francis for respondent memorandum opinion swift judge this matter is before us on respondent’s motion for summary_judgment concerning respondent’s tax_lien_filing against petitioners with regard to petitioners’ outstanding federal_income_tax liability unless otherwise indicated all section references are to the internal_revenue_code in effect for the year in issue background during and at the time their petition was filed petitioners resided in multnomah county oregon on date petitioners filed with respondent a document purporting to be their joint federal_income_tax return tax_return thereon petitioners indicated that gary’s occupation was that of a salesman and that frances’s fran occupation was that of a computer consultant a form_w-2 wage and tax statement that was attached to petitioners’ tax_return reflected that in gary received wages of dollar_figure from his employer and that during dollar_figure in federal income taxes was withheld from gary’s wages there was no form_w-2 attached to and no schedule c profit or loss from business or estimated_tax payments reflected on petitioners’ tax_return relating to wages or income earned in by fran in spite of the above dollar_figure in gary’s wages and in spite of any income fran earned from her computer consulting business on their tax_return petitioners reflected zero wages zero total income zero adjusted_gross_income zero taxable_income and zero tax_liability also on their tax_return petitioners claimed a refund for the total dollar_figure in federal income taxes that had been withheld from gary’s wages petitioners’ tax_return was signed by gary and fran under penalties of perjury after an audit on date respondent mailed to petitioners a notice_of_deficiency for in which respondent treated petitioners’ tax_return as a joint federal_income_tax return for petitioners and in which respondent determined that gary’s dollar_figure in wages constituted taxable_income to petitioners that fran received dollar_figure in nonemployee- fee income that gary and fran received dollar_figure in interest_income and dollar_figure in early retirement account distributions and that petitioners owed a tax_deficiency of dollar_figure in addition to the dollar_figure in federal income taxes withheld from gary’s wages also respondent determined against petitioners a dollar_figure accuracy- related penalty under sec_6662 relating to petitioners’ tax_return petitioners did not file a petition with this court with regard to respondent’s above deficiency and penalty determinations and on date the above deficiency and penalty plus statutory interest were assessed against petitioners one year later on date a notice_of_federal_tax_lien was filed by respondent against petitioners relating to the assessment against petitioners of the above tax_deficiency and penalty on date in response to respondent’s notice_of_federal_tax_lien filing petitioners filed with respondent a request for a hearing which was held on date with respondent’s appeals_office in portland oregon at the appeals_office hearing petitioners argued that they were not taxable on their income petitioners did not claim any error had occurred in respondent’s collection procedures nor did petitioners raise any collection alternatives on date respondent mailed to petitioners a notice_of_determination in which respondent determined that respondent’s tax_lien constituted a valid and appropriate collection activity against petitioners on date petitioners filed their petition herein in which petitioners claim only that they are not subject_to the income_tax petitioners make no claim of irregularity in respondent’s collection procedures quoting from petitioners’ pretrial memorandum petitioners argue that -- a careful examination of sec_1_861-8 as well as over years of predecessor statutes and regulations shows that taxable sources of income are limited to the following types of commerce certain foreign_income of u s citizens sec_1_861-8 the domestic income of foreigners sec_1_861-8 certain income related to federal possessions sec_1_861-8 at the court hearing on date fran argued with much vigor that under her reading and close study of the internal_revenue_code and regulations she and her husband are not taxable on their wages and income fran pleads with the court to provide her with a persuasive written explanation if any exists as to how she and her husband are liable for federal income taxes on her husband’s wages on her fee income on the early retirement account distributions and on the interest_income discussion we note initially that because petitioners received a notice_of_deficiency relating thereto petitioners’ federal_income_tax liability for is not before us in this action 114_tc_176 our jurisdiction herein is limited to a review of respondent’s discretion in filing a notice_of_federal_tax_lien to upgrade respondent’s creditor status vis-a-vis petitioners’ other creditors sec_6323 114_tc_604 on that narrow question as to respondent’s discretion we hold for respondent petitioners have offered no basis on which we could find any error in respondent’s discretionary determination to proceed with the filing of a notice_of_federal_tax_lien relating to the federal_income_tax deficiency penalty and interest that respondent assessed against petitioners with regard to the underlying tax_deficiency determined by respondent against petitioners even if such tax_deficiency were properly before us most courts would not dignify petitioners’ particular tax_protester argument by addressing it at length in a written court opinion for example in 114_tc_136 wherein the taxpayers made the same argument as the petitioners herein make about sec_61 and sec_861 we stated as follows petitioner’s arguments are reminiscent of tax-protester rhetoric that has been universally rejected by this and other courts we shall not painstakingly address petitioner’s assertions with somber reasoning and copious citation of precedent to do so might suggest that these arguments have some colorable merit 737_f2d_1417 5th cir in our discretion however herein we provide to petitioners an explanation as to why their wage and other income constitute taxable_income we do so only with the hope that petitioners will consider themselves personally addressed that they will consider themselves to have had their day in court and that petitioners will find such explanation persuasive and convincing and will come back into compliance with the federal_income_tax system generally under sec_1 u s citizens such as petitioners who reside in the united_states are required to pay tax on their worldwide income the particular source domestic or overseas of a u s citizen’s income has no effect on its treatment_as_income for federal_income_tax purposes and a u s citizen’s federal_income_tax liability is computed before any foreign tax_credits that might be available to the taxpayer without regard to the source of the taxpayer’s income sec_1 b income_tax regs with regard to the definition of income sec_61 expressly states that gross_income constitutes all income and expressly lists as one of the categories of income compensation_for services rendered by the taxpayer which certainly would include gary’s wages as a salesman and any fee income fran received for computer consulting sec_61 also sec_61 expressly lists interest which certainly would include interest_income petitioners received in sec_1_1-1 income_tax regs provides further as follows sec_1_1-1 income_tax on individuals -- a general_rule sec_1 of the code imposes an income_tax on the income of every individual who is a citizen or resident_of_the_united_states b citizens or residents of the united_states liable to tax in general all citizens of the united_states wherever resident are liable to the income taxes imposed by the code whether the income is received from sources within or without the united_states the supreme court has defined income under sec_61 broadly noting that congress intended to tax as income all gains except those specifically exempted 348_us_426 in 515_us_323 the supreme court noted that because of the broad and inclusive nature of sec_61 an income item must be included in income for federal_income_tax purposes unless it is explicitly excluded by another provision of the code petitioners point out that sec_61 uses the word source but that sec_61 does not go on to define the sources which produce income taxable by the united_states petitioners therefore conclude that in order to identify the sources of income that are taxable reference must be made to the income sourcing_rules of sections and to respondent’s regulations thereunder specifically sec_1 f income_tax regs petitioners misread sec_61 that section prefaces its use of the word source by the word whatever thereby making the particular source of a u s taxpayer’s income and the income sourcing_rules of sections irrelevant for purposes of the definition of income under sec_61 the precise language of sec_61 provides as follows except as otherwise provided in this subtitle gross_income means all income from whatever source derived including but not limited to emphasis supplied it is helpful to read carefully the specific language from the regulations under sec_861 on which petitioners rely the introductory language of sec_1_861-8 income_tax regs states as follows f miscellaneous matters-- operative sections the operative sections of the code which require the determination of taxable_income of the taxpayer from specific sources or activities and which give rise to statutory groupings to which this section is applicable include the sections described below emphasis added as we have explained sec_61 does not require the determination of petitioners’ taxable_income from specific sources rather sec_61 explicitly states that petitioners’ income from whatever source constitutes income under sec_61 therefore since sec_61 is not one of the operative sections which require specific sourcing of items of income sec_61 is not affected by sec_1_861-8 income_tax regs as the court of claims has explained the determination of where income is derived or sourced is generally of no moment to either united_states citizens or united_states corporations for such persons are subject_to tax under sec_1 and sec_11 respectively on their worldwide income 678_f2d_180 petitioners’ narrow reading of sec_61 under which the definition of income for purposes of sec_61 would be limited by the sec_861 source-of-income rules is without any legal support and is erroneous petitioners do not provide us with any case citations or other legal authority that reads sec_61 and the source-of-income rules of sections as they do again the source-of-income rules of sections and the regulations under those sections are not definitional provisions that attempt to define income rather those source- of-income rules simply distinguish between income that is earned domestically and income that is earned overseas for purposes primarily of calculating certain foreign tax_credits to which taxpayers who earn income from both domestic and overseas sources may be entitled courts which have addressed the precise argument petitioners make herein have rejected it as frivolous 119_tc_285 williams v commissioner supra corcoran v commissioner tcmemo_2002_18 affd 54_fedappx_254 9th cir madge v commissioner tcmemo_2000_370 affd 23_fedappx_604 8th cir aiello v commissioner tcmemo_1995_40 solomon v commissioner tcmemo_1993_509 affd without published opinion 42_f3d_391 7th cir we sustain respondent’s tax_lien_filing with regard to petitioners’ assessed and unpaid federal_income_tax deficiency accuracy-related_penalty and interest lastly we address respondent’s motion for an award of damages under sec_6673 on the basis of the court’s dialogue with petitioners which occurred at the hearing on respondent’s motion for summary_judgment we decline to impose any sec_6673 penalty on petitioners we strongly encourage petitioners to abandon all erroneous arguments such as those made herein and to bring their conduct into full compliance with the federal tax laws to reflect the foregoing an appropriate order and decision will be entered for respondent


id office uilc cca_2008080814393141 ----------------------------- number release date from --------------- sent friday august pm to -------------------- cc subject re review and comment on new appeals employment_tax non-worker classification sec_530 cases to answer your question yes tps can pay when they file the the payment doesn't have to be posted by the time they file sign in order to get interest-free treatment after the final regs are effective current regs says interests starts after due_date of return final regs effective are changed to say interest starts after file if don't pay by the time you filed