Opinion ID: 2975680
Heading Depth: 3
Heading Rank: 2

Heading: The Living Care Kirkersville Proceedings

Text: The Living Care Kirkersville case arises from its failure to pay quarterly employment taxes for March 2000 through March 2001 and its annual unemployment tax liabilities for the year 2000. On August 11, 2003, the IRS sent Living Care Kirkersville a final notice of federal tax lien filing, which notice also advised of the right to a CDP hearing. Living Care Kirkersville timely submitted a CDP hearing request on September 12, 2003, identifying its grounds for challenging the tax lien filing against it. A hearing officer with the Office of Appeals conducted the CDP hearing and subsequently issued a Summary and Recommendation to continue the subject federal tax lien filing. (Kirkersville J.A. 35-38). This Summary and Recommendation was attached to a March 18, 2004, Notice of Determination letter sent by the IRS to Living Care Kirkersville informing it that the notice of federal tax lien was being upheld with respect to its tax liability. (Kirkersville J.A. 33-34). Living Care Kirkersville’s attachment of purported relevant considerations is substantially similar to that attached to the hearing requests in Living Care Utica III/IV. (Compare Kirkersville J.A. 40-45 with Utica J.A. 272-75). The points presented by Living Care Kirkersville can be summarized as inability to meet tax obligations because of overregulation and inadequate funding by the government; existence of senior lienholders, resulting in no leftover revenue for this tax lien; inability to obtain refinancing and consequent closure of the nursing home by continued imposition of the lien; and a proposed offer in compromise, sale, or refinancing as an alternative to the collection action. -8- The Appeals Officer’s Summary and Recommendation rejected each of Living Care Kirkersville’s challenges. As to the proposed collection alternative of an offer in compromise, Living Care Kirkersville had not evidenced a definite intention to submit an offer in compromise and the related financial information. As to the alternative of refinancing, the summary reflected Living Care Kirkersville had not evidenced how refinancing would result in funds to pay the IRS. The Appeals Officer also concluded that withdrawing the lien to facilitate refinancing was not warranted, because Living Care Kirkersville had failed to provide a specific refinancing arrangement rather than a general assertion, and because it could apply for a certification of subordination of the tax lien and had not done so. Nor did the Appeals Officer agree that withdrawing or removing the lien was warranted due to the existence of senior lienholders that rendered the tax lien valueless, since the presence of such senior lienholders, if documented, actually supported the conclusion that the notice of lien was necessary to protect the government’s interest pending payment of the taxes. And while Living Care Kirkersville advocated that its status as operator of a nursing home should afford it special consideration under the tax laws, the Appeals Officer concluded no lawful authority for affording special rights to such a taxpayer had been identified. Finally, the Appeals Officer noted that Living Care Kirkersville had not offered an alternative that would provide for the efficient collection of the outstanding taxes and also be less intrusive on it. Moreover, withdrawing the notice of federal tax lien would not serve to balance efficient tax collection against intrusiveness since there were other prior notices that would remain, and removing all of these notices would place the Government in a precarious position vis-à-vis other creditors and effectuating collection. -9- On April 16, 2004, Living Care Kirkersville filed a complaint with the district court, challenging this IRS Appeals Office determination. On November 8, 2004, the Government filed a Motion and Supporting Memorandum of Law for Summary Affirmance of the IRS Administrative Decision. In an Opinion and Order dated August 29, 2005, the district court found in favor of the IRS. (Kirkersville J.A. 74-80). The district court concluded that Living Care Kirkersville is in privity with Living Care Utica and that the issues raised by Living Care Kirkersville were the same as those raised by Living Care Utica in Living Care Alternatives of Utica. In the alternative, the district court found that even if the doctrine of collateral estoppel did not apply, the Appeals Officer’s decision to uphold the IRS collection action was not an abuse of discretion because removal of the lien would place the Government in a precarious situation with respect to competing creditors. Appeal 05-4418 followed.