University of Cincinnati Law Review
Spring, 2005
Articles
*1021 COLLECTION DUE PROCESS: THE SCOPE AND NATURE OF JUDICIAL REVIEW
Danshera Cords [FNa1]
Copyright © 2005 University of Cincinnati; Danshera Cords
I. Introduction
The Internal Revenue Service Restructuring and Reform Act of 1998 (RRA 1998) resulted from a series of highly publicized and inflammatory congressional hearings conducted in 1997 and 1998 regarding Internal Revenue Service (IRS, or the Service) practices. [FN1] These hearings created public uproar and demands to reform the IRS. RRA 1998 made sweeping changes to the IRS, taxpayer rights, and tax administration, including tax collection. [FN2] RRA 1998 created a number of new or revised taxpayer rights. [FN3] Among other things, RRA 1998 gives taxpayers the right to a collection due process (CDP) hearing before the taxpayer's property is taken by levy or after the filing of a Notice of Federal Tax Lien (NFTL). Many of the provisions in RRA 1998 have met with criticism, [FN4] but the CDP provisions [FN5] have been among the most controversial. [FN6]
*1022 CDP hearings require significant time and resources. [FN7] Moreover, collection by levy is delayed while the CDP proceedings are conducted. [FN8] Despite the costs and delays, the CDP provisions have been identified as among the most important provisions of RRA 1998. [FN9]
A common criticism relates to CDP requests made by tax protestors to delay the collection process. [FN10] Because of the time and resources required to comply with the CDP provisions, efficient processes are necessary. However, although some taxpayers have used the CDP provisions to advance frivolous positions and delay collection, many more taxpayers use the CDP procedures properly-as a forum to propose collection alternatives, raise spousal defenses, and challenge the amount *1023 of underlying tax liability when the taxpayer has not otherwise had a chance to do so. [FN11]
CDP determinations, issued after a CDP hearing, are subject to limited judicial review. [FN12] Commentators and courts have identified a number of questions about the scope and nature of judicial review of CDP determinations. [FN13] Under Internal Revenue Code (IRC) section 6330 , it is sometimes unclear whether the United States Tax Court or a U.S. district court has jurisdiction over a taxpayer appeal of a CDP determination. [FN14] The nature of the CDP determination required to confer jurisdiction on the courts is also open to some debate. [FN15] *1024 IRC section 6330 provides for the possibility of bifurcated review, particularly in cases raising frivolous claims. The only guidance regarding the standard of review that the courts should apply is found in the legislative history. [FN16]
Judicial review is one of the most important aspects of CDP, [FN17] but it is an unsettled and problematic area of law because it lacks clear direction from Congress. This Article argues that Congress must clarify the jurisdiction of the courts in CDP appeals. This Article proposes changes to the jurisdictional grant and argues that specific remedies for administrative failure to comply with the CDP provisions are necessary. It also acknowledges the need to balance these changes with the need for effective and efficient tax collection.
Part II of this Article discusses the CDP provisions generally. This Part also discusses problems with judicial review of taxpayer appeals of CDP determinations.
Part III considers review by specialized courts, including concerns that specialized courts are subject to capture by frequent users, bias, and a reduced quality of jurisprudence. This Part also discusses possible benefits of specialized court review, including promoting uniform application of a national law, reducing the burden on other courts, and employing specialists to review a complex set of laws. Finally, this Part considers some of the concerns historically raised about Tax Court jurisdiction.
Part IV proposes changes to the CDP provisions' jurisdictional grant to allow concurrent jurisdiction of CDP appeals in the district courts and the Tax Court, but not radical expansion of the Tax Court's jurisdiction. Part IV also proposes creating specific remedies for administrative failings in the CDP process.
The jurisdiction of courts in CDP appeals must be changed. Concurrent jurisdiction should be permitted in the Tax Court and federal district courts, as long as the court would have jurisdiction over at least part of the underlying liability. In addition, the remedies available to address administrative failings must be clarified. It also should be made explicit that both reversal and remand may be used by the courts to remedy CDP determinations that are found to be an abuse of discretion or are issued without adequate process.
*1025 II. The Collection Due Process Provisions
A. Collection Due Process Rights Generally
A taxpayer has a right to a CDP hearing before a levy to collect a tax liability. [FN18] Notice of the right to a CDP hearing must be sent to a taxpayer [FN19] before the government levies on a taxpayer's assets to collect assessed, unpaid tax liability. [FN20] The notice must: (1) be in simple and non-technical terms, (2) inform the taxpayer of the amount of the unpaid liability, (3) describe the proposed collection action, and (4) identify the relevant IRC provisions, available administrative procedures, available alternatives, and the tax law provisions relating to property redemption and release of liens. [FN21] The taxpayer has 30 days from the date on which the Service mailed the CDP notice to request a CDP hearing. [FN22] If a CDP hearing is requested, the IRS Office of Appeals (Appeals Office) must hold it before collection activity can proceed. In the interim, the statute of limitations on collections is suspended. [FN23] Thus, the request by a taxpayer for a CDP hearing prevents the IRS from going forward with any levy on the taxpayer's property.
The Appeals Office is independent of other functions of the Service; it is not comprised of administrative law judges. [FN24] The Appeals Office's independence was confirmed in RRA 1998. [FN25] The Appeals Officer conducting the CDP hearing must be impartial. [FN26]
*1026 Appeals Office proceedings are usually informal. [FN27] The courts have approved of the extension of this informality to CDP hearings, allowing the Appeals Office wide latitude to determine how to conduct CDP hearings. [FN28] The procedures vary widely: [FN29] face-to-face hearings, telephonic hearings, and correspondence hearings have been upheld. [FN30]
During the CDP hearing, the Appeals Officer must verify compliance with all applicable laws and administrative procedures [FN31] and consider all relevant issues, including spousal defenses, the appropriateness of the collection activity, and the collection alternatives proposed by the taxpayer. [FN32] The underlying liability also may be considered at the CDP hearing, if the taxpayer did not receive a notice of deficiency or otherwise have an opportunity to challenge the assessment. [FN33] An otherwise relevant issue cannot be considered at the hearing if the taxpayer raised *1027 it at a previous CDP hearing or in another administrative or judicial proceeding in which the taxpayer meaningfully participated. [FN34]
Following the CDP hearing, the Appeals Officer prepares a CDP determination, [FN35] which must verify compliance with all applicable laws and administrative procedures, discuss the issues raised, and address "whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary." [FN36] The contours of the Appeals Officer's balancing are not well defined, [FN37] and the importance of the verifications has generally been minimized by the courts. [FN38]
Even though CDP hearings are conducted using informal procedures, the hearings take time to schedule and conduct. [FN39] Moreover, even after the Appeals Officer issues the CDP determination, the taxpayer can appeal it to the U.S. Tax Court or a district court, [FN40] further delaying collection of the tax liability. [FN41] Thus, in the interest of efficient tax collection, both the hearing procedures and nature and extent of judicial review must be clearly defined, effective, and prompt.
B. Judicial Review of CDP Determinations
If the taxpayer is dissatisfied with the CDP determination, the taxpayer may appeal to the federal courts. [FN42] Under the CDP provisions, a taxpayer may:
[W]ithin 30 days of a determination . . . appeal such determination-
(A) to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter); or
*1028 (B) if the Tax Court does not have jurisdiction of the underlying tax liability, to a district court of the United States. [FN43]
IRC sections 6320 and 6330 , and the regulations promulgated thereunder, leave unanswered a number of questions regarding judicial review of a CDP determination. [FN44] The statute does not specify the standard of review or the available remedies. In addition, it is not clear in all cases which court has jurisdiction over CDP appeals. These open questions are addressed in the following subsections.
1. Standard of Review
Although the CDP provisions do not specify the standard of review to be applied when a taxpayer appeals a CDP determination, the legislative history of RRA 1998 provides some guidance:
Where the validity of the tax liability was properly at issue in the hearing, and where the determination with regard to the tax liability is a part of the appeal, no levy may take place during the pendency of the appeal. The amount of the tax liability will in such cases be reviewed by the appropriate court on ade novo basis. Where the validity of the tax liability is not properly part of the appeal, the taxpayer may challenge the determination of the appeals officer for abuse of discretion. In such cases, the appeals officer's determination as to the appropriateness of collection activity will be reviewed using an abuse of discretion standard of review. [FN45]
At first blush, the choice between de novo and abuse of discretion review envisioned by the legislative history appears simple, hinging solely on whether the underlying liability is at issue. However, on closer inspection the choice is not quite so clear. Mixed questions may appear in a single CDP appeal. For instance, a taxpayer may have properly challenged the underlying liability at the CDP hearing and also raised spousal defenses or proposed collection alternatives. Issues relating to the Appeals Officer's determination of the underlying liability and the proposed collection alternatives may be raised in the court, but what is the appropriate standard of review? Should the court use de novo review for only the underlying liability or also for the other issues raised in the hearing and on appeal? The distinction is further complicated *1029 particularly in the Tax Court because abuse of discretion review has often been very similar to de novo review. [FN46]
Abuse of discretion is often formulated as "arbitrary and capricious" action, without a sound basis in law. [FN47] However, other formulations have been used. [FN48] All of the formulations examine whether the action taken by the administrative agency was within the scope of its congressional delegation of authority.
Questions relating to the nature of judicial review of administrative agency actions arise in a variety of contexts. In most instances, the courts apply the Administrative Procedure Act (APA), [FN49] which articulates standards for judicial review, remedies for administrative failings, and provides a well developed body of law relating to the review of agency actions. APA section 706 provides:
(1) compel agency action unlawfully withheld or unreasonably delayed; and
(2) hold unlawful and set aside agency action, findings, and conclusions found to be-
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; . . .
(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law; . . .
In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error. [FN50]
The APA not only provides standards of review, but also identifies remedies available to the court to address the failings by the administrative agency. Under the APA, the reviewing court can remand the case to the agency with directions to perform an action required by the relevant statute, such as to conduct a CDP hearing or to consider proposed collection alternatives. The court also can set aside an agency determination, such as a CDP determination issued without a proper hearing or proper balancing as being "in excess of statutory . . . authority . . . or short of statutory rights." [FN51] Setting aside such a determination can be *1030 done without "looking behind" the determination for jurisdictional purposes-a "facially valid" CDP determination would still be necessary to confer jurisdiction on the court, the court would simply set aside the improper CDP determination. [FN52]
Historically, however, the APA has not been applied to judicial review of IRS determinations for two reasons: first, the tax law is often viewed as a law unto itself; [FN53] and second, judicial review of IRS determinations is generally de novo, [FN54] that is, the courts find all necessary facts without reference to the administrative record.
Although it is unclear whether the APA is applicable to tax controversies generally, [FN55] and the Tax Court has decided that the statute does not govern CDP appeals, [FN56] a number of well-reasoned concurring and dissenting opinions argue persuasively that the APA should be applied to judicial appeals of CDP determinations. [FN57] The APA should apply to CDP determinations because the regulations only provide that the APA rules relating to formal adjudications do not apply, not that the APA is wholly inapplicable. [FN58] Furthermore, application of the well-established body of administrative law, which is consistent with the legislative intent, would provide direction and certainty to courts struggling to deal with the influx of an entirely new kind of tax case, the CDP appeal. [FN59]
*1031 In addition, if unauthorized issues are raised and improperly considered in the CDP hearing, it is not entirely clear which issues may be reviewed on appeal. The courts have generally concluded that the Service does not waive its right to assert the statutory bar against an issue, even if the taxpayer raises and the CDP determination addresses an issue that IRC section 6330 (c)(4) would allow the Appeals Officer to refuse to consider. [FN60] However, if the Appeals Officer addresses those issues in the CPD determination, the taxpayer may attempt to challenge his use of discretion. [FN61]
Finally, what is the court to do if the Appeals Officer failed to consider issues that could properly be raised in the CDP hearing or refused to allow the taxpayer to present information relating to such issues? If the Appeals Officer failed to consider an issue because it was not raised by the taxpayer, the issue should be precluded on appeal. On the other hand, if the Appeals Officer neglected to consider an issue that was properly raised, the reviewing court should consider the administrative failure. The CDP provisions, however, do not articulate the approach the courts should take in such circumstances. The court could either remand the case or make its own determination. Absent clear guidelines, different courts have taken different approaches. [FN62]
It is possible that the drafters of the CDP provisions were under a misapprehension regarding the collection and deficiency procedures. [FN63] This would explain the manner in which the CDP provisions address the problem oftaxpayers challenging the underlying liability. It would further explain the absence of a clearly defined standard of review and jurisdiction over appeals. Because the number of CDP appeals is *1032 significant [FN64] and the courts have demonstrated uncertainty as to the approach to take, clear direction from Congress is needed. As will be discussed in the following subsections, the issues that can be considered on appeal of the CDP determination, the standard of review, and the remedies available in cases of administrative error must be clear.
a. Record Review
Courts have long limited judicial review of administrative decisions to the record created at the agency. [FN65] However, this rule of "record review" has not been used in tax proceedings. [FN66]
In Robinette v. Commissioner, the Tax Court concluded that it may look to evidence that is not part of the administrative record to decide whether the Appeals Officer's decision was correct. [FN67] In Robinette, the liabilities involved were income taxes and trust fund recovery penalties resulting from unpaid employment taxes for 1983 through 1991. [FN68] The taxpayer and the Service had entered an offer-in-compromise (OIC) in 1995. [FN69] Under the terms of the OIC, the taxpayer was required to pay $100,000 on a $989,475 liability for individual taxes and statutory additions. [FN70] The entire $100,000 was paid within 60 days of the OIC's acceptance. [FN71] The terms of the OIC also required the taxpayer to "comply with all the provisions of the Internal Revenue Code related to filing . . . returns . . . for five (5) years from the date IRS accepts the offer." [FN72]
The taxpayer had a history of requesting extensions of time to file his tax returns. Each year his accountant requested an extension of time to file, and on the date that the return was due, the accountant obtained the taxpayer's signature and mailed the return. [FN73] In 2000, the Service notified the taxpayer that it had not received his 1998 return. [FN74]
*1033 A revenue officer from another area reviewed the OIC. [FN75] The revenue officer examined the case without considering the taxpayer's filing pattern, declared the OIC in default, and sent a notice to the taxpayer. [FN76] The default on the OIC caused the reinstatement of the entire original unpaid tax liability and the Service sent the taxpayer a notice of intent to levy. [FN77] The taxpayer requested a CDP hearing. [FN78]
The Appeals Officer, after examining the administrative file and the taxpayer's transcript of account for 1998, concluded that the taxpayer had defaulted on the OIC. [FN79] The Appeals Officer refused to accept any evidence that the taxpayer's 1998 tax return was filed. [FN80] The Appeals Officer refused to hear the accountant's explanation of the filing of the 1998 tax return or consider the taxpayer's filing history. [FN81] A copy of the 1998 tax return provided to the Appeals Officer was filed as an original return on April 2, 2001. [FN82] The Appeals Officer believed, incorrectly, that only the IRS National Office could reinstate the OIC. [FN83]
The Tax Court, in a fragmented opinion, held that the Appeals Officer's actions were an abuse of discretion. [FN84] In reaching that conclusion, the Tax Court held that although the appropriate standard of *1034 review was abuse of discretion, the court was not limited to considering the administrative record. [FN85] Rather than remanding as would be appropriate if it was conducting a record review, the Tax Court considered evidence not in the administrative record or considered by the Appeals Officer. Thus, the Tax Court substituted its judgment for that of the Appeals Officer while purporting to apply the less rigorous abuse of discretion standard. The Tax Court's position is hard to justify because the abuse of discretion standard is consistent with the manner federal courts review decisions by other administrative agencies.
Record review would have been more appropriate. It reflects sound use of limited judicial resources. The agency is charged with using its discretion and is in the best position to create a record of its application of that discretion. Considering evidence not in the administrative record often means considering evidence that was not before the agency making the decision. Considering new evidence results in de novo decisionmaking, rather than a determination as to whether there was an abuse of discretion at the agency level. Thus, only in the rare case where the underlying liability is properly at issue and, therefore, subject to de novo review, should the court consider receiving evidence beyond the record from the Appeals Office.
The regulations prescribe the contents of a CDP determination. [FN86] What happens when the Appeals Office fails to follow the regulations? Should the court remand the case? Should it make its own fact findings? Because a delay results where the Appeals Office failed to perform the prescribed tasks, should a penalty be imposed on the Service? How much of a penalty? Should it be imposed in all cases? These and other questions will be considered in the next subsection.
b. Abuse of Discretion Review
Abuse of discretion exists when the agency acts unreasonably, arbitrarily or capriciously. [FN87] Abuse of discretion review of CDP determinations makes sense. Unlike redetermining a deficiency or reconsidering a request for a refund, courts reviewing CDP determinations are generally reviewing matters best left in the discretion of the Service. Congress assigned CDP to the Appeals Office. The Service and the Appeals Office have expertise regarding collection matters. [FN88] Moreover, *1035 assessing collection alternatives, one of the primary reasons for CDP hearings, is uniquely within the expertise of the Service.
The district courts have successfully applied this standard to the review of many different agencies' actions. However, courts reviewing CDP determinations, even when labeling the review abuse of discretion standard, more commonly engage in de novo review, reviewing all aspects of the record below. [FN89] The reluctance to engage in true abuse of discretion review, at least by the Tax Court, may result in part from the Tax Court's history. The Tax Court is not an Article III court. [FN90] It has evolved from an executive agency to an Article I or legislative court. [FN91] At its inception as the Board of Tax Appeals, it was an independent executive agency. [FN92] Its mandate was to conduct a full hearing, independent of any proceeding that had taken place at the Bureau of Internal Revenue. [FN93]
In most instances, the modern Tax Court conducts a de novo review of issues brought before it. In deficiency redetermination cases, which make up the bulk of the Tax Court's docket, the Tax Court does not rely on the record createdby the IRS. Instead, the taxpayer and the Service present evidence pursuant to the Federal Rules of Evidence, with the burden of proof generally on the taxpayer. [FN94] Although the IRS must generally determine a deficiency before the Tax Court has jurisdiction, after a taxpayer petitions for redetermination, the Tax Court starts from the beginning and considers all of the evidence presented by both the taxpayer and the Service.
The Tax Court reviews most CDP determinations under a different standard than it uses with respect to petitions for redetermination of a deficiency. A CDP determination is an agency decision, which should be reviewed pursuant to the APA, just as district courts review the actions of other executive branch agencies. That is, the Tax Court *1036 should engage in true abuse of discretion review, a standard in tax cases that is not unique to CDP appeals. [FN95]
One problem with applying an abuse of discretion review occurs when the record created by the Appeals Office is insufficient. In its most recent report on the Service's compliance with the CDP provisions, the Treasury Inspector General for Tax Administration concluded that in 10.8 percent of the CDP determinations and summary notices of determination issued to taxpayers did not include discussion of the all relevant issues considered at the hearing. [FN96] The lack of documentation may make it difficult, if not impossible, for a court to review an Appeals Officer's CDP determination without remand or the introduction of evidence that was not presented at the CDP hearing. [FN97] This is an inefficient use of resources that leads unnecessarily to multiple considerations of the same information. If the Tax Court will not require the Appeals Office to do its job or impose a penalty, there is less incentive for the Appeals Office to provide a complete CDP hearing.
c. De Novo Review
According to the legislative history of RRA 1998, de novo review of a CDP determination is permitted only if the underlying liability was properly at issue in the CDP hearing. [FN98] The underlying liability may be at issue if no notice of deficiency was issued or the taxpayer did not receive the notice of deficiency. [FN99] This is consistent with allowing pre-assessment redetermination of a deficiency by the Tax Court. After issuance of a notice of deficiency, the taxpayer may seek redetermination in the Tax Court. [FN100] Redetermination is made based on the *1037 presentation of all admissible evidence, albeit with the burden of proof placed primarily on the taxpayer. [FN101]
Similarly, the legislative history indicates that de novo review of a CDP appeal should be available if the taxpayer did not have a prior opportunity to challenge the underlying liability. [FN102] There are a number of instances in which a notice of deficiency is not required. [FN103] In these cases, the taxpayer is given an opportunity to challenge the liability in the CDP hearing and then seek de novo review of the determination in court, unless the taxpayer had an opportunity to participate in an administrative challenge to the liability.
Although the underlying liability can be challenged when the taxpayer does not receive a notice of deficiency, the taxpayer's affirmative refusal to accept the notice of deficiency does not trigger an opportunity for the taxpayer to challenge the underlying liability. [FN104] If the taxpayer has affirmatively avoided receiving the notice of deficiency, the taxpayer has essentially waived his right to seek a redetermination of the deficiency. The taxpayer may be eligible for post-payment refund review in the district court or the United States Court of Federal Claims.
Where challenge to both the underlying liability and other issues are properly presented in the CDP hearing on appeal, it is less clear which issues are subject to de novo review. In some instances, de novo review has been made of the entire CDP hearing. [FN105] In other instances, courts have concluded that de novo review is available only to the determination of the validity of the amount of underpayment. [FN106]
Legislative clarification is necessary to address the standard of review. Abuse of discretion review should be required when spousal defenses, collection alternatives, or other issues, except the underlying liability, are raised. Furthermore, abuse of discretion review should limit review to *1038 the administrative record and prevent the reviewing court from substituting its judgment for that of the Appeals Office.
De novo review should be permitted only where and to the extent that the underlying liability is properly at issue. De novo review should be used to determine the amount or validity of the underlying liability when such a challenge was properly available. [FN107] The statute and its legislative history indicate a desire by Congress to afford taxpayers greater rights, but to not unduly impede the collection of taxes. De novo review of all issues in a CDP hearing will unnecessarily infringe on the determinations made by the Appeals Officer and slow the collection process.
2. Available Judicial Remedies
The CDP provisions fail to address what the court is to do when it finds that the Appeals Office failed to perform all actions required by the statute, did not fully consider all of the necessary issues, or did not create a sufficient record for judicial review. [FN108] Numerous cases have addressed these issues. [FN109]
There are several possible answers. In part, the answer depends on the nature of the court's review. If the court engages in de novo review, then perhaps the taxpayer suffers no harm from administrative failure. In de novo review, the court would simply reconstruct the hearing and examine all information that the Appeals Officer considered or should have considered and substitute its own judgment.
What should happen when the Appeals Officer considers issues that are barred either by the statute or regulations? Does the consideration of those issues result in a waiver of the bar by the Service? If so, what is the appropriate standard of review? The courts have held that the Appeals Officer's consideration of precluded issues does not constitute a waiver of the statutory bar against those issues by the Service on appeal of a CDP determination. [FN110] Not treating consideration of such issues as a waiver of the statutory bar is reasonable because the bar provided by IRC section 6330 (c) is not elective to either the Service or the taxpayer. This is also consistent with the informal nature of the CDP hearing. No harm results to the taxpayer presenting extra issues, *1039 unlike the taxpayer who is prevented from presenting a relevant and permissible issue.
In addressing problems with the CDP provisions, Congress must consider the significant expenditure of resources that results from frivolous claims raised by tax protesters. [FN111] Clearly, this is an important concern, particularly in light of the number of frivolous claims raised, the number of cases litigating the imposition of a frivolous return penalty, and the amount of time required to address the challenges brought by tax protesters. [FN112] However, the fact that many appeals are brought by tax protesters does not diminish the importance of challenges raised by taxpayers legitimately seeking to determine whether the nature of proposed collection action is appropriate, the amount of tax liability owed by the taxpayer, or the availability of spousal defenses.
IRC section 6673 , which allows the Tax Court to impose a penalty of up to $25,000 for frivolous claims, has been applied regularly in CDP cases. [FN113] Applying the APA would also be prudent in this context. The well-developed body of administrative law could guide the courts in fashioning remedies. Specific remedies, including remand and reversal, are discussed in the following subsections. In addition, APA section 706 provides guidance as to the appropriate actions for the court to take in the face of improper agency action or inaction. [FN114]
a. Remand for Further Proceedings
The CDP provisions do not specifically authorize remanding CDP cases to the Appeals Office, leading some courts to question their authority to remand. [FN115] Other courts have assumed that they are *1040 entitled to remand for further proceedings, regardless of whether or not they choose to remand. [FN116] If further administrative action is ordered, judicial oversight may be required.
A more practical question arises if the case is sent back to the Appeals Office: Does the court that remanded it retain jurisdiction? If the court does not retain jurisdiction, who will ensure that the agency acts as it is directed? In recent cases, it has not been seriously questioned that the courts have the power to order further administrative consideration. [FN117] The CDP provisions should clearly address retained jurisdiction, in the same way that IRC section 6330 currently addresses the retention of jurisdiction by the Appeals Office.
Under the APA, the court can retain jurisdiction; [FN118] IRC section 6330 , while silent on retention of jurisdiction by the courts, specifies that the Appeals Office retains jurisdiction over the case. [FN119] After further proceedings, the taxpayer may still want the court to review whether the CDP determination was an abuse of discretion if the taxpayer does not achieve the desired result sought. However, administrative law principles apply the "law of the case," which prevents subsequent reconsideration of issues litigated in the first challenge. [FN120] On the other hand, empirical research indicates that on remand, agencies frequently change their original decisions. [FN121]
*1041 b. Substitution of the Court's Judgment
If the standard of review for CDP determinations is abuse of discretion in most instances, when, if ever, should the courts substitute their judgment for that of the agency? This inquiry is particularly relevant in two settings: first, where the Appeals Office failed to conduct a CDP hearing prior to issuing a CDP determination; and second, where the Appeals Office conducted a hearing and issued a determination, but on the administrative record the court cannot determine what the Appeals Officer considered in making the determination.
The court should seldom,if ever, substitute its judgment for that of the Service. The Service has vast experience dealing with tax collections. [FN122] It has been suggested that CDP delays collection, but that collection decisions are still made by the Service. [FN123] This is as it should be. While specifying the standard of review and appropriate judicial remedies, legislation addressing CDP should make clear that except where an Appeals Officer refused to consider properly presented issues but remand would result in significant, unnecessary delay, or where review is de novo, the courts are not to substitute their judgment for that of the Service.
Making clear that the discretion, unless abused, lies with the Appeals Office to determine whether the proposed collection action is justified should reduce concerns that CDP will be used solely for delay. Swift abuse of discretion review will minimize delay and speed collection. Although taxpayers are entitled to previously unavailable pre-collection safeguards under the CDP provisions, if the CDP process is used only for delay, the courts will uphold the Appeals Office's determination allowing the proposed collection to continue, and interest will continue to accrue. In addition, if the taxpayer has truly used the process to delay collection, then penalties must be assessed and collected.
c. Reversal, Invalidation, or Amendment of CDP Determination
Courts reviewing CDP determinations could choose to reverse, invalidate, or amend a CDP determination. In what circumstances should a court engage in one of these approaches? The answer to this question depends on the appropriate standard of review. If abuse of discretion review is to be conducted in the ordinary course, then reversal, invalidation, or amendment should be made rarely, because such *1042 actions amount to the court substituting its judgment for that of the Appeals Officer. It is more appropriate for the court to remand improper CDP determinations to the Appeals Office with directions to cure its error. [FN124]
The court might properly amend a CDP determination that does not address one or more matters required by the statute or regulation when the administrative record demonstrates that the Appeals Office had performed the required inquiry. For example, suppose that the taxpayer suggested an offer in compromise of $1 on a $100,000 tax liability when such an offer was not acceptable under the rules relating to offers in compromise, yet the CDP determination did not address any proposed collection alternatives. The court could amend the CDP determination by concluding that the Appeals Officer properly considered and rejected the proposed collection alternative. [FN125] Alternatively, the court could conclude that no amendment was necessary because the taxpayer's offer in compromise was tantamount to no proposed collection alternative. Under either approach the court is properly applying abuse of discretion review. Similarly, amendment might be proper if the omitted item was the result of a ministerial error.
A more difficult question is presented if abuse of discretion review is not applicable. Suppose that the taxpayer's argument is that no liability is due (and the Appeals Officer properly considers the issue because the taxpayer did not have a prior opportunity to challenge the assessment), but the taxpayer does not present any collection alternatives. When the Appeals Officer issues the determination, concluding that the assessment is proper and that the proposed collection amount is correct, the taxpayer appeals. In his appeal, the taxpayer again disputes the amount and validity of the assessed tax, and argues in the alternative that a different method of collection should be used. Can the court consider the newly proposed collection alternative? Most courts have stated that they will not consider anything that was not raised during the CDP hearing. [FN126] This is efficient, as it encourages taxpayers to raise all issues as early as possible. However, this statement is at odds with the conclusion *1043 in Robinette v. Commissioner that the court is not limited to record review. [FN127] If the court engages in a de novo review, there is no reason to refuse to consider the proposed collection alternative, since the court is going to substitute its own judgment about the taxpayer's positions for those of the Appeals Officer. The issue is even more difficult in this case because of the availability of a challenge to the underlying liability, which is reviewed under a de novo standard. [FN128] The rest of the issues still may be subject to abuse of discretion review. [FN129]
These examples demonstrate that further clarification of the standard of review is necessary. Congress should clearly state that abuse of discretion review is limited to review of the administrative record, except in the rare case where the underlying liability is properly at issue. In addition, explication of the available remedies would help reduce the burden on the Appeals Office and the courts by clarifying the likely consequences of judicial review of a CDP determination.
3. Judicial Jurisdiction
a. Court in Which Appeal Lies
A taxpayer can seek judicial review of a CDP determination with which the taxpayer disagrees. [FN130] However, the CDP provisions' jurisdictional grant leaves open a number of questions. First, in which court, the Tax Court or the district court, should an appeal be sought? Second, can the taxpayer choose between the Tax Court and the district court? Finally, can jurisdiction over a single appeal be split between both the Tax Court and the district court?
As currently interpreted, the jurisdictional grant of IRC section 6330 (d) may require the taxpayer to bifurcate some appeals. [FN131] An example is a CDP determination pertaining to collection actions with *1044 respect to deficiencies and frivolous return penalties. The Tax Court would have jurisdiction over the deficiency determination but not the frivolous return penalties. [FN132] Although this is the most frequently occurring example in the case law, it is not the only situation in which bifurcation might occur.
The potential of bifurcated judicial review is an inefficient use of scarce judicial resources and may lead to inconsistent results in the same case. [FN133] Because cases requiring bifurcation often involve taxpayers who have a demonstrated willingness and desire to delay and impede the tax collection system by filing frivolous returns, it is ill-advised to provide these taxpayers with an additional mechanism by which to interfere with the collection of assessed taxes. Unless the disposition of the appeal in one court is final and binding on the other court, the taxpayer will simply continue to delay the collection process by seeking review in the other court.
Since shortly after the enactment of RRA 1998 there have been proposals to consolidate jurisdiction of CDP appeals in the Tax Court. This is a suboptimal solution. Placing jurisdiction over all CDP appeals in Tax Court would be to drastically increase the jurisdiction of the Tax Court without thoughtful debate.
Because CDP hearings are available before enforced collection of federal tax liabilities, [FN134] allowing all CDP appeals to be heard by the Tax Court would result in Tax Court jurisdiction over all tax matters. Granted, the jurisdiction of the Tax Court would be limited to cases brought in the procedural posture of CDP determination appeals. Nonetheless, this would allow taxpayers an additional option regarding pursuit of challenges to the Service's application of the tax law. This is contrary to the historically limited jurisdiction of the Tax Court.
Although it might be argued that the complexity of the tax laws lends itself to specialized review, until Congress decides to vest jurisdiction over all tax controversies in the Tax Court in the first instance, it should not do so through the back door. I do not take the position that expansion of Tax Court jurisdiction is a bad idea, simply that it should be intentional. This potential expansion would result from consolidating *1045 all jurisdiction over CDP appeals in the Tax Court because the matters that are not currently subject to Tax Court review are generally of the types for which Congress intended to grant de novo review in CDP appeals. De novo review will be available because many of the liabilities are not subject to the deficiency procedures. The Notice of Deficiency is the "ticket" to the Tax Court in most cases. Thus the back-door and potentially unintentional expansion of the Tax Court's jurisdiction may be significant. Such expansion of a court's jurisdiction should be undertaken only intentionally and with deliberation.
b. Prerequisites to Judicial Jurisdiction
Another recurring issue in the context of CDP appeals is what is required to provide the court with jurisdiction. The courts agree that jurisdiction does not exist without a timely filed appeal. [FN135] An appeal is timely filed if it is filed within 30 days of issuance of a CDP determination. [FN136]
In addition, it is less than clear what constitutes a determination from which judicial review is available. Initially, the Tax Court took the position that a proper CDP hearing must be conducted before a valid CDP determination is issued and that if no valid CDP determination was issued the court did not have jurisdiction to hear the appeal. [FN137] However, the Tax Court relatively quickly abandoned any consideration of the facts underlying the CDP determination. In Lunsford v. Commissioner, the Tax Court concluded that all that was necessary for jurisdiction was a "facially valid" CDP determination. Lunsford reversed the court's barely year-old opinion in Meyer v. Commissioner, which required the Appeals Office to conduct a hearing before the court obtained jurisdiction over a CDP appeal. In Lunsford, consistent with some of the court's earlier CDP cases, the court analogized the CDP determination to a statutory notice of deficiency and concluded that it was improvident and unnecessary to look behind the CDP determination to decide whether the CDP determination was valid. [FN138]
After Lunsford, jurisdiction in the Tax Court exists if there is a facially valid CDP determination, a timely filed petition, and an underlying *1046 liability over which the Tax Court would have had jurisdiction. [FN139] CDP determinations are generally held to be facially valid. [FN140] The court merely requires that the CDP determination address the considerations listed in IRC section 6330(c)(3): (1 ) that the Appeals Officer verified compliance with applicable laws and regulations, (2) that the Appeals Officer considered all of the issues properly raised at the hearing, and (3) that the Appeals Officer considered whether the proposed collection action balanced the need for efficient tax collection with the concern that collection actions be no more intrusive than necessary. [FN141]
c. The Potential for Bifurcated Review and the Effect of Preclusion
If an issue is potentially subject to bifurcated review, there are concerns that this will provide a taxpayer with more than one opportunity for judicial review. [FN142] One circumstance in which the potential for bifurcated review frequently arises is where a taxpayer has unpaid income tax liabilities and has also been assessed frivolous return penalties. [FN143] Bifurcated review may also occur when an individual taxpayer has both an unpaid individual income tax liability and has been assessed trust fund recovery penalties relating to unpaid employment taxes. [FN144]
Because of the short time in which a taxpayer must appeal an adverse CDP determination (30 days), [FN145] the taxpayer may seek to protect the opportunity for judicial review by filing an appeal of the CDP determination in both the Tax Court and the district court. However, duplicative filings should not be necessary for purely protective purposes because taxpayers who file CDP determination appeals in the wrong court are given 30 days to refile in the correct court. [FN146] On the other hand, if two (or more) types of liabilities are addressed in a single CDP *1047 hearing, giving rise to jurisdiction of some issues in one court and other issues in a different court, multiple filings may be required. [FN147]
In Robinette v. Commissioner, the taxpayer and the Service agreed that:
The doctrine of collateral estoppel will apply to prohibit the [Service], as well as the [taxpayer] from re-litigating the [taxpayer's] appeal of the Notice of Determination in the District Court if the Tax Court decides whether the [Appeals Officer] abused his discretion in proceeding with collection of tax liabilities previously compromised prior to a decision of that issue by the District Court. [FN148]
Collateral estoppel, also referred to as issue preclusion, prevents relitigation of an issue that has been previously decided in a contested judicial proceeding between the same parties. [FN149] However, for collateral estoppel to apply the issue in the second action must be identical and have been raised and necessarily decided in the first action. [FN150] Similar to the purpose of collateral estoppel, res judicata prevents litigants who have had their day in court from subjecting their opponents to "the expense and vexation attending multiple lawsuits, conserves judicial resources, and fosters reliance on judicial action by minimizing the possibility of inconsistent decisions." [FN151] Res judicata is often referred to as claim preclusion and prevents a second litigation of the same claim.
[W]hen a court of competent jurisdiction has entered a final judgment on the merits of a cause of action, the parties to the suit and their privies are thereafter bound "not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose." [FN152]
Collateral estoppel and res judicata are affirmative defenses that generally must be pleaded by the party asserting preclusion. [FN153] If the party fails to plead collateral estoppel, particularly where simultaneous filings are necessary and consolidation is impossible, subsequent amendment *1048 should be permitted. [FN154] The courts generally do not raise collateral estoppel sua sponte. [FN155]
Both res judicata and collateral estoppel apply in tax litigation. [FN156]
[I]f a claim of liability or non-liability relating to a particular tax year is litigated, a judgment on the merits is res judicata as to any subsequent proceeding involving the same claim and the same tax year. But if the later proceeding is concerned with a similar or unlike claim relating to a different tax year, the prior judgment acts as a collateral estoppel only as to those matters in the second proceeding which were actually presented and determined in the first suit. Collateral estoppel operates, in other words, to relieve the government and the taxpayer of "redundant litigation of the identical question of the statute's application to the taxpayer's status." [FN157]
In most CDP appeals the court reviews the Appeals Officer's verification of the assessment and compliance with applicable laws and administrative procedures, consideration of any collection alternatives or spousal defenses raised by the taxpayer, and balancing of the need for efficient collection of taxes against the taxpayer's interest that the collection be no more intrusive than necessary for abuse of discretion. Only in the rare instance in which the taxpayer has properly challenged the underlying liability should the court review anything more than the administrative record to determine whether the Appeals Officer abused her discretion. [FN158] Even in those cases, once the court reviews the underlying liability, the court should consider the remainder of the CDP determination for abuse of discretion. [FN159]
In instances where the only issue in a CDP appeal is the propriety of the determination, res judicata should eliminate the need for two courts to address the question. Similarly, in instances where there is the potential for a CDP determination to be appealed to both the Tax Court and the district court and one or more underlying liabilities is at issue, each court will be required to consider any challenges raised to the underlying liability within its jurisdiction, as the other court will not consider liabilities not within its jurisdiction. However, either the taxpayer or the government should be able to assert collateral estoppel *1049 in the second court with respect to the first court's determination whether the Appeals Officer abused her discretion.
Because the legal proceedings may move forward in tandem, making it impossible for collateral estoppel to be raised in the initial pleadings, application of collateral estoppel or res judicata in cases where there is bifurcated review is a bit more difficult. In many instances, when two suits raising the same question are proceeding simultaneously, but cannot be consolidated, one court may stay its proceedings until the conclusion of the other proceedings. [FN160]
In CDP appeals, the district court could stay its CDP determination appeal until the conclusion of Tax Court case, in the interest of judicial economy and allowing the Tax Court to address the tax questions that are within its specialization. In most cases, the district court could then apply res judicata-or collateral estoppel, if the district court is required to consider underlying liability-conclusively to the Tax Court's determination of whether the Appeals Officer had abused her discretion. If neither court stays its proceedings, the decision of the first court to reach a conclusion should be binding on the second court. [FN161]
In a court of general jurisdiction, collateral estoppel may be asserted from a decision of a court of limited jurisdiction, if the issue before a court of general jurisdiction was incidentally decided in the matter before the first, limited jurisdiction court. [FN162] Whether collateral estoppel will apply in a given situation depends on whether its application would be inconsistent with the limitations on the court's subject matter jurisdiction [FN163] and whether there is a reason to believe that the limitation on the deciding court's jurisdiction makes the court's decision unreliable. [FN164]
Although a CDP determination may relate to an issue over which the Tax Court typically would not have jurisdiction, a Tax Court decision whether the Appeals Officer abused her discretion should apply to proceedings raising the same question before the district court. There is an identity of issues between the issues on appeal in the Tax Court and the district court. However, there is some inconsistency in the definition of issues in the context of review of CDP determinations. [FN165]
*1050 The parties are identical, or in privity; regardless of the claims, the parties in judicial review of a CDP determination will always be the taxpayer, or her successor, and the Service. The issues are also identical in most, if not all cases: unless the underlying liability is at issue and the case is subject to de novo review, the issue that is decided is whether the Appeals Officer's CDP determination was an abuse of his discretion. If the underlying liability is at issue and there is the potential for bifurcated review, there is a possibility that there will not be complete identity of issues. However, in the interest of efficient judicial action, the courts should apply preclusion doctrines in most instances. In fact, if the possibility of de novo review were removed, collateral estoppel should apply in all instances.
Because a taxpayer who has not disputed the amount or validity of a liability before collection may bring a refund suit, de novo review should not be allowed in CDP appeals. This would simplify the procedures and eliminate the need for bifurcated judicial review. The taxpayer could choose the forum in which to appeal and would be bound by that court's holding. If the taxpayer requested judicial review in both the Tax Court and the district court, once one court decided, the other court should apply collateral estoppel and dismiss the claims.
Alternatively, the CDP provisions could be revised to require the taxpayer to select one forum in which to have the CDP determination reviewed. However, this approach should be limited to allow a choice of only a forum in which the taxpayer could have challenged at least part of the underlying liability. The reviewing court should not be given authority to make new determinations and should not have its jurisdiction broadened as a result of the taxpayer's choice of forum. This is another reason that abuse of discretion review, rather than de novo review, is the appropriate standard for the courts to apply to CDP determinations.
Finally, if abuse of discretion review is properly applied, it would be possible to grant jurisdiction over all CDP appeals to a single court. This would be similar to the grant of jurisdiction to the Tax Court to review denials of requests for abatement of interest and penalties pursuant to IRC section 6404(e) . Moreover, if the only issues available for review in a CDP appeal are whether the CDP determination is valid *1051 and whether the Appeals Officer abused his discretion, the Tax Court could be given exclusive jurisdiction over CDP appeals without significantly expanding the court's jurisdiction.
III. Tax Court Review
There have been numerous calls for a specialized court to review tax matters. [FN166] At the trial level, taxpayers already have the option of bringing cases for redetermination of a deficiency to the Tax Court. [FN167] There also have been calls for a National Court of Tax Appeals to hear all tax appeals, making possible uniformity in the federal tax laws. [FN168] In addition, numerous proposals have recommended consolidating jurisdiction of all tax matters in one court to make the application of tax law uniform across the nation. [FN169] Calls for specialized review of tax proceedings have been consistently rejected. The goal of uniformity has never outweighed the competing interest of allowing taxpayers a choice of forum. [FN170] The interest of uniformity has also never surpassed the interest of the IRS's Office of Chief Counsel and the Department of Justice in maintaining their roles in the litigation of tax matters.
Similarly, there have been proposals to consolidate review of all CDP appeals in the Tax Court. [FN171] Although consolidating review of all CDP determinations in the Tax Court might be similar in result to giving the Tax Court jurisdiction over all tax matters, [FN172] this has not been considered by the proponents. In addition, some of the arguments against increased jurisdiction of the Tax Court have not been raised in the context of CDP appeals.
This Part first considers the general arguments for and against the creation and use of specialized courts. Next, it looks at how those arguments and objections apply to the Tax Court, both historically and, *1052 more specifically, with respect to CDP appeals. Finally, this Part focuses on the specific problems that could result from increasing the Tax Court's jurisdiction to give it exclusive jurisdiction over CDP appeals.
A. Specialized Courts Generally
A number of concerns regarding the use of specialized courts have been voiced. On the other hand, there are also a number of arguments for the use of specialized courts, particularly with respect to review of complex or technical legal problems, such as federal taxes and patents. [FN173]
Specialization may lead to increased efficiency, better results, uniformity, statutory coherence, and administrative improvements. [FN174] Opponents of specialized courts have countered with a number of concerns, including fears that specialized courts will be vulnerable to capture by the private bar or overly sympathetic to the government's position with respect to enforcement. [FN175] In addition, bias within a specialized court may not be clear to outside observers. [FN176] Opponents also worry that the use of specialized courts will create myopic approaches to adjudication and that the area subject to specialized review may not develop as robustly because the richness of other areas of law and developments in analogous situations may not be brought to bear because of "tunnel vision." [FN177] For instance, in the field of taxation, a number of commentators have already expressed concern that tax practitioners tend to view tax law as a law unto itself, uninformed by other legal specialties. [FN178] Finally, some argue that it may be more difficult to attract top notch jurists for specialized courts. [FN179]
B. Objections Particularly Directed at the Tax Court
Some observers have claimed that the Tax Court has a bias against taxpayers, [FN180] an allegation denied by members of the court. [FN181] In addition, *1053 outside observers have attempted to refute this claim with empirical research. [FN182]
One of the strongest impediments to creating greater or exclusive jurisdiction in the Tax Court has been the issue of who will represent the government in tax proceedings. [FN183] The Office of Chief Counsel has historically represented the Service in proceedings before the Tax Court [FN184] and the Department of Justice has generally represented the Treasury in cases brought in the district court, such as claims for tax refunds. [FN185] Thus, protection of turf has been a significant impediment to increased specialized review of tax proceedings.
There are good arguments for increasing the jurisdiction of the Tax Court and granting the Tax Court Article III status. There are also good arguments for the current limits placed on its jurisdiction. However, any decision to increase or change the jurisdiction or make up of the Tax Court should be made intentionally and only after careful consideration of both the costs and benefits of such a change. There are also significant concerns about judicial economy in the CDP context. These problems are discussed in the next section.
C. Problems Specifically Associated with Increasing the Jurisdiction of the Tax
Court to Review CDP Determinations
The scope of its jurisdiction and its proper role within the field of tax litigation are recurring issues relating to the Tax Court. [FN186] Among the other concerns raised are the constitutional limits of Tax Court jurisdiction, [FN187] the practical limitations of specialized courts, and the wisdom of the use of specialized courts. This is a particularly thorny issue when thinking about jurisdiction over CDP appeals.
Looking at the plain language of IRC section 6330 , it appears that the proper reading is that the Tax Court's jurisdiction over some matters is *1054 exclusive, as is the district courts' jurisdiction over other matters. [FN188] That is, if the Tax Court would have had jurisdiction over the underlying matter, an appeal cannot be brought in any court other than the Tax Court. [FN189]
However, if there are two related assessments, such as an assessment of an income tax deficiency and an assessment of a frivolous return penalty, included in a single CDP notice and considered in a single CDP hearing, jurisdiction of the underlying tax deficiency will reside solely in the Tax Court and jurisdiction of the frivolous return penalty will reside solely with the district court. This means that in any given instance, particularly with respect to tax protesters, it is possible that a single CDP appeal may by necessity require review in two separate courts. The possibility of bifurcated review has occurred in a number of litigated cases. [FN190]
Requiring two courts to hear appeals from a single CDP determination is inefficient. As a result, a number of proposals would vest jurisdiction over all CDP appeals in the Tax Court. Vesting all jurisdiction in the Tax Court is accompanied by some issues that do not appear to have been considered. Vesting jurisdiction over all CDP appeals in the *1055 Tax Court is a grant of jurisdiction that could unintentionally increase the Tax Court's jurisdiction. If adopted, this proposal could allow taxpayers additional opportunities and create incentives to delay payment of taxes. It may also increase the opportunities for taxpayers to engage in forum shopping.
These proposals would potentially increase the Tax Court's jurisdiction significantly. Vesting jurisdiction over all CDP appeals in the Tax Court would allow taxpayers to seek review of issues in the Tax Court that previously could never be heard by the Tax Court. For instance, under no circumstance can a taxpayer currently seek pre-payment review of either trust fund penalties (amount imposed on "responsible parties" that do not pay over taxes withheld from employees' wages for taxes) or for frivolous return penalties, although after payment the taxpayer can seek refund and seek judicial review in a district court or the Court of Claims if a refund claim is denied. [FN191] Proponents of changing the jurisdiction over CDP appeals do not appear to have considered the possibility that these taxpayers, if they felt they would get a better result in the Tax Court, could wait until after assessment and the filing of a NTFL or proposed levy and then request a CDP hearing and judicial review of the CDP determination. De novo review would be available in most cases because these are not taxes subject to deficiency proceedings and in most instances will not have had any opportunity for prior administrative or judicial review. [FN192] Thus, by waiting until levy was proposed or an NFTL was filed, the taxpayer could obtain Tax Court jurisdiction with de novo review in cases where the Service sought forcible collection for a tax liability not otherwise within Tax Court jurisdiction.
IV. Reforming Judicial Review of Collection Due Process Determinations
A. Clarifying the Jurisdictional Grant of CDP Judicial Review
The possibility of bifurcated review is significant, particularly in cases of unpaid income taxes where frivolous return penalties pursuant to IRC section 6702 have been assessed. [FN193] In recent years, concerns about the *1056 fair administration of the tax laws and abuse of the tax collection system by tax protesters have resulted in proposals to increase the amount and availability of frivolous filing penalties. [FN194] In addition, proposals have been made to expand the circumstances under which frivolous filing penalties may be asserted and assessed. [FN195] These proposals include provisions that would allow more summary disposition of frivolous claims.
Frivolous claims should be addressed in a summary manner. [FN196] However, because of the goals of uniformity of administration of the tax laws, it is necessary to clearly specify what constitutes a frivolous claim. The traditional tax protester rhetoric, without a doubt, is frivolous. Of course, there is a continuum from arguable claims to entirely frivolous claims, with a significant gray area between these poles. It would be sufficient to identify frivolous arguments for these purposes as those so identified from time to time by the courts or the IRS. Summary judgment should be quickly granted and penalties imposed on the taxpayer when identified frivolous issues are the only issues raised throughout the CDP hearing, determination, and appeal process.
A clear jurisdictional grant would reduce or eliminate the need for bifurcated review in CDP appeals. Clarification of the available remedies would increase the efficiency and uniformity of decisions reviewing CDP determinations.
B. Expressly Providing Judicial Remedies
Effective, efficient collection of taxes after assessment will be furthered by providing specific remedies for administrative failings within the CDP provisions. Under the current CDP provisions it is unclear what remedies are available to the court.
If the courts were uniformly willing to apply the APA to CDP appeals, there would be a well-developed body of established law that would direct the court to appropriate responses to failures in the administrative process. However, the Tax Court, which hears the bulk of the CDP cases, has concluded that the APA is inapplicable to its review of *1057 CDP determinations. [FN197] A legislative solution is needed. In adopting a "fix" for the CDP provisions, Congress should include direction to the courts to apply the APA provisions relating to judicial review and remedies for administrative failings.
V. Conclusion
Congressional clarification of the CDP provisions relating to judicial review is essential. First, the CDP provisions need to make clear exactly what standards the courts are to apply to CDP appeals, and in what contexts. In addition, clarification of both jurisdiction and remedies for administrative failures is required. To grant jurisdiction of all CDP appeals to the Tax Court without eliminating de novo review would unnecessarily and unintentionally increase Tax Court jurisdiction. Jurisdiction of judicial review should be concurrent between the Tax Court and the district courts. That would mean the Tax Court would obtain jurisdiction over frivolous return penalties pursuant to IRC section 6702 . This is not a significant expansion of Tax Court jurisdiction.
Judicial economy would be increased by providing concurrent jurisdiction of CDP appeals to the Tax Court and the district courts. The taxpayer should be allowed to elect which court will hear his CDP appeal, so long as the court selected (1) had jurisdiction over an underlying liability at issue, and (2) de novo review was not available with respect to a liability over which the selected court did not have jurisdiction. This would eliminate the need for bifurcated review and avoid unnecessarily or unintentionally expanding the jurisdiction of the Tax Court. In addition, the range of remedies available to courts needs to be clarified preferably by adopting the approach of the APA.
[FNa1] . Assistant Professor of Law, Capital University Law School. I would like to thank Leslie Book, Bryan T. Camp, Susan M. Gilles, Gregory Germain, Jeffrey H. Kahn, Marvin C. Kloeppel, and Roberta S. Mitchell for their helpful and insightful comments on earlier drafts of this Article. All errors are my own. I would also like to thank Capital University Law School for its support.
[FN1] . See David Cay Johnston, Perfectly legal: The Covert Campaign to Rig our Tax System to Benefit the Super Rich-and Cheat Everyone Else 14 (2003); Danshera Cords, How Much Process is Due?: I.R.C. Sections 6320 and 6330 Collection Due Process Hearings, 29 Vt. L. Rev. 51, 51-52 (2005) ; Bryan T. Camp, Tax Administration as Inquisitorial Process and the Partial Paradigm Shift in the IRS Restructuring and Reform Act of 1998, 56 Fla. L. Rev. 1 (2004) (discussing the Senate Finance Committee hearings that led to the enactment of the IRS Restructuring and Reform Act); Leslie Book, The New Collection Due Process Taxpayer Rights, 86 Tax Notes 1127 (2000) .
[FN2] . Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. No. 105-206, 112 Stat. 685 (codified in various sections of 26 U.S.C.).
[FN3] . Included in the legislation was the Third Taxpayer Bill of Rights, frequently referred to as TBOR 3. Nina E. Olson, Taxpayer Rights, Customer Service, and Compliance: A Three-Legged Stool, 51 U. Kan. L. Rev. 1239, 1243 (2003) ("RRA '98 introduced seventy-one new taxpayer rights and required, to date, 1,900 implementation actions by the IRS."). Although pre-collection consideration by appeal was available before RRA 1998, CDP hearings depart from the collection appeals program (CAP) in two significant respects. First, the CAP is not a matter of right, while a CDP hearing is a matter of right for the taxpayer. Second, judicial review is unavailable in the CAP, whereas, if timely requested, a taxpayer has a right to judicial review of an unsatisfactory CDP determination.
[FN4] . See, e.g., Camp, supra note 1, at 78-86; Steve Johnson, The 1998 Act and the Resources Link Between Tax Compliance and Tax Simplification, 51 U. Kan. L. Rev. 1013 (2003) .
[FN5] . I.R.C. § § 6320 , 6330 (2000 ) .
[FN6] . Camp, supra note 1, at 119 ("The most elaborate adversarial checks on the Service's tax collection decisionmaking are contained in the massively misnamed 'Due Process' provisions . . . ."); Book, supra note 1, at 1128 ("One important change that specifically addresses supposed IRS collection abuses is the enactment of sections 6320 and 6330 , the new due process rights with respect to collection activities."); Johnson, supra note 4, at 1062 (advocating elimination of the CDP hearing for taxpayers raising frivolous arguments); Olson, supra note 3, at 1248 ("While I acknowledge that some taxpayers are using CDP to delay collection, many more are using it in the manner for which it was intended."); see also Cords, supra note 1.
[FN7] . Over 38,000 CDP determinations were issued between 1999 and 2002. At the end of fiscal year 2002 more than 18,600 CDP hearing requests were pending. Staff of Joint Comm. on Taxation, 108th Cong., Report of the Joint Committee on Taxation Relating to the Internal Revenue Service as Required by the IRS Reform and Restructuring Act of 1998, app. 1 at 22-23 (2003) [hereinafter Joint Committee Report]. CDP hearing requests are increasing: 6,892, 19,199, 26,666, and 31,848 CDP hearing requests were received by the Appeals Office in fiscal years 2000, 2001, 2002, and 2003, respectively. Taxpayer Advocate Service, National Taxpayer Advocate 2003 Annual Report to Congress 46 (2003). Post-Restructuring and Reform Act of 1998 (RRA 1998), the Service does not issue levies until after determining the taxpayer has property subject to levy.
[FN8] . I.R.C. § 6330 (e) . On average the CDP hearing process is complete within six months of the request for a CDP hearing. Treasury Inspector General for Tax Administration, Dep't of Treasury, ref. no. 2001-10-068, Taxpayer Service on Lien and Levy Appeals Could Be Further Improved 5, 8, 22-24, app. VI at 2-4 (2001) (Of the 66 cases in the sample reviewed by the Treasury Inspector General for Tax Administration the time to complete the CDP process ranged from less than 1 to 281 days, with an average of 54 days.), available at http:// www.treas.gov/tigta/oa_auditreports_fy01.shtml.
[FN9] . Steve Johnson, A Residual Damages Right Against The IRS: A Cure Worse than the Disease, 88 Tax Notes 395, 402 (2000) ("Two of the most important of the TBOR3 changes were liberalization of the relief rules as to spousal joint liability and establishment of the collection due process rules."); Book, supra note 1, at 1128 ("One important change that specifically addresses supposed IRS collection abuses is the enactment of sections 6320 and 6330 , the new due process rights with respect to collection activities.").
[FN10] . Compare Olson, supra note 3, at 1248 ("[S]ome critics within the IRS, Congress, and the tax professional community believe that CDP lets taxpayers 'game' the collection system and is responsible for some, if not all, of the decline in IRS collection activities over the last five years. While I acknowledge that some taxpayers are using CDP to delay collection, many more are using it in the manner for which it was intended."), with Camp, supra note 1, at 122. See, e.g., Tilley v. United States, 270 F. Supp. 2d 731, 733 (M.D.N.C. 2003) (Taxpayers sought to relitigate the validity of the CDP hearing, which had previously been adjudicated by the Tax Court, and also raised frivolous constitutional issues relating to the collection of their tax liability.), aff'd without published opinion per curiam, No. 03-1934, 2004 WL 96815 (4th Cir. Jan. 15, 2004) , cert. denied 125 S. Ct. 64 (2004) ; Lunsford v. Commissioner, 117 T.C. 183, 190 (2001) ; Goza v. Commissioner, 114 T.C. 176, 183 (2000) ("Petitioner failed to raise a valid challenge to respondent's proposed levy before the Appeals Office. Petitioner continued to assert the same frivolous constitutional claims in his petition for review filed with the Court.").
[FN11] . Joint Committee Report, supra note 7, at app. 1 at 22-23. The Joint Committee concluded that frivolous requests only accounted for 5 percent of the CDP hearing requests received by the IRS. Five percent of the claims totaled only 906 CDP requests. However, frivolous claims accounted for a disproportionate use of appeals resources and judicial appeals. Id.; see also Johnson, supra note 4, at 1062 (quoting Progress Report on the IRS Restructuring and Reform Act of 1998: Hearings Before the Joint Economic Committee, 107th Cong. 2d. Sess. (2002) (statement of Charles O. Rossotti)); Olson, supra note 3, at 1248; see also, e.g., Robinette v. Commissioner, 123 T.C. 85 (2004) ; Fowler v. Commissioner, T.C.M. (RIA) 2004-163 ; Ramirez v. Commissioner, No. 14154-025, 2004 WL 766432 (T.C. Apr. 12, 2004) (remanding case for further proceedings because the taxpayer was not afforded a proper hearing and further proceedings relating to the taxpayer's offer in compromise could be productive); Estate of Doster v. Commissioner, 83 T.C.M. (CCH) 1044 (2002) (determining that the Appeals Officer did not abuse his discretion by denying the proposed collection alternatives and the request for abatement).
[FN12] . I.R.C. § 6330 (d)(1) (2000) .
[FN13] . Leslie Book, The Collection Due Process Rights: A Misstep or a Step in the Right Direction?, 41 Hous. L. Rev. 1145 (2004) [hereinafter Book, A Misstep or a Step in the Right Direction]; Diane Fahey, The Tax Court's Jurisdiction Over Due Process Collection Appeals: Is it Constitutional?, 55 Baylor L. Rev. 453, 468-69 (2003) ; Book, supra note 1, at 1144-46 (discussing issues and potential confusion arising under the statutory grant of jurisdiction); see also Moore v. Commissioner, 114 T.C. 171, 175 (2000) ( "Congress did not intend to expand the Court's jurisdiction beyond the types of taxes that the Court may normally consider." The Court dismissed claims for trust fund taxes because they were not income, gift or estate taxes.); Katz v. Commissioner, 115 T.C. 329, 339 (2000) (citing Moore and interpreting "the term 'underlying tax liability' in section 6330 (d)(1) to include any amounts owed by a taxpayer pursuant to the tax laws"); Hart v. IRS, No. 00- 4658, 2001 WL 393699 (E.D. Pa. Feb. 8, 2001) (applying the same test used by the Tax Court), aff'd without published opinion, 281 F.3d 221 (3d Cir. 2002) .
[FN14] . The proper court in which to seek judicial review has been frequently litigated. See, e.g., Steidel v. Evans, No. 02-35733, 2003 WL 343229 (9th Cir. Feb. 12, 2003) ; Glass v. IRS, No. 01-2112, 2001 WL 1356141 (10th Cir. Nov. 5, 2001) ; Deifenbaugh v. Weiss, 234 F.2d 1267 (6th Cir. 2000); Downing v. Commissioner, 118 T.C. 22, 27-28 (2002) ; Van Es v. Commissioner, 115 T.C. 324 (2000) ; Moore v. Commissioner, 114 T.C. 171 (2000) ; True v. Commissioner, 108 F. Supp. 2d. 1361 (M.D. Fla. 2000) ; Goza v. Commissioner, 114 T.C. 176, 182 (2000) .
[FN15] . Compare Lunsford v. Commissioner, 117 T.C. 159 (2001) (concluding that all that is required is a CDP determination that sets forth the items required by IRC § 6330 (c)(3) , regardless of the basis for the CDP determination, i.e., it is not essential that the CDP determination be issued after a CDP hearing), with Johnson v. Commissioner, 117 T.C. 204, 209 (2001) (holding that the Tax Court could not review any case for proper hearing unless it had jurisdiction over the underlying liability and overruling Meyer v. Commissioner, 115 T.C. 417 (2000) , to the extent that it was in conflict with this ruling), and Meyer, 115 T.C. 417 (concluding that a CDP hearing had to be conducted for a determination to be valid). Although Meyer was overruled by Lunsford and Johnson, during the intervening 12 months it was good law, which presumably was relied upon by both the Service and taxpayers. Lunsford, 117 T.C. at 181 (Foley, J., dissenting) (noting that "an indeterminate number of case dispositions (i.e., by way of settlement and orders) have relied on it. The Court's flip-flopping creates unnecessary and unwarranted instability in the law.")
[FN16] . See infra Part II.B.1.
[FN17] . The hearing process is arguably more important than judicial review because properly conducted CDP hearings should the need for judicial review. Full discussion of the CDP hearing process is not intended here. Fuller discussion of proper CDP hearing procedures can be found elsewhere. See Cords, supra note 1; Book, A Misstep or a Step in the Right Direction, supra note 13; Book, supra note 1.
[FN18] . This will be referred to throughout as "enforced collection."
[FN19] . I.R.C. § 6320(a)(1) (2000) . The notice must be given to the taxpayer, left at the taxpayer's dwelling or usual place of business, or sent to the taxpayer's last known address by certified or registered mail. Id. § 6320(a)(2) .
[FN21] . Id. § 6330 (a)(3) . The IRS must send a similar notice within five days after the filing of a notice of federal tax lien (NFTL). The requirements for a CDP notice with respect to the filing of a NFTL under IRC § 6321 are slightly different. However, in general the procedures for a CDP notice and hearing are very similar regardless of whether the notice relates to the filing of a Federal tax lien or a proposed levy. See I.R.C. § 6320(c) which prescribes that the provisions of I.R.C. § 6330(c), (d ) (except paragraph (2)(B)), and (e) apply to the conduct of a hearing under I.R.C. § 6320 . A request for a CDP hearing does not require that the Service withdraw an NFTL.
[FN22] . Id. § 6330 (a)(3)(B) . The 30-day period to request a CDP hearing after an NFTL is filed begins five days after the NFTL is filed. Id.
[FN23] . Id. § 6330 (e) . CDP hearings are only available with respect to the first notice of intent to levy or filing of an NFTL. Treas. Reg. § § 301.6320-1(b) , 301.6330-1(b) (2004) . In addition, a notice of a right to a CDP hearing may relate to more than one taxable period. The CDP hearing will cover the entire period covered by the CDP notice.
[FN24] . Michael I. Saltzman, IRS Practice and Procedure ¶ 1.02[4][b] (2d ed. 1991).
[FN25] . Internal Revenue Service Restructuring and Reform Act of 1998 § 1001, Pub. L. No. 105-206, 112 Stat. 685. Ex parte communications between appeals and other IRS employees are limited. Rev. Proc. 2000-43, 2000-2 C.B. 404 . Revenue Procedure 2000-43 applies to communications after Oct. 23, 2000.
[FN26] . I.R.C. § 6330 (b)(3) . An impartial Appeals Officer is an Appeals Officer that has not had prior involvement with the unpaid tax specified in the CDP notice. See Cords, supra note 1, at 64.
[FN27] . Treas. Reg. § 601.106(c) ("Proceedings before the Appeals are informal. Testimony under oath is not taken, although matters alleged as facts may be required to be submitted in the form of affidavits, or declared to be true under the penalties of perjury."); Saltzman, supra note 24, ¶ 9.05[3], at 9-37 (discussing the informal nature of Appeals Office conferences); Roberts v. Commissioner, 329 F.3d 1224, 1228 (11th Cir. 2003) (concluding that the taxpayer's due process rights were not violated by informal Appeals Office proceedings); Kelly v. United States, 209 F. Supp. 2d 981, 988-89 (E.D. Mo. 2002) (concluding that Congress intended CDP hearings in the Appeals Office to be informal); Mesa Oil, Inc. v. United States, No. Civ.A. 00-13-851, 2000 WL 1745280, at *7 (D. Colo. Nov. 21, 2000) (agreeing with Davis v. Commissioner, infra that CDP hearings were to be informal because they were held in the Appeals Office and no change in procedure was suggested); Davis v. Commissioner, 115 T.C. 35, 41 (2000) (agreeing with the authority holding that in enacting the CDP provisions, Congress was aware of the informal nature of Appeals Office proceedings and that Congress' silence indicated its intention that Appeals Office hearings continue to be informal and that the hearings did not include a right to have testimony taken under oath or subpoena witnesses.).
[FN28] . Pamela Kesner, Note, Determining the Meaning of a Meaningful Collection Due Process Hearing: Katz v. Commissioner, 54 Tax Law. 823 (2001) . See generally, Cords, supra note 1.
[FN29] . Cords, supra note 1 (contending that some taxpayers have received more process than other taxpayers).
[FN30] . Treas. Reg. § § 301.6320-1(d)(2) A-D6, 301.6330-1(d)(2) A-D6; see, e.g., Frank v. Commissioner, 85 T.C.M. (CCH) 1066 (2003) (upholding determination made following a telephonic hearing, when the taxpayer did not object to this type of hearing); Tilley v. United States, 270 F. Supp. 2d 731 (M.D.N.C. 2003) , aff'd without published opinion per curiam No. 03-1934, 2004 WL 96815 (4th Cir. Jan. 15, 2004) , cert. denied 125 S. Ct. 64 (2004) ; Cmty. Residential Servs., Inc. v. United States, No. 1:02CV0012S, 2003 WL 21033239 (M.D.N.C. May 7, 2003) (although not required, a face-to-face hearing was conducted); Loofbourrow v. Commissioner, 208 F. Supp. 2d 698 (S.D. Tex. 2002) ; Elek v. Commissioner, 85 T.C.M. (CCH) 1170 (2003) (correspondence hearing conducted at the taxpayer's request); Konkel v. Commissioner, No. 6:99-CV-1026-oRL-31C, 2000 WL 1819417 (M.D. Fla. Nov. 6, 2000) ; Katz v. Commissioner, 115 T.C. 329 (2000) (upholding determination made following telephonic hearing conducted after taxpayer refused offer of in-person hearing at Appeals Office an hour from the taxpayer's location). See generally Kesner, supra note 28.
[FN31] . I.R.C. § 6330 (c)(1) .
[FN32] . Id. § 6330 (c)(2)(A) .
[FN33] . Id. § 6330 (c)(2)(B) . The conduct of CDP hearings, as well as the nature and timing of the verification, present significant issues. These issues have been discussed in depth elsewhere. See Cords, supra note 1; Book, A Misstep or a Step in the Right Direction, supra note 13; Book, supra note 1; Fahey, supra note 13.
[FN34] . I.R.C. § 6330 (c)(4) .
[FN35] . Id. § 6330 (c)(3) .
[FN36] . Id. Significant concerns about the balancing that is to be performed have also been raised. Cords, supra note 1; Book, supra note 1, at 1139.
[FN37] . See Book, supra note 1, at 1139; Cords, supra note 1.
[FN38] . Cords, supra note 1; see also Book, supra note 1, at 1137.
[FN39] . Most CDP hearings occur within six months of the request for a CDP hearing. Treasury Inspector General for Tax Administration, supra note 8, at 5 (2001) (the range of time to complete the sample of 66 cases that were reviewed by the TIGTA reviewed was from less than 1 to 281 days, with the average time being 54 days). The IRS response to the suggestion by the TIGTA that time frames should be established was that each case was different, some were more complex and take longer to resolve. Id. at 22-24, app. VI at 2-4. To the extent that determinations are not issued within six months, procedures for making quarterly status reports have been implemented. Id. at 24, app. VI at 4; see also Cords, supra note 1; Johnson, supra note 4; Camp, supra note 1; Book, supra note 1.
[FN40] . I.R.C. § 6330 (d)(1) . For further discussion of the jurisdiction of these courts over CDP appeals, see infra II.B.3.a.
[FN41] . I.R.C. § 6330 (e)(1) . A limited exception exists where the underlying liability is not at issue and the Service demonstrates good cause to allow the levy to continue. Id. § 6330 (e)(2) .
[FN42] . Id. § 6330 (d)(1) .
[FN43] . Id. § 6330 (d)(1) .
[FN44] . Treas. Reg. § § 301.6320-1 , 301.6330-1 (2004) .
[FN45] . H.R. Conf. Rep. No. 105-599, at 266 (1998) .
[FN46] . Bryan T. Camp, The Failure of CDP, Part 2: Why it Adds No Value, 104 Tax Notes 1567 (2004); Book, A Misstep or Step in the Right Direction, supra note 13, at 1194-97.
[FN47] . See, e.g., Woodral v. Commissioner, 112 T.C. 19, 23 (1999) ; see also Francis M. Allegra, Section 482: Mapping the Contours of the Abuse of Discretion Standard of Judicial Review, 13 Va. Tax Rev. 423 (1994) .
[FN48] . 3 Charles H. Koch, Jr., Administrative Law and Practice § 10.6 (2004).
[FN49] . 5 U.S.C. § § 500 -59, 571 -84, 701 -06 (2000 & Supp. II 2002).
[FN50] . 5 U.S.C. § 706 (2000) .
[FN51] . Id.
[FN52] . Lunsford v. Commissioner, 117 T.C. 159 (2001) (overruling Meyer v. Commissioner, 115 T.C. 417 (2000) ); see also Offiler v. Commissioner, 114 T.C. 492, 498 (2000) (analogizing a CDP determination to a statutory notice deficiency as the jurisdictionally necessary "ticket" to the Tax Court). A CDP determination would be improper if an Appeals Officer failed to comply with the CDP provisions, for instance by failing or refusing to conduct a CDP hearing. Which was the situation presented in both Meyer and Lunsford. I have taken the position elsewhere that the Tax Court's decision in Lunsford was incorrect. See Cords, supra note 1.
[FN53] . Other areas of law, including the APA, have generally not been applied to tax law. See, e.g., Book, A Misstep or Step in the Right Direction, supra note 13, at 1159 ("academics and policymakers have often viewed tax law as an island, apart from the procedural and substantive mainstream"); see also Leandra Lederman, " Civil"izing Tax Procedure: Applying General Federal Learning to Statutory Notices of Deficiency, 30 U.C. Davis L. Rev. 183 (1996) (stating that "Tax law tends to be uninformed by other areas of law. This insularity has the unfortunate consequence of depriving tax and other fields of cross-fertilization." (footnote omitted)); Paul L. Caron, Tax Myopia or Mamas Don't Let Your Babies Grow Up to Be Tax Lawyers, 13 Va. Tax Rev. 517, 518 (1994) (addressing the concern that "tax law too often is mistakenly viewed by lawyers, judges, and law professors as a self-contained body of law" and that "this misperception has impaired the development of tax law by shielding it from other areas of law that should inform the tax debate").
[FN54] . For instance, in deficiency cases the Tax Court makes its own finding as to whether the taxpayer has an under-or overpayment of taxes. I.R.C. § 6214 (2000) . Likewise, in a refund suit, the district court or the Court of Claims makes its own determination on the merits of the taxpayer's claim.
[FN55] . See, e.g., Book, A Misstep or a Step in the Right Direction, supra note 13, at 1159-60.
[FN56] . Robinette v. Commissioner, 123 T.C. 85 (2004) .
[FN57] . Id. at 121-32 (Halpern and Holmes, JJ., dissenting); Keene v. Commissioner, 121 T.C. 8, 20-21 (2003) (Halpern, J., concurring); Nestor v. Commissioner, 118 T.C. 162, 172-75 (2002) (Halpern, J., concurring); Lunsford v. Commissioner, 117 T.C. 159, 165, 167-168 (2001) (Halpern, J., concurring).
[FN58] . Treas. Reg. § § 301.6320-1(d)(2) Q&A-D6, 301.6330-1(d)(2) Q&A-D6 (2004).
[FN59] . For the fiscal year following the availability of CDP hearings, the Tax Court budgeted for 105,000 CDP appeals. That number of filings has not materialized. Johnson, supra note 4, at 1043. However, that is not to say that the number of CDP appeals is insignificant. Quite the contrary, CDP has been among the top ten most litigated issues according to the statistics compiled by the National Taxpayer Advocate in each of the last three years, with the position of CDP in the list rising each year. Taxpayer Advocate Service, National Taxpayer Advocate, 2003 Annual Report to Congress, 312-31 (2003) (identifying CDP as the most litigated tax issue); Taxpayer Advocate Service, National Taxpayer Advocate, 2002 Annual Report to Congress, 256, 272- 82 (2002) (identifying CDP as the second most litigated tax issue); Taxpayer Advocate Service, National Taxpayer Advocate, 2001 Annual Report to Congress, app. C (2001) (identifying CDP as the sixth most litigated tax issue).
[FN60] . Estate of Doster v. Commissioner, 83 T.C.M. (CCH) 1044 (2002) (concluding that the Service had not waived the preclusion of an issue determined in a prior administrative proceeding by reconsidering it during the CDP hearing).
[FN61] . Treas. Reg. § 301.6330-1(f)(2) Q&A-F5 (2004) ("the taxpayer can only ask the court to consider an issue that was raised in the taxpayer's CDP hearing.").
[FN62] . See infra notes 115-16.
[FN63] . Bryan T. Camp, Failure of Collection Due Process, Pt. 1: The Collection Context, 104 Tax Notes 969, 975 & n.35 (2004) ("The legislative history of CDP reflects not just the taxwriters' belief in adversarial process as a check on IRS abuse, but also their misunderstanding of the deficiency process, the collection process, and the function of an assessment.").
[FN64] . Camp, supra note 46, at 1569-70 & nn.10-13.
[FN65] . See, e.g., Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402 (1971) ; Book, A Misstep or a Step in the Right Direction, supra note 13, at 1170-73.
[FN66] . Robinette v. Commissioner, 123 T.C. 85, 93-94 (2004) ; Book, A Misstep or a Step in the Right Direction, supra note 13, at 1170-74.
[FN67] . Robinette, 123 T.C. at 95 (2004) .
[FN68] . Id. at 86. The effect of these different types of taxes on judicial review and judicial jurisdiction will be discussed infra in Part II.B.3.
[FN69] . Id. at 86-87.
[FN70] . Id.
[FN71] . Id. at 87.
[FN72] . Id. (omissions in original).
[FN73] . Id. at 89-90.
[FN74] . Id. at 88-90.
[FN75] . Id. at 90.
[FN76] . Id.
[FN77] . Id.
[FN78] . Id.
[FN79] . Id. at 91.
[FN80] . Id. at 91-92. The Appeals Officer was willing only to accept as evidence of filing a certified mail or registered mail receipt. Id.
[FN81] . Id. at 91.
[FN82] . Id.
[FN83] . Id.
[FN84] . Id. at 85. The report of the case included seven opinions, including the majority, concurring, and dissenting opinions: (1) Six judges, including the Judge Vasquez, the author of the opinion, agreed with the majority opinion: Judges Vasquez, Gerber, Cohen, Swift, Wells, and Laro; (2) Judge Wells also wrote a concurring opinion that questioned the use of contract law to decide the issue of default of the OIC; Judges Gerber, Foley, Marvel, and Wherry joined this concurrence; (3) Judge Thornton wrote a concurrence agreeing with the holding that the Administrative Procedure Act does not apply to review of CDP determinations; Judges Gerber, Cohen, Swift, Laro, Foley, Gale, Haines, Goeke, Wherry, and Kroupa joined this concurrence; (4) Judge Marvel wrote a concurrence agreeing that the Administrative Procedure Act did not apply and that the review was not limited to the administrative record, but questioning the use of contract principles; Judges Laro and Wherry joined this concurrence; (5) Judge Haines wrote a concurring opinion questioning the appropriate contract law to be applied to the OIC and considering the nature of an OIC and default thereof; Judges Goeke and Wherry joined this concurrence; (6) Judge Wherry wrote a concurring opinion focusing on the timing of the offer of evidence that should be considered when the court considers matters not presented at the CDP hearing. Judge Wherry was concerned about taxpayers who used dilatory tactics and concluded that information withheld from the Appeals Officer in the CDP hearing should not be considered, but that if the Appeals Officer did not consider evidence offered, the evidence should be considered by the court; Judges Cohen, Laro, Gale, Thornton, Haines, and Goeke joined this concurrence; and (7) Judges Halpern and Holmes wrote a dissenting opinion. Judge Chiechi dissented from the opinion but did not write a dissent or join in the written dissent.
[FN85] . Id. at 95.
[FN86] . Treas. Reg. § § 301.6320-1(e)(3) Q&A E-8, 301.6330-1(e)(3) Q&A E-8 (2004).
[FN87] . Patton v. Commissioner, 116 T.C. 206, 210 (2001) (quoting Buzzetta Constr. Corp. v. Commissioner, 92 T.C. 641, 647 (1989) ); see Allegra, supra note 47, at 453-75.
[FN88] . See generally Camp, supra note 1.
[FN89] . Camp, supra note 46 (discussing the dichotomy between abuse of discretion review and the potential expansion of judicial review under Robinette); Book, A Misstep or a Step in the Right Direction, supra note 13, at 1194-97; see also Robinette v. Commissioner, 123 T.C. 85, 95 (2004) (concluding that the Tax Court was not limited to reviewing the agency record on appeal).
[FN90] . See generally Harold Dubroff, The United States Tax Court: An Historical Analysis, Part I, 40 Alb. L. Rev. 7 (1975).
[FN91] . Id. Efforts to convert the Tax Court to a full Article III court have been unsuccessful. Id.
[FN92] . See generally Harold Dubroff, The United States Tax Court: An Historical Analysis, Part II, 40 Alb. L. Rev. 53 (1975) (discussing proposals and debates that led to the creation of the Board of Tax Appeals in 1924 as an agency separate from the Department of Treasury).
[FN93] . Id. Prior to becoming the Internal Revenue Service, the tax collection arm of the Treasury Department was called the Bureau of Internal Revenue.
[FN94] . But see I.R.C. § 7491 (2000) (providing for a shift in the burden of proof where the taxpayer presents credible evidence and satisfies the statutory requirements). The shifting of the burden of proof is another change in taxpayer rights resulting from RRA 1998.
[FN95] . Ewing v. Commissioner, 122 T.C. 32, 43-44 (2004) ; I.R.C. § 6404(h) (2000 & Supp. II 2002) ; Book, A Misstep or a Step in the Right Direction, supra note 13, at 1194; Allegra, supra note 47 (discussing the history and application of the abuse of discretion standard of review for allocations made under I.R.C. § 482 ).
[FN96] . Treasury Inspector General for Tax Administration, Ref. No. 2004-40- 067, Appeals Complied with the Provisions of the Law for the Collection Due Process 5 (2004). Despite this data, TIGTA concluded that no additional corrective actions were needed. Id. at 7.
[FN97] . See, e.g., Mesa Oil, Inc. v. United States, No. Civ.A. 00-B-851, 2000 WL 1745280, at *7 (D. Colo. Nov. 21, 2000) (remanding for further proceedings because the administrative record was inadequate for review); see also Robinette v. Commissioner, 123 T.C. 85 (2004) ; I.R.S. Chief Counsel Notice CC-2004-031 (Aug. 31, 2004) (advising Service attorneys of the need to verify a proper administrative record in litigation and directing attorneys to request remand if the record from the Appeals Office is inadequate).
[FN98] . H. .R. Conf. Rep. No. 105-599 .
[FN99] . I.R.C. § 6330 (c )(2)(B) (2000) .
[FN100] . I.R.C. § 6213 (such petition must be filed in the Tax Court within 90 days of issuance of the notice of deficiency in most cases).
[FN101] . The burden of proof is properly placed on the taxpayer, as the taxpayer is in the best position to show the income and deductions of the taxpayer. However, another change in taxpayer rights resulting from RRA 1998 is IRC § 7491 , which shifts the burden of proof to the taxpayer if certain requirements are satisfied. Tax Court's First Case Under New Burden of Proof Rules-More Proof Not Much has Changed, 95 J. Tax'n 125 (2001) ; Philip N. Jones, The Burden Of Proof Under The '98 Act-Not Much Substance Under All That Smoke, 90 J. Tax'n 133 (1999) ; see also supra note 94 and accompanying text.
[FN102] . H. R. Conf. Rep. No. 105-599, at 89 (1998) .
[FN103] . The Tax Court's jurisdiction is limited to deficiencies in income, estate, gift, and generation-skipping transfer taxes, excess profits taxes, certain excise taxes and declaratory judgments. I.R.C. § 7422 .
[FN104] . Sego v. Commissioner, 114 T.C. 604, 610-12 (2000) (rejecting the argument that a taxpayer was entitled to challenge the underlying liability despite not having physically received a statutory notice of deficiency; the reason the notice of deficiency was not received was the taxpayer's refusal to accept the certified letter containing the notice of deficiency).
[FN105] . Tornichio v. United States, 263 F. Supp. 2d 1090, 1095 (N.D. Ohio 2002) (applying de novo review to all issues in the CDP appeal).
[FN106] . See, e.g., Jones v. Commissioner, 338 F.3d 463, 466 (5th Cir. 2003) ; Craig v. Commissioner, 119 T.C. 252, 260 (2002) .
[FN107] . De novo review should not be extended to cases where the taxpayer presented or the Appeals Officer considered the amount or validity of the underlying liability despite the fact that the taxpayer had a prior opportunity to challenge the liability.
[FN108] . Fahey, supra note 13, at 469, 474-79.
[FN109] . See, e.g., Lunsford v. Commissioner, 117 T.C. 159, 167-68 (2001) (Halpern, J., concurring) (" Section 6330 (d)(1) does not, however, specify our remedial powers . . . .").
[FN110] . See, e.g., Estate of Doster v. Commissioner, 83 T.C.M. (CCH) 1044 (2002) .
[FN111] . See supra notes 6, 9 and accompanying text.
[FN112] . Only about 5% of the CDP hearing requests raise frivolous claims; however, those claims account for a disproportionate amount of resources and appeals. Joint Committee Report, supra note 7, app. 1 at 22-23 (JCX-53-03); see also Bryan T. Camp, The Costs of CDP, 105 Tax Notes 1445 (2004).
[FN113] . Pierson v. Commissioner, 115 T.C. 576 (2000) (putting taxpayers on notice that IRC section 6673 penalties would be applied in future cases where taxpayers raised frivolous or groundless issues in CDP appeals). Although significant penalties do not seem to prevent frivolous CDP appeals, the amount of the penalties could be raised to reflect the systemic costs. These penalties do not seem to deter, because many of the taxpayers against whom IRC § 6673 penalties are awarded are repeat players-the taxpayers have raised the same or similar frivolous arguments in other cases. To provide equal treatment and reduce the costs to the system, such penalties should be mandatory. Finally, to reduce recourse expenditures on frivolous claims, rapid, easily obtained summary judgment procedures should be used. However, a discussion of the proper penalties is outside the scope of this Article.
[FN114] . See 5 U.S.C. § 706 (2000) .
[FN115] . See, e.g., MRCA Information Servs. v. United States, 145 F. Supp. 2d. 194 (D. Conn. 2000) ; Silver v. Smith, No. 01-CV-6193L, 2002 WL 31367926 (W.D.N.Y. Sept. 5, 2002) ; Herycyk v. United States, No. 4:01CV00058, 2001 WL 1836194 (N.D. Ohio Dec. 11, 2001) (ordering remand, but raising the question whether the court would retain jurisdiction after remand). But see Montijo v. United States, No. CV-S-01-0423-RLH RJJ, 2002 WL 507573 (D. Nev. Feb. 22, 2002) (finding no authority to remand the case).
[FN116] . Lunsford v. Commissioner, 117 T.C. 183 (2001) (finding remand "[n]either necessary or productive," which assumes the authority to remand).
[FN117] . Harrell v. Commissioner, 86 T.C.M. (CCH) 378, 379 (2003) (remanding to appeals on other grounds, with directions to appeals to consider the effect of taxpayers' bankruptcy filings on the taxpayers' rejection of an installment agreement offer, in light of Young v. United States, 533 U.S. 976 (2001) ); Brown v. Commissioner, No. 16142-038, 2004 WL 1775680 (T.C. Aug. 10, 2004) (remanding the case to the Appeals Office for a CDP hearing where no hearing was conducted and the taxpayer raised issues relating to an interest abatement and the allocation of payments); Ramirez v. Commissioner, No. 14154-02S, 2004 WL 766432 (T.C. Apr. 12, 2004) (remanding for a proper hearing because information relating to an offer-in-compromise request was received by the Appeals Officer after the Appeals Officer administratively closed the file, but before the CDP determination letter and summary were mailed to the taxpayer).
[FN118] . 2 Charles H. Koch, Jr., Administrative Law & Practice § 8.31 (2004 Supp.). Compare Kelby v. Commissioner, T.C.M. (RIA) 2005-025 (2005) (asserting authority to retain jurisdiction on remand to the Appeals Office), with Herycyk v. U.S., No. 4:01CV0058, 2001 WL 1836194, at n.7 (N.D. Ohio Dec. 11, 2001) (remanding case to the Appeals Office, refusing to retain jurisdiction, but acknowledging that after the hearing the taxpayer could begin another action).
[FN119] . I.R.C. § 6330 (d)(2) (2000) .
[FN120] . 2 Koch, supra note 118, § 8.31[1](c). See also Herycyk, 2001 WL 1836194 .
[FN121] . 2 Koch, supra note 118, § 8.31[1](c).
[FN122] . Camp, supra note 46.
[FN123] . Id. Moreover, Professor Camp argues that the statistics indicate that the IRS must be doing a reasonably good job of making collection decisions. Id.
[FN124] . Cox v. Commissioner, 2004 TNT 215-15 (W.D. Okla. 2004) (remanding for a proper hearing before an impartial Appeals Officer, and concluding that this required a different Appeals Officer conduct the new hearing-one not previously involved in the taxes at issue).
[FN125] . The courts should also liberally grant motions for remand to address errors. I.R.S. Chief Counsel Notice CC-2004-031 (Aug. 31, 2004) (recommending motions for remand whenever the record on appeal appears inadequate).
[FN126] . Craig v. Commissioner, 119 T.C. 252 (2002) (issues not raised deemed conceded pursuant to Rule 331); Lunsford v. Commissioner, 117 T.C. 183 (2001) (issues not raised at the hearing not available on appeal).
[FN127] . Robinette v. Commissioner, 123 T.C. 85, 95 (2004) .
[FN128] . See supra note 45 and accompanying text.
[FN129] . See supra note 45 and accompanying text.
[FN130] . I.R.C. § 6330 (d) (2000) .
[FN131] . Id. § 6330 (d)(1) ; Treas. Reg. § § 301.6320-1(f)(2) A-F3, 301.6330-1(f)(2) A-F3 (2002); see, e.g., Eiselstein v. Commissioner, 85 T.C.M. (CCH) 794 (2003) (Tax Court had jurisdiction over the CDP hearing relating to the underlying liability and the district court had jurisdiction over the frivolous return penalty); White v. United States, 250 F. Supp. 2d 919 (M.D. Tenn. 2003) (district court had jurisdiction over frivolous return penalty and the Tax Court had jurisdiction to review the CDP hearing with respect to the underlying liability); Dogwood Forest Rest Home, Inc. v. United States, 181 F. Supp. 2d 554 (M.D.N.C. 2001) (district court had jurisdiction over the taxpayer's penalties for failure to timely file returns and deposit taxes and the Tax Court had jurisdiction over the IRS's determination not to abate interest pursuant to IRC § 6404 ).
[FN132] . Johnson v. Commissioner, 117 T.C. 204, 208 (2001) ; Van Es v. Commissioner, 115 T.C. 324, 328-29 (2000) .
[FN133] . Taxpayer Protection and IRS Accountability Act of 2003, H.R. 1528, 108th Cong. § 303 (2003); Tax Court Modernization Act, S. 753, 108th Cong. § 101 (2003); Taxpayer Protection and IRS Accountability Act of 2002, H.R. 3991, 107th Cong. § 303 (2002); Tax Relief Guarantee Act of 2002, H.R. 586, 107th Cong. § 233 (2001).
[FN134] . The right to a CDP hearing accrues only if collection activity begins after January 19, 1999. Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, § 3401(b), 112 Stat. 685.
[FN135] . I.R.C. § 6330 (d)(1) ; Guerrier v. Commissioner, 83 T.C.M. (CCH) 1047 (2002) (dismissing for lack of jurisdiction a petition appealing a CDP determination filed more than 30 days after its issuance).
[FN136] . I.R.C. § 6330 (d)(1) .
[FN137] . Meyer v. Commissioner, 115 T.C. 417 (2000) , overruled by Lunsford v. Commissioner, 117 T.C. 159 (2001) ; Johnson v. Commissioner, 117 T.C. 204 (2001) .
[FN138] . Lunsford, 117 T.C. at 163-64; see also Offiler v. Commissioner, 114 T.C. 492, 498 (2002) .
[FN139] . Lunsford, 117 T.C. at 163-64; see also, e.g., Green v. Commissioner, 85 T.C.M. (CCH) 742 (2003) ; Stoewer v. Commissioner, 84 T.C.M. (CCH) 13 (2002) .
[FN140] . Offiler, 114 T.C. at 498 (comparing CDP determinations to statutory deficiency notices for jurisdictional purposes).
[FN141] . Lunsford, 117 T.C. at 160 .
[FN142] . See generally Gregory Germain, Discharging Their Duty: A Critical Assessment of the Tax Court's Refusal to Consider Bankruptcy Discharge Questions, 23 Va. Tax Rev. 531 (2004) (discussing inefficiencies in the jurisdictional grant between the Tax Court and the Bankruptcy Courts).
[FN143] . See, e.g., Cords, supra note 1, at 96 n.257 and cases cited therein.
[FN144] . See, e.g., Robinette v. Commissioner, 123 T.C. 85, 86-87 (2004) . The underlying individual tax liability is within the jurisdiction of the Tax Court. The underlying trust fund recovery penalty is within the jurisdiction of the district court.
[FN145] . The taxpayer has 30 days from the issuance of the CDP determination to file a petition seeking judicial review. I.R.C. § 6330 (d)(1) (2000) . However, if the taxpayer requests review in the wrong court, the taxpayer is given an additional 30 days after the dismissal to file the request in the correct court. Id.
[FN146] . I.R.C. § 6330 (d)(1) .
[FN147] . However, if the taxpayer inadvertently appeals to only one court or the other, the taxpayer should be given 30 days to file in the correct court for the dismissed issues. See, e.g., Tkac v. Commissioner, No. 3556-005, 2001 WL 1922701 (T.C. Nov. 14, 2001) .
[FN148] . Robinette, 123 T.C. at 87 n.2 .
[FN149] . Black's Law Dictionary 256 (7th ed. 1999).
[FN150] . Commissioner v. Sunnen, 333 U.S. 591, 599-600 (1948) .
[FN151] . Montana v. United States, 440 U.S. 147, 153-54 (1979) .
[FN152] . Sunnen, 333 U.S. 591, 597 (1948) (quoting Cromwell v. County of Sac, 94 U.S. 351, 352 (1877) ).
[FN153] . Blonder-Tongue Labs., Inc. v. Univ. of Ill. Found., 402 U.S. 313, 350 (1971) ; see Fed. R. Civ. P. 8(c) ; see also 18 Charles Alan Wright et al., Federal Practice & Procedure Jurisdiction and Related Matters § 4405 (2d ed. 2002).
[FN154] . Fed. R. Civ. P. 15(d) (allowing liberal supplemental pleading); see also 18 Wright et al., supra note 153, § 4405.
[FN155] . Jack H. Friedenthal et al., Civil Procedure § 14.9, at 679 (3d ed. 1999) (citing Technograph Printed Circuits, Ltd. v. United States, 372 F.2d 969, 977 (Ct. Cl. 1967) ). The second court may not be aware of the prior litigation. Id.
[FN156] . Commissioner v. Sunnen, 333 U.S. 591, 598 (1948) .
[FN157] . Id. at 598-99 (quoting Taint v. W. Md. Ry. Co., 289 U.S. 620, 624 (1933) ).
[FN158] . See supra Part II.B.2.
[FN159] . Id.
[FN160] . 18 Wright et al., supra note 153, § 4404.
[FN161] . Id.; see also, e.g., Carr v. CIGNA Secs., Inc., 95 F.3d. 544, 546 (7th Cir. 1996) (citing Wright et al., supra note 153); Jones v. Sheehan, Young & Culp, 82 F.3d 1334, 1338-39 n.3 (5th Cir. 1996) (citing Movwer v. Boyer, 811 S.W.2d 560, 563 (Tex. 1991) ; Hansler v. Mainka, 988 F.2d 35, 38 (5th Cir. 1993) ; Hogue v. Royse City, Texas, 939 F.2d 1249, 1256 (5th Cir. 1991) ); Lesher v. Lavrich, 784 F.2d 193, 195 (6th Cir. 1986) (citing Westwood Chemical Co. v. Kulick, 656 F.2d 1224, 1227 (6th Cir. 1981) ).
[FN162] . Friedenthal et al., supra note 155, § 14.9 & n.25.
[FN163] . Id. § 14.9 & n.27, § 14,12.
[FN164] . Id. § 14.9 & n.28.
[FN165] . Robinette v. Commissioner, 123 T.C. 85, 95 (2004) . In Robinette, the court concluded it was not precluded from considering matters that were outside the scope of the administrative record because the testimony offered by the taxpayer, according to the majority, related to an issue presented at the CDP hearing: whether the taxpayer had defaulted on the OIC. Id. at 100-01 (distinguishing the conclusion in Magana v. Commissioner, 118 T.C. 488, 493 (2002) , that "only 'arguments, issues and other matter' presented to Appeals are relevant to the determination whether an appeals officer abused his or her discretion."). But see Robinette, 123 T.C. at 121 (Halpern and Holmes, JJ., dissenting) (arguing that the majority "eviscerates the Court's holding in Magana v. Commissioner, 118 T.C. 488 (2002) , regarding the matters we may properly address in a collection due process case").
[FN166] . David Lupi-Sher, National Court of Tax Appeals: An Idea that Never Quite Goes Away, 81 Tax Notes 1159 (1998) ; David Laro, The Evolution of the Tax Court as an Independent Tribunal, 1995 U. Ill. L. Rev. 17 (1995) ; Deborah A. Geier, The Tax Court, Article III, and the Proposal Advanced by the Federal Courts Study Committee: A Study in Applied Constitutional Theory, 76 Cornell L. Rev. 985 (1991) ; H. Todd Miller, Comment, A Court of Tax Appeals Revisited, 85 Yale L.J. 228 (1975); Louis A. Del Cotto, The Need for a Court of Tax Appeals: An Argument and a Study, 12 Buff L. Rev. 5 (1962); Erwin N. Griswold, The Need for a Court of Tax Appeals, 57 Harv. L. Rev. 1153 (1944).
[FN167] . I.R.C. § 6214 (2000) .
[FN168] . See supra note 166 and accompanying text.
[FN169] . See supra note 166 and accompanying text.
[FN170] . Sandra Jo Craig, Federal Income Tax and the Supreme Court: The Case Against a National Court of Tax Appeals, 1983 Utah L. Rev. 679.
[FN171] . H.R. 1528 § 301, 108th Cong. 2nd Sess. (2004); S. 882 § 301, 108th Cong. 2nd sess. (2004); H.R. 1528 § 301, 108th Cong. 1st Sess. (2003); S. 882 § 301, 108th Cong. 1st Sess. (2003); S. 753 § 101, 108th Cong. 1st Sess. (2003); H.R. 586, 107th Cong. § 233 (2002).
[FN172] . See supra notes 133-34 and accompanying text.
[FN173] . Daniel J. Meador, A Challenge to Judicial Architecture: Modifying the Regional Design of the U.S. Courts of Appeals, 56 U. Chi. L. Rev. 603, 607-11 (1989) (discussing advantages of using subject matter rather than regional courts of appeals).
[FN174] . Richard L. Revesz, Specialized Courts and the Administrative Lawmaking System, 138 U. Pa. L. Rev. 1111, 1116-21 (1990) ; Rochelle Cooper Dreyfuss, The Federal Circuit: A Case Study in Specialized Courts, 64 N.Y.U. L. Rev. 1, 2 (1989) .
[FN175] . Dreyfuss, supra note 174, at 3; Meador, supra note 173, at 635.
[FN176] . Dreyfuss, supra note 174, at 3.
[FN177] . Meador, supra note 173, at 633.
[FN178] . See supra note 53 and accompanying text.
[FN179] . Meador supra note 173, at 637.
[FN180] . B. Anthony Billings et al., Are U.S. Tax Court Decisions Subject to the Bias of the Judge?, 55 Tax Notes 1259 (1992); Geier, supra note 166, at 989; Revesz, supra note 174, at 1152; Dubroff, supra note 92.
[FN181] . David Laro, The Evolution of the Tax Court as an Independent Tribunal, 1995 U. Ill. L. Rev. 17, 18 (The "myth has arisen over the years that the Court is sometimes predisposed in favor of the government."); Theodore Tannenwald, Jr., Reflections on The Tax Court, 36 Tax Law 853, 854 (1983) (remarks of Chief Judge Tannenwald at the Section of Taxation May 1983 May Meeting) ("I have never discerned any pro-government or pro-taxpayer bias on the part of the individual Judges.").
[FN182] . James Edward Maule, Instant Replay, Weak Teams, and Disputed Calls: An Empirical Study of Alleged Tax Court Judge Bias, 66 Tenn. L. Rev. 351 (1999) .
[FN183] . Dubroff, supra note 92.
[FN184] . Id.
[FN185] . Id.
[FN186] . Id.
[FN187] . Fahey, supra note 13; Leandra Lederman, Equity and The Article I Court: Is the Tax Court's Exercise of Equitable Powers Constitutional?, 5 Fla. Tax Rev. 357 (2001) .
[FN188] . I.R.C. § 6330 (d)(1) (2000) .
[FN189] . See I.R.C. § 6330 (d)(1)(B) .
[FN190] . I.R.C. § 6330 (d)(1) ; Treas. Reg. § § 301.6320-1(f)(2) A-F3, 301.6330-1(f)(2) A-F3. An example is a determination pertaining to collection actions with respect to deficiencies and frivolous return penalties. The Tax Court would have original jurisdiction over the deficiency matter, but does not have jurisdiction over frivolous return penalties. Johnson v. Commissioner, 117 T.C. 204, 208 (2001) ; Van Es v. Commissioner, 115 T.C. 324, 328-29 (2000) . As a result, the division of jurisdiction may require judicial review of a single CDP determination in two courts. See, e.g., Stoewer v. Commissioner, 84 T.C.M. (CCH) 13 (2002) (Tax Court concluded that it had jurisdiction over CDP determination relating to unpaid taxes, but dismissed for lack of subject matter jurisdiction with respect to assessed frivolous return penalties); Standifird v. Commissioner, 84 T.C.M. (CCH) 371 (2002) (Tax Court upheld CDP determination with respect to deficiency and dismissed for lack of jurisdiction with respect to determination relating to frivolous return penalties and related interest; Tax Court also imposed 6673 penalty because the taxpayer was a "frequent litigator of groundless challenges to the validity of the Internal Revenue Code" who instituted and maintained this proceeding primarily for delay), aff'd without published opinion, No. 8977-01L, 2003 WL 21995390 (9th Cir. Aug. 21, 2003) ; Pinsonneault v. United States, No. CV-S-01-0919-RLJRRJJ, 2002 WL 442275 (D. Nev. Feb. 14, 2002) (U.S. District Court for the District of Nevada granted summary judgment to the IRS with respect to the Appeals Officer's CDP determination relating to assessed frivolous return penalties, but dismissed for lack of subject matter jurisdiction claims with respect to CDP determination relating to the underlying liability); Dogwood Forest Rest Home, Inc. v. United States, 181 F. Supp. 2d 554 (M.D. Tenn. 2001) (holding that review of determination not to abate penalties was not within this court's jurisdiction, dismissed that claim for lack of subject matter jurisdiction, but granting summary judgment with respect to determination relating to failure to make timely deposit penalties).
The potential necessity of multiple appeals has led to proposals to give exclusive jurisdiction over CDP appeals to the Tax Court, inefficient use of scarce judicial resources, and inconsistent results in the same case. Taxpayer Protection and IRS Accountability Act of 2003, H.R. 1528, 108th Cong. § 303 (2003); Tax Court Modernization Act, S. 753, 108th Cong. § 101 (2003); Taxpayer Protection and IRS Accountability Act of 2002, H.R. 3991, 107th Cong. § 303 (2002); Tax Relief Guarantee Act of 2002, H.R. 586, 107th Cong. § 233 (2001).
[FN191] . I.R.C. § § 6214 , 7442 (2000) .
[FN192] . Id. § 6212.
[FN193] . See, e.g., Eiselstein v. Commissioner, 85 T.C.M. (CCH) 794 (2003) ; White v. United States, 250 F. Supp. 2d 919 (M.D.Tenn. 2003) ; Dogwood Forest Rest Home, Inc. v. United States, 181 F. Supp. 2d 554 (M.D.N.C. 2001) . The frivolous return penalty of IRC § 6702 is a $500 penalty imposed on returns that are deemed frivolous. Specifically, this penalty is often assessed against tax protesters, who claim zero tax liability and zero taxable wages, despite having earned W-2 wages. These returns are often accompanied by the taxpayer's W-2. In addition, the taxpayer generally requests a refund of all withheld taxes and often accompanies the return with a letter purporting to explain why the taxpayer is not subject to the Federal income tax. These claims have been consistently and repeatedly rejected by the IRS and the courts.
[FN194] . Taxpayer Protection and IRS Accountability Act of 2003, H.R. 1528, 108th Cong. § 303 (2003); Tax Court Modernization Act, S. 753, 108th Cong. § 101 (2003); Taxpayer Protection and IRS Accountability Act of 2002, H.R. 3991, 107th Cong. § 303 (2002); Tax Relief Guarantee Act of 2002, H.R. 586, 107th Cong. § 233 (2001).
[FN195] . See supra note 190.
[FN196] . An analogy can be drawn to the treatment of tax shelters that are listed transactions.
[FN197] . Robinette v. Commissioner, 123 T.C. 85, 95 (2004) ("[W]e hold that, when reviewing for abuse of discretion under section 6330 (d) , we are not limited by the Administrative Procedure Act . . . .").
END OF DOCUMENT