Tax Notes logo

Suspension of Collection Statute of Limitations Redux

Posted on July 2, 2020

Les and I have blogged previous cases involving Mr. Weiss here, here and here.  Thanks to sharp eyes by Carl Smith, we get to revisit Mr. Weiss in his continuing, and long lasting, journey along the path to tax compliance. When we first wrote about Mr. Weiss, he had a Collection Due Process case underway in which he argued that he was purposefully attempting to file an equivalent hearing so that the statute of limitations on collection would run. The problem he had with the argument stemmed from a difference between the date on the CDP notice and the date of actual delivery to the postal service. In his case the revenue officer (RO) attempted to hand deliver the CDP notice, but a dog prevented him from making it up the driveway. So, the RO went back to his office where two days later, the RO mailed the CDP notice using certified mail but did not change the date on the notice itself from the date it bore on the date he attempted personal delivery. The taxpayer claimed that the earlier date on the notice governed the 30-day period within which he needed to file a timely CDP request. The Tax Court held that the date of mailing governs and not the date on the notice. He unsuccessfully appealed that decision as discussed further below. And for further discussion, Jack Townsend has also written about this case here.

In 2019, the Department of Justice (DOJ) brought a collection suit against Weiss for his self-reported taxes shown on his 1986-1991 returns seeking to reduce the assessment to judgment. He filed all those returns late in 1994. By the time the suit was filed, he owed about $800,000. How could the collection statute of limitations (CSED) remain open more than 15 years after it would normally have expired? The opinion of the court does an excellent job detailing the facts and walking carefully through all of the suspensions that occurred.

Mr. Weiss filed bankruptcy three times. Filing bankruptcy extends the CSED from the time of the bankruptcy petition until the lifting of the automatic stay plus an additional six months. Depending on the type of bankruptcy, this period can add several years to the CSED. Then he received a notice of intent to levy (NOIL) and requested a CDP hearing, petitioned the Tax Court (in 2011), appealed to the D.C. Cir., then unsuccessfully sought cert. This part of his collection history is chronicled in the prior blog posts referenced above. The consequence of three bankruptcy cases and one very long CDP case is that the IRS calculated the statute of limitations on collection remained open as of the date of the filing of the suit against Mr. Weiss. Because of the amount of money he owed combined with some belief at the IRS that he had assets which would at least in part exist to satisfy the liability, the RO assigned to his case, perhaps the same one last seen running from the dog in Mr. Weiss’ yard, recommended that the government file suit, the IRS Chief Counsel’s office concurred as did DOJ.

In the collection suit, Mr. Weiss moved for summary judgment once again arguing that the CSED had expired by the time the DOJ brought suit. His argument in this case differed from his argument in the CDP case which is a good thing, since he would have been barred from making the exact same argument again. Here he argues that the filing of the request for cert with the Supreme Court did not extend the CSED. Here is the pertinent tolling language from 6330(e)(1):

[I]f a hearing is requested under subsection (a)(3)(B), the levy actions which are the subject of the requested hearing and the running of any period of limitations under section 6502 . . . shall be suspended for the period during which such hearing, and appeals therein, are pending. In no event shall any such period expire before the 90th day after the day on which there is a final determination in such hearing.

Mr. Weiss argued that a cert. petition is not an “appeal” under the terms of the statute, since it is discretionary and not called an appeal. The district court, in an opinion dated May 21, denied the motion, holding that a cert. petition is an appeal.  The district court says that a cert. petition is commonly called an appeal, even if it technically isn’t.

The district court’s opinion does not surprise me. I will also not be surprised if Mr. Weiss decides to appeal the opinion. I do not say that because I think he will win his appeal. In the end, if Mr. Weiss decides not to appeal or loses on the appeal, the IRS will have a judgment against him. As discussed in a prior post, the judgment will give the IRS many more years to attempt to collect from him. We may have further opportunities to discuss tax procedure issues related to Mr. Weiss.  

In addition to bringing the case to my attention, Carl also reminded me that the language concerning Mr. Weiss in the most recent case is language that has created some controversy in the CDP area before because Congress chose the wrong language to describe a petition to the Tax Court. The opinion doesn’t mention the fact that in 2015, 6330(d)(1) was amended to cease calling the Tax Court proceeding an appeal. While it fixed one problem regarding the language it used to describe the filing of a Tax Court petition, Congress forgot at that time to conform the language in 6330(e)(1). But, the Tax Court proceeding was called an “appeal” at the time that Weiss petitioned from his wrongly dated CDP notice.

Carl reminded me that any work done on fixing CDP should make sure to ask for this technical correction to conform 6330(e)(1) language to 6330(d)(1)’s current language. There are two sentences in section 6330(e)(1) that need to be fixed — the above-quoted one and the final sentence, which reads: “The Tax Court shall have no jurisdiction under this paragraph to enjoin any action or proceeding unless a timely appeal has been filed under subsection (d)(1) and then only in respect of the unpaid tax or proposed levy to which the determination being appealed relates.” Perhaps Mr. Weiss’ argument concerning the description of the request for cert. will cause a tightening and conforming of the language in the statute the next time it is amended. If it does, then some good will have come out of the lengthy effort to collect from Mr. Weiss.

Subject Areas / Tax Topics
Copy RID