Drake v. CIR, No. 06-2507. Oh good. A Tax case. The earlier proceedings were important to tax practitioners because they involved the extent to which Appeals Officers could engage in ex parte contacts with other parts of the service. There was a remand by the Tax Court to the IRS. He attempts to raise these issues again, but the First says that the remand purged the taint.
Starting with the worst part of the opinion: The First holds, without any real analysis that “the circuits that have all agree that a prevailing party must prevail in the final outcome of the case.” Therefore, he doesn’t get attorneys fees. Pathetically the First cites three cases. One isn’t even under the Internal Revenue Code (which has its own fee-shifting provision), and the two are not directly on point with the petitioner’s argument – that he was entitled to fees for the initial tainted proceedings that the IRS botched. Instead, they deal fee issues relating to whether someone “substantially prevailed.” I don’t know why the First dropped the ball on this.
You should like totally read on.
However, on appeal here is an issue of whether a settlement offer by the IRS was validly accepted. Despite some murkiness in the facts, in the context of a collection due process hearing, neither side wanted an evidentiary hearing. The Tax Court found that there was no binding agreement, based on the text of a status report filed with the tax court. The First says that is entitled to deference (I actually quibble with this, because I think that when government agents are engaged in certain formalized actions, the legal impact of those actions is a question of law). The IRS argues that such agreements had to be in writing because “the global settlement involved members of the Drake family who were not party to the Tax Court proceedings, the agreement actually had to be in writing, see 26 U.S.C. § 7122; 26 C.F.R. § 301.7122-1(d)(1).” The First seems to say “ it makes some sense to treat the IRS's request for signed documents [which was not complied with] as a precondition to settlement.” While the First might have reached the right result here, I think that they muddled the standard of review, and are not really giving clear guidance to anyone.
Drake makes a second point, that the IRS abused its discretion in not accepting an offer-in-compromise. The First rejects it because the taxpayer didn’t supply it with financial information contained in a second request for information.
A third point, regarding a “jeopardy levy” (in which the IRS can dispense with pre-hearing levy formalities), is termed to be not an abuse of discretion because there was information that became apparent that various assets were being held in the taxpayer’s son’s name.