Gary B. Nelson v. Commissioner

Medical Hardship No Excuse for 'Radio Silence' in $186k Levy Case

A taxpayer facing a levy for $186,182 in unpaid taxes from 2015-2019 found no refuge in his wife's serious medical condition, as Chief Judge Urda ruled the IRS could proceed with collection. Despite the acknowledged hardship, the taxpayer's failure to engage with the IRS or provide necessary financial information proved fatal to his case. The court granted summary judgment for the IRS, emphasizing that "radio silence" cannot be excused, even in the face of personal crisis, when dealing with collection due process.

A Flawed Request and a Missed Hearing

The heart of the matter began with tax liabilities assessed against Mr. Nelson and his wife for the 2015 through 2019 tax years. These liabilities, stemming from self-filed joint tax returns where the tax liability exceeded withholdings and payments, amounted to $186,182 as of August 30, 2021. As part of collection efforts, the IRS issued a levy notice, informing Mr. Nelson and his wife of their right to request a Collection Due Process (CDP) hearing under Section 6330. Section 6330 provides a taxpayer the right to a hearing with the IRS Office of Appeals before a levy is issued.

Mr. Nelson submitted a timely request for a CDP hearing, indicating his interest in an installment agreement. With this request, he included a letter explaining his recent job loss and desire to make monthly installments. However, a critical flaw existed: while Mr. Nelson included his wife's name on the request, she did not sign the form. The IRS promptly notified the Nelsons that both spouses were required to sign the CDP request form to be entitled to a hearing, granting them three weeks until January 24, 2023, to rectify the omission.

Mr. Nelson responded on February 9, 2023, explaining that his wife was facing life-threatening medical issues requiring surgery and requesting an extension to provide her signature. Subsequently, the IRS forwarded the CDP hearing request to the Office of Appeals, but only for Mr. Nelson.

An Appeals officer scheduled a hearing for May 18, 2023, explicitly stating in a letter dated March 15, 2023, that Mr. Nelson could reschedule within 14 days if the time was inconvenient. The letter also requested a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, as well as signed tax returns for 2020, 2021, and 2022. Shortly after the scheduling letter, the IRS provided the Office of Appeals with Mr. Nelson’s February 9, 2023, letter detailing his wife's medical condition. Despite this knowledge, Mr. Nelson neither responded to the scheduling letter nor attended the CDP hearing on May 18, 2023. The Appeals officer left a voicemail requesting a return call, but Mr. Nelson remained silent. The officer then sent another letter granting an additional 14 days to provide any relevant information. Yet, Mr. Nelson remained unresponsive, creating a situation of complete "radio silence" from the taxpayer.

The Court's Ruling: Silence is Consent to Levy

Despite the acknowledged hardship of Mr. Nelson's wife's medical condition, the court found no abuse of discretion in the Appeals officer's determination to proceed with the levy. The court emphasized the limited scope of its review in collection due process cases where the underlying tax liability isn't at issue, explaining that it reviews the IRS’s determination for abuse of discretion. This means the court will uphold the Office of Appeals’ decision unless it is arbitrary, capricious, or without a sound basis in fact or law, citing Murphy v. Commissioner, 125 T.C. 301, 320 (2005).

The court then addressed the "issue raised" doctrine, a key principle in CDP cases stemming from Giamelli v. Commissioner, 129 T.C. 107 (2007). The court explained that it will only consider issues the taxpayer adequately raised during the CDP hearing. As defined in Treasury Regulation § 301.6330-1(f)(2), Q&A-F3, an issue is not properly raised if the taxpayer fails to present any evidence with respect to that issue after being given a reasonable opportunity to do so. Here, because Mr. Nelson failed to attend the hearing or submit the requested Form 433-A (Collection Information Statement for Wage Earners and Self-Employed Individuals), his request for an installment agreement was not properly raised before the Appeals officer. The officer, the court reasoned, cannot evaluate a collection alternative without the necessary financial information from the taxpayer.

Even had the installment agreement been properly raised, the court added, Mr. Nelson's case would not have improved. The court noted that Section 6159(a), authorizes the IRS to enter into a written agreement allowing a taxpayer to pay a tax liability in installments if it concludes that the agreement will facilitate full or partial collection of such liability. The decision to accept or reject an installment agreement, however, lies within the Commissioner’s discretion. The court cited its own precedent, Gebman v. Commissioner, T.C. Memo. 2025-36, noting that it is not an abuse of discretion for an Appeals officer to decline to consider an installment agreement where the taxpayer does not place a specific proposal on the table.

The court concluded by invoking what it termed the "radio silence" precedent, citing Scholz v. Commissioner, T.C. Memo. 2015-2. It reiterated that even with sympathy for Mr. Nelson's situation, an Appeals officer is not required to wait indefinitely when a taxpayer ceases communication. The court emphasized that the Appeals officer provided ample opportunity for Mr. Nelson to respond, requesting information in March 2023, waiting until after the missed hearing in May, and then granting an additional 14 days before ultimately issuing the notice of determination in November.

Procedural Warnings for Taxpayers

This case serves as a stark reminder of the importance of active engagement in Collection Due Process hearings. The Tax Court, while a court of equity, cannot conjure an administrative record where none exists. Mr. Nelson's medical hardship, though undoubtedly challenging, did not excuse his prolonged silence in the face of repeated requests for information from the Appeals officer. The court's decision underscores the Giamelli principle: issues not raised during the CDP hearing are generally barred from consideration in Tax Court. Taxpayers must understand Internal Revenue Code Section 6330, which grants taxpayers the right to a Collection Due Process hearing, requires active participation.

In this case, the Court found no abuse of discretion. The decision rested on the fact that the IRS Appeals officer made repeated attempts to engage with Mr. Nelson, and his failure to respond ultimately led to the levy's affirmation. The Tax Court's ruling grants summary judgement for the Commissioner and affirms the Appeals officer’s determination to sustain the levy action. As the Court noted in footnote 4, Mr. Nelson remains free to submit an offer to the IRS outside of this court proceeding for its consideration, but the levy to collect the $186,000 stands.