Tuesday, February 14, 2012

The ‘Have a Heart’ Case

A taxpayer successfully made a case that the IRS collections agent had abused her discretion in not adequately factoring into her assessment of his offer in compromise request that the taxpayer: was diagnosed with a brain tumor; his doctors had urged that the tumor be surgically removed and he had no health insurance; he had no significant assets and had been denied charity care, and that he continued to have health problems which limited his ability to earn money.

Take aways:

• The court stated that: “The settlement officer’s approach is difficult to square with the applicable administrative guidelines” which specifically permit officers to make allowances for special circumstances such as serious health conditions.

• The IRS agent did not dispute the existence of the health problems. Her log indicates that in calculating petitioner’s ability to pay, she took his health condition into account by allowing him a $200 monthly allowance for health insurance (even though he had none) “due to his medical condition.” (If only! $200/mon won’t cover health insurance, much less brain surgery!)

• The Court remanded the case to the Appeals Office for further consideration and clarification and instructed them to consider any new collection alternative that petitioner may wish to propose.

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