7th Circuit Court of Appeals Issues Ruling to Limit Tax Court Jurisdiction to Invalidate Levies

On November 18, the Seventh Circuit issued its opinion in Adolphson v. Commissioner, in which it upheld the ruling of Tax Court Judge Carluzzo in the underlying case.  The Seventh Circuit that the Tax Court lacked jurisdiction to invalidate levies despite the fact that the crucial “ticket to Tax Court,” a notice of determination for a Collection Due Process hearing, was arguably only not issued because the IRS failed issue a final notice of intent to levy as was statutorily required.  Per the opening paragraphs of the opinion:

To support his argument, Adolphson relies on a line of cases where the tax court ac‐ cepted this argument and invalidated levies despite the fact that absent a notice of determination, the tax court lacks the statutory authority to hear a taxpayer’s claim. While we agree with Adolphson that his case is indistinguishable from this line of tax court precedent, we affirm the judgment dis‐ missing Adolphson’s petition because we find that those decisions are unsound and reflect an improper extension of the tax court’s jurisdiction.

Thus, not only did the Tax Court rule against the taxpayer, but did so by rejecting a line of Tax Court opinions that likely haunted the IRS since Buffano v. Commissioner, 93 T.C.M. (CCH) 901 (2007), was issued in 2007.  Although the IRS prevailed, it seemed to do so despite itself.  The Seventh Circuit repeatedly criticized the Commissioner for failing to produce sufficient evidence as to the mailing of the notice or even to state with certainty where it was mailed, and called the Commissioner’s argument regarding Buffano “untenable” while elsewhere noting the failure of the Commissioner to “engage” the taxpayer’s arguments.

Daniel Layton, the author of this post, is the principal of Tax Attorney OC.