PHILLIPS v. COMMISSIONER OF INTERNAL REVENUE (2021)

United States Court of Appeals, Ninth Circuit.2021-03-19No. No. 20-70051

Summary · law.co

Holding. The court affirmed the Tax Court's judgment, holding that the Commissioner did not abuse its discretion in rejecting the taxpayers' offer in compromise.

David and Jane Phillips challenged the Tax Court's decision upholding the Internal Revenue Service's rejection of their settlement offer regarding federal tax liabilities for 2012 and 2014. The appellate court reviewed whether the Commissioner abused discretion in declining their compromise proposal. The court found no genuine factual dispute supporting the taxpayers' position and determined that the IRS acted within its authority when evaluating and rejecting the settlement offer.

The court rejected the taxpayers' claim that the Commissioner violated internal agency policies in handling their offer. The court also declined to review new arguments raised for the first time on appeal, finding no exceptional circumstances warranting consideration of those contentions.

Summary generated by law.co from the public-domain opinion. The opinion text itself is public domain.

Key issues

Whether IRS rejection of offer in compromise constituted abuse of discretion
Whether computational errors in evaluating settlement offer were prejudicial
Whether Commissioner was bound by internal policies in declining the offer
Proper scope of appellate review for new arguments raised on appeal

Procedural posture

The taxpayers appealed the Tax Court's grant of summary judgment upholding the Commissioner's rejection of their offer in compromise.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM **

David T. Phillips and Jane T. Phillips appeal the decision of the Tax Court holding that the Commissioner of Internal Revenue did not abuse its discretion by rejecting their offer in compromise related to their 2012 and 2014 tax liabilities. We have jurisdiction under 26 U.S.C. § 7482(a)(1). We review de novo questions of law, and for an abuse of discretion the Commissioners rejection of an offer in compromise. Keller v. Commr, 568 F.3d 710, 716 (9th Cir. 2009). We affirm.

The Tax Court properly granted summary judgment because taxpayers failed to raise a genuine dispute of material fact as to whether the Commissioners rejection of their settlement offer was an abuse of discretion. See id. at 717-18 (computational errors by the Commissioner in rejecting taxpayers’ offer in compromise were not prejudicial and thus were not an abuse of discretion); Fargo v. Commr, 447 F.3d 706, 709-10 (9th Cir. 2006) (the IRS has discretion to decide whether to reject an offer in compromise after evaluating all facts and circumstances).

We reject taxpayers’ contentions that the Commissioner abused its discretion by failing to comply with internal policies.

We do not consider taxpayers’ arguments or allegations raised for the first time on appeal because taxpayers have failed to demonstrate exceptional circumstances. See Sparkman v. Commr, 509 F.3d 1149, 1158 (9th Cir. 2007) (“Absent exceptional circumstances, this court will not consider an argument that was not first raised in the Tax Court.”).

AFFIRMED.