BANKS v. COMMISSIONER OF INTERNAL REVENUE (2021)

United States Court of Appeals, Ninth Circuit.2021-08-06No. No. 20-72163

Summary · law.co

Holding. The court affirmed the Tax Court's decision sustaining the Commissioner's rejection of the taxpayer's offer in compromise and denial of the lien withdrawal request, finding no abuse of discretion.

Michael Banks, an individual taxpayer, appealed the Tax Court's decision upholding the Commissioner of Internal Revenue's federal tax lien for unpaid taxes from 2013 and 2015. Banks had submitted a compromise offer of $12,000 to settle his $23,000 tax liability, which the Commissioner rejected. Banks also requested withdrawal of the tax lien, citing a recommendation from the Taxpayer Advocate Service, but the Commissioner declined. The appellate court reviewed whether the Commissioner abused discretion in making these determinations.

The court found no abuse of discretion in rejecting Banks's compromise offer. Because Banks possessed assets exceeding $110,000 and presented no evidence that paying his full tax liability would create genuine economic hardship, the compromise rejection was reasonable. Similarly, the court upheld the decision to maintain the tax lien, noting that while the Taxpayer Advocate Service favored withdrawal, no determination had been made that withdrawal served the interests of the United States as required by tax law. The court also dismissed Banks's remaining arguments regarding alleged criminal conduct and procedural violations as without merit.

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

Key issues

Whether rejection of a compromise offer was an abuse of discretion when taxpayer had substantial assets and claimed no economic hardship
Whether the Commissioner abused discretion in declining to withdraw a federal tax lien despite Taxpayer Advocate Service recommendation
Standard of review for Commissioner's discretionary tax decisions

Procedural posture

The taxpayer appealed pro se from the Tax Court's decision affirming the Commissioner's actions regarding a federal tax lien and rejected compromise offer.

Authorities cited

No cited authorities resolved to law.co cases yet.

Opinion · public domain

MEMORANDUM *

Michael Gordon Banks appeals pro se from the Tax Courts decision to sustain the Commissioner of Internal Revenues notice of federal tax lien related to his outstanding tax liabilities from the years 2013 and 2015. We have jurisdiction under 26 U.S.C. § 7482(a)(1). We review the Tax Courts decision de novo, meaning we engage in “a fresh analysis of whether the Commissioner abused his discretion.” Fargo v. Commr, 447 F.3d 706, 709 (9th Cir. 2006). Finding no basis to conclude there was an abuse of discretion, we affirm.

The Tax Court correctly determined that it was not an abuse of discretion to sustain the rejection of Bankss offer in compromise of $12,000. Banks did not dispute that his assets totaled more than $110,000, nor did he provide evidence that paying the outstanding $23,000 liability in full would cause him economic hardship. See id. at 709 (describing the economic hardship analysis as one focused on basic living expenses). It was not an abuse of discretion to reject Bankss offer in compromise on these facts. See Keller v. Commr, 568 F.3d 710, 717–18 (9th Cir. 2009) (finding no abuse of discretion where calculations revealed the taxpayers could afford to pay substantially more than their offers).

The Tax Court correctly determined that it was not an abuse of discretion to decline to withdraw the notice of federal tax lien. Although the Taxpayer Advocate Service found that withdrawal of the lien would be in Bankss best interest, there has never been a determination that withdrawal would also be in the best interest of the United States as required by I.R.C. § 6323(j)(1)(D). There is no support for Bankss argument that the notice was prematurely filed because his offer in compromise was pending.

Finally, we reject as meritless Bankss claims that the Commissioner engaged in criminal activity or failed to follow proper procedures.

AFFIRMED.