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  • Kenneth D. Eichner, P.C.

Recently in, Whittaker, TC Memo. 2023-59, the tax court ruled IRS abused taxpayers multiple times.

The taxpayer challenged the IRS's denial of the taxpayer's Offer in Compromise and won! The IRS did not correctly consider the taxpayer's home equity valuation. The IRS only used the value reported by the county; however, the taxpayer stated that the county records were wrong and the house was in disrepair, and they could not refinance their home. "Because the IRS ignored its manual, IRM 5.8.11.21(6)(3), which specifically mentions that a taxpayer's inability to borrow against equity is a special circumstance," the court sent the case back to Appeals to reconsider that taxpayer's valuation.


The court further states because the IRS did not mention the taxpayer's need to use their retirement accounts nor that the pandemic changed their financial conditions since the taxpayer filed their Offer that, "the absence of reasoning on the basis [in] the NOD [Notice of Deficiency] "is another ground for [the court] to find that the IRS abused its discretion."


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