Tax Court Allows IRS
To Pursue Collections
While Taxpayer Files Appeals

"Taxpayers have rights they should use when appropriate,” said Kevin M. Brown, commissioner of the IRS Small Business/Self-Employed Division. “But anyone who abuses those rights should understand they can incur significant penalties.”

Ordinarily, the IRS may not enforce collection while a Collection Due Process appeals is pending.

But in an April 2005 decision, the Tax Court, for the first time, allowed the IRS to pursue collection even though an appeal had been filed. In Burke v. Commissioner, 124 T.C No. 11, the court permitted the IRS to proceed with a levy, agreeing that the “taxpayer had used the collection review procedure to espouse frivolous and groundless arguments and otherwise needlessly delay collection.”

The IRS Restructuring and Reform Act of 1998 set forth various taxpayer rights related to tax liens or levies, including the right to seek judicial review. However, the Tax Court may impose sanctions of up to $25,000 on those who misuse their right to a court review merely to stall their tax payments. For example, the court imposed the maximum penalty in Kolker v. Commissioner, T.C. M. 2004-288. Noting that the taxpayer had filed multiple court actions and appeals, the Tax Court stated that he had “repeatedly wasted the Federal tax system's resources and his conduct deserves an appropriate and severe sanction.”

For more information, legal citations, and a list of penalties assessed recently. read this page on the IRS website.