Court upholds IRS levy after taxpayer fails to provide financial information
Bryan Menge v. Commissioner. U.S. Tax Court. 2026-41, No. 18451-23L.
If a taxpayer wants relief from collection, they need to provide Appeals with the financial information it requests. Repeating arguments from past tax years that have already been decided will not stop the IRS from collecting.
Holding
The Tax Court agreed with the IRS’s plan to levy for the 2015 to 2018 tax years. The Court said IRS Appeals acted properly because the taxpayer did not provide the required financial information or properly challenge the tax bills.
Why It Matters
This is a routine but important reminder that Collection Due Process (CDP) hearings require taxpayer participation.
Appeals is not required to consider collection alternatives when a taxpayer fails to submit requested financial disclosures, including Form 433-A.
Taxpayers cannot relitigate issues that have already been finally resolved in prior Court proceedings.
The decision reinforces that courts generally defer to the appeals when the administrative record shows procedural compliance and a reasonable balancing analysis.
Key Facts
The taxpayer filed Forms 1040 for 2015 through 2018 but did not pay the reported tax liabilities.
After receiving a notice of intent to levy, he requested a CDP hearing and indicated that he could not pay the balances due.
Appeals requested extensive financial information, including Form 433-A, bank statements, amended returns, and proof of estimated tax payments.
The taxpayer did not provide the requested documents and initially failed to participate in the scheduled hearing.
During a later hearing, he acknowledged that the assessed liabilities were correct but argued that an alleged overpayment from 2013 should offset the liabilities.
Both the Tax Court and the First Circuit had already rejected his 2013 overpayment arguments in prior litigation.
Appeals ultimately sustained the proposed levy.
Statutory or Regulatory Framework
§6331 authorizes the IRS to levy property when taxes remain unpaid after notice and demand.
§6330 gives taxpayers the right to a CDP hearing before levy action proceeds.
A taxpayer may challenge the underlying liability during a CDP hearing only in limited circumstances.
Appeals must consider:
Whether legal and procedural requirements were satisfied.
Issues properly raised by the taxpayer.
Whether the collection action balances efficient tax collection against unnecessary intrusiveness.
Arguments
Taxpayer argued:
He needed additional time while related litigation involving tax year 2013 proceeded.
An alleged overpayment from 2013 should be applied against the liabilities for 2015 through 2018.
Government argued:
The taxpayer failed to submit the requested financial information.
The 2013 overpayment issue had already been finally decided.
Appeals properly followed all statutory and administrative requirements before sustaining the levy.
Court’s Reasoning
The taxpayer had an opportunity to raise liability issues during the CDP process.
He did not properly challenge the liabilities for 2015 through 2018 and provided no amended returns or supporting evidence.
His arguments focused on an alleged 2013 overpayment, even though that issue had already been resolved against him.
Because the liabilities were not properly raised, the Court reviewed the determination under the abuse-of-discretion standard.
Appeals repeatedly requested financial information needed to evaluate collection alternatives.
The taxpayer failed to provide the requested Form 433-A and supporting documentation.
Appeals verified that legal and procedural requirements were satisfied and performed the required balancing analysis before sustaining the levy.
Result
The Tax Court agreed with the IRS’s decision to levy for the 2015, 2016, 2017, and 2018 tax years.
The Takeaway
There was nothing new in this case, and that is exactly why it is important. CDP hearings are often the best chance for taxpayers to work out collection alternatives, but that cannot happen if they do not provide the needed financial information. Appeals cannot judge claims of inability to pay without real documents. People often keep arguing about old issues instead of dealing with the paperwork needed now.
List of Citations
§6330 — Governs CDP hearings and Appeals review before levy actions.
§6331 — Authorizes IRS levy collection procedures.
Sego v. Commissioner, 114 T.C. 604 (2000) — Addresses liability challenges and abuse-of-discretion review in CDP cases.
Giamelli v. Commissioner, 129 T.C. 107 (2007) — Explains that liability issues must be properly raised during the CDP hearing.
McLaine v. Commissioner, 138 T.C. 228 (2012) — Supports sustaining collection actions when taxpayers fail to provide requested financial information.
Woodral v. Commissioner, 112 T.C. 19 (1999) — Defines abuse-of-discretion review.
Lunsford v. Commissioner, 117 T.C. 183 (2001) — Discusses the balancing test required under §6330(c)(3).