Tax Court Preserves Levy Protection Because IRS Fails to Show Good Cause

On January 3, 2020, the Tax Court issued an order refusing to remove an Internal Revenue Code (IRC) §6330(e)(1) suspension of levy, finding that the Internal Revenue Service (IRS) failed to establish good cause for such removal.[1] In this case, the taxpayer, as an attorney admitted to practice in Tax Court, was able to competently deflect what was essentially an IRS argument that his efforts to enforce his rights were frivolous. Other taxpayers should carefully consider this case as a particularly compelling example of why one is well-advised to hire competent counsel in IRS tax controversies.

Applicable Law

Per IRC §6330(e)(1), a taxpayer's timely CDP request suspends IRS levy action until Appeals issues a determination. As the Tax Court noted, this suspension:

shall not apply to a levy action while an appeal is pending if the underlying tax liability is not at issue in the appeal and the court determines that the Secretary has shown good cause [emphasis added] not to suspend the levy.[2]

While no definition of "good cause" may be found in IRC §6330, the Tax Court has held that the IRS may show good cause where taxpayer used the collection review procedure to present frivolous arguments and needlessly delay collection.[3]


In July of 2019, taxpayer suspended IRS collection activity by filing a Collection Due Process hearing (CDP) request under IRC §6330(e)(1). Taxpayer filed a petition to challenge the IRS's subsequent Notice of Determination Concerning Collection Actions under IRC §6320 or §6330 (NOD), which sustained a notice of intent to levy in lieu of the IRS's determination that taxpayer (1) failed to provide information to consider a collection alternative, and (2) was not compliant with making estimated tax payments.

Shortly thereafter, the IRS filed a Motion to Permit Levy-arguing that taxpayer was using CDP rights just to delay collections. Taxpayer responded with an Opposition to Motion to Permit Levy.

Since taxpayer did not provide documentation supporting his statement that he in fact challenged the existence and amount of the underlying tax liability, the Tax Court assumed, without finding, that petitioner did not challenge this during the CDP hearing.


The Tax Court noted that the IRS's support for its contention that taxpayer was using his CDP rights as a mechanism to exploit the collection review process and delay collections consisted of the following:

1. Taxpayer filed four petitions in the last eight years-all disputing NODs.

2. The outcomes of two of the taxpayer's prior cases, along with the taxpayer's failure to make estimated payments for tax year 2018.

However, the Tax Court explained that:

The Court has generally considered a motion to permit levy at the same time as a dispositive motion, such as a motion for summary judgment. A motion for summary judgment is usually filed with a declaration of the settlement officer [emphasis added] and includes documents that support the arguments made in the motion for summary judgment, including whether petitioner challenged the underlying liability in a CDP hearing.[4]

Here, the Tax Court found it significant that the IRS didn't even provide a settlement officer's declaration supporting the IRS's motion.

The Tax Court emphasized that here the record demonstrates that taxpayer participated in a conference with the settlement officer, and that the record shows nothing to indicate that taxpayer made frivolous arguments or filed his CDP request primarily to delay collections.


Again, this order shows that the IRS will sometimes pursue an aggressive position against a taxpayer acting within their rights-even one as serious as alleging that a taxpayer is acting frivolously-without the necessary evidence to support its position. Again, this particular taxpayer had an edge as an attorney-and was able to competently defend his rights. Other taxpayers are well-advised to hire experienced counsel to assist with their IRS tax controversies.

If you are facing an IRS tax controversy, call the experienced legal team of Frost & Associates, LLC at 410-497-5947.

[1]Percy Squire v. Commissioner, Docket No. 013308-19L.

[2]Id. at 1, citing Burke v. Commissioner, 124 T.C. 189 (2005).

[3] Id. at 2, citing Burke v. Commissioner, 124 T.C. at 196-197 (2005).

[4]Id. at 2, fn 2.

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