Ronald Goldberg v. CIR ( 2021 )

NONPRECEDENTIAL DISPOSITION
To be cited only in accordance with Fed. R. App. P. 32.1
United States Court of Appeals
For the Seventh Circuit
Chicago, Illinois 60604
Submitted November 1, 2021*
Decided November 3, 2021
Before
DIANE S. SYKES, Chief Judge
FRANK H. EASTERBROOK, Circuit Judge
DIANE P. WOOD, Circuit Judge
No. 20-2333
RONALD M. GOLDBERG, Appeal from the United States Tax Court.
Petitioner-Appellant,
No. 14294-13L
v.
Richard T. Morrison,
COMMISSIONER OF INTERNAL Judge.
REVENUE,
Respondent-Appellee.
ORDER
Ronald Goldberg seeks review of a judgment from the United States Tax Court
upholding a lien on his property for the collection of delinquent federal income taxes
and interest. He argues that a tax examiner bound the IRS not to collect interest on his
tax debt and unduly prolonged his audit, and so he is entitled to abatement of interest.
*
We have agreed to decide this case without oral argument because the briefs
and record adequately present the facts and legal arguments, and oral argument would
not significantly aid the court. FED. R. APP. P. 34(a)(2)(C).
No. 20-2333 Page 2
Because the Tax Court correctly ruled that the IRS had not contracted to refrain from
collecting interest, and no other circumstances warranted abating interest, we affirm.
For 20 years Goldberg has clashed with the IRS over unpaid taxes and interest. In
2003, following a criminal investigation of his business, Goldberg reached a civil
settlement with the IRS to pay back taxes. See Goldberg v. United States, 881 F.3d 529, 531
(7th Cir. 2018). Three years later, the IRS began to audit his 2004 income tax return and
in 2011 found a tax-payment deficiency of nearly $47,000. A tax examiner reported this
finding on the IRS’s Form 4549, “Income Tax Examination Changes.” The form
indicated that zero interest had been computed at that time. Goldberg signed this form,
giving his “consent to the “immediate assessment and collection of any increase in tax
and penalties … plus additional interest as provided by law.” When Goldberg did not
pay his tax debt within three months, the IRS assessed interest for 2004 through 2011,
bringing the total outstanding balance to nearly $68,000. Goldberg paid only $50,000.
Although this payment did not extinguish his debt, Goldberg nonetheless filed for a tax
refund contending that he had overpaid. He argued that the IRS had agreed not to
charge interest when it sent him its findings that did not compute interest then owed, so
he continued, any interest had been assessed in error.
As a result of Goldberg’s outstanding debt, in 2012 the IRS imposed a lien on his
property for the unpaid interest—by then $17,000—and Goldberg contested the lien. He
requested a hearing and raised two arguments about the interest. First, he insisted that
in the consent form that he signed, the examiner who determined his tax liability agreed
to limit his liability to $47,000; therefore, when the IRS later assessed interest, it
breached its contract. Second, he contended that the examiner had taken too long to
complete the audit, and so he argued he deserved an abatement of interest attributable
to that delay. See I.R.C. § 6404(e)(1) (authorizing abatements of interest that arise from
IRS’s errors or unreasonable delays). After the hearing, the IRS upheld the lien but did
not reach either argument about the interest. Goldberg appealed to the Tax Court,
which remanded for consideration on the merits of his request for abatement under
I.R.C. § 6404(e)(1). On remand, the IRS granted Goldberg an abatement for April to
August 2011, during which time the IRS had stipulated to an abatement.
Goldberg again petitioned the Tax Court for relief. This time it held a trial to
consider his argument that the IRS had contracted with him not to assess any interest on
his back taxes. Goldberg’s tax examiner testified that the lack of an interest computation
on Form 4549 was provisional; the IRS planned to assess interest once Goldberg
consented to the underlying debt and interest, as he later did by signing the form. She
No. 20-2333 Page 3
also disputed Goldberg’s claim that, during 22 periods reflected in her time logs, she
simply sat on his file. She testified that she worked diligently throughout; any delays
reflected the complexity of Goldberg’s case, how quickly he provided documents, and
the IRS’s decision to prioritize other cases. The Tax Court ruled that, by signing the
consent, Goldberg had agreed to the collection of penalties and interest under I.R.C.
§ 6601, and that the examiner had not unduly delayed the audit. It therefore upheld
both the interest assessment and the limited abatement.
Goldberg now petitions for review of the Tax Court’s decision. He reiterates his
contentions that the IRS contracted with him to assess no interest on his balance and
that he was entitled to further abatements because of the tax examiner’s delays during
his audit. We review Tax Court judgments “in the same manner and to the same extent
as decisions of the district courts in civil actions tried without a jury.” I.R.C. § 7482(a)(1).
Goldberg’s argument about the existence or meaning of a contract is a question of law,
which we review de novo. See Krukowski v. Comm’r, 279 F.3d 547, 550 (7th Cir. 2002). We
review the denial of his request for further interest abatements for abuse of discretion,
Kindred v. Comm'r, 454 F.3d 688, 694 (7th Cir. 2006), and any factual determinations
underlying that ruling for clear error. See Cole v. Comm’r, 637 F.3d 767, 774 (7th Cir.
2011).
We reject Goldberg’s argument that the IRS agreed in Form 4549 that it would
not collect interest on the tax debt that he owed. Form 4549 merely reported a proposed
tax debt, see Jacobsen v. Comm’r, 950 F.3d 414, 416 (7th Cir. 2020), by a tax examiner who
“lacked authority” to bind the government to a contract. Urso v. United States, 72 F.3d
59, 60 (7th Cir. 1995). Furthermore, Goldberg explicitly consented on the form to pay the
IRS “additional interest as provided by law.” Thus, the Tax Court correctly ruled that
Form 4549 did not bind the agency against assessing interest—to the contrary, Goldberg
committed himself to pay lawful interest.
Goldberg’s arguments for further abatements also lack merit. The IRS may abate
an assessment of interest that is attributable to an unreasonable error or delay by an IRS
employee—but only if “no significant aspect of such error or delay can be attributed to
the taxpayer.” I.R.C. § 6404(e)(1). Here, the Tax Court reasonably rejected Goldberg’s
claim that, in his view, “intentional, flagrant delays” during 22 periods of the audit
required an abatement. For periods 1 to 21, Goldberg criticized without support his
examiner’s qualifications and professionalism. The Tax Court, however, reasonably
credited the examiner’s explanation, supported by her work logs, that the audit’s length
resulted from the complexity of the case and delays attributable to Goldberg. See Ballard
No. 20-2333 Page 4
v. Comm'r, 544 U.S. 40, 60 (2005). Although the examiner at times turned to matters that
the agency deemed higher priority, such prioritization is not the type of “unreasonable
error or delay” for which § 6404(e) provides a remedy. Hinck v. United States, 550 U.S.
501, 503 (2007); see Estate of Kunze v. Comm’r, 233 F.3d 948, 950 n.1 (7th Cir. 2000). For
period 22, Goldberg argues that he did not promptly pay the balance of his interest
because the IRS delayed processing his refund request—a delay that he calls “erroneous
or dilatory” under § 6404(e)(1)(B). But Goldberg provided no evidence that he was
ready to pay the balance and only the IRS’s handling of his refund request postponed
his payment. The Tax Court thus permissibly discredited as unsubstantiated Goldberg’s
assertion about period 22. See Cole, 637 F.3d at 773.
AFFIRMED