Chandler v. Commissioner

FILED
United States Court of Appeals
UNITED STATES COURT OF APPEALS Tenth Circuit
FOR THE TENTH CIRCUIT October 4, 2016
_________________________________
Elisabeth A. Shumaker
Clerk of Court
ERIC EDWARD CHANDLER,
Petitioner - Appellant,
v. No. 16-9000
(CIR No. 6866-12L)
COMMISSIONER OF INTERNAL (Commissioner of Internal Revenue)
REVENUE,
Respondent - Appellee.
_________________________________
ORDER AND JUDGMENT*
_________________________________
Before HARTZ, O’BRIEN, and PHILLIPS, Circuit Judges.
_________________________________
Eric Edward Chandler admits that he owes hundreds of thousands of dollars in
federal tax liabilities. After the IRS Office of Appeals rejected Chandler’s offer in
compromise and sustained the notice of federal tax lien, Chandler claimed that his
medical expenses had increased, resulting in changed circumstances. Chandler argues
that the Tax Court should have remanded his appeal to the IRS Office of Appeals to
reconsider its ruling in view of his changed circumstances, even though his
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist in the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument. This order and judgment is not binding
precedent, except under the doctrines of law of the case, res judicata, and collateral
estoppel. It may be cited, however, for its persuasive value consistent with
Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
reasonable collection potential is still substantially more than his offer in
compromise. The Tax Court rejected this argument and concluded that even if
Chandler were able to show a change in circumstances, that change wouldn’t be
material or alter the Office of Appeals’ determination. Exercising jurisdiction under
26 U.S.C. § 7482(a)(1), we affirm.
BACKGROUND
Chandler admits that he owes several years of underpaid taxes, estimating the
total as between $750,000 to $1,000,000. After the IRS filed a notice of federal tax
lien, Chandler requested a Collection Due-Process hearing with the IRS Office of
Appeals. Before the hearing, Chandler submitted an offer in compromise to pay
$122.40 per month for 24 months, totaling $2,937.60.1 The IRS preliminarily rejected
Chandler’s offer in compromise—determining that Chandler was seeking to hinder or
delay its collections actions against him. But because Chandler had requested a
Collection Due-Process hearing, the Office of Appeals issued a final determination
on his offer in compromise.2
The Office of Appeals sustained the IRS’s lien filing and rejected Chandler’s
offer in compromise. The Office of Appeals calculated Chandler’s reasonable
collection potential at $518,579. It did so by adding five years of Chandler’s
1
The record is unclear how Chandler determined this offer in compromise. In
response to Chandler’s offer in compromise, the IRS calculated Chandler’s monthly
disposable income as $1,732. His offer in compromise of $2,937.60 represented less
than two months of his disposable income.
2
Chandler doesn’t dispute the amount of the outstanding tax liabilities or
argue that the Office of Appeals erred in rejecting his offer in compromise.
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disposable income ($103,920) to his equity in other assets, including his retirement
funds ($415,969). Based on its calculated reasonable collection potential, the Office
of Appeals proposed its own Form 433-D Installment Agreement payment plan,
offering to accept $103,920, the value of sixty months’ payments of $1,732.
Dissatisfied with this turn, Chandler appealed the Office of Appeals’ denial of
his offer in compromise to the Tax Court. Once there, Chandler sought a remand to
the Office of Appeals for reconsideration in view of an alleged recent change of
circumstance—medical expenses rising from $144 per month (which the Office of
Appeals considered in determining his reasonable collection potential) to $310 a
month.
The Tax Court began by sustaining the IRS’s tax lien, holding that the Office
of Appeals had acted within its discretion in rejecting Chandler’s offer in
compromise. Next, addressing Chandler’s changed-circumstances argument, the Tax
Court determined that Chandler’s $166 increase in monthly medical expenses would
not materially affect the IRS’s reasonable collection potential. Thus, the Tax Court
concluded that the asserted change in circumstances didn’t justify a remand to the
Office of Appeals.
On appeal to this court, Chandler doesn’t dispute his tax liability, oppose the
Tax Court’s calculation of his reasonable collection potential, or claim that the Office
of Appeals abused its discretion in rejecting his offer in compromise. Instead, he
argues that the Tax Court erred by not remanding his case back to the Office of
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Appeals to reconsider its ruling after he told the Tax Court that his medical expenses
had increased $166 per month.
DISCUSSION
We review “tax court decisions ‘in the same manner and to the same extent as
decisions of the district courts in civil actions tried without a jury.’” Wheeler v.
Comm’r, 521 F.3d 1289, 1291 (10th Cir. 2008) (quoting Kurzet v. Comm’r, 222 F.3d
830, 833 (10th Cir. 2000)). This standard requires us to “review the Tax Court’s
conclusions of law de novo and its factual findings for clear error.” Lewis v. Comm’r,
523 F.3d 1272, 1274 (10th Cir. 2008). The Tax Court has discretion to remand
“where it would be helpful because of ‘a material change in a taxpayer’s factual
circumstances.’” Kuretski v. Comm’r, T.C. Memo. 2012-262, 2012 WL 3964770, * 5
(2012) (quoting Churchill v. Comm’r, T.C. Memo. 2011-182, 2011 WL 3300235 at
*6 (2011)).
Here, the Tax Court didn’t abuse its discretion in denying Chandler’s request
to remand to the Office of Appeals for changed circumstances. In the Tax Court,
Chandler presented evidence that his medical expenses had increased by $166 per
month after he had appeared in the Office of Appeals. But the Tax Court concluded
that even with the increased medical expenses, Chandler’s reasonable collection
potential would marginally decrease from $518,579 to $508,619—still far more than
Chandler’s offer in compromise of $2,937.60. In refusing Chandler’s requested
remand, the Tax Court explained that even with the asserted change in circumstances,
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a remand to consider Chandler’s offer of $2,937.60 would be unhelpful, unnecessary,
and unproductive.
The Tax Court did not abuse its discretion in rejecting Chandler’s request for
remand. Chandler’s change in circumstances isn’t material because it marginally
lowers his reasonable collection potential, which is still far greater than his offer in
compromise. See Murphy v. Comm’r, 469 F.3d 27, 33 (1st Cir. 2006) (explaining that
the IRS “will not accept a compromise that is less than the reasonable collection
value of the case.”). Therefore, the Tax Court did not abuse its discretion in refusing
to remand this case to the Office of Appeals.
CONCLUSION
For these reasons, the Tax Court’s decision is AFFIRMED.
Entered for the Court
Gregory A. Phillips
Circuit Judge
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