CCA 200150010: Invalid assessment did not establish zero tax liability

Plain-English summary

Chief Counsel clarified earlier advice about an assessment made during a bankruptcy case. It had concluded that the current assessment for a tax year was invalid and that an appeals officer should not have allowed a proposed levy. But a deficiency might still be reasserted under a different limitations provision, such as § 6501(e). Counsel therefore advised that the stipulated Tax Court decision should identify the invalid assessment and levy error without stating that the taxpayer's underlying liability was zero.

Ruling snapshot

• Question: Should a stipulated decision say the taxpayer owed zero tax because the assessment was invalid?
• Outcome: Advice given: no; state that the assessment was invalid and the proposed levy was improperly permitted.
• Key authorities: IRC §§ 6330(d), 6501(e).

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
I N T E R N AL R E V E N U E S E R V I C E WASHINGTON, D.C. 20224

OFFICE OF
CHIEF COUNSEL
September 7, 2001

Number: 200150010
Release Date: 12/14/2001
CC:PA:CBS:BR1

UILC: 6213.09-00

INTERNAL REVENUE SERVICE NATIONAL OFFICE FIELD SERVICE ADVICE

MEMORANDUM FOR LOS ANGELES ASSOCIATE AREA COUNSEL, SBSE

FROM: Assistant Chief Counsel (Collection, Bankruptcy &
Summonses)
CC:PA:CBS

SUBJECT: Supplemental response - Validity of an assessment made
during a bankruptcy case where statutory notice of deficiency was previously issued during the same bankruptcy case

This Chief Counsel Advice responds to your memorandum dated February 16, 2001, to be released as 200137010 on September 14, 2001. In accordance with I.R.C. § 6110(k)(3), this Chief Counsel Advice should not be cited as precedent.

LEGEND

Taxpayer =
Year 1 =

This memorandum supplements our June 4, 2001 advice to you in connection with the taxpayer’s Tax Court case brought under I.R.C. § 6330(d). We would like to clarify that the stipulated decision should not state that the Year 1 liability is $0.
While we concluded that the current Year 1 assessment is invalid, we also concluded that a deficiency might be reasserted under a provision other than I.R.C.
§ 6501(a), such as I.R.C. § 6501(e). Accordingly, the liability may not be $0. The decision should state that the assessment is invalid and that the appeals officer abused his discretion in permitting the proposed levy.

Please call if you have any further questions.

GARY D. GRAY
By: ALAN C. LEVINE
Chief, Branch 1
CC:PA:CBS:BR1