Justia U.S. 7th Circuit Court of Appeals Opinion Summaries

King v. Comm’r of Internal Revenue

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King, now deceased, was a lawyer. For several years he failed to pay his quarterly payroll taxes. The IRS stated that it would grant his request for an installment payment plan, but requested additional financial information to determine his eligibility. Eventually, the IRS decided that King had enough income and assets to pay the taxes when they were due, plus penalties and interest that had accrued. He paid the taxes in October 2011 but requested abatement of interest accrued after the date on which the IRS told him it would honor his request for an installment plan. He argued that had the IRS informed him from the outset that he would not be allowed an installment plan, he would have paid the taxes sooner and would have owed less interest. The IRS denied the request. Although 26 U.S.C. 6404(a) allows abatement under certain circumstances, the IRS determined that the interest was “not excessive” and “was not erroneously or illegally assessed.” The Tax Court abated interest for two months, holding that the “failure to communicate … the deficiencies … was unfair.” The Seventh Circuit reversed, finding the Tax Court’s approach inconsistent with a Treasury Department regulation, 26 C.F.R. 301.6404–1(a), which eliminates the vagueness of “excessive” and leaves no room for consideration of “unfairness.” View "King v. Comm'r of Internal Revenue" on Justia Law
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