Appeal from a Decision of the Tax Court Tax Ct. No. 9480-02L
The opinion of the court was delivered by: Thomas, Circuit Judge:
Argued and Submitted February 17, 2011-San Francisco, California
Before: Mary M. Schroeder and Sidney R. Thomas, Circuit Judges, and Lynn S. Adelman, District Judge.*fn1
This appeal presents the question, inter alia, of whether the Tax Court had jurisdiction in a hearing conducted pursuant to 26 U.S.C. § 6330 to review the Internal Revenue Service's failure to comply with its statutory mandate under 26 U.S.C. § 6335(f). We conclude that it did, and we affirm the judgment of the Tax Court.
Michael and Gina Zapara owe the IRS over $450,000 for failing to report income derived from a fraudulent check-cashing scheme. To recover these funds, the IRS issued a levy on accounts the Zaparas opened with a securities investment company, into which the Zaparas had deposited approximately $450,000. Because the Zaparas did not use their names to identify the accounts, the IRS believed the Zaparas were attempting to conceal their ownership. The IRS therefore issued a Notice of Jeopardy Levy, as authorized under 26 U.S.C. § 6330(f).
Under the traditional levy process described in § 6330, the IRS may place a levy on taxpayer property, but it must give the taxpayer thirty days notice before imposition of the levy.
26 U.S.C. § 6330(a). Upon receiving this notice, the taxpayer has a right to request a collection due process (CDP) hearing with the IRS Office of Appeals. Id. § 6330(b).*fn2 Under the jeopardy levy provision, however, the IRS may impose a levy before a hearing if it finds that "collection of tax is in jeopardy." Id. § 6330(f). In such a case, the taxpayer must be given the same CDP hearing "within a reasonable period of time after the levy." Id. During the CDP hearing, the Appeals Officer must "obtain verification from the Secretary that the requirements of any applicable law or administrative procedure have been met." Id. § 6330(c)(1). Additionally, the taxpayer may "raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy." Id. § 6335(c)(2). Once the hearing has been conducted and the Office of Appeals issues a Notice of Determination, the taxpayer may appeal the determination to the Tax Court. Id. § 6330(d)(1).
After receiving notice of the jeopardy levy on their stock accounts, the Zaparas invoked their right to a CDP hearing. During this hearing, they requested that the IRS sell the stock and apply the proceeds to their outstanding tax liabilities. Under 26 U.S.C. § 6335(f), "[t]he owner of any property seized by levy may request that the Secretary sell such property within 60 days after such request . . . ." Once that request has been made, "[t]he Secretary shall comply with such request unless the Secretary determines . . . that such compliance would not be in the best interests of the United States." Id. § 6335(f). Without mentioning the Zaparas' request to sell, the Appeals Officer issued a Notice of Determination concluding that the Zaparas were precluded from challenging their underlying tax liabilities and that the jeopardy levy would not be withdrawn. The Zaparas appealed to the Tax Court.
The Tax Court conducted a trial and issued an opinion affirming the Notice of Determination on the Zaparas' inability to challenge the underlying tax liability. However, the Tax Court found the IRS had violated § 6335(f) by failing to sell the Zaparas' stock within sixty days. To remedy this violation, the Tax Court ordered the IRS to credit the Zaparas' tax deficiency for the value of the stock sixty days after the sale request. The Tax Court then remanded to the Appeals Office to establish the value of the stock accounts on that date. The IRS moved for reconsideration of the Tax Court's decision, arguing that the Zaparas did not make a sufficient request to sell the stock. The Tax Court denied the motion, concluding that the Zaparas appropriately requested a sale under § 6335(f). Based on the Appeals Office's valuation of the stock sixty days after August 23, 2001, the Tax Court ordered ...