## Facts

- James M. Robinette accrued unpaid federal income tax liabilities for 1983–1991 and a trust-fund recovery penalty related to unpaid employment taxes, totaling more than $1 million with additions.
- In 1994, Robinette submitted an offer-in-compromise (OIC) to settle the liabilities, including an up-front payment and a promise to pay the balance shortly after written acceptance.
- The OIC required Robinette to timely file returns and pay required taxes for five years after IRS acceptance and provided that, upon noncompliance, the IRS could collect the original liability by levy without further notice.
- Robinette also entered a collateral agreement requiring additional payments tied to income above a threshold for specified years and annual sworn income statements.
- The IRS accepted the OIC and collateral agreement in 1995.
- The IRS later determined Robinette failed to comply with OIC and collateral-agreement terms, declared a default, and initiated collection by levy.
- After a collection due process (CDP) hearing, an IRS appeals officer reviewed the file, obtained relevant OIC-related documents and correspondence, documented the analysis, and sustained the proposed levy.
- Robinette petitioned the Tax Court, which considered evidence outside the administrative record, found an abuse of discretion, and set aside the levy determination.

## Issues

1. In a CDP case under I.R.C. § 6330(d)(1) where the underlying tax liability is not at issue, must the Tax Court’s review be confined to the administrative record created at the Appeals Office hearing?
2. On the properly reviewable record, did the IRS Office of Appeals abuse its discretion in finding Robinette in default of the OIC and sustaining the levy?

## Decision

- The Eighth Circuit reversed the Tax Court.
- The court held that, when underlying liability is not contested, judicial review of an Appeals Office CDP determination is limited to the administrative record.
- Applying abuse-of-discretion review to the administrative record, the court held the IRS did not abuse its discretion in concluding Robinette defaulted and in sustaining the levy.
- The Appeals Office determination sustaining the levy was reinstated.

## Legal Principles

- In CDP judicial review under I.R.C. § 6330(d)(1) where the underlying liability is not at issue, the reviewing court applies an abuse-of-discretion standard and generally may not consider evidence outside the administrative record.
- A CDP determination is evaluated for whether the appeals officer (1) verified compliance with applicable law and procedure, (2) considered issues properly raised by the taxpayer, and (3) balanced efficient tax collection against the taxpayer’s interest in avoiding unnecessarily intrusive collection, as required by I.R.C. § 6330(c)(3).
- OIC default provisions permitting collection of the original liabilities by levy may be enforced when the taxpayer fails to satisfy ongoing filing, payment, and collateral-agreement obligations, so long as the administrative record reasonably supports the default determination.

## Conclusion

The Eighth Circuit treated the Tax Court’s role in this non-liability CDP appeal as record-based review for abuse of discretion, not a trial-like proceeding, and held that the administrative record supported the IRS’s decision to declare default on the offer-in-compromise and proceed with levy.


Robinette v. Comm’r, 439 F.3d 455 (8th Cir. 2006)