Gillum v. Commissioner

• Decision Date: 11 April 2012
• Docket Number: No. 11–1664.,11–1664.
• Citation: 109 A.F.T.R.2d 2012,676 F.3d 633,2012 USTC P 50303
• Parties: Thomas M. GILLUM, Appellant, v. COMMISSIONER of INTERNAL REVENUE, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

109 A.F.T.R.2d 2012-1725

2012-1 USTC P 50,303

676 F.3d 633

Thomas M. GILLUM, Appellant,

v.COMMISSIONER of INTERNAL REVENUE, Appellee.

No. 11–1664.

United States Court of Appeals, Eighth Circuit.

Submitted: Nov. 15, 2011.Filed: April 11, 2012.

Kenneth Robert Boiarsky, argued, El Prado, NM, for petitioner.

Karen G. Gregory, argued, Washington, DC, for respondent.

Before SMITH, COLLOTON, and GRUENDER, Circuit Judges.

SMITH, Circuit Judge.

Thomas M. Gillum sought judicial review of the Commissioner of Internal Revenue's notice of determination sustaining a proposed levy to collect Gillum's delinquent income tax liabilities for 1996–2002 and a tax-lien filing for 1998 and 2000–2002 tax liabilities. Gillum also sought review of the Commissioner's denial of collection due process (CDP) hearings to his purported nominees and alter egos. Following trial, the tax court ¹ upheld the Commissioner's determinations sustaining the filing of the notice of the federal tax lien and proposed levy. Additionally, the tax court held that it could not enter a decision affecting Gillum's purported nominees and alter egos because they were not parties to the proceeding. Gillum appeals, arguing that he was denied a fair CDP hearing because the Internal Revenue Service (IRS) settlement officer relied on information that was not contained in the administrative record in making his determination. He additionally argues that his purported nominees and alter egos were entitled to a CDP hearing. We affirm.

I. Background ²

A. Criminal Prosecution

Gillum is a veterinarian who operates Cloverdale Animal Hospital, LLC (“Cloverdale”). He was prosecuted in 2004 for failure to file federal income tax returns for 1996–2002. In 2005, Gillum entered into a plea agreement with the United States Attorney for the Eastern District of Arkansas in which he pleaded guilty to one count of criminal failure to file a federal income tax return for 2000. In the plea agreement, Gillum agreed to entry of an order of mandatory restitution under 18 U.S.C. § 3663A for “the full amount of the taxes due and owing for all prosecution years.” The plea agreement provided that “[a]t this time, the United States and the defendant agree that the amount of restitution payable by the defendant is $416,210.” The plea agreement did “not bar or compromise any civil or administrative claim pending or that may be made against the defendant, including but not limited to tax matters.” Furthermore, it was “binding only upon the United States Attorney's Office for the Eastern District of Arkansas and the defendant. It d[id] not bind ... any other federal, state or local prosecuting, administrative, or regulatory authority.”

In a judgment filed December 12, 2005, the district court sentenced Gillum to five years of probation and ordered him to “pay the total criminal monetary penalties” of $246,226 in “[r]estitution.” ³ The district court also ordered Gillum to pay the $246,266 in monthly payments equal to ten percent of his monthly gross income, beginning 30 days after the date of the judgment.

While the criminal proceedings were pending, Gillum filed tax returns for 1996–2002. Thereafter, the IRS assessed the taxes that Gillum had reported on his delinquent returns for those years. In each instance, the IRS added associated tax and interest. The IRS sent notice and demand for payment to Gillum on the date of each assessment. After Gillum failed to pay, the IRS advised him on October 6, 2006, that it was going to file a notice of federal tax lien. Gillum did not request administrative review of the lien-filing at that time.

Notices of federal lien dated October 13, 2006, were recorded in Montgomery County and Pulaski County, Arkansas, on October 23, 2006, and October 24, 2006, respectively, thereby securing Gillum's delinquencies for 1998 and 2000–2003. On October 18, 2006, the IRS sent Gillum a “Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320” for 1998 and 2000–2003. On October 26, 2006, the IRS sent Gillum a “Final Notice [:] Notice of Intent to Levy and Notice of Your Right to a Hearing” under 26 U.S.C. § 6330 to collect Gillum's unpaid tax liabilities for 1996–2003.

On October 26 and 27, 2006, Gillum sent a “Form 433–A,” entitled “Collection Information Statement for Wage Earners and Self–Employed Individuals,” and a “Form 433–B,” entitled “Collection Information Statement for Businesses,” to the IRS. Gillum withheld documentation that he was required to submit with the forms. He failed to provide the account numbers for his personal bank accounts, which were held in the name of “TMG Revocable Living Trust,” or for his personal credit card, which was in the name of “Cloverdale Animal.” On Form 433–A, Gillum stated that there were no judgments against him and that he was not the beneficiary of any trust. He also stated that his monthly living expenses totaled $6,532.75, but he failed to categorize the expenses. He also did not give the estimated value of three vehicles in his possession or other required information about his personal assets. In response to the question of whether he had transferred any assets for less than their actual value in the past ten years, Gillum checked the box for “No” and wrote “Possible” next to the box for “Yes.” On Form 433–B, Gillum omitted bank and credit card account numbers and did not provide the required details about accounts receivable, business assets, available credit, or monthly income and expenses. He stated that it was “possible” that business income would increase.

B. IRS Appeals Office CDP Hearing

On November 21, 2006, Gillum timely submitted his “Request for a Collection Due Process Hearing” under 26 U.S.C. §§ 6320 and 6330, indicating his disagreement with both the lien notice and the levy notice.⁴ In his request, Gillum argued that his criminal plea agreement and judgment reflected his “tax liability for years 1996 through 2002” “and that all further attempts by the IRS to collect on these years are invalid.” He requested “that the IRS cease and desist from any further collection efforts regarding tax years 1996 through 2002 due to the fact that payment on these years is exclusively covered under an agreed court order for restitution to the IRS.” According to Gillum, he was “making payments to the IRS for these tax years under this agreement, and, unless [he] fail[ed] to meet his obligations under that agreed court order, the IRS must cease and desist from further collection activity.” Gillum did not propose any collection alternatives in his hearing request.

On December 14, 2006, the IRS Appeals Office sent Gillum a letter acknowledging its receipt of his CDP hearing request and informing him that IRS settlement officer David P. Schroeder would conduct the hearing. Gillum hired attorney Kenneth Boiarsky as his CDP representative. On April 26, 2007, Schroeder sent a letter to Gillum, with a copy to Boiarsky, scheduling a telephone hearing on May 15, 2007. Schroeder stated in the letter that he “d [id] not recall any prohibited previous involvement with [the] tax periods [at issue]” but that if Gillum believed that Schroeder had prior involvement, then Gillum needed to “notify [Schroeder] immediately.” Schroeder also listed “nonfrivolous issues” for discussion at the CDP hearing, including “[c]ollection alternatives to levy such as full payment of the liability, installment agreement, offer in compromise or temporary suspension of collection action if the action imposes a hardship condition.” Schroeder stated that even though these collection options “may not be considered an ‘alternative’ to a notice of lien filing,” they could still “be discussed at a lien hearing.” Schroeder informed Gillum that he could request a determination as to whether “the notice of lien filing was appropriate and if [Gillum] qualif [ied] for a lien withdrawal or other lien options, such as subordination.” Schroeder instructed Gillum to send Schroeder “any information you want me to consider in your hearing so that I receive it within 14 days from the date of this letter.” ⁵

Gillum did not object to Schroeder conducting the CDP hearing, and on May 15, 2007, Schroeder held the first of three telephone conferences with Boiarsky, Gillum's representative.⁶ During that telephone conference, Schroeder opined that “neither the judgment nor the plea agreement bars IRS from any civil or administrative actions related to the full tax liability, nor do [the plea agreement and judgment] compromise the tax liability.” Schroeder asked Boiarsky whether he wanted the IRS Appeals Office “to consider collection alternatives.” Boiarsky responded that, although he was not “conceding his position regarding his understanding of the agreement and judgment,” he did “want collection alternatives considered.” Boiarsky additionally “stated that [Gillum] is paying everything he makes to [the] IRS, and he proposed that [the] IRS limit its collection to the terms of the plea agreement and court judgment.” Schroeder replied that he would “retrieve the collection admin [istrative] file, which contains current financial info[rmation], review it, and call him back [on May 21, 2007, at] 2PM to conclude [the] hearing.”

Following the first telephone conference, Schroeder “[w]ent to collection” and “[m]et with [a] R/O [ (revenue officer) ].” Schroeder gave the revenue officer an “ex-parte limitation warning.” The revenue officer “had several files on [Gillum]” and “gave [Schroeder the] file with [Gillum's] financial statement and related documents.” Schroeder then “[r]eviewed [the] file containing [Form] 433–A, [Form] 433–B, [the] request for opinion to file nominee and alter ego liens, and counsel's approval memo on this lien request.”

On May 21, 2007, Schroeder conducted the second telephone conference with Boiarsky. Immediately prior to the hearing, Schroeder “reviewed [Form] 433–A, [Form] 433–B, and [the] nominee/alter ego info[rmation] in...