Section 6672

On remand from the Eleventh Circuit, the Tax Court, in Romano-Murphy v. Comm’r, determined that the failure of the IRS to provide a pre-assessment appeals hearing invalidated the IRS’s assessment of trust fund recovery penalty under section 6672 and proposed levy to collect the same.  In July 2006, the IRS sent a letter to the chief operating officer of a healthcare staffing company proposing assessment of a trust fund recovery penalty against her for the business’s failure to withhold and pay over employment taxes.  The letter indicated that the COO had the opportunity to protest the decision to the IRS Office of Appeals.  The COO sent a response requesting an Appeals conference in September of 2006, but the IRS failed to act on it and then subsequently assessed the penalty.  The COO later requested a collection due process hearing after receiving a notice of intent to levy and notice of federal tax lien filing.  As is typically the case, the Settlement Officer issued a determination that the assessment and collection activity, including the proposed levy, were valid, leading to the COO’s challenge in Tax Court.
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