Corporation not covered by economic hardship exception.

• Author: Beavers, James A.

The Tenth Circuit affirmed the Tax Court's holding that Regs. Sec. 301.6343-1(b)(4) was a valid regulation, so the economic hardship exception to the imposition of a levy applies only to individuals, not to corporations.

Background

Seminole Nursing Home Inc. operates a nursing home facility in a rural community of fewer than 8,000 residents in Oklahoma. For the quarter ending Dec. 31, 2013, Seminole timely filed its Form 941, Employer's Quarterly Federal Tax Return, but failed to pay its reported employment tax liability of $61,916.19 for the quarter. On April 14, 2014, the IRS assessed the tax reported and began collection efforts.

On April 24, 2014, the IRS issued Seminole a Letter 1058, Final Notice--Notice of Intent to Levy and Notice of Your Right to a Hearing. In response, Seminole timely submitted a Form 12153, Request for a Collection Due Process or Equivalent Hearing (CDP hearing request), seeking to enter into a $6,000-per-month installment agreement for its unpaid employment tax liability. The CDP hearing request stated that if the IRS were permitted to levy, Seminole's difficulty with Medicare and Medicaid collections would make it unable to pay either its employment tax balance or its current taxes. Seminole, however, did not dispute the underlying employment tax liability in the CDP hearing request.

The IRS mailed Seminole a letter scheduling a CDP hearing for Aug. 26, 2014. The letter advised the company that it did not qualify for consideration of an installment agreement because it was not in compliance with its employment tax deposit requirements for the tax period ending June 30, 2014. It further advised Seminole it was required to send the IRS the following items no later than Aug. 12, 2014, to qualify for a collection alternative: (1) a completed Form 433-B, Collection Information Statement for Businesses, and (2) evidence that it had made the required federal employment tax deposits for the current tax period.

One day before the hearing, Seminole submitted a Form 433-B and a three-paragraph letter to the Office of Appeals (Appeals) stating that in addition to seeking a collection alternative, it was planning to challenge the proposed levy under the Sec. 6343(a)(1)(D) economic hardship exception to the imposition of a levy. The Form 433-B listed among Seminole's assets accounts receivable from Private Pay, Medicaid Oklahoma, Medicare, and Insurance CoPay with a combined balance of $313,112.98. It also asserted, though...