Sunday, May 5, 2013
Adam M. Cole (J.D. 2014, Villanova), Note, A Preference for Deference: The Benefits of the First Circuit's Customized Standard of Review for Collection Due Process Appeals in Dalton v. Commissioner, 58 Vill. L. Rev. 239 (2013):
In Dalton v. Commissioner, the First Circuit dealt with an issue of first impression: whether subsidiary determinations made during a CDP hearing--such as legal ownership of an asset--should be reviewed de novo or under a more deferential standard of review. In a typical case, an appellate court reviews all questions of law de novo, giving no deference to legal conclusions made by lower courts. Dalton held the opposite to be true, stating that in CDP appeals, all subsidiary determinations are reviewed for reasonableness, not correctness.
This Note analyzes how the Dalton standard of review departs from the Tax Court’s previous de novo approach, and argues that the deferential review benefits the tax system because it treats taxpayers fairly and allows the IRS proper deference to collect taxes in an efficient manner. Part II provides a brief background of the CDP process, with an emphasis on the offers-in-compromise issue discussed in Dalton. Part II also describes the standard of review that past courts have used in CDP appeals, as well as how the standard has been applied to subsidiary legal determinations. Part III describes the factual and procedural background of the Dalton case and analyzes the First Circuit’s reasoning. Part IV argues that the First Circuit reached the correct result because the Dalton standard of review increases efficiency and fairness, and is consistent with the purpose of CDP. Part V concludes by urging Congress to expressly incorporate this standard into the CDP statutes because of the likelihood that the Tax Court will not apply the standard in cases appealable to the other circuits.