P filed a petition for review pursuant to I.R.C. §. 6330 in
response to R’s determination to proceed with collection. P sought a
collection alternative of a partial payment installment agreement with a
monthly payment of $3,000. The Internal Revenue Manual provides
guidance for determining how much a taxpayer should be able to pay in
a partial payment installment agreement and how much should be set
aside for the taxpayer’s necessary living expenses. The Internal
Revenue Manual provides that in a partial payment installment
agreement a taxpayer is allowed only necessary expenses; conditional
expenses are not allowed. In computing the necessary expenses, P
included tithing to his Church and expenses for his children’s college.
P claims that both tithing and his children’s college expenses are
necessary expenses. ...
Issue 1. Tithing. This issue involves whether petitioner’s asserted
religious obligation to tithe can trump his obligation to pay substantial
amounts of delinquent penalties and taxesin a reasonably prompt manner. Petitioner introduced evidence, including a biblical passage from the Old Testament, to support his position. See Malachi 3:8-10. This brings to mind another biblical passage suggesting an answer to this type of dilemma: “Render therefore to Caesar the things that are Caesar’s, and to God the things that are God’s.” Matthew 22:21. However, even
this formulation presents the dilemma of determining which things fall into
the two respective categories. While we may be incapable of determining what belongs to God, we believe that we can, and must, decide what is Caesar’s. Therefore, we will consider this issue using the latter approach based on existing procedures and precedents. ...
We hold that the classification of petitioner’s tithing as a conditional expense:
(1) conformed to the guidelines in the Internal Revenue Manual; (2) was not a
violation of petitioner’s rights under the Free Exercise Clause; and (3) did not
violate the [Religious Freedom Restoration Act of 1993]
Issue 2. College Expenses. On Form 433-A petitioner reported monthly college expenses of $2,952.15 Petitioner argues it was an abuse of discretion for the settlement officer to not allow his children’s college expenses as a necessary expense. Respondent contends that his children’s college expenses are conditional
In a partial payment installment agreement only necessary expenses are allowed. See [IRM] pt. 220.127.116.11.1(4). The Internal Revenue Manual discusses both college expenses and education expenses. IRM ex. 5.15.1-1 Q&A (2) provides:
Question. A taxpayer has a child in an expensive university. She has already paid the university $25,000 for tuition and housing for the school year, and she intends to pay another $25,000 next July for the following school year. Should this expense be allowed?
Answer. Yes, if the taxpayer can pay the liability plus accruals within five years. Otherwise, the expense will not be allowable. ...
Petitioner would not fully pay his tax liabilities within five years under the terms of the partial payment installment agreements proposed by either petitioner or the settlement officer. Therefore, the college expenses would not be a necessary expense under IRM ex. 5.15.1-1 Q&A (2).