Taxpayers move. They move their homes, they move their offices, and they file returns from whatever address they happen to be using that year. That is the way it works.
The IRS is supposed to keep up. When the IRS wants to levy on a taxpayer’s property, it has to send the warning notice to the taxpayer’s last known address. That sounds simple until you look at a taxpayer with three addresses and a stack of late-filed returns.
So what happens when the IRS mails the levy notice to one of those addresses and the taxpayer says it picked the wrong one? The taxpayer gets a collection hearing. The Appeals Officer is supposed to verify that the IRS followed the law. But what does verification actually require? Is it enough for the Appeals Officer to write that “all legal and procedural requirements were followed” and move on?
The court addressed this in Laborde v. Commissioner, T.C. Memo. 2026-74, and the answer gives taxpayers something to work with. The case provides an opportunity to consider what an Appeals Officer has to do before signing off on a levy notice, and what a taxpayer can do when the administrative record does not show the work.
Facts & Procedural History
The taxpayer operated a glass and mirror company in New Orleans. The business did not pay payroll taxes for tax periods 2015 through 2018.
The IRS conducted an interview and determined that the taxpayer was a responsible person for the unpaid trust fund taxes. This resulted in an assessment for a trust fund recovery penalty under Section 6672 against the taxpayer personally.
In the ensuing years, the taxpayer reported three different mailing addresses to the IRS. Each reported addresses with three different streets. He filed his returns out of order. He filed his 2018 return in 2019 using the first address. He filed his 2020 return in early 2022 using the second address. Then in August 2022 he filed his 2019 return using the first address again, and two days later filed his 2021 return using the third address. Two returns, two days apart, two different addresses.
In 2021 the IRS sent two Letters 1153 proposing the penalty assessments. The taxpayer protested and had an appeals hearing on each one. The IRS sustained both and assessed the penalties in 2022. The IRS then sent a levy notice in July 2022 to the third address, filed a notice of federal tax lien in August 2022, and sent a second levy notice in October 2022 to the first address.
The taxpayer requested collection due process hearings for all three actions. He did not ask for an installment agreement or any other collection alternative. He raised one thing. He said the notices had not been mailed to his last known address. The Appeals Officer rejected the argument and sustained the collection action. The taxpayer then petitioned the U.S. Tax Court to contest this determination and the case was submitted to the tax court fully stipulated.
What Does a Collection Due Process Hearing Actually Review?
Sections 6320 and 6330 give a taxpayer the right to a hearing before the IRS files a lien notice or levies on property. The hearing is held by the IRS Independent Office of Appeals. This is not a new provision. Congress added it in 1998 because the IRS was taking collection actions, many of which the public perceived as aggressive, without confirming it had followed its own rules. The hearing is intended to be a procedural speed bump, basically.
The hearing has three parts. The Appeals Officer has to verify that the requirements of applicable law and administrative procedure were met. The Appeals Officer has to consider the issues the taxpayer raises. And the Appeals Officer has to balance the need for efficient collection against the taxpayer’s interest in collection being no more intrusive than necessary. If the taxpayer disagrees with the outcome, he can petition the U.S. Tax Court to review the determination.
The standard of review matters. If the underlying liability is properly at issue, the tax court reviews the determination de novo. This means that it reviews it fresh with no limitation to just reviewing the record. If it is not, the tax court reviews for abuse of discretion. This means the determination has to be arbitrary, capricious, or without sound basis in fact or law and it is limited to a review of the administrative record.
For the liablity issue, the taxpayer only gets one review. So prior appeals or second looks at it by the IRS, can preclude having the court consider the liability during a review in tax court on a collection case.
Here the taxpayer had already had a shot at the penalty through the Letter 1153 protests and hearings, so he could not dispute whether he was a responsible person again in this manner. That left abuse of discretion part of it.
Why the Verification Requirement Is Different
There is a difference between the issues a taxpayer raises and the verification the Appeals Officer owes.
Section 6330(c)(2) issues, like collection alternatives and spousal defenses, only come into play if the taxpayer raises them at the hearing. If the taxpayer stays silent, the court will not hear about them later.
The verification requirement under Section 6330(c)(1) works differently. The court has held in prior cases that verification is required to be part of every determination. This is true whether or not the taxpayer raises the issue with Appeals.
This means the tax court can review whether the Appeals Officer actually verified compliance even if the taxpayer never raised it administratively. This is a meaningful difference, and it is what made the difference in this case.
What has to be verified in a trust fund penalty collection case? The Appeals Officer has to confirm the written supervisory approval under Section 6751(b) was obtained before assessment. The Appeals Officer also has to confirm the Letter 1153 was properly issued. And under Section 6330(a)(2), the levy notice itself has to have been given in person, left at the taxpayer’s home or business, or sent by certified mail to the last known address.
What Is a “Last Known Address”?
The regulation defines “last known address” as the address on the taxpayer’s most recently filed and properly processed federal tax return, unless the IRS has been given clear and concise notification of a different address. Two phrases in there do a lot of work.
“Properly processed” is not the same as “filed.” Under the revenue procedure the IRS follows, a return is generally considered properly processed after a 45-day processing period that starts the day after the IRS receives it. So a return filed today does not change the taxpayer’s last known address today. It changes it about six weeks from now. For a taxpayer who files two returns two days apart, that window can produce a genuinely uncertain answer about which address controls on any given date.
“Clear and concise notification” covers everything else the taxpayer might do to tell the IRS he has moved. A Form 8822, a written statement, and in some circumstances the address on a Form 12153 request for a collection hearing. There are cases that show this is not always so, but that is the general rule.
On top of the regulation, the Fifth Circuit requires the IRS to exercise reasonable diligence to determine the last known address in light of all the circumstances. Circumstances that would create doubt in a reasonable person about whether the address is right count against the IRS. Returned mail is the classic example. A taxpayer bouncing between three addresses on late-filed returns is another.
Is Boilerplate Enough to Show the Appeals Officer Verified Anything?
This is the heart of the case. The Appeals Officer’s case activity record said he verified that the levy notices and the lien notice were mailed to the last known address. There was no indication anywhere in the record of how he reached that conclusion. The notice of determination said the levy notice “was issued in accordance with all legal and procedural requirements.” The activity notes said “all legal and procedural requirements were followed.”
The court was not satisfied. It could tell that the Appeals Officer noted the July levy notice went out by certified mail, but he never said whether or how he confirmed the certified mail went to the correct address. The court pointed out that elsewhere in the same notes the Appeals Officer specifically stated that other letters were “mailed to the taxpayer’s last known address.” So he knew how to say it when he meant it.
The October levy notice had the same problem in a different form. It went to the first address. That might have been fine. But between the return that listed that address and the mailing of the notice, the taxpayer filed another return listing a different address. The record did not show which return the IRS processed first. The determination explained the legal precedent the Appeals Officer reviewed, but not which documents he applied it to. The IRS argued the verification obligation was satisfied and cited no authority for that position. Unfortunately, IRS agents often treat the verification box as something to check rather than something to do.
The court sustained the lien determination, which the taxpayer had conceded. It sustained the conclusion that the April Letter 1153 went to the right address, because the stipulated record showed the last filed return and the letter both used the same street. But on the two levy notices, it remanded to Appeals for clarification of what the Appeals Officer relied on. The taxpayer did not win outright. He got another hearing, and this time the IRS has to show its work.
Can a Taxpayer Raise the Address Issue Late?
It should be noted that the taxpayer never challenged the mailing of the July levy notice at the collection hearing. He did not raise it in his petition either. He raised it for the first time in the joint motion asking the court to decide the case without a trial.
Normally an issue not pleaded in the petition is deemed conceded. So naturally, there is an argument that the IRS should have won on that notice by default. It did not, for two reasons.
First, a challenge to proper mailing is a verification issue, and the court can consider verification whether or not the taxpayer raised it below. Second, the court can consider issues tried by express or implied consent of the parties. The IRS had agreed in the joint motion that the issue for decision was whether both levy notices were invalid for want of proper mailing. It only argued failure to plead after the motion was granted and the case was submitted. That was too late.
The practical lesson is not that pleading does not matter, because it does. The lesson is that verification arguments survive procedural mistakes that would kill other arguments. If you are handling a collection due process case and you find a defect in how the IRS mailed something, frame it as a verification failure under Section 6330(c)(1). Do not frame it as a liability challenge. The Appeals Officer in this case made exactly that mistake in reverse, treating the address argument only as a liability challenge and never analyzing it as a verification question.
What Happens If the IRS Still Cannot Show It?
The court did not reach this, but it is the obvious next question. On remand the Appeals Officer has to identify what he relied on. What if he cannot do so. Suppose the administrative record simply does not establish which return was processed when, and the IRS cannot show reasonable diligence.
A levy notice that was not sent to the last known address does not satisfy Section 6330(a)(2). Without a valid notice, the 30-day clock for a hearing never started and the IRS has no authority to proceed with that levy. The IRS would have to issue a new notice, which would give the taxpayer a fresh right to a hearing and a fresh chance to propose an alternative to collection. For a taxpayer whose finances have changed since 2022, that is not a small thing. Time is often the only leverage a taxpayer has in a collection case, and a remand buys time.
There is also a question the case leaves open about what happens when two returns are filed within days of each other. The 45-day processing rule assumes returns arrive in a sensible order. It does not tell you what to do when a 2019 return and a 2021 return arrive two days apart with different addresses. The taxpayer has a position that the later-filed return controls, because it reflects the most current information. The IRS has a position that the return covering the later tax year controls. The regulation does not clearly answer it, and the court declined to.
The Takeaway
Collection due process hearings exist to make the IRS confirm it followed the law before it takes property. That confirmation has to be real. An Appeals Officer who writes that all legal and procedural requirements were met, without saying what he looked at, has given the court nothing to review, and the court can send the case back. Verification is also reviewable even when the taxpayer never raised it, which makes it one of the few arguments that survives a weak administrative record. If you are fighting a levy and you have moved in the past few years, pull the mailing addresses on every return you filed and compare them to the address on the notice. Then ask Appeals to show its work.
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