When the IRS levies or takes property from the taxpayer, the taxpayer has the right to request that the property be sold within 60 days. In Zapara v. Commissioner, 126 T.C. 215 (2005), aff’d, 652 F.3d 1042 (9th Cir. 2011), the U.S. Tax Court ordered the IRS to credit $47,501.06 to the taxpayer for the loss in value of the taxpayer’s stock after the levy due to the IRS’s failure to sell the property within 60 days.

Facts & Procedural History In Zapara’s Case

The IRS served a jeopardy levy to seize the taxpayer’s stock accounts. The taxpayer requested a collection due process hearing.

The taxpayer asked the IRS Office of Appeals to sell the stock. The IRS did not act on the taxpayer’s request and the value of the stock declined.

The taxpayer petitioned the U.S. Tax Court to consider the IRS’s decision.

As noted above, the U.S. Tax Court ordered the IRS to credit the taxpayers $47,501.06 for the loss in value of the stocks that were levied by the IRS.

The IRS issued AOD 2012-06 to nonacquiese with the holding. The IRS does not agree that the U.S. Tax Court has the power to order it to credit taxpayers for the loss in value of their property. The IRS argues that Sec. 7433 is the only means for ordering the IRS to pay taxpayers and this section specifies that the power to order payments is limited to the U.S. district court–not the U.S. Tax Court–per Section 7433.

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