Tim’s Tax News on the Tenth – February 2023

On January 27, 2023, a Federal Court in United States of America v. Richard Varner et al (1:21-cv-1812 – Document 36 (N.D. Ohio 2023)) denied the Taxpayer’s motion for equitable relief based upon hardship and denied his request to have the Court either to return collection jurisdiction to the IRS so that he may administratively appeal or to require the United States to comply with the Federal Debt Collection Procedures Act. 

The Government was trying to collect on Mr. Varner’s 2003 income tax liability of about $2,089,256.76 and 2008 Trust Fund Penalties of $204,305.18, initiated a federal lawsuit, and issued levies on two companies that were making regular monthly payments on notes to Mr. Varner. 

The balances due were not discharged in Varner’s 2013 Chapter 7 bankruptcy. In that case, Mr. Varner listed about $10,000.00 in assets and $27,000,000.00 in liabilities. Shortly after Mr. Varner received his bankruptcy discharge, his sister transferred ownership interest in three businesses. Upon receipt of those three, Mr. Varner almost immediately sold his interest in two of them for $4,000.000.00 consisting in part of the promissory notes the government levied.

After the government’s levies on the two notes, Mr. Varner’s income was reduced to just Social Security. He argued to the Court that his Social Security was inadequate to fund his monthly expenses of $30,806.00, leaving him about $28,000.00 in the red each month.

The Court declined to exercise its equitable power to grant Mr. Varner any hardship relief and ruled against him in finding that the government was limited to only one path, either judicial or administrative, in attempting to collect from the taxpayer in his facts. 

If you would like more details, please do not hesitate to call our office. Our office has been successful in helping taxpayers with IRS and IDOR collection problems for over 30 years. If you have a tax or debt problem, please contact me at 847-705-9698 or thughes@lavellelaw.com and find out how we can help you.

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