The Tax Court has upheld the IRS’ federal tax lien against Horizon Health Services, Inc., a Maryland-based corporation, after finding that the Appeals officer did not abuse his discretion in sustaining the lien for unpaid income and employment tax liabilities. (Horizon Health Services, Inc., T.C. Memo, 2025-104).
Horizon failed to provide the required financial documentation and delinquent tax returns during the collection due process (CDP) proceedings, which prevented the IRS from considering its request for a collection alternative, according to the court.
Background
The IRS issued a Notice of Deficiency for Horizon Health’s 2018 tax year, which Horizon neither paid nor challenged in court. After Horizon’s continued nonpayment, the IRS filed a Notice of Federal Tax Lien and notified the company of its right to request a CDP hearing.
Horizon requested a CDP hearing and proposed alternatives to the lien, such as an offer in compromise (OIC) or an installment agreement, claiming financial hardship and inability to pay. The Appeals officer assigned to the case set a hearing date and requested financial information from the company, including a signed income tax return for 2021 and a signed unemployment tax return for 2022, both of which were delinquent.
CDP Hearing
During the hearing, Horizon did not challenge the underlying tax liabilities but reiterated its request for a collection alternative. The Appeals officer gave the company more time to submit the required financial information and proof of filing the delinquent returns. However, Horizon did not provide the documents or file the returns within the deadline.
Additionally, Horizon submitted an OIC to the IRS to settle its tax debt for less than the full amount owed but also failed to provide supporting financial information and proof of compliance with tax filing requirements, according to the court. The IRS returned the OIC due to the company’s unfiled returns.
The Appeals officer sustained the tax lien and explained that Horizon was not eligible for any collection alternative because the company “is not in compliance with filing requirements.”
Abuse of Discretion
The court ultimately found that the officer properly verified relevant statutory and procedural requirements, including confirming that valid notices and assessments had been issued and that a balance was due when the lien was filed.
“Furthermore, this Court has consistently held that the IRS does not abuse its discretion in rejecting a collection alternative where it finds that the taxpayer is not in current compliance with tax laws,” the decision reads.
Horizon argued that “ineffective assistance of counsel” during the hearing prevented the officer from effectively reviewing its offer. However, the court explained that ineffective counsel is not relevant to determining whether the Appeals officer abused his discretion.
Additionally, the court found that the Appeals officer considered Horizon’s request for a collection alternative but was justified in rejecting it because the company did not provide the required financial information and proof of filing its delinquent returns.
The court concluded that the officer “appropriately balanced the need for efficient tax collection with Horizon’s legitimate concern that any collection action be no more intrusive than necessary.”
For more information about CDP hearings for federal tax liens, see Checkpoint’s Federal Tax Coordinator 2d ¶V-6000.
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