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This argument hearkens to the liberal rules of pleading that
treat issues actually tried as if they had been raised in the
pleadings. See Rule 41(b)(1); Fed. R. Civ. P. 15(b). And the
Nicholses might even be able to tease such an argument out of the
regulations themselves. Consider the regulation as it stood when
they had their hearing:
In seeking Tax Court or district court review
of Appeals’ Notice of Determination, the
taxpayer can only request that the court
consider an issue that was raised in the
taxpayer’s CDP hearing.
Sec. 301.6320-1(f)(2), A-F5, Proced. & Admin. Regs. (as amended
in 2002) (emphasis added). And compare it to the recent
revision:
In seeking Tax Court review of a Notice of
Determination, the taxpayer can only ask the
court to consider an issue, including a
challenge to the underlying tax liability,
that was properly raised in the taxpayer’s
CDP hearing.
Sec. 301.6320-1(f)(2), A-F3, Proced. & Admin. Regs. (effective
Nov. 16, 2006) (emphasis added).
The problem with this reasoning is that the revised
regulation states existing law; it doesn’t change it. We had
already held before this revision that the Code itself limits the
power of the Commissioner (and on appeal, us) to reconsider
liability issues. De novo review such as the Nicholses are
requesting is appropriate only “[w]here the validity of the tax
liability was properly at issue in the hearing * * *.” H. Conf.
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Last modified: May 25, 2011