Percy Squire v. Commissioner: Serial Litigant Faces $10K Penalty for Frivolous CDP Appeal

The $158K Tax Bill: A Serial Litigant’s Latest Battle with the IRS

The stakes couldn’t have been higher when attorney Percy Squire squared off against the IRS in Percy Squire v. Commissioner, T.C. Memo. 2026-71 (Aug. 19, 2026). The Tax Court sustained the IRS’s collection actions—including a $158,810.20 tax bill for 2011 and 2018–2020—and imposed a $10,000 penalty under § 6673, finding that Squire’s petition was filed primarily for delay and advanced frivolous arguments. The court’s frustration with Squire’s history of serial litigation was palpable, with Judge Ashford noting in the opinion that the case represented yet another in a “pattern of delay” spanning 15 years. The ruling underscored the Tax Court’s willingness to wield its § 6673 penalty power against repeat litigants who abuse the system, signaling a judicial intolerance for what the court deemed a “groundless and dilatory” strategy.

This was not an isolated dispute over a disputed deduction or a technical interpretation of the Code. It was a high-stakes showdown over whether the IRS could proceed with enforced collection against a taxpayer who had spent over a decade challenging its authority—despite prior warnings, sanctions, and repeated rejections of his arguments. The $158,810.20 at issue was the culmination of unpaid federal income taxes for tax years 2011 and 2018–2020, a sum that the IRS sought to collect through a levy and a Notice of Federal Tax Lien (NFTL). The Tax Court’s decision to uphold these actions—and to penalize Squire for his conduct—sent a clear message: the judicial system will not tolerate serial litigants who weaponize the Tax Court to obstruct legitimate collection efforts.

A Pattern of Delay: Percy Squire’s 15-Year History of Tax Court Battles

Percy Squire’s latest foray into the U.S. Tax Court is not an isolated incident—it is the culmination of a 15-year campaign of repeated filings, procedural missteps, and frivolous arguments that have repeatedly drawn the court’s ire. The record shows Squire has filed seven petitions with the Tax Court since 2011, including three on behalf of his wholly owned LLC, Percy Squire Co., LLC, each time challenging IRS collection actions with claims the court has consistently rejected. The IRS has not merely opposed these filings; it has warned Squire directly that his conduct risks sanctions under Section 6673, which authorizes penalties of up to $27,000 for frivolous or delaying tactics.

The court’s prior admonishments have been explicit. In Percy Squire Co. LLC v. Commissioner, T.C. Memo. 2016-48 (Docket No. 4812-16L), the Tax Court granted the Commissioner’s motion for summary judgment and cautioned that “the Court may well impose a [Section 6673] penalty should it or Mr. Squire return to this Court without due cause to again unreasonably delay respondent from collecting petitioner’s tax liabilities in the future.” That warning was not hypothetical. In Squire v. Commissioner, T.C. Memo. 2019-133 (Docket No. 13308-19L), the court sanctioned Squire $5,000 under Section 6673(a)(1) for filing a frivolous petition challenging a levy for 2016 income tax liabilities. The court’s opinion did not mince words: “Petitioner’s arguments are frivolous and groundless. They have been rejected by this Court and every other court to consider them.”

Squire’s pattern of litigation has been marked by repeated jurisdictional missteps and procedural failures, each time prompting the court to dismiss his claims or grant summary judgment in the IRS’s favor. On July 14, 2011, Squire filed a petition in Squire v. Commissioner (Docket No. 16587-11L), challenging a Notice of Determination sustaining a proposed levy for federal payroll and unemployment tax liabilities for 2007–2008. The Tax Court granted the Commissioner’s motion for summary judgment, and Squire’s appeal to the U.S. Court of Appeals for the Sixth Circuit was dismissed in 2013 for failure to prosecute.

Less than a year later, on March 5, 2012, Squire filed another petition in Squire v. Commissioner (Docket No. 6044-12L), again challenging a levy determination. This time, the Tax Court dismissed the case for lack of jurisdiction, finding the petition was untimely under Section 6330(d)(1). The court’s order was terse but definitive: “The petition was not filed within the 30-day period prescribed by section 6330(d)(1).”

Squire’s LLC joined the fray on February 29, 2016, filing a petition in Percy Squire Co. LLC v. Commissioner (Docket No. 4812-16L) challenging a levy and Notice of Federal Tax Lien (NFTL) for payroll and unemployment tax liabilities spanning 2009–2015. The court granted the Commissioner’s motion for summary judgment and, as noted above, warned Squire that further frivolous filings could trigger a Section 6673 penalty. The warning was ignored. On July 17, 2019, Squire filed Squire v. Commissioner (Docket No. 13308-19L), challenging a levy for 2016 income tax liabilities. The court again granted summary judgment and imposed the $5,000 sanction, citing Squire’s history of “unreasonable delays” and “groundless arguments.”

The pattern continued unabated. On January 21, 2021, Percy Squire Co. filed Percy Squire Co. LLC v. Commissioner (Docket No. 1816-21L), challenging a levy for 2007 employment tax liabilities. The LLC filed a motion to dismiss its own petition, which the court granted, and in doing so reiterated its warning against Squire bringing new matters before the court “solely for delay.” The court’s order underscored the futility of Squire’s strategy: “The Court has repeatedly warned petitioner against bringing new matters before this Court solely for delay. The Court will not tolerate further abuse of the judicial process.”

Squire’s most recent filing—October 13, 2023, in Percy Squire Co. LLC v. Commissioner (Docket No. 16141-23L)—challenges a levy and NFTL for payroll and unemployment tax liabilities spanning 2014–2021. The case remains pending, but the court’s prior rulings leave little doubt about the likely outcome. The IRS has argued, and the court has repeatedly signaled, that Squire’s filings are not genuine disputes but tactical maneuvers to obstruct legitimate collection efforts under Section 6320 and Section 6330. The court’s patience, once tested by repeated warnings, now appears exhausted. The message is clear: the Tax Court will not be a vehicle for serial delay.

The 2023 Offer in Compromise: A Rejected Lifeline

The IRS’s preliminary rejection of Percy Squire’s 2023 Offer in Compromise (OIC) laid bare the fatal flaws in his financial narrative—a $24,000 bid to settle $158,810.20 in unpaid liabilities for tax years 2011 and 2018–20. The rejection, delivered in a June 30, 2023, letter, cited two irreconcilable issues: Squire’s transfer of assets into an irrevocable trust and his business tax compliance failures. The IRS’s preliminary rejection letter explicitly warned that acceptance of the OIC would not serve the government’s best interest, given that Squire had placed four properties—three of which were held in the Percy Squire Irrevocable Trust—beyond the reach of collection efforts. The letter further noted that his ownership in multiple businesses, which had unresolved tax compliance issues, undermined the feasibility of the offer.

Squire’s OIC claimed “doubt as to collectability,” asserting financial hardship due to his suspension from the practice of law between 2011 and 2015, the COVID-19 pandemic’s impact on his business from 2020–2021, and his role as a caregiver for elderly parents during 2017–2020. His Form 656, submitted on February 21, 2023, proposed a $24,000 payment in monthly installments of $1,000 over 24 months, accompanied by Forms 433-A and 433-B, which detailed his assets and income. The IRS’s rejection, however, exposed the hollowness of these claims. Appeals Officer Trudy Strickland, who later reviewed the OIC during Squire’s Collection Due Process (CDP) hearing, confirmed in her case activity record that Squire’s Reasonable Collection Potential (RCP) had been calculated at $591,652.42—a figure that dwarfed his $24,000 offer.

The IRS’s rejection was not merely a procedural formality but a substantive assessment of Squire’s financial maneuvering. The preliminary rejection letter, issued by Offer Specialist James Norton, explicitly stated that the OIC could not proceed due to the irrevocable trust’s potential to shield assets and the businesses’ tax compliance issues. Norton’s June 12, 2023, letter had already warned Squire that he needed to provide additional financial information within ten days or risk the OIC being returned without further consideration. When Squire failed to respond, the IRS moved swiftly to preliminarily reject the offer, setting the stage for the CDP hearing where Appeals would ultimately sustain the rejection.

Squire’s argument during the CDP hearing mirrored his OIC submission: he claimed financial hardship and inability to pay more than the offered amount. The IRS, however, countered that his financial disclosures—particularly the irrevocable trust and business tax compliance issues—demonstrated a lack of good faith and an attempt to avoid full liability. Appeals Officer Strickland’s review of the OIC during the September 20, 2023, CDP hearing confirmed that the rejection would be sustained, though she left the door open for Squire to submit a new OIC after resolving his businesses’ tax compliance issues. The IRS’s position was clear: Squire’s financial narrative was inconsistent with the documentation provided, and his asset shielding through the irrevocable trust undermined the legitimacy of his hardship claim.

The CDP Hearing: Missed Opportunities and Unanswered Calls

The Collection Due Process (CDP) hearing is a taxpayer’s statutory right under 26 U.S.C. § 6320(c), which grants the IRS Office of Appeals jurisdiction to review collection actions—such as a Notice of Federal Tax Lien (NFTL)—if requested within 30 days of the lien filing. The hearing is not a forum to relitigate the underlying tax liability but an opportunity to negotiate collection alternatives, such as an Offer in Compromise (OIC) or installment agreement, while ensuring the IRS’s actions comply with procedural requirements. The taxpayer’s failure to engage meaningfully during this process—whether by missing calls, withholding documentation, or refusing to discuss alternatives—can result in the IRS sustaining its collection actions without further recourse.

Percy Squire’s CDP hearing, assigned to Appeals Officer Trudy Strickland, became a case study in procedural missteps. On August 21, 2023, Strickland sent Squire two letters acknowledging his CDP hearing requests for tax years 2011, 2018, 2019, and 2020. She scheduled a telephone hearing for September 20, 2023, and explicitly outlined the three critical prerequisites for discussing collection alternatives: (1) proof of full estimated tax payments for 2023, (2) additional documentation for the 2023 OIC, and (3) a completed Form 14135, Application for Certificate of Discharge of Property from Federal Tax Lien, due within 14 days. The letter left no ambiguity: Squire’s participation was contingent on compliance with these deadlines.

On September 20, 2023, Strickland called Squire at the scheduled time, but he did not answer. She left a voicemail urging him to call back to proceed with the hearing and warning that if he failed to respond, she would issue a letter granting an additional 14 days to contact her. Later that day, Squire left his own voicemail claiming he was unaware of the hearing and requested a rescheduling. Strickland attempted to call him back but received no answer. She left another voicemail confirming the rescheduled hearing for September 26, 2023.

The rescheduling did not improve Squire’s engagement. On September 25, 2023—just one day before the rescheduled hearing—he faxed a completed Form 14135 to Strickland. His justification for the lien discharge request, marked under § 6325(b)(2)(B), was a single line: “given age of taxpayer and liens request is to remove lien in order for children to inherit.” The form lacked any supporting documentation, such as an appraisal or county valuation, despite the instructions explicitly requiring these materials. The IRS’s Collection Due Process regulations (Treas. Reg. § 301.6320-1(e)(2)) mandate that lien discharge requests must include evidence of the property’s value and the taxpayer’s financial hardship. Squire’s submission fell short on both counts.

When the telephone hearing finally occurred on September 26, Strickland reviewed the 2023 OIC, which had been preliminarily rejected. Squire raised the irrevocable trust he had created, arguing it shielded his assets from collection. Strickland, however, reiterated that the OIC rejection would stand unless Squire resolved his businesses’ tax compliance issues. She then turned to the lien discharge request. Squire claimed he had provided a mortgage statement and lien notice but requested additional time to submit the appraisal and valuation. Strickland granted a deadline of October 10, 2023, with a clear warning: if the documentation was not received, the NFTL would be sustained.

The hearing also broached the possibility of an installment agreement, but Squire insisted his lack of collectability limited him to an OIC. Strickland reviewed the assets Squire had disclosed in the 2023 OIC—four properties, three of which were held in the irrevocable trust—and noted that the trust’s structure raised questions about asset ownership and equity. She advised Squire that once he provided the lien discharge documentation, she could evaluate whether a partial payment installment agreement was feasible based on his remaining assets.

By October 9, 2023, Strickland received additional faxed information from Squire regarding the lien discharge request, but the materials still failed to meet the IRS’s evidentiary standards. The record reflects no further attempts by Squire to supplement his submission or engage in good-faith negotiations. The IRS’s position, as articulated in its brief, was that Squire’s failure to cooperate—marked by missed calls, rescheduling, and incomplete documentation—demonstrated a lack of willingness to resolve his liabilities through the statutorily prescribed channels. The IRS argued that Squire’s conduct during the CDP hearing undermined his claims of financial hardship and lien discharge eligibility, leaving the agency with no alternative but to proceed with collection.

The IRS’s Case: Why the Collection Actions Stood

The IRS’s opposition to Percy Squire’s collection alternatives hinged on three interlocking pillars: the taxpayer’s Reasonable Collection Potential (RCP), his noncompliance with tax obligations, and his failure to substantiate his claims during the CDP hearing. The agency’s position was not an exercise of arbitrary power but a meticulous application of statutory and regulatory mandates under Section 7122 and Treas. Reg. § 301.7122-1(b), which govern the IRS’s discretion to accept or reject offers-in-compromise.

The IRS argued that Squire’s RCP of $591,652.42—calculated from assets placed in an irrevocable trust and his wholly owned businesses—far exceeded his $24,000 offer-in-compromise, rendering the proposal untenable under the IRS’s administrative guidelines. These guidelines, codified in Revenue Procedure 2003-71, require that an OIC reflect the taxpayer’s total RCP unless special circumstances justify a lower amount. The IRS’s Internal Revenue Manual (IRM 5.8.4.3) explicitly states that an OIC will be rejected if the taxpayer’s RCP meets or exceeds the offer amount, as was the case here. The agency cited Reed v. Commissioner, 141 T.C. 248, 256 (2013), which held that an OIC must account for all collectible assets, including those held in trusts, to be considered adequate.

Squire’s businesses were not in tax compliance, a critical factor that the IRS emphasized as grounds for rejecting his OIC. Appeals Officer Strickland advised Squire during the September 26, 2023, CDP hearing that his businesses’ unresolved tax issues precluded acceptance of his offer. The IRS’s position was reinforced by IRM 5.8.7.7.1(1), which permits rejection of an OIC when it is not in the best interest of the government—here, because Squire’s businesses remained noncompliant despite his repeated filings. The agency’s brief underscored that Squire had failed to resolve these compliance issues despite multiple opportunities, leaving the IRS with no statutory basis to accept an offer that ignored his ongoing delinquencies.

Finally, the IRS contended that Squire failed to provide documentation to support his request for a lien discharge, a prerequisite under Section 6325(b)(2)(B). The agency noted that Squire did not substantiate his claims of financial hardship or explain why the equity in his assets—particularly those held in the irrevocable trust—should not be considered in calculating his RCP. The IRS’s brief pointedly observed that Squire had no record of disputing the asset valuations in his Form 433-A or Form 433-B, leaving the agency with no alternative but to proceed with collection actions. The court later echoed this reasoning, finding that Squire’s lack of cooperation during the CDP hearing undermined his claims and justified the IRS’s position.

The IRS’s arguments were not a display of unchecked authority but a faithful application of the law to Squire’s specific circumstances. The agency’s discretion under Section 7122 is broad but not unlimited, and the Tax Court has repeatedly affirmed that Appeals’ decisions will stand if they are thoroughly reasoned and grounded in the administrative record. In this case, the IRS’s rejection of Squire’s OIC and its refusal to discharge the lien were not abuses of discretion but the logical outcome of his failure to meet the statutory and procedural requirements. The court’s later opinion would confirm this, emphasizing that Squire’s procedural missteps—not the IRS’s overreach—were the root of his predicament.

The Court’s Verdict: No Abuse of Discretion, But a $10K Penalty

The Tax Court’s opinion in Squire v. Commissioner, T.C. Memo. 2026-12 (Aug. 15, 2026), delivered a two-part ruling that underscored the IRS’s procedural rigor while flexing the court’s authority to police frivolous litigation. First, the court sustained the IRS’s collection actions—rejecting Percy Squire’s challenge to the lien and levy—finding no abuse of discretion in Appeals Officer Strickland’s determination. Second, it imposed a $10,000 penalty under Section 6673, a provision that empowers the Tax Court to sanction taxpayers for delaying tactics or groundless positions.

The court’s analysis began with a blunt assessment of Squire’s litigation history. “Petitioner is no stranger to this Court,” the opinion noted, referencing his seven prior petitions filed over 15 years, many of which had already drawn warnings about frivolous arguments and sanctions. In one prior case, Squire had been sanctioned $5,000 under § 6673 for similar tactics. The court emphasized that these prior sanctions had failed to deter him, despite his status as an attorney admitted to practice before the Tax Court.

Turning to the merits, the court rejected Squire’s arguments as “irrelevant” and “not part of the stipulated record.” It cited his insistence on rehashing a 2014 Offer in Compromise (OIC) withdrawal claim—a position the court had already deemed meritless—as emblematic of his primary purpose: delay. The opinion quoted the IRS’s motion directly: “Petitioner has continued to press arguments that are irrelevant and to rely on documents that are not part of the stipulated record.”

The court then applied Section 6673(a)(1), which authorizes penalties of up to $25,000 for proceedings instituted primarily for delay or for positions that are frivolous or groundless. The opinion defined a “frivolous” position as one “contrary to established law and unsupported by a reasoned, colorable argument for change in the law,” citing Rader v. Commissioner, 143 T.C. 376, 392 (2014). A “groundless” position, it explained, lacks “any ground or foundation: lacking cause or reason for support,” quoting Keating v. Commissioner, T.C. Memo. 1985-312.

Applying these standards, the court found Squire’s arguments met both criteria. His repeated filings, the court held, were “primarily for delay,” while his substantive claims—such as his insistence that the OIC withdrawal was improper—were “frivolous or groundless.” The opinion cited Pierson v. Commissioner, 115 T.C. 576, 581 (2000), for the proposition that § 6673 penalties serve as a deterrent against abusive litigation tactics.

In imposing the $10,000 penalty, the court signaled its willingness to escalate sanctions if Squire persisted. It warned: “Petitioner should realize that if in the future he continues to persist in litigation for the primary purpose of delaying the collection of his federal tax liabilities... the Court should instead consider imposing a much larger penalty, up to the maximum of $25,000.” This explicit threat underscored the court’s exercise of its inherent authority to regulate its own docket, a power it has increasingly wielded against repeat filers.

The opinion closed with a procedural coda, dismissing Squire’s underlying challenge to the lien and levy. It reiterated that Appeals Officer Strickland’s decision was “thoroughly reasoned and grounded in the administrative record,” leaving no room for the court to substitute its judgment. The ruling thus reinforced the abuse of discretion standard under Section 6330(d)(1), which limits the Tax Court’s review to whether the IRS’s actions were arbitrary, capricious, or lacking a sound basis in law.

For taxpayers, the decision served as a stark reminder: the Tax Court will not tolerate procedural gamesmanship, and its authority to impose penalties under § 6673 is not merely theoretical. As the court made clear, the next penalty could reach $25,000—a sum that would dwarf the $10,000 imposed here.

What This Means for Taxpayers: The Cost of Frivolous Appeals

For taxpayers, the Tax Court’s decision in Squire v. Commissioner (T.C. Memo. 2026-XX) is a cautionary tale about the limits of procedural delay and the real-world consequences of ignoring the IRS’s rules. The court’s ruling underscores that Collection Due Process (CDP) hearings under Section 6330 are not a tool for delay, but a structured process with strict deadlines and limited judicial review. The IRS’s discretion in sustaining collection actions is afforded significant deference, and taxpayers who miss the 30-day window to request a CDP hearing—like Percy Squire—lose all opportunity for Tax Court review. As the court held, "the abuse of discretion standard under Section 6330(d)(1) limits our review to whether the IRS’s actions were arbitrary, capricious, or lacking a sound basis in law." This means that even if a taxpayer believes the IRS acted unfairly, the Tax Court’s hands are tied unless the IRS’s decision was legally indefensible.

The case also serves as a stark warning about the dangers of repeatedly submitting frivolous arguments in CDP hearings or Tax Court petitions. The court explicitly noted that Squire’s arguments—such as claiming his tax liabilities were invalid due to a prior offer-in-compromise withdrawal—had been "previously rejected by this Court" and were "without merit." This is not a hypothetical risk. Section 6673 authorizes the Tax Court to impose penalties of up to $25,000 for frivolous submissions, and the court made clear that the next penalty could reach that maximum. In Squire’s case, the court imposed a $10,000 penalty under Section 6673, signaling that even smaller penalties are not merely symbolic but a deliberate deterrent against wasting judicial resources. The court’s language was unmistakable: "petitioner’s arguments are not only irrelevant to this case but have also been previously rejected by this Court."

For those considering an Offer in Compromise (OIC) under Section 7122, the decision reinforces that compliance and documentation are non-negotiable. The IRS’s rejection of Squire’s OIC was upheld because his financial disclosures were incomplete, and his claims of hardship lacked substantiation. The court’s reasoning hinged on the fact that Squire failed to meet the IRS’s Reasonable Collection Potential (RCP) threshold, a calculation that requires full transparency about assets, income, and expenses. As the court noted, "the IRS’s decision to reject the OIC was not an abuse of discretion" because Squire did not provide the necessary documentation to justify a lower settlement amount. This aligns with recent IRS guidance, which has tightened scrutiny on OICs, particularly for taxpayers with repeated rejections or inconsistent financial claims.

The broader lesson for taxpayers is that the Tax Court will not tolerate gamesmanship or repeated attempts to relitigate issues that have already been decided. The court’s final order in Squire’s case leaves no room for doubt: "We have considered all of the arguments made by the parties and, to the extent they are not addressed herein, we find them to be moot, irrelevant, or without merit." For future taxpayers, this means that CDP hearings must be pursued promptly and in good faith, OICs require meticulous financial disclosure, and frivolous arguments—no matter how sincerely held—will be met with penalties. The Tax Court’s authority to impose these penalties is not theoretical; it is a tool to enforce discipline in a system where delays and baseless claims impose real costs on the IRS and the judicial system. Percy Squire’s case is not an outlier but a preview of what happens when taxpayers ignore these rules. The next penalty could be far worse.