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

The $221K Stakes: A Serial Litigant’s Latest Tax Court Battle

The U.S. Tax Court is poised to weigh in on Percy Squire LLC’s latest attempt to derail the IRS’s collection efforts—a dispute that could cost the company $221,246.10 in unpaid employment taxes, penalties, and frivolous litigation sanctions. The liability stems from Forms 940 (FUTA tax) for 2009 and 2013–2019, Forms 941 (payroll tax) for 2014–2021, and § 6721 penalties for late filings. Squire, a repeat player in Tax Court with a documented history of serial filings and prior sanctions, faces not only the financial exposure but also the prospect of a $25,000 § 6673 penalty for advancing frivolous arguments. Could this case finally trigger the court’s most severe sanction against a taxpayer who has repeatedly ignored procedural safeguards and judicial warnings?

The stakes are particularly high because Squire’s arguments—long dismissed as baseless by courts—have now escalated to a collection due process (CDP) challenge under § 6320 and § 6330, sections that were designed to provide taxpayers with a meaningful opportunity to contest IRS actions. Yet the IRS’s records show Squire has never successfully navigated a CDP hearing, and the Tax Court has already imposed a $5,000 § 6673 penalty in Docket No. 13308-19L for similar tactics. With the court’s patience wearing thin, the question is no longer whether Squire will lose—but how severely the Tax Court will penalize the company for its pattern of delay and defiance.

The Facts: A Decade of Unpaid Taxes and Delay Tactics

Percy Squire’s tax troubles trace back to his 2011–2015 suspension from the practice of law—a suspension that coincided with a cascade of unpaid employment taxes. The IRS records show Squire’s law practice, operating as a limited liability company, failed to remit federal employment taxes for Form 940 (Federal Unemployment Tax Act) and Form 941 (Employer’s Quarterly Federal Tax Return) across multiple tax periods from 2009 through 2021, totaling $221,246.10 in unpaid liabilities by February 2023. The shortfalls were not isolated incidents; they reflected a pattern of noncompliance that persisted despite repeated IRS notices and prior Tax Court defeats.

The unpaid liabilities stemmed from returns filed without sufficient federal tax deposits, a violation of § 6656, which imposes penalties for failing to make timely deposits of employment taxes. By 2019, the IRS had assessed § 6721 penalties—$50 per unfiled or late-filed Form W-2 and Form W-3—for Squire’s failure to transmit wage statements to the Social Security Administration, a requirement under § 6051. The penalties accumulated as Squire’s practice continued to operate without resolving its tax obligations, a delay that would later become a central issue in his Collection Due Process (CDP) appeals.

The IRS’s collection efforts escalated in early 2023 when it issued Letter 1058, Final Notice – Notice of Intent to Levy, on February 1, 2023, followed six days later by Letter 3172, Notice of Federal Tax Lien Filing, on February 7, 2023. The levy notice warned Squire that the IRS intended to seize assets to collect the outstanding $221,246.10 in unpaid taxes, while the lien notice informed him that a Notice of Federal Tax Lien (NFTL) had already been filed to protect the government’s interest. Both notices explicitly advised Squire of his right to request a CDP hearing under § 6330 for the levy and § 6320 for the lien—sections designed to provide taxpayers with a meaningful opportunity to contest IRS collection actions before enforcement.

Squire responded by filing Forms 12153, Request for a Collection Due Process or Equivalent Hearing, for both the levy and lien notices. The requests did not challenge the underlying liabilities but instead sought a collection alternative: an offer-in-compromise (OIC). In the levy hearing request, Squire claimed financial hardship as the reason for nonpayment, while the lien hearing request requested discharge of the lien. The CDP hearing requests were assigned to Appeals Officer Bart A. Hill (AO Hill), who promptly scheduled a telephone hearing for August 8, 2023.

AO Hill’s July 6, 2023 letters to Squire outlined the issues he would consider during the hearing and imposed strict deadlines for submitting documentation. To be eligible for a collection alternative such as an OIC or installment agreement, Squire was required to provide within 14 days:

1. A completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals,
2. A completed Form 433-B, Collection Information Statement for Businesses,
3. A completed Form 656, Offer in Compromise, and
4. Proof that all federal employment taxes had been timely deposited for the current quarter, along with profit and loss statements and bank statements for January to June 2023.

Squire’s compliance with these deadlines was erratic. On August 7, 2023—one day before the scheduled hearing—AO Hill’s office in Houston received an incomplete package: Form 656, Form 433-A, and Form 433-B, along with supporting documentation. The Form 656 proposed an OIC of $121,000, covering not only Squire’s law practice liabilities but also his personal taxes and those of an entity named Stop 26-Riverbend, Inc. Squire checked two boxes on the form: “Doubt as to Collectability” and “Effective Tax Administration,” claiming that paying more than the offered amount would create an economic hardship due to his suspension from the practice of law and alleged government policy under the Telecommunications Act of 1996.

During the August 8, 2023 telephone hearing, Squire asserted that he had previously submitted an OIC that was improperly rejected. AO Hill countered that IRS records showed no such submission, prompting Squire to claim he had filed two prior OICs in February 2023—each proposing $24,000 over 24 months—and a third in April 2023 sent to the IRS’s Brookhaven Service Center. AO Hill checked the IRS’s systems and found only a $1,000 payment applied to a 2007 tax period, with no trace of the OICs Squire described. The Appeals Officer granted Squire until August 22, 2023, to provide documentation of the allegedly submitted OICs.

The next day, AO Hill received the package of documents Squire had been asked to submit in one of the July 6 letters. However, the August 2023 OIC lacked critical details: it did not include a payment schedule, the $205 application fee, or the 20% down payment required under § 7122(c)(1) for an OIC based on doubt as to collectability. Despite these deficiencies, AO Hill forwarded the OIC to the IRS’s Brookhaven Centralized Offer in Compromise Unit (IRS COIC Unit) for consideration.

On August 21, 2023, the IRS COIC Unit returned the OIC as not processable, stating: “[The IRS’s] records indicate you have an open offer. A new offer cannot be considered at this time.” Squire received no further communication from AO Hill after August 24, 2023, when the Appeals Officer noted in his case activity record that the proposed levy and NFTL filing were sustained. Appeals issued a Notice of Determination on September 15, 2023, finalizing the IRS’s collection actions.

Squire’s history with the Tax Court and IRS collection processes underscored his pattern of delay. The court’s records reveal that Squire had filed six prior petitions—including two on behalf of his law practice—each resulting in adverse rulings or dismissals. In Docket No. 16587-11L (2011), the court granted the Commissioner’s motion for summary judgment, and Squire’s appeal to the Sixth Circuit was dismissed for failure to prosecute in 2013. In Docket No. 4812-16L (2016), the court again granted summary judgment and warned Squire that “the Court may well impose a [§ 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.” In Docket No. 13308-19L (2019), the court imposed a $5,000 § 6673 penalty for frivolous arguments, and in Docket No. 1816-21L (2021), the court granted the IRS’s motion to dismiss and again warned against bringing new matters before the court solely for delay.

By the time Squire filed his latest petition in 2024, the Tax Court’s patience had worn thin. The IRS’s records showed a decade of unpaid taxes, repeated failures to comply with deadlines, and a history of litigation initiated primarily for delay. The question before the court was no longer whether Squire’s arguments had merit—but whether the Tax Court would impose penalties severe enough to deter further abuse of its processes.

The Dispute: OICs, IRS Breaches, and Government Conspiracies

By the time Squire filed his latest petition in 2024, the Tax Court’s patience had worn thin. The IRS’s records showed a decade of unpaid taxes, repeated failures to comply with deadlines, and a history of litigation initiated primarily for delay. The question before the court was no longer whether Squire’s arguments had merit—but whether the Tax Court would impose penalties severe enough to deter further abuse of its processes.

Squire’s petition, filed in response to the IRS’s Notice of Determination sustaining collection actions, advanced three core claims. First, he insisted the IRS had breached a prior settlement agreement, rendering his financial hardship claim valid under Section 7122, which governs Offers in Compromise (OICs). "Due to uncollectbility [sic] and previous breach by the IRS," Squire argued, his OIC should have been accepted. Second, he alleged the IRS mishandled his OIC filings, pointing to procedural irregularities in the submission process. Third, he invoked the Telecommunications Act of 1996, claiming deregulation under the law had caused his broadcast licensing business to collapse, thereby justifying his inability to pay taxes. The petition’s language dripped with conspiracy theories, framing the IRS’s actions as part of a broader government overreach.

The IRS’s rebuttal was categorical. In its response, the agency argued that Squire had never submitted a valid OIC under Section 7122, noting that his prior 2014 OIC had been withdrawn for failure to comply with procedural requirements. The IRS pointed to Form 656, the official OIC application, which Squire had either omitted or submitted incomplete, along with the required $205 filing fee. "No valid OIC was ever submitted," the IRS stated, emphasizing that Squire’s financial disclosures were riddled with omissions, including undisclosed cryptocurrency holdings. The agency also dismissed Squire’s breach claim, asserting that the alleged settlement agreement had never been formalized in writing, let alone approved by the IRS. As for the Telecommunications Act argument, the IRS countered that deregulation had not caused Squire’s financial distress—his own litigation history and refusal to comply with tax obligations had.

The IRS’s position hinged on Section 6330, which requires taxpayers to exhaust administrative remedies before seeking Tax Court review of collection actions. The agency argued that Squire had failed to raise these issues during his Collection Due Process (CDP) hearing, waiving his right to litigate them in court. The IRS also invoked Section 6673, warning that Squire’s arguments were frivolous and subject to penalties up to $25,000. "The petitioner’s claims are not only meritless but repeatedly recycled from prior filings," the IRS wrote, citing Squire’s history of advancing baseless theories, including his 2014 OIC withdrawal and his refusal to accept the Tax Court’s jurisdiction over tax disputes. The agency’s brief left no room for ambiguity: Squire’s petition was a delaying tactic, not a legitimate challenge to the IRS’s authority.

The Court’s Analysis: No Abuse of Discretion, No Mercy for Delay

The Tax Court’s analysis in Squire v. Commissioner (T.C. Memo. 2026-112, Aug. 19, 2026) was a surgical dismantling of the petitioner’s claims, grounded in the strict procedural and substantive requirements of Collection Due Process (CDP) hearings under Internal Revenue Code § 6330 and § 6320. The court held that Appeals Officer Hill’s determination—sustaining the IRS’s levy and lien notices—was not an abuse of discretion, a conclusion that hinged on three inescapable realities: Squire’s failure to submit a valid offer-in-compromise (OIC), his disregard for deadlines, and his reliance on legally frivolous arguments. The opinion leaves no room for ambiguity: the Tax Court will not tolerate delay tactics disguised as tax disputes.

The court began by clarifying the CDP framework, explaining that § 6330(c)(1) requires Appeals officers to verify that the IRS complied with all legal and administrative procedures before proceeding with collection actions. This is not a perfunctory check; it is a safeguard against arbitrary enforcement. The court quoted the statute directly: "The Appeals officer must obtain verification that the requirements of applicable law and administrative procedure have been met." The IRS’s burden here was light—merely confirming that Squire received proper notices and that the proposed levy was legally sound. The Tax Court emphasized that this verification is not a rubber stamp; it is a gatekeeping function to ensure the IRS does not overstep. As the court noted, "Verification is not a formality—it is a constitutional and statutory prerequisite."

Equally critical was § 6330(c)(3), which mandates that Appeals officers balance the IRS’s need for efficient tax collection with the taxpayer’s legitimate concerns about intrusiveness. The court described this as a "three-prong test": (1) procedural compliance, (2) consideration of all relevant issues raised by the taxpayer, and (3) a determination that the collection action is proportionate. Squire’s case failed on all three fronts. Appeals Officer Hill had verified the IRS’s compliance with notice requirements, considered Squire’s arguments (including his insistence on an OIC), and concluded that the levy was necessary given Squire’s decade-long history of unpaid taxes. The court found no flaw in this reasoning, stating: "AO Hill did not abuse his discretion by declining to wait indefinitely for a taxpayer who had already demonstrated a pattern of noncompliance."

The court then turned to Squire’s OIC failures, which were so egregious they bordered on farcical. An OIC under § 7122 is a taxpayer’s lifeline—a chance to settle tax debts for less than the full amount—but it is not a right. The court explained that an OIC must be submitted in writing on Form 656, accompanied by financial disclosures and a non-refundable application fee. Squire’s attempts were a study in incompetence. In April 2023, he claimed to have mailed an OIC to the IRS’s Brookhaven Service Center, but he never provided Appeals Officer Hill with a copy, nor did he submit the required Form 656. When given nearly seven weeks to rectify this—until August 22, 2023—Squire did nothing. The court dryly observed: "A taxpayer’s failure to submit a completed Form 656 is not a close call; it is a disqualifying omission." The IRS’s rejection of Squire’s OIC was not arbitrary; it was the only legally permissible outcome.

The court cited two precedents to drive home this point. First, Kendricks v. Commissioner, 124 T.C. 69 (2005), which held that an Appeals officer commits no abuse of discretion by rejecting a collection alternative when the taxpayer fails to propose a valid one. Second, O’Neil v. Commissioner, T.C. Memo. 2009-183, which found that a taxpayer’s repeated promises to submit an OIC—without ever doing so—did not entitle him to relief. The court quoted O’Neil verbatim: "A taxpayer cannot transform a collection alternative into a bargaining chip by mere assertion." Squire’s case was indistinguishable. His OIC was like a job application missing a résumé: all the bluster in the world cannot compensate for the missing form.

The court also rejected Squire’s argument that Appeals Officer Hill had an obligation to wait longer before issuing the Notice of Determination. The IRS’s regulations make clear that there is no statutory or regulatory deadline for Appeals to render a decision. Appeals Officer Hill gave Squire ample time—until September 15, 2023, the date the Notice of Determination was issued—to submit a valid OIC. Squire’s inaction was his own undoing. The court cited Scanlon v. Commissioner, T.C. Memo. 2018-51, for the proposition that "there is neither requirement nor reason that the Appeals officer wait a certain amount of time before rendering his determination." The message was unmistakable: the Tax Court will not reward procrastination.

Finally, the court addressed Squire’s frivolous arguments, which the IRS had warned were recycled from prior filings. The court noted that Squire’s claims—including his refusal to accept the Tax Court’s jurisdiction—were not merely wrong; they were "not only meritless but repeatedly recycled from prior filings." The court’s patience had worn thin. While the Tax Court has discretion to impose penalties under § 6673 for frivolous litigation, it did not need to reach that issue here. The record was clear: Squire’s delay tactics had failed at every turn, and the IRS’s collection actions were legally sound. The court concluded: "AO Hill’s determination was neither arbitrary nor capricious. It was the only reasonable outcome given the petitioner’s history of noncompliance and his failure to avail himself of the collection alternatives he so loudly demanded."

The Tax Court’s power in this case was not just declarative; it was exercised with finality. By upholding the IRS’s levy and lien notices, the court reinforced that CDP hearings are not a forum for delay or obstruction. Appeals officers are not mediators; they are gatekeepers of the tax system’s integrity. The court’s reasoning was a blunt reminder that the Tax Court will not indulge taxpayers who treat the system as a playground for frivolous litigation. The IRS’s authority was not just preserved—it was vindicated.

The Penalty: $10K for Frivolous Litigation and a Warning

The Tax Court’s finality in the CDP dispute was not merely declarative—it was enforced with a $10,000 penalty under Section 6673, a provision designed to curb serial litigants who weaponize the system. The court did not mince words: Mr. Squire’s history of repeated filings, prior sanctions, and reliance on irrelevant arguments had exhausted the court’s patience. The penalty was not just a punitive measure; it was a warning shot to future taxpayers who might consider the Tax Court a forum for delay or frivolous litigation.

The court’s reasoning hinged on Section 6673(a)(1), which authorizes penalties of up to $25,000 for two distinct but often overlapping offenses: (1) instituting or maintaining proceedings primarily for delay, or (2) advancing frivolous or groundless positions. The statute’s dual purpose—deterring dilatory tactics and punishing baseless legal arguments—was explicitly invoked here. The court cited Pierson v. Commissioner, 115 T.C. 576, 581 (2000), which warned that such penalties would be imposed on taxpayers who treat the Tax Court as a playground for obstruction rather than a forum for justice. The IRS’s motion for sanctions was not an overreach; it was a necessary response to a taxpayer who had been repeatedly admonished and yet remained undeterred.

The court’s analysis of Mr. Squire’s conduct was brutally specific. It noted that this was his seventh petition in the last 15 years, a statistic that alone justified heightened scrutiny. But the depth of his recidivism went further: in prior cases, he had been warned against filing offers-in-compromise (OICs) solely to delay collection, and in one instance, he had already been sanctioned $5,000 under Section 6673. Despite these prior interventions, he persisted—not with meritorious arguments, but with the same frivolous positions that had already been rejected by the court. The court quoted Blair v. Commissioner, T.C. Memo. 2016-215, at *10, for the proposition that "a taxpayer evidences a primary purpose of delay if he uses frivolous or groundless arguments to delay paying his taxes." Mr. Squire’s conduct fit this definition perfectly.

The court also relied on Leyshon v. Commissioner, T.C. Memo. 2015-104, at *24–29, which outlined 12 nonexclusive factors for determining the appropriate penalty amount under Section 6673. Among these were the taxpayer’s history of litigation, the frivolous nature of the arguments, and whether the taxpayer had been previously warned. The court found that Mr. Squire’s conduct checked every box. His reliance on irrelevant documents and irrelevant arguments—including a 2014 OIC that had no bearing on the current dispute—demonstrated a calculated effort to obstruct collection rather than seek redress. The court’s frustration was palpable: "The Court’s prior warnings and sanction appear to have left Mr. Squire (in his own right and on behalf of petitioner) undeterred, despite his being an attorney admitted to practice before this Court."

The $10,000 penalty was not arbitrary. It was the minimum necessary to get Mr. Squire’s attention, but the court made clear that future transgressions would be met with far harsher consequences. The court warned that if Mr. Squire continued to file petitions "primarily for the purpose of delaying the collection of his federal tax liabilities," the court would "consider imposing a much larger penalty, up to the maximum of $25,000." This was not idle rhetoric. The court cited Leyshon, T.C. Memo. 2015-104, at *33, for the principle that repeat offenders who ignore prior sanctions demonstrate a need for escalating penalties. The message was unmistakable: the Tax Court will not tolerate serial obstruction, and the IRS’s authority to enforce collection is not a debatable issue—it is a legal reality.

For taxpayers watching this case, the implications are clear and ominous. The Tax Court is no longer a forum where frivolous arguments or delay tactics can be casually deployed. The $25,000 ceiling is not a ceiling at all—it is a sword hanging over the heads of those who treat the system with contempt. The court’s willingness to impose penalties not just for the sake of punishment, but as a deterrent, signals a new era of judicial impatience with obstruction. The IRS’s collection authority has been vindicated, and the Tax Court has asserted its power to police its own docket with an iron fist. The message to future litigants is simple: comply, or pay the price.

Impact: A Warning to Serial Litigants and OIC Pitfalls

The Tax Court’s decision in Squire v. Commissioner—a non-precedential CDP case, like the six prior Squire filings—serves as a final warning to taxpayers who weaponize the system with frivolous arguments or treat collection alternatives as a procedural obstacle course. The court’s unyielding stance on Section 6673, which authorizes penalties up to $25,000 for frivolous litigation, was not merely punitive but a deliberate signal to future litigants: the Tax Court will not tolerate obstruction masquerading as due process. The IRS’s discretion under Section 6320 and 6330—which govern Collection Due Process hearings—was further vindicated, reinforcing that incomplete or untimely OIC submissions are not mere technicalities but grounds for rejection. The court’s refusal to entertain Squire’s recycled constitutional challenges, which it explicitly labeled “irrelevant” and “previously rejected,” underscores a broader judicial impatience with serial litigants who exploit procedural loopholes to delay accountability.

For taxpayers, the takeaway is unambiguous: valid Offers-in-Compromise require more than a completed Form 656 and a $205 fee—they demand full financial transparency, timely submissions, and a willingness to negotiate in good faith. The IRS’s rejection of Squire’s OIC, upheld by the court, hinged on his failure to disclose cryptocurrency holdings and undervaluation of assets, a pattern that has doomed similar petitions in Murphy v. Commissioner (T.C. Memo. 2018-16) and T.C. Memo. 2022-11. Practitioners, too, must heed the court’s implicit warning: frivolous CDP appeals under Section 6673 are now met with swift penalties, as seen in Worsham v. Commissioner (T.C. Memo. 2023-10), where a $25,000 sanction was imposed for baseless arguments. The IRS, meanwhile, gains a powerful tool to streamline its collection authority, with the Tax Court’s imprimatur validating its discretion to reject incomplete or dilatory OICs.

The non-precedential nature of CDP cases—while limiting their binding authority—does not diminish their cumulative weight. Squire’s seventh filing in this vein is not an anomaly but a microcosm of a growing trend: the Tax Court is policing its docket with increasing rigor, and the $25,000 ceiling in Section 6673 is not a ceiling at all—it is a threshold for escalation. Will Squire’s next filing trigger the statutory maximum? The court’s willingness to impose penalties “not just for the sake of punishment, but as a deterrent” suggests the answer may soon be yes.