Bryan Edward Menge v. Commissioner of Internal Revenue

Taxpayer Loses $200K+ Levy Fight Over Procedural Missteps

The stakes could not have been higher for Bryan Edward Menge. The Internal Revenue Service sought to levy his assets to collect more than $200,000 in unpaid federal income taxes for tax years 2015 through 2018—a liability that, if sustained, would have triggered immediate seizure of bank accounts, wages, and other property. The case landed in the Tax Court not because of a dispute over the underlying tax debt, but because of a procedural misstep that cost Menge his right to challenge the IRS’s collection action. In a blunt ruling that underscored the Tax Court’s deference to the IRS’s discretion under Internal Revenue Code § 6330, Judge Kerrigan sustained the IRS’s levy determination, leaving the pro se taxpayer with no judicial recourse. The decision serves as a stark reminder that the Collection Due Process (CDP) hearing—a taxpayer’s last line of defense against an IRS levy—is not a forum for second chances, but a procedural gauntlet where missed deadlines and arbitrary noncompliance can be fatal.

A Chronology of Missed Opportunities: How the Taxpayer Forfeited His Rights

The taxpayer’s procedural missteps began the moment the IRS sent its first warning, a Notice of Intent to Levy dated November 22, 2021. That document, issued under Internal Revenue Code § 6330(d), notified the taxpayer of the IRS’s intent to seize assets to satisfy unpaid liabilities for the years at issue. The notice also informed him of his right to a Collection Due Process (CDP) hearing, a critical safeguard under § 6330(b) where taxpayers can challenge the proposed levy or propose collection alternatives. Instead of acting, the taxpayer waited nearly a month before filing Form 12153, the official request for a CDP hearing, on December 23, 2021. By checking the box indicating he could not pay the balance, he signaled his intent to seek relief—but relief would require more than a form.

The IRS assigned a settlement officer to his case on November 8, 2022, nearly a year after the initial notice. That officer scheduled a hearing for January 12, 2023, and demanded a trove of documents: Form 433-A, three months of bank statements, a corrected 2016 Form 1040, signed 2020 and 2021 Forms 1040, and proof of 2022 estimated tax payments. The taxpayer, however, did not comply. Instead, he requested the Administrative Record, the compilation of all IRS documents related to his case, and the hearing was postponed until that request was fulfilled. The case was then reassigned to a second settlement officer, who sent an identical document request and scheduled a new hearing for May 16, 2023.

The taxpayer’s response was silence. He did not participate in the May hearing, nor did he supply any of the requested information. On June 16, 2023, he left a voicemail for the second settlement officer, claiming the tax years at issue were also under review by this Court and the First Circuit Court of Appeals. The settlement officer called back, clarifying that none of the periods involved in those unrelated cases overlapped with the matters at hand. She then demanded he call in for a rescheduled hearing on June 22, 2023.

When the taxpayer finally connected, he insisted the income tax liabilities were correct and asked for more time, citing his belief that the First Circuit would resolve a dispute in his favor—a reference to cases involving 2013 for which he claimed an overpayment credit. The settlement officer reiterated that he needed to submit the requested financial information to proceed. He did not. The hearing concluded without any additional submissions, and the taxpayer’s file remained barren of the documents the IRS had demanded repeatedly. The second settlement officer issued a Notice of Determination on October 25, 2023, sustaining the levy. By then, the taxpayer’s rights had long since slipped through his fingers.

The Clash: Taxpayer’s Overpayment Claim vs. IRS’s Collection Authority

The IRS’s collection authority clashed head-on with the taxpayer’s insistence on carrying forward a disputed overpayment credit from 2013, a claim the agency dismissed as legally irrelevant to the years at issue. The dispute crystallized during the Collection Due Process (CDP) hearing, where the taxpayer argued that an overpayment credit from 2013 should offset his liabilities for 2015–2018. The IRS countered that the 2013 tax year had been finally adjudicated—both by the Tax Court and the First Circuit—and that the taxpayer’s claim was therefore barred from consideration.

The taxpayer’s position rested on the assertion that he was owed an overpayment for 2013, despite the courts having rejected that contention. He maintained that the credit should carry forward to his later liabilities, effectively arguing that the IRS had an obligation to apply the credit proactively. The IRS, however, took the position that the 2013 case was closed and that the taxpayer’s failure to challenge the underlying liabilities for 2015–2018 during the CDP hearing rendered those liabilities immune from dispute. Under § 6330(c)(2)(B), a taxpayer may challenge the existence or amount of an underlying tax liability in a CDP hearing only if they did not receive a Notice of Deficiency or otherwise have an opportunity to dispute the liability. Since the taxpayer had not received Notices of Deficiency for the years at issue, the IRS argued that he had the chance to raise the underlying liabilities during the hearing—but he did not. The agency emphasized that the taxpayer’s persistent focus on the 2013 overpayment credit, rather than the liabilities for 2015–2018, amounted to a procedural failure to engage with the core issue at hand. The IRS’s stance hinged on the principle that a CDP hearing is not a forum for rehashing previously adjudicated disputes but rather a mechanism for addressing collection actions or unchallenged liabilities.

Court Upholds IRS Levy, Citing Taxpayer’s ‘Arbitrary’ Noncompliance

The Tax Court’s decision in Menge v. Commissioner (Docket No. 22622-16) delivers a stark reminder of the deference owed to IRS settlement officers in Collection Due Process (CDP) cases, while underscoring the fatal consequences of procedural missteps. The court’s ruling—sustaining a $200,000+ levy against a taxpayer who failed to comply with basic administrative requirements—highlights the narrow scope of judicial review under § 6330(d) and the irrelevance of equitable arguments when statutory and regulatory mandates are ignored.

The court’s analysis hinged on the abuse of discretion standard, a doctrine that grants extraordinary latitude to IRS Appeals officers in CDP matters. Under § 6330(c)(3), settlement officers must consider three statutory factors when evaluating a proposed levy:

1. Whether the IRS complied with applicable laws and administrative procedures;
2. Any issues the taxpayer raised during the CDP hearing; and
3. Whether the levy balances the need for efficient tax collection with the taxpayer’s legitimate concerns about intrusiveness.

The court emphasized that this balancing test is not a forum for reweighing the merits of the taxpayer’s financial hardship but rather a procedural safeguard to ensure the IRS followed its own rules. In Woodral v. Commissioner, the Tax Court held that an abuse of discretion occurs only when the IRS acts "arbitrarily, capriciously, or without sound basis in fact or law"—a threshold the petitioner in Menge failed to meet. The court’s refusal to reexamine the settlement officer’s decision reflects its limited role as a reviewing body, not a substitute for the Appeals process.

The petitioner’s downfall stemmed from his complete failure to engage with the CDP hearing’s core requirements. While § 6330(c)(2)(A) permits taxpayers to raise "any relevant issue relating to the unpaid tax or the proposed collection action," the court noted that this right is not a blank check. The taxpayer’s insistence on litigating a 2013 overpayment credit—a dispute already adjudicated by the First Circuit in Menge v. Werfel (No. 22-1203, 2024)—was deemed irrelevant to the 2015–2018 liabilities at issue. The court cited Treas. Reg. § 301.6330-1(f)(2), Q&A-F3, which requires taxpayers to raise underlying liabilities during the CDP hearing or forfeit the right to challenge them in court. The petitioner’s omission was fatal.

Equally damning was the taxpayer’s refusal to provide requested financial documentation, including Form 433-A, despite multiple opportunities to do so. The court cited McLaine v. Commissioner, which establishes that a settlement officer’s failure to consider a taxpayer’s financial information can constitute an abuse of discretion—but only if the taxpayer actually submitted the information. Here, the petitioner did not comply, leaving the settlement officer with no basis to evaluate collection alternatives. The court’s holding in Menge thus reinforces that procedural compliance is non-negotiable: a taxpayer cannot demand judicial intervention when they themselves disregard the hearing’s procedural rules.

The court’s deference to the IRS extended beyond the statutory factors. It rejected the petitioner’s argument that the settlement officer failed to balance the "need for efficient collection" against his hardship, noting that no such balancing was required when the taxpayer provided no evidence of financial distress. The court’s citation of Link v. Commissioner—which holds that Appeals officers need not "reweigh the equities" if they follow all guidelines—underscores the limited judicial role in CDP cases. The Tax Court’s function is not to substitute its judgment for the IRS’s, but to ensure the agency did not act arbitrarily. In Menge, the IRS did not.

The opinion also serves as a cautionary tale for taxpayers who treat CDP hearings as a second chance to relitigate prior disputes. The court’s reiteration of Giamelli v. Commissioner—which bars challenges to underlying liabilities unless raised in the CDP hearing—reinforces that finality is paramount. The petitioner’s attempt to revive a 2013 overpayment claim in the context of 2015–2018 liabilities was dismissed as procedurally improper, a ruling that aligns with the First Circuit’s affirmance in Menge v. Werfel (2024).

Ultimately, Menge demonstrates the Tax Court’s reluctance to disrupt IRS collection actions when taxpayers fail to engage meaningfully with the process. The court’s refusal to entertain equitable arguments—such as the petitioner’s claim that the levy was "unfair"—signals that procedural compliance trumps substantive fairness in CDP cases. For taxpayers facing IRS collection actions, the lesson is clear: the CDP hearing is not a negotiation; it is a procedural gauntlet. Missing a deadline, omitting a document, or raising an untimely issue can foreclose judicial review entirely, leaving the IRS’s levy unassailable.

What This Ruling Means for Taxpayers Facing IRS Collection Actions

The Tax Court’s decision in this case underscores a harsh but unavoidable truth: procedural compliance is the only path to judicial review in Collection Due Process (CDP) cases. The court’s refusal to entertain equitable arguments—such as the petitioner’s claim that the levy was "unfair"—signals that the CDP hearing is not a negotiation but a procedural gauntlet. Missing a deadline, omitting a document, or raising an untimely issue can foreclose judicial review entirely, leaving the IRS’s levy unassailable.

For taxpayers facing IRS collection actions, this ruling offers critical lessons. First, document requests during CDP hearings are non-negotiable. The IRS’s demand for financial disclosures, such as Form 433-A, is not a mere formality—it is a prerequisite for challenging a levy. Failure to comply with these requests, even in part, can result in the Appeals Officer’s decision being upheld without further review. The court’s deference to the IRS’s discretion under § 6330(d) is nearly absolute, and the bar for proving abuse of discretion is extraordinarily high. Taxpayers must demonstrate that the IRS’s decision was arbitrary, capricious, or without sound basis in fact or law—a standard that is difficult to meet unless the taxpayer can show the IRS ignored its own procedures or failed to consider relevant evidence.

Second, the limited scope of CDP hearings cannot be overstated. Taxpayers cannot use the hearing to reopen issues that were previously adjudicated or to challenge tax liabilities from unrelated years. The court’s decision in Kestin v. Commissioner (2021) makes clear that if a taxpayer had a prior opportunity to dispute a liability—such as through a notice of deficiency or audit reconsideration—they cannot raise it again in a CDP hearing. This means taxpayers must raise all relevant issues during the CDP hearing itself, as the Tax Court will not entertain arguments that were not presented to the Appeals Officer. The case serves as a stark reminder that pro se taxpayers—those without legal representation—are particularly vulnerable to procedural missteps. Missing a deadline or failing to submit the correct forms can have irreversible consequences, as the court will not grant relief based on ignorance of the process.

Finally, the ruling highlights the risks of relying on unrelated tax years or previously adjudicated cases to challenge a levy. The court’s refusal to entertain equitable arguments means that substantive fairness is secondary to procedural compliance. Taxpayers must approach CDP hearings with the same rigor as a courtroom trial, ensuring that every document is submitted, every argument is raised, and every deadline is met. For practitioners, this case reinforces the importance of meticulous record-keeping and client counseling to avoid procedural pitfalls. For taxpayers, the message is clear: the CDP hearing is not the place for negotiation—it is the place for compliance.