Gillum v. Commissioner

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________

No. 11-1664
___________

Thomas M. Gillum, *
*
Appellant, *
* Appeal from the United States
* Tax Court.
v. *
*
Commissioner of Internal Revenue, *
*
Appellee.

___________

Submitted: November 15, 2011
Filed: April 11, 2012
___________

Before SMITH, COLLOTON, and GRUENDER, Circuit Judges.
___________

SMITH, Circuit Judge.

Thomas M. Gillum sought judicial review of the Commissioner of Internal
Revenue's notice of determination sustaining a proposed levy to collect Gillum's
delinquent income tax liabilities for 1996–2002 and a tax-lien filing for 1998 and
2000–2002 tax liabilities. Gillum also sought review of the Commissioner's denial of
collection due process (CDP) hearings to his purported nominees and alter egos.
Following trial, the tax court1 upheld the Commissioner's determinations sustaining
the filing of the notice of the federal tax lien and proposed levy. Additionally, the tax
court held that it could not enter a decision affecting Gillum's purported nominees and
alter egos because they were not parties to the proceeding. Gillum appeals, arguing
that he was denied a fair CDP hearing because the Internal Revenue Service (IRS)
settlement officer relied on information that was not contained in the administrative
record in making his determination. He additionally argues that his purported
nominees and alter egos were entitled to a CDP hearing. We affirm.

I. Background2
A. Criminal Prosecution
Gillum is a veterinarian who operates Cloverdale Animal Hospital, LLC
("Cloverdale"). He was prosecuted in 2004 for failure to file federal income tax
returns for 1996–2002. In 2005, Gillum entered into a plea agreement with the United
States Attorney for the Eastern District of Arkansas in which he pleaded guilty to one
count of criminal failure to file a federal income tax return for 2000. In the plea
agreement, Gillum agreed to entry of an order of mandatory restitution under 18
U.S.C. § 3663A for "the full amount of the taxes due and owing for all prosecution
years." The plea agreement provided that "[a]t this time, the United States and the
defendant agree that the amount of restitution payable by the defendant is $416,210."
The plea agreement did "not bar or compromise any civil or administrative claim
pending or that may be made against the defendant, including but not limited to tax
matters." Furthermore, it was "binding only upon the United States Attorney's Office
for the Eastern District of Arkansas and the defendant. It d[id] not bind . . . any other
federal, state or local prosecuting, administrative, or regulatory authority."

1
The Honorable Michael B. Thornton, United States Tax Court Judge.
2
The factual background in this case is extensive and complicated by Gillum's
criminal prosecution, the civil-collection process for Gillum's delinquent taxes, and
the substantial administrative record.

-2-
 In a judgment filed December 12, 2005, the district court sentenced Gillum to
five years of probation and ordered him to "pay the total criminal monetary penalties"
of $246,226 in "[r]estitution."3 The district court also ordered Gillum to pay the
$246,266 in monthly payments equal to ten percent of his monthly gross income,
beginning 30 days after the date of the judgment.

While the criminal proceedings were pending, Gillum filed tax returns for
1996–2002. Thereafter, the IRS assessed the taxes that Gillum had reported on his
delinquent returns for those years. In each instance, the IRS added associated tax and
interest. The IRS sent notice and demand for payment to Gillum on the date of each
assessment. After Gillum failed to pay, the IRS advised him on October 6, 2006, that
it was going to file a notice of federal tax lien. Gillum did not request administrative
review of the lien-filing at that time.

Notices of federal lien dated October 13, 2006, were recorded in Montgomery
County and Pulaski County, Arkansas, on October 23, 2006, and October 24, 2006,
respectively, thereby securing Gillum's delinquencies for 1998 and 2000–2003. On
October 18, 2006, the IRS sent Gillum a "Notice of Federal Tax Lien Filing and Your
Right to a Hearing Under IRC 6320" for 1998 and 2000–2003. On October 26, 2006,
the IRS sent Gillum a "Final Notice[:] Notice of Intent to Levy and Notice of Your
Right to a Hearing" under 26 U.S.C. § 6330 to collect Gillum's unpaid tax liabilities
for 1996–2003.

On October 26 and 27, 2006, Gillum sent a "Form 433-A," entitled "Collection
Information Statement for Wage Earners and Self-Employed Individuals," and a

3
As the tax court explained, "[t]his amount corresponded to the amount stated
in the plea agreement as representing [Gillum's] total tax liability for the years 1999
through 2001." Gillum v. Comm'r, 100 T.C.M. (CCH) 562, 2010 WL 5393884, at *1
n.2 (2010). The record contains no explanation regarding "why the [d]istrict [c]ourt
reduced the restitution in this manner." Id.

-3-
"Form 433-B," entitled "Collection Information Statement for Businesses," to the
IRS. Gillum withheld documentation that he was required to submit with the forms.
He failed to provide the account numbers for his personal bank accounts, which were
held in the name of "TMG Revocable Living Trust," or for his personal credit card,
which was in the name of "Cloverdale Animal." On Form 433-A, Gillum stated that
there were no judgments against him and that he was not the beneficiary of any trust.
He also stated that his monthly living expenses totaled $6,532.75, but he failed to
categorize the expenses. He also did not give the estimated value of three vehicles in
his possession or other required information about his personal assets. In response to
the question of whether he had transferred any assets for less than their actual value
in the past ten years, Gillum checked the box for "No" and wrote "Possible" next to
the box for "Yes." On Form 433-B, Gillum omitted bank and credit card account
numbers and did not provide the required details about accounts receivable, business
assets, available credit, or monthly income and expenses. He stated that it was
"possible" that business income would increase.

B. IRS Appeals Office CDP Hearing
On November 21, 2006, Gillum timely submitted his "Request for a Collection
Due Process Hearing" under 26 U.S.C. §§ 6320 and 6330, indicating his disagreement
with both the lien notice and the levy notice.4 In his request, Gillum argued that his
criminal plea agreement and judgment reflected his "tax liability for years 1996
through 2002" "and that all further attempts by the IRS to collect on these years are
invalid." He requested "that the IRS cease and desist from any further collection
efforts regarding tax years 1996 through 2002 due to the fact that payment on these
years is exclusively covered under an agreed court order for restitution to the IRS."

4
"After [Gillum] submitted his request for a collection due process (CDP)
hearing, on Dec. 8, 2006, [the IRS] issued to [Gillum] a notice of deficiency with
respect to [Gillum's] taxable years 1998 through 2002. The parties agree that the
deficiencies determined in the notice are not at issue in this case." Gillum, 2010 WL
5393884, at *2 n.6.

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According to Gillum, he was "making payments to the IRS for these tax years under
this agreement, and, unless [he] fail[ed] to meet his obligations under that agreed
court order, the IRS must cease and desist from further collection activity." Gillum
did not propose any collection alternatives in his hearing request.

On December 14, 2006, the IRS Appeals Office sent Gillum a letter
acknowledging its receipt of his CDP hearing request and informing him that IRS
settlement officer David P. Schroeder would conduct the hearing. Gillum hired
attorney Kenneth Boiarsky as his CDP representative. On April 26, 2007, Schroeder
sent a letter to Gillum, with a copy to Boiarsky, scheduling a telephone hearing on
May 15, 2007. Schroeder stated in the letter that he "d[id] not recall any prohibited
previous involvement with [the] tax periods [at issue]" but that if Gillum believed that
Schroeder had prior involvement, then Gillum needed to "notify [Schroeder]
immediately." Schroeder also listed "nonfrivolous issues" for discussion at the CDP
hearing, including "[c]ollection alternatives to levy such as full payment of the
liability, installment agreement, offer in compromise or temporary suspension of
collection action if the action imposes a hardship condition." Schroeder stated that
even though these collection options "may not be considered an 'alternative' to a
notice of lien filing," they could still "be discussed at a lien hearing." Schroeder
informed Gillum that he could request a determination as to whether "the notice of
lien filing was appropriate and if [Gillum] qualif[ied] for a lien withdrawal or other
lien options, such as subordination." Schroeder instructed Gillum to send Schroeder
"any information you want me to consider in your hearing so that I receive it within
14 days from the date of this letter."5

5
Additionally, Schroeder explained that Gillum's request for a hearing was
timely with respect to the proposed levy for 1996–2002 and the tax-lien filing for
1998 and 2000–2002, but that, at the time of the hearing request, a notice of tax lien
had not been filed for 1996, 1997, or 1999.

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 Gillum did not object to Schroeder conducting the CDP hearing, and on May
15, 2007, Schroeder held the first of three telephone conferences with Boiarsky,
Gillum's representative.6 During that telephone conference, Schroeder opined that
"neither the judgment nor the plea agreement bars IRS from any civil or
administrative actions related to the full tax liability, nor do [the plea agreement and
judgment] compromise the tax liability." Schroeder asked Boiarsky whether he
wanted the IRS Appeals Office "to consider collection alternatives." Boiarsky
responded that, although he was not "conceding his position regarding his
understanding of the agreement and judgment," he did "want collection alternatives
considered." Boiarsky additionally "stated that [Gillum] is paying everything he
makes to [the] IRS, and he proposed that [the] IRS limit its collection to the terms of
the plea agreement and court judgment." Schroeder replied that he would "retrieve the
collection admin[istrative] file, which contains current financial info[rmation], review
it, and call him back [on May 21, 2007, at] 2PM to conclude [the] hearing."

Following the first telephone conference, Schroeder "[w]ent to collection" and
"[m]et with [a] R/O [(revenue officer)]." Schroeder gave the revenue officer an "ex-
parte limitation warning." The revenue officer "had several files on [Gillum]" and
"gave [Schroeder the] file with [Gillum's] financial statement and related documents."
Schroeder then "[r]eviewed [the] file containing [Form] 433-A, [Form] 433-B, [the]
request for opinion to file nominee and alter ego liens, and counsel's approval memo
on this lien request."

On May 21, 2007, Schroeder conducted the second telephone conference with
Boiarsky. Immediately prior to the hearing, Schroeder "reviewed [Form] 433-A,
[Form] 433-B, and [the] nominee/alter ego info[rmation] in the collection
admin[istrative] file." Schroeder noted that "[t]he 433-A and B were voluntarily

6
Schroeder recorded his case preparatory work and hearing notes from the three
telephone conferences in the "Case Activity Record."

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signed under penalty of perjury, and it is clear from the information developed by the
R/O that [Gillum] has not disclosed all assets and income, and is still taking actions
to shield income and assets from IRS and/or other creditors." Schroeder concluded
that "[c]ollection options cannot be considered under these circumstances." During
the telephone conference, Boiarsky had no objections to the tax-lien filing, so
Schroeder sustained the filing. They "then discussed collection alternatives to the
proposed levy action," and Boiarsky again proposed "that [the] IRS limit its collection
action to the amount specified in the plea agreement and court judgment as this is
[Gillum's] maximum ability to pay." But Schroeder

informed [Boiarsky] that [he had] reviewed the financial statements and
related info[rmation] in the collection admin[istrative] file and
concluded that the financial statements did not provide full disclosure
of income and assets controlled by [Gillum] and therefore [Schroeder]
was unable to recommend acceptance of [Boiarsky's] proposal to limit
collection to the terms of the restitution.

In response, Boiarsky "asked for details of the non-disclosure," but Schroeder
"declined to discuss this at the time." Schroeder told Boiarsky that he would "research
this request for disclosure of collection details and possibly seek guidance from
Counsel." Schroeder stated that he would call Boiarsky later in the week to conclude
the hearing. After the conference ended, Schroeder was "concerned about how much
info[rmation] to give to [Boiarsky] regarding [Schroeder's] determination that
[Boiarsky's] proposed collection alternative is not acceptable under the
circumstances." After not finding any guidance related to the collection-disclosure
issue on the IRS Appeals Office's website, Schroeder "[d]iscussed [the] case with
[the] acting [Appeals Team Manager]." The Appeals Team Manager had never
encountered the issue before and "was concerned about [an] ex-parte issue."
Schroeder advised the Appeals Team Manager that he "had no discussion of [the]
issues with Collection, but ha[d] only relied on the collection admin[istrative] file."

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 On May 22, 2007, Schroeder sought advice from IRS attorney Lisa Downs.
Downs "found no ex-parte issue with [Schroeder's] reliance on info[rmation] in the
collection admin[istrative] case file as [a] basis for determination regarding collection
alternatives." Downs and Schroeder also "discussed the nominee/alter ego situation."
The issue was "to what extent Appeals is obliged to discuss/explain/disclose to
[Boiarsky] the basis for the determination—i.e., the financial statements [Gillum]
submitted . . . do not fully disclose the assets and income available to [Gillum] by his
nominee/alter ego activity." Downs told Schroeder that she would consider the issue
and call him back. The next day, Schroeder reviewed Downs's response. Downs
advised Schroeder "to adequately disclose why the amount offered is not sufficient
and why it does not adequately reflect collection potential." Thereafter, Schroeder
"[r]eviewed [the] collection admin[istrative] case file info[rmation] again to prepare
for [a] conference with [Boiarsky]." Schroeder

conclude[d] that it is very clear that [Gillum] has not accurately reported
income and expenses, which makes it impossible for Appeals to
accurately determine true ability to pay. He has done this by funneling
income and paying personal expense through various entities for no
apparent legitimate business reason.

Schroeder also found that Gillum had

placed assets beyond the reach of creditors, even though he enjoys full
use and benefit of these assets and is the de[ ]facto owner. Because these
assets and any encumbrances to these assets have not been voluntarily
disclosed, Appeals is unable to make a determination regarding net
equity and collection potentialof [sic] them.

According to Schroeder, Gillum's "assets include real estate, vehicles, boats(including
a houseboat) [sic], and ATVs."

-8-
 On May 24, 2007, Schroeder conducted the final telephone conference with
Boiarsky. Schroeder told Boiarsky that he had "again reviewed the information in the
collection admin[istrative] file and . . . concluded that the proposed collection
alternative cannot be accepted under the circumstances." Schroeder informed
Boiarsky that documentation "clearly show[ed]" that Gillum failed to adequately
disclose his income and expenses. Boiarksy responded that he was unaware of this
information and that Gillum had not fully disclosed these actions to his own legal
counsel. Boiarsky stated that he "understood why Appeals could not consider a
collection alternative to the proposed levy at th[is] time." Schroeder and Boiarsky
then discussed their disagreement regarding "the intent and effect of the court
judgment regarding restitution . . . on [the] IRS's ability to administratively collect."
Schroeder pointed out "that the order did not limit collection of the tax." Schroeder
then stated "that legal and procedural requirements have been followed, the filing of
the lien and issuance of the notice of intent to levy were appropriate, and these
collection actions are therefore sustained."

On June 15, 2007, the IRS Appeals Office issued its "Notice of Determination
Concerning Collection Action(s) Under Section 6320 and/or 6330." The notice of
determination sustained the tax-lien filing for 1998 and 2000–2002 and the proposed
levy for 1996–2002. It verified that the hearing was timely requested, the settlement
officer who conducted the hearing had no prior involvement with the specified tax
periods, and legal and procedural requirements were satisfied. According to the notice
of determination, the proposed levy was sustained because "neither the plea
agreement nor the court judgment represent a settlement or compromise of the tax
liability, and do not bar [the] IRS from taking additional collection actions." The
notice of determination also addressed the "Consideration of Collection Alternatives,"
even though the issue was "not raised by the representative [(Boiarsky)] as an issue"
in the CDP request or hearing. The notice of determination explained that,

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 [t]o evaluate this proposal[,] Appeals reviewed the collection
administrative case file. This file contained financial statements (forms
433-A and 433-B) that were signed by the taxpayer under penalties of
perjury on October 26, 2006. It also contained documentation and
information secured by Collection in an effort to verify the taxpayer's
financial statements. Appeals has determined from this review that the
taxpayer has not accurately reported income and expenses, which
make[s] it impossible to determine his true ability to pay the tax liability.
The taxpayer has done this by diverting income through various entities
(trusts, limited liability companies, and his wife) and paying personal
expenses through these entities for no apparent reason other than to
avoid taxes and collection of taxes. He has also placed assets beyond the
reach of [the] IRS by purchasing them in the name of various entities he
controls or transferring them to these entities. It is clear that the taxpayer
maintains full use and benefit of these assets, which include real estate,
vehicles, watercraft, and all-terrain vehicles. Because these assets and
any encumbrances against these assets have not been disclosed, Appeals
is not able to determine their net equity and collection potential. For
these reasons Appeals cannot accept the only collection alternative
proposed by the taxpayer's representative.

The notice of determination also concluded that the proposed tax lien filing and
levy action properly balanced "the need for efficient collection of taxes" with the
"concern that the collection action be no more intrusive than necessary."

C. Notices to Cloverdale and LeStat Ops
During the pendency of Gillum's CDP hearing, on May 15, 2007, the IRS sent
letters to Cloverdale, as alter ego of Gillum, and a trust known as "LeStat Ops," as
nominee of Gillum. These letters provided notice of the filing of tax liens and advised
the entities of the right to a CDP hearing. By letters dated June 20, 2007, these two
entities timely requested CDP hearings. On June 25, 2007, IRS Revenue Officer
Robert Brown sent letters to Cloverdale and LeStat Ops acknowledging receipt of the
hearing requests but advising the entities that they were "not entitled to a CDP
hearing as the taxpayer has previously been afforded CDP rights regarding these same

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tax periods." Brown indicated, however, that the entities were "entitled to a
Collection Appeal with [his] immediate manager."

D. Tax Court
On July 17, 2007, Gillum timely petitioned the tax court for judicial review of
the IRS Appeals Office's determination. Gillum asked that the tax court overrule "the
determinations in the Notice of Determination." Additionally, Gillum sought judicial
review of the June 25, 2007 letters that the IRS sent to four entities that Gillum
created, including Cloverdale and LeStat Ops, denying them the opportunity for CDP
hearings with respect to the filing of tax liens against them as Gillum's alleged
nominees, transferees, or alter egos.7 In the petition, Gillum asserted that the proposed
levy and tax-lien filing were "invalid because they are in contravention of the plea
agreement and court order." Additionally, Gillum alleged that Schroeder and other
IRS employees "refused to discuss or explain the factual basis" for the notice of
determination, denied him an opportunity to address the facts underlying the notice
of determination, and "declined to elaborate as to just how any such discussion or
explanation might 'place the Government's interests in jeopardy[.']" According to
Gillum, the IRS employees' actions produced a "CDP hearing [that] was neither fair
nor impartial" and denied Gillum due process. As to the June 25, 2007 letters, Gillum
asserted that the revenue officer, his supervisor, and Schroeder "refused to discuss or
explain why Cloverdale Animal Clinic, LLC, LeStat Ops, Pireaus Group, and
MRMLBS were considered to be nominees, transferees, and alter-egos of the
taxpayer" and "declined to elaborate as to just how any such discussion or
explanation might 'place the Government's interests in jeopardy[.']" Gillum contended

7
"The record contains the June 25, 2007, letters, described supra, from [IRS]
Revenue Officer Robert Brown to Cloverdale and Lestat Ops. The petition seems to
assert that two other entities, Pir[ea]us Group and MRMLBS, received similar letters
also dated June 25, 2007. The record does not contain copies of any such letters."
Gillum, 2010 WL 5393884, at *5 n.9.

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that "[t]he denial of CDP rights with respect to the nominee, transferee, and alter-ego
matters constitutes a denial of constitutional due process."

In accordance with Tax Court Rule 91(e), Gillum and the IRS agreed to a
stipulation of facts, which was "conclusive." According to the stipulation, "[a]ny
relevance or materiality objection may be made with respect to all or any part of this
stipulation at the time of submission, but all other evidentiary objections are waived
unless specifically expressed within this stipulation."

The stipulated administrative record included, inter alia, (1) Schroeder's Case
Activity Record; (2) Form 433-A; (3) Form 433-B; (4) a memorandum dated
February 22, 2007, from IRS Revenue Officer Brown to IRS district counsel in
Oklahoma City, Oklahoma, requesting approval to file alter ego and nominee liens
and levies against several entities Gillum created ("Brown request"); (5) several
diagrams detailing Gillum's alleged alter ego and nominee activities8; and (6) a
memorandum from IRS Associate Area Counsel Bruce K. Meneely in Oklahoma City
responding to the Brown request ("Meneely memorandum").

Prior to trial, Boiarsky, Gillum's counsel, submitted a pretrial memorandum
indicating that he would call Schroeder, the IRS settlement officer, as a witness to
elicit testimony that Schroeder

refused to discuss or explain the factual basis for any of the CDP
determinations; that, accordingly, no opportunity was afforded to
[Gillum] to address any of the underlying facts relied upon in making
those determinations; that he stated that any such discussion or
explanation would "place the Government's interests in jeopardy"; and

8
"The record does not reveal who prepared these diagrams." Gillum, 2010 WL
5393884, at *3 n.7.

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 that he further declined to elaborate as to just how any such discussion
or explanation might "place the Government's interests in jeopardy."

On the morning of trial, the tax court heard arguments on the Commissioner's
motion to quash the subpoena for Schroeder's testimony and corresponding motion
in limine. Boiarsky argued that the court should deny the motions. The court asked
whether Boiarsky's "contention" was that "the administrative record was incomplete,"
and Boiarsky responded, "In that regard, yes." Boiarsky argued that "the appeals
officer . . . failed to give an adequate explanation for the determination." Based on
those grounds, the court decided to permit Boiarsky "an opportunity to at least
develop this evidence." The court was "not prepared to say at this point that there
might not be some evidence that is missing from the administrative record" and noted
that it was "hard to know at this point."

During trial, the stipulation of facts and exhibits were admitted without
objection. Schroeder was the sole witness. Schroeder testified that the administrative
record was "complete," as certified in his declaration. Schroeder confirmed that "the
facts that [he] relied upon in making [his] determinations [were] part of the
administrative record."

Boiarsky then had Schroeder read the paragraph entitled "Consideration of
Collection Alternatives" contained in the notice of determination. Boiarsky focused
on the paragraph's statement that, in evaluating Gillum's collection alternative,
Schroeder had reviewed the collection administrative case file. This file "contained
documentation and information secured by Collection in an effort to verify the
taxpayer's financial statements." Boiarsky asked Schroeder, "The documentation and
information referred to in that notice of determination, where in the administrative
record is that documentation and information?" Boiarsky gave Schroeder the
complete administrative record, and Schroeder then reviewed the Case Activity
Record contained therein. Schroeder testified that he relied on "Exhibit AX, regarding

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Mr. Gillum's activities," which was contained in the administrative record. Exhibit
AX was the Brown request. Schroeder confirmed that he did not supply the Brown
request to Boiarsky during the CDP hearing; however, he testified that he did discuss
the document with Boiarsky "in general terms." Schroeder also identified other
documents in the administrative record that he relied on in making his
determination—"Exhibit AZ," the Meneely memorandum, and "Exhibit AY," the
"work product from the revenue officer obtained from his collection file,
diagram[m]ing the schemes employed by Mr. Gillum." According to Schroeder, he
supplied this information, along with the Forms 433-A and 433-B to Boiarsky "in
general terms."

Thereafter, the following exchange occurred between Boiarsky and Schroeder:

Q. [by Boiarsky]: Okay. If I understand your testimony, sir, it's
that the administrative record here, which underlies the determination
that you authored, the administrative record contains the information
necessary to support those determinations; is that correct? The
administrative record contains the information necessary to support the
conclusions that you reached and the determinations?

A. [by Schroeder]: That is not correct.

Q. [by Boiarsky]: Then please clarify that for me.

A. [by Schroeder]: I guess the issue is whether or not the revenue
officer's case file is part of the administrative record; is that what we're
asking?

Q. [by Boiarsky]: No.

A. [by Schroeder]: Again, I don't know if the entire revenue
officer case file is in there.

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 Q. [by Boiarsky]: It's not but you're certainly free to look at the
record that you certified as being complete to see if it's there. Do you not
know whether it's there?

A. [by Schroeder]: I don't know what's in that pile of papers right
now.

Q. [by Boiarsky]: Okay. If you'd like to take a moment then and
look? There's the complete file. It should be fairly easy to identify the
collection officer's record, would it not?

A. [by Schroeder]: Yes. That file's not here. Parts of that file are
here though actually. Again, his memorandum to and from counsel.

Q. [by Boiarsky]: All right. But that information is information
that you relied upon in making your determinations in your notices of
determination; is that correct? The information in the collection—

A. [by Schroeder]: Yes, yes.

Q. [by Boiarsky]: But that information is not part of the
administrative record?

A. [by Schroeder]: Not part of this administrative record.

Q. [by Boiarsky]: And was not disclosed to me during the
collection due process proceeding?

A. [by Schroeder]: Only in general terms.

On cross-examination, IRS attorney Downs asked Schroeder whether, "[w]hen
[he] compiled [his] record for [his] determination, that record . . . contain[ed] the
information that [he] relied on from the collection file." Counsel specifically referred
Schroeder to three documents—"Exhibits AX, AY[,] and AZ." Schroeder confirmed
that he took "[t]hose three documents . . . from the revenue officer's case file."

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 The tax court sustained the IRS's "determinations sustaining the filing of the
notice of Federal tax lien and the proposed levy." Gillum, 2010 WL 5393884, at *8.
First, the court rejected Gillum's challenge to his underlying liabilities, concluding
that Gillum's "criminal plea agreement and judgment ordering restitution did not
discharge, and do not limit [the IRS's] assessment and collection of, [Gillum's] civil
tax liabilities for his taxable years 1996 through 2002." Id. at *7.

Second, the court concluded that Schroeder "did not abuse his discretion in
rejecting any collection alternative based on doubt as to collectibility." Id. at *8. The
court found that the "only collection alternative that [Gillum] proposed [was] to limit
his 1996 through 2002 liability to $246,226; i.e., the amount of restitution ordered by
the District Court in the criminal proceeding." Id. at *7. The court found that
Schroeder did not abuse his discretion in rejecting this "collection alternative" as an
"offer-in-compromise" because there was no doubt as to liability or collectibility, nor
had Gillum "argued that his collection alternative was for the promotion of effective
tax administration." Id. at *7–8.

Third, the tax court rejected Gillum's argument "that he was denied a fair
collection hearing because the settlement officer did not disclose to his representative
all the information in the collection administrative file which the settlement officer
had reviewed in reaching his conclusions." Id. at *8. According to the court,
"[c]ollection hearings are conducted in an informal setting that does not include the
right to discovery." Id. The court pointed out that "[t]he information that the
settlement officer reviewed related to matters that should have been within
petitioner's knowledge, and the settlement officer did in fact share with petitioner's
representative the nature of his concerns about petitioner's nondisclosure of income
and assets." Id. And, the court emphasized that Gillum's failure to submit to
Schroeder "all required financial information was reason enough for the settlement
officer to reject his collection alternative." Id. The court "d[id] not see that the
settlement officer's disclosure or nondisclosure of the materials in question had any

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significant bearing on the fairness or outcome of [Gillum's] hearing." Id. In a
footnote, the court noted that Schroeder had reviewed the Brown request and the
Meneely memorandum in making his determination. Id. at *8 n.13. The court rejected
Gillum's claim that these documents were not included in the administrative record
because "[t]he parties have stipulated . . . that the stipulated exhibits, which include
the materials in question, 'constitute the complete administrative record in this
case[.']" Id. The court also noted that because Schroeder's trial testimony "had little
probative value or relevancy," it did "not rel[y] upon this testimony in [its] analysis
or holdings." Id.

Finally, the tax court declined to address whether Cloverdale and LeStat Ops
were improperly denied CDP hearings as alter egos or nominees of Gillum "because
they are not parties to this proceeding." Id. at *8.

II. Discussion
On appeal, Gillum argues that the tax court erred in (1) upholding the IRS's
notice of determination because he was not afforded a fair CDP hearing and (2)
failing to recognize that his asserted alter egos and nominees were entitled to a CDP
hearing.

A. Fairness of the CDP Hearing
Gillum argues that the tax court erred in concluding that he was afforded a fair
CDP hearing because Schroeder, the settlement officer, relied on information that was
not part of the administrative record in making his determination. Gillum asserts that
26 U.S.C. § 6330 guarantees him the right to a fair hearing before an impartial
settlement officer and a right of judicial review based on the underlying
administrative record. According to Gillum, Schroeder admitted at trial to providing
an incomplete administrative record to the tax court. He contends that Schroeder
relied upon nonrecord information in making his determinations, thereby depriving
the tax court of an adequate basis for review. Gillum contends that even though "there

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may be information in the revealed portion of the administrative file tending to
support the determinations reached," such information is insufficient to uphold the
determination "because without disclosure of all information admittedly relied upon,
the Court is deprived of any real opportunity to evaluate any unfairness or partiality,
including circumstances of bias, improper ex parte communication, or 'prior
involvement' which the statute prohibits."

"Congress created an administrative proceeding, commonly known as a
'collection due process hearing,' in the Internal Revenue Service Restructuring and
Reform Act of 1998." Robinette v. Comm'r, 439 F.3d 455, 458 (8th Cir. 2006).
Subsection (a) of 26 U.S.C. § 6330 "requires notice to the taxpayer of a right to a
hearing before a levy is made," and subsection (b) "guarantees the right to a fair
hearing before an impartial officer from the Internal Revenue Service Office of
Appeals." Id. During the CDP hearing, a taxpayer is permitted to raise "'any relevant
issue relating to unpaid tax or the proposed levy,' including 'challenges to the
appropriateness of collection actions,' and 'offers of collection alternatives, which
may include . . . an offer-in-compromise.'" Id. (quoting 26 U.S.C. § 6330(c)(2)(A)).
"The appeals officer then must consider whether any proposed collection action
'balances the need for the efficient collection of taxes with the legitimate concern of
the person that any collection action be no more intrusive than necessary.'" Id.
(quoting 26 U.S.C. § 6330(c)(3)(C)).

Section 6330(d)(1) "affords a right of judicial review of the determination by
the impartial hearing officer, in either the Tax Court or a United States District Court,
depending on whether the Tax Court has jurisdiction." Id. In the present case,
"[j]udicial review . . . was available in the Tax Court because the levy related to
[Gillum's] underlying liability for unpaid income tax." Id. (citing 26 C.F.R.
§ 301.6330-1(f)(2)). "Review of the administrative decision is markedly deferential:
if the amount of tax owed is not in dispute, courts may disturb the administrative
decision only if it constituted 'a clear abuse of discretion in the sense of clear taxpayer

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abuse and unfairness by the IRS.'" Fifty Below Sales & Marketing, Inc. v. United
States, 497 F.3d 828, 830 (8th Cir. 2007) (quoting Robinette, 439 F.3d at 459).

[W]here the IRS followed the statutes and regulations governing grants
of relief, see Speltz v. Comm'r, 454 F.3d 782, 784–85 (8th Cir. 2006),
and the appeals officer took into account the taxpayer's proposed
alternative and the statutory balancing test, followed the prescribed
procedures, gave a reasoned decision, and did not rely on any improper
criteria or facts that are contrary to the evidence, we may not reverse
simply because we would have weighed the equities differently than the
appeals officer did. See Orum v. Comm'r, 412 F.3d 819, 820–21 (7th
Cir. 2005).

Id. This court's review of the lower court's decision is de novo. Id. ("Our review of
the district court's decision is de novo.").

"[F]or purposes of Tax Court review" of a "Notice of Determination issued by
Appeals," "the administrative record" consists of

[t]he case file, including the taxpayer's request for hearing, any other
written communications and information from the taxpayer or the
taxpayer's authorized representative submitted in connection with the
CDP hearing, notes made by an Appeals officer or employee of any oral
communications with the taxpayer or the taxpayer's authorized
representative, memoranda created by the Appeals officer or employee
in connection with the CDP hearing, and any other documents or
materials relied upon by the Appeals officer or employee in making the
determination under section 6330(c)(3) . . . .

Treas. Reg. 301.6330-1(f)(2), Q&A (4) (2006) (emphasis added). Thus, the "court's
review of a collection due process decision rendered by an appeals officer under
section 6330 is limited to the administrative record before the appeals officer, subject
to [some] exceptions . . . ." Fifty Below Sales, 497 F.3d at 829.

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 But, "where a record created in informal proceedings does not adequately
disclose the basis for the agency's decision, then it may be appropriate for the
reviewing court to receive evidence concerning what happened during the agency
proceedings." Robinette, 439 F.3d at 461. In such circumstances, the evidentiary
proceeding "is not a de novo trial, but rather is limited to the receipt of testimony or
evidence explaining the reasoning behind the agency's decision." Id.

Here, the tax court permitted Gillum to call Schroeder as a witness at trial in
an attempt "to show that the settlement officer failed to adequately explain the
reasons for his determination." Gillum, 2010 WL 5393884, at *8 n.13 (citing
Robinette, 439 F.3d at 461). The tax court concluded that Schroeder's testimony "had
little probative value or relevancy." Id. Therefore, it did "not rel[y] upon this
testimony in [its] analysis or holdings." Id. Furthermore, the tax court "d[id] not see
that the settlement officer's disclosure or nondisclosure of the materials in question
had any significant bearing on the fairness or outcome of [Gillum's] hearing" because
Gillum's "failure to provide the settlement officer all required financial information
was reason enough for the settlement officer to reject his collection alternative." Id.
at *8.

We agree with the tax court that Gillum was not denied a fair CDP hearing
based on Schroeder's purported reliance on information that was not part of the
administrative record in making his determination. First, contrary to Gillum's
assertion, Schroeder did not admit to providing an incomplete administrative record
to the tax court. The trial transcript reveals that Schroeder confirmed that the
administrative record was "complete" and that "the facts that [he] relied upon in
making [his] determinations [were] part of the administrative record." During trial,
Schroeder referenced his Case Activity Record, which is included in the
administrative record. The Case Activity Record provides that although Schroeder
obtained "several files" on Gillum from the revenue officer, Schroeder "[r]eviewed
[the] file" containing Form 433-A, Form 433-B, the Brown request, and the Meneely

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memorandum. All of these documents are included in the administrative record.
Consistent with the Case Activity Record, Schroeder testified at trial that, in addition
to Forms 433-A and 433-B, he "relied on" the Brown request (Exhibit AX), the
Meneely memorandum (Exhibit AZ), and several diagrams detailing Gillum's alleged
alter ego and nominee activities (Exhibit AY).

In arguing that Schroeder admitted to relying on documents outside of the
administrative record, Gillum relies on the exchange between Boiarsky and Schroeder
at trial in which Boiarsky questioned Schroeder regarding whether the administrative
record contained the information necessary to sustain Schroeder's determination. We
find the exchange between Boiarsky and Schroeder unhelpful to Gillum's case. A
careful reading of the exchange reveals that Boiarsky confused Schroeder with an
ambiguous question. Schroeder's responses reflect his uncertainty regarding whether
Boiarsky was asking him if the entire revenue officer's case file was included in the
administrative record, not just those parts of the file that Schroeder relied on.
Schroeder indicated that the entire file was not there, but that "[p]arts of the file" were
included in the administrative record. Boiarsky then asked Schroeder whether "that
information is information that you relied upon in making your determinations in
your notices of determination." (Emphasis added.) Before Boiarsky could complete
the question, Schroeder answered, "Yes, yes." "[T]hat information" refers back to
Schroeder's statement that "[p]arts of the file," including the "memorandum to and
from counsel," were in the administrative record. Boiarsky again asked whether "that
information is not part of the administrative record," and Schroeder answered, "Not
part of this administrative record." This convoluted exchange is not tantamount to a
direct admission by Schroeder that he relied on documents outside of the
administrative record. In fact, on cross-examination, Schroeder confirmed that the
documents that he "relied on" from the revenue officer's file—the Brown request, the
Meneely memorandum, and the diagrams—are included in the administrative record.
According to Schroeder, those documents discussed Gillum's purported alter egos and
nominees. He used those documents in evaluating the veracity of Gillum's Forms 433-

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A and 433-B. And, on redirect examination, Schroeder again explained that he took
the three aforementioned documents from the revenue officer's file and included them
in the administrative record.

Second, even assuming that Schroeder did rely on documents outside of the
administrative record, such error was harmless. Cf. Shinseki v. Sanders, 556 U.S. 396,
407 (2009) ("We have no indication of any relevant distinction between the manner
in which reviewing courts treat civil and administrative cases. Consequently, we
assess the lawfulness of the Federal Circuit's approach in light of our general case law
governing application of the harmless-error standard."). "Basing our review on the
information [contained in the stipulated administrative record] that was before the
appeals officer," we conclude that the record adequately justifies the IRS's
determination. Robinette, 439 F.3d at 462.

As the tax court found, Schroeder did not abuse his discretion in denying
Gillum's proposed collection alternative—limiting his liability to the amount in the
restitution order—because no grounds exist "for compromising a liability" under 26
C.F.R. § 301.7122-1(b). Gillum, 2010 WL 5393884, at *7 ("The regulations set forth
three grounds for compromising a liability: (1) Doubt as to liability; (2) doubt as to
collectibility; and (3) promotion of effective tax administration."). First, Gillum "has
put forward no legitimate issue regarding his civil tax liabilities." Id. Second, Gillum
did not "expressly argue that his collection alternative was for the promotion of
effective tax administration." Id. Finally, Gillum "submitted incomplete Forms 433-A
and 433-B," thereby "fail[ing] to provide the settlement officer all financial
information necessary to evaluate his ability to fully pay his civil tax liabilities." Id.
at *8. Thus, Schroeder "did not abuse his discretion in rejecting any collection

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alternative based on doubt as to collectibility." Id. (citing Kansky v. Comm'r, 93
T.C.M. (CCH) 921 (2007); Criner v. Comm'r, 86 T.C.M. (CCH) 655 (2003))9

B. Alter Egos and Nominees
Gillum also contends that "[b]ecause the CDP hearing in question [was not]
. . . fair and impartial, the denial of the right to a CDP hearing with respect to the lien
filing against asserted nominee and alter ego entities of [Gillum] [cannot] properly
. . . be sustained." Gillum admits that 26 U.S.C. § 6320(b)(2) "does indeed provide
for only one CDP hearing for each tax year," but he maintains that "an improper
hearing" cannot "be counted as that 'one.'" Furthermore, he argues that although
nominees and alter egos are not permitted a CDP hearing under 26 C.F.R. §
301.6320-1(b)(2), "the relevant 'person' here is [Gillum], and [Gillum] is a party to
this proceeding." Thus, Gillum concludes that he is entitled to the requested CDP
hearing on behalf of his asserted nominees and alter egos.

In response, the Commissioner argues that the tax court lacked jurisdiction to
review letters from an IRS revenue officer to the purported alter egos and nominees
because the court's jurisdiction under 26 U.S.C. § 6330(d)(1) is limited to reviewing
determinations by the IRS Appeals Office. We agree.

"In cases where the IRS seeks to collect unpaid tax by means of a lien or levy,
the Tax Court has jurisdiction to review an adverse determination by the IRS Office
of Appeals." Cleveland v. Comm'r, 600 F.3d 739, 741 (7th Cir. 2010). Here, Gillum
concedes in his brief that the "asserted nominee and alter ego matters were neither
addressed nor considered in the . . . Notice of Determination." Thus, "as [Gillum]

9
Nowhere in Gillum's brief does he challenge the tax court's conclusion that
Schroeder did not abuse his discretion in rejecting Gillum's proposed collection
alternative; instead, he only argues that he was not afforded a fair CDP hearing
because Schroeder relied on information that was not part of the administrative record
in making his determination.

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concedes, the Office of Appeals was never involved in this matter and did not issue
a notice of determination." Id. As a result, "the Tax Court [does] not have subject-
matter jurisdiction because there was no issuance of a notice of determination" as to
letters sent by an IRS revenue officer to Gillum's purported nominees and alter egos.
Id.

Furthermore, the tax court "[could not] enter a decision affecting the [nominees
and alter egos] because [they] [are] not . . . [parties] to this proceeding." Dalton v.
C.I.R., 135 T.C. 393, 401 (2010) (citing 26 C.F.R. § 301.6330-1(b)(3)).

III. Conclusion
Accordingly, we affirm the judgment of the tax court.

COLLOTON, Circuit Judge, dissenting.

This appeal challenges the Tax Court’s review, pursuant to 26 U.S.C.
§ 6330(d), of a determination of an appeals officer of the Internal Revenue Service
in a collection due process hearing. The hearing concerned the filing of a lien and a
levy made on the property of Thomas M. Gillum. See 26 U.S.C. §§ 6320(b), 6330(b).
Gillum complains that the Tax Court conducted judicial review on an incomplete
administrative record. In my view, this claim has merit, and the error is not harmless.
I would therefore remand the case to the Tax Court for supplementation of the
administrative record and a decision by that court on a complete record.

It is a basic principle of administrative law that judicial review of action by an
administrative agency should be conducted on the complete administrative record.
This principle is embodied in the Administrative Procedure Act, which provides that
a reviewing court shall review the “whole record.” 5 U.S.C. § 706; see Citizens to
Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 420 (1971) (“[R]eview is to be
based on the full administrative record that was before the Secretary at the time he

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made his decision.”) (emphasis added) (footnote omitted). The rule prevents a party
from withholding evidence unfavorable to its case or defending a determination with
post-hoc rationalizations. Walter O. Boswell Mem’l Hosp. v. Heckler, 749 F.2d 788,
792 (D.C. Cir. 1984). This court concluded in Robinette v. Commissioner, 439 F.3d
455 (8th Cir. 2006), that the Tax Court’s review under § 6330(d) is governed by the
APA, id. at 459-60 & n.4, and the Commissioner makes no argument here that the
requirement of review on the whole record is inapplicable.

By regulation, the Department of the Treasury provides that the administrative
record for purposes of review by the Tax Court includes all “documents or materials
relied upon by the Appeals officer or employee in making the determination under
section 6330(c)(3).” 26 C.F.R. § 301.6330-1(f)(2) (Q-F4, A-F4). The appeals officer
in this case, David Schroeder, testified before the Tax Court that some information
that he relied upon in making his determinations was not part of the administrative
record. App. E-31. While there is no dispute that three particular exhibits on which
Schroeder relied—Exhibits AX, AY, and AZ (including what Schroeder called the
“memorandum to and from counsel”)—were part of the record, App. E-32, the Tax
Court’s appellate review must be conducted on the whole record. Schroeder testified
that only “[p]arts” of the revenue officer’s file on which he relied were in the
administrative record. App. E-31.

When Gillum argued to the Tax Court that the administrative record was
incomplete, App. E-7; Brief of Petitioner at 7-9, Gillum v. Commissioner, 100 T.C.M.
(CCH) 562 (2010) (No. 16110-07L), 2009 WL 7698301, the Tax Court’s only
response was that the parties had stipulated that the record was complete. Gillum,
100 T.C.M. (CCH) 562, 2010 WL 5393884, at *8 n.13. The Commissioner, however,
should not be heard to rely on such a stipulation when the appeals officer
subsequently admits before the Tax Court that he relied on information that was not
among the stipulated exhibits. “For review to go forward on a partial record, we
would have to be convinced that the selection of particular portions of the record was

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the result of mutual agreement between the parties after both sides had fully reviewed
the complete record.” Boswell Mem’l Hosp., 749 F.2d at 793 (emphasis added).
Given that Gillum never received the complete administrative record, the court
appropriately declines to affirm on the Tax Court’s rationale.

When judicial review is conducted on an incomplete administrative record, the
appropriate course is to remand for further review on a supplemented and complete
record. See, e.g., Boswell Mem’l Hosp., 749 F.2d at 790; Natural Res. Def. Council,
Inc. v. Train, 519 F.2d 287, 292 (D.C. Cir. 1975); Am. Radio Relay League, Inc. v.
FCC, 524 F.3d 227, 243 (D.C. Cir. 2008) (Tatel, J., concurring); cf. Okoroha v. INS,
715 F.2d 380, 384 (8th Cir. 1983) (remanding case to administrative agency for
reconsideration where the agency considered an administrative appeal on an
incomplete record). The issue here is not, as the court would have it, whether Gillum
was “denied a fair CDP hearing” because the appeals officer relied on information
that was not later included in the administrative record before the Tax Court. Cf.
ante, at 20. The question is whether Gillum was deprived of appropriate judicial
review of the CDP hearing on a complete administrative record. That the partial
record presented to the Tax Court may include sufficient evidence to support the
appeals officer’s determination is not grounds to affirm. With only a partial
administrative record, we cannot know whether the Tax Court would have sustained
the determination of the appeals officer on a complete record, or whether such a
decision by the Tax Court should be affirmed on appeal with a full record. Without
the whole record, Gillum also cannot explore whether the undisclosed portions of the
record show impermissible “prior involvement” by the appeals officer, see 26 U.S.C.
§ 6330(b)(3), or other grounds for challenging the fairness of the due process hearing.

For these reasons, I would vacate the decision of the Tax Court and remand the
case to the Tax Court for consideration of Gillum’s appeal on the full administrative
record.
______________________________

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