A recent ruling by a federal court has determined that a former Chicago attorney and his wife cannot sue the IRS to enforce a previous settlement agreement. The case centers around David and Charmain Novoselsky, who had entered into an offer-in-compromise (OIC) with the IRS—a settlement mechanism that allows taxpayers to settle their tax debts for less than the full amount owed. The contentious point arose when the IRS rescinded the agreement, alleging that the couple had misrepresented their assets during the negotiation process.
The Novoselskys brought their plea to the US District Court for the Eastern District of Wisconsin, claiming they had met all the obligations under the OIC’s terms. However, invoking the Tax Anti-Injunction Act, the court concluded that it lacks jurisdiction to grant the relief sought by the couple. The Act generally prohibits lawsuits aiming to restrain the assessment or collection of any tax, thereby limiting judicial interventions in tax disputes.
This decision echoes a previous ruling by the US Tax Court in 2020, which held that the couple was liable for taxes despite the purported OIC. More details on the 2020 ruling can be found here. For further information and ongoing updates related to this case, interested parties can review the full article on Bloomberg Tax here.
This ruling exemplifies the intricate interplay between federal tax statutes and judicial oversight, underscoring the necessity for tax professionals to meticulously navigate asset disclosures in negotiations with the IRS.