Justin Joseph Moore v. Commissioner of Internal Revenue, T.C. Memo. 2026-85, Docket No. 2249-25L (Sept. 15, 2026).

Tax practitioners representing clients in IRS Collection Due Process (CDP) proceedings must maintain strict compliance with procedural rules governing standard of review, underlying tax liability challenges, and lien withdrawal requests. In Justin Joseph Moore v. Commissioner of Internal Revenue, T.C. Memo. 2026-85 (Docket No. 2249-25L, filed September 15, 2026), the United States Tax Court evaluated the Internal Revenue Service’s (IRS) refusal to withdraw a Notice of Federal Tax Lien (NFTL) securing $730,027 in unpaid income tax liabilities. Beyond providing a rigorous framework regarding the scope of review under Internal Revenue Code (I.R.C.) §§ 6320 and 6330, the decision offers a stern judicial warning regarding the unverified use of generative artificial intelligence (AI) in legal drafting. This article analyzes the facts, legal framework, judicial holdings, and practical implications of Moore v. Commissioner, while examining companion authority from the Arizona Court of Appeals on AI-related sanctions.

Factual Background and Procedural History

The petitioner, Justin Joseph Moore, a pro se taxpayer residing in Arizona, owned and operated a commercial real estate business. For the 2017, 2018, 2019, and 2020 tax years, Mr. Moore failed to timely file federal income tax returns. In 2021, the IRS prepared a Substitute for Return (SFR) pursuant to I.R.C. § 6020(b) for the 2018 tax year. In spring 2022, Mr. Moore submitted original tax returns for 2017 through 2020 reporting self-assessed tax liabilities, but failed to remit full payment upon filing.

During this timeframe, Mr. Moore sought commercial loans to renovate and maintain his real estate holdings, which were operating at approximately 34% occupancy. Although prospective lenders granted conditional loan approvals, they refused to finalize funding without assurances that Mr. Moore’s assets would remain unencumbered by federal tax liens. Simultaneously, Mr. Moore entered into a structured installment agreement with the Arizona Department of Revenue to satisfy $165,000 in state tax obligations over a two-year period at $6,230 per month.

In January 2023, following extensive communication with IRS Collections, Mr. Moore entered into an informal IRS installment agreement requiring monthly payments of $7,000. IRS internal records noted that “[w]ithout allowing state tax payment, [Mr. Moore’s] FIN [financial information] shows we can accept [$]7,000.00 per month... because FIN shows [that the] payment required per FIN is $3,459.00”. Although Mr. Moore remitted multiple payments, he failed to maintain strict compliance with the payment schedule.

Responding to Mr. Moore’s request for financial relief, the IRS approved a revised partial pay installment agreement on April 1, 2024, establishing reduced monthly payments of $4,000 effective May 15, 2024. The IRS approval letter explicitly cautioned: “You must meet all conditions of your installment agreement. If you don’t, your installment agreement could go into default and we may terminate it and take enforcement action to collect the full amount of your tax liability. Enforcement action could include filing a Notice of Federal Tax Lien...”.

On April 11, 2024, the IRS filed an NFTL in Maricopa County, Arizona, covering the 2017–2020 tax years and reflecting an unpaid balance of $730,027. Concurrently, the IRS issued a Notice of Federal Tax Lien Filing and Your Right to a Hearing Under IRC 6320.

Taxpayer Request for Relief and Administrative CDP Proceedings

Concerned that the recorded lien would jeopardize commercial financing, Mr. Moore submitted Form 12277 (Application for Withdrawal of Filed Form 668(Y), Notice of Federal Tax Lien) and Form 12153 (Request for Collection Due Process or Equivalent Hearing). On Form 12153, Mr. Moore checked the box requesting NFTL withdrawal, but intentionally left unchecked the box stating “I am not liable for the tax”.

The IRS denied the Form 12277 administrative withdrawal application but granted a CDP hearing before Settlement Officer (SO) Ellen Niedert. During the July 31, 2024 CDP conference, Mr. Moore stated that his primary objective was full withdrawal of the NFTL under I.R.C. § 6323(j)(1) to “facilitate collection of the tax liability”. He argued that unencumbering his real property would allow him to secure commercial debt, fund property improvements, increase tenant occupancy above 34%, and generate cash flow to satisfy his federal liabilities. Additionally, he cited external financial hardship, noting that two major commercial tenants defaulted in 2023 following involvement in an Arizona Medicaid fraud scheme.

SO Niedert initially recommended granting the NFTL withdrawal, submitting Form 13794-W (Request for Withdrawal or Partial Withdrawal of Notice of Federal Tax Lien) under the “Facilitate Collection” criteria. She advised Mr. Moore via message that his financial documentation “is sufficient to prove you own this property and the expenses involved”. However, her supervisory manager reviewed the transmittal and declined to approve the withdrawal. SO Niedert subsequently concurred with her manager’s determination. During a subsequent telephone discussion, Mr. Moore remarked, “I don’t even know if the balances are correct,” but offered no specific factual allegations or supporting documentation contesting the tax assessments.

On January 22, 2025, the IRS Independent Office of Appeals issued a Notice of Determination sustaining the NFTL filing. Appeals reasoned that Mr. Moore failed to demonstrate that lien withdrawal would increase the likelihood of tax collection, emphasizing that he sought financing solely to reinvest in property improvements without committing loan proceeds to tax reduction. Furthermore, Appeals highlighted that Mr. Moore held $1.3 million in property equity against nearly $1 million in total tax debt, had reported $1,404,663 in gross income in 2020 without remitting estimated tax payments, had previously defaulted on tax obligations resulting in IRS write-offs, and failed to maintain required installment payments during the CDP review. Mr. Moore timely petitioned the U.S. Tax Court for review.

Statutory Framework and Standards of Review

In CDP litigation under I.R.C. §§ 6320(c) and 6330(d)(1), the threshold determination governs both the standard and scope of judicial review. When the taxpayer’s underlying tax liability is properly in dispute, the Tax Court conducts a de novo review, permitting consideration of evidence beyond the administrative record. Conversely, where the underlying liability is not properly challenged, the Tax Court reviews the administrative determination under an abuse of discretion standard, restricting its review strictly to the administrative record compiled by Appeals. Because appeal of this case lay to the U.S. Court of Appeals for the Ninth Circuit, the Tax Court applied Ninth Circuit binding precedent under Golsen v. Commissioner, 54 T.C. 742, 757 (1970), which confines abuse of discretion CDP review strictly to the administrative record (Keller v. Commissioner, 568 F.3d 710, 718 (9th Cir. 2009)).

To properly preserve an underlying liability challenge for de novo review, a taxpayer must raise the issue during the administrative CDP hearing and present supporting evidence. Under Treas. Reg. § 301.6330-1(f)(2), Q&A-F3, “[a]n issue is not properly raised if the taxpayer fails... to present to Appeals any evidence with respect to that issue after being given a reasonable opportunity to [do so]”. See also Thompson v. Commissioner, 140 T.C. 173, 178 (2013); Giamelli v. Commissioner, 129 T.C. 107, 112–16 (2007).

Applying these principles to Mr. Moore’s case, Judge Toro determined following an evidentiary hearing that the underlying liabilities were not properly in dispute. Mr. Moore exclusively requested NFTL withdrawal on Form 12153, declined to check the liability challenge box, and confirmed to SO Niedert that he had no liability issues to raise. His passing oral comment that “I’m not even sure the amounts are correct” was held legally insufficient. Judge Toro observed: “Stating that one is unsure whether something is correct is not the same as alleging that it is incorrect. And it is certainly not the same as presenting evidence to support such an allegation”.

Consequently, the court applied an abuse of discretion standard, reviewing whether the administrative determination was arbitrary, capricious, or without sound basis in fact or law (Belair v. Commissioner, 157 T.C. 10, 17 (2021)). Under this standard, the court declined to consider collateral arguments raised in Mr. Moore’s post-trial briefs regarding interest abatement under I.R.C. §§ 6404 or 6601(e)(2)(A), or disaster penalty relief under I.R.C. § 7508A(d) (Abdo v. Commissioner, 162 T.C. 148 (2024); Tellock v. Commissioner, T.C. Memo. 2026-59), holding that post-trial briefing is far too late to raise issues omitted from the CDP hearing.

Court’s Analysis and Application of Law to Facts

The Tax Court addressed three core administrative claims raised by the taxpayer: administrative verification, lien withdrawal discretion, and statutory balancing.

Verification Obligations Under Section 6330(c)(1)

Mr. Moore asserted that SO Niedert abused her discretion by failing to audit and reconcile alleged transcript discrepancies. Evaluating verification duties under I.R.C. § 6330(c)(1), the court reaffirmed established precedent (Hoyle v. Commissioner, 131 T.C. 197 (2008); Ron Lykins, Inc. v. Commissioner, 133 T.C. 87 (2009); Med. Prac. Sols., LLC v. Commissioner, T.C. Memo. 2009-214). Judge Toro clarified that for self-reported tax liabilities, administrative verification requires confirming only four basic legal prerequisites: (1) timely assessment under I.R.C. §§ 6201(a)(1) and 6501(a); (2) notice and demand for payment under I.R.C. §§ 6321 and 6331(a); (3) taxpayer failure to pay; and (4) proper issuance of the NFTL notice and CDP hearing rights under I.R.C. § 6320(a).

The court firmly rejected the notion that Appeals officers must audit IRS records independently: “The verification rules of section 6330(c)(1) do not require an Appeals officer to scour the record for any and all potential issues. Rather, the Appeals officer must confirm that standard procedures have been followed... Where the taxpayer does not do so, an Appeals officer is not required to step in and fill the gap”.

Discretionary Lien Withdrawal Under Section 6323(j)

Addressing the refusal to withdraw the NFTL, the court underscored that I.R.C. § 6323(j)(1) is entirely permissive. The statute provides that the Secretary may withdraw an NFTL if withdrawal will facilitate tax collection or serve the best interests of the taxpayer and the United States. Citing Berkery v. Commissioner, T.C. Memo. 2011-57, and Treas. Reg. § 301.6323(j)-1(c), Judge Toro emphasized: “[N]othing in it requires [the Commissioner] to withdraw the NFTL because of [an] installment agreement... Implementation of an installment agreement [does] not preclude the Commissioner from filing an NFTL, nor [is] the Commissioner required to withdraw the NFTL after the installment agreement bec[omes] effective”.

Because Mr. Moore possessed $1.3 million in property equity, owed nearly $1 million, had a documented history of prioritizing business reinvestment over tax duties, and failed to commit loan proceeds to tax reduction, Appeals acted well within its discretion in finding that lien withdrawal would expose the government to excessive credit risk.

Statutory Balancing Analysis Under Section 6330(c)(3)(C)

Under I.R.C. § 6330(c)(3)(C), Appeals must determine whether the proposed collection action balances the government’s need for efficient tax collection against the taxpayer’s concern that collection be no more intrusive than necessary. Mr. Moore contended that the SO failed to perform proper balancing, citing her initial agreement with his position and subsequent reversal.

Judge Toro held that an Appeals officer’s change of mind following supervisory consultation does not constitute an abuse of discretion. The Notice of Determination adequately articulated rational grounds for sustaining the lien, and prior IRS administrative delays or external tenant defaults did not invalidate the statutory balancing determination. The court sustained the Notice of Determination in full.

Taxpayer’s Use of Generative AI and Judicial Warnings

A critical aspect of the Moore decision lies in Judge Toro’s explicit admonition regarding generative artificial intelligence in legal drafting. In Footnote 3 of the opinion, the Tax Court observed that Mr. Moore’s Opening Brief appeared to have been prepared with AI assistance and exhibited severe citation deficiencies.

Specifically, the brief cited nonexistent page numbers and attributed legal propositions to cases that had no bearing on the cited topics. For example, Mr. Moore’s brief cited page 1260 of Mesa Oil, Inc. v. United States, 467 F.3d 1252 (10th Cir. 2006)—a volume ending on page 1256—and cited the decision for the proposition that I.R.C. § 6330(c)(3)(C) requires a reasoned balancing analysis. In reality, Mesa Oil addressed the collateral order doctrine and dismissed an interlocutory appeal for lack of jurisdiction, making no mention of I.R.C. § 6330.

Warning practitioners and pro se litigants alike, Judge Toro wrote: “Mr. Moore is reminded that, although the Tax Court Rules of Practice and Procedure do not prohibit parties from using AI tools to help with preparing their cases, each party remains responsible for ensuring the accuracy of information submitted to the Court” (citing Clinco v. Commissioner, T.C. Memo. 2026-16).

Comparative Analysis: AI Hallucinations and Sanctions in Arizona State Court

The Tax Court’s warning in Moore aligns directly with an Arizona state court decision issued shortly prior by the Arizona Court of Appeals. In In the Matter of the Estate of Acciavatti (Dineen/Shibata v. Kotchka), No. 1 CA-CV 25-0606 PB (Ariz. Ct. App. July 15, 2026), Division One confronted the severe ramifications of unchecked generative AI in court filings.

In Kotchka, a pro se appellant appealing a probate order filed an opening brief containing eight legal citations, six of which were deficient, misstated law, or misrepresented facts, and two of which cited cases that were completely fabricated by generative AI. Following an order to show cause, the appellant admitted relying entirely on AI research tools without verifying citations in a law library or primary legal database.

Delivering the opinion of the court, Judge Brian Y. Furuya articulated a comprehensive judicial framework regarding AI usage in litigation:

Non-Abusive vs. Abusive AI Usage

The court clarified that AI technology is not inherently objectionable and can enhance access to justice when used for grammar editing, concision, and document summarization. However, when used for legal research without verification, AI acts as an “unreliable narrator and researcher” prone to hallucination. Judge Furuya noted that hallucination “has no end in sight, as AI’s tendency to fabricate results arises from the training and structures of AI programs” (quoting Fletcher v. Experian Info. Sols., Inc., 168 F.4th 231, 233 (5th Cir. 2026)).

Equal Standard for Self-Represented Litigants

Rejecting claims of pro se leniency, the Arizona Court of Appeals held that self-represented litigants are bound by the same substantive and procedural rules as licensed attorneys (State v. Gomez, 231 Ariz. 219 (2012); Ramos v. Nichols, 252 Ariz. 519 (2022)). Citing hallucinated cases constitutes an abdication of the duty of reasonable inquiry under Arizona Rule of Civil Procedure 11 and ARCAP 13.

Sanctions and Bad Faith Conduct

The court held that submitting fabricated cases constitutes objectively groundless litigation and bad faith conduct under A.R.S. § 12-349(A)(1), ARCAP 25, and the court’s inherent authority. Judge Furuya declared: “Misrepresenting the law to the courts by presenting hallucinated cases as legitimate authority poses a profound danger that threatens to undermine the legal process... Submission of hallucinated case citations—intentional or unintentional—is unjustifiable”. Consequently, the court struck the non-existent citations, deemed all underlying arguments waived, affirmed the judgment, and assessed mandatory attorneys’ fees and costs against the appellant.

The decision noted that courts across federal and state jurisdictions are actively sanctioning AI hallucinations, citing Sanders v. United States, 176 Fed. Cl. 163 (2025); Hardy v. Whitaker, 351 F.R.D. 84 (E.D. Mich. 2026); Whiting v. City of Athens, 170 F.4th 455 (6th Cir. 2026); and In re Domestic Partnership of Torres Campos & Munoz, 342 Cal. Rptr. 3d 227 (Cal. Ct. App. 2026).

Conclusion and Key Takeaways for Tax Professionals

The decisions in Moore v. Commissioner and Estate of Acciavatti deliver vital technical lessons for CPAs, Enrolled Agents, and tax attorneys representing clients in administrative controversies and court proceedings.

First, in CDP representation, practitioners must explicitly raise underlying tax liability challenges on Form 12153 and present corroborating evidence during the administrative hearing. Failure to do so forever forfeits de novo review and restricts judicial review to an abuse of discretion standard governed solely by the administrative record.

Second, an existing installment agreement does not prohibit the IRS from filing an NFTL, nor does it obligate Appeals to grant a lien withdrawal under I.R.C. § 6323(j). Requests for lien withdrawal under the “facilitate collection” standard require clear proof that unencumbering assets directly enhances collection probability without exposing the government to unreasonable credit risk.

Finally, while AI tools offer administrative efficiencies, practitioners bear non-delegable personal responsibility for the accuracy of every statutory citation, case precedent, and factual statement submitted to tax authorities or courts. As judicial scrutiny heightens, verifying primary legal sources remains an irreplaceable duty of professional tax practice.

Prepared with assistance from Gemini Notebook.