Imagine you signed a payment plan with the IRS, made every single payment on time for two straight years, and one morning got a notice that the agency was about to seize your bank account for the entire remaining balance anyway. That is exactly what happened to the taxpayer in White v. Commissioner, T.C. Memo. 2026-56 — and on June 29, 2026, the Tax Court told the IRS it couldn't do that.
For any small business owner who has ever negotiated a payment plan with the IRS, this case is worth understanding. It confirms something the tax code implies but rarely gets tested in court: once the government agrees to let you pay over time, it can't turn around and demand the whole balance immediately just because it changes its mind.
What happened in White v. Commissioner
The taxpayer, an electrical contractor, pleaded guilty to tax evasion after underreporting income over roughly a decade. As part of the criminal sentence, a court ordered him to pay restitution of about $1.2 million. Separately, the IRS converted that restitution order into a civil tax assessment — a "restitution-based assessment," or RBA — for the same amount, since restitution and the underlying tax liability aren't legally treated as identical debts.
The Department of Justice then sued to collect the civil debt, which had grown to roughly $1.9 million with penalties and interest. In September 2023, the parties settled: the taxpayer would pay the balance down through monthly installments running through July 2027. He held up his end of the bargain, paying nearly $1 million between November 2023 and the time of the case.
Then the IRS Independent Office of Appeals sustained a levy notice for the entire unpaid balance — $1,101,788 — even though the taxpayer was current on the payment plan and had roughly two years left to pay under the settlement he'd already honored.
Why the Tax Court sided with the taxpayer
The taxpayer challenged the levy at a Collection Due Process (CDP) hearing, and when the settlement officer sustained it anyway, he took the case to Tax Court. The court's reasoning turned on a specific requirement built into Section 6330 of the tax code: any collection action the IRS takes has to be "no more intrusive than necessary."
The court found that the settlement officer never grappled with the fact that a signed, court-approved payment plan already existed and was being honored. Seizing the full remaining balance immediately, rather than letting the existing schedule run its course, made the levy inherently more intrusive than the situation called for. That's the legal definition of an abuse of discretion — a determination that's arbitrary or lacks a sound basis in the actual facts of the case. The Tax Court denied the IRS's motion for summary judgment and granted the taxpayer's cross-motion instead.
The practical takeaway from tax practitioners who've reviewed the ruling: if you're paying under an agreement and the IRS moves to levy anyway, that inconsistency itself is a defense you can raise at the CDP hearing. The agreement you signed may be exactly what stops the levy.
What this means if you're on an IRS payment plan
Most small business owners will never rack up a seven-figure restitution-based assessment, but the underlying protections in this case apply to garden-variety installment agreements too:
- An active installment agreement generally blocks levies. The IRS generally cannot levy while an installment agreement is pending review, in effect, or within 30 days of a rejection or termination (and longer if you appeal within that window).
- You have 30 days to request a CDP hearing after a Final Notice of Intent to Levy. Miss that window and you lose the right to a formal hearing before the IRS Office of Appeals — don't let a levy notice sit in a drawer.
- A CDP hearing pauses enforced collection. Requesting one buys you time while Appeals reviews whether the proposed action is actually justified.
- "No more intrusive than necessary" is a real standard, not just a slogan. If the IRS tries to jump ahead of an agreement you're actively honoring, White gives you a citable precedent for arguing that the levy goes further than the law allows.
If you ever receive a levy notice while current on a payment plan, the first move isn't to panic — it's to request the CDP hearing within the deadline and point directly at the payment history that proves you're holding up your end.
Keep Your Payment History Airtight
Cases like White v. Commissioner turn on documented proof: a signed settlement, a clear payment schedule, and records showing every payment was made on time. That's exactly the kind of paper trail that's easy to produce when your books are in order and painfully hard to reconstruct under pressure from a levy notice. Beancount.io gives you plain-text accounting with a full version-controlled history of every transaction — so if the IRS ever questions your payment record, you can show it, instantly and completely. Get started for free and keep your financial history as solid as your legal position.