Ronald E. BYERS, Appellant v. COMMISSIONER OF INTERNAL REVENUE SERVICE, Appellee.
No. 12-1351.
United States Court of Appeals, District of Columbia Circuit.
Argued Oct. 25, 2013. Decided Jan. 17, 2014.
741 F.3d 107
Carlton M. Smith and Frank Agostino were on the brief for amici curiae Peter Kuretski, et al. in support of appellant.
Teresa E. McLaughlin, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief was Marion E.M. Erickson, Attorney, U.S. Department of Justice.
Before: TATEL and BROWN, Circuit Judges, and EDWARDS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge EDWARDS.
EDWARDS, Senior Circuit Judge:
Appellant Ronald Byers seeks review of orders and decisions issued by the United States Tax Court affirming a decision by the Internal Revenue Service (“IRS“). The disputed IRS decision imposed a levy on Appellant‘s property to collect overdue income taxes for the tax years 1999-2002.
Appellant does not seek review of the amount of the taxes he owes. Rather, he raises a number of procedural and substantive challenges emanating from an IRS Office of Appeals Collection Due Process (“CDP“) hearing which resulted in the contested levy. The IRS has moved for a change of venue, arguing that this appeal should be transferred to the United States Court of Appeals for the Eighth Circuit, where venue properly lies. Appellant responds that venue is proper here under
[a] plain meaning reading of the [statute] instructs that the D.C. Circuit
Court is the appropriate venue, the default even, for all tax cases on appeal from the Tax Court that are not expressly brought up in section 7482(b)(1). Thus, it would appear that cases dealing with . . . “collection due process” hearings . . . should all be appealed to the D.C. Circuit Court.
Id. at 456-57. We agree and therefore deny the Commissioner‘s motion to transfer this case to the Eighth Circuit.
On the merits, Appellant principally argues that the Tax Court should be reversed because: (1) the CDP Settlement Officer engaged in improper ex parte communications and thus conducted Appellant‘s CDP hearing arbitrarily and unfairly; (2) Senior Judge Stephen J. Swift of the Tax Court erred in denying Appellant‘s request that he recuse himself from ruling on Appellant‘s Appointments Clause challenge to the ability of the Chief Judge to recall Senior Judges to decide cases before the Tax Court; (3) the Tax Court erred in dismissing as moot the collection of Appellant‘s 2003 tax liability after the IRS abated the assessment for that year and indicated that it was no longer pursuing a levy based on the 2003 assessment; and (4) the Tax Court erred in upholding the levy determination after the 2003 tax assessment was no longer under consideration. Appellant also raises a number of other issues which do not warrant recitation here. After carefully reviewing all of Appellant‘s claims, we find no merit in any of his challenges to the contested orders and decisions of the Tax Court. We therefore affirm the judgment of the Tax Court.
I. BACKGROUND
A. Tax Redeterminations and Collection Due Process Hearings
1. Redetermination of Tax Assessments
When the IRS finds a discrepancy between an individual‘s income tax filing and records from other sources, it may use a “notice of deficiency” to inform the taxpayer that it intends to collect the difference in owed taxes.
A taxpayer who disagrees with the statement of the amount of taxes owed in a notice of deficiency has two options: pay the amount assessed and then sue for a refund in federal district court or the Court of Federal Claims under
2. Collection Due Process Hearings
In addition to seeking redeterminations, taxpayers may also contest the IRS‘s means of collecting overdue taxes. The IRS can initiate a lien on a taxpayer‘s property,
In a CDP hearing challenging a levy, a taxpayer may raise “any relevant issue relating to the unpaid tax or the proposed levy,” including “challenges to the appropriateness of collection actions,” and “offers of collection alternatives.” Id.
CDP proceedings are informal and may be conducted via correspondence, over the phone, or face to face. See
3. Appellate Review of Tax Court Redetermination and Collection Due Process Decisions
Under the Internal Revenue Code, the federal courts of appeals have jurisdiction to review Tax Court redetermination and CDP decisions:
The United States Courts of Appeals (other than the United States Court of Appeals for the Federal Circuit) shall have exclusive jurisdiction to review the decisions of the Tax Court, except as provided in
section 1254 of Title 28 of the United States Code , in the same manner and to the same extent as decisions of the district courts in civil actions tried without a jury; and the judgment of any such court shall be final, except that it shall be subject to review by the Supreme Court of the United States upon certiorari, in the manner provided insection 1254 of Title 28 of the United States Code .
Congress originally placed venue for all appeals from decisions issued by the U.S. Board of Tax Appeals—later renamed the U.S. Tax Court—in the regional circuits, unless the individual did not file a return. 26 U.S.C. § 1141(b)(1) (1940) (providing that “decisions may be reviewed by the Circuit Court of Appeals for the circuit in which is located the collector‘s office to which was made the return of the tax in respect of which the liability arises or, if no return was made, then by the United States Court of Appeals for the District of Columbia“).
In 1966, Congress changed the venue provision, adding two subsections that prescribed the proper venue for appeals from Tax Court decisions concerning redetermination requests sought by individuals and by corporations. Pub.L. No. 89-713, § 3(c), 80 Stat. 1107, 1108–09 (1966) (codified at
Between 1966 and 1997, as Congress continued to expand the jurisdiction of the Tax Court, it also amended
The applicable provisions of the statute now read as follows:
(b) Venue
(1) In general
Except as otherwise provided in paragraphs (2) and (3), such decisions may be reviewed by the United States court of appeals for the circuit in which is located—
(A) in the case of a petitioner seeking redetermination of tax liability other than a corporation, the legal residence of the petitioner,
(B) in the case of a corporation seeking redetermination of tax liability, the principal place of business or principal office or agency of the corporation, or, if it has no principal place of business or principal office or agency in any judicial circuit, then the office to which was made the return of the tax in respect of which the liability arises,
(C) in the case of a person seeking a declaratory decision under section 7476, the principal place of business, or principal office or agency of the employer,
(D) in the case of an organization seeking a declaratory decision under section 7428, the principal office or agency of the organization,
(E) in the case of a petition under section 6226, 6228(a), 6247, or 6252, the principal place of business of the partnership, or
(F) in the case of a petition under section 6234(c)—
(i) the legal residence of the petitioner if the petitioner is not a corporation, and
(ii) the place or office applicable under subparagraph (B) if the petitioner is a corporation.
If for any reason no subparagraph of the preceding sentence applies, then such decisions may be reviewed by the Court of Appeals for the District of Columbia. For purposes of this paragraph, the legal residence, principal place of business, or principal office or agency referred to herein shall be determined as of the time the petition seeking redetermination of tax liability was filed with the Tax Court or as of the time the petition seeking a declaratory decision under section 7428 or 7476 or the petition under section 6226, 6228(a), or 6234(c), was filed with the Tax Court.
(2) By agreement
Notwithstanding the provisions of paragraph (1), such decisions may be reviewed by any United States Court of Appeals which may be designated by the Secretary and the taxpayer by stipulation in writing.
There is no question here regarding the Tax Court‘s exclusive jurisdiction over petitions for income tax redeterminations
B. Proceedings Below
Appellant is a self-employed taxpayer. In the tax years 1999 through 2002, Appellant failed to file federal tax returns. The IRS, pursuant to
The Commissioner also asserted that Appellant owed taxes for 2003. Appellant brought a separate challenge to this determination in Tax Court. In 2010, the Tax Court concluded that it lacked jurisdiction over taxable year 2003 because no notice of deficiency was produced and because there “was no indication or evidence that one was mailed” to Appellant. Mot. to Dismiss on Ground of Mootness at 3-4, reprinted in Appendix (“App.“) 6-7. The Commissioner did not appeal and instead abated the 2003 assessment. Id.
In January 2009, prior to the Tax Court‘s ruling as to 2003, the IRS collections department determined that Appellant was subject to tax collection by levy for liabilities (including penalties and interest) totaling $175,506.25 for the years 1999, 2000, 2001, 2002, and 2003. Final Notice of Intent to Levy, reprinted in App. 60-61. Appellant first challenged the levy determination with the IRS Office of Appeals via a CDP hearing. His challenge was denied. Notice of Determination Concerning Collection Action(s) under Section 6320 and/or 6330, reprinted in App. 52-58.
Appellant appealed to the Tax Court. After the Commissioner abated the 2003 assessment, the Commissioner moved to dismiss as moot Appellant‘s CDP petition with respect to taxable year 2003. Mot. to Dismiss on Ground of Mootness, reprinted in App. 4-8. The Tax Court granted this motion, leaving taxable years 1999-2002 in dispute. Order, reprinted in App. 9. The Tax Court then granted summary judgment in favor of the Commissioner. Byers, 103 T.C.M. (CCH) at 1170.
Appellant now seeks review in this court to overturn the orders and decisions issued by the Tax Court denying his appeal of the determination made by the IRS Office of Appeals in his CDP hearing. Appellant does not seek a redetermination of the underlying tax liabilities in this court. He merely challenges the Tax Court‘s decisions and orders relating to his CDP hearing. The IRS has moved to transfer venue, arguing that
II. ANALYSIS
A. Standard of Review
The parties’ dispute over the proper interpretation of the venue provisions in
We also apply de novo review to decisions to grant summary judgment, applying the same standards as the district courts. See generally EDWARDS, ELLIOTT & LEVY, FEDERAL STANDARDS OF REVIEW 44-50 (2d ed. 2013). “Those standards are largely derived from Federal Rule of Civil Procedure 56 and the Supreme Court‘s seminal decisions in [Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)], and [Celotex Corp. v. Catrett, 477 U.S. 317 (1986)].” Id. at 44. As required by
In a CDP case in which the merits of the underlying tax liability are not at issue, this court reviews the determinations made by the Office of Appeals for an abuse of discretion. See, e.g., Tucker v. Comm‘r, 676 F.3d 1129, 1135-37 (D.C. Cir. 2012).
B. Venue
The Internal Revenue Manual clearly states that “none of subparagraphs (A)-(F) [in
The IRS offers several arguments in support of its claim that venue is proper only in the Eighth Circuit. As we explain below, we find no merit in these arguments.
First, the IRS urges that since CDP hearings can in some circumstances include “challenges” to the underlying tax liability, they can appropriately be considered “redeterminations.” Br. for the Appellee at 26. Relatedly, the IRS asserts that if venue turns on whether a redetermination of a tax liability is “properly at issue,” venue determinations will invariably depend on the merits of each case. Id. at 27. Both points miss the mark. It is true that the statutory venue provision places appeals in the circuit of a taxpayer‘s residence whenever the taxpayer is “seeking redetermination of tax liability.”
Second, the IRS argues that “[i]t would not be reasonable to suppose that in adopting the CDP provisions for the benefit of taxpayers, Congress intended to inconvenience them by requiring them to bring all appeals to this Court, absent stipulation by the Commissioner under § 7482(b)(2), no matter where they live.” Br. for the Appellee at 29. The IRS‘s suppositions regarding congressional intent carry hardly any weight when the statutory provision at issue is absolutely clear. Moreover, our holding is limited to appeals challenging only a lien or levy determination; it does not reach an appeal contesting both collection action and redetermination decisions, which presumably would fall under subsection (b)(1)(A) with venue lying in a regional court of appeals. See
Third, the IRS asserts that if Congress meant to limit venue to the D.C. Circuit, it would have done so explicitly. Br. for the Appellee at 30-31. This is a curious argument because the plain terms of the statute settle the issue. See Bamberg, supra, at 456-57. It is true that the regional circuits have taken venue over CDP appeals in the past, and this court has granted motions to transfer venue to other circuits. See Robinson v. Comm‘r, No. 13-1081 (D.C. Cir. July 5, 2013); Brown v. Comm‘r, No. 02-1012, 2002 WL 1364313 (D.C. Cir. May 13, 2002); Br. for the Appellee at 18; Br. for the Appellant at 51-52. However, the IRS has not identified—nor have we found—a decision where the venue issue addressed here was properly raised and fully addressed by a court of appeals.
Finally, the IRS argues that it is simply impractical for the D.C. Circuit to hear all non-redetermination CDP cases. Br. for the Appellee at 31-32. Our research, however, indicates that the number of published decisions from the courts of appeals involving appeals from Tax Court CDP decisions is far from overwhelming. Furthermore, it is not unreasonable to assume that, even after the issuance of our decision in this case, many taxpayers who seek review of CDP decisions will agree with the IRS to have their cases heard in a circuit other than the D.C. Circuit. In any event, Congress determines the jurisdiction and venue of this court and we have no authority to declare otherwise. Cf. Cohens v. Virginia, 19 U.S. 264, 404 (1821) (“We have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not given.“); Union Pac. R.R. Co. v. Bhd. of Locomotive Eng‘rs, 558 U.S. 67, 71 (2009) (holding that “there is surely a starting presumption that when jurisdiction is conferred, a court may not decline to exercise it“).
Most of the arguments raised by the IRS rest on the Commissioner‘s view that it would be illogical, inconvenient, and bad policy to apply
Congress expressly provided, in
§ 7482(b) , that venue for an appeal is to be fixed at the outset of the case: the time the taxpayer files his petition in the Tax Court. Any other approach to laying venue would be at odds with this express legislative judgment. Moreover, as the various courts of appeals do not always agree, and it may take some time for the Supreme Court to resolve any conflict that develops between the Circuits, it is important for the Tax Court to apply the precedent of the Circuit to which appeal lies. And unless appellate venue is known at the outset of the case, the Tax Court will not be able to identify the Circuit with the controlling precedent that is to be followed in making its decision under its Golsen rule. See Golsen v. Commissioner, 54 T.C. 742 (1970), aff‘d, 445 F.2d 985 (10th Cir.1971).
Br. for the Appellee at 27-28. Even if the IRS‘s policy argument raises a legitimate concern, this is a matter for Congress, not the courts.
The IRS‘s arguments “rest[] on reasoning divorced from the statutory text,” which surely cannot carry the day. Massachusetts v. EPA, 549 U.S. 497, 532 (2007). It is well established that “when the statute‘s language is plain, the sole function of the courts—at least where the disposition required by the text is not absurd—is to enforce it according to its terms.” Hartford Underwriters Ins. Co. v. Union Planters Bank, N. A., 530 U.S. 1, 6 (2000) (internal quotation marks omitted). Indeed,
Excluding a few exceptions that are not relevant here, the plain text of
We have no occasion to decide in this case whether a taxpayer who is seeking review of a CDP decision on a collection method may file in a court of appeals other than the D.C. Circuit if the parties have not stipulated to venue in another circuit.
C. Appellant‘s Claims on the Merits
1. Ex Parte Communications
Appellant contends that the judgment of the Tax Court should be reversed because his CDP hearing was tainted by ex parte communications between the Office of Appeals Settlement Officer and other IRS employees. The Tax Court rejected this claim, finding that Appellant had “presented no credible support for this claim.” Byers, 103 T.C.M. (CCH) at 1170.
As the IRS explains:
Under Revenue Procedure 2000-43, 2000-2 [2002-2] C.B. 404, Appeals and Settlement Officers are prohibited from having ex parte communications with other IRS employees to the extent that such communications appear to compromise their independence. Improper ex parte communications include discussions of the strengths and weaknesses of the issues or positions in the case. Rev. Proc. 2000-43, Q & A-6. There is no evidence whatsoever that the Settlement Officer engaged in any improper ex parte communications with other IRS employees in her handling of taxpayer‘s CDP hearing. The Settlement Officer disclosed the nature and extent of her communications, which she engaged in solely for administrative, ministerial or procedural purposes, such as obtaining documents and information she needed in order to conduct [the] taxpayer‘s CDP hearing.
Br. for the Appellee at 45-46. We agree.
There is not one iota of evidence in the record to indicate that the Settlement Officer impermissibly communicated with other IRS employees or interested parties. The Settlement Officer exchanged emails with someone in the IRS general counsel‘s office in an effort to obtain copies of the notices of deficiency that she needed to conduct her review of Appellant‘s case. The ban on ex parte communications is aimed at communications between offices that might actually bias the appeals officer against the taxpayer, not at communications that might help her obtain documents that she is required to obtain. See Internal Revenue Service Restructuring and Reform Act of 1998, Pub.L. No. 105-206, § 1001(a)(4), 112 Stat. 685, 689 (banning “ex parte communications between appeals officers and other Internal Revenue Service employees to the extent that such communications appear to compromise the independence of the appeals officers“). Nothing in the record indicates that the independence of the Settlement Officer was in any way compromised during the CDP hearing.
2. The Senior Tax Court Judge‘s Refusal to Recuse Himself from Consideration of Appellant‘s Appointments Clause Argument
On February 13, 2012, the Tax Court entered an order and decision, sustaining the determination of the Office of Appeals to allow collection by levy of Appellant‘s tax assessments for the years 1999-2002. Order & Decision, reprinted in App. 118. On March 13, 2012, Appellant filed a timely motion to vacate the order and decision of the Tax Court. On the same day, Appellant filed a motion to recuse Senior Tax Court Judge Swift from considering his motion to vacate. Appellant contended that the Tax Court lacked jurisdiction to enter its order and decision because Judge Swift was a Senior Judge and, therefore, was not properly appointed under the Appointments Clause of the Constitution,
Appellant‘s motion asserted that the Tax Court could not act through Senior Judge Swift because
Appellant‘s claim is untimely. As the IRS notes: “This is a purely legal argument that taxpayer could have raised earlier in the proceeding, but chose not to. For that reason alone, the Tax Court did not abuse its discretion in denying the motion to vacate.” Br. for the Appellee at 56 (citing Cerand & Co., Inc. v. Comm‘r, 254 F.3d 258, 260 (D.C. Cir. 2001)). We agree. Because Appellant did not timely raise his Appointments Clause argument with the Tax Court, we “shall not pass upon [Appellant‘s] argument.” Cerand & Co., 254 F.3d at 260.
Furthermore, we have no reason to be concerned that the actions of Senior Judge Swift were ultra vires. Under
3. The Tax Court‘s Dismissal of Appellant‘s Tax Liability for the Year 2003 as Moot
In the proceedings before the Tax Court, the IRS moved to dismiss as moot the claim relating to the levy to collect income tax liability for the year 2003. The IRS pointed out that “[t]he assessment for taxable year 2003 is based on a failure to timely petition from a statutory notice of deficiency, but this entry on petitioner‘s tax account is incorrect.” Mot. to Dismiss on Ground of Mootness at 2, reprinted in App. 5. The IRS explained that, because of this error, “[t]he assessment for tax year 2003 has been abated” and the Commissioner was no longer pursuing a levy with respect to year 2003. Id. at 3, reprinted in App. 6. The IRS thus moved to have the 2003 claim dismissed as moot, and the Tax Court granted the motion.
Appellant argues that the Tax Court “erred by mooting and striking 2003 from the case” because the year 2003 assessment “remained relevant to resolving the case‘s outcome.” Br. for the Appellant at 72. Appellant is mistaken. With no levy being placed upon his property for the 2003 year, there was no actual case in controversy regarding an appeal of such a levy action. There was no appropriate course of action for the Tax Court to take but to dismiss as moot the dispute as to the year 2003 tax assessment.
4. Appellant‘s Challenge to the Notice of Determination Imposing the Levy
Finally, Appellant argues that the Tax Court erred in upholding the levy determination after the 2003 tax assessment was no longer under consideration. Appellant suggests that the Settlement Officer “may not have” found that a levy was proper if she had excluded the 2003 tax year in her initial determination. Br. for the Appellant at 71. Appellant thus appears to suggest that the Tax Court erred in deciding the case on a record that was different from the one that was relied upon by the Settlement Officer. Id. at 72.
In support of this claim, Appellant cites SEC v. Chenery Corp., 318 U.S. 80, 87-88 (1943), for the proposition that the Tax Court should not have based its decision on factors other than those considered by the Settlement Officer in the first instance. Under the Chenery doctrine, a reviewing court must confine itself to the grounds upon which the record discloses that the agency‘s action was based. Id. at 87-88. “If those grounds are inadequate or improper, the court is powerless to affirm the administrative action by substituting what it considers to be a more adequate or proper basis.” SEC v. Chenery Corp., 332 U.S. 194, 196 (1947). Appellant‘s argument fails for two reasons: First, the claim is based on the false premise that the Tax Court reviewed a record that was different from the record considered by the Settlement Officer. Second, the claim is not properly before this court because it was never raised with the Tax Court in the first instance. Our de novo review of the record confirms that the Tax Court did not err in granting summary judgment for the IRS.
After the Tax Court dismissed the year 2003 claim as moot, the IRS filed a motion for summary judgment asserting that the underlying tax liabilities for the years 1999-2002 were not at issue and that the IRS Appeals Office had not abused its discretion in determining that Appellant was subject to levy. Resp‘t‘s Mot. for Summ. J. at 9-13, Byers v. Comm‘r, No. 3032-10L (T.C. May 19, 2011). The IRS further asserted that Appellant had failed to offer any viable collection alternatives; that Appellant had failed to submit any information necessary to allow a collection alternative to be considered by the Settlement Officer; and that, pursuant to the requirements of
Appellant‘s response to the motion for summary judgment, Pet‘r‘s Notice of Objection, Byers v. Comm‘r, No. 3032-10L (T.C. Dec. 27, 2011), did not raise any genuine disputes with respect to any of the material facts asserted by the IRS. And, importantly, Appellant‘s opposition to the motion for summary judgment did not challenge the admissibility of the Amended Declaration of the Settlement Officer, nor did it claim that the record before the Tax Court was different from the one that was relied upon by the Settlement Officer with respect to taxable year 2003.
The Tax Court granted the motion for summary judgment, holding that the IRS had not abused its discretion in allowing the levy against Appellant to proceed. Byers, 103 T.C.M. (CCH) at 1170. We agree with the Tax Court that summary judgment in favor of the IRS is clearly supported by the record.
As noted above, following the Tax Court‘s issuance of a summary judgment in favor of the IRS, Appellant filed a motion to vacate the Tax Court‘s orders and decision. In his motion to vacate, Appellant did not assert the Chenery argument that he has raised with this court. Mot. to Vacate Orders and Decision, Byers v. Comm‘r, No. 3032-10L (T.C. Mar. 13, 2012). The first time that Appellant raised this argument as to taxable year 2003 was in his brief to this court. Appellant does not suggest that the record before the Tax Court was inadequate to support a levy. This is unsurprising because, even without considering the year 2003 tax assessment, Appellant admittedly owed more than $120,000 in back taxes and had expressed no intent to pay them.
It is unnecessary to tarry over Appellant‘s Chenery argument. We hold that, on the record at hand, we need not reach the Chenery question that has been raised by Appellant because it comes too late. “It is well settled that issues and legal theories not asserted at the District Court level ordinarily will not be heard on appeal.” District of Columbia v. Air Fla., Inc., 750 F.2d 1077, 1084 (D.C. Cir. 1984); see also Breeden v. Novartis Pharm. Corp., 646 F.3d 43, 56 (D.C. Cir. 2011) (holding argument raised for first time on appeal forfeited); Benoit v. U.S. Dep‘t of Agric., 608 F.3d 17, 21 (D.C. Cir. 2010) (same). This principle controls here because Appellant never pursued his claim with the Tax Court in the first instance, although he had at least two opportunities to do so. We have discretion to consider untimely arguments if “exceptional circumstances” are present, Flynn v. Comm‘r, 269 F.3d 1064, 1068-69 (D.C. Cir. 2001), but we find no such circumstances in this case.
In sum, we have no grounds to overturn the IRS‘s levy determination in this case.
III. CONCLUSION
For the foregoing reasons, we affirm the decisions of the United States Tax Court.