Byers v. Comm'r

• Decision Date: 19 March 2014
• Docket Number: No. 12–1351.,12–1351.
• Citation: 740 F.3d 668
• Parties: Ronald E. BYERS, Appellant v. COMMISSIONER OF INTERNAL REVENUE SERVICE, Appellee.
• Court: U.S. Court of Appeals — District of Columbia Circuit

740 F.3d 668

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.

Rehearing En Banc Denied March 19, 2014.

On Appeal from Orders and Decisions of the United States Tax Court.

Ronald E. Byers, pro se, argued the cause and filed the briefs for appellant.

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 26 U.S.C. § 7482(b)(1) because he is not seeking a redetermination of the amount of his taxes. In support of his claim, Appellant points the court to an illuminating article, James Bamberg, A Different Point of Venue: The Plainer Meaning of Section 7482(b)(1), 61 Tax Law. 445 (2008), in which the author contends that

[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. 26 C.F.R. § 301.6212–1. If a taxpayer fails to file a return, the IRS may create a substitute tax form under 26 U.S.C. § 6020(b) and file a notice of deficiency for the total amount it calculates as due.

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 28 U.S.C. § 1346(a), or refuse to pay the tax and file a petition in Tax Court under 26 U.S.C. § 6213 for a “redetermination of the deficiency.” Either of the two court proceedings may result in a redetermination of the amount of taxes owed by the taxpayer.

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, 26 U.S.C. § 6321, and impose a levy on the taxpayer's property, id.§ 6331. In 1998, Congress established the CDP hearing process to temper “any harshness caused by allowing the IRS to levy on property without any provision for advance hearing.” Olsen v. United States, 414 F.3d 144, 150 (1st Cir.2005); Internal Revenue Service Restructuring and Reform Act of 1998, Pub.L. No. 105–206, § 3401, 112 Stat. 685, 746 (codified at 26 U.S.C. §§ 6320, 6330). The statute requires notice to the taxpayer of a right to a hearing before a levy or lien is made and guarantees the right to a fair hearing before an impartial officer from the IRS Office of Appeals. 26 U.S.C. §§ 6320, 6330.

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. § 6330(c)(2)(A). The appeals officer then considers 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. § 6330(c)(3)(C). The law also affords a taxpayer the right to appeal a CDP determination to the Tax Court. Id. § 6330(d)(1).

CDP proceedings are informal and may be conducted via correspondence, over the phone, or face to face. See26 C.F.R. §§ 601.106(c), 301.6330–1(d). A taxpayer may challenge his underlying tax liability at a CDP hearing, but only if he “did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.” 26 U.S.C. § 6330(c)(2)(B).

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 in section 1254 of Title 28 of the United States Code.

26 U.S.C. § 7482(a)(1).

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 26 U.S.C. § 7482(b)(1)(A)-(B) (1970)). For both corporations and individuals, the statute stated that the proper venue for appeals involving redeterminations of liability was the federal court of appeals for the circuit in which the taxpayer's residence was located. Id. However, for the appeal of any case not enumerated in subsection (A) and (B), it assigned venue to the D.C. Circuit. Id. In other words, in 1966, Congress deliberately made the D.C. Circuit the default venue for tax cases.

Between 1966 and 1997, as Congress continued to expand the jurisdiction of the Tax Court, it also amended § 7482(b)(1) to add four more subsections, § 7482(b)(1)(C)-(F), that established venue based on a taxpayer's residency. See Revenue Act of 1978, Pub.L. No. 95–600, § 336(c), 92 Stat. 2763, 2842; Employee Retirement Income Security Act of 1974, Pub.L. No. 93–406, § 1041(b), 88 Stat. 829, 950–51; Tax Reform Act of 1976, Pub.L. No. 94–455, §§ 1042(d), 1306(b), 90 Stat. 1520, 1638–39, 1719; Tax Equity and Fiscal Responsibility Act of 1982, Pub.L. No. 97–248, § 402, 96 Stat. 324, 668; Taxpayer Relief Act of 1997, Pub.L. No. 105–34, § 1239, 111 Stat. 788, 1028. After these various revisions, the D.C. Circuit remained the default venue if “for any reason no subparagraph [assigning venue to a regional circuit] applies.” 26 U.S.C. § 7482(b)(1). Unlike its approach when expanding Tax Court jurisdiction to other areas, Congress did not alter the venue provision when it created the CDP framework in 1998.

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...