Cross v. U.S.
| Decision Date | 29 November 1993 |
| Citation | 149 F.3d 1190,1998 WL 255054 |
| Parties | -2042, 98-1 USTC P 50,442, 98 CJ C.A.R. 2490 NOTICE: Although citation of unpublished opinions remains unfavored, unpublished opinions may now be cited if the opinion has persuasive value on a material issue, and a copy is attached to the citing document or, if cited in oral argument, copies are furnished to the Court and all parties. See General Order of |
| Court | U.S. Court of Appeals — Tenth Circuit |
Before HENRY, LUCERO, Circuit Judges, and MILES-LAGRANGE, District Judge. **
The plaintiffs James H. Cross and Adah I. Cross appeal the district court's order denying their motion for permanent injunctive relief and dismissing their complaint against the defendant the United States. In the district court proceedings, the Crosses sought an injunction prohibiting the United States from attempting to enforce federal income tax assessments, federal tax liens, and tax levies for the years 1974-76 and 1979-80. The Crosses contended that, for these tax years, the Internal Revenue Service (IRS) failed to issue the required statutory notices of deficiencies and failed to establish that they had waived the notice of deficiency requirement by signing an IRS Form 870-AD. The district court rejected the Crosses' argument, reasoning that even though the IRS was unable to produce the Form 870-AD, it had presented circumstantial evidence sufficient to establish that the Crosses had executed the form.
We exercise jurisdiction under 28 U.S.C. § 1291. For the reasons set forth below, we affirm the district court's decision.
In 1986, the IRS examined the Crosses' tax returns for 1974-76 and 1979-80 and determined that they owed additional income taxes. After the examination, the Crosses and the IRS reached an agreement as to the amount of the additional assessments that the Crosses would pay. On May 2, 1986, IRS Appeals Officer R. Keith Ward sent a letter to Tom Dechant, the Crosses' accountant, regarding the agreement to pay the additional taxes. Mr. Ward attached a Form 870-AD to his letter. He requested Mr. Dechant to obtain the required signatures and return the form within ten days.
A Form 870-AD is an IRS document that is used when the IRS and the taxpayer have reached an agreement as to the additional amount owed by the taxpayer or the amount of overassessment by the IRS. 1 The form states that the taxpayer waives his or her statutory right (under 26 U.S.C. § 6213(a)) to have the IRS issue a notice of deficiency before collecting additional taxes. It further states that the taxpayer consents to the IRS's assessment and collection of deficiencies and to the IRS's calculation of overassessments. The form contains blank spaces in which the particular amounts of agreed deficiencies or overassessments may be inserted. See Aplts' App. at 66. It must be signed by both the taxpayers and a representative of the IRS.
On May 8, 1986, Mr. Dechant sent a letter and the Form 870-AD to Mr. Cross. Mr. Dechant explained that the Form 870-AD "sets out the tax and penalties you owe, pursuant to our settlement with Keith Ward." Id. at 65. Mr. Dechant added that he had "reviewed the IRS calculations and found them correct." Id. He told Mr. Cross that both he and Mrs. Cross should sign the Form 870-AD and return it to Mr. Ward.
In subsequent years, the Crosses made several additional payments to the IRS for the tax years in question. The IRS also levied on the Crosses' property to collect some of the taxes.
In November 1994, an attorney representing the Crosses requested that the IRS produce a copy of the statutory notices of deficiency for the tax years 1974-76 and 1979-80 as well as any waivers of the statutory notice requirement. After the IRS responded that it was unable to locate any such waivers, the Crosses filed this lawsuit. They alleged that in light of the IRS's failure to produce the requested waivers, "[t]he subject assessments ... have no basis in law or fact." Aplts' App. at 13 p 5 (First Amended Complaint, filed April 26, 1995). They requested the district court to enter an order declaring the IRS's assessments for 1974-76 and 1979-80 to be of no force and effect and to enter preliminary and permanent injunctions prohibiting the United States or any of its agencies or employees from collecting the challenged assessments and requiring the IRS to return all property previously seized.
On July 20, 1995, the district court entered an order granting the Crosses request for a preliminary injunction. The court enjoined the IRS from issuing notices of levy or from seizing or otherwise interfering with the Crosses' property until the case was finally adjudicated. It directed the IRS to produce evidence or otherwise show cause within thirty days why the court should not grant the Crosses permanent injunctive relief. The court reasoned that it was the IRS's burden to demonstrate that the Crosses had waived the notice of deficiency requirements for the subject tax years. "The IRS will have to produce more compelling evidence and more persuasive legal arguments if it hopes to carry that burden," the court said. Aplts' App. at 6 (District Court Order, filed July 20, 1995).
The IRS filed a response to the district court's order and presented the affidavits of several officials regarding its routine practices in entering into agreements with taxpayers. See Aplts' App. at 57-60 (affidavits of Brenda L. Fisher and William C. Reitan). These affidavits explained that, in 1986, agency procedures required five levels of review before a case could be closed and a tax assessment made. See id. at 59-60. According to the IRS, none of these five steps would be completed unless a Form 870-AD had been signed by the taxpayers. "The standard procedures made it virtually impossible to permit an assessment without the taxpayers' signature on [F]orm 870-AD." Id. at 60.
After considering the IRS's evidence and the Crosses' response, the district court entered an order dissolving the preliminary injunction, denying the Crosses' request for a permanent injunction, and dismissing their complaint. The court concluded that "[a]lthough the IRS has been unable to produce a signed copy of the Form 870[-]AD, it has met its burden of proof through the use of circumstantial evidence." Aplts' App. at 97 (District Court Order, filed Nov. 30, 1995). The court cited the affidavits of the IRS officials regarding the five levels of review and said that it was unreasonable to conclude that an unsigned Form 870-AD would have gone unnoticed.
The Crosses then filed a motion to alter or amend the district court's judgment. Upon reviewing that motion, the court allowed the Crosses to depose William C. Reitan, the Chief of the IRS Appeals Office in Oklahoma City in 1986. After reviewing a transcript of Mr. Reitan's deposition, the court denied the Crosses' motion to alter or amend the judgment. It reasoned that his testimony did not rebut the circumstantial evidence establishing that the Crosses signed the Form 870-AD and that the challenged assessments were therefore proper.
On appeal, the Crosses argue that the district court erred in concluding that the evidence in the record was sufficient to establish that they executed the Form 870-AD. They also argue that the record does not establish that an IRS official executed the form. According to the Crosses, because a reasonable fact finder could draw conflicting inferences as to whether the form was executed, the case should be remanded to the district court for trial.
Because the district court reviewed the documentary evidence submitted by the IRS but did not conduct an evidentiary hearing or a trial, we treat its ruling as a grant of summary judgment to the IRS. See M.S. News Co. v. Casado, 721 F.2d 1281, 1285 n. 3 (10th Cir.1983) (). We review the grant of summary judgment de novo, applying the same standard as the district court. J.B. v. Washington County, 127 F.3d 919, 923 (10th Cir.1997). Summary judgment is appropriate only 'if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). "We view the evidence and draw any inferences therefrom in the light most favorable to the party opposing summary judgment." Coosewoon v. Meridian Oil Co., 25 F.3d 920, 929 (10th Cir.1994). " 'Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party,' summary judgment in favor of the moving party is proper." Thomas v. I.B.M., 48 F.3d 478, 484 (10th Cir.1995) (quoting Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). "When the moving party has carried its burden [of demonstrating the absence of a genuine issue of material fact] under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita, 475 U.S. at 586.
When the IRS determines that a taxpayer owes additional taxes, it is authorized to send a notice of deficiency to the taxpayer. See 26 U.S.C. § 6212(a); Guthrie v. Sawyer, 970 F.2d 733, 735 (10th Cir.1992). The notice of deficiency is a "pivotal feature of the [Internal Revenue] Code's assessment procedures." Holof v. Commissioner, 872 F.2d 50, 53 (3d Cir.1989). It "serves as a prerequisite to a valid assessment...
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