Todd v. U.S.

• Decision Date: 10 June 1988
• Docket Number: No. 85-4106,85-4106
• Citation: 849 F.2d 365
• Parties: -5043, 57 USLW 2010, 88-1 USTC P 9381 Donna L. TODD, Plaintiff-Appellee, v. UNITED STATES of America and R.S. Wintrode, Jr., District Director, Internal Revenue Service, Defendants-Appellants.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 365

849 F.2d 365

62 A.F.T.R.2d 88-5043, 57 USLW 2010, 88-1

USTC P 9381

Donna L. TODD, Plaintiff-Appellee, v. UNITED STATES of America and R.S. Wintrode, Jr., District Director, Internal Revenue Service, Defendants-Appellants.

No. 85-4106.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Aug. 5, 1986.

Order and Opinion Decided June 10, 1988.

Michael L. Paup, Roger M. Olsen, Jonathan S. Cohen and Elaine Ferris, Dept. of Justice, Washington, D.C., for defendants-appellants.

Stephen L. Pevar, American Civil Liberties Union, Denver, Colo., and W. Corbin Howard, Billings, Mont., for plaintiff-appellee.

Appeal from the United States District Court for the District of Montana.

Before POOLE, NORRIS and BEEZER, Circuit Judges.

ORDER

The court's opinion filed October 20, 1986, and reported at 802 F.2d 1152-58 (9th Cir.1986), is hereby withdrawn and replaced with the attached opinion.

OPINION

BEEZER, Circuit Judge:

This appeal is the result of a Bivens ¹ action against IRS agents for damages arising out of a penalty imposed under 26 U.S.C. Sec. 6702. The United States and the individual IRS agents appeal a partial denial of their motion for summary judgment. The district court dismissed Todd's claims against the United States and the individual defendants acting in their "official" capacities on sovereign immunity grounds. The district court upheld Todd's claims against the IRS agents in their "individual" capacities, concluding that the agents violated Todd's "clearly established" First and Fifth Amendment rights. We reverse.

I

The plaintiff, Donna L. Todd, filed a federal income tax return and an amended return for 1982. Below the jurat, ² she typed "signed involuntarily under penalty of statutory punishment."

The IRS assessed a $500 penalty against Todd pursuant to 26 U.S.C. Sec. 6702. ³ In response to a letter from Todd, R.S. Wintrode, Jr., the IRS District Director in Helena, Montana, wrote to Todd and explained that the added statement invalidated the tax return. Wintrode attached a photocopy of section 6703, which establishes procedures for contesting the penalty. ⁴

In response to further correspondence from Todd, the Chief of the IRS "Selection Unit" in Ogden, Utah, explained by letter that "the penalty was charged because you altered the jurat." This letter also apprised Todd of the method by which she could contest the assessment.

Todd did not pursue the judicial remedies provided by section 6703. Accordingly, the IRS attached Todd's bank account, which contained $140, and filed a tax lien against her real property in Billings, Montana.

In May of 1984, Todd filed suit in district court, alleging violations of various constitutional rights. The following month, the Department of Justice offered to stipulate to entry of judgment against the United States for a return of all monies obtained by levy, to release all liens, and to pay attorney's fees and costs. Todd refused to so stipulate.

The government concedes that the section 6702 penalty was improperly assessed against Todd. Todd's return was complete and accurate. She provided all the information necessary to process her return and claimed no frivolous deductions. Thus, neither of the prerequisites contained in section 6702(a)(1) was satisfied. Nevertheless, the government contends that the district court erred in concluding that the IRS agents' conduct contravened clearly established constitutional rights. The government notes that no court has held that the conduct at issue in this case violates a taxpayer's First and Fifth Amendment rights. We find the government's argument persuasive.

II

We have jurisdiction pursuant to 28 U.S.C. Sec. 1291. In Mitchell v. Forsyth, 472 U.S. 511, 530, 105 S.Ct. 2806, 2819, 86 L.Ed.2d 411 (1985), the Supreme Court concluded that denial of a claim to qualified immunity is appealable under the collateral order doctrine, set forth in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), notwithstanding the absence of a final judgment.

The Supreme Court's grant of appellate jurisdiction under Mitchell is narrow. We have jurisdiction only to decide if defendants' conduct violated Todd's clearly established constitutional rights. The government advances the defense on appeal that Todd's Bivens action is supplanted by alternative adequate and effective remedies. Following Mitchell, we conclude that we do not have jurisdiction to decide this claim. Accordingly, we confine this analysis to the qualified immunity issue.

III

Defendants' assertion of qualified immunity presents a question of law. Mitchell v. Forsyth, 472 U.S. at 528 n. 9, 530, 105 S.Ct. at 2816 n. 9, 2817. We review the denial of qualified immunity de novo. White v. Pierce County, 797 F.2d 812, 814 (9th Cir.1986).

A

In Harlow v. Fitzgerald, 457 U.S. 800, 102 S.Ct. 2727, 73 L.Ed.2d 396 (1982), the Supreme Court created a strictly objective standard for evaluating claims to qualified immunity. ⁵ The Harlow Court held:

government officials performing discretionary functions, generally are shielded from liability for civil damages insofar as their conduct does not violate clearly established statutory or constitutional rights of which a reasonable person would have known.

Harlow, 457 U.S. at 818, 102 S.Ct. at 2738. ⁶ Applying the Harlow test, we are here required to identify the applicable law and to determine whether that law was "clearly established" at the time defendants acted. Harlow, 457 U.S. at 818, 102 S.Ct. at 2738; Davis v. Scherer, 468 U.S. 183, 191, 104 S.Ct. 3012, 3017, 82 L.Ed.2d 139 (1984). The rationale underlying Harlow is simply put: If the controlling law is not clearly established, a reasonable person would not be expected to know how to structure his conduct in order to avoid liability. In such a case the defendant will be immune from suit. On the other hand, if a defendant has violated clearly established law, he will generally be liable. Harlow, 457 U.S. at 818, 102 S.Ct. at 2738; Davis, 468 U.S. at 191, 104 S.Ct. at 3017. Additionally, a public official who violates established standards may be immune from suit, if he is able to claim "extraordinary circumstances and can prove that he neither knew nor should have known of the relevant legal standard." Harlow, 457 U.S. at 819, 102 S.Ct. at 2738.

The district court held that the defendants violated Todd's Fifth Amendment right to due process and First Amendment right to freedom of speech. Todd v. United States, 613 F.Supp. 552, 556 (D.Mont.1985). We now analyze these holdings in view of the Harlow test.

B

The district court reached the following conclusion without citation to relevant law: "By attaching her bank account and putting a lien on her property without first having a hearing, defendants violated plaintiff's Fifth Amendment right to due process." Todd, 613 F.Supp. at 556. This holding overlooks half a century of precedent.

Well-settled is the rule that the United States government's revenue requirements justify use of summary procedures in collection of taxes. Phillips v. Commissioner, 283 U.S. 589, 51 S.Ct. 608, 75 L.Ed. 1289 (1931). In Phillips the Supreme Court held:

Where only property rights are involved, mere postponement of the judicial enquiry is not a denial of due process, if the opportunity given for the ultimate judicial determination of the liability is adequate. Delay in the judicial determination of property rights is not uncommon where it is essential that governmental needs be immediately satisfied.

Id., 283 U.S. at 596-97, 51 S.Ct. at 611 (citations omitted). Since Phillips, the Supreme Court has consistently held that post-deprivation hearings satisfy the demands of due process, when revenue collection is at issue. See, e.g., Bob Jones University v. Simon, 416 U.S. 725, 746-48, 94 S.Ct. 2038, 2050-52, 40 L.Ed.2d 496 (1974); Fuentes v. Shevin, 407 U.S. 67, 90-92, 92 S.Ct. 1983, 1999-2000, 32 L.Ed.2d 556 (1972). Accordingly, taxpayers do not have the right to a hearing prior to collection efforts by the IRS.

Nevertheless, Congress recognized that assessment of a $500 penalty under section 6702 could impose an acute financial hardship on certain taxpayers. Accordingly, Congress devised a rapid and inexpensive procedure, codified at section 6703, for challenging a section 6702 assessment. ⁷ The remedies provided in section 6703 satisfy the requirements of due process. Jolly v. United States, 764 F.2d 642, 645-46 (9th Cir.1985); Boday v. United States, 759 F.2d 1472, 1475 (9th Cir.1985).

In a letter dated June 30, 1983, the IRS advised Todd of the procedures available under section 6703. Todd, however, did not avail herself of those remedial procedures. Thus, we conclude that Todd had no clearly established Fifth Amendment right to a hearing prior to the attachment of her bank account and the filing of a lien against her real property, except under the section 6703 procedures of which the IRS notified her and of which she failed to avail herself.

C

If the IRS had properly assessed Todd under section 6702, we would have little difficulty now in concluding that Todd's First Amendment rights were not abridged. The First and Third Circuits have recently rejected similar First Amendment challenges to section 6702. See Eicher v. United States, 774 F.2d 27, 29-30 (1st Cir.1985); Kahn v. United States, 753 F.2d 1208, 1216-17 (3d Cir.1985); Welch v. United States, 750 F.2d 1101, 1108-09 (1st Cir.1985). ⁸ These courts reasoned that section 6702 penalizes the furnishing of inaccurate information on a tax return, rather than the taxpayer's expression of unpopular political views. When a taxpayer provides inaccurate or incomplete information on a tax return, for a frivolous reason, the IRS may impose a penalty under section 6702 without infringing the taxpayer's First Amendment rights. Eicher, 774 F.2d at 29-30; Kahn, 753 F.2d at 1216-17; Welch, 750 F.2d at 1108-09.

Todd's tax return was,...