[00:00:01] Speaker 03:
Case number 14-1042, John Ryskamp, Appellant versus Commissioner of Internal Revenue Service.

[00:00:08] Speaker 03:
Mr. Barron for the Appellant, Mr. Clark for the Appellate.

[00:00:39] Speaker 01:
May it please the Court, Jeremy Barron, on behalf of the Court of Puerto Amicus.

[00:00:44] Speaker 01:
Your Honours, the IRS made three reviewable determinations in Mr. Rice Camp's case.

[00:00:49] Speaker 01:
First, the IRS determined that Mr. Rice-Kan's hearing request was entirely frivolous.

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Second, it determined that collection could proceed without a hearing.

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And third, on remand from the tax court, the IRS issued a notice of determination, which even under the Commissioner's theory of the case, was sufficient to support jurisdiction in the tax court.

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The presumption of reviewability underscores these conclusions.

[00:01:15] Speaker 01:
Under the Commissioner's reading of the statute, the IRS has the unilateral ability to terminate a taxpayer's statutory right to a collection due process hearing.

[00:01:25] Speaker 01:
That is just the type of interpretation that the presumption guards against.

[00:01:30] Speaker 01:
To begin, the IRS issued a reviewable determination when it determined that Mr. Rice Camp's hearing request was entirely frivolous.

[00:01:39] Speaker 01:
Section 6330D1 grants jurisdiction to the tax court to review a determination under this section.

[00:01:47] Speaker 01:
That is, a determination under Section 6330.

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The government's argument that there is only one determination that counts for tax court jurisdiction

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of determination after a subsection C3 hearing is a limitation that is found nowhere in the statute.

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And indeed, the statute grants jurisdiction to the tax court not just over a notice of determination, but a functional equivalent of a notice of determination.

[00:02:14] Speaker 04:
But Mr. Barron, what about the provision in subsection G dealing with frivolous requests for a hearing that provides that notwithstanding any other provision of this section, if the secretary determines any portion of her request is frivolous, there's going to be no further administrative or judicial review.

[00:02:34] Speaker 04:
So it sort of seems to be sweeping everything away, including the basis that you point to for review.

[00:02:42] Speaker 01:
Subsection G prevents further review of the merits of a portion deemed frivolous if the IRS undergoes a correct prerequisite analysis.

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First, it has to identify the specific portions of the hearing request that it thinks may be frivolous.

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And then it must determine whether Clause 1 or Clause 2 of Section 6702B2A applies.

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If the IRS does not conduct a proper analysis under Subsection G, it lacks the authority to make a frivolousness determination and treat that portion as if it were never submitted.

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The tax court's review only extends to whether the IRS has made a facially plausible frivolousness determination.

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It does not extend to the merits of the claim if the tax court upholds that frivolousness determination.

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This is a very limited form of review.

[00:03:33] Speaker 01:
All that the tax court is accomplishing is making sure that the IRS has not missed or misconstrued a taxpayer's argument.

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Indeed, that was the very problem in the Thornberry case.

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In the Thornberry case, the taxpayers had requested collection alternatives at their collection due process hearing.

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That was a non-frivolous request, but the IRS decided to ignore the entire hearing request as frivolous anyway.

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The tax court observed that the IRS must have missed the request for a collection alternative because there was no basis in the IRS's correspondence

[00:04:07] Speaker 01:
to support a determination that the request reflected a desire to delay or impede tax administration.

[00:04:14] Speaker 00:
Your brief points out that we may not even need to reach that question, right, because what happened on the first go-round

[00:04:22] Speaker 00:
may be irrelevant at this point, as you say in the reply brief, whether the tax court should have permitted the appeals office to disregard Rice Camp's hearing request in the first instance is now irrelevant to this case because it went back and there was a clear determination?

[00:04:36] Speaker 01:
Yes, Your Honor.

[00:04:37] Speaker 01:
On remand from the tax court, the IRS issued a notice of determination to Mr. Rice Camp.

[00:04:43] Speaker 01:
Under the government's theory of the case,

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the Notice of Determination was sufficient to confer jurisdiction in the tax court to review that Notice of Determination.

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So whether or not the tax court had jurisdiction in the first instance when the IRS issued its disregard letter is now irrelevant.

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Once the tax court made a jurisdictional determination and the government declined to challenge that jurisdictional holding, it became law of the case and the IRS was bound to follow the tax court's mandate on remand.

[00:05:13] Speaker 01:
When it then issued the Notice of Determination, even under the government's position, the tax court then had jurisdiction and there is still jurisdiction in front of this court to review the merits of Mr. Rice Camp's appeal.

[00:05:26] Speaker 01:
But the tax court also has jurisdiction over other forms of determination that the IRS can render under Section 6330.

[00:05:35] Speaker 01:
When the IRS issues a blanket disregard letter to a taxpayer, that is an insufficient frivolousness determination to allow it to invoke its authority under Section 6330-G to treat a portion as if it were never submitted.

[00:05:50] Speaker 01:
The statute clearly states,

[00:05:52] Speaker 01:
that the IRS must determine the specific portions of a hearing request that are frivolous, and then must make a further finding that either Clause 1 or Clause 2 of 6702b2a applies.

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That is, that the argument appears on the Commissioner's published list of frivolous positions or otherwise reflects a desire to delay or impede tax collection.

[00:06:14] Speaker 01:
When the IRS simply sends a letter saying, we treat your entire hearing request as frivolous, without specifying the frivolous portions and explaining the basis for its frivolousness determination, that is an insufficient determination under 6330G to allow it to continue.

[00:06:31] Speaker 04:
It's a little bit concerning that what you're asking for is tax court review and potentially this court's review in a pre-collection context.

[00:06:42] Speaker 04:
And isn't it the case, well I guess this is my question for you, whether the taxpayer would have any kind of remedy after the fact in challenging the taxes after they've been paid?

[00:06:58] Speaker 01:
No, Your Honor, the taxpayer would not.

[00:07:00] Speaker 04:
And that's because what's being raised here is the method of payment and is it going to be installment?

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Does the taxpayer get some kind of partial relief?

[00:07:09] Speaker 04:
And those things are going to be moved or?

[00:07:10] Speaker 01:
Yes, Your Honor.

[00:07:11] Speaker 01:
There are three points why a refund proceeding is inadequate.

[00:07:15] Speaker 01:
First, the collection due process statute reflects Congress's measured judgment that the imposition of a lien or a levy is extremely disruptive to a taxpayer and is a very harsh decision on the part of the IRS and the taxpayer should have the chance to convince the IRS not to impose that lien or levy.

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Second,

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A refund proceeding is only available if the taxpayer has discharged his entire tax liabilities.

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So if the IRS levies property, but the value of the property is not sufficient to close out that taxpayer's liabilities, the taxpayer will be unable to bring a refund proceeding and will be left with no remedy.

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And third, if the government's position on subsection G is true, that would potentially hold in the refund proceeding as well.

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Subsection G says no further administrative or judicial review.

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If that applies to the frivolousness determinations, it's unclear how the district court or the court of federal claims in a refund proceeding could possibly review

[00:08:14] Speaker 01:
that determination.

[00:08:16] Speaker 01:
Instead, the better reading of the statute is that subsection G does foreclose further review of the merits of a claim deemed frivolous, but only if the IRS makes the prerequisite determination in a facially plausible manner.

[00:08:31] Speaker 04:
So your ruling would require a more granular

[00:08:35] Speaker 04:
description by the IRS why something, why she's being determined to be frivolous and would open to pre-collection review all such determinations.

[00:08:49] Speaker 01:
Your Honor, we're not purporting to micromanage how the IRS conducts its correspondence with taxpayers.

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But the tax court has to be able to satisfy itself that the IRS has, in fact, given measured consideration to the taxpayers' arguments under G and made a proper frivolousness determination.

[00:09:07] Speaker 01:
If the IRS simply rubber stamps a collection due process hearing request as frivolous without indicating on the face of its letter that it has actually considered the arguments

[00:09:18] Speaker 01:
in the taxpayers hearing request, that is an insufficient determination under subsection G. And indeed, the Supreme Court's mock mining case issued on Wednesday speaks to this very point.

[00:09:30] Speaker 01:
The form of review that the Supreme Court authorized in that case

[00:09:34] Speaker 01:
as it described it, was very bare bones.

[00:09:37] Speaker 01:
But it was essential, the Supreme Court said, to making sure that the EEOC was not making errors.

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It does not require this court to cast aspersions on the IRS to observe that errors do happen, and especially so when those errors are unreviewable.

[00:09:55] Speaker 01:
The form of review we are advocating for is very narrow.

[00:09:58] Speaker 01:
The IRS still has substantial discretion to determine that an argument is frivolous.

[00:10:04] Speaker 01:
It must merely do enough to convince the tax court that it has not rendered an implausible determination and simply ignored or completely misconstrued a potentially meritorious argument that the taxpayer has made.

[00:10:17] Speaker 04:
Would it be enough if they had their list of

[00:10:23] Speaker 04:
positions identified as frivolous and then like an other line and checked which ones on the list of frivolous arguments they thought applied to the particular taxpayers' contentions and then filled in on other or anything else?

[00:10:37] Speaker 01:
Yes, Your Honor.

[00:10:38] Speaker 01:
That may well be sufficient.

[00:10:39] Speaker 01:
And again,

[00:10:40] Speaker 01:
we are not reporting to micromanage how the IRS conducts its correspondence.

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And we are not suggesting that this requirement is going to be burdensome on the IRS.

[00:10:50] Speaker 01:
It need not go into extreme detail as to why it considers a particular argument frivolous, but it must do enough to satisfy the tax court that the IRS has considered the argument and has either correctly deemed it one that appears on the commissioner's published list of frivolous positions or has stated a plausible reason

[00:11:09] Speaker 01:
why that argument is intended to delay or impede tax collection.

[00:11:12] Speaker 01:
If the IRS does not do that, it has no authority under the statute to treat that portion as if it were never submitted.

[00:11:19] Speaker 01:
And this court's decision in COMSTAT makes clear that despite a jurisdiction stripping provision, the courts retain jurisdiction to ensure that the agencies are acting within the scope of their statutory authority.

[00:11:33] Speaker 01:
There is further jurisdiction in this case because

[00:11:37] Speaker 04:
And would this apply, would this kind of review or frivolous determination apply?

[00:11:42] Speaker 04:
So would someone be subject to this who had had any kind of hearing, or this is only where you don't get your collection to process hearing?

[00:11:52] Speaker 01:
If the IRS does conduct a collection due process hearing, but determines that a number of the arguments in the hearing request are frivolous, then yes, the tax court has jurisdiction to review those frivolousness determinations that it reached during the course of the hearing.

[00:12:07] Speaker 01:
But even if this court does not adopt that position, it is certainly true that the IRS cannot issue a disregard letter where it does not consider any of the taxpayers' arguments and simply says that the entire hearing request is frivolous.

[00:12:21] Speaker 04:
Is there any way to distinguish cases in which, I mean, is there any statutory ground for distinguishing cases in which there has been a collection due process hearing and those in which there hasn't, as was the case here?

[00:12:32] Speaker 01:
I'm sorry, Your Honor, if you could repeat the question.

[00:12:34] Speaker 04:
Well, it just seems like the question about jurisdiction stripping assumes, I think, and potentially over broadly, that there isn't another encounter in which the claims can be pressed to the IRS.

[00:12:47] Speaker 04:
And where there has been a collection due process hearing, there has been an opportunity to press the claims.

[00:12:52] Speaker 04:
No?

[00:12:52] Speaker 01:
Yes, Your Honor, but if the IRS makes an improper frivolousness determination as to a specific argument, the taxpayer lacks a full and fair opportunity to discuss the nature of that claim with the IRS.

[00:13:05] Speaker 01:
Instead, the IRS treats that portion as if it were never submitted and does not treat it to any further review.

[00:13:10] Speaker 01:
the tax court retains a minor form of oversight to make sure that the IRS is not simply missing an argument and labeling a frivolous by mistake or misconstruing the nature of the argument.

[00:13:22] Speaker 01:
Again, that was the problem in Thornberry, where the IRS missed a legitimate argument.

[00:13:27] Speaker 01:
And on remand from the tax court in Thornberry, the IRS closed out the Thornberry's account as uncollectible for reasons of economic hardship.

[00:13:35] Speaker 01:
So the taxpayer in Thornberry actually got relief from the IRS on remand.

[00:13:40] Speaker 01:
In addition, in the Schlabach case in the Court of Federal Claims, the IRS misconstrued an argument that a taxpayer had made against the imposition of a 6702b penalty.

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The taxpayer argued that the appeals officer did not get approval from a supervisor before imposing the penalty as required.

[00:14:00] Speaker 01:
The IRS mistakenly thought that was a common type of taxpayer protest or challenge involving signature requirements.

[00:14:08] Speaker 01:
As a result, it disregarded that argument.

[00:14:11] Speaker 01:
But the Court of Federal Plans observed that that was mistaken and the argument was in fact meritorious.

[00:14:18] Speaker 04:
I mean, this is very tough.

[00:14:20] Speaker 04:
I appreciate your position that, and really I appreciate the IRS's position institutionally, which is that you get a lot of frivolous arguments.

[00:14:31] Speaker 04:
But, and therefore, I think the natural tendency is to say, oh, I recognize this, and toss it in the note pile.

[00:14:39] Speaker 04:
And so what you're asking is for a rule that you think will make them ever so much more careful about that scrutiny.

[00:14:48] Speaker 04:
But you're also talking about levels of scrutiny, including judicial review, of a mass of

[00:14:58] Speaker 04:
frankly, pointless for the most part, submissions.

[00:15:02] Speaker 04:
And it's actually quite a tough problem, and it's not a unique problem, but it seems like it's particularly pointed when we're dealing with tax collection.

[00:15:12] Speaker 01:
Yes, Your Honor, but a little bit of oversight goes a long way.

[00:15:16] Speaker 01:
This is not going to be a burdensome imposition on the IRS to state a short reason why it believes an argument is frivolous, and it is not going to be a burden on the tax court or this court to see whether the IRS's reason is facially plausible.

[00:15:30] Speaker 04:
You say that although the most unreasonable taxpayers are not going to be satisfied with what should be a satisfactory answer, they're going to go to the tax court, and the tax court's going to say, sorry, the IRS has done exactly what it was required to do under Rice Camp, by hypothesis, were you to prevail.

[00:15:48] Speaker 04:
And then that's going to go up to our court, no?

[00:15:51] Speaker 04:
in every case in which you have the most stubborn taxpayers.

[00:15:55] Speaker 01:
Yes, Your Honor, I see my time is up if I can answer the question.

[00:15:59] Speaker 01:
That will be a problem regardless of this Court's jurisdictional holding because taxpayer protesters can continue to try to file appeals even when there is no jurisdiction.

[00:16:08] Speaker 01:
There is not an easy way to ensure that taxpayer protesters stop filing frivolous submissions.

[00:16:13] Speaker 01:
But what our rule does is it requires a minor level of oversight on the part of the tax court simply to make sure that the IRS has not completely missed or completely misconstrued an argument.

[00:16:25] Speaker 01:
That's an essential form of review to make sure that the IRS isn't conducting the sort of mistakes that it conducted in Thornberry and Shalbach

[00:16:34] Speaker 01:
And indeed, that form of oversight will lead the IRS to make more careful and proper determinations.

[00:16:40] Speaker 03:
What if the legislation said that the Office of Appeals could do exactly what they did?

[00:16:47] Speaker 03:
In other words, it said you may just deem that if you decide the whole thing is frivolous, you may deem it never to have been submitted.

[00:16:58] Speaker 03:
Would you still be arguing that there would have to be oversight?

[00:17:02] Speaker 01:
No, Your Honor, that statute would likely provide clear and convincing evidence of Congress's intent to foreclose review of frivolousness determinations, although there may be a constitutional issue with the removal of a federal forum for constitutional claims.

[00:17:17] Speaker 01:
But there is no clear and convincing evidence in the statute Congress wrote that Congress meant to foreclose review of frivolousness determinations.

[00:17:25] Speaker 01:
Indeed, to the contrary, the statute expressly requires the IRS to conduct a prerequisite analysis before it can treat a portion as if it were never submitted.

[00:17:35] Speaker 01:
And if the IRS does not conduct that analysis, or does so in a facially implausible way, it lacks the authority under 6330G to treat the portion as if it were never submitted.

[00:17:48] Speaker 01:
There are no further questions.

[00:17:49] Speaker 03:
Thank you.

[00:17:59] Speaker 02:
May it please the court, Thomas Clark on behalf of the United States Commissioner.

[00:18:05] Speaker 02:
I'd like to begin by emphasizing that there's no dispute in this case that the tax court's a court of limited jurisdiction and may exercise only the jurisdiction that's conferred upon it by the Internal Revenue Code.

[00:18:16] Speaker 02:
The interim revenue code section initially at issue here is subsection D1 of section 6330, which confers upon the tax court jurisdiction in collection due process or CDP cases.

[00:18:31] Speaker 02:
It says that a taxpayer may appeal from the determination of the appeals office in a CDP case, and the tax court shall have jurisdiction with respect to the matter.

[00:18:45] Speaker 02:
That jurisdiction, and we differ with the amicus as to the scope of the term determination in section D1, but regardless of how broadly you might interpret that word, even if you agree with the amicus,

[00:19:04] Speaker 02:
interpretation of the word determination in D1, you still have to confront subsection G, which carves out an exception to the jurisdiction that is bestowed by D1.

[00:19:16] Speaker 02:
So G says that in the iarresti terms that any portion

[00:19:21] Speaker 02:
of a hearing request is frivolous, then that portion shall not be subject to any further administrative or judicial review.

[00:19:31] Speaker 02:
I don't want to emphasize the word any.

[00:19:34] Speaker 02:
This court confronted similar language or almost identical language in the Texas Alliance for Home Care Services case and in the Amgen Inc.

[00:19:43] Speaker 02:
case.

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Both of those cases provided for no judicial or administrative review of specified matters.

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And in Texas Alliance, the court said that that language unequivocally precludes review of those matters.

[00:19:57] Speaker 02:
I think that the court's decisions in Texas Alliance and Amgen Inc.

[00:20:02] Speaker 02:
really effectively control the outcome in this case, because the statutory language used here is virtually identical.

[00:20:10] Speaker 04:
So, yes, there... How do you respond to Amicus's contention that that bar on any further administrative review is preconditioned on a

[00:20:22] Speaker 04:
a correct determination by the secretary that a portion of the request for the hearing is frivolous under subsection one or two of 6702B2A.

[00:20:33] Speaker 02:
Well, I don't think that it is a precondition, because once that determination is made, then that portion of the hearing request is not subject to any further judicial administrative or judicial review.

[00:20:44] Speaker 02:
So if the court is precluded from reviewing any portion of that hearing request, well, then how can you determine whether the preconditional determination was correct?

[00:20:57] Speaker 04:
Well, I guess the way they're reading it, and I'd be interested to know your response, is that

[00:21:02] Speaker 04:
You can't review the merits of those determinations, but they're just asking for a very shallow determination on frivolousness or not.

[00:21:12] Speaker 04:
So it's a deferential kind of mini review.

[00:21:15] Speaker 04:
And I mean, you see the problem.

[00:21:16] Speaker 04:
I was asking your present counsel about it.

[00:21:20] Speaker 04:
It's concerning, given the way we operate in a high-volume world, to give the IRS a blank check and say, whatever you say on frivolousness goes.

[00:21:33] Speaker 04:
It's just, you know, it's human nature if you have that kind of unreviewable blank check in a harassing and high-volume workplace to take less care.

[00:21:42] Speaker 04:
And so how can you reassure us that were we to rule for the commission in this case, it wouldn't really be stripping a lot of taxpayers of

[00:21:53] Speaker 02:
critical right to their property.

[00:22:04] Speaker 02:
Amgen Inc., the court said, when there was no judicial or administrative review, the court may not inquire whether the challenged agency action is arbitrary, aprecious, or procedurally defective.

[00:22:16] Speaker 02:
That's an exact quote from Amgen Inc.

[00:22:19] Speaker 02:
And so I think the answer to your question, Your Honor, is that Congress considered the matter, and Congress was willing to accept the possibility that there might, on occasion, be administrative errors that are going to go uncorrected.

[00:22:33] Speaker 02:
But Congress said that, well, we're willing to live with that.

[00:22:38] Speaker 02:
And I want to follow this up by saying that for the whole history of our income tax laws, up until 1998,

[00:22:48] Speaker 02:
There was no pre-hearing remedy available before the IRS serves a levy.

[00:22:53] Speaker 02:
In 1931, the IRS, the Supreme Court, in the Phillips case we cited in our brief, held that the levied procedures established by Congress are constitutional.

[00:23:02] Speaker 02:
They passed constitutional muster.

[00:23:04] Speaker 02:
And so from then up until 1998, the IRS could just go out and levy, and the taxpayer's remedy was to bring a later refund suit where he could test whether or not he used the taxes.

[00:23:15] Speaker 04:
I think that a little bit cuts both ways.

[00:23:16] Speaker 04:
I mean, they considered that there was a real problem in enacting the legislation in 1998.

[00:23:22] Speaker 04:
You know, that was maybe too much power for the government and was causing people unwarranted.

[00:23:27] Speaker 02:
Exactly.

[00:23:27] Speaker 02:
And that's why Congress enacted this additional scope of review within the agency in 1998.

[00:23:33] Speaker 02:
But then it quickly determined that the IRS and the courts were being inundated with these provisional questions.

[00:23:39] Speaker 00:
Well, why did the tax court itself then, do you think, come to the opposite conclusion than the Thornberry?

[00:23:46] Speaker 02:
Your Honor, I can only speculate.

[00:23:49] Speaker 00:
Obviously, we think that... I mean, you were talking about a big burden, huge burden, clear language, yet the tax court, who deals with this all the time... Yes, it does.

[00:23:58] Speaker 02:
And I don't know why it came out to that conclusion, but I think it's wrong.

[00:24:01] Speaker 02:
I think it's inconsistent with the statute and, you know, inconsistent with the notion of the tax court can exercise only that jurisdiction... Has they been flooded since Thornberry?

[00:24:14] Speaker 00:
I don't have the statistics on how many CDP cases... But that's one of the concerns here, I think, on your side, put aside the pure legal argument, which I understand, but is that this would open the floodgates to a lot of things, and we should have some indication of that post-Tornberry, if that's really happening.

[00:24:34] Speaker 02:
Well, I mean, the flood gates were open in 1998, and then Congress attempted to shut the door in 2006.

[00:24:41] Speaker 00:
Right, but we would know if they reopened in Thornberry, right?

[00:24:45] Speaker 00:
Because since Thornberry, it's been back to the 1998 to 2006 model, right?

[00:24:52] Speaker 02:
Well, yeah, I don't have the statistics on that.

[00:24:56] Speaker 02:
Okay.

[00:24:56] Speaker 02:
It's not in the record.

[00:24:57] Speaker 00:
And what about the fact that this case went up and down, and so there was a determination, ultimately, under your view?

[00:25:04] Speaker 02:
Well, ultimately, there was a determination, but I see it as a problem, though, that, I mean, if you're, if we're correct, if you accept our arguments, then the initial order of the tax court remanded the case when it was void, and, you know, under rules, you know,

[00:25:19] Speaker 02:
I mean, that's it.

[00:25:22] Speaker 02:
It has no effect.

[00:25:25] Speaker 02:
So I think that any subsequent proceedings would be a void as well.

[00:25:29] Speaker 02:
But in any case, there's an additional concern as to that.

[00:25:33] Speaker 02:
And that is that the

[00:25:35] Speaker 02:
When the taxpayer here filed the initial hearing request, the IRS under its authority in subsection G treated it as if it had never been filed.

[00:25:46] Speaker 02:
When the tax court later directs the taxpayer to file the CVP request,

[00:25:52] Speaker 02:
which ultimately led to the notice of determination in the Tax Court's subsequent hearing.

[00:25:55] Speaker 02:
That was filed far outside a 30-day period.

[00:25:59] Speaker 02:
And remember, the taxpayer has to file a CDP request within 30 days of the notice of levy in order to confer jurisdiction and to have the right to a CDP proceeding.

[00:26:10] Speaker 02:
So the CDP request that the taxpayer filed on remand from that first Tax Court order was filed far outside of that

[00:26:19] Speaker 02:
the 30-day time period.

[00:26:21] Speaker 02:
And in those cases, by the way, the IRS often will grant the taxpayer what they call an equivalent hearing.

[00:26:27] Speaker 02:
So the IRS doesn't even when a late hearing request is filed, they don't just ignore it.

[00:26:33] Speaker 02:
They will on occasion grant an equivalent hearing

[00:26:36] Speaker 02:
And after an equivalent hearing, they issue a decision letter.

[00:26:39] Speaker 02:
This is all in their regulations under 6330.

[00:26:41] Speaker 02:
But that decision letter that they issue in an equivalent hearing is not appealable to the tax court or any other court.

[00:26:48] Speaker 04:
Mr. Clark, you rely on Amgen, but it just, I may not be remembering correctly, but isn't the basic determination

[00:26:57] Speaker 04:
actually subject to some review that the notion whether the particular kind of biologics rate determination was in fact

[00:27:10] Speaker 04:
the kind of action that was shielded from review, that's not that word.

[00:27:14] Speaker 02:
Yes, exactly, Your Honor, and that derives from the court's decision in Comset back in the 1990s, where that was an FCC case where the court held that, well, yeah, there's no judicial review of that determination, but we can review whether or not this was the type of determination contemplated by the statute.

[00:27:32] Speaker 04:
It seems to me that that's, therefore, more support for the amicus than for your position.

[00:27:36] Speaker 04:
All they're saying is,

[00:27:37] Speaker 04:
review for whether this is the kind of determination that falls within that

[00:27:42] Speaker 04:
consider it never to have existed, exception of subsection G, which just can review whether it's properly in that category.

[00:27:48] Speaker 04:
And then if it is, you get the free ride.

[00:27:53] Speaker 02:
I think all it means is, did the IRS determine that this was frivolous?

[00:27:57] Speaker 02:
Yes.

[00:27:58] Speaker 02:
That's it.

[00:27:59] Speaker 02:
We look no further.

[00:28:00] Speaker 02:
Because it is not subject to any further judicial review.

[00:28:02] Speaker 02:
Any further.

[00:28:03] Speaker 02:
See, I think that the tax that the amicus here would rewrite the statute, that they would say, well,

[00:28:08] Speaker 04:
subject to a little bit of review or subject to review whether in fact the

[00:28:14] Speaker 04:
commissioner made a determination that gets it on the chute down to no further consideration.

[00:28:22] Speaker 02:
So it's gatekeeping.

[00:28:23] Speaker 04:
It's a gatekeeping jurisdiction rather than a merits review jurisdiction.

[00:28:26] Speaker 04:
And as I read the Amgen case, there was kind of a gatekeeping jurisdiction as well.

[00:28:31] Speaker 02:
Well, yes.

[00:28:32] Speaker 02:
The court wanted to look at Amgen.

[00:28:34] Speaker 02:
I'm thinking that was the case where there was a new anemia treatment.

[00:28:40] Speaker 02:
There was a new anemia treatment, and the secretary was

[00:28:43] Speaker 02:
had the discretion to make equitable adjustments.

[00:28:47] Speaker 02:
And the court looked into whether or not the adjustment that was made was to the type of equitable adjustment.

[00:28:55] Speaker 02:
And here, the IRS issued a letter to taxpayers saying that your hearing request is frivolous.

[00:29:03] Speaker 02:
And I think that what Comshat demands and Amgen is, was that frivolous determination the type of determination that the IRS was authorized to make under G?

[00:29:14] Speaker 02:
And I think the answer is yes.

[00:29:15] Speaker 02:
And if that's the determination the IRS made, then whatever they based that on, whatever the four corners of the request, is not subject to any judicial review.

[00:29:27] Speaker 02:
Not even a little bit of judicial review to see whether or not it was reasonable.

[00:29:32] Speaker 02:
of the statute because Section 6703 says that, you know, in the IRS imposes the $5,000 frivolous penalty under 6702, then under 6703C, the IRS imposes the $5,000 frivolous penalty.

[00:29:52] Speaker 02:
that the taxpayer may pay 15% of the penalty and then sue the government for a refund, and then the IRS has the burden of proof.

[00:30:00] Speaker 02:
So in that proceeding, the IRS may have the burden of showing, here's the hearing request, it's frivolous, okay, that the $5,000 penalty stays.

[00:30:09] Speaker 02:
And the amicus he said is being inconsistent with our position here, but I don't think it's inconsistent at all.

[00:30:16] Speaker 02:
What Subsection G bars is any review

[00:30:26] Speaker 02:
So the IRS issues a notice of levy this year to collect your 2010 taxes, and you file a frivolous hearing request.

[00:30:40] Speaker 02:
In that proceeding, that hearing request is not subject to any further judicial review.

[00:30:46] Speaker 02:
Next year, however, the IRS might send you another notice of levy to try to collect the $5,000 penalty that it assessed this year.

[00:30:55] Speaker 02:
Then you could file a new CDT request for that new notice of leverage.

[00:31:00] Speaker 02:
And in that new proceeding, you might be able to raise the merits of the $5,000 penalty.

[00:31:05] Speaker 02:
But that's a different proceeding.

[00:31:07] Speaker 02:
And in that proceeding, if you challenge the merits of the penalty, the IRS would have the burden of showing that the penalty was justified, just as it would in a later refund suit.

[00:31:16] Speaker 02:
So I mean, this is how we make sense of all of these statutes, that in the CDP proceeding that is initially brought by the frivolous request, there's no further judicial review in that proceeding.

[00:31:30] Speaker 02:
But if there is a subsequent proceeding in a refund suit or a subsequent notice of intent of levy leading to a new CDP proceeding, well then the IRS

[00:31:40] Speaker 02:
would have the burden of showing that the initial request was frivolous.

[00:31:47] Speaker 03:
Just to make sure I understand, are you arguing that the initial jurisdictional defect here couldn't be cured and so even the order under review is improper?

[00:32:00] Speaker 02:
Yes, Your Honor.

[00:32:03] Speaker 02:
It's our position that there was no appealable determination in this case that G, deprive the tax court of any jurisdiction, and therefore that was it.

[00:32:12] Speaker 02:
The tax court should have gone no further.

[00:32:14] Speaker 04:
So you're asking us to dismiss for want of jurisdiction?

[00:32:17] Speaker 02:
For want of jurisdiction, yes.

[00:32:18] Speaker 04:
And there's no form of review whatsoever if, just by a hypothesis, and I don't at all mean to be saying that this is the case, but if it were the case that the commission were overwhelmed and just

[00:32:32] Speaker 04:
you know, decided informally among the claims processors, say, let's just use the furloughs as power for a few months and get ourselves caught up.

[00:32:40] Speaker 04:
And they just were erroneously and willy-nilly using it.

[00:32:44] Speaker 04:
There really is no place to go for review of that.

[00:32:49] Speaker 02:
The IRS abuses its power and clearly violates its statutory duties.

[00:32:54] Speaker 02:
Well, maybe a petition for rid of mandamus would be available.

[00:33:00] Speaker 02:
But under this statute, which says that there's, you know, precludes any judicial review, the bottom line is our position is the word any means any.

[00:33:09] Speaker 04:
And their position is the word if means if.

[00:33:14] Speaker 04:
If the secretary determines

[00:33:16] Speaker 04:
XYZ, then there's not any review.

[00:33:21] Speaker 04:
And so the question is, does the court have an opportunity to look at whether that precondition to a very broad or a very sort of firm door closing subject to review?

[00:33:32] Speaker 02:
Well, perhaps the court might require the IRS just to make a certification.

[00:33:36] Speaker 02:
Yes, I certify by some official in the service that this determination has been made.

[00:33:42] Speaker 02:
And our position is that cuts off everything.

[00:33:45] Speaker 02:
Are there any further questions?

[00:33:48] Speaker 03:
All right, thank you.

[00:33:51] Speaker 03:
Mr. Barron, you have no further time, but we'll give you two minutes.

[00:33:56] Speaker 01:
Thank you, Your Honor.

[00:33:56] Speaker 01:
I just want to make sure we don't lose sight of the second determination in this case, which was the IRS's decision to proceed to collection without a hearing.

[00:34:05] Speaker 01:
There are two statutory criteria that the IRS is supposed to consider in every collection due process hearing.

[00:34:12] Speaker 01:
That's the C3A verification that appropriate procedures and laws have been complied with, and the C3C balancing that the imposition of the lien of the levy will balance the IRS's need for efficient tax collection against the taxpayer's concern that collection be no more intrusive than necessary.

[00:34:31] Speaker 01:
When a taxpayer submits a written request for a hearing and states grounds, the IRS must consider those two factors in the collection due process hearing.

[00:34:43] Speaker 01:
But under the government's interpretation of the statute, if the IRS determines that every portion of a written hearing request is frivolous, it can treat that whole hearing request as if it were never submitted.

[00:34:54] Speaker 01:
But that will just cause taxpayers in the future to reference those two statutory criterias in their hearing request, the C3A verification and the C3C balancing.

[00:35:05] Speaker 01:
So the government's rule will not help the IRS because taxpayers just reference those two statutory criteria in their hearing requests

[00:35:14] Speaker 01:
and will thereby be able to secure a collection due process hearing.

[00:35:18] Speaker 01:
But of course, a rule that would require a taxpayer to reference statutory considerations that Congress has already directed the Commission to consider would make no sense.

[00:35:29] Speaker 01:
Indeed, in this case, on the initial remand from the tax court, when the IRS held the collection due process hearing, it did conduct the C3A verification and the C3C balancing.

[00:35:41] Speaker 01:
And it rendered a notice of determination, so the tax court would have had jurisdiction to at least confirm that the C3A verification and the C3C balancing were appropriately conducted.

[00:35:52] Speaker 04:
I'm so sorry.

[00:35:53] Speaker 04:
I thought I was with you.

[00:35:57] Speaker 04:
I wish you would do that argument about C3A and C3C, the version for dummies, and just explain how that fits in with the rest of your argument.

[00:36:07] Speaker 01:
Yes, Your Honor.

[00:36:08] Speaker 01:
Subsection C describes the collection due process hearing, and it states in subsection three that there are two considerations the IRS has to consider at every collection due process hearing.

[00:36:22] Speaker 01:
First, the IRS has to obtain a procedural verification that appropriate laws and procedures have been complied with, and that's under C1 and C3A.

[00:36:31] Speaker 04:
And this fits together with the frivolousness how?

[00:36:35] Speaker 01:
Because even if the taxpayer's hearing request is entirely frivolous, the IRS is still obligated to conduct the hearing, obtain the A verification, and conduct the C3C balancing.

[00:36:48] Speaker 01:
Under the government's rule, if a hearing request is entirely frivolous, it doesn't state any grounds for a hearing.

[00:36:54] Speaker 04:
And they don't need to go ahead at all.

[00:36:56] Speaker 01:
Right, Your Honor.

[00:36:57] Speaker 01:
But that is a flawed rule, because it will just force taxpayers to reference those two statutory criteria in their hearing requests.

[00:37:06] Speaker 04:
So that if it's a- And that'll get them around, having the door closed on them under subsection G?

[00:37:10] Speaker 01:
Yes, Your Honor.

[00:37:11] Speaker 01:
So if a hearing request is entirely frivolous, except that at the very end, the hearing request says, I would like the IRS to conduct these two statutory inquiries that it is obligated under the statute to conduct,

[00:37:26] Speaker 01:
then under the government's reading of the statute, the IRS would be obligated to hold the hearing because the taxpayer would have stated non-frivolous grounds in his written request.

[00:37:37] Speaker 01:
What the government is asking is for a rule that would require the taxpayer to reference those statutory criteria in order to get a hearing.

[00:37:46] Speaker 01:
But of course it makes no sense to require a taxpayer to reference statutory criteria that the agency is already obligated to consider in every single case.

[00:37:58] Speaker 03:
So no further questions.

[00:37:59] Speaker 03:
Thank you.

[00:38:00] Speaker 03:
Mr. Barron, you were appointed by the court to represent the appellant in this case, and we thank you for your assistance.

[00:38:07] Speaker 01:
Thank you.

[00:38:07] Speaker 01:
Thank you, Your Honor.

[00:38:08] Speaker 03:
Thank you.

[00:38:10] Speaker 03:
Thank you, counsel.

[00:38:10] Speaker 03:
The case will be submitted.