Justia U.S. D.C. Circuit Court of Appeals Opinion Summaries

Articles Posted in Tax Law

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Plaintiff filed suit seeking damages under Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, alleging that IRS employees barred him from representing taxpayers before the Service without due process in violation of the Fifth Amendment. The district court dismissed the case because the Internal Revenue Code's remedial scheme for tax practicitioners foreclosed a Bivens action. The court did not reach the issue and ruled on the alternative ground that plaintiff failed to state a claim under Federal Rule of Civil Procedure 12(b)(6) because his complaint contains no allegation that defendants deprived him of a constitutionally protected interest. Accordingly, the court affirmed the judgment. View "Bowman v. Iddon" on Justia Law

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Plaintiffs filed suit against the IRS and several of its individual employees, seeking money damages by way of relief under Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, and equitable relief by way of injunction and declaratory judgment. Additionally, the complaints alleged that the IRS invaded plaintiffs’ statutory rights by violating 26 U.S.C. 6103, by conducting unauthorized inspection and/or disclosure of tax return information from their applications and the other information improperly obtained from them. The court affirmed the district court's dismissal of the Bivens actions under Rule 12(b)(6). The court held, however, that the equitable actions are not moot. After the initiation of the suits, the IRS took action to end some unconstitutional acts against at least a portion of plaintiffs. Based on these actions, the district court dismissed the equitable claims as moot. Even if the court accorded deference to the district court, the government has not carried its heavy burden of showing mootness under the voluntary cessation doctrine. Therefore, the court vacated and remanded for further proceedings with respect to the equitable claims. View "True the Vote, Inc. v. IRS" on Justia Law

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The PACT Act, 15 U.S.C. 376a(a)(3)-(4), (d), prohibits the remote sale of cigarettes unless sales taxes have been paid in advance. Plaintiff, an enrolled member of the Seneca Indian tribe of New York State, operated a tobacco business in the Allegany Indian Territories and sold tobacco products from there across state lines. In 2010, plaintiff sought a preliminary injunction barring enforcement of several sections of the PACT Act. The district court preliminarily enjoined the provisions and the court affirmed. The court found that plaintiff's closure of his business in the course of the litigation had not mooted the appeal, but observed that facts might later develop that had that effect. After remand, plaintiff renewed his pursuit of relief. The district court concluded that the case was moot and vacated the preliminary injunction because plaintiff stipulated that he had no intent to re-enter the business and the BATFE submitted a declaration stating that it had no intention of seeking or recommending enforcement action against plaintiff. The court concluded that, because plaintiff faces only a remote risk of federal prosecution or civil penalties, and any further merits decision would not shield him from the effects of possible state or local lawsuits, the case is moot. Accordingly, the court affirmed the judgment. View "Gordon v. Lynch" on Justia Law

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Michael Boulware, the president and sole owner of two companies, was convicted of tax evasion and tax fraud. The companies paid for his legal and professional fees in the criminal trial and other litigation. The IRS subsequently issued deficiency notices because Boulware did not report the payments, which totaled approximately $2 million, as income. The Tax Court held that the payments were taxable as corporate distributions. The Ninth Circuit affirmed and the Supreme Court denied certiorari. Because Boulware did not post a bond while pursuing his appeals, the IRS immediately collected on his liability. In this appeal, Boulware challenges a Settlement Officer's rejection of his proposed installment agreement and refusal of his request for a face-to-face hearing. The Tax Court upheld the determination. The court concluded that the Settlement Officer did not abuse her discretion by denying a request for an installment agreement when Boulware is not in compliance with his current tax obligations. The court need not decide whether the aggregation of Boulware’s particular circumstances were “special,” Boulware failed to raise the argument during his CDP hearing. Further, nothing in the record supports Boulware's contention that the Settlement Officer improperly considered his criminal conviction for tax evasion in rejecting his proposed installment agreement. Finally, given that Boulware’s failure to comply with his tax obligations made him generally ineligible for a collection alternative, the Settlement Officer's denial of a face-to-face hearing was reasonable. Accordingly, the court affirmed the judgment. View "Boulware v. Commissioner" on Justia Law
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The Authority faced a funding shortfall for at least the period immediately after its opening in 2014. To cover the shortfall, the Authority, with emergency authorization from the District’s Council, levied a charge on all insurance policies above a certain premium threshold sold by health carriers in the District. American Council raised statutory and constitutional challenges to that charge and the district court rejected Council's arguments, dismissing the complaint for failure to state a claim. The court agreed with the District that the district court lacked jurisdiction to hear this case because the charge levied by the Authority was a tax rather than a fee. Therefore, the court vacated the district court's judgment for lack of jurisdiction and remanded with instructions to dismiss the case for lack of jurisdiction because the assessment is a tax. View "American Council of Life Ins. v. District of Columbia Health" on Justia Law

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Appellant received his 2006 income tax refund twice and the IRS sought to recover the erroneous refund by levy. At the tax court stage, the IRS conceded that the levy was an improper collection method, zeroed out appellant's disputed tax liability and moved to dismiss the case as moot. Appellant objected to the dismissal. Appellant argued that, because he paid $5,100 to the IRS during the course of the administrative proceedings and he is entitled to a return of those funds, this controversy precludes dismissal on mootness grounds. The court affirmed the tax court's rejection of appellant's argument, concluding that the abeyance of a pending levy meant that no case or controversy remained. In this case, appellant has received all the relief that 26 U.S.C. 6330 authorizes the tax court to grant him, and he must seek relief in the Court of Federal Claims for the disputed $5,100. View "Willson v. Commissioner" on Justia Law
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The American Institute of Certified Public Accountants, a professional association of certified public accountants and their firms, challenged an IRS program that allows previously uncredentialed tax return preparers who take required courses and fulfill other prerequisites to obtain a “Record of Completion.” The program also requires them to have their names listed in the IRS’s online “Directory of Federal Tax Return Preparers.” The district court dismissed the complaint for lack of Article III standing, finding that the Institute lacks actual or imminent harm. The court concluded that the Institute has adequately alleged the program will subject its members to an actual or imminent increase in competition and that it therefore has standing to pursue its challenge. Accordingly, the court reversed the judgment. View "American Institute of Certified Public Accountants v. IRS" on Justia Law

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This case concerns an IRS regulation that imposes a “penalty” on U.S. banks that fail to report interest paid to certain foreign account-holders. Two Bankers Associations challenged the legality of the regulation. At issue was whether a challenge to a tax-related statutory or regulatory requirement that is enforced by a “penalty” – as opposed to a challenge to a statute or regulation that imposes a tax – is covered by the Anti-Injunction Act, 26 U.S.C. 7421. The court concluded that the Tax Code defines some penalties as taxes for purposes of the Anti-Injunction Act. In those cases, such as the one here, the Anti-Injunction Act ordinarily applies because the suit, if successful, would invalidate the regulation and thereby directly prevent collection of the tax. The penalty at issue here is located in Chapter 68, Subchapter B of the Tax Code. The Tax Code provides that penalties in Chapter 68, Subchapter B are treated as taxes under the Anti-Injunction Act. Accordingly, the Anti-Injunction Act bars this suit as premature. The court vacated the district court's judgment and remanded with directions to dismiss the case. View "Florida Bankers Ass'n v. US Dep't of the Treasury" on Justia Law
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The IRS Appeals Office denied appellant a Collection Due Process hearing based on its unexplained determination that all the reasons he gave for requesting a hearing were frivolous. Further, the Appeals office contends that its frivolousness determination is not subject to judicial review. However, the tax court held that it has jurisdiction to conduct a review limited to whether the IRS correctly treated appellant’s arguments as frivolous. The court affirmed the tax court’s conclusion regarding jurisdiction; the court also affirmed the tax court’s assessment that the IRS’s boilerplate letter rejecting appellant’s arguments as frivolous was inadequate; and, after remand, the Appeals Office held a Collection Due Process hearing, and the tax court correctly decided that the Office did not abuse its discretion in concluding that the IRS could proceed with collection actions. Accordingly, the court affirmed the tax court’s decision in its entirety. View "Ryskamp v. Commissioner" on Justia Law
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Petitioner, a mutual fund, challenged the Commission's denial of an exemption from rules governing the calculation and reporting of petitioner's deferred tax liability. The court concluded that petitioner’s attacks on the Commission’s “hypothetical speculation” affords no basis for setting aside the Commission’s reasonable conclusion that petitioner’s proposal to provide for only a small fraction of its full potential tax liability may result in inequitable treatment of redeeming and non-redeeming shareholders, contradicting a primary purpose of the Investment Company Act of 1940, 15 U.S.C. 80a-22(a). The court rejected petitioner's remaining claims. Accordingly, petitioner's arguments fail to carry the high burden required to overturn the Commission’s denial of an exemption and, therefore, the court denied the petition for review. View "Copley Fund, Inc. v. SEC" on Justia Law