United States v. Wankel , 475 F. App'x 273 ( 2012 )

FILED
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
April 3, 2012
TENTH CIRCUIT Elisabeth A. Shumaker
Clerk of Court
UNITED STATES OF AMERICA/
INTERNAL REVENUE SERVICE,
Petitioner-Appellee, No. 11-2100
(D.C. No. 1:11-CV-00020-MCA)
v. (D. of N.M.)
LOUIS E. WANKEL,
Respondent-Appellant.
ORDER AND JUDGMENT *
Before KELLY, TYMKOVICH, and GORSUCH, Circuit Judges. **
Louis E. Wankel, a resident of New Mexico, appeals two rulings made by
the district court below: (1) whether the district court correctly enforced an
Internal Revenue Service (IRS) summons; and (2) whether the district court
correctly dismissed his counterclaim for lack of jurisdiction. The government
*
This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
**
After examining the briefs and the appellate record, this three-judge
panel has determined unanimously that oral argument would not be of material
assistance in the determination of this appeal. See Fed. R. App. P. 34(a); 10th
Cir. R. 34.1(G). The cause is therefore ordered submitted without oral argument.
filed a motion to dismiss the appeal as untimely, since Wankel filed his initial
notice of appeal prior to entry of the district court’s final order.
Exercising jurisdiction pursuant to 28 U.S.C. § 1291, we DENY the
government’s motion to dismiss, and for substantially the same reasons as the
district court, we AFFIRM the district court’s rulings.
I. Facts
Wankel failed to pay his income tax assessments due for the years 2001,
2002, and 2003. In 2010, the IRS assigned a Revenue Officer to investigate the
collection of the assessments against Wankel. The officer issued a summons
directing Wankel to appear and give testimony and produce certain documents
pertaining to his finances. Wankel appeared at the proper time, but did not
comply with the summons by failing to produce documents, and would not
cooperate with the officer. Instead, Wankel stated that he was not the “entity”
summoned, but was a separate, “living man,” and demanded “immunity.” The
officer gave Wankel another opportunity to appear at a future date and comply
with the summons. Again he appeared, but continued to demand “immunities and
waivers of liability.” R., Doc. 26 at 1.
The IRS petitioned the district court to enforce the summons, submitting a
declaration from the officer, which made the requisite showing for enforcement of
a summons under United States v. Powell, 379 U.S. 48 (1964). Wankel responded
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with a variety of frivolous arguments, along with a “Countercomplaint” asking for
an injunction against any future tax collection, a declaratory judgment to the
effect that he is exempt from the Internal Revenue Code, and $2,600,000 in
damages.
The district court held a hearing on the petition to enforce the summons,
with the officer being called to testify for both sides. Following the hearing, the
district court issued an order granting the petition to enforce the summons,
finding that the government had established all of the requirements necessary to
make a prima facie case for enforcement of the summons. R., Doc. 26 at 4.
Additionally, the court found that Wankel had “not come forward with evidence
that would rebut the United States’ showing of the reasonableness of its
summons,” and that he had “failed to establish any reason for denying”
enforcement of the summons. Id. The court continued: “objections to the Court’s
jurisdiction to enforce an IRS summons and [Wankel’s] arguments challenging
the validity of the Internal Revenue Code . . . [are] precisely the kind of
incoherent, ‘tax-protestor’ arguments that are routinely rejected as frivolous.”
Id.; see also Lonsdale v. United States, 919 F.2d 1440, 1447–48 (10th Cir. 1990).
As to Wankel’s counterclaim, the district court found that “no federal
question [was] apparent on the face of the counterclaim,” and that “by failing to
make any showing that the United States had waived its sovereign immunity,
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Wankel has additionally failed to establish the Court’s subject-matter jurisdiction
over the claim.” R., Doc. 61 at 5–6.
Wankel now appeals.
II. Discussion
A. Motion to Dismiss
Before addressing the merits, we must address the motion to dismiss filed
by the government. The government contends that this court lacks jurisdiction
because the notice of appeal was filed before the district court entered its written
order. For the reasons below, we deny the government’s motion.
The district court held a hearing on the petition to enforce the summons on
May 13, 2011. Wankel filed his notice of appeal on May 16. The district court
issued its written order enforcing the summons on May 17. This court abated the
appeal on August 8, pending the disposition of three motions filed by Wankel.
On December 2, the district court denied the motions, as well as dismissing
Wankel’s counterclaim. Final judgment was entered on the same day and the
abatement of the appeal was lifted on December 23.
The notice of appeal, though filed before entry of the written order
enforcing the summons, was filed after the district court announced its decision at
a hearing. See Fed. R. App. P. 4(a)(2) (“A notice of appeal filed after the court
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announces a decision or order—but before the entry of a judgment or order—is
treated as filed on the date of and after entry of judgment.”). It is clear from a
review of the clerk’s minutes and the transcript of the hearing that the district
court announced its decision enforcing the summons. The court even set the time
and place for Wankel to produce the requested documents. Although the order
enforcing the summons is not final under Federal Rule of Civil Procedure 54(b),
the order became final and appealable when the district court entered final
judgment on December 23. See Lewis v. B.F. Goodrich Co., 850 F.2d 641, 645
(10th Cir. 1988).
B. IRS Summons
Whenever a person fails to obey an IRS summons, the government may
petition a federal district court to enforce the summons. See 26 U.S.C.
§§ 7402(b), 7604(a). To obtain enforcement of a summons, the government must
establish a prima facie case for enforcement by showing that (1) the summons was
issued for a proper purpose; (2) the information sought may be relevant to that
purpose; (3) the IRS does not already possess that information; and (4) the
administrative steps required by the Internal Revenue Code have been followed.
United States v. Powell, 379 U.S. 48, 57–58 (1964); Anaya v. United States, 815
F.2d 1373, 1377 (10th Cir. 1987). Once the government has met this burden,
which is “slight,” burden shifts to Wankel to show that enforcement of the
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summons would “constitute an abuse of the court’s process,” or that the IRS lacks
“institutional good faith.” Anaya, 815 F.2d at 1377 (internal quotations omitted).
We review a district court’s order enforcing an IRS summons for clear
error. United States v. Coopers & Lybrand, 550 F.2d 615, 620 (10th Cir. 1977).
The district court determined that “the United States has established the
elements of a prima facie case through the testimony of” the officer, and that
Wankel “failed to establish any ground for denying” the petition. R., Doc. 26 at
4. Upon this finding, the burden shifted to Wankel to establish a valid defense.
In response to his purported defense, the court found that Wankel’s “objections to
the Court’s jurisdiction . . . are precisely the kind of incoherent tax-protestor
arguments that are routinely rejected as frivolous.” Id.; see also Lonsdale, 919
F.2d at 1447–48. Finally, the court held that Wankel’s due process arguments are
also incorrect. Wankel’s “beliefs about the tax laws, as proffered, are far
removed from the mainstream of jurisprudence. Due process does not require that
this Court adopt and accept positions which have been repeatedly rejected by
other courts and which, to a great extent, are unintelligible.” R., Doc. 26 at 5.
On appeal, Wankel raises the same type of “tax-protestor” arguments,
challenging the jurisdiction of the IRS and the underlying statutes which
authorize tax collection. Given the persuasive reasoning of the district court’s
opinion, id. at 4–5, there is no reason to repeat the analysis dismissing the
arguments here. See also Crain v. Commissioner, 737 F.2d 1417, 1417 (5th Cir.
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1984) (finding there is “no need to refute these arguments with somber reasoning
and copious citation of precedent; to do so might suggest that these arguments
have some colorable merit”).
But in any event, even if we reach the merits of Wankel’s arguments, they
are all easily eliminated. Specifically, reference to an extended quotation from
this court’s opinion in Lonsdale covers all of Wankel’s arguments:
[T]he following arguments . . . are completely lacking in legal merit
and patently frivolous: (1) individuals . . . are not “persons” subject
to taxation under the Internal Revenue code; (2) the authority of the
United States is confined to the District of Columbia; . . . (7) no
statutory authority exists for imposing an income tax on individuals;
(8) the term “income” as used in the tax statutes is unconstitutionally
vague and indefinite; (9) individuals are not required to file tax
returns fully reporting their income;
To this short list of rejected tax protester arguments we now add as
equally meritless the additional arguments made herein that (1) the
Commissioner of Internal Revenue and employees of the Internal
Revenue Service have no power or authority to administer the
Internal Revenue laws, including power to issue summons, liens and
levies, because of invalid or nonexistent delegations of authority,
lack of publication of delegations of authority in the Federal
Register, violations of the Paperwork Reduction Act, and violations
of the Administrative Procedure Act, including the Freedom of
Information Act; and (2) tax forms, including 1040, 1040A, 1040EZ
and other reporting forms, are invalid because they have not been
published in the Federal Register.
Lonsdale, 919 F.2d at 1448.
In sum, the government met its burden under Powell, and all of Wankel’s
rebuttal arguments are unconvincing.
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C. Counterclaim
Wankel raised a counterclaim, seeking monetary and injunctive relief, on
the theory that the IRS violated his right to due process by failing to provide
certain information that Wankel claims is necessary for tax collection. The
district court held that it lacked subject matter jurisdiction over these claims due
to sovereign immunity.
We review the district court’s dismissal of Wankel’s counterclaim for lack
of subject matter jurisdiction de novo. Tsosie v. United States, 452 F.3d 1161,
1163 (10th Cir. 2006).
It is clear that the United States is immune from suit absent its explicit
consent and that the burden is on Wankel to prove an “explicit waiver of
sovereign immunity.” Lonsdale, 919 F.2d at 1444. As the district court found,
Wankel’s arguments are merely “frivolous legal arguments and conclusions
regarding the validity of the IRS and the tax code and the authority of IRS
agents.” R., Doc. 61 at 5. He raises no meritorious, or even cognizable,
arguments on appeal to upset this finding. But even if Wankel managed to meet
the burden of overcoming sovereign immunity, his counterclaim raises no federal
question or federal issue on its face. “To merely allege that a federal question
exists is insufficient.” Id. at 6.
Finally, as the district court noted, to the extent that Wankel is attempting
to assert a cause of action against any IRS officers in their individual capacities,
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it is well settled that such a suit is improper. “[I]n light of the comprehensive
administrative scheme created by Congress to resolve tax-related disputes,
individual agents of the IRS are also not subject to Bivens actions.” Dahn v.
United States, 127 F.3d 1249, 1254 (10th Cir. 1997).
In sum, the district court properly dismissed Wankel’s counterclaim for
lack of subject matter jurisdiction.
III. Conclusion
For the foregoing reasons, we DENY the government’s motion to dismiss,
AFFIRM the district court’s order to enforce the summons, and AFFIRM the
district court’s dismissal of Wankel’s counterclaim.
Entered for the Court,
Timothy M. Tymkovich
Circuit Judge
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