Paul F. Wrubleski v. Commr of IRS , 170 F. App'x 591 ( 2005 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
October 20, 2005
No. 05-12121 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
U.S. Tax Court No. 3826-04L
PAUL F. WRUBLESKI,
Petitioner-Appellant,
versus
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.
________________________
Petition for Review of a Decision of the
United States Tax Court
_________________________
(October 20, 2005)
Before BLACK, PRYOR and FAY, Circuit Judges.
PER CURIAM:
Taxpayer Paul Wrubleski, proceeding pro se and pursuant to 26 U.S.C.
§ 6330(d)(1), filed a petition in the tax court for review of the Internal Revenue
Service Appeals Office’s (“the Appeals Office’s”) determination sustaining a
proposed levy on Wrubleski’s property, to collect unpaid tax liabilities for the tax
years 1998, 1999, and 2000. Again proceeding pro se on appeal, he is challenging
the tax court’s grant of the Commissioner of Internal Revenue’s (“the
Commissioner’s”) motion to dismiss his petition for review for failure to
prosecute. For the reasons set forth more fully below, we affirm.
Prior to Wrubleski filing the instant petition for review, he reported “zero”
income tax due on tax returns he filed for 1998, 1999, and 2000. Because
Wrubleski’s tax liabilities, instead, were $28,354 for tax year 1998, $10,618 for tax
year 1999, and $10,211 for tax year 2000, the Commissioner sent to Wrubleski by
certified mail notices of deficiencies for these years, pursuant to 26 U.S.C.
§ 6212(a). After Wrubleski failed to petition the tax court for review of these
asserted deficiencies within the 90-day period permitted under 26 U.S.C.
§ 6213(a), the Commissioner assessed these deficiency amounts and mailed to
Wrubleski a notice and demand for payment. Moreover, after Wrubleski failed to
pay these assessed amounts, the Commissioner mailed to him a final notice,
2
pursuant to 26 U.S.C. § 6330(d), informing him of (1) the Commissioner’s intent
to levy Wrubleski’s property, and (2) Wrubleski’s right to a CDP hearing.1
Wrubleski subsequently requested a CDP hearing, arguing that he was not
liable for any income tax because (1) his wages were not taxable as income, (2) no
tax had been assessed against him, and (3) the Commissioner lacked authority
either to assess income taxes or to levy his property. The Appeals Office sent
Wrubleski a letter advising him that, because his arguments were frivolous, he was
not entitled to a face-to-face conference. The Appeals Office also attached to this
letter transcripts of Wrubleski’s accounts for tax years 1998 through 2000. After
electing to have his CDP hearing conducted through correspondence, Wrubleski
again raised multiple constitutional challenges to the federal income tax and to the
Commissioner’s general authority.
In February 2004, the Appeals Office issued a notice of determination,
sustaining the proposed levy. The Appeals Office explained that Wrubleski was
barred, pursuant to 26 U.S.C. § 6330(c)(2)(B), from challenging either the
1
Section 6321 of Title 26 of the United States Code provides that, “[i]f any person liable
to pay any tax neglects or refuses to pay the same after demand, the amount . . . shall be a lien in
favor of the United States upon all property and rights to property, whether real or personal,
belonging to such person.” See 26 U.S.C. § 6321. If a person neglects or refuses to pay such tax
within ten days after notice and demand for payment, the Commissioner may collect such tax by
levy upon property belonging to the person. See 26 U.S.C. § 6331(a). The Commissioner,
however, may not collect taxes by way of a levy on a person’s property until the person is given
notice of, and an opportunity for, an administrative review of the matter, such as in the form of a
CDP hearing, and, if dissatisfied, provided judicial review of the administrative determination.
See 26 U.S.C. § 6330(a)-(d); see also Roberts v. C.I.R., 329 F.3d 1224, 1227 (11th. Cir. 2003).
3
existence, or the amount, of his tax liabilities for tax years 1998 through 2000,
because he admitted that he had received notices of the deficiencies, and he had
failed to timely petition the tax court for their redetermination. The Appeals Office
also explained that an officer had verified that the deficiency assessments were
valid and unpaid, and that applicable laws and administrative procedures had been
followed. In addition, it discussed that Wrubleski neither had proposed a “valid
collection alternative,” nor “an acceptable, less intrusive method of payment.” The
Appeals Office concluded that the proposed levy balanced “the need for the
efficient collection of taxes and [Wrubleski’s] legitimate concern that any
collection action be no more intrusive than necessary.”
On March 3, 2004, Wrubleski filed the instant petition, arguing that the
Appeals Office’s determination was “lawless and erroneous” because the
Commissioner failed to provide him with, or to attach to the determination, (1) a
“Summary Record of Assessment” that supported the levy, as required by Treas.
Reg. § 301.6203-1; (2) a “notice and demand for payment,” as required by 26
U.S.C. §§ 6303, 6321, and 6331; (3) a “valid notice of deficiency in connection
with any of the years at issue”; and (4) verification from the Secretary of the
Treasury “that the requirements of any applicable law or administrative procedure
ha[d] been met,” pursuant to 26 U.S.C. § 6330(c)(1). Wrubleski also contended
that he was challenging the existence of the underlying tax liability, and that this
4
challenge was authorized because he did not receive any statutory notice of the
deficiencies for the relevant years. As relief, Wrubleski sought (1) a declaration
that the Appeals Office’s determination was invalid; (2) an order directing the
Appeals Office to conduct a proper CDP hearing and to have available at this
hearing all “relevant documents”; and (3) an order directing the Commissioner to
reimburse Wrubleski for his costs.
In June 2004, the Commissioner filed an answer to Wrubleski’s petition,
arguing that the Appeals Office’s determination should be sustained. In July 2004,
the tax court issued (1) a standing pretrial order, and (2) a notice setting
Wrubleski’s trial date as December 6, 2004. In its pretrial order, the tax court
instructed the parties that “all parties shall be prepared for trial,” and that “[t]he
[c]ourt may impose appropriate sanctions, including dismissal, for any unexcused
failure to comply with this Order.” Moreover, in its notice of the trial date, the tax
court warned the parties:
[B]oth parties are expected to be present at that time and be prepared
to try the case. YOUR FAILURE TO APPEAR MAY RESULT IN
DISMISSAL OF THE CASE AND ENTRY OF DECISION
AGAINST YOU.
The Commissioner subsequently moved for summary judgment, arguing that
no genuine issue of material fact existed. Wrubleski responded that the officer
who had conducted his CDP hearing had not satisfied the verification requirement
5
in 26 U.S.C. § 6330(c)(1), because (1) “[n]ot one of the documents provided . . .
came from the office of the Secretary,” and (2) the Commissioner had not provided
him with “the unbroken chain of delegation and re-delegation orders from the
Secretary to the Revenue Agent level and Appeals Officer level of the IRS.”2
Wrubleski also filed a motion to compel the Commissioner to produce multiple
documents, including (1) proof that the notices of deficiencies and other statutory
notices and demands had been mailed to him; (2) proof that he had received these
documents; (3) a document stating that the Secretary of the Treasury had
authorized an action for the collection of taxes and penalties; and (4) a signed
document by the Secretary that all applicable laws and regulations had been
followed. The Commissioner replied that the Secretary was not required to verify
personally that all such requirements were met.
On November 1, 2004, Wrubleski filed a document labeled “praecipe for
judicial notice of pending settlement and petition for stay,” in which he referred to
a “settlement pending between the parties” and requested that the tax court stay
the proceeding during the “pendency of the settlement.”3 Wrubleski included in
2
As part of this verification challenge, Wrubleski also argued that (1) “code 494" was
required to appear on transcripts to prove that notices of deficiencies were issued to him; (2) the
absence of this code “shed[] complete doubt on the validity of the balances of the entries on
these transcripts”; and (3) he was “unable to verify or translate the meaning and significance of
the IRS codes” that appeared on his transcripts.
3
As the Commissioner notes in its brief on appeal, Wrubleski has included in his record
excerpts an “Affidavit of Agreement,” which purportedly is signed by attorneys representing the
6
this document that he intended “to pay all debts validated, i.e., verified and
substantiated, as being owed” by him. Construing this motion as a motion to
continue the trial date, the tax court denied it. On November 22, 2004, the tax
court also denied the Commissioner’s motion for summary judgment and directed
the Commissioner to provide Wrubleski with the documents he requested in his
motion to compel.
On December 6, 2004, the tax court called the case for trial, both in the
morning and the afternoon. Wrubleski failed to appear at either time. The
Commissioner then moved to dismiss the petition for failure to prosecute,
explaining that (1) no issues existed on which the Commissioner bore the burden
of proof, and (2) Wrubleski had failed to appear after being informed of the trial
date. The tax court summarily granted the Commissioner’s motion and ordered the
levy of Wrubleski’s property.
Wrubleski argues on appeal that the tax court either abused its discretion, or
clearly erred, by refusing to accept for filing “all evidence Wrubleski attempted to
Commissioner. This document, however, is not part of the appellate record. Moreover,
Wrubleski has not sought leave from this Court to supplement the record. Thus, we will not
review it. See Jones v. White, 992 F.2d 1548, 1566-67 (11th Cir. 1993) (explaining that,
although “[t]his [C]ourt’s inherent equitable powers allow it to supplement the record with
information not reviewed by the district [court],” it “[has] not allowed supplementation when a
party has failed to request leave of this [C]ourt to supplement a record on appeal or has appended
material to an appellate brief without filing a motion requesting supplementation”). Regardless,
as discussed below, in the absence of proof of formal acceptance, this document does not
establish “a binding settlement on a tax liability.”
7
file after November 1, 2004.” Wrubleski asserts in support that (1) the court’s
refusal to accept Wrubleski’s evidence was “tantamount to the denial of due
process”; and (2) this refusal “undermine[d] confidence in the outcome of the
proceedings in this Case to an unacceptable degree.” Wrubleski asserts that the
Appeals Office refused to provide, or even identify, each and every document
requested by him. Wrubleski also argues that the court erred in dismissing the
petition in light of the fact that the parties had a settlement agreement, which the
Commissioner, at least implicitly, had ratified by (1) not avoiding it, (2) using
Wrubleski’s “trademark,” and (3) refusing tender of payment.4
As a preliminary matter, to the extent Wrubleski is arguing in reply that the
tax court erred in dismissing his petition because the Appeals Office improperly
denied his constitutional challenges to his levy, he failed to raise this argument in
his initial brief. We, therefore, deem this argument abandoned. See Access Now,
Inc. v. Southwest Airlines Co., 385 F.3d 1324, 1330 (11th Cir. 2004) (issues not
argued in initial brief are deemed abandoned). Regardless, we repeatedly have
rejected these “tax protest” type arguments. See Biermann v. C.I.R., 769 F.2d 707,
4
Wrubleski also argues for the first time in reply that the Appeals Office erred in finding
frivolous his constitutional challenge to the income tax. Wrubleski contends in support that,
because his labor is his property, if he exchanges his labor for his employer’s monetary
compensation, there is no gain or profit on his part.
8
708 (11th Cir. 1985). Thus, even if Wrubleski had properly raised this argument, it
is without merit.
Pursuant to 26 U.S.C. § 7453, the Tax Court has promulgated rules of
practice and procedure governing the conduct of proceedings in that court. See 26
U.S.C. § 7453. Under Rule 123(b) of the Tax Court Rules of Practice and
Procedure:
For failure of a petitioner properly to prosecute or to comply with
these Rules or any order of the Court or for other cause which the
Court deems sufficient, the Court may dismiss a case at any time and
enter a decision against the petitioner. The Court may, for similar
reasons, decide against any party any issue as to which such party has
the burden of proof, and such decision shall be treated as a dismissal.
26 U.S.C. foll. § 7453, Tax Court Rule 123(b). Moreover, “a decision rendered
. . . in consequence of a dismissal, other than a dismissal for lack of jurisdiction,
shall operate as an adjudication on the merits. Id., Tax Court Rule 123(d). We
review a tax court’s dismissal for failure to properly prosecute, pursuant to Rule
123(b), for abuse of discretion. Crandall v. C.I.R., 650 F.2d 659, 660 (5th Cir.
Unit B July 13, 1981).
In explaining this abuse-of-discretion standard, the former Fifth Circuit
discussed in Crandall that standards governing Fed.R.Civ.P. 41—the rule
applicable when a party fails to prosecute his case, comply with a court order, or
follow the Federal Rules of Civil Procedure in a district court—similarly should
9
govern dismissals by the tax court. Id. “Dismissal under Rule 41(b) is appropriate
where there is a clear record of ‘willful’ contempt and an implicit or explicit
finding that lesser sanctions would not suffice.” Gratton v. Great American
Communications, 178 F.3d 1373, 1374 (11th Cir. 1999).
In Crandall, the former Fifth Circuit reviewed a tax court’s dismissal of a
taxpayer’s appeal of a tax deficiency, which dismissal was based on the taxpayer’s
failure to file a timely petition and filing fee. See Crandall, 650 F.3d at 659. The
Crandall Court noted that (1) “no history of delay or contumacious conduct by the
appellant” existed; (2) the tax court had dismissed the case after only three months
of inactivity by the taxpayer; (3) the taxpayer had not repeatedly failed to comply
with the tax court’s orders; (4) the tax court had not repeatedly warned the taxpayer
that he was risking dismissal; and (5) on appeal, the taxpayer had offered a reason
for his failure to comply the tax court’s order. See id. at 660. The Crandall Court
determined that, under these circumstances, the tax court’s dismissal of the
appellant’s case was premature. See id. The court, therefore, remanded the case
to allow the taxpayer to present evidence of his excuse, and for the tax court to
make findings as to whether dismissal was justified. See id.
On the other hand, in Freedson v. C.I.R., 565 F.2d 954 (5th Cir. 1978), the
former Fifth Circuit affirmed a tax court’s dismissal of a petition relating to a
protest of assessments of deficiencies and additional taxes, when the dismissal was
10
based on the taxpayers’ unpreparedness to present their case at their trial date. See
id. at 954. The Freedson Court explained that (1) the case had been pending for a
sufficient length of time to enable the taxpayers to prepare their case, (2) the
taxpayers already had obtained three continuances of their trial date, and (3) the
court had warned the taxpayers two and one-half years before their case was
dismissed that the court would look unfavorably upon further requests for
continuances. See id. at 955. The Freedson Court also noted that the taxpayers
had been uncooperative in providing the Commissioner with information necessary
for the trial, and that the tax court had considered possible lesser sanctions and
found them inappropriate. See id. Although the Freedson Court acknowledged
that dismissal of an action is “a severe sanction,” it concluded that dismissal was
not excessive under the circumstances. See id.In the instant case, Wrubleski filed his petition in the tax court nine months
before his scheduled trial date. The tax court warned Wrubleski in both its pretrial
order and its notice of trial that his unexcused failure to appear and be ready for
trial on his schedule trial date might result in appropriate sanctions, including
dismissal. Moreover, Wrubleski neither explained in the tax court, nor on appeal,
why he did not appear at his scheduled trial date, or why he could not have
presented evidence at that time. Although Wrubleski filed a pretrial document
labeled “praecipe for judicial notice of pending settlement and petition for stay,” in
11
which he requested the court to stay the proceedings pending a settlement between
the parties, as discussed below, he presented no evidence showing that a “binding
settlement agreement” existed. Thus, similar to Freedson, we conclude that the
district court did not abuse its discretion in dismissing Wrubleski’s petition. See
Freedson, 565 F.2d at 955; see also Loren v. Sasser, 309 F.3d 1296, 1304 (11th
Cir. 2002) (holding that, although pro se litigants are entitled to liberal construction
of their pleadings, pro se litigants must follow procedural rules).
Even if we were to conclude that the tax court abused its discretion in
dismissing Wrubleski’s petition, Wrubleski has failed to show prejudice because
his arguments in his petition either were without merit, or were ones that the tax
court could not consider. See Admiral Ins. Co. v. Cresent Hills Apartments, 328
F.3d 1310, 1312 (11th Cir. 2003) (we “may affirm the district court’s decision on
any adequate ground, even if it is other than the one on which the court actually
relied” (quotation omitted)). During a CDP hearing, a taxpayer may raise “any
relevant issue relating to the unpaid tax or the proposed levy,” including spousal
defenses; challenges to the appropriateness of the collection action; and offers of
collection alternatives. 26 U.S.C. § 6330(c)(2)(A). A taxpayer, however, may not
challenge the amount or existence of the underlying tax liability unless he “did not
receive any statutory notice of deficiency for such tax liability or did not otherwise
have an opportunity to dispute such tax liability.” 26 U.S.C. § 6330(c)(2)(B). On
12
appeal to the tax court, a taxpayer also is limited to issues he raised during his CDP
hearing. Treas. Reg. § 301.6330-1(f)(2).5
As discussed above, Wrubleski received statutory notice of his deficiencies
for tax years 1998 through 2000. Moreover, Wrubleski has failed to explain why
he could not have contested these deficiencies during the 90-day period that he had
to seek review. See 26 U.S.C. § 6213(a) (setting a 90-day time limit on appeals of
assessments of tax deficiencies to the tax court for a redetermination). Thus,
Wrubleski could not challenge these deficiency amounts during his CDP hearing.
See 26 U.S.C. § 6330(c)(2)(B).
To the extent Wrubleski also argued in the tax court that the Appeals Office
refused to provide, or to identify, evidence that Wrubleski requested, the United
States Code provides that “[t]he appeals officer shall at the [CDP] hearing obtain
verification from the Secretary that the requirements of any applicable law or
administrative procedure have been met,” 26 U.S.C. § 6330(c)(1). Moreover,
“[t]he assessment [of taxes] shall be made by recording the liability of the taxpayer
in the office of the Secretary in accordance with rules or regulations prescribed by
5
Examining similar treasury regulations in effect in 1945, the Supreme Court noted in
Boehm v. C.I.R., 326 U.S. 287, 66 S.Ct. 120, 90 L.Ed. 78 (1945), that “[s]uch regulations, being
‘long continued without substantial change, applying to unamended or substantially reenacted
statutes, are deemed to have received congressional approval and have the effect of law.’” See
id., 326 U.S. at 291-92, 66 S.Ct. at 123 (quotation omitted).
13
the Secretary. Upon request of the taxpayer, the Secretary shall furnish the
taxpayer a copy of the record of the assessment.” 26 U.S.C. § 6203.6We, however, have determined that § 6330(c)(1) “does not require the
Appeals officer to give the taxpayer a copy of the verification that the requirements
of any applicable law or administrative procedure have been met.” See Roberts,
329 F.3d at 1228. We also concluded in Roberts that a computer transcript
detailing the record of each assessment was sufficient verification, pursuant to
§ 6203, at least where there was no evidence to the contrary. See id. at 1225-28.
Because the Appeals Office was not required to provide Wrubleski with
verification that proper procedures were followed in assessing his deficiencies for
tax years 1998 through 2000, and because the computer-generated records that the
Commissioner attached to its motion for summary judgment detailed the record of
each assessment and, thus, was sufficient under § 6203, at least where Wrubleski
failed to present contradictory evidence, these arguments were without merit.
To the extent Wrubleski alternatively is claiming that the tax court erred in
dismissing his petition because of a settlement agreement that he asserted existed
6
The regulations further provide that “[t]he assessment shall be made by an assessment
officer signing the summary record of assessment. The summary record, through supporting
records, shall provide identification of the taxpayer, the character of the liability assessed, the
taxable period, if applicable, and the amount of the assessment . . .. If the taxpayer requests a
copy of the record of assessment, he shall be furnished a copy of the pertinent parts of the
assessment which set forth the name of the taxpayer, the date of assessment, the character of the
liability assessed, the taxable period, if applicable, and the amounts assessed.” See Treas. Reg.
§ 301.6203-1.
14
between the parties, “[t]he Secretary may compromise any civil or criminal case
arising under the internal revenue laws prior to reference to the Department of
Justice for prosecution and defense.” 26 U.S.C. § 7122(a). The only three possible
grounds for a compromise of federal tax liabilities are: (1) doubt as to liability;
(2) doubt as to collectibility; and (3) the promotion of effective tax administration.
Treas. Reg. § 301.7122-1(b). “An offer to compromise has not been accepted until
the IRS issues a written notification of acceptance to the taxpayer or the taxpayer’s
representative.” Treas. Reg. § 301.7122-1(e)(1); see also Klein v. C.I.R., 899 F.2d
1149, 1152-53 (11th Cir. 1990) (holding that a binding settlement on a tax liability
must follow the requirements of the tax code which include the execution of a
closing agreement). The requirements in §§ 7121 and 7122, and the accompanying
regulations, are exclusively and strictly construed. Id. at 1153 (citing Botany
Worsted Mills v. United States, 278 U.S. 282, 288-89, 49 S.Ct. 129, 131-32, 73
L.Ed.2d 379 (1929)); see also Creel v. C.I.R., 419 F.3d 1135, 1141 (11th Cir.
2005) (holding that the U.S. Attorney’s actions would not bind the government,
even if he intended to compromise a taxpayer’s civil-tax liability, if the U.S.
Attorney did not have authority to reach a compromise).
Even if we were to consider the “Affidavit of Agreement” that Wrubleski
attempted to file in the tax court prior to his trial date, this document neither
reflects that liability was at issue, nor that Wrubleski intended to pay the assessed
15
amounts. None of the possible grounds for a compromise, therefore, existed in this
case. See Treas. Reg. § 301.7122-1(b). More importantly, Wrubleski has not
shown that the IRS issued “a written notification of acceptance to the taxpayer or
the taxpayer’s representative,” as required by Treas. Reg. § 301.7122-1(e)(1).
Thus, even assuming for purposes of argument that the Commissioner refused
tender of payment, declined to provide proof or evidence of a claim, and used
Wrubleski’s “trademark”—conduct that Wrubleski claims demonstrates that the
Commissioner implicitly ratified the alleged settlement agreement—this conduct
was not sufficient under the tax code to create a “binding settlement.” See Klein,
899 F.2d at 1152.
Accordingly, we conclude that Wrubleski has failed to show that the tax
court abused it discretion in granting the Commissioner’s motion to dismiss his
petition for review. We, therefore, affirm.
AFFIRMED.
16