United States v. Daryl Kollman , 774 F.3d 592 ( 2014 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 10-36059
Plaintiff-Appellee,
D.C. No.
v. 1:08-cv-03027-
PA
DARYL J. KOLLMAN,
Defendant-Appellant, OPINION
and
MARTA C. CARPENTER, FKA Marta
C. Kollman; THE NEW ALGAE
COMPANY; CELL TECH
INTERNATIONAL, INC.; KAZI
MANAGEMENT VI, LLC,
Defendants.
Appeal from the United States District Court
for the District of Oregon
Owen M. Panner, Senior District Judge, Presiding
Submitted October 6, 2014*
Portland, Oregon
*
The panel unanimously finds this case suitable for decision without
oral argument. Fed. R. App. P. 34(a)(2).
2 UNITED STATES V. KOLLMAN
Filed December 16, 2014
Before: Alex Kozinski, Ferdinand F. Fernandez,
and Andre M. Davis,** Circuit Judges.
Per Curiam Opinion
SUMMARY***
Tax/Statute of Limitations
Affirming the district court’s judgment in an action by the
United States to reduce to judgment income tax assessments
and to foreclose on certain properties, the panel held that the
government’s action was not barred by the ten-year statute of
limitations because the running of the statute of limitations
had been tolled.
Applying the Chevron analysis, the panel concluded that
the tolling period provided for in 26 U.S.C. § 6330(e)(1)
includes the time during which a taxpayer could file an appeal
to the Tax Court, even if the taxpayer does not actually file
such an appeal.
**
The Honorable Andre M. Davis, Senior Circuit Judge for the U.S.
Court of Appeals for the Fourth Circuit, sitting by designation.
***
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
UNITED STATES V. KOLLMAN 3
COUNSEL
Bruce C. Moore, Moore & Associates, Eugene, Oregon, for
Defendant-Appellant.
Kathryn Keneally, Assistant Attorney General, Gilbert Steven
Rothenberg, Deputy Assistant Attorney General, Bridget M.
Rowan and Ellen Page DelSole, Attorneys, United States
Department of Justice, Tax Division/Appellate Section,
Washington, D.C., for Plaintiff-Appellee.
OPINION
PER CURIAM:
Daryl J. Kollman appeals the district court’s judgment in
an action by the United States to reduce to judgment income
tax assessments for the 1996 calendar year and to foreclose
on certain properties. The district court determined, among
other things, that the government’s collection suit was not
barred by the ten-year statute of limitations. See 26 U.S.C.
§ 6502(a)(1).1 The court did so on the basis that the running
of the statute of limitations had been tolled. See § 6330(e)(1).
Kollman asserts that the district court erred. We disagree and
affirm.
1
Hereafter, unless otherwise stated, references to section numbers will
be to sections of the Internal Revenue Code, Title 26 of the United States
Code.
4 UNITED STATES V. KOLLMAN
BACKGROUND
On November 24, 1997, the Internal Revenue Service
(IRS) made an assessment against Kollman for the 1996 tax
year. On March 18, 1999, Kollman submitted a request for
a Collection Due Process (CDP) hearing. See § 6330(b). On
June 18, 1999, the IRS issued a notice of determination
regarding Kollman’s request for a CDP hearing. He then had
a right to appeal the CDP determination to the United States
Tax Court within thirty days. See § 6330(d)(1). However, he
did not do so. On March 12, 2008, the government filed a
complaint seeking to reduce the assessment to judgment and
to foreclose tax liens against two parcels of property.
The case went to trial, and at the close of evidence,
Kollman moved for a partial judgment as to the 1996 taxes
assessed on November 24, 1997, arguing that the suit was
filed beyond the ten-year limitations period because
§ 6330(e)(1) clearly provided that the tolling period ended
when the IRS issued its CDP hearing determination.
The district court denied the motion on the basis that the
language of § 6330(e)(1) was ambiguous and deferred to 26
C.F.R. § 301.6330-1(g)(1), the Treasury Regulation
interpreting the statutory language. It then ruled that the
government’s March 12, 2008, complaint to collect the 1996
taxes assessed on November 24, 1997, was timely because
the limitations period was tolled from March 18, 1999 (when
Kollman requested the CDP hearing) until thirty days
following the June 18, 1999, CDP determination.2 Judgment
2
Without tolling, the ten-year limitations period set forth in § 6502(a)(1)
would have expired on November 24, 2007. The government filed its
collection suit on March 12, 2008, 110 days beyond the untolled
UNITED STATES V. KOLLMAN 5
was entered against Kollman, and this timely appeal
followed.
JURISDICTION AND STANDARD OF REVIEW
The district court had jurisdiction pursuant to § 7402 and
28 U.S.C. §§ 1340 and 1345. We have jurisdiction pursuant
to 28 U.S.C. § 1291.
We review the district court’s interpretation of the statute
de novo. See Texaco Inc. v. United States, 528 F.3d 703, 707
n.5 (9th Cir. 2008); Ann Jackson Family Found. v. Comm’r,
15 F.3d 917, 920 (9th Cir. 1994).
DISCUSSION
The central question before us is whether the tolling
period provided for in § 6330(e)(1) includes the time during
which a taxpayer could file an appeal to the Tax Court, even
if he does not actually file such an appeal. We answer that
question in the affirmative.
In doing so, we apply the familiar Chevron3 approach. In
that case, the Supreme Court outlined our task as follows:
expiration of the limitations period. It is undisputed that § 6330(e)(1)
suspended the limitations period from March 18, 1999, through June 18,
1999 — a total of ninety-three days. The district court adopted the
regulatory interpretation in 26 C.F.R. § 301.6330-1(g)(1) and tolled the
limitations period for the additional thirty-day period for appealing — a
total of 123 days. Therefore, if the thirty-day period is included in the
tolling calculation, the government’s collection action was timely.
3
Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837,
104 S. Ct. 2778 (1984).
6 UNITED STATES V. KOLLMAN
When a court reviews an agency’s
construction of the statute which it
administers, it is confronted with two
questions. First, always, is the question
whether Congress has directly spoken to the
precise question at issue. If the intent of
Congress is clear, that is the end of the matter;
for the court, as well as the agency, must give
effect to the unambiguously expressed intent
of Congress. If, however, the court
determines Congress has not directly
addressed the precise question at issue, the
court does not simply impose its own
construction on the statute, as would be
necessary in the absence of an administrative
interpretation. Rather, if the statute is silent
or ambiguous with respect to the specific
issue, the question for the court is whether the
agency’s answer is based on a permissible
construction of the statute.
The power of an administrative agency to
administer a congressionally created . . .
program necessarily requires the formulation
of policy and the making of rules to fill any
gap left, implicitly or explicitly, by Congress.
Id. at 842–43, 104 S. Ct. at 2781–82 (internal quotation marks
and footnotes omitted). We will proceed with this outline in
hand.
Once the assessment of a tax has been made, the
government may collect that tax “by levy or by a proceeding
in court” but, as relevant here, must do so “within 10 years
UNITED STATES V. KOLLMAN 7
after the assessment of the tax.” § 6502(a)(1). However, the
law also provides for a CDP hearing,4 and the determination
by the appeals officer5 can be appealed within thirty days
after that determination.6 If the CDP hearing process is
initiated, the ten-year statute of limitations is tolled. See
§ 6330(e)(1). The § 6330(e)(1) tolling provision reads as
follows, in pertinent part:
[I]f a hearing is requested under subsection
(a)(3)(B), the levy actions which are the
subject of the requested hearing and the
running of any period of limitations under
section 6502 (relating to collection after
assessment) . . . shall be suspended for the
period during which such hearing, and appeals
therein, are pending. In no event shall any
such period expire before the 90th day after
the day on which there is a final determination
in such hearing.
In due course, the United States Department of the
Treasury issued 26 C.F.R. § 301.6330-1(g)(1), which
provides as follows, in pertinent part:
The period[] of limitation under section 6502
(relating to collection after assessment) . . .
[is] suspended until the date . . . the
determination resulting from the CDP hearing
4
§ 6330(b).
5
§ 6330(c)(3).
6
§ 6330(d)(1).
8 UNITED STATES V. KOLLMAN
becomes final by expiration of the time for
seeking judicial review or the exhaustion of
any rights to appeals following judicial
review. In no event shall [this] period[] of
limitation expire before the 90th day after the
date on which . . . the Notice of Determination
with respect to such hearing becomes final
upon either the expiration of the time for
seeking judicial review or upon exhaustion of
any rights to appeals following judicial
review.
A. Ambiguity
Kollman argues that it is perfectly clear that Congress’s
intent was that the clause “shall be suspended for the period
during which such hearing, and appeals therein, are pending”
means that the thirty-day period to appeal to the tax court is
excluded from the suspension time when the taxpayer does
not in fact appeal. But, contrary to Kollman’s assertion, it is
far from clear what Congress meant by that language.
We, of course, agree “that the first step in interpreting a
statute ‘is to determine whether the language at issue has a
plain and unambiguous meaning with regard to the particular
dispute in the case.’” Texaco, 528 F.3d at 707 (quoting
Robinson v. Shell Oil Co., 519 U.S. 337, 340, 117 S. Ct 843,
846 (1997)). But the language in question does not, on its
face, speak to whether the statute of limitations is suspended
during the time to appeal in the event that an appeal is not
taken. It does not address what Congress meant when it used
the word “pending.” Nor does it address whether the phrase
“final determination” in the next sentence of § 6330(e)(1)
means that the determination by the IRS hearing officer is
UNITED STATES V. KOLLMAN 9
final before the time to appeal runs. If anything, it is “silent
or [at most] ambiguous” on that subject. Chevron, 467 U.S.
at 843, 104 S. Ct. at 2782.
In fact, the Eighth Circuit Court of Appeals had occasion
to review similar language in § 7609(e), which provides that
the running of the period of limitations “shall be suspended
for the period during which a proceeding, and appeals therein,
. . . is pending.” It found that the language “does not
specifically address whether the period allowed for appeal is
to be included in the tolling period in the event an appeal is
not actually taken.” United States v. Meyer, 808 F.2d 1304,
1306 (8th Cir. 1987). Incidentally, it also declared that in
light of a Treasury Regulation so stating, the appeals period
was properly included. Id.; see also Hefti v. Comm’r,
983 F.2d 868, 871–72 (8th Cir. 1993); United States v.
Orlowski, 808 F.2d 1283, 1287 (8th Cir. 1986).
Kollman’s counterargument is that by setting off “and
appeals therein” in commas, Congress intended the term
“pending” to apply separately to the CDP hearing and the
appeal of a notice of determination. Thus, according to
Kollman, where no appeal is filed, the applicable tolling
period consists of the time that a CDP hearing is under
consideration, which concludes when the IRS issues a notice
of determination. But that same phrase, “during which [the
CDP] hearing, and appeals therein,” could just as plausibly be
read as encompassing the thirty days in which to appeal the
notice of determination, where no appeal is filed.
Kollman points to the fact that the term, “final
determination,” is used in the second sentence of § 6330(e)(1)
but not in the first sentence defining the tolling period, as
proof of Congress’s intent not to extend the tolling period
10 UNITED STATES V. KOLLMAN
beyond the time when the IRS issues a notice of
determination, where no appeal is filed. But, contrary to
Kollman’s contention, the absence of “final determination”
from the first sentence does not unambiguously show that the
tolling period excludes the thirty-day period during which an
appeal may be filed. The language in the first sentence
stating that the tolling period consists of the time “during
which the [CDP] hearing, and appeals herein, are pending,”
does not preclude the interpretation that the tolling period
expires when the notice of determination becomes a “final
determination.” See Padash v. INS, 358 F.3d 1161, 1169 (9th
Cir. 2004) (unless Congress specifies otherwise, the
customary meaning of “final determination” is “a final
decision from which no appeal can be taken”).7 It is entirely
reasonable to understand a proceeding as “pending”8 until the
time to appeal has expired. See, e.g., Burnett v. N.Y. Cent.
R.R. Co., 380 U.S. 424, 435, 85 S. Ct. 1050, 1058 (1965).
Kollman’s additional reflection that statutes of limitations
are designed to assure fairness to defendants9 also fails to
advance his case. Kollman’s interpretation of the statute
leaves open whether the tolling period includes the time after
a notice of determination is issued and before the taxpayer
decides whether to appeal. Put another way, the government
7
Cf. Ariz. Electric Power Coop., Inc. v. United States, 816 F.2d 1366,
1375 (9th Cir. 1987).
8
The word “pending” is not without intrinsic ambiguity. See Int’l Union
of Elec., Radio & Mach. Workers, AFL-CIO, Local 790 v. Robbins &
Myers, Inc., 429 U.S. 229, 243, 97 S. Ct. 441, 450 (1976); Inda v. United
Air Lines, Inc., 565 F.2d 554, 560–61 (9th Cir. 1977).
9
See Burnett v. N.Y. Cent. R.R. Co., 380 U.S. 424, 428, 85 S. Ct. 1050,
1054 (1965).
UNITED STATES V. KOLLMAN 11
would have to determine whether to proceed with a levy
action as soon as the IRS issues the notice of determination,
or suffer the running of the limitations period while it awaits
the taxpayer’s decision. Indeed, Kollman’s reading could
even turn out to be quite unfair to the taxpayer if the
government initiated levy proceedings prior to the expiration
of the thirty-day period to appeal.
In short, despite Kollman’s efforts to persuade us
otherwise, we are satisfied that the provision in question is
ambiguous. With that, we are led to the second part of the
Chevron analysis.
B. Reasonable Construction
Having determined that § 6330(e)(1) is ambiguous, we
must now consider whether the Treasury Regulation, 26
C.F.R. § 301.6330-1(g)(1), sets forth a permissible
construction of the statute. It does.
There is no dispute that Congress has delegated the power
to “prescribe all needful rules and regulations” pertaining to
internal revenue to the Secretary of the Treasury. See
§§ 7701(a)(11)(B), 7805(a); see also Mayo Found. for Med.
Educ. & Research v. United States, 562 U.S. 44, __, 131 S.
Ct. 704, 714 (2011). Where such delegation exists, we “may
not substitute [our] own construction of a statutory provision
for a reasonable interpretation made by the administrator of
an agency.” See Chevron, 467 U.S. at 844, 104 S. Ct. at
2782. Moreover, we “need not conclude that the agency
construction was the only one it permissibly could have
adopted to uphold the construction.” Chevron, 467 U.S. at
843 n.11, 104 S. Ct. at 2782 n.11.
12 UNITED STATES V. KOLLMAN
The Treasury Regulation easily meets the permissible
construction test. First, as discussed earlier, before this
regulation was adopted, a court of appeals had determined
that a similar statute, § 7609, was ambiguous and relied on
another Treasury regulation, 26 C.F.R. § 301.7609-5(b),
which stated that the limitations period is tolled until the
expiration of the time to file an appeal. See Meyer, 808 F.2d
at 1306; see also Hefti, 983 F.2d at 871–72; Orlowski,
808 F.2d at 1287. We are not aware of any determination to
the contrary. It is reasonable to assume that Congress was
aware of and content with that result when it incorporated
nearly identical language into § 6330(e)(1). See Northcross
v. Bd. of Educ., 412 U.S. 427, 428, 93 S. Ct. 2201, 2202
(1973) (per curiam); see also Schnall v. Amboy Nat’l Bank,
279 F.3d 205, 218–19 (3d Cir. 2002).
Second, in other contexts, courts have considered actions
to be “pending” until the expiration of the time to file an
appeal. See Burnett, 380 U.S. at 435, 85 S. Ct. at 1058
(Federal Employer’s Liability Act); Knights of the Ku Klux
Klan Realm of La. v. E. Baton Rouge Parish Sch. Bd.,
679 F.2d 64, 67–68 (5th Cir. Unit A 1982) (Equal Access to
Justice Act); Perzinski v. Chevron Chem. Co., 503 F.2d 654,
657–58 (7th Cir. 1974) (Wisconsin evidence rules).
Third, legislative history supports the Treasury’s reading
of § 6330(e)(1). The House Conference Report regarding the
statute states that:
The taxpayer may contest the determination of
the appellate officer in Tax Court by filing a
petition within 30 days of the date of the
determination. The IRS may not take any
collection action pursuant to the determination
UNITED STATES V. KOLLMAN 13
during such 30-day period or while the
taxpayer’s contest is pending in Tax Court.
H.R. Rep. No. 105-599, at 264 (1998) (Conf. Rep.). True,
this report only addresses the period during which collection
by levy — and not the ten-year statute of limitations — is
suspended. But, § 6330(e)(1) addresses both in the same
sentence, which provides that “levy actions . . . and the
running of any period of limitations under section 6502 . . .
shall be suspended.” § 6330(e)(1). It is unlikely that
Congress intended the sentence to have two different
meanings — one for levy, and another for the limitations
period.
In fine, the regulation’s method of illuminating the
somewhat tenebrous language of § 6330(e)(1) was a
permissible construction of that language.
CONCLUSION
The Treasury Department’s issuance of 26 C.F.R.
§ 301.6330-1(g)(1) was a permissible construction of
§ 6330(e)(1). Thus, the government’s collection action
against Kollman was not barred by the statute of limitations.
AFFIRMED.