Robert Gosnell v. United States

FILED
NOT FOR PUBLICATION MAY 24 2013
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
ROBERT A. GOSNELL, No. 11-17026
Plaintiff - Appellant, D.C. No. 2:09-cv-01399-NVW
v.
MEMORANDUM*
UNITED STATES OF AMERICA,
Defendant - Appellee.
Appeal from the United States District Court
for the District of Arizona
Neil V. Wake, District Judge, Presiding
Argued and Submitted May 15, 2013
San Francisco, California
Before: McKEOWN and WATFORD, Circuit Judges, and DUFFY, District
Judge.**
Taxpayer Robert Gosnell appeals from the district court’s grant of summary
judgment to the government in his tax refund suit. He argues that adjustments the
Internal Revenue Service (IRS) made to his tax liability were improperly assessed
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable Kevin Thomas Duffy, United States District Judge for
the Southern District of New York, sitting by designation.
directly against him without a notice of deficiency, depriving him of the deficiency
proceedings to which he claims he was entitled. The IRS’s direct assessment of
taxes was unlawful, Gosnell maintains, because the assessment involved a
“computational adjustment” requiring additional “partner level determinations,”
making the statutory provision for direct assessment of computational adjustments
inapplicable. 26 U.S.C. § 6230(a)(1), (a)(2)(A)(i); see also Temp. Treas. Reg.
§ 301.6231(a)(6)-1T(a).
We disagree. Gosnell’s tax benefits from the sham Son-of-BOSS
transaction flowed both from the foreign currency exchange and from the transfer
in lieu of foreclosure of the resort. This complex transaction involved partnerships
in a multi-tiered structure, and we acknowledge that the IRS conducted
partnership-level proceedings only for Acquisitions, the top-tier partnership. Yet
despite the transaction’s complexity, no “partner level determinations” were
required to compute Gosnell’s proportionate share of the improper tax benefits
because he stipulated to the precise amounts in question. See Napoliello v. C.I.R.,
655 F.3d 1060, 1064 (9th Cir. 2011). As a result, the IRS was able to directly
assess Gosnell’s tax liability “with mathematical accuracy” by examining his
returns, striking out tax benefits he conceded were related to the disallowed Son-
of-BOSS transaction, and then re-computing his tax liability. See Olson v. United
2
States, 172 F.3d 1311, 1317–18 (Fed. Cir. 1999). No “individualized factual
determination” regarding the “correctness of the originally declared figures or any
other factual matter such as the state of mind of the taxpayer upon filing” was
required. Id. at 1318; see also Bush v. United States, 655 F.3d 1323, 1333–34
(Fed. Cir. 2011).
We also reject Gosnell’s argument that the IRS was required to issue a
notice of deficiency before assessing penalties against him. The Taxpayer Relief
Act of 1997, Pub. L. No. 105-34, amended 26 U.S.C. § 6221 to require the IRS to
determine the applicability of penalties in partnership-level proceedings (rather
than individual partner-level proceedings) when the penalties relate to the
adjustment of partnership items. Once such proceedings have concluded, the IRS
may directly assess an individual partner’s share of the penalties without following
ordinary deficiency procedures. See 26 U.S.C. § 6230(a)(2)(A)(i). Here, the IRS
conducted partnership-level proceedings for Acquisitions and found that penalties
were applicable because the entire Son-of-BOSS transaction was a sham. Under
the Treasury Department’s regulations, it was proper for the IRS to directly assess
Gosnell’s share of the penalties as a computational adjustment without following
deficiency procedures, regardless of whether partner-level determinations were
3
required to do so. See Treas. Reg. § 301.6231(a)(6)-1(a)(3); Temp. Treas. Reg.
§ 301.6231(a)(6)-1T(a)(2).
AFFIRMED.
4