Levy v. Department of the Treasury

NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2007-3204
SHARON D. LEVY,
Petitioner,
v.
DEPARTMENT OF THE TREASURY,
Respondent.
Sharon D. Levy, of Memphis, Tennessee, pro se.
Douglas K. Mickle, Trial Attorney, Commercial Litigation Branch, Civil Division,
United States Department of Justice, of Washington, DC, for respondent. With him on the
brief were Peter D. Keisler, Assistant Attorney General, Jeanne E. Davidson, Director and
Mark A. Melnick, Assistant Director. Of counsel on the brief was Garry Wade Klein, Office
of the Chief Counsel, Internal Revenue Service, of Atlanta, Georgia.
Appealed from: United States Merit Systems Protection Board
NOTE: This disposition is nonprecedential.
United States Court of Appeals for the Federal Circuit
2007-3204
SHARON D. LEVY,
Petitioner,
v.
DEPARTMENT OF THE TREASURY,
Respondent.
___________________________
DECIDED: September 12, 2007
___________________________
Before DYK and MOORE, Circuit Judges, and COTE, District Judge * .
PER CURIAM.
Sharon D. Levy (“Ms. Levy”) appeals from the decision of the Merit Systems
Protection Board (“Board”) in AT07520702221-I-1, affirming the decision of the Internal
Revenue Service (“IRS”) to remove her. We affirm.
BACKGROUND
Until her removal, Ms. Levy had been employed since April 6, 1999, as a
seasonal clerk, GS-303-4, in the Memphis office of the IRS. The IRS selected Ms.
Levy’s Federal tax returns from 2001 and 2002 for audit based upon routine computer
matching. The audit of her 2001 return, completed over a month before her 2002 return
was due, found that she had substantial unsubstantiated itemized deductions for
medical and dental expenses and for charitable contributions, and that she had a tax
*
Honorable Denise Cote, District Judge, United States District Court for the
Southern District of New York, sitting by designation.
deficiency of $2,850.97. The audit of her 2002 return also found substantial
unsubstantiated deductions and found that Ms. Levy had a tax deficiency of $4,208.81.
In addition, on February 14, 2005, the IRS notified Ms. Levy that she still owed money
to the United States for back taxes for tax years 2001, 2002, and 2003.
On June 27, 2007, the IRS issued a notice of proposed removal to Ms. Levy.
The notice stated two reasons for removing Ms. Levy. Reason I charged Ms. Levy with
overstating deductions for tax years 2001 and 2002. Reason II charged Ms. Levy with
failing to timely pay her income tax liability for 2001, 2002, and 2003. The notice then
stated that, with respect to Reason I, Ms. Levy was being charged in the alternative with
violating Section 1203(b)(9) of the Internal Revenue Service Restructuring and Reform
Act of 1998 (“Restructuring and Reform Act”), Pub. L. No. 105-206, tit. I, § 1203, 112
Stat. 685, 720-21 (codified at 26 U.S.C. § 7804 note) 1 , or with violating a provision of
other laws, rules, or regulations.
On November 17, 2006, the IRS sustained the charges in the proposed removal
and determined that removal was an appropriate penalty and that mitigation was not
appropriate. Ms. Levy was removed from her position effective December 1, 2006. Ms.
Levy appealed her removal to the Board.
After conducting a hearing, the administrative judge (“AJ”) issued an initial
decision on April 5, 2007, sustaining Ms. Levy’s removal. The AJ found that the agency
had established by a preponderance of the evidence the facts necessary to sustain both
1
Section 1203(b)(9) of the Restructuring and Reform Act provides for the
automatic termination of any employee of the IRS if there is a final administrative
determination that the employee has willfully understated his income tax liability, unless
there was reasonable cause for such understatement.
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charges. The AJ found that the improper nature of the deductions taken on the 2001
and 2002 returns was readily apparent and noted that the 2002 deductions claimed
totaled approximately 56% of the Levys’ gross income for that year. The AJ also found
that Ms. Levy “with reckless indifference” continued to use the tax preparer that had
prepared her 2001 return after being informed that that return was being audited. Levy
v. Dep’t of Treasury, No. AT-0752-07-0221-I-1, at * 4 (M.S.P.B. April 5, 2007). The AJ
also found that Ms. Levy failed to timely pay her tax returns for 2001, 2002, and 2003.
The AJ held that Ms. Levy’s removal clearly promoted the efficiency of the service
because her failure to file timely accurate returns went to the heart of the mission of the
IRS, her employer. The AJ concluded that the penalty of removal was well within the
bounds of reasonableness. See Douglas v. Veterans Admin., 5 M.S.P.R. 280, 306-308
(1981).
Ms. Levy did not petition the full Board for review of the AJ’s decision, and the
initial decision thus became the final decision of the Board. Ms. Levy timely filed this
appeal. We have jurisdiction pursuant to 28 U.S.C. § 1295(a)(9) (2000).
DISCUSSION
The Board’s decision must be affirmed unless it is found to be arbitrary,
capricious, an abuse of discretion, or otherwise not in accordance with law; obtained
without procedures required by law, rule, or regulation; or unsupported by substantial
evidence. 5 U.S.C. § 7703(c) (2000); Yates v. Merit Sys. Prot. Bd., 145 F.3d 1480,
1483 (Fed. Cir. 1998).
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On appeal Ms. Levy argues that “the MSPB failed to take into account that the
tax preparer defrauded [her] [and] misled [her].” Pet’r Br. 1. However, we see no error
in the Board’s findings that Ms. Levy could not excuse her incorrect tax filing in 2002 by
her reliance on the same tax preparer after the audit of her 2001 return had revealed
substantial unsubstantiated deductions. Moreover, “[a]s a general rule, the duty of filing
accurate returns cannot be avoided by placing responsibility on a tax return preparer.”
Metra Chem Corp. v. Comm’r, 88 T.C. 654, 662 (1987).
Ms. Levy also argues that “there were important grounds for mitigation” in this
case. Pet’r Br. 1. The Board’s determination that the penalty of removal was well within
the bounds of reasonableness was supported by substantial evidence.
Accordingly, we affirm the Board’s decision.
No costs.
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