good morning and may it please the court my name is le var taylor i'm here on behalf of the appellant mr ames case involves the question of when the tax court has the authority to determine the merits of an underlying tax liability in the collection due process case there are two subsections of sixty three thirty to shew c to b and c for i'm going to start with c four that's the section that was not discussed by the tax court below in this case c four it was not even raised by the government in its original motion it was raised in a subsequent pleading because this deals with the authority of the court we have no objection of the court addressing c four in fact we think the courts require to do so because this deals with subject matter jurisdiction over the merits of the liability i start with c four because the tax court in a case handed down last year while this case was pending issued an opinion saying see four does not apply this case and the reasoning of the task court's very interesting because what the tax court said that's the hampton software case at page sixteen of our reply brief the task court said that applying c four would undercut the very regulation that the government wants stop holdin the subpoena so this case is very interesting i've never encountered one like this in thirty five years of representing people representing the i r s or representing clients outside of the i r s where the government is saying well we think you ought to uphold this regulation but they're arguing the regulate and the other down there are getting the regulation is no good that's what's happening in this case notwithstanding that conflict there are other reasons why see for does not apply first there's an exception to see for indy three b that exception says you can raise an issue that was raised in a prior administrative or judicial proceeding which was considered that's the test under c four you can raise it notwithstanding the prohibition if there is a change in circumstances with respect to such person that's the taxpayer now liabilities if they're disputed unpaid can go down but they can't go sideways and this exception d three b deals with what happens when a taxpayer goes sideways if a taxpayer there's a ruling they file an appeal in the ruling is you pay a thousand dollars a month in an installment agreement and the taxpayer later loses their job that's what de three b is there for so the fact that the exception applies to taxpayers who go sideways and not to liability syndicates that see forward does not apply to liabilities second applying seaforth to liabilities would encourage taxpayers to delay the resolution of the case when the i r s let's take the following fact pattern suppose the i r s comes to my client and says we think you owe a penalty of a million dollars my client says i can't pay a million dollars and assume it's not subject to the deficiency proceeding so the only place if i can't raise it in the collection process appeal and litigated in court they're the only place i can litigate it is in a refund suit in if my client says i can't pay a million dollars i have to plan things so that i can go raise the merits in a collection due process feel how do i do that i don't pursue the people at the earliest opportunity instead of pursuing the appeal early and raising all the would rest that momentarily but see for deals with what happens when you participate in an administrative proceeding and you actually raise the issues so i will get to the opportunity and what and what that means but see ford is a different animal and so what happens with c four is if i go raise the raise it i lose the opportunity to challenge in the collection due process case that's that's crazy we want to have a system that encourages taxpayers to come in early and resolve disputes early we don't want to have a system that says oh taxpayer if you raise early you're going to lose the ability to raise it later on and all collection due process is a good you did it was raised in considered out of previous hearing it was not in this case you know it was right that the well the underlying liability the rendered is not three twenty six there's no sixty three this is a sixty three thirty case there was no sixty three twenty hearing in this case what happened here was the government said we think you're a libel for a sixty seven o seven a penalty but here it is or in any other previous administrative or judicial proceeding and the question i have with respect to your argument on to see for is it explicitly encompasses a previous administrative proceedings and i thought you p and raised the matter before we irish office of appeals so that was done pretty assessment yes i took some just and i realized the tax court didn't address the c four argument but of course we can affirm on any gray on and it did seem to me that the see for a one applied to your client it applies to liability determinations opposition did participate in a previous administrative hearing so that is correct i didn't that's not disputed but i point is to see how it isn't that just w why doesn't that ok you participated that's what the situation addresses that it's really a it's it's a it it's a two bite at the apple provision we don't want you to have two bites at the apple because overall what the what congress was concerned about is having these procedural hearings that piece of collection due process hearings turn into expensive merits challenges and so they that that's what these provisions are aimed out not just opening up these collection due process hearings to merits challenges to taxpayer liability and the and see for and and also see to see two way both seem directed at that same point and the hard part of your case for you to get over was that you had an opportunity and took advantage of the opportunity to litigate the merits of your deficiency your honor the procedures the government was using for the levy but the merits of your you're a liability before the i r s office of appeals and i can't read in the statute something that that says oh well i was just an administrative hearing and we all know that there are normal appeals to courts from administrative hearings and everything and it just seems to me that congress wanted to do something a little bit different here your honor my client is not giving two bites at the apple when it comes to going to court in fact if i'm raising it and i can't i couldn't have gone my client could not have gone in the from the prior to stay the precise maturing there was no right to go to court none zero in this the liability is so large that my client can't go to district court by paying the seven o seven a the when you say the other participant you're talking about the sixty seven zero seven and eight in the other circuit i'm arguing brown thomas that he those folks the kid that deals with the income tax liability we're not talking about an income tax liability in this case we're talking about a penalty that was imposed as a result of my client not sending in a form with their return so those thirteen plan participants that i just mentioned had a different taxes this yes it's an income tax and this is not an income tax this is merely a penalty  case that was decided in the seventh circuit ok that that was decided by the tax court that's a that's has nothing to do with this case this case has to do simply with the penalty so my point is going back your honor said this this stat purpose of the statute was to limit no in one nine hundred ninety eight congress perceives that there were abuses by the ira us collection abuses and they made a judgment that said we think that the taxpayer should have an additional opportunity right ability and be a liability in the treasury department came back and said wait we don't want to be able to to them to litigate a liability that's already been litigated ok my clients never had an opportunity  don't let me go back to the course because i'm a little bit confused here's the first argument out of the box by the government is that this case is moot precisely because these other participants in this they're really and had an opportunity to litigate this issue last you agreed with that result and therefore the case is moot thinking that aside for the moment you seem to be saying that that's an entirely different tax as nothing at all to do with whether or not this issue of whether this plan should have been listed a merits based decision ok so this court can't say collateral estoppel applies or doesn't apply because the tax court never addressed the question they said we can't determine the liability period second in this situation my client disputes the amount of the liability ok the whole issue of whether it what type of plan it is isn't it the collateral estoppel doesn't affect the main argument we're making our position is that computer to been correctly the penalty in correctly because they they referenced the penalty by looking to the hypothetical tax loss for years prior to our year two thousand and seven the government assessed a penalty of sixty one thousand dollars and change against my client for failing to submit a form with a return and they base that kind only not on that hypothetical tax loss for two thousand and seven which was zero instead they said we're going to back and look and look at the hypothetical tax loss in prior years those years there was no to send in the form because the transaction didn't become listed until two thousand and seven and like crack that's the merits hey we didn't get a chance to raise that well before the office of appeals you didn't get a chance to raise not no well yes but we couldn't go to court from that and my point is we don't get to buy so the apple here we're not we're only asking for one bite at the apple to go to court and the government's position here leads to a c to be speaks in terms of underlying our says if the person did not receive statutory notice or did not otherwise have an opportunity  didn't you have the opportunity well i thought he truly did participate in if you actually did participate we say that's a judicial opportunity but let me address y c to be good i know you say that show opportunity but the the statute doesn't say that it is an opportunity right i agree but but but there are reasons why when you look at the statutory framework as a whole it has to be it doesn't offer too many and not administrat i mean at best you get it to the level of ambiguity and then chevron takes over we don't think chevron applies and even if it does the regulation does not survive the rational basis here is why let me ask you this between the between the taxpayer between the court office of the i r s court of the i r s office of appeals and the collection due process hearing was there any adjustment process here we're talking about the same email yes sixty one thousand are because it might be a different case if the member had been adjusted for the first time in that interim period but it wasn't that i would like to but i would like to just of appeals hey that's the standard with an exception that has no rational basis but get to that more bottle but the basic rule says let's look and see why we go to if you can go to have the opportunity to go to appeals you lose the right to raise it in court partake so it's a little broader than traditional version of clause of a first year kata but that's specific to the c d p proceeding seafoam or is that it sounds a little reading this statutory and regulatory regime sounds a bit arbitrary as to who gets the opportunity to participate or not is it the case that in every situation such as this taxpayer is going to have an opportunity to participate in a ministry of hearing before the office of appeals and actually know there are certain penalties that are not subject to a prius osment protest or that sort of thing there are also certain situations for somebody say has and knowledge they  someone was not given was not properly given notice which the such it actually knowledge is for instance someone should have gotten a deficiency notice didn't receive or you're not precluded if you didn't get a notice right if you did not receive your d efficiency you didn't receive adequate notice because the capital b underlying liability said if the person did not the person may also re raise challenges to the exact amount of the tax liability if a person did not receive statutory notice of deficiency for such or did not have the opportunity so either want to see it's phrased in the dish junk that doesn't know it's a tax payer didn't receive notice he wouldn't be if you don't request it and you don't request it properly you won't be offered an appeals hearing so there are numerous situations for somebody it just does not have the opportunity for an appeal hearing is not offered that opportunity either properly or in this case and also for you thank was very candid with the court indicated that he not only had the opportunity but actually the opportunity for judicial review of the merits of the tax liability was not work congress had in mind  the doesn't have that it doesn't have that same reference to a prior administration here just so we know are we to conclude that the that the presence of the word administrative in the fore and the absence of a reference to administrative to be significant no i actually read that as a proceeding as well as from a judicial proceeding but i did actually say that the inclusion of administrative proceedings in c four is some powerful evidence that opportunity to be heard opportunity just liability should include administrative proceedings what i just don't want your time to run out ok if i could just very briefly on c for just saying number one i think the plain language we're not asking for any deference to any interpretation we're pointing to the plain language under see to it tells you what issues can be raised that and then includes liability is included under those issues c t b c three talks about issues considered in the determination c four is issue preclusion there's no reason why liability would be want to respond to in following up on my good colleagues question about c to be yes it it's possible i suppose that ok in general these are the issues and you can raise any of it relevant issue to unpaid tax or proposal levy including spousal defenses challenges to the appropriateness of collection actions operators of collection alternatives so you get the idea that from sea to that what congress intended here was what these things are called which is a collection due process right hearing that if the government is abra truly putting a  property or what have you that you have a chance to contest procedure law betraying us on the part of the government and it gives to the taxpayer some actually fairly significant protections in this way and it that is they can they can post a bond or they can have a substitution of other assets on which the levy can be  or imposed or you can repay an installment agreements or there can be a compromise in other words this those collection due process hearing is not just  a you know an empty formality there are some real protections that the taxpayer has but they just didn't want to turn to a person something indicated to talk about collection methodology into merits litigation that that would really have a huge impact on the functioning of has been in place for decades and decades and we simply don't believe that congress would have done anything that major without making it a lot clearer than the stat it would seem to be which is something that the lewis court made clear on one twenty eight at sixty one you know  the real point here is that it is a collections due process as you say and we see to be as a stopgap if you really got no opportunity at all to dispute liability if somehow you just never got it either because of the type of case or because there was some mistake that occurred or something like that yes then you can raise it but it is not supposed to be in every case it's not supposed to be in most cases it's a stopgap and that's a reasonable reading as my opponent tries to argue clearly state that only judicial opportunities count no sitter so ceases completely unhelpful here and the superfluity argument as we've already discussed when i was responding to judge d s s answers really does not really doesn't apply here because there are circumstances where someone does not get the opportunity to be heard on liability prior to the c d p process which means we're looking at the regulation and it's not is there a rational basis on his face facially it is reasonable now my opponent has made some arguments to say i always think there's some inconsistency is with how there are exceptions but none of his arguments actually really make sense in the end he says included this in our brief was when i read the our country home decision my immediate thought was why does it matter how sixty three thirty c is interpreted if this goes back and remember going to our argue collateral stoppel and i think we win because the list a transaction issue is resolved here and we do believe that is the only issue that is alive in this case i think is an actually very accurate description of how things went down in these cases on page eight of the my opponent but they say in the pre assessment protest hearing we raised the calculation argument and we think it's a great calculation argument and we think that if we were adopted something we win and the thing is not during the c d p proceedings that issue wasn't raised and so you know you look at you look at their previous specially reply tenses here's all these places we raised it none of those places raise this issue the closest they come was in the post just one hearings where they talked i think that both are going to that's why you wanted to include steve often in liability cases i think there's a tendency to default to c t b because you don't have to show that the issue is actually raised you don't have to show that it was considered you don't have to show that there w meaningful participation as it happens in this case it's pretty easy because it's a plain language analysis which is why i put it first and i would say that we acknowledge that c c p is in big us and therefore we're going to the regulation so see for how are we think is plain language we think that it's it is clear and in this particular case might my suspicion is based on how unjust these words my suspicion is that there were but i clearly can't confirm that but they have not made a state farm argument i mean i think that the  regulation pretty clear what it's trying to do is trying to define what an opportunity to spew and and it makes clear what it would but it says that is which is an appeals hearing expecting  pre deficiency notice deficiency cases if you if you met with appeals before that which is reasonable in terms of the language of c t v it's also laying in reasonable in terms of the  acknowledge i'd like to now discuss why seat the government's regulation or c to b is completely arbitrary their argument is that we look to whether or not there's an appeals hearing whether you could have gone to appeals doesn't matter what the amount there's no requirement in the in the law the rest i rest can offer an appeals hearing or not offer an appeals hearing but it can go if it wants to one off for an appeal hearing to every single under under sea to be ok let me repeat the regulation says can you go to appeals if so explicit next option that has no rational basis but if you can go to appeals you can't raise it but the i just can offer everybody an  if they want to there's nothing in the law that prohibits them from doing that and so there's nothing in the law that prevents them from precluding every single taxpayer who has a disputed liability from ever living gating in a c d p case i don't think that's what congress it's there and if a taxpayer can't doesn't have the ability to pay if it's a million dollars two million dollars c d p is the only place in the world where they can litigate but also if you step back and ignore the regulation for a minute if you say well now we think that administrative opportunities preclude you from going not whether you took advantage of them but whether they exist we point out pages twenty six through thirty five approximate of opening brief that  that you know that they had to consider other ways of collecting taxes but they didn't want to change the system so thorough is that they were going to be rea tax of the merits of tax liabilities in each one of these and each one of these hearings because you know you could you you can just bogged the proceedings dale why you know quite significantly by turning it into a related tax liability when you've already had a shot at it your honor there's nothing in the legislative history there's nothing in the text of the statute there's nothing in the context of the statutory scheme that supports the these kind of things they just can't go after a particular asset out if there are other assets or installment payments or other ways that would be a little bit less a little bit more geneal to the taxpayer involved  so i thank you for your comment was way way too high a level of generality when you say you want to change those just if i think they wanted to modify it in certain very discre if you can you go look at the legislative history that's discussed in lewis ok the original language basically allowed taxpayers to challenge any liability so it's clear the congress was contemplating that then the treasury department said wait we don't want the taxpayers to dispute liabilities that have already been litigated they don't come back and say we want to narrow it to issue it situations where it wasn't previously litigated that was their reaction said we don't want taxpayers to litigate price not that in the strait of we appeal twice to litigate twice and the result in response to that letter was the language we have now ok there's nothing so it's from there clear that congress was looking at completely changing the system the question is and because the treasury said we don't want the taxpayers to litigate twice we take no fishing with that we're not trying to litigate try sweet we're trying to litigate wa