good afternoon george clark on behalf of mr hoops or may please the court you are here to determine today whether my client has the right just the just the right to know what standard of proof the government must meet before they take away half a slice of life savings for failure to file a two page form well it's that let's take a situation when the government might be taking away someone's liberty which is even more fundamental someone's being investigated for insider trading and his lawyers are negotiating a possible plea deal but he's thinking well you know the laws in flux in that area if i'm going to really get jury instruction maybe i should go to trial and not not do a plea with the government before an indicted can he followed a clear tree judgment asking what the jury instruction would be in his criminal trial in the event he's indicted i don't believe so you know how is this different this is different because the process that we're got we're talking about is the iris examination division which is the part of the i r s that determines did you do something wrong the iris examination division audited him for multiple years they interviewed him they interviewed his wife they interviewed his accountant they made a determination that this penalty they got that determination reviewed by a lawyer to say you've you've you're right you can go ahead with this determination they issued that letter thirty seven o nine and that's at one fifty one to one fifty five  the record they issued that letter the only thing that prevented that from going to assessment and collection ok is the fact that he has a right under seventy eight zero three of the code to an appeals settlement hearing and what his appeal settlement appeal settlement and this is important to understand appeal settlement doesn't bind us does not bind mr groups or it can bind the government if there's some review process in that  the d o j has some saying in that ok it is not of it is something that's a p they were viewable it doesn't create a record there's not a record that would come up here when we it let's say that the appeals officer says you know what i think this burden of proof issue is sort of really a difficult one i think it's fifty fifty so i'm going to just give you a settlement offer a fifty fifty and let's say we don't take that settlement offer and we come up here you know in the lower court they're not going to be reviewing what back what happened there that that that that's not going to be subject to review here or abuse of discretion or anything else the question here is going to be what is the proper standard and did the government meet that standard that's that's going to be the issue so i think it's important to understand that th proof is this unclear and i think you have to understand the background to this specific inforcing area why is it limited to burden of proof what if it's like i said the definition of insider trading or the definition of bank account or in the or the tax code i think if you were to look at case and i think a lot of the you know this specific jury instruction of this specific rule of evidence of how with this the rules are minor issues this is a fundamental due process on the case it's crimes those are the whole case turns on the jury instruction or  evidence it absolutely could you are you're right about that i think there's a difference though with the burden of proof the burden of proof is the fundamental measure of how society says people who potentially are going to be subject to either taking their liberty away or procedures and the i r s procedures talk through how this works if you look at the three seven zero nine but for appeals it says we will assess and collect that's what that letter says they're not going to change that position the examination division  finished and work out the point that there's going to be a resolution of it i think stepping back so we say ok if they do nothing else just a penalty that that's options thrid or you've chosen option to disagree and request a conference in which you got your your option to you're on it the process is not if we look at abbott labs the process is not at a point where you're going to be interfering with administrative policy making that's the task for wri inform our our understanding of what the settlement process is it's going to inform my clients should i do this the question is do we have to take them foresman agencies work for the burden of proof or can we get a court to look at this and this is all about when of course you can bring a challenge after they impose the fine it's not like you're being deprived of the right for a court to one day decide whether this was proper right well we have to rights we have a right to an appeals hearing that's meaningful how can you have a meaningful hearing if we don't know that he owes us money the justice department has made their determination that the standard is proponents it's not like it would be a very different case if the appeals if the if if iris are to go to saying look we don't know what the standard is yet we're still an iris process that has completed the they tyrus examination division has made its determination and the department of justice has made its determination that what the standards and so the question is do we as part of an iris settlement discussion do we have an ability to know that it would be the same if the parties it is no difference to lose surance cases where you know an insurance company has got a policy holder who they don't know if the coverage i what i did wrong is covered by this statute your honor i think that i would have a tough time seeing where the jurisdiction was for that kind of a case to be brought we've got a thirteenth of the statute thirteen fifty five that allows the district courts result i just just hope that you will definitely resolve what the stare proof is whether the appeals officer and the field office are supposed to hew to the law so we can expect them to follow it but let's say he doesn't follow it it's still binding with respect us and the department of justice there's no question when we go forward after that both of the parties will know for an absolute certainty what that standard is there's no doubt it of that that's the way declaratory judgment would work in this context we will know exactly what that standard is during this option to procedure hav court because of the burden or because of the evidence so is there are a new number other there is not a new numbers we're going through you're still at the one point three we are retirement he basically doesn't know whether he's going to be able to retire in needs to continue to work he's got serious restrictions this is not a minor financial amount this is a huge financial amount to him and it's not just him that or that there is in this situation there have been in this is updated from the brief there have been ten billion dollars collected from one hundred thousand applicants into the vault voluntary disclosure program all without clarity with respect to the burden of proof and we think that's important to understand the context issue which is just addressing even though with respect to the proposed assessment the injury of the proposed assessment which is the only injury he raised in the complaint he did concede below of course that this character judgement you know in his favor would not actually result in the assessment not being or in the penalty not being assessed he's conceded that issue and he doesn't pursue that on appeal when he has done on appeal is identified as the other issue of the uncertainties surrounding the burden of level he conceded that the declaratory judgment in his favor would not prevent the assessment from occurring and so he has shifted his focus on appeal to this injury of the uncertainty of the standard of proof and we think that that the allegations in arguments with respect to that are actually contradict the complaint he's not entitled to have the facts that contradict the complaint to be taken as true for purposes of the motion to dismiss specifically he's saying that all this uncertainty has sort of paralyzed the process in the appeals because the appeals officer allegedly was riddled with doubt and requested guidance and didn't know what to do on the standard those allegations you raise for the first time of the hearing on the mission to dismiss and to contradict the complaint and again here today has said that it's very important in that the appeals officer are required to hew to the law and that's precisely what the appeals officers doing so far been any allege though that the appeals officer said if it is this higher standard then i can't meet it yes he does allege that you're out of that doesn't mean that it would be dispositive of anything right but you're just saying what's not in the complaint is this allegation of uncertainty by the hearing off rex and he really he runs with that on appeal there are numerous places if we noted this and footnote in a brief and numerous pages in the particularly opening brief where he's saying what the appeals officer absolutely needs guidance he requested he specifically requested it and that's why we need it and that's why you should give it to us turned out to be wrong there were three cases including the case that we noted in the twenty eight j letter by hand acts which have decided that a preponderance of the evidence to hundred standard applies here he says also that he can't get a meaningful hearing without guidance from this court but the fact is there is guidance there are these three cases what he has essentially identified as not an uncertainty about the standard of proof but a disagreement about the standard of proof and that's why what he's seeking to do here is to get an advisory opinion he wants to know what the district court would do if a penalty were assessed even though a district court made never have to rule in the standard of proof in the ordinary course of litigation meaning if a penalty ever officer it is officially i believe well they don't call it it's not technically litigation hole but they call it a suspension and the situation is of this is a very abnormal situation for the overwhelming number of cases that they handle  tax cases and taxpayers don't generally run to court to get a ruling on a particular you know legal issue they wait until you know there's either sort of a nod and we take it to court and here you know where the appeals is supposed to give a full and fair hearing statements doesn't say anything about what the parties have discussed it doesn't say anything about whether mr blitzer has presented different facts isn't present in a pending assessment there's no pending assessment  mandate and in fact if anything the tax there the individual there seems to have relied on a different statute for his claim so southern unity may not have the leadership of thirteen fifty five there but one key in looking at the case is that although that wasn't norman which was tucker a case we were earning about the exclusive jurisdiction of the district court to consider recovery suits against the government what we're saying here is starting fifty five provides no waiver sovereign immunity for declaratory judgment and standard of proof the most you can say about thirteen fifty five is that if it allows for a private cause of action you know for a recovery of penalty but there's been no penalty here it's n five i mean declaratory judgment act applies otherwise against the united states it has congress has carved out of twenty two a one once what it wants to carve out as a carve this out and thirteen fifty five does apply and again there's no question on january seventh january eleventh of twenty seventeen there was a reply and we can we can twenty a j this in this can tear versus united states case the department justice filed saying by its terms this statute thirteen fifty five would apply in as much as the plaintiffs would be seeking a recovery of a penalty so there's there's no question that thirteen fifty five that's the recovery that it already been paid it is your honor but i think you have to put that together with the declaratory judgment act unless they declare charges right just doesn't apply against the government where is that any place that they say other than twenty two a one about the declared charges but that doesn't apply and they've carved out specific government actions in there including taxes they haven't carved this one out with respect to the some certainty issue and whether we're inconsistent uncertainty with respect to the  officer sorry or and whether we're into this is that in our filings the the question is is there a dispute about the standard of proof and there is a dispute about the standard of proof we think it's clear and convincing the government thinks it's we have under the declaratory judgment a right to seek a review of that if we have standing and if it's right the only rightness argument that i think you know is kind of a hard one but a technical one is is it pre assessment assessment somehow magical under the under the terms of f or you know do we have to wait for assessment to get there in order to find that it's right and there's nothing indicate in any of the case law indicating there is a magical period of time like that again if you go back to the age as insurance  cases you know you wait for the proof a claim to come in you get a proof a claim you know i can sue you have the insurance companies could approve a claim ok well at that point in time i can go get declaratory judgment as to whether or not there's coverage what about that is akin to assessment there's nothing that's akin to assessment in that i would say just just in enclosures and you know this is a case about certainty and that's what this case is about at the an at the end of the day it's about our ability to you know make decisions strace on a certain standard you know the only question really for us is do we have a right to make decisions based on a judge's view of the law or do we have to make those decisions based on force when agencies view of the law and i think the idea that a person doesn't have any regulator decides what the burden should be to impose some fine and or osho i mean you can list twenty or thirty examples of what federal ministry of agencies do that there's a right to go get a declaratory judgment on what the standards should be for that fine that's being imposed by any enforcement agency you know of any other area in which there's this lack of clarity with respect to the state run you're talking about taking fifty percent of some of these funds for failure to follow minor form the government itself and they were not setting this up preston but the government itself previously found that it was more likely that it was a clear and convincing standard we just don't which are the standard for when you can get a declare to a judge or is only when it's really unclear what the administrative agencies burden is so i don't think it's clear the question is exactly the one isn't it right is it is it important is a concrete is it something that susceptible to judicial resolution is there haunt you seems to be that's you know there's administrative agencies making enforcement decisions you know every day all over the country and there's always legal questions people who hire lawyers they have defenses and you have to deal with that in the with the administrative agency first but we did deal with the administration agency first that we went through the audit we went through interviews