NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT

___________ N o. 09- 4367

___________ J AC QU ELI NE J
. M I LLER- W AG ENK NEC HT, A ppel l ant
v . CO M M I S S I ONE R O F I NT E RN AL RE VE NUE

____________________________________ O n A p p ea l from the U n it ed S tat es T ax C o u rt

( T ax C t . N o. 11219- 07) T ax C our tJ udge: H onor abl e D avi d G us t afs on

____________________________________ Subm i t t ed Pur s uantt o T hi r d C i r cui tL A R 34. 1( a)

J une 22, 2010 B efor e: FU E N T E S, G R E E N A W A Y A N D V A N A N T W E R PE N , C i r cui tJ udges ( O pi ni on fi l ed: J une 25, 2010)

___________ OP I NI ON

___________ P E R C UR I AM J acque l i ne J
. M i l l er - W agenkne chtappea l s t he j udgm entof t he U ni t ed St at es T ax C our ts us t ai ni ng t he det er m i nat i on of t he C om m i s s i onerof I nt ernal R evenue ( t he “C om m i s s i oner ” or“I R S”) t o pr ocee d w i t h t he col l ect i on of ce r t ai n unpai d fede r alB eca us e M i l l er - W agenkne cht ’ s hear i ng w as t o be conduc t ed t el ephoni cal l y , s he w as 1 notper m i t t ed t o r ecor d t he pr ocee di ngs . See C al afa t i v. C om m ’ r , 127 T
. C
. 219, 227- 28 (20 0 6 ). T he I R S di d notm ove fors um m aryj udgm enton M i l l er - W agenkne cht ’ s cl ai m t hatt he 2 I R S A ppeal s O ffi ce a bus ed i t s di s cr et i on byver i fy i ng t hats he had be en pr oper l ys er ved w i t h a N ot i ce of

D efi ci encyfort he 2002 t ax y ear . T he I R S l at erdet er m i ned thatt he d ef ici en cyfo r 20 0 2 sh o u ld n o t be s u stai n ed an d ab ated it s ass essm en t fo r t h at y ea r. 2 i n c o me t a x l i a b i l i t i e s b yl e v y , a n d d i r e c t i n g h e rt o p a ya $ 1 0 0 0 p e n a l t yp u r s u a n tt o I
. R. C. § 6 6 7 3 (a )( 1 ). W e w ill a f f ir m . II. A ft err ece i vi ng fr om t he I R S a fi nal not i ce of i nt entt o l evy , t o col l ectunpai d t axes fort he y ear s 1997 t hr ough 2002, M i l l er - W agenkne chtr eques t ed and r ece i ved a c ol l ect i on d u e p ro c e s s h e a ri n g (“ C D P ” ) b e f o re th e IR S O f

f ic e o f A p p e a ls , p u rs u a n t to 2 6 U .S .C . § 6330( b) ( 1)
. Speci fi cal l y , M i l l er - W agenkne chtr eques t ed a f ace - t o- fac e C D P hear i ng,
r athert han a t el ephoni c hea r i ng, and al s o t hats he be a l l ow ed t o audi o r ecor d t he pr ocee di ngs . T he I R S deni ed herr eques tfora fa ce- t o- fac e hea r i ng on gr ounds t hats he fai l ed t o r ai s e anys ubs t ant i al , non- fr i vol ous i s s ues t o be addr es s ed att he hea r i ng. 1 Fol l ow i ng a t el ephoni c C D P hear i ng, t he I R S A ppeal s O ffi ce i s s ued a N ot i ce of D e te rm in a tio n a p p ro v in g o f th e p ro p o s e d le v yu p o n M ille r- W a g e n k n e c h t’ s p ro p e rt y . M i l l er - W agenkne chtt i m el ys oughtr evi ew of t hatdet er m i nat i on i n t he U ni t ed St at es T ax C our t . T he C om m i s s i onerm oved forpar t i al s um m aryj udgm ent . U pon 2
re v iew o f

M ill e r-W a g e n k n e c h t’s g ro u n d s f o r a p p e a l, th e T a x C o u rt d e ter m in e d th a t w h ile
m anyof hercl ai m s w er e fr i vol ous , s he had r ai s ed s ever al non- fr i vol ous cl ai m s , i ncl udi ng:T he Tax C our tr eas oned t hatbeca us e M i l l er - W agenkne chtdi d notpar t i ci pat e i n a 3 fac e- t o- fac e hea r i ng, s he w as notper m i t t ed t o r ecor d t he t el ephoni c hea r i ng. 3 1 ) w h e th e r th e IR S A p p e a ls o f f ice r w h o c o n d u c ted h e r C D P h e a rin g a c ted w ith im p a rtiality ; 2 ) w h e th e r th e IR S A p p e a ls o f f ice r e n g a g e d in p ro h ib ited e x -p a rte
c o m m u n ica tio n s w ith o th e r IR S e m p lo y e e s; 3 ) w h e th e r th e IR S A p p e a ls o f f ice r f a iled to
cons i dert he col l ect i on al t ernat i ve t hats he pr opos ed; and 4) w hethert he I R S O ffi ce of A p p e a ls p ro p e rl yre f

u s e d h e r r e q u e s t to a u d io re c o rd th e C D P h e a ri n g . I n a M ar ch 2009 dec i s i on, t he Tax C our tgr ant ed i n par tand deni ed i n par tt he C om m i s s i oner ’ s m ot i on forpar t i al s um m aryj udgm ent . T he C our thel d t hatgenui ne iss u e s o f m a ter ial f

a c ts e x iste d a s to w h e th e r th e IR S a p p e a ls o f f ice r a c ted w ith im p a rtiality , w h e th e r th e IR S a p p e a ls o f f ice r e n g a g e d in im p ro p e r e x p a rte
c o m m u n ica tio n s, a n d w h e th e r th e IR S a p p e a ls o f f ice r a b u se d h e r d isc re tio n in re f u sin g to
co n side r an install m en t pay m en t agre em en t pro p o sed b yM il ler-W ag en k n ec h t. H o w ev er, t he Tax C our tfound t hatt he I R S A ppeal s O ffi ce pr oper l ypr ohi bi t ed the audi o r ecor di ng of M i l l er - W agenkne cht ’ s C D P hear i ng. 3 Fol l ow i ng a J une 2009 benc h t r i al , t he Tax C our tent er ed a de ci s i on i n favorof t he I R S on t he r emai ni ng i s s ues i n t he ca s e. M i l l er - W agenkne chts ubs equent l yfi l ed a mot i on t o vaca t e and mot i on forr econs i der at i on cl ai m i ng, i nt eral i a, t hatt he document s s he pr evi ous l ys ubm i t t ed ent i t l ed “N ot i ce[ s ] of A ffi davi tSt at ement [s ] i n Pr ot es tof I nt ernal R evenue C ode 6011” ha d been a cce pt ed byt he I R S as val i d t ax r etur ns , and thus , s he had
s at i s fi ed the fi l i ng r equi r ement s fort he y ear s ati s s ue. T he Tax C our tdeni ed the mot i onA s t hes e ar e t he onl yi s s ues M i l l er - W agenkne chtr ai s es i n heropeni ng br i ef, s he has 4 w ai ved r evi ew of ot herar gum ent s t hats he r ai s ed i n t he courtbel ow . See K os tv. K o za k iew icz, 1 F
. 3 d 1 7 6 , 1 8 2 (3d C ir
. 1 9 9 3 ). 4 for r econ si derat i on , bu tvacated i t s pri or deci si on so t hat i tcou l d im po se a pen al t yagainst M i l l er - W agenkne chtpur s uantt o I
. R
. C
. § 6673( a) ( 1) forr evi vi ng fr i vol ous ar gum ent s t hat had bee n r epea t edl yr ej ect ed. T hi s appea l fol l ow ed. II. W e h av e jurisdicti o n p u rsua n t t o 2 6 U
. S
. C
. § 7 4 8 2 (a). W e re v iew the T ax C o u rt ’s fac tual fi ndi ngs forcl earer r orand exe r ci s e pl enaryr evi ew overi t s l egal concl us i ons . See P N C B a n c o rp , In c . v . C o m m ’r o f In te rn a l R e v e n u e , 2 1 2 F .3 d 8 2 2 , 8 2 7 (3 d C ir . 2 0 0 0 ). W e re v iew the im p o sit ion o f a p en alt yu n d er § 6 6 7 3 fo r ab u se o f d iscreti o n . S ee S au ers
v . C o m m ’r o f

In te rn a l R e v e n u e , 7 7 1 F .2 d 6 4 , 7 0 (3 d C ir . 1 9 8 5 ). M i l l er - W agenkne chtr ai s es t w o ar gum ent s on appea l
. Pr i nci pal l y , s he ar gues t hat t he IR S O ffi ce of

A pp eal s w ronglyden i ed h er a face- t o fac e C D P heari ng . S he als o
c h a llen g e s th e $ 1 ,0 0 0 sa n c tio n im p o se d u p o n h e r b yth e T a x C o u rt. 4 W e c o n c lu d e th a t M ill e r-W a g e n k n e c h t’s f irst a rg u m e n t is n o t p ro p e rlyb e f o re th is C our tas s he fa i l ed t o r ai s e t he ar gum enti n herpet i t i on t o t he Tax C our tand has pr ovi ded
n o ex p lana ti o n in h er b ri ef s fo r fa il ing to d o so . S ee M o n etaryII L td. P’sh ip v
. C o m m ’r of I nt ernal R evenue . , 47 F. 3d 342, 347 ( 9t h C i r . 1995) ; M i nnes ot a Law y er s M ut . I ns . C o. & S u b s i d i a r i e s v . Co mm ’ ro f I n t e r n a l Re v e n u e , 2 8 5 F
. 3 d 1 0 8 6 , 1 0 9 2 ( 8 t h Ci r . 2 0 0 2 )
. As
m ent i oned ea r l i er , t he Tax C our tgr ant ed s um m aryj udgm enti n favorof t he5

C o m m iss io n e r o n M ill e r-W a g e n k n e c h t’s c laim th a t th e IR S A p p e a l’s O f f ice im p ro p e rly deni ed herr eques tt o audi o r ecor d hert el ephoni c C D P hear i ng. I n t he or ders o hol di ng, t he Tax C our tnot ed t hatM i l l er - W agenkne chtcoul d have a l s o r ai s ed the cl ai m t hats he
w a s im p ro p e rlyd e n ied a f a c e -to -f a c e h e a rin g , b u t th a t in h e r p e tit io n to th e T a x C o u rt,
s he fa i l ed t o do s o. ( Supp. A ppx. at8. ) Pur s uantt o T ax C our tR ul e 331( b) ( 4) , anyi s s ue notr ai s ed i n s uch a pe t i t i on has been “ conce ded. ” Thus, beca us e M i l l er - W agenkne cht f a iled to ra ise th e c laim b e lo w , w e a re u n a b le to c o n sid e r it o n a p p e a l. A s t o M i l l er - W agenkne cht ’ s s econd c l ai m , w e di s cern no err oron t he partof t he T ax C our tr egar di ng i t s i m pos i t i on of a $1000 s anct i on. W her e, as her e, i tappea r s t hat

“ th e ta x p a y e r’ s p o s itio n in [ a ta x lia b ility d is p u te ] i s f ri v o lo u s o r g ro u n d le s s ,” 2 6 U .S .C . § 6673( a) ( 1) ( B ) , “t he Tax C our t , i n i t s deci s i on, m ayr equi r e the t axpay ert o payt o t he U n ited S tate s a p e n a ltyn o t in e x c e ss o f $ 2 5 ,0 0 0 ,” id . at 6 6 7 3 (a )(1 ). A n a rg u m e n t is fr i vol ous forpurpos es of § 6673( a) ( 1) ( B ) w hen i ti s “contr aryt o es t abl i s hed l aw and
uns uppor t ed bya r eas oned, col or abl e ar gum entforchange i n t he l aw . ” C ol eman v. C om m ’ rof I nt er nal R evenue , 791 F. 2d 68, 71 ( 7t h C i r . 1986)
. I n herm ot i on t o vaca t e, M i l l er- W agen kn echt i nsi st ed thatseveral “N oti ce[s] of A ffi dav i tS t at em ent[s ] i n P rot est of I nt ernal R evenue C ode 6011” w hi ch s he s ubm i t t ed t o t he I R S i n A ugus t2004 had bee n accep t ed b yt he IR S as val i d returns. S he als o ex pan ded on her earl i er cl ai m t hat because T it le 26 h as n o t bee n en ac ted a s p o sit ive law , itd o es n o t app lyto h er. M i l l er - W agenkne cht ’ s ar gum ent s have be en r out i nel yr ej ect ed. See U ni t ed St at esM or eover , i n a pr i orappea l t o t hi s C our t , w e r ej ect ed the as s er t i on t hatt he 5 “A ffi davi t s ” M i l l er - W agenkne chthas r epea t edl ys ubm i t t ed t o t he I R S cons t i tut e r etur ns w ith in the m ea n ing o f th e In terna l R ev en u e C o d e. S ee M il ler-W ag en k n ec h t v. C o m m ’r o f In terna l R ev en u e, 28 5 F
. A p p ’x 9 5 6 , 9 5 9 (3d C ir
. 2 0 0 8 ). 6 v. E del s on, 604 F. 2d 232, 234 ( 3d C i r . 1979) ( t ax form s cont ai ni ng no fi nanci al in f o rm a tio n u p o n w h ich a tax p a y e r’s tax liab ili tyc a n b e c a lcu late d d o n o t co n stitu te
r etur ns w i t hi n t he meani ng of t he I nt ernal R evenue C ode) ; R y an v. B i l by , 764 F. 2d 1325, 1328 ( 9t h C i r . 1985) ( t hatC ongr es s di d notenac tT i t l e 26 i nt o pos i t i ve l aw does not render provi si on s of Int ernal R even ue C od e i nv al i d o r unenf orceable)
. B ecause M ill e r-W a g e n k n e c h t k n e w , o r sh o u ld h a v e k n o w n , tha t h e r a rg u m e n ts w e re c o n tra ryto
w ell -estab li sh ed law an d thu s w ere frivo lou s, itw as w ith in the d iscreti o n o f th e tax co u rt t o i m pos e a s anct i on. 5 A c c o rd in g ly , w e w ill a f f irm th e ju d g m e n t o f

th e U n ited S tate s T a x C o u rt.