Opinion ID: 3161896
Heading Depth: 2
Heading Rank: 1

Heading: The Reliability of the IRS’s Assessments

Text: We review a district court’s grant of a motion for summary judgment de novo. Hughes v. McCarthy, 734 F.3d 473, 478 (6th Cir. 2013). We also review de novo a district court’s denial of a summary judgment motion on strictly legal grounds. Marcilis v. Twp. of Redford, 693 F.3d 589, 598 (6th Cir. 2012) (citing Watson Carpet & Floor Covering, Inc. v. Mohawk Indus., Inc., 648 F.3d 452, 459 (6th Cir. 2011)). The IRS’s tax assessments enjoy “a legal presumption of correctness” in civil cases. United States v. Fior D’Italia, Inc., 536 U.S. 238, 242 (2002). If an assessment is supported by “a minimal evidentiary foundation,” the “burden of disproving” it rests on the taxpayer. United States v. Hammon, 277 F. App’x 560, 563 (6th Cir. 2008) (citing United States v. Walton, 909 F.2d 915, 919 (6th Cir. 1990); United States v. Besase, 623 F.2d 463, 465 (6th Cir. 1980)). To meet this burden in most cases, the taxpayer must show “the determination to be incorrect or arbitrary.” Indmar Prods. Co. v. Comm’r, 444 F.3d 771, 776 (6th Cir. 2006) (citing Ekman v. Comm’r, 184 F.3d 522, 524 (6th Cir. 1999)). But if the taxpayer can only prevail by “proving a negative assertion”—as when a taxpayer contends that he did not, in fact, receive income the IRS has attributed to him—he is only required to make a “[r]easonable denial[] of the assessment’s validity . . . to shift the burden back to the government.” Hammon, 277 F. App’x at 563 (first alteration in original) (quoting Besase, 623 F.2d at 465). “Vague and general denials” of an assessment’s accuracy do not, however, establish a reasonable denial sufficient to shift the burden to the Government. Id. (citing Walton, 909 F.2d at 922; Williams v. United States, Nos. 93-5965, 93-5966, 1995 WL 21431, at  (6th Cir. Jan. 19, 1995) (per curiam)).4 4 Rohner argues that the 1998 enactment of 26 U.S.C. § 7491(a) abrogated the existing regime of presumptive regularity for IRS assessments. Section 7491(a)(1) provides that “[i]f, in any court proceeding, a taxpayer introduces credible evidence with respect to any factual issue relevant to ascertaining the liability of the taxpayer for any tax . . . , the [Government] shall have the burden of proof with respect to such issue.” Rohner has -6- Case Nos. 14-4135; 15-3083 United States v. Rohner Rohner makes several arguments as to why the district court should not have treated the IRS’s assessments as reliable in this case. At the analytical threshold, he claims that the presumption of correctness should not have attached to the IRS’s assessments because the Government did not present a minimal evidentiary foundation for the calculations therein. However, the first clear statement of this argument appears in his reply brief for Case No. 14-4235, and we have regularly held that arguments initially raised on appeal in a reply brief are waived. See Sanborn v. Parker, 629 F.3d 554, 579 (6th Cir. 2010). While Rohner mentions the Government’s failure to provide evidentiary support for the assessments at certain points in his opening brief, these references were, at most, made in passing, and he did not develop the argument. Matters “adverted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived,’ and . . . ‘[i]t is not sufficient for a party to mention a possible argument in the most skeletal way, leaving the court to . . . put flesh on its bones.’” United States v. Robinson, 390 F.3d 853, 886 (6th Cir. 2004) (second and third alterations in original) (quoting McPherson v. Kelsey, 125 F.3d 989, 995–96 (6th Cir. 1997)); see also White Oak Prop. Dev., LLC v. Washington Twp., Ohio, 606 F.3d 842, 850 (6th Cir. 2010). Therefore, Rohner has waived his ability to argue on appeal that summary judgment was improper because the assessments lacked a sufficient evidentiary foundation. Rohner’s claims that he otherwise overcame the assessments’ presumptive correctness lack merit. First, he contends that the assessments in this case should not be treated as reliable because Government Accountability Office (“GAO”) audits have found “IRS computer printouts” to be “inaccurate, unreliable, and untrustworthy” in general. But Rohner does not connect the reports to the particular assessments at issue in this case. In essence, his position is not presented a cogent argument as to how this “credible evidence” standard is more favorable to his position than the “reasonable denial” standard discussed supra. -7- Case Nos. 14-4135; 15-3083 United States v. Rohner that, due to the GAO’s conclusions, all electronic IRS documents are unreliable. His reasoning on this point amounts, therefore, to a general denial that the assessments were correct, which will not overcome the presumption to the contrary. See Hammon, 277 F. App’x at 563.5 To argue against the presumptive reliability of the assessments, Rohner also points to the Government’s conduct during discovery, including its allegedly inadequate responses to requests for production of documents, the withholding of Frazee’s work product, and the failure to provide “a complete list of the IRS[’s] due process requirement[s] for taxpayer hearings and proceedings.” As the district court properly noted, Rohner has not connected any of these matters to the validity of the assessments. These arguments are, therefore, mere vague denials of the assessments’ validity that will not defeat the presumption of accuracy. See Hammon, 277 F. App’x at 563. Rohner also alleges “numerous violations involving the IRS administrative code and the agents’ Internal Revenue Manual.” This claim appears to focus on several alleged technical errors in the assessment process, including the Government’s failure to comply with the requirements of Williams v. United States, No. 89-5740, 1990 WL 47555 (6th Cir. Apr. 17, 1990) (order), and a lack of proof of the production or mailing of the Notice and Demands. 6 At the outset, Rohner cannot claim relief based on a violation of the Internal Revenue Manual 5 Additionally, Rohner’s reliance on Latif v. Obama, 677 F.3d 1175 (D.C. Cir. 2011), and Godfrey v. United States, 997 F.2d 335 (7th Cir. 1993), is misplaced. The Latif court specifically rejected an argument that the general conditions under which documents related to Guantanamo Bay detainees were created defeated the general presumption that these records were accurate. See Latif, 677 F.3d at 1178–79. The panel reasoned that to accept such a claim “would render the traditional presumption of regularity wholly illusory,” id. at 1179, an observation that applies equally to Rohner’s assertion here. Godfrey found that certain computerized information was not sufficient to establish that the IRS mailed a particular refund check. Godfrey, 997 F.2d at 339. But, as the Government correctly notes, the Godfrey court explicitly stated that Certificates of Assessments and Payments, the documents at issue here, “constitute[] evidence that an assessment was made in accordance with the law.” Id. (citation omitted). 6 Rohner also claims that the IRS improperly filed Substitute Returns for the 1996 and 1997, but we consider this contention below under the standard for Rule 60(b) instead of Rule 56 because he first raised the argument in a motion for relief from judgment. See, e.g., Marietta Franklin Sec. Co. v. Muldoon, No. 93-3432, 1994 WL 399550, at –4 (6th Cir. 1994) (per curiam) (addressing arguments raised for the first time in a motion to reconsider under the standards applicable to Rule 60(b)). -8- Case Nos. 14-4135; 15-3083 United States v. Rohner because it generally does not carry the force of law. See Reisman v. Bullard, 14 F. App’x 377, 379 (6th Cir. 2001) (citing Valen Mfg. Co. v. United States, 90 F.3d 1190, 1194 (6th Cir. 1996)); see also United States v. McKee, 192 F.3d 535, 540 (6th Cir. 1999) (“[T]he [Internal Revenue] Manual was generally created for the agency’s own internal administration, and not for the protection of taxpayers.”).7 Further, the Notice and Demand requirement of 26 U.S.C. § 6303(a) applies “only where the summary powers of the IRS to collect taxes administratively are concerned,” not when the Government “maintain[s] a civil action against the taxpayer to obtain judgment for the amount due,” as in the present case. United States v. Berman, 825 F.2d 1053, 1060 (6th Cir. 1987); see also Anuforo v. Comm’r, 614 F.3d 799, 805 (8th Cir. 2010). Finally, Williams, unlike this case, concerned challenges particular to tax liens, not civil collection suits. See Williams, 1990 WL 47555, at –3. Additionally, Rohner argues that the report of his expert witness, Victoria Osborn, was sufficient to overcome the assessments’ presumption of accuracy. Osborn, a fraud examiner and accountant, found that (1) certain discrepancies existed in the documentation of the 2006 penalty, (2) the Government had not established that the 1996 and 1997 Notices of Deficiency had been mailed to Rohner because it did not include a copy of a proof of mailing and attempted delivery to Rohner’s last known address, and (3) the Government had not provided any evidence of the 2000, 2001, 2003, 2006, and 2008 Notices of Deficiency.8 The Government subsequently attached the notices for these years to its reply. 7 In dicta, McKee suggested that the IRS’s non-compliance with Manual provisions designed to protect constitutional rights may be “relevant in determining whether a taxpayer’s constitutional rights have been offended” in the context of a criminal case. McKee, 192 F.3d at 540‒41. This dicta has since been called into question, see United States v. Rutherford, 555 F.3d 190, 194−97 (6th Cir. 2009), and, regardless, that situation is not present here. 8 Although Rohner refers to the Notice and Demands in this portion of his brief, the expert report only discusses Notices of Deficiency. -9- Case Nos. 14-4135; 15-3083 United States v. Rohner Regarding whether the Government established that it mailed the notices to Rohner, the magistrate judge found that although the Government did not benefit from the presumption of mailing that would have been afforded it had it produced a completed Postal Service Form 3877, it had nevertheless met its burden to present the requisite “otherwise sufficient” evidence to show that the notices had been mailed because each Form 4340 stated that additional tax had been assessed “per default of 90 day letter.” See O’Rourke v. United States, 587 F.3d 537, 540 (2d Cir. 2009) (“[W]hen the IRS (a) shows that the notice of deficiency existed and (b) produces a properly completed Postal Form 3877 certified mail log (or equivalent), it is entitled to a presumption of mailing . . . . [I]f the IRS is unable to make that showing, then it has the burden of proving timely mailing with evidence that is ‘otherwise sufficient.’”). The magistrate judge ultimately recommended that because Osborn’s report only pointed to a lack of documentation that the Government subsequently provided, and Rohner did not offer any other opposing evidence, the district court should find that the Government produced “sufficient evidence of proper mailing.” The district court overruled Rohner’s objections on this matter and further noted that he did not provide an affidavit that he never received the Notices of Deficiency. Rohner relies on the expert report again on appeal, but he does not point to any affirmative evidence that the notices were not mailed. Therefore, he has not shown that a genuine issue exists as to whether proper mailing took place. See Chappell v. City of Cleveland, 585 F.3d 901, 913 (6th Cir. 2009) (“To make out a genuine issue of material fact, plaintiff must present significant probative evidence tending to support her version of the facts, evidence on which a reasonable jury could return a verdict for her.” (citation omitted)). - 10 - Case Nos. 14-4135; 15-3083 United States v. Rohner Accordingly, Rohner has not come forth with evidence to counter the assessments’ presumption of reliability. He has therefore failed to show that the district court erred in affording the Government this presumption in granting summary judgment in its favor.