Court Opinion

ID: 210376
Source: CourtListenerOpinion
Date Created: 2011-03-13 08:06:47+00
Date Added: 2024-06-11T09:43:08.425696
License: Public Domain

NOTE: This disposition is nonprecedential.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                           NOTE: This disposition is nonprecedential.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.

2007-3204
                                        2
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).

2007-3204
                                         3
      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.

2007-3204
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