Court Opinion

ID: 2679758
Source: CourtListenerOpinion
Date Created: 2014-06-20 19:00:51.639238+00
Date Added: 2024-06-11T11:15:56.165201
License: Public Domain

Case: 13-11456   Date Filed: 06/20/2014   Page: 1 of 9

                                                         [DO NOT PUBLISH]

            IN THE UNITED STATES COURT OF APPEALS

                    FOR THE ELEVENTH CIRCUIT
                      ________________________

                            No. 13-11456
                        Non-Argument Calendar
                      ________________________

                D.C. Docket No. 3:09-cv-00101-HES-MCR

UNITED STATES OF AMERICA,

                                                           Plaintiff-Appellee,

                                 versus

DONALD F. HANKS,
JENNIFER SPANGLER ARNSTEIN,

                                                       Defendants-Appellants.

                      ________________________

               Appeal from the United States District Court
                   for the Middle District of Florida
                     ________________________

                             (June 20, 2014)

Before PRYOR, ANDERSON and DUBINA, Circuit Judges.

PER CURIAM:
              Case: 13-11456      Date Filed: 06/20/2014   Page: 2 of 9

      In 2002, Donald F. Hanks entered into an agreement with the IRS, pursuant

to which he would pay off assessed, unpaid income taxes in a series of monthly

installments. See generally 26 U.S.C. § 6159 (2012). Within a few years, Hanks

had breached the terms of the agreement. The parties agree that the IRS was

consequently authorized to terminate the agreement. See id. § 6159(b)(4)(A).

Hanks argues, however, that the IRS did not do so properly because it failed to

notify him in advance as required. See id. § 6159(b)(5)(A).

      In 2009, the government filed suit against Hanks seeking, inter alia, to

reduce the unpaid assessments to judgment. The parties agree that this suit was

barred if the installment agreement was still in effect. After a bench trial, the

district court found that the IRS had properly notified Hanks before terminating the

agreement so that the termination was effective and this suit was not barred.

Hanks challenges the district court’s finding on appeal. We affirm.

                                           I.

      The terms of the 2002 installment agreement required Hanks to make

monthly payments of $1000 until he had paid off the full amount that he owed for

years including 1995 and 1999. The IRS assigned a tax examining technician to

monitor Hanks’s progress. In March 2004, after paying off only a small fraction of

the liabilities covered by the agreement, Hanks notified the IRS that he believed

that he no longer owed any money. Hanks testified that he repeated this contention

                                           2
                Case: 13-11456       Date Filed: 06/20/2014       Page: 3 of 9

in monthly letters. In October 2004, his payments began to decline from the

required amount of $1000 to as little as $100 by July 2006.

       An IRS database contains an entry dated August 16, 2006, purporting to

memorialize the termination of the 2002 installment agreement. The parties agree

that in order to terminate the agreement, the IRS was required to notify Hanks at

least thirty days in advance. See 26 U.S.C. § 6159(b)(5) (2012). At trial, Hanks

testified that he was never so notified. The IRS database does not indicate whether

Hanks was so notified. A revenue officer testified that at the time of the alleged

termination, when tax examining technicians manually monitored installment

agreements, they only sometimes recorded the required notification as a separate

entry in the database. According to this witness, revenue officers routinely

assumed that an entry memorializing termination meant that the agreement had

been properly terminated.

       In October 2006, the IRS sent Hanks a “refresher” demand letter for years

including 1995 and 1999. In November 2006, Hanks responded with a letter

asserting that the IRS owed him money, without saying anything about the 2002

installment agreement. Around the same time, Hanks made one final voluntary

payment of $100 toward the liabilities covered by the 2002 agreement. 1

1
       Hanks asserts that he continued to make payments until January 2007. The district court,
however, found that the last payment Hanks made in relation to the agreement was in November
2007, and this finding was not clearly erroneous. It is undisputed that Hanks made an additional
                                               3
                Case: 13-11456       Date Filed: 06/20/2014      Page: 4 of 9

       In January 2007, the IRS began to levy on Hanks’s assets. Hanks called the

IRS and, inter alia, indicated that he did not understand why he owed so much. A

detailed log of the conversation does not mention the 2002 installment agreement.

In February 2007, the IRS began to apply Hanks’s involuntary (levy) payments

toward the liabilities covered by the 2002 agreement.

       In August 2007, the IRS mailed Hanks a letter titled “Annual Installment

Agreement Statement.” The statement covered a period beginning in July 2006

and ending in July 2007. The statement reflected Hanks’s two aforementioned

voluntary $100 payments in July and November 2006. It also reflected multiple

involuntary (levy) payments between February 2007 and June 2007. The

statement indicated that all of these payments were applied against the amount that

Hanks owed for 1995.

       In October 2007, Hanks delivered quitclaim deeds to two parcels of real

property to his future wife and ex-wife, respectively, within days of learning that

his ex-wife had talked to an IRS collections official. At some point after August

2006, Hanks also caused title to his boat to be transferred to an entity that was

controlled by his stepdaughter. The district court concluded that these transfers

were fraudulent, and Hanks does not challenge this conclusion on appeal.

voluntary payment in January 2007, but the IRS applied that payment toward a liability that was
not covered by the 2002 agreement.

                                               4
               Case: 13-11456       Date Filed: 06/20/2014     Page: 5 of 9

       In February 2009, the government filed suit against Hanks in order to, inter

alia, reduce the unpaid assessments for years 1995 and 1999 to judgment. Hanks

argued, inter alia, that the suit was barred because the 2002 installment agreement

had never been properly terminated. See 26 U.S.C. § 6331(k)(3)(A), (i)(4) (2012);

26 C.F.R. § 301.6331-4(b)(2) (2013).

       After a bench trial, the district court found that the IRS had properly notified

Hanks before terminating the installment agreement. 2 According to the district

court, the database entry dated August 2006 created a presumption that the

agreement had been properly terminated, rebuttable only by “clear evidence to the

contrary.” United States v. Chem. Found., Inc., 272 U.S. 1, 14–15, 47 S. Ct. 1, 6

(1926). The court declined to credit Hanks’s testimony that he had never received

notice, finding him incredible based on his admitted history of tax evasion and his

“evasive” and “implausible” responses to questions posed at trial. In particular, the

court observed that Hanks had denied receiving various letters from the IRS until,

or even though, the IRS produced records to the contrary, including certified

mailing logs, database entries, and a signed certified mail receipt.

2
       The district court alternatively concluded that Hanks had abrogated the agreement in
2004 when he informed the IRS that he considered his tax debts paid in full and subsequently
breached the terms of the agreement. According to the court, Hanks’s actions amounted to a
constructive request that the agreement be terminated, so that pre-termination notice was not
required. See 26 C.F.R. § 301.6159-1(c)(3)–(4) (2006) (amended and renumbered as 26 C.F.R.
§ 301.6159-1(e)(3)–(4) (2013)). The government eschews this theory on appeal, and we offer no
opinion on its merits.

                                              5
               Case: 13-11456     Date Filed: 06/20/2014    Page: 6 of 9

      The court also found that Hanks did not believe that the agreement was in

place after August 2006. The court observed that after that date, Hanks made only

one voluntary payment toward the liabilities covered by the agreement. The court

also observed that when Hanks contacted the IRS as it proceeded to levy on his

assets, he did not assert that the agreement was still in effect, which, if true, would

have barred the levies. See 26 U.S.C. § 6331(k)(2). Finally, the court observed

that Hanks had subsequently attempted to protect his assets from government

seizure. This appeal followed.

                                          II.

      After a bench trial, we review the district court’s conclusions of law de novo

and findings of fact for clear error. Renteria-Marin v. Ag-Mart Produce, Inc., 537

F.3d 1321, 1324 (11th Cir. 2008). We hold that the district court did not clearly err

in finding that the IRS properly notified Hanks before terminating the 2002

installment agreement.

      At the outset, we question whether a “presumption of regularity” controls

this case. “The presumption of regularity supports the official acts of public

officers, and, in the absence of clear evidence to the contrary, courts presume that

they have properly discharged their official duties.” United States v. Chem.

Found., Inc., 272 U.S. 1, 14–15, 47 S. Ct. 1, 6 (1926). “The presumption perhaps

is less a rule of evidence than a general working principle.” Nat’l Archives &

                                           6
              Case: 13-11456     Date Filed: 06/20/2014    Page: 7 of 9

Records Admin. v. Favish, 541 U.S. 157, 174, 124 S. Ct. 1570, 1581 (2004). For

example, when the IRS produces a dated and properly addressed copy of a

taxpayer notice, it is sometimes presumed that that notice was sent. See United

States v. Dixon, 672 F. Supp. 503, 506 (M.D. Ala. 1987), aff’d mem., 849 F.2d

1478 (11th Cir. 1998). A record certifying that notice was sent on a specific date

may also give rise to the same presumption, see United States v. Chila, 871 F.2d

1015, 1019 (11th Cir. 1989), at least where the existence of the notice is not in

dispute, see Welch v. United States, 678 F.3d 1371, 1379 (Fed. Cir. 2012).

      In this case, however, the government has produced neither a copy of the

alleged notice nor a record certifying that notice was sent. The IRS’s database

entry purports to indicate only that the 2002 installment agreement was terminated.

A revenue officer testified that at the time, the issuance and sending of a notice of

termination was only sometimes memorialized in a separate database entry when

an installment agreement was being manually monitored. This description of the

then-existing practice hardly amounts to “proof of procedures followed in the

regular course of operations which give rise to a strong inference” that a notice was

sent. Godfrey v. United States, 997 F.2d 335, 338 (7th Cir. 1993). We are

disinclined to uphold such an inference based on a single ambiguous database

entry. Cf. id. at 338–339 (holding that an IRS database entry reflecting a “refund

of overpayment” did not establish that a refund check had been issued and sent).

                                          7
                Case: 13-11456        Date Filed: 06/20/2014       Page: 8 of 9

       However, the district court’s opinion suggests it did not rest on the

presumption, and the district court’s findings of fact make any reliance on the

presumption superfluous. The district court highlighted circumstantial evidence

that Hanks had received a notice of termination. The court observed, for example,

that as the IRS proceeded to levy on Hanks’s assets, Hanks contested his liability

but never asserted that the installment agreement was still in effect, even though

that would have barred the levies. See 26 U.S.C. § 6331(k)(2) (2012). The court

also observed that Hanks made only one voluntary payment toward the liabilities

covered by the agreement once it had allegedly been terminated. The court further

observed that Hanks engaged in fraudulent transfers after the agreement was

allegedly terminated in an effort to shield his assets. Based on this evidence, the

court found that Hanks no longer believed that the agreement was in force after

August 2006.3

       In addition, the court observed that Hanks denied receiving various letters

from the IRS until, or even though, the IRS produced convincing records to the

contrary. The court concluded that this pattern of denial exhibited Hanks’s

strategic dishonesty. Sitting as factfinder, the court was permitted to infer that

3
         Hanks argues that the district court was required to draw an “adverse inference” against
the government based on its inability to produce additional evidence that Hanks was properly
notified. See generally Callahan v. Schultz, 783 F.2d 1543, 1545 (11th Cir. 1986) (per curiam).
We disagree. The government did not refuse to produce evidence that was within its control;
rather, it acknowledged that it could not produce any additional evidence. The “adverse
inference” rule does not apply.

                                                8
                Case: 13-11456        Date Filed: 06/20/2014       Page: 9 of 9

Hanks was also lying about his failure to receive pre-termination notice regarding

the 2002 agreement. “Such an inference is consistent with the general principle of

evidence law that the factfinder is entitled to consider a party’s dishonesty about a

material fact as ‘affirmative evidence of guilt.’” Reeves v. Sanderson Plumbing

Prods., Inc., 530 U.S. 133, 147, 120 S. Ct. 2097, 2108 (2000) (quoting Wright v.

West, 505 U.S. 277, 296, 112 S. Ct. 2482, 2492 (1992)).

       Hanks asserts that he has a history of exercising his right to administrative

appeal and that the fact that he did not do so here indicates that he did not receive

the notice in question. See 26 U.S.C. § 6159(e). The district court was not

required to accept this argument in light of the aforementioned evidence to the

contrary. 4 The court was permitted to infer that the IRS properly notified Hanks

before terminating the 2002 agreement.

       AFFIRMED.

4
         Hanks also argues that the “Annual Installment Agreement Statement” provided to him
in August 2007 is evidence that the 2002 installment agreement was still in effect at that time.
Hanks observes that the statute requires “each taxpayer who has an installment agreement in
effect” to be provided “an annual statement setting forth the initial balance at the beginning of
the year, the payments made during the year, and the remaining balance as of the end of the
year.” 26 U.S.C. § 6159 note (emphasis added) (Statements Regarding Installment Agreements).
Hanks’s argument is unpersuasive. It is undisputed that the 2002 installment agreement was “in
effect” at the beginning of the period covered by the 2007 “Annual Installment Agreement
Statement.” It would be natural for the IRS to provide a final closing statement at the “end of the
year” during which the agreement was terminated. Even if a closing statement was not
statutorily required, it was certainly not prohibited by the statute in question and, consequently,
is not strong evidence that the 2002 agreement was still in effect in August 2007.

                                                9