Court Opinion

ID: 4474188
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:10:48.516199+00
Date Added: 2024-06-11T15:04:05.195034
License: Public Domain

Halpern, J., concurring: I agree with the majority that, if in determining to proceed with collection, respondent erred in informing petitioner that all applicable laws and administrative procedures had been met, such error was harmless error. I write separately to express my views as to why the majority is correct. I. Introduction Petitioner requested and received a so-called collection due process hearing. At that hearing, the Appeals officer was required to obtain verification that the requirements of any applicable law or administrative procedure had been met. Sec. 6330(c)(1). Following the hearing, the Appeals officer informed petitioner that all applicable laws and administrative procedures had been met and that collection from petitioner of his tax liability for 1990 through 1997 would proceed. Petitioner contends that he was entitled to receive assessment records under section 6203.1 The majority finds: The Appeals officer did not give petitioner a copy of the record of assessment at or before the hearing as petitioner had requested. Respondent gave petitioner copies of the Forms 4340 prior to the trial in this case. The Forms 4340 that respondent gave petitioner before trial showed that the amounts at issue were properly assessed, and petitioner did not show at trial any irregularity in the assessment procedure that would raise a question about the validity of the assessments. * * * Petitioner was not prejudiced in any way by the fact that he first received copies of those records after the section 6330 hearing. * * * [Majority op. p. 167; emphasis added.] As will be shown, a person seeking judicial review of agency actions bears the burden of demonstrating prejudice from any error. Since petitioner did not show prejudice, the “rule of prejudicial error” is applicable, and petitioner is entitled to no relief. II. Administrative Procedure Act I have previously stated my belief that various provisions of the Administrative Procedure Act, 5 U.S.C. secs. 551-559, 701-706 (1994) (hereafter, sections of which are cited as 5 U.S.C.), inform our authority under section 6330(d)(1)(A) to review a determination made by an Appeals officer pursuant to section 6330(c)(3). Lunsford v. Commissioner, 117 T.C. 159, 165, 167-168 (2001) (Halpern, J., concurring). Among the applicable APA provisions is 5 U.S.C. sec. 706, which, in pertinent part, provides: Scope of review To the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. The reviewing court shall— (1) compel agency action unlawfully withheld or unreasonably delayed; and (2) hold unlawful ánd set aside agency action, findings, and conclusions found to be— (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; (D) without observance of procedure required by law; In making the foregoing determinations, the court shall review the whole record or those parts of it cited by a party, and due account shall be taken of the rule of prejudicial error. [Emphasis added.] The “rule of prejudicial error” (otherwise the doctrine of harmless error), as applied to an administrative action, provides that the reviewing court shall disregard procedural errors unless the complaining party was prejudiced thereby. As recently summarized by the Court of Appeals for the First Circuit: The doctrine of harmless error is as much a part of judicial review of administrative action as of appellate review of trial court judgments. Indeed, the Administrative Procedure Act, 5 U.S.C. § 706, says that in reviewing agency action, the court “shall” take due account of “the rule of prejudicial error,” i.e., whether the error caused actual prejudice. And while many of the decisions involve harmless substantive mistakes, no less an authority than Judge Friendly [in Kerner v. Celebrezze, 340 F.2d 736, 740 (2d Cir. 1965)] has applied the harmless error rule to procedural error, as has the circuit [Court of Appeals for the District of Columbia Circuit] that most often reviews agency action. [Sane Our Heritage, Inc. v. FAA, 269 F.3d 49, 61 (1st Cir. 2001); in. ref. omitted.] The Court of Appeals added: Obviously, a court must be cautious in assuming that the result would be the same if an error, procedural or substantive, had not occurred, and there may be some errors too fundamental to disregard. But even in criminal cases involving constitutional error, courts may ordinarily conclude that an admitted and fully preserved error was “harmless beyond a reasonable doubt.” Agency missteps too may be disregarded where it is clear that a remand “would accomplish nothing beyond further expense and delay.” [Id. at 61-62; emphasis added; citations omitted.] The party seeking judicial review of an agency action bears the burden of demonstrating prejudice from any error. DSE, Inc. v. United States, 169 F.3d 21, 31 (D.C. Cir. 1999) (“Under the APA, we will not set aside agency action unless the party asserting error can demonstrate prejudice from the error” (internal quotation marks and brackets omitted)).2  It is no bar to application of the doctrine of harmless error that the agency error complained of is the omission of a statutory prerequisite. See, e.g., Hydro Engg., Inc. v. United States, 37 Fed. Cl. 448, 477 (1997) (“The standard of review for the denial of a procedural right at the agency level, even one that is statutory, is harmless error.” (Emphasis added.)). The reviewing court must consider whether deviation from the requirements of the statute would affect the interests that the statute is designed to protect and must take into account the general principle that public rights should not be prejudiced because of immaterial errors on the part of public servants. Intercargo Ins. Co. v. United States, 83 F.3d 391, 395 (Fed. Cir. 1996) (citing Brock v. Pierce County, 476 U.S. 253, 260 (1986), in which the Court said: “We would be most reluctant to conclude that every failure of an agency to observe a procedural requirement voids subsequent agency action, especially when important public rights are at stake.”). III. Discussion Section 6203 provides that, on request of the taxpayer, the Secretary shall furnish the taxpayer a copy of the record of assessment. Section 6203 does not provide any remedy for the Secretary’s failure to comply. In United States v. James Daniel Good Real Prop., 510 U.S. 43, 63 (1993), in connection with agency disregard of statutorily imposed timing requirements, the Supreme Court stated: “We have held that if a statute does not specify a consequence for noncompliance with statutory timing provisions, the.federal courts will not in the ordinary course impose their own coercive sanction.” The Court relied on United States v. Montalvo-Murillo, 495 U.S. 711, 717 (1990) (failure to comply with Bail Reform Act’s prompt hearing provision) for the following proposition: “There is no presumption or general rule that for every duty imposed upon the court or the Government and its prosecutors there must exist some corollary punitive sanction for departures or omissions, even if negligent.” See also Diaz v. Dept. of the Air Force, 63 F.3d 1107, 1109 (Fed. Cir. 1995) (“An agency’s violation of a statutory procedural requirement does not necessarily invalidate the agency action, especially where Congress has not expressed any consequences for such a procedural violation.”). In effect, section 6330(c)(3)(A) provides that, prior to making his determination to proceed with collection, an Appeals officer shall obtain verification that all applicable laws or administrative procedures have been met. See sec. 6330(c)(1), (3)(A). As Judges Foley’s and Swift’s separate opinions in this case show, it is debatable whether section 6203 is an applicable law. Assuming that it is, however, the majority has concluded that petitioner was not prejudiced in any way by the delay in providing him with the required record. The Appeals officer’s verification that all applicable laws had been met may have been in error; nevertheless, the majority has, in effect, concluded that it was harmless error. Given the lack of a specific remedy in section 6203 and respondent’s eventual compliance with the statute (without demonstrable prejudice to petitioner), I agree with the majority’s conclusion: “Requiring the Appeals officer to provide petitioner with a second copy of petitioner’s Forms 4340 at this time would [needlessly] delay disposition of this case.” Majority op. p. 167. IV. Conclusion If the Appeals officer committed error at all, it was harmless. Petitioner has failed to show that the Appeals officer’s determination would have differed in the slightest if petitioner had been provided the assessment record prior to or at the Appeals hearing. The majority is correct. Whalen and Thornton, JJ., agree with this concurring opinion.   Sec. 6203 provides: SEC. 6203. METHOD OF ASSESSMENT. The assessment shall be made by recording the liability of the taxpayer in the office of the Secretary in accordance with rules or regulations prescribed by the Secretary. Upon request of the taxpayer, the Secretary shall furnish the taxpayer a copy of the record of the assessment. [Emphasis added.]    In certain circumstances, sec. 7491(a) imposes on the Commissioner the burden of proof in connection with- factual issues relevant to determining the liability of the taxpayer for any income, estate, or gift tax. See sec. 7491(a)(1). Even if sec. 7491(a) is applicable to the determination of whether petitioner has demonstrated prejudice, petitioner has failed to introduce credible evidence of prejudice and, thus, must carry the burden of proof. See sec. 7491(a)(1).