Court Opinion

ID: 9962302
Source: CourtListenerOpinion
Date Created: 2024-04-23 15:01:00.604168+00
Date Added: 2024-06-11T08:20:19.349537
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 6, 2023              Decided April 23, 2024

                       No. 22-1308

      JOHANNES LAMPRECHT AND LINDA LAMPRECHT,
                    APPELLANTS

                             v.

          COMMISSIONER OF INTERNAL REVENUE,
                      APPELLEE

                On Appeal from a Decision
               of the United States Tax Court

     Lloyd De Vos argued the cause for appellants. With him
on the briefs was Robert F. Ruyak.

    Robert J. Branman, Attorney, U.S. Department of Justice,
argued the cause for appellee. With him on the brief was
Arthur T. Catterall, Attorney.

   Before: WILKINS and WALKER, Circuit Judges, and
RANDOLPH, Senior Circuit Judge.

    Opinion for the Court filed by Circuit Judge WALKER.

    WALKER, Circuit Judge: Johannes Lamprecht and his wife
Linda are Swiss citizens. In 2006 and 2007, the couple lived
                               2
in the United States. Each year, they underreported their
taxable income by telling the Internal Revenue Service they
had no foreign bank accounts. In fact, they had millions in a
Swiss bank called UBS.

     It looked like the Lamprechts would avoid tax liability on
those accounts until the United States served a summons on
UBS in 2008. The summons requested information about a
class of unknown taxpayers who might have failed to report the
existence of taxable income in UBS accounts. Lamprecht v.
Commissioner of Internal Revenue, T.C. Memo 2022-91, 2022
WL 3923833, at *3 (T.C. Aug. 31, 2022). Because the
summons sought information about unknown people, it is
called a John Doe Summons.

     The United States sued in federal court to enforce the John
Doe Summons. But in August 2009, out-of-court agreements
made enforcement unnecessary. UBS agreed to give the
information to Switzerland, which agreed to give it to the
United States. After entering those agreements, the United
States dismissed the enforcement suit.

    By November 2010, the exchange of information was
complete. So the United States formally withdrew the John
Doe Summons.

     The next month, the Lamprechts amended their tax returns
for 2006 and 2007. The new returns reported taxable income
in the previously undisclosed UBS accounts, which increased
their tax liability by approximately $2.5 million. The couple
paid these back taxes, which are not in dispute.

     But the IRS wasn’t finished with the Lamprechts. It sent
them a letter in 2014 saying they would be penalized for their
original inaccuracies. In January 2015, the IRS followed up
                               3
with a formal “notice of deficiency” assessing about $500,000
in penalties.

      The couple challenged those penalties in the United States
Tax Court, where they raised some (but not all) of the
arguments they invoke here. Throughout, they’ve argued that
the IRS didn’t follow the tax code’s procedures when the IRS
first decided to penalize them; that they deserved protections
for voluntarily fixing their own mistake before the IRS acted;
and that in any event, the statute of limitations for assessing
accuracy penalties had run on the two tax years.

    The tax court granted summary judgment to the IRS.
Except where noted, we review that decision de novo. See
Ryskamp v. Commissioner of Internal Revenue, 797 F.3d 1142,
1147 (D.C. Cir. 2015).

    We affirm.

     I. The IRS Complied with 26 U.S.C. § 6751(b)(1)

     The Lamprechts make three arguments related to a
statutory requirement that:

    No penalty under this title shall be assessed unless the
    initial determination of such assessment is personally
    approved (in writing) by the immediate supervisor of
    the individual making such determination or such
    higher level official as the Secretary may designate.

26 U.S.C. § 6751(b)(1).

    Each argument lacks merit.
                              4
  A. It Doesn’t Matter When (or Whether) a Supervised
      Tax Examiner Signs the Approval Required by
                       § 6751(b)(1)

    The Lamprechts say that a form approving their tax
penalty was signed by a tax examiner after it was signed by the
examiner’s supervisor. According to the couple, that means the
IRS has not proven that it complied with § 6751(b)(1). We
disagree.

    For a tax penalty assessment, “the initial determination of
such assessment” must be “personally approved (in writing) by
the immediate supervisor of the individual making such
determination.” 26 U.S.C. § 6751(b)(1).

     That’s what happened here. For each relevant tax year
(2006 and 2007) a tax examiner made the initial determination
and then submitted a Form 5345-D to his immediate
supervisor. Each form stated an intent to “[a]ssess” an
“accuracy penalty” on the Lamprechts. A 762 (2006), 761
(2007). And each form was signed by the supervisor. That is
the only signature that the statute requires.

     True, each form was also signed by the tax examiner. And
the tax examiner may have signed the forms after his supervisor
did. But it doesn’t matter when or even whether the tax
examiner signs — what matters is that a supervisor signed and
approved each form. And here, a supervisor did.

   B. The IRS May Use a Form 5345-D to Comply with
                     § 6751(b)(1)

    The Lamprechts also argue that the IRS may not use a
Form 5345-D to prove that a supervisor complied with
§ 6751(b)(1). But “[s]ection 6751(b) does not require written
                                 5
supervisory approval on any particular form.” Palmolive
Building Investors, LLC v. Commissioner, 152 T.C. 75, 86
(T.C. 2019). Rather, the statute requires a supervisor to put in
writing his approval of a subordinate’s initial determination to
assess a penalty. And here, the two Forms 5345-D (signed by
the supervisor) stated the IRS’s intent to “[a]ssess” an
“accuracy penalty” on the Lamprechts.

     On appeal, the couple argues that regardless of whether a
Form 5345-D is ever acceptable, the tax examiners did not fill
out these particular Forms 5345-D with enough specificity to
explain which of several accuracy penalties would be assessed.
That is an intriguing argument. But the Lamprechts did not
preserve it. In the tax court, they made only a “fleeting and
skeletal reference” to it in their reply to their own motion for
summary judgment. Crawford v. Duke, 867 F.3d 103, 110
(D.C. Cir. 2017). That is too little, too late, and the argument
is forfeited. See Blau v. Commissioner of IRS, 924 F.3d 1261,
1273 n.3 (D.C. Cir. 2019).1

C. The Tax Court’s Refusal to Exclude the Forms 5345-D
     from Evidence Was Not an Abuse of Discretion

    The Lamprechts also asked the tax court to exclude the
Forms 5345-D from evidence because the IRS did not produce
them until the IRS moved for summary judgment. The tax
court denied that request for such an “extreme sanction.”
Bonds v. District of Columbia, 93 F.3d 801, 809 (D.C. Cir.
1996) (cleaned up). We review its decision for an abuse of

1
  The tax court (understandably) did not address this argument in its
opinion. At that point, the Lamprechts could have moved for
reconsideration. See Tax Court Rule 161. They didn’t. Cf. Blau,
924 F.3d at 1267 n.2.
                               6
discretion. United States ex rel. Folliard v. Government
Acquisitions, Inc., 764 F.3d 19, 26 (D.C. Cir. 2014).

     There was no abuse of discretion. As the tax court
explained, the Lamprechts never expressly asked the IRS to
produce the Forms 5345-D. Lamprecht v. Commissioner of
Internal Revenue, T.C. Memo 2022-91, 2022 WL 3923833, at
*11 (T.C. Aug. 31, 2022). Nor did they even make a more
general request for forms showing compliance with
§ 6751(b)(1). See id. And the tax court never ordered
production of them, contrary to the couple’s contentions. See
id. at *11-12. So the IRS’s delay in producing the Forms
5345-D did not require the tax court to exclude them from
evidence.

 II. The Lamprechts’ Corrected Returns Did Not Protect
                 Them from Penalties

     IRS regulations preclude penalties for some taxpayers who
correct their previously filed tax returns. But the protection
does not apply if taxpayers fail to file new returns before “the
IRS serves a summons . . . relating to the tax liability of a
person, group, or class that includes the taxpayer . . . with
respect to an activity for which the taxpayer claimed any tax
benefit on the return directly or indirectly.” 26 C.F.R.
§ 1.6664-2(c)(3)(i)(D)(1). Returns that meet those criteria are
called “qualified amended returns.” Id. at (c)(3) (cleaned up).

     Though the Lamprechts filed corrected returns, they were
not “qualified amended returns.” That’s because their
corrected returns were filed after a John Doe Summons sought
information on a class of taxpayers who did exactly what the
Lamprechts did — use UBS accounts to underreport their
taxable income.
                               7
    They make two arguments to the contrary, but neither is
persuasive.

                A. The Summons Was Legal

     The Lamprechts do not dispute that they were within the
“class” covered by the John Doe Summons; instead, they argue
that the summons was illegal. According to them, the United
States issued the John Doe Summons only to extend the
relevant statute-of-limitations period, so it was not “issued for
a legitimate purpose,” and thus it didn’t prevent them from
filing “qualified amended returns.” Lamprecht Br. at 41, 43;
see also 26 C.F.R. § 1.6664-2(c)(3)(i)(D)(1).

     We can assume without deciding that the Lamprechts
introduced enough evidence to show that extending the statute
of limitations was one purpose of the John Doe Summons. But
the couple has not shown that it was the only purpose. In fact,
the Lamprechts’ own evidence shows that there was a second
purpose.

     As they explain, the IRS “wanted to use the [John Doe]
Summons as leverage against Switzerland to ensure that UBS
met its obligations under the UBS Settlement Agreement.” See
Lamprecht v. Commissioner of Internal Revenue, T.C. Memo
2022-91, 2022 WL 3923833, at *17 (T.C. Aug. 31, 2022)
(quoting the Lamprechts). There isn’t any dispute among the
parties about whether that was a legitimate purpose, and we
agree with the tax court that it was. Cf. id. at *18 n.25. That
ruins the couple’s claim that the summons was an “attempt to
extend the limitations period for assessment, and for that
purpose only.” Lamprecht Br. at 46.
                               8
   B. The Summons Relates to a Benefit Claimed on the
           Lamprechts’ Original Tax Returns

     Next, the couple argues that the John Doe Summons was
not issued “with respect to an activity for which the
[Lamprechts] claimed any tax benefit on the return directly or
indirectly.” 26 C.F.R. § 1.6664-2(c)(3)(i)(D)(1). If that’s
right, then the summons does not disqualify their corrected
returns from the category of “qualified amended returns” that
protects them from penalties.

     But (1) there was a “tax benefit” claimed “on the return[s]”
originally filed by the Lamprechts (2) “with respect to” an
activity covered by the John Doe Summons. Id.

     First, let’s consider the “tax benefit” claimed “on the
return[s].” Id. Each return asked if the couple had “a financial
account in a foreign country, such as a bank account.” A 131
(2006), 199 (2007). For 2006, the Lamprechts originally
answered: “No.” Id. at 131. They did the same for 2007. Id.
at 199. As their corrected returns acknowledge, each no was a
misrepresentation. Id. at 165 (2006), 232 (2007). And each
misrepresentation “on the return” provided a “tax benefit” to
the couple because the misrepresentations allowed the
Lamprechts to avoid about $2.5 million in taxes. 26 C.F.R.
§ 1.6664-2(c)(3)(i)(D)(1).

    Second, the John Doe Summons covered information
“with respect to” the tax benefit of those misrepresentations.
Id. The summons was issued to secure information about
taxpayers who failed to report the existence of UBS bank
accounts. Lamprecht, 2022 WL 3923833, at *3. That is
exactly what the Lamprechts did.
                               9
     III. The Penalty Assessments Were Not Too Late

    The Lamprechts say that the statute of limitations bars the
IRS’s penalty assessments. See 26 U.S.C. § 6501(e)(1)(A).

     Usually they’d be correct. The six-year statute-of-
limitations period began to run when each original tax return
was due in 2007 and 2008. Id. And the IRS issued the notice
of deficiency penalizing the couple in 2015 — more than six
years later.

     But the John Doe Summons changes the calculation. If a
summons goes unresolved for at least six months, the
limitations period “shall be suspended” for “any person with
respect to whose liability the summons is issued.” 26 U.S.C.
§ 7609(e)(2). The suspension runs from six months after the
summons’s service until “the final resolution of such
response.” Id. at (e)(2)(B); see also Treasury Regulation
§ 301.7609-5(d)(1) (the “final resolution” is “the date on which
there is a final resolution of the summoned party’s response to
the summons”); id. at (e)(3) (elaborating). If the “final
resolution” was in November 2010 — when the summons was
withdrawn — then the penalties were timely.

     In response, the Lamprechts say that the “final resolution”
of the John Doe Summons occurred in August 2009 — or
alternatively, that the summons was illegal and never effective.

    We cannot endorse either of those arguments.

   A. The Summons Was Not Resolved in August 2009

     According to the Lamprechts, the John Doe Summons was
resolved when the United States agreed to dismiss the
                               10
summons’s enforcement suit as part of an out-of-court
settlement in August 2009.

     But the text of that settlement agreement with UBS
specifically said that the enforcement suit’s dismissal did not
resolve the summons. The settlement agreement provided that
“in and of itself,” the dismissal would “have no effect on the
[John Doe] Summons or its enforceability.” A 921. If UBS
“fail[ed] to timely meet in any material respect any of its
obligations under” the settlement agreement, then the IRS was
“not obligated to withdraw the [John Doe] Summons.” Id. at
924. So the parties left the door open for a second suit to
enforce the original summons.

     In other words, although the 2009 agreement was an
important step toward resolution of the summons, no one
understood the enforcement suit’s dismissal to be “in and of
itself” the final resolution of the summons. Id. at 921; cf.
Winston Churchill, A Speech at the Lord Mayor’s Day
Luncheon at the Mansion House (Nov. 10, 1942) (“Now this is
not the end. It is not even the beginning of the end. But it is,
perhaps, the end of the beginning.”).

     Because the summons survived the enforcement suit’s
dismissal, the “final resolution” of the summons came after the
suit’s dismissal in August 2009. And because the Lamprechts
have identified no other date for the final resolution, they have
not shown that the summons was resolved before its
withdrawal in November 2010. That means the summons
remained unresolved long enough to extend the statute-of-
limitations period beyond the date that the IRS assessed the tax
penalties in 2015.
                                  11
             B. The Summons Was Legal (Again)

     The Lamprechts’ final argument is one we have already
rejected. According to them, the only purpose of the John Doe
Summons was to extend the statute-of-limitations period;
because that purpose renders the summons illegal, the
summons did not extend the statute-of-limitations period.

    We have already held that the John Doe Summons had
another proper purpose and was legal. Our holding was
necessary to the resolution of the Lamprechts’ argument about
“qualified amended returns.” And that holding forecloses this
rerun of their argument.2

2
  The IRS says that when it issues a summons to a bank (like UBS),
the bank’s customers (like the Lamprechts) cannot retroactively
challenge the legality of the summons for statute-of-limitations
purposes. But we need not consider whether that bar to litigation
exists. Nor must we decide whether that bar would be jurisdictional.

   Just as this court “need not resolve difficult questions of its
jurisdiction[ ] when a prior judgment of the court forecloses the
merits issue,” we need not resolve a difficult jurisdictional question
if the merits issue is foreclosed by an earlier holding in the same case
on the exact same merits issue — so long as we had jurisdiction to
make the earlier holding. See Sherrod v. Breitbart, 720 F.3d 932,
937 (D.C. Cir. 2013); cf. Steel Co. v. Citizens for a Better
Environment, 523 U.S. 83, 93-102 (1998).

  No one disputes our jurisdiction to hold (earlier in this opinion)
that the summons had a proper purpose in the “qualified amended
returns” context. And the couple expressly concedes that the
argument there is identical to their argument here in the statute-of-
limitations context. See Lamprecht Br. at 40-41. In other words, the
outcome here is “foreordained.” Sherrod, 720 F.3d at 937 (cleaned
up).
                              12
                       IV. Conclusion

     We are unpersuaded by each of the Lamprechts’
arguments. First, the IRS showed in tax court that a supervisor
preapproved the Lamprechts’ penalties in writing. Second, the
couple did not protect themselves from penalties by filing
“qualified amended returns.” And third, the statute of
limitations does not bar the assessment of those penalties.

    We affirm the tax court’s decision to award summary
judgment to the IRS.

                                                   So ordered.