Court Opinion

ID: 7799920
Source: CourtListenerOpinion
Date Created: 2022-08-11 20:00:32.809016+00
Date Added: 2024-06-11T16:29:00.770509
License: Public Domain

Case: 21-51064     Document: 00516428682         Page: 1    Date Filed: 08/11/2022

           United States Court of Appeals
                for the Fifth Circuit                               United States Court of Appeals
                                                                             Fifth Circuit

                                                                           FILED
                                                                     August 11, 2022
                                  No. 21-51064                        Lyle W. Cayce
                                                                           Clerk

   Daphne Jeanette Rost, Executor of the Estate of John H. Rebold,

                                                           Plaintiff—Appellant,

                                      versus

   United States of America, the Internal Revenue
   Service,

                                                           Defendant—Appellee.

                  Appeal from the United States District Court
                       for the Western District of Texas
                            USDC No. 1:19-CV-607

   Before Smith, Duncan, and Oldham, Circuit Judges.
   Stuart Kyle Duncan, Circuit Judge:
         In 2005, John Rebold formed the Enelre Foundation as a Stiftung
   under the laws of Liechtenstein. Stiftung is a German word meaning, roughly,
   “foundation” or “endowment.” Enelre’s purpose is to provide education
   and general support for Rebold and his children. Rebold transferred $3
   million to Enelre’s bank accounts. He later learned the IRS would consider
   Enelre a “foreign trust,” triggering certain reporting requirements. Rebold
   belatedly filed the reports, and the IRS assessed penalties. Rebold paid the
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                                        No. 21-51064

   penalties and then filed this refund action. The district court granted
   summary judgment for the government. We affirm.
                                             I.
                                             A.
          The Internal Revenue Code (IRC) requires disclosures regarding
   foreign trusts. See I.R.C. § 6048. Under section 6048(a), a “United States
   person” must report “the creation of any foreign trust” and “the transfer of
   any money or property (directly or indirectly) to a foreign trust.” Id.
   § 6048(a)(1), (3)(A)(i)–(ii). A “United States person” includes U.S. citizens
   and residents. Id. § 7701(a)(30)(A). These reportable events are disclosed to
   the IRS on Form 3520. 1 Failure to timely file the form or to fully disclose all
   required information results in a “penalty equal to the greater of $10,000 or
   35 percent of the gross reportable amount.” Id. § 6677(a). The “gross
   reportable amount” is “the gross value of the property involved in the event
   (determined as of the date of the event).” Id. § 6677(c).
          Under section 6048(b), as in effect during the years relevant to this
   case, anyone treated as the owner of a foreign trust under the grantor trust
   rules of I.R.C. §§ 671–679 must “ensure” the trust annually “makes a
   return . . . which sets forth a full and complete accounting of all trust
   activities and operations for the year, the name of the United States agent for
   such trust, and such other information as the Secretary may prescribe.” Id.

          1
            See Treas. Reg. § 16.3-1(a) (2018), removed by Eliminating Unnecessary Tax
   Regulations, 84 Fed. Reg. 9231-01, 9238 (Mar. 14, 2019); see also Form 3520, Annual
   Return To Report Transactions With Foreign Trusts and Receipt of Certain Foreign Gifts,
   Dep’t Treas. & IRS (2021), https://www.irs.gov/pub/irs-pdf/f3520.pdf.

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   § 6048(b)(1)(A) (2009). 2 The return is made on Form 3520-A. 3 Failure to
   timely file the form or to fully disclose all required information results in “a
   penalty equal to the greater of $10,000 or [5] percent of the gross reportable
   amount.” Id. § 6677(a)–(b). The “gross reportable amount” is “the gross
   value of the portion of the trust’s assets at the close of the year treated as
   owned by the United States person.” Id. § 6677(c)(2).
                                                 B.
           Rebold was a U.S. citizen who worked overseas as an engineer in the
   oil and gas industry. In 2005, he traveled to Switzerland and created the
   Enelre Foundation as a Stiftung 4 under the laws of Liechtenstein. At the time

           2
            In 2010, Congress amended section 6048(b) to require that a foreign trust owner
   not only “ensure” the trust makes an annual return but also directly “submit” a return
   “with respect to such trust for such year.” I.R.C. § 6048(b)(1) (2010).
           3
            See Treas. Reg. § 404.6048-1(a) (2017), removed by Eliminating Unnecessary Tax
   Regulations, 84 Fed. Reg. at 9239; see also Form 3520-A, Annual Information Return of
   Foreign Trust With a U.S. Owner, Dep’t Treas. & IRS (2021),
   https://www.irs.gov/pub/irs-pdf/f3520a.pdf.
           4
            Stiftung is translated from German to English as “foundation,” “establishment,”
   “donation,” or “endowment.” German-English Translation for “Stiftung,”
   Langenscheidt, https://en.langenscheidt.com/german-english/stiftung (last visited
   Aug.      2,      2022);        Stiftung:   German         to    English,      Collins,
   https://www.collinsdictionary.com/us/dictionary/german-english/stiftung (last visited
   Aug. 2, 2022). The plural form of Stiftung is “Stiftungen.” Stiftung v. Plains Mktg., L.P.,
   603 F.3d 295, 299 n.1 (5th Cir. 2010).
            “A stiftung is a creation of the laws of Liechtenstein . . . , resembling a trust, but
   not limited to specific lives in being. A stiftung can own property and is controlled by an
   administrator (known as a stiftungerat) whose powers and duties are comparable to a
   trustee.” Kraus v. Comm’r, 59 T.C. 681, 685 (1973). “A Stiftung does not have members
   or a board of directors.” I.R.S. Chief Couns. Att’y Mem. AM2009-012, 2009 WL 3336014
   (Oct. 7, 2009). In forming a Stiftung, the founder “transfers specific assets to the Stiftung
   that are then endowed for specific purposes,” “states the objectives of the Stiftung[,] and
   appoints its [stiftungerat].” Ibid. A Stiftung “can be created for charitable or personal
   purposes” but “cannot be created to undertake commercial activities.” Von E. Sanborn et
   al., Classifying Trusts, Anstalts, and Stiftungs—When Is a Trust Not a Trust?, A.L.I.-

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   of Enelre’s founding, Rebold was the settlor and primary beneficiary, and his
   children were secondary beneficiaries. “Enelre” is the name of Rebold’s
   wife, Erlene, spelled backwards.
           Enelre’s organizing documents provide that its purpose is to provide
   education, training, support, and maintenance for its beneficiaries. The
   documents prohibit “commercial trade” and do not provide for allocation of
   profits. They refer to Enelre as a trust, and Enelre has trustees and pays
   trustee fees. Liechtensteinian Public Registry filings reiterate Enelre’s
   purpose and prohibition of commercial business.
           Rebold opened bank accounts for Enelre at Credit Suisse, UBS, and
   Bank Wegelin. He transferred $2 million to Enelre in 2005 and another $1
   million in 2007. Neither Rebold nor Enelre filed Form 3520 or 3520-A
   disclosing to the IRS the creation of Enelre or these transfers.
           In 2010, UBS notified Rebold that it intended to turn over Enelre’s
   account records to the IRS. Rebold consulted counsel regarding tax liability
   for Enelre. An attorney for “the trust and trustees” (i.e., Enelre and its
   trustees) advised Rebold’s counsel that Rebold was “an American who set
   up a foreign trust, so [h]e will need to do 3520’s and 3520-A’s as well as
   amended US returns,” and recommended that he participate in a voluntary
   disclosure program “to limit his exposure to penalties.” That attorney noted
   that Rebold “will owe some serious tax! Nothing to be taken lightly.”
   Rebold’s counsel explained that he was “trying to find a way to treat the

   A.B.A. Course of Study, SL003 ALI-ABA 293, 300 (July 2005). “Liechtenstein law
   provides that in certain cases commercial activities may be undertaken by a Stiftung if such
   activities serve its noncommercial purposes.” AM2009-012, 2009 WL 3336014. Once
   formed, the Stiftung “is entered onto the Register in Liechtenstein and must have a
   minimum amount of initial capital.” Ibid. The Stiftung “exists for the benefit of those
   named in its formation documents as being appointed as beneficiaries.” Ibid.

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   Enelre Foundation as something other than a trust for US tax purposes,”
   which was “not easy.”
            In 2013, Daphne Jeanette Rost, Rebold’s daughter and power of
   attorney, filed a Form 3520 for 2005 on Rebold’s behalf, reporting that he
   owned a portion of Enelre and had transferred money to it. Rost also filed
   Forms 3520-A for the years 2005, 2006, and 2007, reporting year-end
   balances of $1,680,272, $1,807,873, and $3,116,898, respectively.
            In 2014, the IRS assessed $1,380,252.35 in penalties against Rebold
   under section 6677(a) and (b) for his failure to timely file Forms 3520 and to
   ensure that Enelre timely filed Forms 3520-A in 2005, 2006, and 2007. The
   IRS soon notified Rebold of its intent to levy the penalties. Rebold contested
   his liability and requested collection due process hearings. The IRS Appeals
   Office sustained the levy notices but cut the penalties in half. In June 2017,
   Rebold paid the penalties, as adjusted. In August 2018, he filed administrative
   refund claims with the IRS.
                                          C.
            In June 2019, having not received a decision from the IRS, Rebold filed
   this action, seeking refunds for the penalties. Upon Rebold’s death in
   December 2019, Rost, his executor, substituted as plaintiff.
            After discovery, the parties cross-moved for summary judgment on
   Rebold’s liability. The government argued that federal tax law determines
   the classification of an entity as a trust for tax purposes and that, under a
   facts-and-circumstances test, Enelre qualified as a foreign trust. Rost argued
   that because no statute, regulation, or judicial decision provides that a
   Liechtensteinian Stiftung is a foreign trust for federal tax purposes, the
   penalties violated the government’s “duty of clarity when imposing
   sanctions,” the Administrative Procedure Act (APA), and the Due Process
   Cause.

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          The court granted the government’s motion and denied Rost’s. Rost
   v. United States, No. 1:19-CV-0607-RP, 2021 WL 5190875 (W.D. Tex. Sept.
   22, 2021). Applying a facts-and-circumstances test, the court held that Enelre
   qualified as a foreign trust based on its purpose and form, as stated in its
   organizing documents, and because it failed the tests for domestic trusts set
   forth in Treasury regulations. Id. at *4. The court found that Rost submitted
   no evidence “demonstrating fact issues that would prevent [it] from
   determining that [Enelre] is a ‘foreign trust’ as a matter of law.” Ibid. The
   court rejected Rost’s notice arguments, finding the statutory and regulatory
   frameworks were “sufficiently clear.” Id. at *5, *7–9. Rost timely appealed.
                                         II.
          We review a summary judgment de novo. United States v. Bittner, 19
   F.4th 734, 740 (5th Cir. 2021) (citation omitted), cert. granted, 142 S. Ct. 2833
   (2022). Summary judgment is appropriate “if the movant shows that there is
   no genuine dispute as to any material fact and the movant is entitled to
   judgment as a matter of law.” Fed. R. Civ. P. 56(a); see Anderson v. Liberty
   Lobby, Inc., 477 U.S. 242, 248 (1986). Once the movant satisfies this burden,
   the nonmovant “must present competent summary judgment evidence of
   the existence of a genuine [dispute] of fact.” Johnson v. World All. Fin. Corp.,
   830 F.3d 192, 195 (5th Cir. 2016) (citations omitted). “We view the evidence
   in the light most favorable to the nonmovant and draw all reasonable
   inferences in its favor.” Bittner, 19 F.4th at 740 (citation omitted).
          In a tax refund action, “the taxpayer bears the burden of proving both
   the error in the assessment and the amount of refund to which he is entitled.”
   Brown v. United States, 890 F.2d 1329, 1334 (5th Cir. 1989) (citations
   omitted); see also Trinity Indus., Inc. v. United States, 757 F.3d 400, 413 (5th
   Cir. 2014).

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                                          III.
          At bottom, Rost argues that Rebold had insufficient notice that Enelre
   qualifies as a foreign trust for federal tax purposes. She contests the facts-
   and-circumstances test employed by the district court. She claims that
   applicable statutes, regulations, and case law do not clearly “connect[] the
   imposition of penalties for failure to file foreign trust information returns with
   respect to a Liechtenstein Stiftung.” She then argues the penalties violate the
   APA, the government’s “duty of clarity,” and due process.
          We disagree with each contention. We first outline the legal
   framework for classifying an arrangement as a foreign trust, then explain why
   Enelre qualifies as one, and then address Rost’s notice arguments.
                                            A.
          The classification of an organization “for federal tax purposes is a
   matter of federal tax law and does not depend on whether the organization is
   recognized as an entity under local law.” Treas. Reg. § 301.7701-1(a).
   Sections    301.7701–2,     301.7701–3,       and   301.7701–4    determine     the
   classification of organizations recognized as separate entities, unless the IRC
   “provides for special treatment of that organization.” Id. § 301.7701-1(b).
   Neither the IRC nor its regulations specifically classify or provide for special
   treatment of Stiftungen. Cf. id. § 301.7701-2(b)(8) (classifying Liechtenstein
   Aktiengesellschaften as corporations).
          Determining whether an arrangement is a foreign trust requires a two-
   step inquiry: (1) whether it is a trust under section 301.7701-4 or a business
   entity under sections 301.7701-2 or 301.7701-3, and (2) if it is a trust, whether
   it is a United States person (i.e., a domestic trust) or a foreign trust. See I.R.C.
   § 7701(a)(30)(E), (31)(B); Treas. Reg. §§ 301.7701-1(a)–(b), (d), 301.7701-
   2(a), 301.7701-4(a), 301.7701-5(a), 301.7701-7.

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          A “trust” in the IRC is an arrangement where “trustees take title to
   property for the purpose of protecting or conserving it for the beneficiaries.”
   Treas. Reg. § 301.7701-4(a). An arrangement generally qualifies as a trust if
   “the purpose of the arrangement is to vest in trustees responsibility for the
   protection and conservation of property for beneficiaries who cannot share in
   the discharge of this responsibility and, therefore, are not associates in a joint
   enterprise for the conduct of business for profit.” Ibid.; see also Frank Aragona
   Tr. v. Comm’r, 142 T.C. 165, 175 (2014).
          An arrangement’s purpose thus distinguishes a trust from other
   entities. “[A]ny entity recognized for federal tax purposes . . . that is not
   properly classified as a trust under § 301.7701–4” is a “business entity.”
   Treas. Reg. § 301.7701-2(a). Arrangements “known as trusts because the
   legal title to property is conveyed to trustees for the benefit of beneficiaries”
   may nevertheless not qualify as trusts under the IRC “because they are not
   simply arrangements to protect or conserve the property for the
   beneficiaries.” Id. § 301.7701-4(b). “Business trusts,” for example,
   “generally are created by the beneficiaries simply as a device to carry on a
   profit-making business which normally would have been carried on through
   business organizations that are classified as corporations or partnerships
   under the [IRC].” Ibid.; see Petersen v. Comm’r, 148 T.C. 463, 475 n.8 (2017).
          In classifying an arrangement as a trust or other business entity for tax
   purposes, “there is no one rule or set formula,” and “[e]ach case must be
   decided upon its own particular facts.” Keating-Snyder Tr. v. Comm’r, 126
   F.2d 860, 862 (5th Cir. 1942); see also Comm’r v. Horseshoe Lease Syndicate,
   110 F.2d 748, 749 (5th Cir. 1940) (“the facts of each case[] must control”).
   The seminal case is Morrissey v. Commissioner, 296 U.S. 344 (1935). There,
   the Supreme Court held that a trust created for developing tracts of land and
   constructing and operating a golf course was properly classified and taxed as
   “an association” (i.e., a business trust), rather than an ordinary trust, based

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   on its “character” and “salient features,” including the trustees’ “use and
   adaptation of the trust mechanism.” Id. at 359–61. The Court applied
   Morrissey’s fact-specific approach in three companion cases decided that
   same day. See Swanson v. Comm’r, 296 U.S. 362 (1935); Helvering v. Coleman-
   Gilbert Assocs., 296 U.S. 369 (1935); Helvering v. Combs, 296 U.S. 365 (1935).
           An arrangement’s most relevant features for tax-classification
   purposes are its “nature,” “purpose,” and “operations.” Morrissey, 296
   U.S. at 357; Swanson, 296 U.S. at 365. 5 The form of organization under which
   the arrangement operates “may furnish persuasive evidence” of a
   classification but “cannot be regarded as decisive.” Morrissey, 296 U.S. at
   358. No feature is dispositive; they “all go to the point of whether the trust is
   being used to achieve the organizational conveniences of the corporate
   form.” Guar. Emps. Ass’n v. United States, 241 F.2d 565, 571 (5th Cir. 1957).
           In assessing these features, the arrangement’s organizing documents
   are determinative. See Swanson, 296 U.S. at 363–65; Morrissey, 296 U.S. at
   360–61. As the Supreme Court has explained, “parties are not at liberty to
   say that their purpose was other or narrower than that which they formally
   set forth in the instrument under which their activities were conducted.”
   Coleman-Gilbert, 296 U.S. at 374. 6

           5
             Morrissey relied on five corporate features to conclude the trust was “analogous
   to a corporate organization” and thus qualified as an “association,” or “business trust.”
   296 U.S. at 359–61. These features are “(1) title to the property held by the entity,
   (2) centralized management, (3) continuity uninterrupted by deaths among the beneficial
   owners, (4) transfer of interest without affecting the continuity of the enterprise, and
   (5) limitation of the personal liability of participants.” Comm’r v. Rector & Davidson, 111
   F.2d 332, 333 (5th Cir. 1940); see Kurzner v. Comm’r, 413 F.2d 97, 101–04 & n.22 (5th Cir.
   1969) (reviewing Morrissey’s discussion of “distinguishing attributes of ‘corporateness’”).
           6
             See also Abraham v. United States, 406 F.2d 1259, 1262–63, 1263 n.4 (6th Cir.
   1969) (finding “broad powers . . . for conducting a business for profit . . . carefully spelled
   out” in the trust instrument could not “be negated by [a] self-serving limiting declaration

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           Once an entity is deemed a trust, it must be classified as foreign or
   domestic. A foreign trust is “any trust other than a trust” that is a “United
   States person” (i.e., a domestic trust). I.R.C. § 7701(a)(30)(E), (31)(B);
   Treas. Reg. § 301.7701-7(a)(2). A trust is domestic if (1) “a court within the
   United States is able to exercise primary supervision over the administration
   of the trust” (the “court test”) and (2) “one or more United States persons
   have the authority to control all substantial decisions of the trust” (the
   “control test”). I.R.C. § 7701(a)(30)(E); Treas. Reg. § 301.7701-7(a)(1).
           A trust satisfies the court test if the governing document “does not
   direct that the trust be administered outside of the United States,” “[t]he
   trust in fact is administered exclusively in the United States,” and “[t]he
   trust is not subject to an automatic migration provision” that would move it
   outside the U.S. if a U.S. court were to “attempt to assert jurisdiction” over
   it. Treas. Reg. § 301.7701-7(c)(1), (4)(ii). As to the control test, “control
   means having the power, by vote or otherwise, to make all of the substantial
   decisions of the trust, with no other person having the power to veto [them].”
   Id. § 301.7701-7(d)(1)(iii). This includes anyone with authority over
   substantial decisions, not only trust fiduciaries. Ibid. Substantial decisions are
   those “authorized or required” under the trust instrument and applicable
   law “that are not ministerial.” Id. § 301.7701-7(d)(1)(ii) (providing
   examples).

   contained in the last paragraph” that the trust “shall not be deemed or considered a trust
   operated for financial profit”); Nee v. Main St. Bank, 174 F.2d 425, 429 (8th Cir. 1949)
   (“The intention, through the creation of a trust, to conduct a business enterprise may
   accordingly legally be inferred . . . from the enumeration in the instrument of powers
   which, if exercised, would necessarily cause such an enterprise to result.”); Sears v. Hassett,
   111 F.2d 961, 962–63 (1st Cir. 1940) (noting the “character of the trust” is determined by
   “the purposes and potential activities as disclosed on the face of the trust instrument”).

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                                              B.
           The district court correctly found that Enelre qualifies as a foreign
   trust. Its organizing documents explain that Enelre’s purpose is to support
   its beneficiaries and limit its transactions to “pursuing and realising its
   purpose.” This is “characteristic of an ordinary trust.” Morrissey, 296 U.S.
   at 356–57. The documents also prohibit Enelre from conducting commercial
   trade. Liechtensteinian Public Registry filings confirm this prohibition.
   Enelre’s familial purpose, lack of business objective, and bar on commercial
   activity render it a trust. See McKean v. Scofield, 108 F.2d 764, 765–66 (5th
   Cir. 1940) (holding a trust was taxable as a trust and not an association
   because “[s]olicitude for the future of [the settlor’s] family [wa]s a main
   purpose of the trust”); see also Estate of Bedell v. Comm’r, 86 T.C. 1207, 1221
   (1986) (holding a “trust characterized by a dominant familial objective” was
   taxable as a trust and not an association because it lacked a business
   purpose). 7
           Enelre’s form of organization confirms it is a trust. Enelre is subject
   to Liechtenstein’s “Act on Trust Enterprises.” Its board members serve the
   same function as independent trustees, and Enelre’s counsel considered
   them trustees. Enelre also has beneficiaries like an ordinary trust. Rebold
   described himself as “Settlor and Beneficiary” of Enelre, and he transferred
   money to Enelre the same way a trust grantor would. Rebold’s children, the
   other beneficiaries, were not involved with Enelre and did not know it existed
   during the years in question, so they could not have been “associates”

           7
             Cf. Coleman-Gilbert, 296 U.S. at 373–74 (holding trust was taxable as an
   association because the parties engaged “in carrying on an extensive business for profit”);
   Adkins Props. v. Comm’r, 143 F.2d 380, 381 (5th Cir. 1944) (holding trust with “an active
   business purpose, having the general characteristics and advantages of corporate
   organization” was taxable as an association); cases cited supra note 6.

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   engaged in a common business enterprise. See Morrissey, 296 U.S. at 357; cf.
   Elm St. Realty Tr. v. Comm’r, 76 T.C. 803, 813–18 (1981). And Enelre’s
   organizing documents do not provide for profit sharing. See Morrissey, 296
   U.S. at 357.
          Enelre is not a domestic trust. It fails the court test because any
   disputes must proceed to arbitration under Liechtensteinian law, with “the
   President of the Princely Liechtenstein Court of Appeal” assisting in
   appointing an arbitrator. See I.R.C. § 7701(a)(30)(E)(i); Treas. Reg.
   § 301.7701-7(a)(1)(i), (c)(1). And it fails the control test because Rebold, as
   settlor, “waive[d] any influence on [Enelre] and on any other rights
   whatsoever towards [Enelre], [its] board, and the beneficiaries,” and
   Enelre’s       board   has    decision-making       authority.    See    I.R.C.
   § 7701(a)(30)(E)(ii); Treas. Reg. § 301.7701-7(a)(1)(ii), (d)(1)(i)–(iii).
   Failing both tests, Enelre is not a domestic trust and so qualifies as a foreign
   trust. See I.R.C. § 7701(a)(30)(E), (31)(B); Treas. Reg. § 301.7701-7(a)(1)–
   (2); see also Kaplan v. Comm’r, 107 T.C.M. (CCH) 1226, 2014 WL 988465,
   at *7 (Mar. 13, 2014) (holding trusts “organized under the laws of the Isle of
   Jersey and supervised by the Royal Court of Jersey[] are foreign trusts”).
          Rost argues that because the IRC and its regulations do not specifically
   classify Liechtensteinian Stiftungen as trusts, they could be corporations,
   partnerships, or other entities. They very well could, under certain facts and
   circumstances. But Rost presents no evidence that Enelre should be classified
   as anything other than a trust. See, e.g., Jones v. United States, 936 F.3d 318,
   321 (5th Cir. 2019) (“A non-movant will not avoid summary judgment by
   presenting ‘speculation, improbable inferences, or unsubstantiated
   assertions.’” (citation omitted)).
          Rost also claims that courts have treated a Stiftung as a corporation
   under the IRC, citing Oak Commercial Corp. v. Commissioner, 9 T.C. 947

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   (1947), aff’d sub nom. Aramo-Stiftung v. Commissioner, 172 F.2d 896 (2d Cir.
   1949). But there, neither the Tax Court nor the Second Circuit evaluated
   whether the Stiftungen were properly characterized as foreign corporations.
   The Tax Court merely accepted the IRS’s position that the Stiftungen were
   corporations because the taxpayer failed to challenge the classification. See
   Oak Commercial, 9 T.C. at 954–55. Accordingly, the treatment of the
   Stiftungen there is unhelpful. See Estate of Swan v. Comm’r, 247 F.2d 144, 147
   n.3 (2d Cir. 1957); Estate of Swan v. Comm’r, 24 T.C. 829, 860 (1955).
                                         C.
          Rost’s notice arguments are without merit. Rost first claims the
   penalties violate the APA because the government relied on an unwritten
   “rule” promulgated without notice and comment that Stiftungen are foreign
   trusts for tax purposes. But the government applied no “rule.” See 5 U.S.C.
   § 551(4) (defining “rule”). As the district court explained, “Rost’s argument
   is based on the faulty premise that the IRS established a ‘rule’ that a Stiftung
   always qualifies as a ‘foreign trust.’” Rost, 2021 WL 5190875, at *8. The IRS
   has consistently recognized that each Stiftung must be analyzed on its own
   facts and circumstances. See, e.g., I.R.S. Chief Couns. Att’y Mem. AM2009-
   012, 2009 WL 3336014 (Oct. 7, 2009). Rost does not challenge the validity of
   the regulations under which Enelre qualifies as a foreign trust. See Treas. Reg.
   §§ 301.7701-4, 301.7701-7.
          Rost next argues the penalties “violate[] the duty of clarity for tax
   laws,” citing Central Illinois Public Service Co. v. United States, 435 U.S. 21
   (1978). She claims the penalties cannot be imposed “without a clear
   description of the prohibited circumstances, facts, or status.” This
   argument, too, is based on the false “presumption that the IRS automatically
   considers a Stiftung to be a foreign trust for tax and penalty purposes.” Rost,
   2021 WL 5190875, at *8.

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                                           No. 21-51064

           Rost claims there is “no indication which foreign entities” the
   government “might deem to be a foreign trust.” But the IRS is not obligated
   to promulgate a regulation listing all foreign entities that are or may be
   classified as a foreign trust. As Morrissey acknowledged, “it is impossible in
   the nature of things to translate the statutory concept of ‘association’ into a
   particularity of detail that would fix the status of every sort of enterprise or
   organization which ingenuity may create.” 296 U.S. at 356. So too for trusts.
           In any event, Central Illinois is inapposite. There, the Court held an
   employer could not be penalized for failing to withhold income taxes on
   reimbursements of meal expenses for employees day-traveling on business
   because it was unclear at the time that the meals constituted wages subject to
   withholding. 435 U.S. at 29, 33. Rost identifies no decision applying this logic
   outside third-party withholding contexts. Cf. id. at 31 (“Because the
   employer is in a secondary position as to liability for any tax of the employee,
   it is a matter of obvious concern that . . . the employer’s obligation to
   withhold be precise and not speculative.”). 8 But even if it applied here, the
   legal framework set forth above is sufficiently precise.
           Finally, Rost argues that the penalties violate due process because
   there is no “clear, written rule of law” that Stiftungen qualify as foreign
   trusts. As shown above, the IRC, regulations, and case law provide ample
   notice that the classification of an arrangement as a trust, and whether it is

           8
                 This defense has been dubbed the “‘deputy tax collector’
   defense, . . . protect[ing] an employer from liability for failing to withhold employment
   taxes from its employees when the employer lacks ‘precise and not speculative’ notice of
   its duty to withhold.” N.D. State Univ. v. United States, 255 F.3d 599, 608 (8th Cir. 2001)
   (quoting Cent. Ill., 435 U.S. at 31); see also Univ. of Chi. v. United States, 547 F.3d 773, 784
   (7th Cir. 2008); Gen. Elevator Corp. v. United States, 20 Cl. Ct. 345, 354 (1990).

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   foreign or domestic, are case-specific inquiries based on the facts and
   circumstances. 9
                                              IV.
           The district court’s judgment is AFFIRMED.

           9
            Rost also claims there was no statutory authority to penalize Rebold for failing to
   file Form 3520-A before the 2010 amendment to section 6677. We decline to consider this
   argument because Rost did not raise it below. See, e.g., Rollins v. Home Depot USA, 8 F.4th
   393, 397–99 (5th Cir. 2021); Doe v. MySpace, Inc., 528 F.3d 413, 422 (5th Cir. 2008).

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