Court Opinion

ID: 4474148
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:10:47.216979+00
Date Added: 2024-06-11T12:23:11.185508
License: Public Domain

Halpern, J., concurring: I concur with the majority that we have jurisdiction to hear an appeal from a section 6330(c)(3) determination notwithstanding that no section 6330(b) hearing was held. I write separately to lend support to the majority’s conclusion and to offer some comments concerning our authority to dictate to respondent the nature of the hearing required by section 6330(b). I. Jurisdiction A. Meyer v. Commissioner In Meyer v. Commissioner, 115 T.C. 417 (2000), the taxpayers had requested a section 6330(b) hearing. The Appeals officer, considering the grounds raised by the taxpayers, did not schedule (or offer to schedule) a conference with the taxpayers, but proceeded to issue notices of determination (the notices) that all administrative procedures had been met and respondent would proceed with collection against them for the years in issue. Id. at 418. The taxpayers appealed to this Court, and we dismissed for lack of jurisdiction, concluding that the notices were invalid because the Appeals officer had not provided the taxpayers with an opportunity for a hearing “either in person or by telephone” prior to issuing the notices. The consequences of a dismissal on such grounds are unclear. Section 6330(e) provides for the suspension of collections and the statute of limitations during the pendency of a section 6330(b) hearing and any appeal therefrom.1 It does not appear that Congress used the adjective “pending” in section 6330(e)(1) in any special sense, and it is arguable that all section 6330 suspensions end upon our dismissal for lack of jurisdiction of a case in which, pursuant to section 6330(d)(1), we are the only Court to which an appeal may be made. Moreover, under the last sentence of section 6330(e)(1), a prerequisite to our jurisdiction to enjoin any collection action is the timely filing of an appeal under section 6330(d)(1). I have found no authority that an appeal can be timely filed with a court that lacks jurisdiction to hear that appeal. If it cannot be, then we lack jurisdiction to enjoin any collection action following our dismissal for lack of jurisdiction. Certainly, section 6330 entitles a taxpayer to a hearing. See sec. 6330(a)(3)(B). It is a matter of statutory interpretation, however, whether there can be no determination under section 6330(c)(3) (and, thus, no basis for court review) if there is no hearing. The review of an administrative action of an agency is not a normal task for us. In a proceeding before the Tax Court to redetermine a deficiency, we find facts de novo. See sec. 6214(a); O’Dwyer v. Commissioner, 266 F.2d 575 (4th Cir. 1959), affg. 28 T.C. 698 (1957); Greenberg’s Express, Inc. v. Commissioner, 62 T.C. 324, 327-328 (1974).2 But see, e.g., section 7429(b)(2)(B), providing for our review of jeopardy levy or assessment proceedings, and section 6404(i), providing for our review of whether respondent’s failure to abate interest was an abuse of discretion. There is an extensive jurisprudence dealing with court review of agency administrative actions. The Administrative Procedure Act (APA), 5 U.S.C. secs. 551-559, 701-706 (1994) (hereafter, sections of which are cited APA), provides the basic structure of Federal administrative law. As discussed immediately below, I believe that various provisions of the APA inform our authority (and our jurisdiction) under section 6330(d)(1)(A). I believe that the APA is persuasive evidence for the proposition that the failure to accord a taxpayer a section 6330(b) hearing does not deprive us of jurisdiction to review a section 6330(c)(3) determination. B. Administrative Procedure Act Section 6330(d)(1) establishes our jurisdiction to consider an appeal from an adverse section 6330(c)(3) determination: “[T]he Tax Court shall have jurisdiction with respect to such matter”. Sec. 6330(d)(1)(A). Section 6330(d)(1) does not, however, specify our remedial powers in such a situation.3 Such powers are established in part by APA section 706. In pertinent part, APA section 706 provides: The reviewing court shall— (2) hold unlawful and set aside agency action, findings, and conclusions found to be— (A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law; (D) without observance of procedure required by law; [Emphasis added.] If section 6330 requires a hearing before a determination can be made, then we, as a reviewing court, can set aside the determination as “not in accordance with the law” or “without observance of procedure required by law”. To do so, however, we must have jurisdiction over the matter. That, of course, is provided by section 6330(d)(1). To hold that we have no jurisdiction to exercise our authority under APA section 706 makes no sense. The application of APA section 706 is established by other provisions of the APA. In pertinent part, APA section 702 provides: “A person suffering legal wrong because of agency action, or adversely affected or aggrieved by agency action within the meaning of a relevant statute, is entitled to judicial review thereof.” In full, APA section 703 provides: The form of proceeding for judicial review is the special statutory review proceeding relevant to the subject matter in a court specified by statute or, in the absence or inadequacy thereof, any applicable form of legal action, including actions for declaratory judgments or writs of prohibitory or mandatory injunction or habeas corpus, in a court of competent jurisdiction. If no special statutory review proceeding is applicable, the action for judicial review may be brought against the United States, the agency by its official title, or the appropriate officer. Except to the extent that prior, adequate, and exclusive opportunity for judicial review is provided by law, agency action is subject to judicial review in civil or criminal proceedings for judicial enforcement. [Emphasis added.] It seems to me that the emphasized language fits a section 6330(d)(1) appeal exactly. If, indeed, a section 6330(b) hearing is a prerequisite to a section 6330(c)(3) determination, then, by all means, we should hold the determination to be unlawful and set it aside (or take other appropriate action). If we are going to set the determination aside, we should do so in the manner prescribed by Congress (in enacting the apa), and not by disclaiming the jurisdiction to do so. C. Conclusion Notwithstanding the failure of respondent’s Appeals officer to offer a taxpayer a hearing before making a section 6330(c)(3) determination, such determination is valid, in the sense that we have jurisdiction under section 6330(d)(1) to review the determination and, if appropriate, set it aside or take other appropriate action and, if necessary, enjoin any improper collection action by respondent. II. Section 6330(b) Hearing A. Introduction In Meyer v. Commissioner, 115 T.C. 417 (2000), we dismissed for lack of jurisdiction on the grounds that the Appeals officer had made an invalid determination because he had not provided the taxpayers with an opportunity for a hearing “either in person or by telephone” prior to making that determination. Id. at 422-423. Implicit in our disposition of Meyer is some notion of what is normative for a hearing. Since we found that the Appeals officer had communicated with the taxpayers prior to making his determination, id. at 418, it seems safe to conclude that such communication was in writing and that an implicit holding in Meyer is that (at least without the taxpayer’s agreement) an exchange of correspondence does not constitute a hearing. I believe that we are in error when we dictate to respondent the particulars of a section 6330(b) hearing. B. The Instant Case In the instant case, the majority finds the following: On account of respondent’s issuing a notice of intent to levy, petitioners requested a section 6330(b) hearing. By the request, petitioners raised as an issue only the validity of the assessment. In response to the request, the Appeals officer wrote to them, telling them that the validity of the assessment had been verified and instructing them, if they wished to discuss other matters, to contact him by a date certain, or he would make a section 6330(c)(3) determination. Petitioners failed to contact him, and he made the specified determination. Respondent’s position is that the exchange of correspondence between petitioners and the Appeals officer satisfied petitioners’ right to a section 6330(b) hearing. Respondent argues that, by correspondence, petitioners informed the Appeals officer of their arguments, the Appeals officer then considered those arguments and, by correspondence, addressed them, and, therefore, petitioners had a hearing, and the Appeals officer’s determination should be sustained. I agree with respondent since, within wide parameters, it is for respondent to decide what constitutes a section 6330(b) hearing. I disagree with the implicit holding in Meyer v. Commissioner, supra, that an exchange of correspondence cannot constitute a hearing. Again, the APA and cases construing it are at the center of the relevant jurisprudence. C. Administrative Procedure Act 1. Introduction The conclusions I reach are that, absent a requirement in section 6330 that a section 6330(b) hearing be “on the record” or language in section 6330 that can only refer to an oral hearing, we cannot introduce a generally applicable in-person or telephonic (i.e., oral) interview requirement into the proceedings that respondent has established for section 6330 hearings and that respondent has established permissible procedures that were followed in this case. 2. Adjudications The APA governs certain aspects of both rule making and adjudications by Federal agencies. See, e.g., APA secs. 553 (rule making) and 554 (adjudications).4 APA section 551(7) defines “adjudication” as “agency process for the formulation of an order”. In pertinent part, APA section 551(6) defines “order” as “the whole or a part of a final disposition, whether affirmative, negative, injunctive, or declaratory in form, of an agency in a matter other than a rule making”. Although many categories of agency actions could fit within the APA definitions of either “adjudication” or “rule making” (APA sec. 551(5)), the determination contemplated in section 6330(c)(3), and which we review pursuant to section 6330(d)(1) is, within the meaning of the APA, an “adjudication”. APA sections 554 through 557 describe a process of formal adjudication that includes elements of a judicial trial in a civil proceeding. Among those elements are the right to an evidentiary hearing, at which the party “is entitled to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts”. APA sec. 556(d). APA section 554(a), however, requires an agency to employ this formal trial type procedure only in an “adjudication required by statute to be determined on the record after opportunity for an agency hearing” (a formal adjudication). No such requirement for an on-the-record hearing appears in section 6330, and we have, by inference, in Davis v. Commissioner, 115 T.C. 35 (2000), concluded that a determination under section 6330(c)(3) is not a formal adjudication. In Davis, we precluded the taking of testimony under oath or the compulsory attendance of witnesses. See id. at 41-42. Those are elements of a formal adjudication specifically provided for in APA section 556(c)(1) and (2). In Davis, we inferred correctly that a determination under section 6330(c)(3) is not a formal adjudication. See United States v. Fla. E. Coast Ry. Co., 410 U.S. 224, 234-238 (1973) (distinguishing between a rule to be made “after hearing” and the requirement that a rule be made “on the record after opportunity for an agency hearing”). If an adjudication is not within the relatively narrow scope of APA section 554(a), the only provision of the APA that prescribes procedures applicable to the adjudication is APA section 555. That section requires only that an agency (1) permit a party to be represented by counsel or other authorized representative, (2) permit a person to obtain a copy of any data or evidence she provides, and (3) provide a brief statement of the grounds for denying an application or petition. 3. Vt. Yankee Nuclear Power Corp. In Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., 435 U.S. 519 (1978), the Supreme Court held that courts cannot compel an agency to use rule-making procedures beyond those required by statute or by the Constitution. In Pension Benefit Guar. Corporation v. LTV Corp., 496 U.S. 633 (1990), the Court made clear that its holding in Vermont Yankee applied to agency adjudications: “Vermont Yankee stands for the general proposition that courts are not free to impose upon agencies specific procedural requirements that have no basis in the APA.” Id. at 654. 4. The Meaning of the Term “Hearing” In United States v. Fla. E. Coast Ry. Co., supra, the Supreme Court looked to the APA to determine the meaning of the phrase “after hearing” in a statute that empowered the Interstate Commerce Commission, “after hearing”, to engage in certain rule making. See id. at 225 n.l. With respect to the APA, the Court said: “Turning to that Act, we are convinced that the term ‘hearing5 as used therein does not necessarily embrace either the right to present evidence orally and to cross-examine opposing witnesses, or the right to present oral argument to the agency’s decisionmaker.” Id. at 240. The Court held that the APA requires an agency to use formal rule-making procedures, including an oral evidentiary hearing, only when, pursuant to APA section 553(c), rules “are required by statute to be made on the record after opportunity for an agency hearing.” Id. at 240-241. If the statute requires the agency only to make rules “after hearing”, the agency is free to use informal rule-making procedures, even if the agency bases its rule on consideration of contested factual issues. United States v. Fla. E. Coast Ry. Co., supra, involved rule making. Although the Supreme Court has not yet addressed directly the question of whether the reasoning of Fla. E. Coast Ry. Co. also applies to agency adjudications, Professors Davis and Pierce, in their respected treatise on administrative law (Davis & Pierce, Administrative Law Treatise (3d ed. 1994)), conclude that there are three reasons to believe that it does: First, the language in APA section 553(c) that triggers the requirement to use formal rule making is identical to the language in APA section 554(a) that triggers a requirement to use formal adjudication. In both cases, formal procedures are required only when an agency action is “required by statute to be made on the record after opportunity for an agency hearing”. Second, recent opinions of the Courts of Appeals support the view that the Fla. E. Coast Ry. Co. reasoning, that “hearing” can mean a written exchange of views, applies to adjudications as well as to rule makings. Third, Fla. E. Coast Ry. Co., considered in conjunction with Vt. Yankee Nuclear Power Corp. v. Natural Res. Def. Council, Inc., supra, Pension Benefit Guar. Corporation v. LTV Corp., supra, and a third case, Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837 (1984), suggests that the Supreme Court would hold that the requirements of a “hearing” can be satisfied by an informal written exchange of views in most adjudicatory contexts. See 1 Davis & Pierce, supra sec. 8.2, at 381-382, 386-387. 5. Chevron In Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., supra, the Supreme Court established the framework for judicial review of an agency’s interpretation of a statute under its administration. At the outset, a court must ask whether “Congress has directly spoken to the precise question at issue”, id. at 842; if so, then the court “must give effect to the unambiguously expressed intent of Congress” and may not defer to a contrary agency interpretation, id. at 842-843. If the statute is “silent or ambiguous with respect to the specific issue”, however, the court proceeds to ask “whether the agency’s answer is based on a permissible construction of the statute”, id. at 843; if so, then the court must defer to the agency’s construction. The Chevron framework has been applied in determining that an agency can interpret the term “hearing” to mean a written exchange of views. See, e.g., Chem. Waste Mgmt., Inc. v. EPA, 873 F.2d 1477 (D.C. Cir. 1989). 6. When Formal Adjudication Is Required With a note of caution, Professors Davis and Pierce reach the following conclusion: The sequence of opinions in Florida East Coast, Vermont Yankee, Chevron, and LTV suggests strongly that the Supreme Court is increasingly reluctant to require an agency to use formal adjudicatory procedures unless Congress has explicitly directed an agency to do so, either by requiring the agency to act “on the record” or by describing the nature of the required hearing with language that can only refer to an oral evi-dentiary hearing. * * * [Davis & Pierce, supra sec. 8.2, at 387.5] I reach the same conclusion. Moreover, we have concluded that section 6330 does not require a formal adjudication (i.e., an on-the-record hearing). See supra sec. II.C.2. (discussion of Davis). Section 6330 does not contain language that can refer only to an oral evidentiary hearing. That leaves for consideration whether respondent’s regulations, sec. 301.6330-IT, Temporary Proced. & Admin. Regs., 64 Fed. Reg. 3405 (Jan. 22, 1999), which fail to accord taxpayers an oral interview, are a permissible construction of the statute under Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., supra. I believe that they are. 7. Chevron Analysis Nothing in the language of section 6330 can be interpreted as Congress’s, having “directly spoken” to whether a section 6330 hearing must include an oral interview. Moreover, in Davis v. Commissioner, 115 T.C. 35 (2000), we found that Congress intended an informal administrative hearing, of the type that, traditionally, had been conducted by Appeals and was prescribed by section 601.106(c), Statement of Procedural Rules. Those procedural rules contemplate that Appeals may grant a conference, but do not require an oral interview. Sec. 601.106(c), Statement of Procedural Rules (“At any conference granted by the Appeals”). Moreover, respondent’s Publication 1660 (Rev. 05-2000), Collection Appeal Rights, specifically addresses procedures applicable to a section 6330(b) hearing. The publication states that, at the time a taxpayer requests a section 6330(b) hearing, she must address all of her reasons for disagreeing with the proposed collection action. The publication further states: “The Office of Appeals will contact you to schedule a hearing. Your hearing may be held either in person, by telephone, or by correspondence.”6 In the instant case, the exchange of correspondence between the Appeals officer and petitioners, ending with the Appeals officer’s offer to discuss other matters constitutes a hearing as contemplated in Publication 1660. I conclude that section 301.6330-1T, Temporary Proced. & Admin. Regs., supra, is a permissible construction of section 6330. 8. Conclusion As expressed supra section II.C.l., I conclude that we cannot introduce a general oral interview requirement into the proceedings that respondent has established for section 6330(b) hearings, and that respondent has established permissible procedures that were followed in this case. D. Constitutional Due Process Due process does not require that the taxpayer be accorded an opportunity for an oral hearing prior to respondent’s enforcing his collection proceedings. Prior to 1998, taxpayers did not have the right to any form of a hearing before collection actions were taken. That pre-1998 collection process was challenged by taxpayers on constitutional due process grounds. The Supreme Court, however, held that respondent’s administrative lien and levy procedures did not violate constitutional due process standards. See Phillips v. Commissioner, 283 U.S. 589, 595 (1931), where the Supreme Court stated: The right of the United States to collect its internal revenue by summary administrative proceedings has long been settled. Where, as here, adequate opportunity is afforded for a later judicial determination of the legal rights, summary proceedings to secure prompt performance of pecuniary obligations to the government have been consistently sustained. [Id. at 595; in. ref. omitted.] See also, e.g., Tavares v. United States, 491 F.2d 725 (9th Cir. 1974) (no requirement that judicial hearing be held prior to levy). However, even if due process required a hearing prior to collection, respondent is not necessarily obligated to provide an oral hearing. (“The fundamental requirement of due process is the opportunity to be heard ‘at a meaningful time and in a meaningful manner.’” Mathews v. Eldridge, 424 U.S. 319, 333 (quoting Armstrong v. Manzo, 380 U.S. 545, 552 (1965)). In Eldridge, the Supreme Court held that the decision to terminate disability benefits based on written evidence did not violate the recipient’s right to due process. What was particularly significant to the Court in making its determination that an oral hearing was not required was that the decision to terminate disability benefits generally does not involve issues of veracity and credibility. Id. at 343-345. Likewise, the kinds of issues that a taxpayer may raise at a section 6330 hearing, such as collection alternatives, are generally not issues that require the Appeals officer to evaluate the taxpayer’s veracity or credibility. “‘[D]ue process is flexible and calls for such procedural protections as the particular situation demands.’” Id. at 334 (quoting Morrissey v. Brewer, 408 U.S. 471, 481 (1972)). In light of the fact that the taxpayer has the opportunity for judicial review, due process does not require that the section 6330 hearing be oral. Whalen, Beghe, and Thornton, JJ., agree with this concurring opinion.   Sec. 6330(e)(1) provides: SEC. 6330(e). Suspension of Collections and Statute of Limitations.— (1) In GENERAL. — Except as provided in paragraph (2), if a hearing is requested under subsection (a)(3)(B), the levy actions which are the subject of the requested hearing and the running of any period of limitations under section 6502 (relating to collection after assessment), section 6531 (relating to criminal prosecutions), or section 6532 (relating to other suits) shall be suspended for the period during which such hearing, and appeals therein, are pending. In no event shall any such period expire before the 90th day after the day on which there is a final determination in such hearing. Notwithstanding the provisions of section 7421(a), the beginning of a levy or proceeding during the time the suspension under this paragraph is in force may be enjoined by a proceeding in the proper court, including the Tax Court. The Tax Court shall have no jurisdiction under this paragraph to enjoin any action or proceeding unless a timely appeal has been filed under subsection (d)(1) and then only in respect of the unpaid tax or proposed levy to which the determination being appealed relates.    In O’Dwyer v. Commissioner, 266 F.2d 575, 580 (4th Cir. 1959), affg. 28 T.C. 698 (1957), the Court of Appeals for the Fourth Circuit stated: “We agree that the Tax Court is not subject to the Administrative Procedure Act.” That statement was made in the context of the court’s stating that, in redetermining a deficiency, the Tax Court is not a reviewing court, reviewing the record of an administrative agency, but, rather, is a court reviewing facts de novo.    With respect to court review of an Appeals officer’s sec. 6330(c)(3) determination, the legislative history of sec. 6330 states that, where the validity of the tax liability was properly at issue in the sec. 6330 hearing, the reviewing court is to review such liability on a de novo basis and, with respect to other aspects of the Appeals officer’s determination, the reviewing court is to review such aspects for abuse of discretion. See H. Conf. Rept. 105-599, at 266 (1998), 1998-3 C.B. 747, 1020, which accompanied H.R. 2676, 105th Cong. (1998), the bill that, when enacted, became the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, 112 Stat. 685. Sec. 3401(b) of such act added sec. 6330; see also Goza v. Commissioner, 114 T.C. 176, 181-182 (2000) (referring to legislative history). The conference report does not specify that, if we find an abuse of discretion, we are to fashion an alternative.    For an authoritative discussion of both rule making and adjudications under the APA, see 1 Davis & Pierce, Administrative Law Treatise, chs. 7 and 8 (3d ed. 1994); see also 2 Davis & Pierce, supra ch. 9, with respect to the constitutional requirement of due process.    Professors Davis and Pierce caution: “Some caution is necessary in interpreting and applying this generalization, however, because of the Court’s countervailing tendency to interpret ambiguous statutory provisions in a manner that avoids the need to resolve difficult issues of constitutional law.” 1 Davis & Pierce, supra sec. 8.2, at 387.    Chief Counsel Advisory 200123060 (June 8, 2001), referred to by some of the dissenters, states: “Appeals would strive to grant, at a minimum, face-to-face conferences to all requesting taxpayers.” The advisory states a goal, not a mandate. The record in Watson v. Commissioner, T.C. Memo. 2001-213, contains a memorandum from respondent’s counsel emphasizing that the advisory expresses an aspiration. Moreover, the usual view of this Court is that even revenue rulings, an official publication of respondent’s (which the advisory is not), get no deference, since they are merely opinions of a lawyer in the agency. See, e.g., N. Ind. Pub. Serv. Co. v. Commissioner, 105 T.C. 341, 350 (1995), affd. 115 F.3d, 506 (7th Cir. 1997). But see United States v. Mead Corp., 533 U.S. 218 (2001), for a discussion of the deference, less than Chevron deference, owed to certain agency interpretations of a statute.