Court Opinion

ID: 4474694
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:11:06.034821+00
Date Added: 2024-06-11T14:51:04.357398
License: Public Domain

Vasquez, J., dissenting: As pointed out by Judge Swift, in Davis v. Commissioner, 115 T.C. 35, 41-42 (2000), we created the informal setting and procedures for section 6330 hearings. Subsequent jurisprudence has rendered the holding of Davis obsolete and has eviscerated the Court’s section 6330 review function. The current state of section 6330 jurisprudence leaves us with two equally unpalatable choices: (1) Overrule Davis and require the IRS to conduct more formal hearings in order to create a record sufficient for the Court to fulfill our review function, or (2) steadily become more handcuffed and less able to meaningfully review section 6330 cases. I believe either of these eventualities is contrary to the purpose of section 6330. After a year of intensive work, 12 days of public hearings, three field hearings, and hundreds of hours in private sessions with public and private sector experts, academics, and citizens’ groups, the Report of the National Commission on Restructuring the Internal Revenue Service: A Vision for a New IRS (IRS Restructuring Report), at v-vi, 43, 67 (1997), concluded that the IRS needed to be more accountable, and that a significant part of improving the system would be taxpayers’ ability to seek redress or review of IRS actions in the courts expeditiously. The IRS Restructuring Report was the foundation for the Internal Revenue Service Restructuring and Reform Act of 1998 (rra 1998), Pub. L. 105-206, 112 Stat. 685.1  During the hearings and deliberations over rra 1998, many members of Congress spoke of an agency “out of control” and the need for a system of “checks and balances” to oversee the IRS so that the IRS was not acting as “judge and jury” and to ensure the IRS was not abusing taxpayers’ rights.2 A witness from the U.S. General Accounting Office (GAO) stated that although the IRS believed that it had adequate checks and balances in place to identify misuse of collection actions, the GAO did not believe adequate checks and balances were in place.3  Senators heard from the former historian of the IRS, the GAO, and the Acting Commissioner that the IRS did not maintain adequate or any records regarding their collection activities.4 The witness from the GAO further noted that the collection case files were often incomplete or inaccurate.5 The Acting Commissioner even admitted that “there have been records management problems”.6  Witnesses, including former Commissioners, both in their own statements and in response to questions by Senators, agreed that judicial review of collection actions was necessary, and specifically recommended the Tax Court as the forum to provide checks and balances (by allowing taxpayers to appeal irs collection actions to the Tax Court).7 Congressmen and Senators also stated that review of collection actions needed to be done, expeditiously, by an independent judge that is not part of the IRS, and decided on the Tax Court as the forum.8  Although some Senators wanted to pass H.R. 2676, 105th Cong., 1st Sess., the Internal Revenue Service Restructuring and Reform Act of 1997 (H.R. 2676), as quickly as possible, H.R. 2676 did not contain any provision similar to sections 6320 and 6330.9 Senator Roth, chairman of the Senate Finance Committee and the Senator presiding over hearings to reform the irs, and other Senators felt that Congress should not rush to pass irs reform legislation, and one issue that needed to be further addressed was “Insuring that all taxpayers have due process and that the IRS does not abusively use its liens and seizures authority”.10 During the Senate hearings, Senator Gramm stated that “before somebody’s home or somebody’s business can be taken by the IRS, that they get their day in court to make their case, where they are heard, where an independent judgment is rendered.”11 Senator Nickles also stated: Some people were saying, well, let us just pass the House bill. We can pass that unanimously and it can be signed into law by the bill. But we are adding a provision that came out in Oklahoma, and also the hearings here, that a taxpayer would be given the opportunity for a court hearing before liens, levies, or seizures of his assets. That is a very important provision. It was not in the House bill, but is in the Senate bill. [S. Hrg. 105-598, IRS Oversight Hearings, at 10.] Congress knew that proceedings in the Tax Court would be conducted de novo. In response to a question from Senator Roth (“what can be done to protect the taxpayers’ legitimate interest?”), Michael Saltzman — an attorney with 33 years of experience, a professor of taxation, and author of a treatise on IRS practice and procedure — responded that the Tax Court “has ruled and has for years stated that what happens in the Tax Court is a de novo proceeding”.12 (Emphasis added.) The legislative history establishes that in section 6330 cases Congress intended there to be a trial de novo in the Tax Court, that we can receive evidence beyond the administrative record, and we may consider issues not raised at the section 6330 hearing. Davis was premised on the idea that we would be able to hear issues and receive evidence beyond those raised or provided at the section 6330 hearing. If our review is limited to those issues raised at the section 6330 hearing (and possibly to the administrative record), Davis is outdated. In order to fulfill our section 6330 review function, as mandated by Congress after lengthy and careful deliberation, the Court needs more information than is provided by current section 6330 hearings. This statement is tempered by almost a decade of experience handling section 6330 cases where the IRS consistently has attempted to limit the evidence the Court can review. Frequently the Court is provided virtually no record at all or the scant documents accumulated by Appeals, making meaningful review impossible. By abandoning our precedent and interpreting the statute in a manner contrary to the intent of Congress, the majority opinion bears striking similarity to the decision in Billings v. Commissioner, 127 T.C. 7 (2006). I hope that Congress moves as expeditiously to correct the jurisprudential errors regarding section 6330 as it did to correct the jurisprudential errors regarding section 6015.13    144 Cong. Rec. S4400 (daily ed. May 6, 1998); S4521 (daily ed. May 7, 1998); 144 Cong. Rec. H5354 (daily ed. June 25, 1998).    Practices and Procedures of the Internal Revenue Service: Hearings Before the S. Comm, on Finance, 105th Cong., 1st Sess. 16, 135, 195, 221, 223, 231 (1997) (S. Hrg. 105-190, First Hearing); 143 Cong. Rec. S9992-S9993 (daily ed. Sept. 26, 1997), S11584-S11591, S11594 (daily ed. Nov. 3, 1997); 143 Cong. Rec. H10004, H10024, H10042 (daily ed. Nov. 5, 1997); IRS Restructuring: Hearings on H.R. 2676 Before the S. Comm, on Finance, 105th Cong., 2d Sess. 7 (1998) (S. Hrg. 105-529, IRS Restructuring Hearings); IRS Oversight: Hearings Before the S. Comm, on Finance, 105th Cong., 2d Sess. 165, 169, 211, 243 (1998) (S. Hrg. 105-598, IRS Oversight Hearings); 144 Cong. Rec. S4028, S4031 (daily ed. May 1, 1998), S4184, S4191 (daily ed. May 4, 1998), S4407, S4415 (daily ed. May 6, 1998), S4472, S4478, S4490, S4495, S4499 (daily ed. May 7, 1998), S7629 (daily ed. Sept. 14, 1998), S7718 (daily ed. Sept. 15, 1998); 144 Cong. Rec. H5359 (daily ed. June 25, 1998).   S. Hrg. 105-190, First Hearing, at 236, 334^335, 338. The U.S. General Accounting Office is now called the U.S. Government Accountability Office. See Qwest Commons. Inti. Inc. v. FCC, 398 F.3d 1222, 1230 n.3 (10th Cir. 2005); S.K.J. & Associates, Inc. v. United States, 67 Fed. Cl. 218, 219 (2005).    S. Hrg. 105-190, First Hearing, at 35, 45, 216, 245-246, 259, 334-338.    S. Hrg. 105-190, First Hearing, at 246, 251, 337.    S. Hrg. 105-190, First Hearing, at 282.   S. Hrg. 105-190, First Hearing, at 40-41, 46-47, 58-59, 69; S. Hrg. 105-529, IRS Restructuring Hearings, at 74, 100-102, 126, 136, 224, 254, 281, 351, 374-376, 386.    S. Hrg. 105-190, First Hearing, 232; 143 Cong. Rec. S9992-S9993 (daily ed. Sept. 26, 1997); 143 Cong. Rec. H10031 (daily ed. Nov. 5, 1997); S. Hrg. 105-529, IRS Restructuring Hearings, at 7, 12, 43-44, 51, 75; 144 Cong. Rec. S4031 (daily ed. May 1, 1998), S4184, S4191 (daily ed. May 4, 1998), S4490, S4494, S4508 (daily ed. May 7, 1998).    143 Cong. Rec. H10006-10022 (daily ed. Nov. 9, 1997); 144 Cong. Rec. S4508 (daily ed. May 7, 1998); H. Conf. Rept. 105-599, at 263 (1998), 1998-3 C.B. 747, 1017.    143 Cong. Rec. S11913-S11914 (daily ed. Nov. 7, 1998), S12100 (daily ed. Nov. 8, 1998); S. Hrg. 105-529, IRS Restructuring Hearings, at 7,16.    S. Hrg. 105-529, IRS Restructuring Hearings, at 7.    S. Hrg. 105-529, IRS Restructuring Hearings, at 126, 132, 133. As Judges Halpern and Holmes aptly wrote: “it is important to distinguish between two concepts — ‘scope of review’ and ‘standard of review’ — that delimit judicial review of agency action.” Ewing v. Commissioner, 122 T.C. 32, 56-67 (2004) (Halpern and Holmes, JJ., dissenting), vacated 439 F.3d 1009 (9th Cir. 2006). Citing Franklin Sav. Association v. Office of Thrift Supervision, 934 F.2d 1127, 1136 (10th Cir. 1991), they explained: “The scope of judicial review refers merely to the evidence the reviewing court will examine in reviewing an agency decision. The standard of judicial review refers to how the reviewing court will examine that evidence.” Id. at 56. I believe it is incorrect to conclude that when the standard of review is abuse of discretion, a fortiori the scope of our review is limited to the administrative record.    See Tax Relief and Health Care Act of 2006, Pub. L. 109-432, div. C, sec. 408, 120 Stat. 3061 (within a matter of months, Congress reinstated our jurisdiction to review the Commissioner’s determinations under sec. 6015(f) as we originally had held in Ewing v. Commissioner, 118 T.C. 494 (2002), revd. 439 F.3d 1009 (9th Cir. 2006); Billings v. Commissioner, 127 T.C. 7 (2006) (abandoning Ewing); Bartman v. Commissioner, 446 F.3d 785, 787 (8th Cir. 2006), affg. in part and vacating in part T.C. Memo. 2004-93; Commissioner v. Ewing, 439 F.3d 1009 (9th Cir. 2006), revg. 118 T.C. 494 (2002) and vacating 122 T.C. 32 (2004).