92-2 USTC ¶50,476] In re: Robert J. Burns, Debtor. Robert J. Burns,
United States of America
Court of Appeals, 9th Circuit, 91-15882, 8/31/92, 974 F2d 1064,
Affirming an unreported District Court decision
6325 and 6404 ]
Liens: Release: Excessive assessment: Abatement: Effect.--The
abatement of an excessive assessment computed on an erroneous
legal theory does not necessarily render the entire assessment
void. Accordingly, the reduction of an excessive assessment did
not require the release of a lien under the release of lien Code
80 Swan Way
, for plaintiff-appellant. Edward T. Perlemuter, Department of
, for defendant-appellee.
, and KLEINFELD, Circuit Judges.
case turns on a single issue. An
assessment was too high, because the
used an erroneous legal theory. The taxpayer argues that the
assessment was void and the lien and money collected under it must
be released. The
would then proceed under a reduced assessment and a new lien as of
the date of the reduced assessment. The Commissioner argues that
the effective date of the original assessment and lien must be
maintained, and only reduced in amount. We are persuaded that the
controlling statutes require us to adopt the Commissioner's view.
1982 and 1984, Robert Burns was a co-director of marketing for
United Energy Corporation. In February 1984, the Internal Revenue
Service enjoined United Energy from selling tax shelters in
violation of 26 U.S.C. §6700
assessed Robert Burns $3,668,318.65 for penalties under 26 U.S.C. §6700
and interest, made demand, and filed a lien for that amount.
Burns filed for bankruptcy. Subsequently, we held in Bond v.
United States [89-1
USTC ¶9271 ], 872 F.2d 898 (9th Cir. 1989), that the method
used to assess Burns was improper. We determined that the
could not impose a separate minimum $1,000 penalty under §6400
for each transaction.
at 901. To conform to Bond, the
reduced Burns' assessment to $526,884.23.
then moved in the bankruptcy court to have the lien released
because it was based on an original assessment that had become
void. The bankruptcy court rejected this argument, the district
court granted summary judgment to the government, and we affirm.
Standard of Review
court reviews the grant of summary judgment de novo. Johnson v.
Moore, 948 F.2d 517, 519 (9th Cir. 1991); United States v.
Hunter Engineers & Contractors, Inc. [86-1
USTC ¶9431 ], 789 F.2d 1436, 1437 (9th Cir. 1986), cert.
of Excessive Assessment
tax liens are governed by federal statutes. United States v.
USTC ¶9516 ], 363 U.S. 237, 240 (1960). Burns argues that he
was entitled to a release of the tax lien under the release of
lien statute, 26 U.S.C. §6325
(a) Release of lien
Subject to such regulations as the Secretary may prescribe,
the Secretary shall issue a certificate of release of any lien
imposed with respect to any internal revenue tax not later than 30
days after the day on which--
(1) Liability satisfied or unenforceable
The Secretary finds that the liability for the amount
assessed, together with all interest in respect thereof, has been
fully satisfied or has become legally unenforceable;
26 U.S.C. §6325(a)
(1988). Burns' argument depends on treating "legally
unenforceable" as equivalent to "excessive in
amount," an unpersuasive construction. The related treasury
regulation adds the word "entire" to modify liability
unenforceable as a matter of law. Treas. Reg.
§301.6325-1(a) (lien released "whenever [the Secretary]
finds that the entire liability for the tax has been
satisfied or has become unenforceable as a matter of law . . .
.") (emphasis added). In Burns' case, only part of the amount
is unenforceable. Therefore, §6325(a)(1)
does not require release of the lien.
in excessive assessments, as opposed to assessments which become
legally unenforceable in their entirety, are governed by the
abatement statute, 26 U.S.C. §6404(a)
The Secretary is authorized to abate the unpaid portion of the
assessment of any tax or any liability in respect thereof, which--
is excessive in amount, or
. . .
is erroneously or illegally assessed.
26 U.S.C. §6404(a)
(1988). This statute speaks directly to the problem of an
assessment excessive in amount because it was computed on an
erroneous legal theory. The Secretary is authorized by the statute
to "abate" the assessment, which means to reduce the
assessment in amount, not to strike it or treat it as void. In
refers to abating a "portion," implying that
abatement is not an all-or-nothing proposition. Under Burns'
theory that an improperly calculated assessment voids the lien,
this abatement statute becomes meaningless. We "avoid any
statutory interpretation that renders any section superfluous and
does not give effect to all of the words used by Congress." Central
Mont. Elec. Power Co-op, Inc. v. Administrator of Bonneville Power
Admin., 840 F.2d 1472, 1478 (9th Cir. 1988).
construction is in accord with long established precedent in
similar cases. In United States v. Rindskopf, 105 U.S. 418
(1881), the parties disputed the quantity of taxable liquor
distilled. The Court held that the lower court "erred in
instructing the jury that the assessment was to be taken and
considered in its entirety, and that the government was entitled
to recover the exact amount assessed, or not any sum." Id.
at 422. The taxpayer could show that he distilled less liquor, and
"in part" overthrow the assessment. Id.
is not to say that a lien based on an incorrect assessment always
survives. Rindskopf recognized the existence of a category
of assessments which could not be abated:
may undoubtedly be cases where an assessment must stand as an
entirety, or not at all; as where an erroneous rate has been
adopted by the officer; or where it is impossible to separate from
the property assessed the part which is exempt from the tax; or
where its validity depends upon the jurisdiction of the
commissioner. The present case does not fall within either of
these classes. Here the question is as to the quantity of spirits
produced on which taxes were not paid.
formulation appears in United States v. Janis [76-2
USTC ¶16,229 ], 428 U.S. 433 (1976). In Janis, the
issue was whether the exclusionary rule extended to federal tax
proceedings, where the evidence was obtained by state officials
pursuant to an invalid search warrant. The court determined that,
were the evidence excluded, then "[w]hat we have is a 'naked'
assessment without any foundation whatsoever." Id.
at 441. The court assumed that "[c]ertainly, proof that an
assessment is utterly without foundation is proof that it is
arbitrary and erroneous." Id. at 442. In Heck v.
Walters, 523 F.2d 23 (9th Cir. 1975), we did not reach the
question before us now, but we did conclude that an assessment
remained valid "so far as uncorrected." Id. at
Seventh Circuit reached the same conclusion we do when the
erroneously made too high an assessment. United States v.
USTC ¶50,250 ], 900 F.2d 1144 (7th Cir. 1990). Schroeder
distinguishes a case such as the one hypothesized in Janis,
when the assessment is "naked . . . without any
foundation whatsoever," from one when the assessment is
"arbitrarily computed and excessive in amount." In the
latter case the "liability is merely adjusted to coincide
with the proof." Id. at 1148-49.
of the exceptions to the abatement rule apply here. Burns does not
dispute that the
made a good faith calculation on a legal theory which later turned
out to be erroneous, and then reduced the assessment and lien, in
accord with the abatement statute, to comply with Bond v.
United States [89-1
USTC ¶9271 ], 872 F.2d 898 (9th Cir. 1989). This case is
analogous to the erroneous quantity of liquor situation in Rindskopf,
when the assessment may be reduced "in part."
argues that allowing the government to keep its lien when it
reduces the assessment by a factor of seven denies !he taxpayer
due process. He begins from the premise that 26 U.S.C. §6703(c)(1)
requires a taxpayer to pay fifteen percent of the penalty within
thirty days of the notice and demand of the assessment in order to
challenge the assessment before collection. He argues that when
the government so greatly overassesses the taxpayer, the
taxpayer's due process rights are violated because his ticket to
court for judicial review costs seven times as much as it should,
roughly $550,000 instead of $79,000. Because Burns received
judicial review of his assessment in his bankruptcy proceedings,
he lacks standing to pursue this claim, and we do not reach it.
Our Unpublished Disposition
argues that we have already decided that the assessment was
"void" in an unpublished opinion, Lambert v. United
States, 87-2421 (9th Cir. Aug. 1, 1989). Under Ninth Circuit
Rules, unpublished opinions shall not be cited "except when
relevant under the doctrines of law of the case, res judicata, or
collateral estoppel." 9th Cir. R. 36-3. Burns uses the Lampert
decision in his brief both for a collateral estoppel argument and
collateral estoppel argument is incorrect. The Lamperts owned
United Energy Corporation, the tax shelter promoter for which
Burns worked. The
made the same assessment error against the Lamperts as against
Burns, multiplying the $1,000 minimum penalty under 26 U.S.C. §6703(a)
by the number of abusive tax shelters sold. The Lamperts sued
for an injunction against collection of the erroneously calculated
penalty. The issue before us, however, was not whether an
excessive assessment is abated in part or void, but rather whether
the district court had jurisdiction under the exception to the
Anti-Injunction Act where "it is clear that under no
circumstances could the government ultimately prevail." Enochs
v. Williams Packing & Navigation Co. [62-2
USTC ¶9545 ], 370 U.S. 1, 7 (1962). We held that the
exception applied, because under Bond the penalty was
erroneously calculated, so the government could not under any
circumstances ultimately prevail on the merits. In addition,
nonmutual offensive collateral estoppel is unavailable against the
government. National Medical Enterprises v. Sullivan, 916
F.2d 542, 545 (9th Cir. 1990), cert. denied, 111 S.Ct. 2014
(1991). Our rule against citation of unpublished dispositions
prevents, among other things, every unpublished disposition
unfavorable to the government from being effectively
"published" by the collateral estoppel exception to Rule
used the phrase that the assessment "was improperly
calculated and therefore void," Lampert, slip op. at
2, and remanded the case to the district court "with
instructions to remand the matter back to the Tax Service for
reconsideration of the penalty assessment," id. at
7-8. Burns argues that because we used the word "void"
in Lampert, the assessment is "void" here, so the
lien must be released under 26 U.S.C. §6325(a)(1)
because the liability "has become legally
unenforceable." Since collateral estoppel is unavailable both
because it would be against the government and because the issue
was not litigated in Lampert, this is an argument for use
of the unpublished Lampert decision as precedent, barred by
the rule. Because we did not publish, we did not have to resolve
how the word "void" might work as precedent in unrelated
rule against citing unpublished opinions serves a significant
judicial purpose, beyond moderating the number of pages in Federal
Reporter. We rely upon previous court decisions as precedent in
order to treat like cases alike. The ratio decidendi is the
principle which explains why certain facts in a certain procedural
context compel a certain conclusion, which is not necessarily the
same as the literal meaning of the words used to articulate the
principle in the particular case. Karl Llewellyn, The Bramble
Bush 39, 47 (1930). We publish when our disposition "[e]stablishes,
alters, modifies or clarifies a rule of law" in this circuit.
9th Cir. R. 36-2. The rule of law, not the form of words,
constitutes the principle we must apply to treat like cases alike.
If our disposition does not establish, alter, modify or clarify a
rule of law, because the rule of law is fully and clearly
established by prior authority, then we do not publish, where none
of the alternative grounds for publication pertain. Lambert
was not published, because we found that the case was controlled
by a rule already clearly and fully established by published
authority in this circuit. For that reason, Lambert could
not be properly understood as establishing a rule, so a citation
to it could have no force.
rule against publication of such a disposition keeps the books
from being cluttered with dicta that could result in confusion for
lawyers and tribunals addressing similar issues. This permits us
to resolve the issues concretely before us without the need to
state the facts and how the case arose in order to display the
context for purposes of future distinctions of the case from
others, and without laboring to refine our language lest it be
taken out of context. In an unpublished memorandum disposition, we
seek only to explain our decision to the parties and a court or
agency which may have to work with the disposition after remand.
See generally Lauren K. Robel, Caseload and Judging:
Judicial Adaptations to Caseload, 1990 B.Y.U. L. Rev. 3,
1 26 U.S.C. §6700(a)
, as in effect at the time at issue, provided:
organizes (or assists in the organization of)--
a partnership or other entity,
any investment plan or arrangement, or
any other plan or arrangement, or
participates in the sale of any interest in an entity or plan or
arrangement referred to in subparagraph (A), and
makes or furnishes (in connection with such organization or
a statement with respect to the allowability of any deduction or
credit, the excludability of any income, or the securing of any
other tax benefit by reason of holding an interest in the entity
or participating in the plan or arrangement which the person knows
or has reason to know is false or fraudulent as to any material
a gross valuation overstatement as to any material matter,
pay a penalty equal to the greater of $1,000 or 20 percent of the
gross income derived or to be derived by such person from such
2 26 U.S.C. §6703(c)(1)
, as in effect at the time at issue, provided:
within 30 days after the day on which notice and demand of any
penalty under section
6700 , 6701 ,
or 6702 is made
against any person, such person pays an amount which is not less
than 15 percent of the amount of such penalty and files a claim
for refund of the amount so paid, no levy or proceeding in court
for the collection of the remainder of such penalty shall be made,
begun, or prosecuted until the final resolution of a proceeding
begun as provided in paragraph (2). Notwithstanding the provisions
7421(a) , the beginning of such proceeding or levy during the
time such prohibition is in force may be enjoined by a proceeding
in the proper court.