For the Fourth Circuit
John C. Calhoun }
Appellant-Plaintiff } No. 05-19
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Vs. } Reply to Memorandum Brief of Appellees
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United States of America and }
Mark W. Everson, Commissioner }
of Internal Revenue }
Appellee-Defendants
Appellant Calhoun files his Reply to the IRS Brief of Appellees dated
Appellee has spent a surprising amount of space in the “Statement” section of its reply brief discussing issues raised 12 to 14 years ago, which Appellant has not raised in this case, in order to deflect attention from the key issues. Those issues were dealt with administratively at that time as Calhoun frequently corresponded with the IRS, which summarily ignored him. In fact, Calhoun had written to the IRS regarding these matters, sending three copies over a 90 day period, asking for the IRS to deny his claims. Curiously, the Appellee is now raising some of those issues in this case that have nothing to do with the issues before the Court.
There are five issues before this Court. First, the requirement of judicial review of IRS actions (as elevated in the Second Circuit’s Schulz II decision) has not been provided to Appellant. Appellee responded in part to this issue by correctly identifying that the issue revolves around obtaining judicial review of Collection Due Process (CDP) determinations (p. 1), but then once again fell into utilizing the determination in Schulz I instead of Schulz II (p. 13). Calhoun does not deny that Appellee has correctly identified the issues in Schulz I but that case is not the basis for Appellant’s issue. Calhoun’s contention is not “superfluous”, as the Appellee erroneously contends (p. 13), precisely because Calhoun has not received an independent judicial review, making oral argument necessary for resolution of this appeal.
Second, Appellant was wrongly denied a face-to-face hearing in violation of the intention of Congress, even though Appellant followed the correct procedure in requesting one. Counsel for the Appellee contends that the granting of a face-to-face hearing is the prerogative of the Appellee. Such an autocratic decree has been issued and therefore, logically, they claim that Calhoun will not get the face-to-face hearing mandated by law.
This hearing would have been very important since Calhoun had never received any Notice of Deficiency from the IRS (for years 1991 and 1992) until 2003. By that time, Calhoun had no chance to contest the liability charged a decade earlier. He had no chance to show that the penalty (pp. 20-21) or general tax liability were incorrect. As the Sixth Circuit recently noted:
A taxpayer may challenge his underlying tax liability at the collections due process hearing only if he “did not receive a any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability” 26 U.S.C. § 6330(c)(2)(B). [Living Care v.
So the face-to-face meeting would have afforded discussion about collection alternatives and tax liability for the penalty, etc. The IRS knows that procedural errors took place and is trying to weasel out of having a legitimate hearing. Calhoun had no chance to show procedural errors or collection alternatives because no CDP hearing was allowed.
Third, the IRS sent a Notice of Deficiency to Calhoun at a known bad address and then proceeding against Appellant more than a decade later. Counsel for Appellee does not deny this fact in its Memorandum and thus admits that Appellant’s position is correct. Failure to deny is admission. The IRS’s failure to send Calhoun the statutory Notice of Deficiency is a procedural error making their procedure against Calhoun a wrongful action. Judgment should be entered for Appellant on these grounds alone.
In the same vein, Appellee did not deny, and thus admits that the extension of the statute of limitations on Calhoun’s existing liens for reason of extended travel outside of the
In fact, the counsel for the Appellee is mistaken and lies in saying that the IRS verified that all procedural requirements were met (p. 11). Sending something as crucial as the Notice of Deficiency to a known bad address is a clear violation of procedure. Moreover, having a hearing on one’s tax liability has to occur before an impartial judge (appointed for life and receiving “compensation, which shall not be diminished during their continuance in office”) rather than the appeals officer of Calhoun’s opponent and accuser. Tax Court judges simply do not fit the criteria for being impartial judges because they do not comply with the standards of Article III of the Constitution. Both the CDPH statute and Schulz II requires that the IRS be subject to independent judicial review before an Article III court. Calhoun did not have the opportunity to thus contest his tax liability on the penalty or otherwise, and counsel for Appellee is in error to say that Calhoun received and independent review of the administrative action taken against him” (p.13).
In one of the cases cited by the Appellee’s counsel, Living Care v. United States (2005), 411 F.3d 621, 624, 625 (June 2, 2005), the court held that “The method or standards for judicial review of these [CDP] hearings is not yet settled [since the creation of the Internal Revenue Service Restructuring and Reform Act of 1998], hence the problems in these cases” (emphasis added). But the matter was more clearly settled in the Schulz II decision just four weeks later, and the Appellee is ignoring this fact! The court also noted: “Congress overlaid the Restructuring and Reform Act on a previous system that involved very little judicial oversight. The result is a surprisingly scant record…[and] [s]ince normal judicial review of an administrative decision requires the existence of a record…Congress must have been contemplating a more deferential review of these tax appeals than of more formal agency decisions.”
Instead of going with recent judicial developments, the Appellee is inappropriately trying to rely on the partly overruled (by Schulz II) decision in Phillips v. Commissioner (1929), 283
Fourth, the IRS is using the law illicitly to punish Appellant because of his strongly free market views and publications. Why else would Appellee raise issues over a decade after the fact? The counsel for the Appellee claims that no such debased motive could possibly be attributed to the good people at the IRS. Calhoun doubts this claim since after a decade of silence the IRS has risen up to assail Calhoun after his publication and public speaking record became prominent.
Fifth, the subject matter jurisdiction in District Court re underlying tax liability issue is being skirted by the IRS—even though Calhoun has a statutory right to question the alleged tax liability that has been upheld time and again by the courts (as in Living Care v. United States (2005), 411 F.3d 621, 624 supra). The trial court did not review the $500 frivolous penalty. The counsel for Appellee makes a bald-faced lie (p. 7) in saying that the trial court dismissed the penalty case because the nonresident alien argument was deemed frivolous. The nonresident alien argument was not an issue in the trial court case. Calhoun never got a hearing on the frivolous penalty case. He never had his opportunity, granted by statute, to challenge the $500 penalty. The matter was dismissed out-of-hand.
Why is the Appellee bringing up nonresident alien issues anyway? What past tax code and legal experts have said regarding that issue make far more sense than the abominable IRS code! Nobody knows what the IRC says. It is a difficult document. The nonresident alien issue was raised long ago, so why bring it up now? The IRS is doing so in order to deflect the five real issues raised in this Court. It is grossly unfair for the Appellee to use stuff from
Counsel for the Appellee also spends much time filling its brief with cases that have little or no bearing on the instant case. For instance, in Tilley v. U.S., 270 F.Supp.2d 731 (
There are also a couple of jurisdictional matters raised by the Appellee to consider. The counsel for the Appellee still desires that two separate cases to deal with the identical issues underlying the $500 penalty and the other taxes. Why should we have the same case in two different courts at the same time? Nevertheless, if that is what the Fourth Circuit wants, it is fine with Appellant, who would ask that this Court remand to the trial court accordingly.
In addition, Appellant has also simultaneously petitioned the Tax Court from the trial court, but not for the motive that Appellee ascribes to him (p. 17). Appellee’s believes that the statute in IRC 6330(c)(3) is somewhat ambiguous on what to do regarding filing “in the correct court” within 30 days in the case of an appeal. So, in order to protect his rights, Calhoun has filed in Tax Court as well and asked them to hold his case in abeyance pending the appeal in this Court. Doing so hardly made Appellant’s position “superfluous and self-defeating” (p. 17).
Finally, Appellant believes that Appellee is disingenuously attempting to minimize the importance of the issues in this case, calling them “overblown”, etc. The judicial review question from Schulz II is crucial. Appellee continues to bring up old tax returns and moot issues. For instance, the IRS claims that Calhoun did not request “specific” collection alternatives. But the statute does not specify that Calhoun must request any alternative in particular. It just says that he should request them, which he has done. The IRS is adding something to the statute that does not exist. The IRS also admits (p. 22) that Calhoun used the term “collection alternatives” several times in his correspondence with them. Calhoun wanted to dispute his tax liability on the penalty but the IRS would not allow him to do so (p.18).
Likewise, the statute does not require that Calhoun provide financial information prior to receiving a CDP hearing. If Congress does not require Calhoun to provide financial information then why does the IRS require it? It does not require that Calhoun first file tax returns for past years that it believes are unfilled (even though Calhoun was not required to file for those years). These things too have been added to the statute by Appellee unlawfully.
Therefore, Appellant requests that this Court reject the contorted claims of the Appellee and its disingenuous attempt to halt this appeal in favor of considering the five issues of this case. Appellant also requests that this Court find in his favor on account of the admitted procedural violations of the IRS.
Certificate of Service: I do hereby certify that on this date I delivered properly a copy of this pleading to opposing counsel.
Executed on
Respectfully submitted,
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John C. Calhoun, pro se