TPs Fail At PRA Again

[The Observer]

CLIFTON K WILLIS; SHERI A WILLIS,
Petitioners-Appellants
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee

Release Date: NOVEMBER 04, 2009


IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

Summary Calendar

Appeal from the United States Tax Court
USTC Nos. 7140-06 and 7222-06

Before HIGGINBOTHAM, CLEMENT, and SOUTHWICK, Circuit Judges.

PER CURIAM:/*/

Clifton and Sheri Willis appeal the Tax Court's decision to penalize them for not timely filing income tax returns for the years 1999-2003. Before this court -- as before the Tax Court -- the Willises claim that the Paperwork Reduction Act protects them from fines and other penalties for failing timely to file their Form 1040 tax return. Our court's binding precedent forecloses their argument, so we now affirm.

The Willises have stipulated that they did not timely file their tax returns, so only a question of law remains: Does the Paperwork Reduction Act relieve taxpayers from their burden to pay accrued interest and penalties on their overdue tax returns? 1

The Paperwork Reduction Act states that no person shall be subject to any penalty for failing to comply with a collection of information that . . . does not display a valid control number . . . or [for which] the agency fails to inform the person who is to respond . . . that such person is not required to respond . . . unless it displays a valid control number. 2 The Willises contend that Tax Form 1040 -- the form they should have filed -- does not in various ways comply with the Paperwork Reduction Act. Consequently, they claim that the government cannot subject them to any penalty for failing to submit their information.

This court has held to the contrary. Indeed, we have stated that the Paperwork Reduction Act does not apply to the statutory requirement that a taxpayer must file a return. 3 Over the years, this court has uniformly reaffirmed that holding. 4 The Willises protest that because they face a civil penalty -- in contrast to the criminal penalties imposed on the appellants in our previous cases -- the precedent does not control. Any such distinction is both illogical and unsupported by the text of the Paperwork Reduction Act, which uses the generic term any penalty -- so we reject the argument.

AFFIRMED.

//*//

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.


FOOTNOTES:


/1/ See 26 U.S.C. section 6651(a).


/2/ 44 U.S.C. section 3512.


/3/ United States v. Kerwin, 945 F.2d 92, 92 (5th Cir. 1991).


/4/ United States v. Willis, 958 F.2d 60, 64-65 (5th Cir. 1992) ( [Appellant] also argues on appeal that his conviction is barred by the Paperwork Reduction Act. . . . This argument is foreclosed by this court's decision in United States v. Kerwin. . . . ); United States v. Ferrand, 284 F. App'x 177, 178 (5th Cir. 2008) ( This court has explicitly held that the public protection provision of the PRA does not constitute a defense to criminal violations of the Internal Revenue Code because the regulations concerning the filing of income tax returns do not constitute information requests within the meaning of the PRA. ) (unpublished); United States v. Rupe, 308 F. App'x 777, 778 (5th Cir. 2009) ( [T]he Paperwork Reduction Act requirements do not affect the taxpayer's obligations to file a tax return and, accordingly, to fulfill his tax liabilities as imposed by statute. ) (unpublished).

[LPC]

I found this paragraph of interest in the Tax Court opinion:

Petitioners' reasoning is somewhat convoluted in that they argue, for example, that the Form 1040 has a control number for 1999, but that the control number expires on December 31, 1999, before the form is used in 2000 (typically on or before April 15, 2000) to report income for 1999. Under petitioners' interpretation, respondent would face the conundrum of never being able to have a valid control number, because the form must be prepared, printed, and distributed prior to filing time, which begins January 1st each year. Accordingly, we find petitioners' initial argument to be sophistry and without merit. The Forms 1040 contain a control number that has been provided and displayed in accord with the PRA.

Willis v. Commissioner, T.C. Memo. 2008-233, aff’d 2009 TNT 212-10, No. 09-60334 (11/4/2009) (unpublished).

That's a new one to me, so I'll be adding it to the Tax Protester FAQ.

[fortinbras]

As the affirmance from the 5th Circuit was issued only yesterday (Nov. 4th), I think it is much to early to designate it as unpublished. I expect that, within a few months, it will be published in USTC and AFTR2d and probably either F3d or Fed.Appx.

[LPC]

/4/ United States v. Willis, 958 F.2d 60, 64-65 (5th Cir. 1992) ( [Appellant] also argues on appeal that his conviction is barred by the Paperwork Reduction Act. . . .

Different Willis.

The convict was Howell C. Willis, not Clifton (or Sheri).

[LPC]

As the affirmance from the 5th Circuit was issued only yesterday (Nov. 4th), I think it is much to early to designate it as unpublished. I expect that, within a few months, it will be published in USTC and AFTR2d and probably either F3d or Fed.Appx.

"Published" for this purpose doesn't mean printed in a book, but whether the court thinks it should appear in the official reporter (F.3d) and be citable as precedent.

From the opinion itself:

Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

And the rule in question says:

47.5.5 Definition of “Published.” An opinion is considered as “published” for
purposes of this rule when the panel deciding the case determines, in accordance with 5TH CIR.
R. 47.5.2, that the opinion shall be published and the opinion is issued.

Generally speaking, opinions in F.3d are "published" while opinions in Fed.Appx. are "unpublished."

[notorial dissent]

I know at this point that the PRA nonsense has been trotted out a number of times, and as far as I can remember, and has been shot down and finely dismembered in each instance.

I know there has been at least one, if not more, ruling that I am pretty sure has come right out and not only said that the tax forms did not come under the restrictions of PRA, but that they were specifically exempted by the act.

I thought I also remembered one stating that the number on the form was basically a perpetual number and that the IRS forms were not treated the same way so that the number on the forms was only indicative of it having been submitted and meeting the requirements.

I just keep wondering when they are going to start coming out and saying anything to do with PRA is a frivolous position and bouncing them from the start.

[LPC]

I know there has been at least one, if not more, ruling that I am pretty sure has come right out and not only said that the tax forms did not come under the restrictions of PRA, but that they were specifically exempted by the act.

There is nothing in the statute that provides any exemption for tax forms, but there is a regulation adopted by the Office of Management and Budget (not the IRS) which states that the "penalty protection" provisions of the PRA do not provide any protection for failing to comply with a statutory filing requirement. Specifically, 5 C.F.R. 1320.6(e) states that:

The protection provided by paragraph (a) of this section does not preclude the imposition of a penalty on a person for failing to comply with a collection of information that is imposed on the person by statute--e.g., 26 U.S.C. Sec. 6011(a) (statutory requirement for person to file a tax return)....

That regulation was added after the 1995 amendments to the PRA (which negates Springer's argument that the 1995 amendments somehow changed the law in this regard), and in proposing the regulation the OMB cited five court decisions that had upheld convictions or penalties for failing to file tax returns (the Salberg, Neff, Dawes, Hicks, and Wunder decisions), concluding:

In those cases, the courts concluded that Congress, in enacting the Paperwork Reduction Act, did not intend to require itself to comply with the requirements of that Act (and seek and obtain OMB approval) whenever Congress decides to impose a paperwork requirement on persons directly by statute.

There is no legislative history pertinent to the Paperwork Reduction Act of 1995 that suggests that Congress intended to change this court interpretation for 44 U.S.C. 3512.

Accordingly, where Congress imposes a collection of information directly on persons, by statute (as, e.g., in 26 U.S.C. Sec. 6011(a) and 42 U.S.C. Sec. 6938(c)), then the public protection provided by proposed Sec. 1320.6(a) would not preclude the imposition of penalties for a person’s failure to comply with the statutory mandate.

60 F.R. 30437, 30441 (6/8/1995) (footnote omitted).

The second paragraph of the quotation above also negates Springer's claims about the 1995 amendments.

I thought I also remembered one stating that the number on the form was basically a perpetual number and that the IRS forms were not treated the same way so that the number on the forms was only indicative of it having been submitted and meeting the requirements.

The IRS resubmits its tax forms to OMB every year for review and approval, and OMB assigns the same control number each year.

Cases addressing various claims about the PRA have been collected at http://evans-legal.com/dan/tpfaq.html#PRA

I just keep wondering when they are going to start coming out and saying anything to do with PRA is a frivolous position and bouncing them from the start.

The IRS is certainly taking that position. See Rev. Rul. 2006-21, 2006-15 IRB 1, and Notice 2007-30, 2007-14 I.R.B. 883.