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951 F.2d 1065
UNITED STATES of America; Charles L. Gresham, Revenue Officer of the
Internal Revenue Service, Petitioners-Appellees,
David O. SAUNDERS and Sharon Saunders, Respondents-Appellants.
Nos. 91-35012, 91-35170.
United States Court of Appeals,
Submitted Nov. 4, 1991. [FN*]
FN* The panel finds this case appropriate for submission without oral argument
pursuant to Ninth Circuit Rule 34-4 and Fed.R.App.P. 34(a).
Decided Dec. 13, 1991.
David O. Saunders III and Sharon Saunders, in pro per.
Gary R. Allen, Tax Div., Dept. of Justice, Washington, D.C., for petitioners-
Appeal from the United States District Court for the District of Oregon.
Before TANG, O'SCANNLAIN and RYMER, Circuit Judges.
TANG, Circuit Judge:
In March 1990, the Internal Revenue Service served summonses on David and
Sharon Saunders to appear and produce records for tax years 1981 through 1988.
U.S.C. s 7602. Although the Saunders appeared as directed, they refused
to turn over the documents and records requested in the summonses. The IRS
filed an action in federal district court to enforce the summonses. 26
U.S.C. s 7604(b). In December 1990, the district court denied the Saunders'
to dismiss and issued an order enforcing the summonses. The Saunders appeal.
1. Standard of Review
The district court's decision to enforce the IRS summonses will be reversed
only for clear error. See United States v. Abrahams, 905 F.2d 1276, 1280
(9th Cir.1990). To the extent the district court predicated its judgment
on issues of statutory construction, we review de novo. See Saratoga Sav. & Loan
Ass'n v. Federal Home Loan Bank Bd., 879 F.2d 689, 691 (9th Cir.1989). We
also review de novo the question of the district court's jurisdiction. Owner-Operators
Indep. Drivers Ass'n v. Skinner, 931 F.2d 582, 584 (9th Cir.1991).
2. OMB Number
The Saunders argue first that the summonses were invalid because they lacked
an Office of Management and Budget ("OMB") control number. Consequently,
the Saunders continue, section 3512 of the Paperwork Reduction Act, 44 U.S.C.
ss 3501 to 3520, relieves them of the obligation to respond to the summonses.
Section 3512 reads: Notwithstanding any other provision of law, no person
shall be subject to any penalty for failing to maintain or provide information
to any agency if the information collection request involved was made after
December 31, 1981, and does not display a current control number assigned
by the Director, or fails to state that such request is not subject to this
The district court appropriately rejected the Saunders' argument. The Paperwork
Reduction Act specifically excepts from section 3512's requirements "the
collection of information ... during the conduct of ... an administrative action
or investigation involving an agency against specific individuals or entities." 44
U.S.C. s 3518(c)(1)(B); see also 5 C.F.R. s 1320.3(c). An IRS investigation
of a taxpayer's failure to file her or his income tax return constitutes "an
agency action against specific individuals." Consequently, the summonses
were valid even absent either an OMB number or a statement that the document
request is not subject to the requirements of section 3512. See Lonsdale v.
United States, 919 F.2d 1440, 1444-45 (10th Cir.1990) ("We agree with
those courts that have relied upon [44 U.S.C.] section 3518(c)(1)(B)(ii) to
hold that the Paperwork Reduction Act is inapplicable to 'information collection
request' forms issued during an investigation against an individual to determine
his or her tax liability."); Neumann v. United States, No. M89-50028,
1990 WL 209631, at *1, 1990 U.S.Dist. LEXIS 8312, at *2-3 (W.D.Mich. June 20,
1990); United States v. National Commodity & Barter Ass'n, 90-1 U.S. Tax
Cas. (CCH) P 50,284, at 83,998, 1990 WL 85905 (D.Colo.1990) ("[T]he statute
excepts IRS summonses from the provision[s] of 3512."); Van Sant v. United
States, 90-1 U.S. Tax Cas. (CCH) P 50,179, at 83,651-52, 1990 WL 21279 (D.Colo.1990)
(same), aff'd, 1990 WL 265081 (10th Cir. Aug. 2, 1990); United States v. Particle
Data, Inc., 634 F.Supp. 272, 275 (N.D.Ill.1986) ("IRS issued the Summonses
pursuant to its investigation of Berg, a 'specific individual[ ].' ").
3. IRS Authority to Issue and Enforce Summonses
The Saunders also contend that the IRS lacks the authority to issue and enforce
its request for records and documents pertaining to the tax years in issue.
We find no merit to this argument. Section 7602(a) of 26 U.S.C. expressly
empowers the IRS to issue a summons for "books, papers, records, or other
data" relevant to "determining the liability of any person for any
internal revenue tax." Our cases have repeatedly recognized this authority.
See, e.g., Harris v. United States, 758 F.2d 456, 457 (9th Cir.1985).
When taxpayers fail to comply with a summons, the plain language of 26 U.S.C.
s 7604(b) authorizes the IRS to seek enforcement of the summons in federal
district court. Again, we have consistently acknowledged the propriety of such
action. See, e.g., Abrahams, 905 F.2d at 1279.
For the summonses to be enforced, the IRS needed only to make a "minimal" showing
that (1) the summonses were issued for a legitimate purpose, (2) the information
requested is relevant to that purpose, and (3) the IRS did not already possess
the equivalent material. Id. at 1280; see also Liberty Fin. Servs. v. United
States, 778 F.2d 1390, 1392 (9th Cir.1985). The district court found, and we
agree, that the affidavit of Revenue Officer Charles Gresham established each
of these prerequisites to enforcement. See Liberty, 778 F.2d at 1392 ("Assertions
by affidavit of the investigating agent that the requirements are satisfied
are sufficient to make the prima facie case."). The IRS thus had the authority
both to issue and to seek enforcement of the Saunders' summonses.
4. Delegation of Authority
The Saunders respond that the IRS and Officer Gresham have never properly
been vested with the authority to issue and seek enforcement of summonses because
the order delegating that authority from the Secretary of the Treasury
the Commissioner of Internal Revenue was not executed in accordance with
law. Specifically, the Saunders argue that the government's failure to
publish in the Federal Register Treasury Department Orders 150-37 (1955) and
(1982) (collectively, "TDOs"), delegating the Secretary's power
to administer various aspects of the tax laws to the Commissioner, invalidates
the transfer and leaves the IRS and its officers powerless to investigate
Like the Saunders' Paperwork Reduction Act argument, this contention cannot
withstand a full reading of the Federal Register Act, 44 U.S.C. ss 1501 to
1511. The Act requires the publication only of the following items in the Federal
Register: (1) Presidential proclamations and Executive orders, except those
not having general applicability and legal effect or effective only against
Federal agencies or persons in their capacity as officers, agents, or employees
thereof; (2) documents or classes of documents that the President may determine
from time to time have general applicability and legal effect; and (3) documents
or classes of documents that may be required so to be published by Act of Congress.
44 U.S.C. s 1505(a).
The TDOs are not Presidential proclamations or documents cited for publication
by the President or by an Act of Congress. Nor are they orders having "general
applicability and legal effect." Rather, the TDOs fall squarely within
section 1505(a)'s express exception for orders "effective only against
Federal agencies or persons in their capacity as officers, agents, or employees
thereof." The TDOs had no legal impact on, or significance for, the general
public. They simply effected a shifting of responsibilities wholly internal
to the Treasury Department. Accordingly, we hold that the Federal Register
Act does not mandate the publication of the TDOs and that, as a consequence,
the government's failure to publish them does not affect the validity of the
Secretary's delegation of authority to the Commissioner. See Lonsdale, 919
F.2d at 1446 ("[W]e hold that the [Federal Register Act] did not require
publication of TDO 150-37 or 150-10.") (citing cases); Murdock v. United
States, 90-2 U.S. Tax Cas. P 50,420, at 85,324-25, 1990 WL 120664 (D.Utah 1990);
Neumann, 1990 WL 209631, at *1, 1990 U.S.Dist. LEXIS 8312, at *2 ("An
internal delegation of administrative authority does not adversely affect members
of the public and need not be published in the Federal Register to be valid.");
National Commodity, 90-1 U.S. Tax Cas. P 50,284, at 83,998; Van Sant, 90-1
U.S. Tax Cas. P 50,179, at 83,651; Reimer v. United States, 90-1 U.S. Tax Cas.
P 50,285, at 84,000, 1990 WL 85686 (D.Hawaii), aff'd, 919 F.2d 145 (9th Cir.1990);
United States v. McCall, 727 F.Supp. 1252, 1254 (N.D.Ind.1990) ("It is
well-settled that rules of agency organization, procedure, or practice need
not be published to be effective. The court finds the delegation orders at
issue here to be such rules of internal agency procedure, obviating their publication
in the Federal Register.") (quotation and citation omitted); accord Hatcher
v. United States, 733 F.Supp. 218, 221 (M.D.Pa.1990) (failure to publish TDOs "does
not allow an individual to ignore a summons"); United States v. DeVaughn,
414 F.Supp. 774, 779 (D.Md.1976) (IRS Handbook and Policy Statement need not
be published in Federal Register), aff'd, 556 F.2d 575 (4th Cir.), cert. denied,
434 U.S. 954, 98 S.Ct. 479, 54 L.Ed.2d 312 (1977).
5. Notice of Dishonor/Lack of Jurisdiction
The Saunders argue that the district court lacked jurisdiction to enforce
the summonses. In support of their position, they cite The Glide, 167 U.S.
623-24, 17 S.Ct. 930, 936, 42 L.Ed. 296 (1897), which holds that "[t]he
maritime and admiralty jurisdiction conferred by the constitution and laws
of the United States upon the district courts of the United States is exclusive." The
Saunders apparently interpret this language as limiting the jurisdiction
of federal district courts to admiralty and maritime actions. The Saunders
also seem to believe that, by issuing a notice of dishonor under the Uniform
Commercial Code, they prevent the IRS from characterizing this case as a
contract in admiralty or a maritime action, leaving the district court no
basis for jurisdiction.
The Saunders reading of The Glide founders. In describing the district courts'
maritime and admiralty jurisdiction as "exclusive," the Supreme Court
excluded state courts from adjudicating either category of lawsuit. The Court
did not, by employing the phrase "exclusive," delimit the bases of
federal jurisdiction. To the contrary, Congress has expressly directed federal
district courts to hear tax enforcement matters. See 26 U.S.C. ss 7402(b),
7604(a); 28 U.S.C. s 1340. We have repeatedly confirmed the authority--indeed,
duty--of the district courts to adjudicate tax summons cases such as the one
being prosecuted here. See, e.g., United States v. Author Servs., Inc., 804
F.2d 1520, 1525 (9th Cir.1986), amended, 811 F.2d 1264 (9th Cir.1987).
In their reply brief, the Saunders raise for the first time the argument
that the summonses were invalid because not attested as required by 26 U.S.C.
s 7603. We will not decide matters neither presented to the district court
nor raised in the appellant's opening brief. See Eberle v. City of Anaheim,
901 F.2d 814, 818 (9th Cir.1990) ("It is well established in this circuit
that the general rule is that appellants cannot raise a new issue for the
first time in their reply briefs.") (quotations and citations omitted);
Bolker v. Commissioner, 760 F.2d 1039, 1042 (9th Cir.1985) ("As a general
rule, we will not consider an issue raised for the first time on appeal.").
Accordingly, the decision of the district court is AFFIRMED.
to Tax Protestor Exhibit