Number xx-XXXXX

In the

United States Court of Appeals

For the XXXXX Circuit

PETITIONER

Petitioner-Appellant

-v.-

Commissioner of Internal Revenue

Respondent-Appellee.

On appeal from the United States Tax CourtDocket Number XXXX-XX

REPLY BRIEF FOR PETITIONER-APPELLANT

PETITIONER

ADDRESS

PHONE

In the United States Court of Appeals

For the Fifth Circuit

Petitioner Name )Petitioner – Appellant )

) Docket No. XX-xxxxxv. )

) Petitioner’s Reply BriefCommissioner of Internal Revenue )Respondent – Appellee )

REPLY BRIEF FOR PETITIONER

INTRODUCTION

This brief is in response to Respondent’s served DATE. The case concerns the

Commissioner’s decision to sustain a proposed levy to collect a §6702(a) frivolous

return penalty. Respondent attempts on brief to meet the burden of proof that his

Appeals Office should have met during the hearing. Evidence and Respondent’s

admissions in the administrative record, however, indicate:

1.) that he never acknowledged, let alone met, his burden to prove the elements

of a §6702 penalty,

2.) that the subject return contained no specified frivolous positions,

3.) that R failed to prove the foundational fact element necessary to show that I

am a person subject to the penalty, and

4.) that the assessment was not just procedurally irregular, but completely bogus,

having been made outside the statutory limit for assessments.

[2]

The Court further ordered a $1,000 sanction against me for having raised an

unspecified frivolous argument in an ex parte letter and for the Court’s

unexplained, and indeed, inexplicable accusation that a statement of fact is a

“frivolous argument.”

The Tax Court should be reversed on the liability determination and on the

penalty determination.

TABLE OF CONTENTS

REPLY BRIEF FOR PETITIONER..................................................................2

INTRODUCTION.............................................................................................2

STATEMENT OF THE ISSUES.......................................................................5

STATEMENT OF THE CASE..........................................................................6

RELEVANT FACTS.........................................................................................7

REPLY TO RESPONDENT’S ARGUMENT..................................................8

A. The Assessment Was Time Barred by Statute........................................8

B. Petitioner Is Not Among Those Subject to §6702(a) Penalty..............14

CONCLUSION............................................................................................20

CERTIFICATE OF SERVICE.....................................................................22

[3]

TABLE OF AUTHORITIESWhere not otherwise specified, references are to Title 26 of the United States Code of 1986

Statutes

§6373.........................................................................................................................6

§6501.........................................................................................................8, 9, 13, 14

§6671(a).........................................................................................................8, 11, 14

§6671(b)......................................................................................................15, 18, 19

§6673.......................................................................................................................21

§6700.......................................................................................................................13

§6701.......................................................................................................................13

§6702(a)............................................................................................................passim

§6703(a).....................................................................................................................6

§7701(a)(1)........................................................................................................15, 18

§7701(c)...................................................................................................................16

Pub. L. 109–432, 120 Stat. 2960 (2006)................................................................17

Pub. L. 97–248, title III, § 326(a), Sept. 3, 1982.....................................................17

Cases

Arizona Grocery Co. v. Atchison, T. & S.F. Ry. Co.,

284 U.S. 370, 52 S.Ct. 183 (1932)..........................................................................13

Astoria Federal Savings & Loan Ass’n v. Solimino, 501 U.S. 104, 112 (1991).....17

Badaracco v. Commissioner, 464 U.S. 386, 104 S. Ct. 756, 78 L. Ed. 2d 549.......10

Bailey v. United States, 516 U.S. 137, 146 (1995)..................................................17

Barnett v. Internal Revenue Service, 988 F.2d 1449 (5th Cir.1993),......................14

Beard v. Commissioner, 82 TC 766, at 784 (1984)...........................................10, 11

Colautti v. Franklin, 439 U. S. at 392-393, n. 10....................................................15

Colton, 902 F.2d 1462.............................................................................................19

[4]

Commonwealth National Bank of Dallas v. United States,

665 F.2d 743 (5th Cir. 1982)....................................................................................19

Connecticut Nat'l Bank v. Germain, 112 S. Ct. 1146, 1149 (1992)........................18

Cox v. Louisiana, 379 U.S. 559, 85 S.Ct. 476 (1965).............................................13

Dixon v. Commissioner, 316 F.3d 1041 (9th Cir. 2003)...........................................21

Florsheim Bros. Dry Goods Co., Ltd. v. United States,

280 U. S. 453, 280 U. S. 462...................................................................................10

Fox v. Standard Oil Co. of N. J., 294 U. S. 87,

95-96, 55 S.Ct. 333, 336 (1935)..............................................................................15

Helvering v. Morgan's Inc. 239 U.S. 121,

79 L.Ed. 232, 55 S.Ct. 60, 125 n.1 (1934)...............................................................16

Houston v. Commissioner, 38 TC 486, 489,(1962).................................................10

Kizzier v. United States, 598 F.2d 1128, (8th Cir. 1979)..........................................19

McDermitt v. United States, 954 F.2d 1245, (6th Cir. 1992)....................................19

Meese v. Keene, 481 U. S. 465, 484-485 (1987).....................................................15

Moser v. United States, 341 U.S. 41, 71 S.Ct. 553 (1951);.....................................13

Murphy v. United States, 45 F.3d 520 (1st Cir. 1995)..............................................19

National Paper Products Co. v. Helvering, 293 U.S. 183 (1934)...........................10

National Refining Co. v. Commissioner, 1 B. T. A. 236 (1924).............................10

National Refining Co. v. Commissioner, 1 B. T. A. 236 (1924).............................10

Pacific National Insurance Co. v. United States, 422 F.2d 26 (9th Cir. 1970). .19, 20

Plett v. United States, 185 F.3d 216, 84 A.F.T.R.2d 99 (4th Cir. 1999)..................19

Quattrone Accountants, Inc. v. I.R.S., 895 F.2d 921 (3rd Cir. 1990)......................19

Radalis v. U.S.A., & I.R.S., 169 Fed. Appx. 390.....................................................19

Raley v. Ohio, 360 U.S. 423, 79 S.Ct. 1257 (1959),...............................................13

Robert W. Monday v. United States, 421 F.2d 1210, (7th Cir. 1970).......................19

Roth v. United States, 779 F.2d 1567, (11th Cir. 1986)............................................19

[5]

Russello v. United States, 464 U.S. 16 23, 78 L Ed 2d 17, 104 S. Ct. 296 (1983)..18

Sisemore, 797 F.2d. 268..........................................................................................19

Slodov v. U.S., 436 U.S. 238, 249 (1978)................................................................16

Smith v. United States, 555 F.3d 1158, (10th Cir. 2009)..........................................19

Sprietsma v. Mercury Marine, 537 U.S. 51, 63 (2003 )..........................................17

Stenberg v. Carhart, 530 U.S. 914, 942, 120 S.Ct. 2597, 2615 (2000)..................15

Stone v. INS, 514 U.S. 386, 397 (1995)...................................................................18

United States v. Aguilar, 21 F.3d 1475, 1480 (9th Cir. 1994).................................18

United States v. Laub, 385 U.S. 475, 487, 87 S.Ct. 574 (1967)..............................13

United States v. McCombs, 30 F.3d 310 (2nd Cir. 1994).........................................19

United States v. Wong Kim Bo, 472 F.2d 720, 722 (CA5 1972).............................18

Western Union Telegraph Co. v. Lenroot, 323 U. S. 490, 502 (1945)....................15

White v. United States, 372 F.2d 513, 517, 178 Ct. Cl. 765 (1967)........................20

Wilson v. United States, 250 F.2d 312, 316 (9th Cir. 1958)....................................20

Wnuck v. Commissioner, 136 T.C. No. 24, slip op. (2011).....................................20

Zellerbach Paper Co. v. Helvering, 292 U.S. 172, 180 (1934)...............................10

Zimmerman v. STATE, DEPT. OF JUSTICE, 170 F. 3d 1169 (9th Cir. 1999).......19

STATEMENT OF THE ISSUES

Contrary to Respondent’s allegations in his brief, the only issues before this

Court are the following, which I raised in my opening brief:

1. Whether the assessment was made outside the statute of limitations.

2. Whether I am subject to the alleged penalty.

3. Whether the Commissioner’s Appeals Office met his burden of proof

concerning the application of the §6702 (a) penalty.

[6]

4. Whether a §6373 penalty of $1,000 assessed against me by the Tax Court is

lawful and properly supported.

STATEMENT OF THE CASE

The case has been described with in detail in the opening briefs. At the heart of

our controversy is Respondent’s consistent refusal to acknowledge his burden of

proof under §6703(a),1 and his efforts, even after admitting that he has the burden,

to avoid presenting evidence and to insist that I prove my return is not frivolous.

Respondent devotes most of his brief to a confused effort to meet a burden that he

was required to meet at the Collections Due Process hearing. His discussion of

what he regards as my “underlying position”2 is entirely irrelevant. The issue of

whether my earnings are taxable was not before the Tax Court and is not before

this Court. Respondent’s efforts to address that issue are a waste of time. Just as his

efforts to demonstrate the factual elements of the penalty now are too little too late.

R cannot show where in the record those elements were considered and determined

1 Sec. 6703. Rules applicable to penalties under sections 6700, 6701, and 6702 TITLE 26, Subtitle F, CHAPTER 68, Subchapter B, PART I, Sec. 6703. STATUTE(a) Burden of proof In any proceeding involving the issue of whether or not any person is liable for a penalty under section 6700, 6701, or 6702, the burden of proof with respect to such issue shall be on the Secretary. (Emphasis added)

2 R’s Brief, pg. 15, line 1. “Taxpayer’s underlying position is that she is not obliged to pay tax on her earnings.”

[7]

as he was required to do to sustain his levy. His efforts to meet his burden now are

meaningless speculation as to how the determination was made.

This is a collections action. R must already have proven the liability and made a

procedurally proper assessment to justify the levy. The issue is whether R met his

burden at the CDP hearing to prove the penalty liability. He never even

acknowledged such a burden and made no effort to meet it. He failed to prove I am

subject to the penalty. He failed to prove that the assessment was properly made.

He failed to prove the amended return at issue met the elements for a frivolous

penalty as they are described in §6702(a). Respondent has the burden to prove

penalty liability in “any proceeding.”3 Proving it now doesn’t justify collection

actions that have already begun.

RELEVANT FACTS

Respondent failed to object to any of the Statements of Relevant Fact in my

opening brief. He thus concedes them. In examining the rambling mixture of facts,

legal conclusions, and speculation in R’s “Statement of Facts”4 it appears as though

he agrees to the essential fact elements underlying my case as they were stated in

my opening brief.

3 §6671(a). 4 R’s Brief, pg. 4 - 14

[8]

REPLY TO RESPONDENT’S ARGUMENT

A. The Assessment Was Time Barred by Statute

The facts are not in dispute concerning the date of my valid original 1040 filing

for 2004 and the date of the alleged assessment. The assessment date of

10/23/2009 is well outside the three year limit specified at §6501. The

Commissioner has not alleged that the statute has been extended or waived in any

way.5 Pursuant to §6671(a), penalties under §6702(a) are assessed and collected in

the same manner as taxes.6 The offending document is associated with my original

1040 return throughout the record.7

After a long and generally accurate description of the “statutory framework for

CDP hearings,” Respondent admits that the Appeals Office must “obtain

verification from the Secretary that the requirements of any applicable law or

administrative procedures have been met.”8 I agree and have been trying to hold R

to that requirement throughout this process. R shows that he understands the

importance of a proper assessment when he states:

5 The statute may be extended by a number of circumstances described in §6501(c), (d), and (e), none of which are alleged to exist in this case.

6 §6671(a) Penalty assessed as tax The penalties and liabilities provided by this subchapter shall be paid upon notice and demand by

the Secretary, and shall be assessed and collected in the same manner as taxes. Except as otherwise provided, any reference in this title to “tax” imposed by this title shall be deemed also to refer to the penalties and liabilities provided by this subchapter. (Emphasis added)

7 USTCE, Exhibit 1-J pg. 1 Tax Type/Form Number; Exhibit 13-J, all pages, Tax Year;8 R’s Brief, pg. 17, 2nd paragraph.

[9]

“This inquiry includes a determination that taxes have been properly assessed, since it’s the assessment that gives rise to the authority to collect the levy.”9 (Emphasis added)

One of the foundational “requirements of applicable law” for a proper

assessment is in the limitation statute at §6501. After a long irrelevant effort to

demonstrate that the subject return was indeed frivolous, an issue not before

this court, Respondent addresses the statute of limitations (SOL) starting on

page 15. He incorrectly asserts that the SOL does not relate back to the filing of

the original return. Respondent offered no citation to authority for this

statement, which directly contradicts rulings in Zellerbach,10 Florsheim11,

Houston,12 Beard,13 Badaracco14 and many others. The Supreme Court stated in

Badaracco,

“It thus has been held consistently that the filing of an amended return in a nonfraudulent situation does not serve to extend the period within which the Commissioner may assess a deficiency.”(Badaracco v. CIR)15

9 R’s Brief, pg. 17, 2nd paragraph., citing Roberts v. Commissioner, 329 F.3d 1224, 1227 (11 th Cir. 2003)

10 Zellerbach Paper Co. v. Helvering, 292 U.S. 172, 180 (1934).11 Florsheim Bros. Dry Goods Co., Ltd. v. United States, 280 U. S. 453, 280 U. S. 46212 Houston v. Commissioner, 38 TC 486, 489,(1962)13 Beard v. Commissioner, 82 TC 766, at 784 (1984)14 Badaracco v. Commissioner, 464 US 386, 104 S. Ct. 756, 78 L. Ed. 2d 549.15 Badaracco v. Commissioner, 464 US 386, 394 fn. 8, 104 S. Ct. 756, 78 L. Ed. 2d 549: citing

as examples, Zellerbach Paper Co. v. Helvering, 293 U.S. 172 (1934); National Paper Products Co. v. Helvering, 293 U.S. 183 (1934); National Refining Co. v. Commissioner, 1 B. T. A. 236 (1924). Please note also that in referring to a “tax” deficiency, we are also referring to a “penalty” deficiency. Pursuant to §6671(a) the words “tax” and “penalty” are interchangeable for assessment purposes.

[10]

Respondent rejoins the SOL argument on pg. 27 of his brief where he does not

claim the assessment was within the time limit, or that any extension of the time

limit occurred, but instead makes three separate, and equally meritless arguments.

First R argues that the statute of limitations simply doesn’t apply to §6702

penalties,16 second, that filing an amended return starts its own three year time

limit,17 and finally, that §6501 applies to “tax payable by return or stamp,”18 and

would somehow not apply to a penalty against my amended return.

The second argument is long settled. Section 6671(a) tells us that penalties “are

assessed and collected in the same manner as taxes.”19 In the landmark Beard case,

the Court agreed, citing Zellerbach:

“The Court in Zellerbach held that an original return, despite its inaccuracy, was a "return" for limitations purposes, so that the filing of an amended return did not start a new period of limitations running.” (Emphasis added) (Beard v. CIR)20

There is no dispute that my original return was valid. My amended return did

not start a new limitation period.

16 R’s Brief, pg. 27, last paragraph, “Taxpayer erroneously assumes that a §6702 penalty must be assessed within the three-year statute of limitations set by §6501(a).”

17 R’s Brief, pg. 29: “In any event, if § 6501(a) were applicable, the three-year period would begin to run when the frivolous return was filed.”

18 R’s Brief, pg. 28. “…the statute of limitations set by § 6501(a), which taxpayer invokes, applies only to a tax payable by return or stamp.”

19 §6671(a)20 Beard v. Commissioner, 82 TC 766, at 784 (1984).

[11]

As to whether §6501 applies to §6702 penalties, Respondent argues that it does

not, stating: “There is no statute of limitation on an assessment of a frivolous-

return penalty under §6702.”21 Respondent offers no reference to any authority for

this statement. The exceptions to the limits in §6501 are explicit, not at issue here,

and do not specify an exemption for §6702. Respondent is, or should be, aware that

the statute does indeed apply to §6702. The Tax Court in Callahan v. CIR ruled,

based on undenied allegations in R’s answer to the petition, that:

“…petitioners are deemed to have admitted that the frivolous return penalties for 2003 were timely assessed before the expiration of the 3-year limit for assessment applicable under section 6501(a).”22 (Emphasis added)

The Tax Court could hardly have been more explicit.

Respondent is also presumed to be aware of and to conduct himself according to

the policies and procedures in the Internal Revenue Manual. The Internal Revenue

Manual says this about §6702 penalties and the §6501 limits:

“4. Penalties

“As a general rule, the statute of limitations to assess IRC Section 6702 penalty begins with a valid return filing;”23

The Internal Revenue Manual itself specifies its significance for

Respondent’s organization of the information it contains:

21 R’s Brief, pg. 2822 Callahan v. Commissioner , 130 T.C. 3, 5 (2008)

23 IRM 4.10.12.4.9 (11-27-2009)

[12]

“The IRM is the primary, official source of instructions to employees relating to the organization, administration and operation of the IRS. The IRM contains the directions employees need to carry out their responsibilities in administering the laws or other agency obligations. It ensures that employees have access to current procedures.

The IRM is used to fulfill the IRS' legal requirements as a Federal agency to document, publish, and maintain records of policies, authorities, procedures, and organizational operations.”24

Information such as that in the IRM is generally considered a defense

against contrary assertions by the government when cited as authority in

controversies between citizens and the government.25

The IRM states as a matter of procedure and law, and the Tax Court

agreed in Callahan supra, that §6702 penalties are subject to the statutory

limits at §6501. But even if the IRM didn’t so state, Respondent has offered

no citation to any authority to show an exemption to §6501 applies to §6702.

Respondent further argues that because penalties under §6700 and §6701

have been found not to be ‘return based’ penalties, and thus not subject to

the SOL, then §6702 is likewise not subject to §6501. This is his last

desperate attempt to exempt the penalty from the limitation statute. He does

so this time by arguing that the penalty he refers to as a “frivolous-return

24 IRM 1.11.6.2 (05-07-2010) Using the IRM 25 See e.g. Arizona Grocery Co. v. Atchison, T. & S.F. Ry. Co., 284 U.S. 370, 52 S.Ct. 183

(1932); Moser v. United States, 341 U.S. 41, 71 S.Ct. 553 (1951); Raley v. Ohio, 360 U.S. 423, 79 S.Ct. 1257 (1959), Cox v. Louisiana, 379 U.S. 559, 85 S.Ct. 476 (1965), United States v. Laub, 385 U.S. 475, 487, 87 S.Ct. 574 (1967).

[13]

penalty” in the previous sentence26 “applies only to a tax payable by return or

by stamp.” If my amended return had shown a tax due, there is no question

that it would have been payable with the return. Respondent’s administrative

record identifies the penalty as a return penalty again and again.27 The notion

that a “frivolous return penalty” levied against a Form 1040X return that was

filed to amend a Form 1040 return is not a return base penalty is flawless

nonsense. No case cited by Respondent in support of this loopy notion even

mentions §6702.

Section 6501 is a statutory prohibition that applies to R’s authority to assess

taxes, and, through §6671(a), return-based penalties. It’s not a suggestion that can

be disregarded if R can sneak it past an uninformed citizen. The prohibition applies

to §6702 by Respondent’s own admission in the IRM. Respondent has openly and

knowingly violated that prohibition. This Court cannot lawfully sustain his actions.

26 R’s Brief, pg. 28, line 5-9. 27 USTCE, Exhibit 1-J pg. 1 “Tax Type/Form: Civil Penalty/Form 1040”; Ex. 2-J; Ex. 3-J; Ex.

13-J, all pages, Tax Year, pg. 3 “** INFORMATION FROM THE RETURN OR AS ADJUSTED **” (Emphasis added).

[14]

B. Petitioner Is Not Among Those Subject to §6702(a) Penalty

The I.R.C. specifies those subject to penalty under §6702 at §6671(b).28 The

status of a §6671(b) person is a matter of fact, not a question of law. 29 Contrary to

R’s allegation,30 my statement in the Pretrial Memo31 concerning my status is a

statement of fact, not a legal argument.

Respondent doesn’t argue that I fit the definition of “person” at 6671(b). Instead

he argues a point of statutory construction. Respondent claims that the §6671(b)

definition, because it uses the verb “includes” instead of “means,” includes not

only the types of persons specified in the definition but all possible “persons”

embraced by the common English definition and the title-wide definition at

§7701(a)(1). Respondent states, without any reference to authority,

“Section 6671(b) does not define “person” to mean exclusively something other than its ordinary meaning; it simply provides that the term, in addition to its regular meaning, also includes officers, employees, or members of entities.” (Emphasis in original)

28 Section 6671(b) provides as follows: Person defined.--The term "person", as used in this subchapter, includes an officer or employee of a corporation, or a member or employee of a partnership, who as such officer, employee, or member is under a duty to perform the act in respect of which the violation occurs.

29 Barnett v. Internal Revenue Service , 988 F.2d 1449 (5th Cir.1993) , In this case a jury was charged with determining whether the plaintiff was the “responsible person” under §6671(b). Juries do not decide questions of law in modern American courtrooms.

30 R’s Brief, pg. 31 bottom – 32 top. Referring to that statement, “…this is not a statement of fact but, rather, it is essentially an argument that taxpayer is not required to “perform any act” related to the Internal Revenue Code,…” Respondent not only confuses a statement of fact with an argument but sets up an argument that I never made.

31 Dkt. No. 0021, Transcript of Recall and Order,pg.4, ln. 25 - pg. 5, lns. 4.

[15]

Such an interpretation is contrary to every relevant rule of statutory construction.

In my brief I referenced controlling authorities that conclusively establish that

statutory definitions of words replace common English definitions.32 Respondent

cited no authority at all to support his argument that statutory definitions expand

common meanings without limit.

Supreme Court in Slodov v. U.S. stated that the definition at §6671(b) creates a

“class” of individuals.33 Respondent referenced no authority for his argument that

the definition excludes no one.

The Supreme Court in Helvering v. Morgan’s, Inc. (where R prevailed arguing

the opposite of what he is arguing here, i.e., that “includes” is the same as

“means”)34 clearly told us how “includes” is to be interpreted in statutory

definitions:

“…the verb ‘includes’ imports a general class, some of whose particular instances are those specified in the definition.”35

32 Petitioner’s Opening Brief, pg. 27, fn. 44, citing the following controlling cases: Stenberg v. Carhart, 530 U.S. 914, 942, 120 S.Ct. 2597, 2615 (2000); Meese v. Keene, 481 U.S. 465, 484-485 (1987); Colautti v. Franklin, 439 U.S. at 392-393, n. 10; Western Union Telegraph Co. v. Lenroot, 323 U.S. 490, 502 (1945); Fox v. Standard Oil Co. of N. J., 294 U. S. 87, 95-96, 55 S.Ct. 333, 336 (1935); see original footnote for supporting quotations from these cases.

33 Slodov v. U.S., 436 U.S. 238, 249, 98 S.Ct. 1778, (1978)34 Helvering v. Morgan's Inc. 239 U.S. 121, 79 L.Ed. 232, 55 S.Ct. 60, 125 n.1 (1934): “It may

be admitted that the term "includes" may sometimes be taken as synonymous with "means," and that the subsection may be taken to require, as the Government contends, that a fractional part of a normal taxable year of twelve months for which a return is made shall be treated, for all purposes, as a separate taxable year.” (Emphasis added)

35 Helvering v. Morgan's Inc. 239 U.S. 121, 79 L.Ed. 232, 55 S.Ct. 60, 125 n.1 (1934).

[16]

Section 7701(c) reflects this interpretation36 but not as clearly as the regulation at

27 CFR §72.11 which states:

“Meaning of Terms: The terms "includes and including" do not exclude things not enumerated which are in the same general class.” 27 CFR 72.11 (Emphasis added)

Respondent proposes that the §6671(b) definition is essentially meaningless, that

it excludes no one, that it is simply a considerate reminder from Congress to be

sure to ‘include’ people involved with businesses who are responsible for paying

the company’s taxes. R suggests that Congress here is like Mom reminding us to

wear our mittens, but not really ordering us to. Laws are not helpful suggestions.

Such an interpretation would render the §6671(b) definition “mere surplusage.”

It is a settled principle of statutory construction that statutes are to be construed “so

as to avoid rendering superfluous” any statutory language.37 If §6671(b) excludes

no one, it is entirely superfluous.

A closely related principle of statutory construction applies to statutory

amendments. In 2006, when the frivolous return penalty increased from $500 to

36 §7701(c) Includes and including “The terms "includes" and "including" when used in a definition contained in this title shall not

be deemed to exclude other things otherwise within the meaning of the term defined.” 37 Astoria Federal Savings & Loan Ass’n v. Solimino , 501 U.S. 104, 112 (1991); Sprietsma v.

Mercury Marine, 537 U.S. 51, 63 (2003 )(interpreting word “law” broadly could render word “regulation” superfluous in preemption clause applicable to a state “law or regulation”). See also Bailey v. United States , 516 U.S. 137, 146 (1995) (“we assume that Congress used two terms because it intended each term to have a particular, non-superfluous meaning”) (rejecting interpretation that would have made “uses” and “carries” redundant in statute penalizing using or carrying a firearm in commission of offense).

[17]

$5,000, Congress also changed the term “individual”38 in §6702 to the term

“person.”39 We may presume that Congress intended to make that specific change:

“When Congress acts to amend a statute, we presume it intends its amendment to have real and substantial effect.”40

We may also presume that Congress was aware of the differences between a

§7701(a)(1) “person” and the class of “persons” defined at §6671(b) 41 who are

subject to Subchapter B42 penalties.43

“[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” (Emphasis added) 44

38 Pub. L. 97–248, title III, § 326(a), Sept. 3, 1982: “§ 6702. Frivolous income tax return “(a) Civil penalty.--If-- “(1) any individual files what purports to be a return of the tax imposed by subtitle A but

which-…” (Emphasis Added)39 Pub. L. 109–432, div. A, title IV, § 407(a), Dec. 20, 2006, 120 Stat. 2960: “§ 6702. Frivolous tax submissions “(a) Civil penalty for frivolous tax returns.--A person shall pay a penalty of $5,000 if--…”

(Emphasis Added)40 Stone v. INS , 514 U.S. 386, 397 (1995). 41 Russello v. United States, 464 U.S. 16 23, 78 L Ed 2d 17, 104 S. Ct. 296 (1983) (Quoting

United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972). “[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” (Emphasis added)

42 Any reference in this brief to “Subchapter B” means: Title 26, Subtitle F, Chapter 68, Subchapter B, the subchapter to which § 6671 by its own clear language applies, and in which § 6702 is located.

43 Connecticut Nat'l Bank v. Germain, 503 U.S. 249, 253, 112 S. Ct. 1146, 1149 (1992) “We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there. ”

[18]

In determining legislative intent we look first to the language of the statute.45

It appears from the cases R cited, Radilis, Sisemore, and Colton,46 that he is

either unaware of, or doesn’t want to talk about, the change that Congress made to

the law in 2006. Prior to 2006, this issue did not exist. “Individuals” were subject

to the §6702 penalty. But as the law reads now, only §6671(b) “persons” are so

subject.47 Congress changed the law. Respondent and the Tax Court are bound by

the language of the law as Congress wrote it, not as they wish it were written. Only

by ignoring or hopelessly twisting settled principles of statutory construction can

Respondent expand without limit definitions that use the verb ‘includes’.

An overwhelming number of controlling cases, from Supreme Court48 and

Appeals Courts in every circuit,49 agree that the statutory definition in §6671(b) 44 Russello v. United States, 464 U.S. 16 23, 78 L Ed 2d 17, 104 S. Ct. 296 (1983) (Quoting

United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972). 45 United States v. Aguilar, 21 F.3d 1475, 1480 (9th Cir. 1994) , aff'd in part, rev'd in part on

other grounds,115 S.Ct. 2357 (1995): “The primary indication of [Congress'] intent is the language of the statute.”

46 Radalis v. U.S.A., & I.R.S., 169 Fed. Appx. 390; Sisemore, 797 F.2d. 268; and Colton, 902 F.2d 1462. These cases concerned penalties levied before the law was changed, and none of them addresses the issue of whether the subject of the penalty was a §6671(b) person.

47 Zimmerman v. STATE, DEPT. OF JUSTICE, 170 F. 3d 1169 (9th Cir. 1999), citing Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837, 867 n. 9, 104 S.Ct. 2778 (1984) “Using our ‘traditional tools of statutory construction,’, ‘[w]hen interpreting a statute, [we] look first to the words that Congress used.’ ” (internal quotes unpaired: ‘’).

48 Slodov, supra, Helvering, supra.49 Murphy v. United States, 45 F.3d 520 (1st Cir. 1995); United States v. McCombs, 30 F.3d 310

(2nd Cir. 1994); Quattrone Accountants, Inc. v. I.R.S., 895 F.2d 921 (3rd Cir. 1990); Plett v. United States, 185 F.3d 216, 84 A.F.T.R.2d 99 (4th Cir. 1999); Commonwealth National Bank of Dallas v. United States, 665 F.2d 743 (5th Cir. 1982); McDermitt v. United States, 954 F.2d 1245, (6th Cir. 1992); Robert W. Monday v. United States, 421 F.2d 1210, (7th Cir. 1970); Kizzier v. United States, 598 F.2d 1128, (8th Cir. 1979); Pacific National Insurance Co. v.

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limits the application of Subchapter B penalties to the specific class of persons

described in that section. This Court and Respondent are bound to follow Supreme

Court precedent and that of the Appeals Court in the 5th Circuit in this case.50

Those courts have found that members of the class created by §6671(b) must

have a relationship with a business entity, AND a “duty” with respect to the

violation that occurred.51 I have neither. Respondent produced no evidence that I

am in the class of persons there defined. The notion that “includes” in a statutory

definition does not change the meaning of the defined word is legal nonsense,

United States, 422 F.2d 26 (9th Cir. 1970); Smith v. United States, 555 F.3d 1158, (10th Cir. 2009); Roth v. United States, 779 F.2d 1567, (11th Cir. 1986); Godfrey v. United States, 748 F.2d 1568, (Fed. Cir. 1984).

50 IRM § 4.10.7.2.9.8 (01-01-2006) ¶ “The Internal Revenue Service must follow Supreme Court decisions. For examiners, Supreme

Court decisions have the same weight as the Code.”51 Pacific National Insurance Company v. United States, 422 F.2d at 30-31, citing Wilson v.

United States, 250 F.2d 312, 316 (9th Cir. 1958), and referencing White v. United States, 372 F.2d 513, 517, 178 Ct. Cl. 765 (1967). “But the definition of "persons" [in IRC § 6671] does not require that they be formally vested with the office or employed in the position normally charged with this function; the definition simply "includes" such persons. Indeed, the language itself does not require that they be officers or employees of the corporation at all, so long as they are in fact responsible for controlling corporate disbursements .... [I]t reaches those who have "the final word as to what bills should or should not be paid, and when.”(Emphasis added)

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unsupported by any authority save the self-serving dissembling52 of the ethically

compromised and heavily biased Tax Court.53

CONCLUSION

The IRS is attempting to collect a penalty from me that was time barred from the

start. The IRS failed to meet its burden of proof for the liability when it was

required to meet it. The Tax Court failed to meet its burden of production in

sanctioning me under §6673. The Tax Court left all of us guessing as to the facts

and law it relied on in its decision.

I urge this Honorable Court to remand the case for proper consideration of the

statute of limitations, my eligibility for the penalty, Respondent’s burden of proof,

and the unsupported additional penalty imposed by the Court. Or make such order

as the Honorable Court finds consistent with the law and justice.

52 See e.g. Wnuck v. Commissioner, 136 T.C. No. 24, slip op. (2011), wherein the Tax Court glibly misinterprets the plain language of the learned and honorable men who sat on the Supreme Courts for the Helvering v. Morgan’s and Slodov decisions. The Tax Court works the language like a hustler working a pea and three cups. In Wnuck the Court misquotes the law, makes athletic leaps to false conclusions, indulges in serial logical fallacies, and resorts to judiciously reserved, but none the less gleeful name calling. We can expect to see many citations to this and similar cases by Respondent in the future. I despair for the future of the rule of law.

53 See e.g. Dixon v. Commissioner , 316 F.3d 1041 (9 th Cir. 2003) wherein the Tax Court actively colluded with Respondent’s fraud on the court and subsequent cover-up.

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Respectfully submitted this XX of XXXX, 20XX.

___________________________Appellant/Petitioner without representationADDRESS AND PHONE

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CERTIFICATE OF SERVICE

I, Petitioner Name, hereby certify that on, DATE I sent a copy of Appellant’s Reply Brief for Docket No. XX-xxxxx to the Clerk of U.S. Court of Appeals postage paid via U.S. mail, at the following address:

ClerkU.S. Court of Appeals For the Circuit

And served a copy of the same document on Appellee counsel by postage paid mail at the following address:

U.S. Department of JusticeAttorneyAppellate SectionInternal Revenue ServiceP.O. Box 502Washington, DC 20044

_____________________________________Appellant without representation

DATE

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CERTIFICATE OF COMPLIANCE

with Type-Volume Limitation, Typeface Requirements, and Type Style

Requirements

1. This brief complies with the type-volume limitation of Fed. R. App. P. 32(a)(7)(B) because the brief contains XXXX words, excluding the parts of the brief exempted by Fed. R. App. P. 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App. P. 32(a)(5) because the brief was prepared in a proportionally spaced typeface, 14-point Times New Roman, composed in Microsoft Word 2010.

____________________________________

APPELLANT NAME appellant without representation

DATE

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