United States Court of Appeals
For the First Circuit
No. 03-1835
KATHLEEN M. MARINO,
Plaintiff, Appellant,
v.
KATHLEEN E. BROWN, Appeals Team Manager,
Internal Revenue Service,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Campbell, Senior Circuit Judge,
Torruella and Selya, Circuit Judges.
Kathleen Marino on brief pro se.
Annette M. Wietecha, David I. Pincus, Attorneys, Tax Division,
Department of Justice, Eileen J. O'Connor, Assistant Attorney
General, and Michael J. Sullivan, United States Attorney, on brief
for appellee.
February 12, 2004
Per Curiam. Pro se appellant Kathleen Marino appeals from a
district court judgment dismissing her action for lack of
jurisdiction and denying her motion for reconsideration. We
affirm. In addition, we grant the government's request for
sanctions, albeit in a lesser amount than requested.1
I. Background
The Internal Revenue Service ("IRS") filed a Notice of Federal
Tax Lien on Marino's property relative to her income tax liability
for the 1996 tax year. On October 29, 2002, a Collection Due
Process ("CDP") hearing was held, at which Marino contested her
underlying income tax liability.2 She made arguments which the IRS
settlement officer informed her had been consistently rejected as
groundless by the courts. For example, she asserted that she was
not liable for the income tax, that she did not have to file
returns, that the Internal Revenue Code was unconstitutional, and
other similar "tax protester" arguments. The IRS settlement
officer gave her a copy of Pierson v. Commissioner, 115 T.C. 576
(2000), which warns taxpayers about sanctions for frivolously
1
Internal Revenue Service Appeals Manager Kathleen Brown is
the appellee, but the government has filed a brief on her behalf,
and so we refer to the government in describing the appellate
contentions.
2
She had apparently never received the Notices of Deficiency
the IRS had sent her prior to the hearing. Accordingly, the
pertinent statute gave her the right to challenge "the existence or
amount of the underlying tax liability[.]" 26 U.S.C. §
6330(c)(2)(B).
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opposing the collection of taxes.3
On November 27, 2002, appellee Brown issued a Notice of
Determination upholding the lien. Brown instructed Marino to file
any challenge to the determination in the Tax Court. Citing the
Pierson case, she reminded Marino that seeking review primarily for
delay and asserting frivolous or groundless positions could result
in sanctions of up to $25,000. Brown also advised Marino that the
IRS considered her objections to its collection efforts to be
groundless.
Marino then filed the instant petition against Brown in the
district court, seeking review of the IRS's determination.
Although the IRS was seeking to collect on an income tax liability,
she asserted that the case involved "employment taxes." The
government moved to dismiss for lack of jurisdiction, without
opposition by Marino. In an endorsed order, the district court
granted the motion, stating: "ALLOWED, the motion appearing well
founded and no opposition having been filed. See True v.
Commissioner, 108 F. Supp. 2d 1361, 1364 (M.D. Fla. 2000)."4
3
The Pierson case discusses 26 U.S.C. § 6673(a), which
authorizes the United States Tax Court ("Tax Court") to impose
sanctions of up to $25,000 if taxpayers have instituted proceedings
in that court "primarily for delay" or have taken "frivolous or
groundless" positions.
4
In True, a pro se taxpayer filed an action in federal
district court, alleging that the IRS had violated his due process
rights by denying him a CDP hearing relative to a levy on his
assets. Evaluating the same judicial review statute that is at
issue here, 26 U.S.C. § 6330(d), the district court concluded that
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Marino then asked the court to reconsider. She contended that
she had not received a copy of the government's motion to dismiss
and argued that the district court had jurisdiction over her
petition. In an endorsed order, the district court denied her
motion, stating that "no good cause [had] been shown to reconsider
on the merits, even if plaintiff did not previously receive a copy
of the motion to dismiss."
Marino appealed the district court's orders dismissing her
petition and denying reconsideration.
II. Discussion
A. Jurisdiction
The parties essentially agree that the Tax Court has
jurisdiction over cases involving an underlying income tax
liability.5 However, Marino asserts on appeal, as in the district
it lacked jurisdiction over the suit because the evidence showed
that the underlying tax liability was for income tax based on
income derived from True's self-employment. True had asserted that
his tax liability was for an "employment tax," urging, therefore,
that the district court rather than the Tax Court had jurisdiction
over his suit. This is the very contention Marino makes, and self-
employment income may be at issue in this case as well. The Notice
of Federal Tax Lien describes the pertinent tax area as "Small
Business/Self Employed Area # 1."
5
See 26 U.S.C. §6330(d)(1) (allowing appeal from lien
determination "to the Tax Court . . . or . . . if the Tax Court
does not have jurisdiction of the underlying tax liability, to a
district court of the United States"); 26 C.F.R. § 301.6230(f)(2),
A-F3 [Answer to Question F3] ("If the Tax Court would have
jurisdiction over the type of tax specified in the CDP Notice (for
example, income . . . taxes), then the taxpayer must seek judicial
review by the Tax Court.").
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court, that this case involves "employment taxes," so that the
district court has jurisdiction.6 She makes other arguments as
well.7 For its part, the government contends that the IRS's
determination upholding its lien on Marino's property was based on
an underlying income tax liability.
There is no question that the government's position is the
correct one. The documents attached to Marino's district court
petition -- e.g., the Notice of Federal Tax Lien -- verify that the
lien was based on her income tax liability for the 1996 tax year.
Accordingly, the Tax Court has exclusive jurisdiction, and Marino
should have filed her petition for review in that court, as
6
See 26 C.F.R. § 601.102(b)(2)(i) (identifying "[e]mployment
taxes" as "[t]axes not within the jurisdiction of the U.S. Tax
Court"). Marino does not explain the reasoning behind her
contention that the case involves "employment taxes." That term
usually includes such taxes as "the taxes under the Federal
Insurance Contributions Act (FICA), . . . the Federal Unemployment
Tax Act (FUTA), and income tax withholding, [26 U.S.C. §§] 3401-
3406." Evans Publishing, Inc. v. Commissioner, 119 T.C. 242, 252
n.2 (2002).
7
Marino raises the new claim that the Tax Court lacks the
judicial power to resolve the issues in this case. In particular,
she asserts that the Tax Court is an administrative tribunal in the
executive branch of government, that it is not a court of law, that
it does not consider issues of law, and that it cannot exercise
"Article III judicial power." The government correctly asserts
that her claim is meritless, as a Supreme Court case cited in
Marino's own appellate brief confirms. See Freytag v.
Commissioner, 501 U.S. 868, 890-91 (1991) (holding that the Tax
Court, although an Article I court, exercises judicial power much
like that of the federal district courts); see also Crain v.
Commissioner, 737 F.2d 1417, 1417-18 (5th Cir. 1984) (sanctioning
taxpayer for "spurious" claim that the Tax Court was
"unconstitutionally exercising Article III powers").
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appellee Brown advised her to do. Under the circumstances, we
readily affirm the district court's judgment. See Skwira v. United
States, 344 F.3d 64, 71 (1st Cir. 2003) (in dismissals for lack of
subject matter jurisdiction, the court of appeals reviews the
district court's predicate fact-finding for clear error and uses de
novo review for its "ultimate conclusion regarding the existence
vel non of subject matter jurisdiction").
B. Sanctions
In a separate motion, the government asks this court to impose
a $4,000 "lump sum" sanction on Marino for her frivolous appeal,
citing Fed. R. App. P. 38 and 28 U.S.C. § 1912.8 It offers
evidence that this sum is less than the average expense ($4,900) it
incurred in attorney salaries and other costs to defend typical
frivolous tax appeals during the 1998-99 time period.9 It also
refers us to a recent frivolous tax appeal, Stafford v. United
States, 208 F.3d 1177, 1179 (10th Cir. 2000), in which the Tenth
Circuit imposed a $4,000 sanction based essentially on the same
evidence.
Marino opposes the request for sanctions. Among other things,
8
Rule 38 allows the imposition of "just damages" and single or
double costs for a frivolous appeal, and § 1912 allows the same for
an appeal which has caused "delay" for the prevailing party.
9
The government has submitted a supporting declaration,
pursuant to 28 U.S.C. § 1745, by government attorney Annette M.
Wietecha. Attorney Wietecha works in the Appellate Section of the
Tax Division of the Department of Justice and has had primary
responsibility for defending this case.
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she claims that she did not appeal in bad faith or with intent to
harass, that she is pro se, that she had no notice that her
arguments were frivolous, and that her actions did not cause any
delay. She does not contend that she cannot pay the amount
requested, and she has not questioned the government's evidence.
Marino's objections lack merit. Sanctions are appropriate
whenever the appeal, objectively viewed, is completely frivolous,
as it was in this instance. J. Moore, 16A Federal Practice &
Procedure, § 3984.1, at 647-50 (3d ed. 2003) (stating that
subjective motivation is irrelevant where an appeal is "utterly
without merit"). Moreover, we have routinely sanctioned pro se
taxpayers who pursue frivolous appeals. E.g., Kelly v. United
States, 789 F.2d 94, 98 (1st Cir. 1986) (per curiam). While
imposing double costs in past cases, we have warned that filing
frivolous appeals will expose pro se taxpayers to "the full range
of sanctions," including a flat damages award in lieu of attorney's
fees and costs. Lefebvre v. Commissioner, 830 F.2d 417, 420, 421
(1st Cir. 1987) (per curiam). Other circuits have routinely
imposed the latter-type flat sanction in frivolous taxpayer
appeals, id. at 420 & n.4 (citing the cases).
IRS personnel twice warned Marino that she could be sanctioned
in Tax Court proceedings for frivolously opposing the government's
collection activities. Their notification satisfies any advance
warning requirement that this circuit may have. See Lefebvre, 830
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F.2d at 421 (imposing appellate sanction on taxpayer who had been
warned by the Tax Court about the possibility of sanctions in that
court). On this record, Marino appealed, obviously knowing that
she had no reasonable expectation of success. She knew that the
IRS's determination upholding its lien was based on her income tax
liability, and she knew that she had to seek judicial review in the
Tax Court. Instead, she filed her petition for review in the
district court, falsely asserting that the case involved an
underlying employment tax liability. The district court's rulings
and the case law it cited, which she utterly ignored, put her on
notice that she lacked any basis for an appeal. We can only
conclude that she has pursued this appeal in order to further delay
the government's collection of income tax from her.
The government's request for a lump sum sanction is
reasonable. We see no point in requiring the government to submit
a detailed statement of its fees and costs, which would prolong the
present proceedings at further expense to the government and this
court. See Parker v. Commissioner, 117 F.3d 785, 787 (5th Cir.
1997) (per curiam) (describing the advantages of making a lump sum
award under Rule 38).
The $4,000 sanction requested by the government--which may be
less than its actual cost of defending this appeal--is also
reasonable. However, because this is the first case involving a
pro se taxpayer in which we impose a significantly higher sanction
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than double costs, we set the sanction in this instance at $2,000.
We warn those who may contemplate filing frivolous appeals in
similar egregiously meritless cases of this type that, when
warranted, we may well be expected to impose the figure of at least
$4,000 in future such appeals.
Affirmed. A sanction of $2,000 is imposed on the appellant.
See Fed. R. App. P. 38; 28 U.S.C. § 1912.
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