Marino v. Brown

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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