# Department of the Treasury (2014)

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/agency%3Airs%3A51af911bbe915af8

## Record

- **Collection:** Agency decision
- **Document type:** Agency decision

## Text

United States
Department of the Treasury

DIRECTOR, OFFICE OF PROFESSIONAL RESPONSIBILITY,
Complainant-Appellee
Complaint No. 2014-00004
(b)(3)/26 USC 6103

Respondent-Appellant

DECISION ON APPEAL
Pursuant to General Counsel Order No. 9 (January 19, 2001) and Office of Chief
Counsel Notice CC-2014-008 (September 8, 2014), I decide disciplinary appeals to the
Secretary of the Treasury filed under 31 C.F.R. Part 10 (Practice Before the Internal
Revenue Service (IRS), hereinafter referred to as Circular 230 - all references are to
Circular 230 as in effect for the periods at issue). This is such an appeal from a
Decision and Order entered into this proceeding by Administrative Law Judge Parlen L.
McKenna. By this Appeal, Respondent-Appellant (b)(3)/26 USC 6103 (“Respondent”)
contests the granting of a Default Decision in this matter.

In my capacity as Appellate Authority, I review the entire administrative record in the
proceeding. Under Circular 230, the Appellate Authority's standard of review differs
depending upon whether the issue being reviewed is a purely factual issue or a mixed
question of fact and law (in either instance, reviewable under a "clearly erroneous”
standard), or a purely legal issue (which the Appellate Authority reviews de novo).
§ 10.78 of Circular 230. The Appeal of the granting of a Default Decision in this case is
a mixed question of fact and law.

Background
This proceeding was commenced on March 12, 20151 when Timothy E. Heinlein, an
attorney acting as the authorized representative of the Complainant-Appellee Office of
Professional Responsibility (henceforth, “OPR” or “Complainant”) filed a Complaint
against Respondent under the authority of 31 C.F.R part 102 (Circular 230), alleging that
1 As will be discussed, infra, a first Complaint was erroneously filed with the Administrative Law Judge for
the United States Department of the Interior on March 12, 2015. That Complaint was returned, unfiled, to
OPR; however, a copy of this first Complaint was mailed to the Respondent.
2 Portions of Circular 230 were amended on June 12, 2014. See 79 Fed. Reg. 33685 (June 12, 2014);
Circular 230 (Rev. 6-2014). The savings clause contained at 31 C.F.R. § 10.91 of the revised regulations
provides that any proceeding under this part based on conduct engaged in prior to June 12, 2014 which is
instituted after that date shall apply the procedural rules of the revised regulations contained in Subparts
D and E. Conduct engaged in prior to the effective dates of these revisions will be judged by the
regulations in effect at the time the conduct occurred.

the Respondent engaged in disreputable conduct under § 10.51 of Circular 230, based
upon eight separate counts and two aggravating factors alleged in the Complaint. The
Complainant requested that the Respondent be disbarred from practice before the
Internal Revenue Service (IRS).
On October 15, 2015, Administrative Law Judge Parlen L. McKenna (‘the ALJ") issued
an Order (“the Default Decision”) to the parties granting OPR’s Motion for Default
Decision in this matter. On November 25, 2015, the Respondent filed a “Notice of
Appeal (Short Version)," requesting additional time within which to file an “extended”
(b)(6)
Notice of Appeal. due to
(b)(6)
By Order dated April 6, 2016, I denied OPR's Motion to Dismiss Appeal
as Untimely, and directed OPR to file a Response brief within 30 days of that Order. On
May 6, 2016, the Complainant-Appellee Director, Office of Professional Responsibility
submitted its Opposition to Respondent's Appeal. I have reviewed the materials
submitted by the parties.

The record in this case is replete with instances of mailings by OPR and the ALJ to the
Respondent, with virtually no responses generated by the Respondent; however, in
some instances, the Respondent did respond. This record frames the question
important to the granting of the Default Decision in this case: Whether, when and how
was the Respondent served with copies of the pleadings and orders in this case?
Suffice it to say that at least two addresses were used in communications by OPR and
(b)(3)/26 USC 6103
and one address in
the ALJ to the Respondent. One address in
Same

The “

Same

address”, stated in full is:
(b)(3)/26 USC 6103/(b)(6)

The “

(b)(3)/26
USC 6103

address is:
(b)(3)/26 USC 6103

This case began on March 12, 2015, with an error; essentially, a procedural foot-fault by
OPR, by which the original Complaint filed against Respondent was filed by OPR’s
attorney with the improper Administrative Law Judge. On April 15, 2015, after being,
notified of this error, OPR’s attorney filed an identical second Complaint with the correct
ALJ, and attempted to serve the Respondent with a copy of this second Complaint.
However, these events appear to have started things off on the wrong foot, from which it
appears the proceedings never recovered.

And here’s why: On April 17, 2015, the Respondent attempted to submit a timely
Answer to that original, erroneously-filed Complaint by OPR. He served a copy of this

Answer on both the "incorrect” ALJ with whom OPR’s attorney had filed the original
Complaint, as well as with OPR’s attorney. It is not disputed that OPR’s attorney
received that Answer, some 30 pages in length, and received it prior to filing his Motion
for Entry of Default Decision. Indeed, it appears this Answer literally crossed in the mail
with OPR’s mailing of the identical “correct” second Complaint. Thus, OPR’s attorney
received Respondent’s detailed Answer within days of mailing their corrected Complaint
that now forms the basis of the Default Decision. Directly underneath Respondent's
signature to that Answer, Respondent gave his address of record as the(b)(3)/
6103
USC
26
address.
It is also uncontested by the parties that this second Complaint was identical to the
erroneously-filed Complaint for which this Answer was received. So, the Answer
submitted by Respondent and received by OPR appears to be responsive to the
allegations both in the erroneously filed original Complaint and the correctly filed second
Complaint (no opinion is being made here with respect to the merits of the allegations
contained in the Answer, as they are not at issue).

Respondent did not directly file an Answer with the correct ALJ, however, and this
ultimately led to the granting of a Default Decision. Respondent asserts that this failure
is because he did not receive any notification of the second ALJ and second Complaint
until he received a copy of the Default Decision from OPR. From an inspection of the
record, it appears that all intervening communications from Complainant and the
administrative law judges might not have been received by Respondent In these
Same
communications the Complainant and the ALJs exclusively used the
Same
address contained in Respondent’s Answer.
address, rather than the
As stated, it is clear that OPR’s attorney received a copy of Respondent’s 30 page
Answer to the Complaint (albeit the version filed by OPR’s attorney with the incorrect
ALJ) on April 22, 2015. This Answer was substantively responsive to the contents of the
allegations contained in both the original erroneously-filed original Complaint and the
identical “correctly-filed" second Complaint. Despite this, on June 3, 2015,
approximately six weeks after having received the Respondent's Answer to the (first)
Complaint, OPR’s counsel mailed a letter to Respondent alleging the improper filing of
the Answer by Respondent. OPR warned that if an Answer were not properly mailed to
the ALJ by June 19, 2015, OPR would move for entry of a Default Decision (emphasis
mine). One wonders: Why? Could not OPR, given its own initial misstep in the case,
have simply forwarded Respondent’s Answer to the correct ALJ, asking it to be
incorporated into the record as substantially compliant, and begun to use the Same
address contained in that Answer?

Indeed, it appears the Default Decision in this case is based upon the insistence that
Respondent file a second, duplicative, Answer in this case with the correct ALJ, even
though OPR’s attorney was properly served with a copy of an Answer that substantively
responded to its Complaint.

There is an email in the record, from OPR’s counsel to Curtis E. Renoe, AttorneyAdviser to the ALJ, dated July 14, 2015 (one week after the issuance of the Order to
Show Cause Regarding Filing of Answer). By this email, OPR’s counsel provided
("without comment”) a copy of Respondent's Answer to the first Complaint, which had
been delivered to OPR’s counsel approximately 12 weeks before. There is no
explanation as to why the Answer was being forwarded to the ALJ in July, having been
received by Complainant in April. No mention is made in the email from OPR’s counsel
of the (b)(3)/IRC 6103 [address contained on the Respondent's signature line of the
Answer. It seems reasonable to conclude from this email that OPR had not previously
provided a copy of this Answer to the (correct) ALJ’s office prior to July 14, 2015, and
did so only after beginning the process of seeking a Default Decision against
Respondent. The Respondent was not included on a “cc” line to this email to the ALJ’s
office; it is not known if the Respondent was included as a recipient of this message in a
hard copy.

The Default Decision in this case was entered for a Complaint to which a detailed
Answer had been provided by the Respondent to OPR’s Counsel months before, and a
copy of which OPR had belatedly provided to the ALJ, because of an insistence that
Respondent “correctly” file a second and identical 30 page Answer. Unfortunately, that
insistence was not mailed to the address provided by Respondent in his Answer. The
ALJ’s granting of the Default request by Complainant was based on a conclusion that
the record demonstrated several factual determinations, including:
a) That the revised “correct” Complaint was delivered to the Respondent on April
15, 2015;
b) That Complainant advised Respondent a second time via the Notice of
Failure to Properly File Answer that Respondent was obligated to file an
Answer not later than June 19, 2015; and
c) That OPR Counsel served Respondent with a copy of the Motion for Default
on Respondent’s last known address.
Law and Analysis
This is a serious matter: we are dealing with the disbarment from practice of a
professional's livelihood. Additionally, there is a general disfavor with default judgments;
there is instead a strong preference favoring resolution of genuine disputes on their
merits. Jackson v. Beech, 636 F.2d 831 (D.C. Cir. 1980). Other circuits have expressed
similar sentiments, using similar approaches. Harvey v. United States, 685 F.3d 939
(10th Cir. 2012); Colleton Preparatory Academy v. Hoover Universal, Inc., 616 F.3d 412
(4th Cir. 2010); United States v. Signed Personal Check No. 730, 615 F.3d 1085 (9th
Cir. 2010).
Respondent asserts that he had received only two documents in these proceedings: the
Complaint (that is, the first Complaint filed with the Department of the Interior), and a
copy of the Order of Default (sent by OPR in a transmittal letter dated October 22,
2015). Seen from the Respondent’s point of view, the record in this proceeding would
be brief and puzzling: it consisted of the receipt of the first Complaint and his mailing of
his Answer, followed by silence until the Order granting the default decision was

provided to him by a transmittal letter to the
October 22, 2015.

(b)(3)/26 USC
6103

address (after the fact) dated

On the other hand, from OPR’s point of view, the record reflects numerous documents
mailed to the Respondent with no response. At least some of these documents were
returned to OPR and the ALJ. On closer inspection, though, the circumstances
surrounding this latter view of the record are not clear, and can be confusing in some
instances.
For example, the record in this case reflects that only two items can be confirmed as
having been received by the Respondent prior to the Notice of Appeal in this case: the
erroneously filed first Complaint, and the October 22, 2015 transmittal letter conveying
the Order of Default. With respect to the first Complaint, the Respondent filed an
Answer, and mailed that to OPR and the first ALJ. With respect to the October 22, 2015
transmittal letter, the Respondent filed his Notice of Appeal. Thus, in both cases where
the record shows that Respondent actually received a document in this proceeding, the
record also shows the Respondent provided a response. Indeed, in every case where
Same
address has been used, the Respondent has timely responded. For
the
example, in this Appeal, with the requirement to serve the Respondent at the Same
address in place, the Respondent has timely fulfilled all filing requirements.

In contrast, in every other instance below where it is alleged Respondent failed to
respond to a document mailed by OPR, the available record does not demonstrate
Same
address was used. Additionally
delivery of that document, and only the
identifying this record of non-delivery was available to OPR through a simple internet
search using the certified mail number affixed to the envelopes (which is presumably
why these numbers are used). Despite having received Respondent's Answer noting
Same
address, all documents mailed by OPR or the ALJ after April 22nd failed
the
Same
address was used.
to use that address; only the
I am not convinced that the Respondent is entirely without fault with respect to the
troubling level of responsiveness to events in these proceedings; however, I have
significant doubts with respect to which items, if any, the Respondent might have
received between the time of his submission of his Answer in this case (which appears
to have crossed in the mail with the notification of the new, correct forum), and October
72 2015 when a copy of the Order of Default Decision was mailed — importantly — to
Same
address. It is entirely possible, as Respondent alleges,
Respondent at his
that he heard nothing between those two events. The record is confused and unclear,
but appears to support this view.
Indeed, there is other confusion with respect to the mailing of some items. For example,
Same
address
on June 3, 2015, OPR asserts it mailed to Respondent, solely at the
a letter that it refers to as a Notice of Improper Filing (which the ALJ referenced in his
Default Decision as the Notice of Failure to Properly File Answer). On the Certificate of
Service for this letter, Complainant's secret ary certifies that the letter was mailed to
Respondent, bearing certified mail number
3547. However, the

mailing record is confused here. Attached to the exhibit copy in the record of this June
3rd correspondence is a copy of the official USPS Track and Confirm website
information, for certified mail number REDACTED TEXT 3530 (emphasis mine and
henceforth “3530”), as having been mailed on June 3, 2015 (received by the USPS on
June 4, 2015). However, this is not the certified mail number reflected on the Certificate
of Service for the June 3, 2015 “Notice of Improper Filing" letter.
This “3530” certified mail number reflected in the June 2015 Track and Confirm
information relates to the certified mail number referenced in OPR’s Certificate of
Service attached to the second Complaint to the Respondent, which is alleged to have
been mailed on April 15, 2015 (some six weeks earlier). Thus, it is unclear what was
mailed on June 3, 2015, and what was mailed on April 15, 2015, and why the
Certificates of Service are incorrect. Was the second Complaint only mailed on June 3rd
(and not April 15th) as this document would appear to show? Such confusion makes it
difficult, if not impossible, to determine the delivery of items in the record. The accuracy
of the Certificates of Service themselves are now called into question, and would likely
be impossible to unravel using USPS Track and Confirm to determine actual mailing
dates of the various correspondence. In short, the Certificates of Service for key
documents, upon which the Default Decision are based, are unreliable.
OPR asserts that it used the “last known address” for the Respondent, and that service
(b)(3)/26 USC
address is sufficient. This is not a last known address case. While it is
on the
6103
certainly relevant that the last known address may be relied upon to mail the complaint
to the Respondent, it is uncontested that Respondent received that Complaint.
However, having been so served, the Respondent then provided Complainant with a
different address of record in his Answer, received within davs of the correctly filed
Same
address) in
Complaint. The Complainant failed to use this address (the
subsequent mailings relating to this litigation.

This is litigation, and OPR had in its possession an Answer filed by Respondent that, in
Same
address as the Respondent’s address of
the signature line, contained the
record for this case. Having been received in such manner by Complainant, that
Same
address should have been used with regard to subsequent
correspondence relating to this case.
Specifically, I find to be clearly erroneous the ALJ’s factual determinations:
a) That the revised “correct” Complaint was delivered to the Respondent on April
15, 2015;
b) That Complainant advised Respondent a second time via the Notice of
Failure to Properly File Answer that Respondent was obligated to file an Answer not
later than June 19, 2015; and
c) That OPR Counsel served Respondent with a copy of the Motion for Default
on Respondent’s last known address.
Documents within the record, from the official website of the United States Postal
Service, state that the second “correct” Complaint, using the tracking number identified

by the Complainant in its Certificate of Service, was mailed on June 3, 2015, and not
April 15, 2015. Further, this calls into question the mailing date for other items served on
Respondent, including the Notice of Improper Filing/Notice of Failure to Properly
Answer, dated June 3, 2015. Lastly, I find that the Motion for Default was not properly
served by Complainant on the Respondent’s address of record, which address was
conspicuously contained on the Answer served on Complainant on April 20, 2015.
Again, overarching all of this discussion, it is clear that OPR had a copy of
Respondent’s Answer, even as it insisted on procedural exactitude by Respondent to
“correctly” file a second, identical Answer, demanding this exactitude by continually
using an address which generated no response, while ignoring the conspicuous
address of record used by the Respondent in that detailed Answer. Under these
circumstances, and given the confusion of the mailing record, I find that it was clearly
erroneous to enter a Default Decision against the Respondent.
Therefore:
For the reasons stated, the ALJ’s Default Decision is REVERSED and I REMAND this
matter to the ALJ directing that a copy of the Answer in the possession of OPR’s
Counsel is to be filed as the Answer of Respondent, and a hearing on the merits to be
undertaken pursuant to the procedures identified in Circular 230.

It is further ORDERED that all future correspondence directed to Respondent in this
matter is to be served upon Respondent at the two addresses indicated on the
Certificate of Service to this Order, or to such other address that the Respondent
provides to OPR and the Administrative Law Judge.

Thomas J Travers
Appellate-Authority
Office of Chief Counsel
Internal Revenue Service
(As Authorized Delegate of the
Secretary of the Treasury)

June 6, 2017
Lanham, MD

CERTIFICATE OF SERVICE
I hereby certify that the DECISION ON APPEAL dated June 6, 2017 in Complaint No.
2014-00004 was sent this day by UPS Next Day Air and by First Class U.S. Mail to the
addresses listed below:
UPS Next Day Air:
(b)(3)/26 USC 6103

First Class U.S. Mail:
Honorable Parlen L. McKenna
United States Coast Guard
Coast Guard Island
Building 54A
Alameda, CA 94501

Stephen A. Whitlock
Director, Office of Professional Responsibility
Internal Revenue Service
1111 Constitution Avenue, NW
SE:OPR 7238IR
Washington, DC 20224
Timothy E. Heinlein, Senior Counsel
Office of Chief Counsel (IRS)
100 First Street, Suite 1800
San Francisco, CA 94105
(b)(3)/26 USC 6103/(b)(6)

(b)(3)/26 USC 6103

Thomas J Travers
Appellate Authority
Office of Chief Counsel
Internal Revenue Service
Lanham, MD

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/agency%3Airs%3A51af911bbe915af8. Public record. Not legal advice.