Petitioners Reply Brief — Sisemore v. United States

Dn

6406 ~- y Bupreme Court, US.

£6 -3.6 FILED

- JUL 15 986

° pv F. SPANIOL, Jk.

JOSE CLERK

——

IN THE

SUPREME COURT OF THE UNITED STATES

TERM, 1986

HAROLD N. SISEMORE

PETITIONER,

V.

UNITED STATES OF AMERICA

RESPONDENT

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

AND

REQUEST FOR SUMMARY REVERSAL

HAROLD N. SISEMORE PRO SE

ROUTE TWO BOX 547

ERIN, TENNESSEE 37061

(615) 289-4786

QUESTIONS PRESENTED FOR REVIEW

1. Whether a 1040X Amended U.S.

Individual Income Tax Return (Claim For

Refund) falls within the scope of 26

USC 6702, "Frivolous Return Penalty"?

2. Whether 26 USC 7430 prohibits

an award of costs and attorney's fees

to the prevailing party, other than the

United States? \

3. Holding the Act of Congress Un-

constitutional in its enactment of the

Tax Equity and Fiscal Responsibility Act

of 1982 (TEFRA) pursuant to 28 USC 1252?

4. 26 USC 6702 being in conflict

with the IRS Publication 586-A and 556?

5. 26 USC 6702 in violation and

conflict with the 5th and 7th Amendments

Right of Due Process and Trial by Jury?

6. Order treating as Summary Judg-

ment being inappropriate when the Court

is called upon to decide questions of

ali

ii

Constitutional Law without benefit of

Trial?

7. Title 28 USC 1346(a)(1) gives

Jury Trial to either party that requests

Jury Demand?

8. Congress has created a Law En-

forcement System in which criminal and

civil elements are intertwined pursuant

to 28 USC 1252?

iii

PARTIES INTERESTED JOINTLY

Pursuant to Rule 19.4, 10.6 and 21(b)

of the Supreme Court Rules the following

parties interested jointly, with a Joint

Appeal to this Court involving identical

or closely related questions, have agreed

to have the Petitioner, Harold N. Sisemore

Pro Se, take his case, Sixth Circuit Court

of Appeals File NO. 85-5825 with his fil-

ings and whatever the Court ruled in his

case, would be accepted by all other par-

ties.

This was agreed upon by the Petition-

ers to save this Court time and unneces-

sary paper work.

The following Petitioners with Sixth

Circuit File Numbers opposite their names

Appeal as follows:

Billy H. Burlison---------- 85-5846

Donnelly L. Sisemore------- 85-5787

Sixth Circuit Joint Appeal-85-5038

Harold N. Sisemore--------- 85-5038

iv

Donnelly L. Sisemore------- 85-5922

Danny C. Landers----------- 85-5923

Billy H. Burlison---------- 85-5924

Jerry D. Fertig----~------- 85-5925

Adrian E, Hutchinson----~--- 85-5926

Carl L. Locke-------------- 85-5927

Kem Clark------------------ 85-5928

Robert Berggren------------ 85-5929

Orders were handed down by the Sixth

Circuit of April 18, 1986 for each of the

foregoing Petitioners with the exception

of Harold N. Sisemore, Petitioner Pro Se

85-5825, which was handed down April 21,

1986.

TABLE OF CONTENTS

Page

QUESTIONS PRESENTED FOR REVIEW------- 25

PARTIES INTERESTED JOINTLY--------- iii,iv

OPINIONS BELOW----------------~--------- 2

JURISDICTION--------------------~-------- 3

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED-------------------- ~3

STATEMENT OF THE CASE------------------- 4

REASONS PETITION SHOULD BE GRANTED------ 5

CONCLUSION----------------------------+- 16

CERTIFICATE OF SERVICE----------------- 19

INDEX OF APPENDICES

APPENDIX "A"

Opinion from Sixth Circuit------------ A-1

APPENDIX "B"

Motion for Reconsideration Denial

(Court of Appeals) ------------------- A-10

APPENDIX "Cc"

Order from District Court------ ------ A-12

APPENDIX "D"

Motion to Reverse Courts Direction

Denial (District Court )-------------- A-16

APPENDIX "E"

Motion to Publish Opinion

(U.S. Justice Department )------------ A-18

vi

TABLE OF AUTHORITIES

CASES:

Armstrong v. Manzo, 380 U.S. 545,

85 S$. Ct. 1187, 14 L. Ed. 24

62 (1965)-------------- errr 11

Benson v. Allphin, (1982 ND 111)

544 F. Supp. &66--------------------- 13

Blessing v. U.S., 447 F. Supp. 1160----- 9

Boyd v. United States, 116------------- 16

Brown v. Bullock, 194 F. Supp.

207 Affirmed 294 F. 2d 415----------- 14

Coffey v. United States, (1886)

116 U.S. 437---------------------- 16

Commissioner of Internal Revenue

v. Shapiro, 424 U.S. 614, 96 S.

Ct. 1062, 47 L. Ed. 278 (1976)------- 12

Felix v. Young, (1976 CA 6 Mich)

536 F. 2d 1126-------------------- 13,14

Giacco v. Pennsylvania, 382 U.S.

399, 402-403 (1965)------------------ 12

Goldberg v. Kelly, 397 U.S. 254,

90 S. Ct. 1011, 25 L. Ed. 2d

287 (1970) ------------- ne 11

Homan Mfg. Co. v. Long, 23 FR

SERV 634, 242 F. 2d 645

(CA 7 1957) -------- 99-90-2999 13

Iowa v. Chicago, B&O R.R. Co.,

(1889) 37 F. 49]--------2------------ 16

ee ieee eee

vii

Joint Anti-Fascist Comm. v. McGrath,

S98 Usbe kaso 106, 71 Ss CO. G26,

95 L. Ed. 817 (1951)-------------- 10,11

Mathews v. Eldridge, 424 U.S. 319

70 Ss GO. S9a. 47 Le BE. 24

18 (1976)----------------------+--- race

Mathis v. United States, 391 U.S. at

pg. 4--------------------------------- 15

North Georgia Finishing, Inc. v. Di-

Coem. t9¢., 819 Usd. 6UL, 93 S. Ct.

719, 42 L. Ed. 2d 751 (1975)--------- 12

Rogers v. State, 72 Ark. 565, 82 S.W.

169 (1904)----------~------------~----- 9

Sniadach v. Family Corp., 396 U.S.

337, BF S. Ct. 1820, 23 L. Bd.

2d 349 (1969)------------------------ 12

Sniadach v. Family Corp., supra-------- 12

State v. Skaley, 108 Fla. 506,

146 So. 544-----------------~---~----- 9

State v. Wisconsin State Board of

Medical Examiners, 172 Wis. 317,

177, N.W. 910 (1920)------------------ 9

Steward v. Kahn, 78 US 504-------------- 6

United States v. Claflin, (1878)

Uede 546 ee SD ee Sn a OP a a a ae a ae —_—_———— — 16

United States v. LaSalle National

Bank 437 U.S. 298 (1978) at pg.309---15

Welt v. Koehring Co., (1979 ND 111)

482 F. Supp. 437--------------------- 14

:

viii

CONSTITUTION:

Amendment I, IV, V, VII, VIII------------ 3

Amendment V, VII------------------------ 10

Article I, Section 7, 9------------------ 3

Article III------------------------------ 3 |

STATUTES:

26 USC 6702--------------------- 3,4,5,6,10

26 USC 6703---------------------------- 3,4 \

26 USC 7430---------~------------~------- Oe

28 USC 1254(1)--------------------------- 3

28 USC 1346(a)(1)------------------------ 3 |

28 USC 2402--------------------------- 3,14 |

MISCELLANEOUS:

IRS Publication 556------~--------- 4,6,9,10 |

IRS Publication 586-A---------------- 4,6,9 |

Letter from Congressman Don

Sundquist Sept. 11, 1984--------------- 8

Senate Report 98-562 Cal. No. 1058---3,4,5

TEFRA Public Law 97-248

H.R. 4961, 97th Congress------- ee ee

i

NO.

IN THE

SUPREME COURT OF THE UNITED STATES

TERM, 1986

HAROLD N. SISEMORE

PETITIONER,

Ve

UNITED STATES OF AMERICA

RESPONDENT,

FETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS FOR THE SIXTH CIRCUIT

AND

REQUEST FOR SUMMARY REVERSAL

1

The Petitioner, Harold N. Sisemore,

Pro Se, respectfully requests that on Writ

1/ Billy H. Burlison, Donnelly L.

Sisemore, and Joint Appeal No.

85-5038 (Listed iii,iv)

Of Certiorari issue from the judgment of

the United States Court of Appeals for

the Sixth Circuit, entered on the 2lst

of April 1986, to review the questions

presented for review as the issues of

this case have never been established by

the other Courts. (Appendix E Section 1

and 2), (Joint Appeal Case 85.5038 Bottom

of page iii)

OPINION BELOW

The Court of Appeals affirmed the

District Court Orders January 30, 1986

and doubled attorney's fees and cost.(App.

A) Motion for Reconsideration was denied

April 21, 1986. (App. B)

The District Court ordered to treat

this as one for Summary Judgment and dis-

posed of it as provided in Rule 56 of

FRCivP July 23, 1985 @ 12:30 p.m.(App.C)

Motion to Reverse the Court's Direction

was denied August 30, 1985 @ 3 p.m.(App.D)

Attorney fees and cost were assessed,

JURISDICTION

On April 21, 1986 the United States

Court of Appeals for the Sixth Circuit

denied Petitioner's Motion For Reconsider-

ation to Reverse the United States Dis-

trict Court's Order to treat as one for

Summary Judgment or trial by Jury of 12

peers under 28 USC 2402 and 1346(a)(1).

(App.B) This Court has original juris-

diction under Article III of the Consti-

tution of the United States and as set

forth in 28 USC 1254(1).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

This case involves the Constitution

of the United States, Article I Section

Seven and Nine and Article III. United

States Amendments I, IV, V, VII, and VIII.

Provisions of the Internal Revenue Code 26

USC §6702, §6703, and §7430. Senate

Report 98-562 Calendar No. 1058, and Pub-

lic Law 97-248 (H.R. 4961, 97th Congress)

IRS Rule and Regulations Publications

586-A and 556.

STATEMENT OF THE CASE

For the tax year 1981 and 1982 a

1040X Claim For Refund was filed and mail-

ed March and May of 1984. For those years

a 1040 form was filed and the tax paid.

The Claims For Refund, without a hearing

of any sort, was assessed a $500 TEFRA

penalty pursuant to 26 USC 6702. The 152

was paid on each penalty pursuant to 26

USC 6703 and a complaint was filed in the

United States District Court for the

Middle District of Tennessee. On Aug. 30,

@3 p.m. the Court issued an Order to treat

as one for Summary Judgment, granting

Attorney's fees and cost. (App.C) On

Jan. 30, 1986 the United States Court of

Appeals affirmed the District Court's

Order and doubled Attorney's

fees and cost. (App.A) Motion for

Reconsideration was filed Feb. 12, 1986

and that Motion was denied April 21, 1986.

(App.B)

REASONS PETITION SHOULD BE GRANTED

Congressional intent pursuant to 26

USC 6702 was not to penalize a 1040X Claim

For Refund. Calendar No. 1058, 98th Con-

gress Senate Report 98-562 states:

PENALTY FOR FRIVOLOUS RETURNS

",.+eThe Committee stresses that the

incorrect interpretation of the law

by agents must cease immediately.

The Committee urges that immediate

action be taken by the Administrator

of the IRS to correct the problem and

insure that agents are interpreting

the law correctly."

H.R. 4961, 97th Congress; Public Law

97-248, TEFRA states:

"For example, the penalty under this

provision is immediately assessable

against any individual who files, as

a _ purported Form 1040, a document ap-

pearing to be a Form 1040, but which-

contains altered or incorrect de-

scriptions of line items or other

altered provisions. Such purported

"returns" are not designed to inform

the Secretary of the filer's taxable

income and are not in processible

form...... (Emphasis mine)

The separation of the 1040X Claim For

Refund comes under the Rules and Regula-

tions of IRS Publications 586-A and 556,

as the 1040X Claim For Refund is the only

form set aside for this.

The Courts that have rendered an

opinion concerning 26 USC 6702 have used

the motive of the committee "to get" so |

called "tax protestors". The Courts did

not examine the statute to determine if it

actually manifested the express intent of

Congress. The United States Supreme

Court, Steward V. Kahn 78 US 504 stated:

"The intent of the legislators con-

stitutes the law."

The foregoing clearly shows that the |

authority is being abused and it was given

for the tax liability and collecting of

NE

taxes. There is no tax liability in this

case; as the tax has already been paid.

The Tax Equity and Fiscal Responsibi-

lity Act of 1982, 26 USC 7430(a) states:

"In the case of any civil proceeding

which is--(1) brought by or against

the United States in connection with

the determination, collection, or

refund of any tax, interest, or pen-

alty under this title, and (2)

brought in a court of the United

States (including the tax court), the

prevailing party (other than the

United States or any creditor of the

taxpayer involved) may be awarded a

judgment for reasonable litigation

costs incurred in such proceeding."

Section 7430 of the Internal Revenue

Code, 26 USC 7430, as enacted by 292 of

the Tax Equity and Fiscal Responsibility

Act of 1982, Public Law 97-248, H.R. 4961

97th Congress; Public Law 97-248 (Dec. 31,

1982) at 445 states:

"Congress believes that taxpayers who

prevail in civil tax actions should

be entitled to awards for litigation

costs and attorney's fees up to

$25,000 when the United States has

acted unreasonable in pursuing the

case. Fee awards in such tax cases

will deter abusive actions or over-

reaching by the Internal Revenue Ser-

vice and will enable individual tax-

payers to vindicate their rights re- |

gardless of their economic circum-

stances.”

The TEFRA penalty is an unjustified

act, under the color of law, and the Due

Process Clause of the Fifth Amendment has

the purpose to protect against having the

Government impose burdens upon a person

except in accordance with the valid Law of

the Land.

Holding the Act of Congress unconsti-

tutional in its enactment of TEFRA, Con-

gressman Don Sundquist, letter of Septem-

ber 11, 1984 stated:

"TEFRA was passed after the Senate

struck the entirety of the House Bill

and substituted its own language by

Amendment..."

There is not a word in the Senate

"version" of H.R. 4961, as passed by the

Senate which "originated" in the House of

Representatives. The Number H.R. 4961 was

Ee

ali that remained the same as stated by

Congressman Sundquist.

No Law can be enacted unless both

Houses pass the same Bill. See:Rogers v.

State, 72 Ark. 565, 82 S.W. 169 (1904);

State v. Skaley, 108 Fla. 506, 146 So.

544; State v. Wisconsin Board of Medical

Examiners, 172, Wis. 317, 177, N.W. 910

(1920).

In Blessing v. U.S., 447 F. Supp.

1160 the Court stated:

"Where courts and litigations con-

front new and unsettled areas of law,

clear preference exists for deciding

cases on merit rather than precipi-

tously disposing of them on plead-

ings."

IRS Publication 586-A Claim Procedure

for Refund or Credit states:

"Once you have paid your tax bill in

full, you have the right to file a

claim for refund or credit if you

feel the tax is erroneous or exces-

sive....(Emphasis added)

IRS Publication 556 Claim for Refund:

10

"Once you have paid your tax, you

have the right to file a claim for a

credit or refund if you believe the

tax is incorrect or too much. If you

filed form 1040, or Form 1040A, or

Form 1O40EZ, you may claim a credit

or refund by filing Form 1040X,

Amended U.S. Individual Income Tax

Return." (Emphasis added)

The foregoing RIGHT to file a 1040X

Claim for Refund does not come under 26

USC 6702 as a RIGHT cannot be penalized.

The Fifth Amendment states:

"No person...., nor be deprived of

life, liberty, or property without

due process of law;..." (Emphasis

added)

The Seventh Amendment states:

" ..ethe right of trial by jury shali

be preserved..."

The United States Supreme Court has

consistently held that the right to due

process involves the right to a hearing in

cases both civil and criminal. The Court

stated this principle in Joint Anti-

Fascist Comm. V. McGrath, 341 U.S. 123,

168, 71 S. Ct. 624, 95 L. Ed. 817 (1951):

a

il

"(T)he right to be heard before being

condemned to suffer grievous loss of,

any kind, even though it may not in+~

volve the stigma and hardship of a

criminal conviction, is a principle

basic to our society."

The Supreme Court went on to clarify

its position on what constitutes a hearing

in Armstrong v. Manzo, 380 U.S. 545, 85 S.

Ct. 1187, 14 L.Ed. 2d 62 (1965):

"A fundamental requirement of due

process is ‘the opportunity to be

heard', It is an opportunity which

must be granted at a meaningful time

and in a meaningful manner."

In Goldberg v. Kelly, 397, U.S. 254,

90 S. Ct. 1011, 25 L.Ed. 2d 287 (1970),

the Court went on to include in it defi-

nition of Due Process:

"An effective opportunity to defend

by confronting any adverse witnesses

and by presenting his own arguments

and evidence orally...."

With regards specifically to due pro-

cess as it applies in matters of depriva-

tion of property, the Court has said in,

Mathews v. Eldridge, 424 U.S. 319, 96 S.

12

Ce. O93, 47 L. Bd. 24 18 (1976):

"This court has consistently held

that some form of hearing is required

before an individual is finally de-

prived of a property interest."

Other cases as to due process are:

Commissioner of Internal Revenue v. Sha-

piro, 424 U.S. 614, 96 S. Ct. 1062, 47 L.

Ed. 2d 278 (1976); Snidach v. Family

Corp., 396 U.S. 337, 89 S. Ct. 1820, 23 L.

Ed. 2d 349 (1969); Sniadach v. Family

Corp., supra; North Georgia Finishing,

Inc. v. Di-Chem, Inc., 419 U.S. 601, 95 S.

Ct. 719, 42 L. Ed. 2d 751 (1975) The Su-

preme Court noted in Giacco v, Pennsylva-

nia, 382 US 399, 402-403 (1965):

"Tt is established that a law fails

to meet the requirement of the Due

Process Clause if it is so vague and

standardless that it leaves the pub-

lic uncertain as to the conduct it

prohibits or leaves judges or jurors

free to decide, without any legally

fixed standards, what is prohibited

and what is not in each particular

case."

A moving party is not entitled to

13

judgment as a matter of law, if the find-

ing on the ultimate fact for either party

is possible, nor is summary judgment ap-

propriate if issues of fact are present,

as the nature of the hazard is in regard

to intent and state of mind, both of which

are subjective and are not open to in-

spection by conclusions of laws. In the

granting or treating an order as summary

judgment granted the court's have stated:

"Summary judgment cannot be granted

if issues of fact are present."

Homan Mfg. Co. v. Long, 23 FR SERV

634, 242 F 2d 645 (CA 7 1957).

"In cases involving questions of mo-

tive intent, delicate constitutional

rights, complex facts, situations

disputed testimony and questionable

credibility summary judgment is in-

appropriate." Benson v. Allphin,

(1982 ND 111) 544 F. Supp. 464.

"Without adequate factual basis in

record, district court should be ex-

tremely hesitant to grant summary

judgment on important and complex is-

sues, particularly where Court is

called on to decide questions of

constitutional law without benefit of

trial." Felix v. Young, (1976 CA 6

14

MICH) 536 F. 2d 1126,

"Questions of motive and intent are

particularly inappropriate for

summary judgment adjudication." Welt

v. Koehring Co., (1979 ND 111) 482 F.

Supp. 437.

In Brown v. Bulllock, 194 F. Supp. 207,

Affirmed 294 F. 2d 415 the Court stated:

"Motions for judgment on pleadings

must be denied unless it appears to

certainty that Plainiff's are enti-

tled to no relief under any state of

facts, which could be proved in sup-

port of claim.”

28 USC 2402 JURY TRIAL IN ACTIONS AGAINST

THE UNITED STATES states:

"Any action against the United States

under section 1346 shall be tried by

the court without a jury except that

any action against the United States

under section 1346(a)(1) shall, at

the request of either party to such

action, be tried by the court with a

jury.

This Petitioner made this request on the

Complaint filed in Federal District Court

but was never afforded a Trial by Jury.)

Congress has created a law enforce-

ment system in which criminal and civil

15

elements are intertwined. With these

elements being intertwined the civil

penalty deserves the same considerations

as the criminal penalty. Criminal and

Civil elements of a tax investigation are

impossible to separate.

Mathis v. United States, 391 U.S. at pg 4

states:

"This result is inevitable because

Congress has created a law enforce-

ment system in which criminal and

civil elements are inherently inter-

twined."

United States v. LaSalle National Bank,

437 U.S. 298 (1978), at pg. 309 states:

"The legislative history of the Code

supports the conclusion that Con-

gress intended to design a system in

with interrelated criminal and civil

elements."

U.S. v. LaSalle National Bank,

supra, pg. 310.

The Courts have long held that any

code of laws that is part criminal and

part civil must be considered criminal.

16

See Coffey v. United States, (1886) 116

U.S. 437; Boyd v. United States, (1886)

116; Iowa v. Chicago, B.& 0. R.R. Co.,

(1889) 37 F. 497.

In the United States v. Claflin,

(1878) U.S. 546, it is a well settled

point that any civil code which contem-

plates criminal penalties and sanctions is

unenforceable, null and void.

CONCLUSION

The Petitioner brings this petition

for a ruling of this court on 1) whether

an amended return (1040X Claim for Re-

fund) falls within the scope of 26 USC

6702 for the purposes of imposing a "fri-

volous return penalty". The Petitioner

believes and relied upon 26 USC 6702 in

that it makes no provision for any penalty

on a 1040X Claim for Refund; and, to fur-

ther enhance my belief and to justify my

actions having read IRS Publication 586-A

17

and 556 and the rights given in them, the

1040X is specifically separated from the

1040, 1040A and 1040EZ. Therefore this

does not fall within the scope of the

penalty.

2) Whether 26 USC 7430 prohibits an

award of costs and attorney's fees to the

Government. Having read and understood 26

USC 7430 and relying on specific wording

excluding the United States as a party to

collect costs and attorney fees, my peti-

tion is for this Court to rule on this

issue. It is agreed by the Government

and the Petitioner that the Courts are not

precisely on point on these issues. This

is a legal issue of continuing public in-

terest in that should the Citizen have to

bear the financial responsibility in vio-

lation of 7430 the result would be citi-

zens being forced not to seek essential

justice. (App. E, Sec. 1,2)

18

!

The action of the Government in not

allowing this Petitioner Freedom of Speech

in the Courts, no Due Process of Law, the

amount in controversy being in excess of

$20, my right to a trial by jury has not

been preserved. I was required by 26 USC

6703 to forfeit $75 of my personal prop-

erty before suit could be brought.

Petitioner seeks this Court to rule

on the Constitutionality of TEFRA and its

enactment. Should this Court rule that

TEFRA is UnConstitutional this Petitioner

is aware that no further ruling is nec-

essary on 26 USC 6702.

The Courts treating this as one for

Summary Judgment has not allowed Consti-

tutional Rights to be afforded this Peti-

tioner.

For the foregoing reasons a Writ of

Certiorari and Request for Summary Rever-

sal should be granted.

19

Respectfully submitted,

HAROLD N. SISEMORE Pro SE

RR 2, BOX 547

ERIN, TN 37061

CERTIFICATE OF SERVICE

I, Harold N. Sisemore, Petitioner Pro

Se, hereby certify that I did on the

/2 TH, day of July, 1986 serve 3 copies

of the original printed Petition for Writ

of Certiorari and Request for Summary Re-

versal to the United States Court of Ap-

peals for the Sixth Circuit, by first-

class U.S. Mail, postage prepaid and the

following:

Joe B. Brown U.S. Attorney

Room 879 U.S. Courthouse

801 Broadway

Nashville, Tennessee 37203

Michael L. Paup

Chief, Appellate Section

Tax Division

U.S. Department of Justice

Washington, D.C. 20530

Solicitor General

Department of Justice

Washington, D.C. 20530

FERRER RN

APPENDIX

A-1

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

UNITED STATES OF AMERICA Jan. 30,1986

HAROLD N. SISEMORE )

)

Plaintiff-Appellant, ) No.85-5825

)

Ve ) ORDER

) Filed:

)

)

)

Defendant-Appellee

BEFORE: ENGEL, MILBURN, AND RYAN

Circuit Judges

This pro se Tennessee taxpayer ap-

peals from a district court judgment dis-

missing his suit as frivolous and finding

him liable for costs and attorney fees in

the amount of $221.50 for maintaining the

suit in bad feith.

Plaintiff filed his suit in order to

seek refund of two penalties ‘assessed

against him and his wife under 26 U.S.C.

§6702(a) by the Commissioner of the In-

ternal Revenue Service for their having

filed two unsubstantiated and frivolous

A-2

amended income tax returns for the years

1981 and 1982. Plaintiff and his wife

filed two amended tax return forms 1040X

claiming that they had erroneously claimed

their wages and salary as income in their

initial returns. Attached to the amended

returns was a memorandum of law in which

they argued that their wages were a 3o0urce

of their income and were received in equal

exchange for their labor. Upon review of

the amended returns, the Commissioner as-

sessed two $500 frivolous return penal-

ties against the plaintiff and his wife

pursuant to 26 U.S.C. $6702. After paying

15% of the penalties, or $150.00, the

plaintiff sought a refund of the penal-

ties from the Commissioner. Upon the

denial of the refund, the plaintiff filed

the instant law suit.

Upon review of the district court re-

cord and of the arguments presented by the

A-3

parties in their appellate briefs, this

Court concludes that the district court

properly dismissed plaintiff's suit and

properly assessed costs and fees against

the plaintiff in the stated amount. The

Court also concludes that assertion of

plaintiff's arguments in this appeal also

warrants double ccsts and attorney fees to

be assessed against him pursuant to Rule

38, Federal Rules of Appellate Procedure.

Courts have uniformly rejected

plaintiff's argument attacking the consti-

tutionality of 26 U.S.C. $6702 and its re-

quirement to pay the penalty-assessment

without prior notice before judicial re-

view becomes available. Hudson v. United

States, 766 F. 2d 1288, 1291-92 (9th Cir.

1985); Jolly v. United States, 764 F. 2d

642, 644-47 (9th Cir. 1985); Wardell v.

United States, 757 F. 2d 203, 205 (8th

Cir. 1985) (per Curiam); Anderson v.

A-4

United States, 754 F, 2d 1270, 1272 (5th

Cir. 1985) (per curiam) Kahn v. United

States, 753 F, 2d 1208, 1217-22 (3rd Cir.

1985). It is also clear that the plain-

tiffs amended returns fell within the

scope of 26 U.S.C. §6702. The plaintiff

filed the amended returns in order to show

that he had no income and to claim refund

of taxes paid in the years 1981 and 1982.

Such requests for refunds did constitute

returns within the meaning of §6702.

Lovell v. United States, 755 F. 2d 517,

519 (7th Cir. 1984) (per curiam), cert.

denied, 105 S.Ct. 1769 (1985); Anderson v.

United States, supra, 754 F. 2d at 1272;

Davis v. United States, 742 F. 2d 171, 173

(Sth Cir. 1984) (per curiam). The penal-

ties were also properly assessed against

the plaintiff pursuant to 26 U.S.C. §6702

(a) because his amended returns on their

face clearly showed that his assessment of

A-5

the taxes was substantially incorrect and

that his position on the matter was friv-

olous. The returns reflected that taxes

were withheld on wages earned and that

the wages were erroneously reported as

income but were now considered by the

taxpayer as exempt for having been re-

ceived in equal exchange for his services.

The courts which have considered this po-

sition have uniformly rejected it as pa-

tently without merit, the assertion of

which has also fully justified the penal-

ty allowed under 26 U.S. §6702. Hyslep v.

United States, 765 F. 2d 1083 (llth Cir.

1985); Jolly v. United States, supra;

Stelly v. C.I.R8. 761 F. 2d 1113 (Sth

Cir.), cert. denied, 106 S. Ct. 149

(1985); Lovell v. United States, supra;

Davis v. United States Government, supra.

The assertion of the latter argument

in the district court e180 supported the

A-6

district court's imposition of costs and

reasonable attorney fees against the

plaintiff because the argument is frivo-

lous and its assertion was vexatious and

in bad faith. Alyeska Pipeline Service

Co. v. Wilderness Society, 421 U.S. 240,

259 (1975); Shimman v. Intern. Union of

Operation Eng., Loc 18, 744 F, 2d 1226,

1230 & n.6 (6th Cir, 1984), cert, denied,

105 S. Ct. 1191 (1985). Review of the

government's declaration in support of the

fees and costs also shows that the amount

awarded is reasonable under the circum-

Stances of this cases Cf. Blum v. Sten-

son, 104 S. Ct. 1541 (1984); Northcross v.

Board of Education of Memphis City

Schools, 611 F. 2d 624 (6th Cir. 1979),

cert. denied, 447 U.S. 911 (1980). Con-

trary to the plaintiff's assertion, the

award of costs and fees for the govern-

ment is not prohibited under 26 U.S.C.

A-7

§7430. This latter section was enacted to

permit costs and fees to be awarded

against the government in tax cases when

its position was not substantially justi-

fied. It was, therefore, simply meant to

supersede the Equal Access to Justice Act

in tax cases. See Hall v. United States,

773 F. 2d 703, 706 n. 3 (6th Cir. 1985);

United States v. Balanced Financial Man-

agement, 769 F. 2d 1440, 1451 n.12 (10th

Cir. 1985). An award of costs and fees

may still be awarded for the government in

all cases where it must defend against

frivolous and vexatious lawsuits. See

Dallo v. I.N.S., 765 F. 2d 581, 589 (6th

Cir. 1985); Stelly v. C.I.R., supra; Paul-

son v. United States, 758 F. 2d 61 (2nd

Cir. 1985); Anderson v. United States,

supra 754 F. 2d at Fare

Finally, we believe double costs and

attorney fees should be imposed against

A-8

the plaintiff because he has brought a

frivolous appeal involving issues which

have already been clearly resolved. See

Martin v. C.I.R., 756 F. 2d 38, 40-41 (6th

Cir. 1985); Perkins v. C.I.R., 746 F. 2d

1187, 1188-89 (6th Cir. 1984) (per curi-

am).

For these reasons, this panel unani-

mously agrees that oral argument is not

necessary in this appeal. Rule 34(a),

Federai Rules of Appellate Procedure. The

district court's judgment is, accordingly,

affirmed pursuant to Rule 9(d)(3), Rules

of the Sixth Circuit. Double costs and

attorney fees are also hereby awarded to

the government pursuant to the decided

case authority and Rule 38, Federal Rules

of Appellate Procedure. An itemized and

verified bill for the costs and attorney

fees may be filed with the Clerk of this

Court, with proof of service within

A-9

fourteen days after the entry of this or-

der.

ENTERED BY ORDER OF THE COURT

John P,. Hehman, Clerk

A-10

APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

HAROLD N. SISEMORE

Plaintiff-Appellant,

Ve

~~ SS Se Se Se”

UNITED STATES OF AMERICA )No. 85-5825

)Filed:

Defendant-Appellee )April 21,1986

Before: ENGEL, MILBURN and RYAN

Circuit Judges

Upon consideration of the plaintiff's

motion to reconsider this Court's affirm-

ing the district court's judgment and as-

sessing double costs and attorney fees

against the plaintiff,

It appearing that this Court did not

overlook or misapprehend any facts or

points of law when it entered its order

pursuant to Rule 9(d)(3), Rules of the

Sixth Circuit.

It is hereby ORDERED that the motion

be and hereby is denied,

A-11

ENTERED BY ORDER OF THE COURT

JOHN P. P. HEHMAN, CLERK

A-12

APPENDIX C

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF TENNESSEE

HAROLD N. SISEMORE

PLAINTIFF

vy.

UNITED STATES OF AMERICA NO. 3-85-0320

DEFENDANT

MEMORANDUM OPINION, ORDER

FINDING AND DIRECTION

As matters outside the pleadings have

been presented to and not excluded by this

Court, the motion of the defendant for a

dismissal of this action, for failure of

the plaintiff to state a claim upon which

relief can be granted, is treated as one

for summary judgment and will be disposed

of as provided in Rule 56, F.R.Civ.P.

There are no genuine issues of material

fact extant between the parties herein,

and this Court has already decided the re-

levant legal-issues in favor of the

A-13

1/

defendant. Harold N. Sisemore, et ux.,

plaintiffs v. United States of America,

defendant civil action no. 3:84-0939, men-

orandum opinion, etc. of Jecember 5, 1984

(notice of appeal filed January 9, 1985);

accord: Hill v. United States, 599 F.

Supp. 118 (D.C. Tenn. 1984)

The defendant, thus, is entitled to a

judgment as a matter of law, and its mo-

tion for summary judgment hereby is GRANT-

ED. Rule 56(c), F.R.Civ.P.

Additionally, the Court FINDS that

this action was frivolous and was main-

tained by the plaintiff in bad faith. For

that reason, the United States is entitled

to recover, as a part of its cost herein,

1/7

Whether a document filed with the

Internal Revenue Service falls within the

scope of 26 U.S.C. 6702(a) is a question

of law for the Court to decide. Holker v.

United States, 737 F. 2d 751, 752 (8th

Cir. 1984); Hill v. United States, supra,

599 F. Supp. at 121 [3].

A-14

a reasonable attorney's fee and related

expenses under 28 U.S.C. ssakbtel and

the bad faith exception to the American

rule generally denying such recovery in

the absence of a contractual or statutory

provision therefor. See Reed v. United

States, 581 F. Supp. 718, 720-721 (D.C.

Col. 1984); Lovell v. United States, 579

F. Supp. 1047, 1049 (D.C. Wis. 1984); Tib-

betts v. Secretary of the Treasury, 577 F.

Supp. 911, 915 [6] (D.C.N.C. 1984); Col-

lorafi v. United States, 579 F. Supp. 506,

507 [2] (D.C.N.Y. 1983); cf. Perkins v.

Commissioner of the Internal Revenue, 746

2/

"Unless expressly prohibited by

statute, a court may award reasonable fees

and expenses of attorneys. In addition to

the costs which may be awarded pursuant to

subsection (a), to the prevailing party in

any civil action brought by or against the

United States or any agency and any offi-

cial of the United States acting in his or

her official capacity in any court having

jurisdiction of such action.* * * " 28

U.S.C. §2412(b).

A-15

F, 2d 1187, 1188-1189 [4] (6th Cir. 1984).

Counsel for the defendant will file

forthwith his declaration under penalty of

perjury, see 28 U.S.C. §1746, itemizing

the number of hours he expended in repre-

senting his client in this proceeding, the

approximate hourly-rate at which the Uni-

ted States has compensated (or will com- ,

pensate) him for such representation, and

any expenses incurred in such representa-

tion. The plaintiff will be allowed 5

days after such filing in which to submit

any desired response.

Entry of a final judgment herein will

await the Court's determination of the

amount of allowable attorney's fee.

ENTER:

C.G. Neese

United States Senior

Judge

District Judge by

designation and

assignment

A-16

APPENDIX D

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF TENNESSEE

HAROLD N. SISEMORE

Plaintiff

No.3-85-0320

Ve

UNITED STATES OF AMERICA

ee eee ee

Defendant

ORDERS, FINDING, AND DIRECTION

The motion of the plaintiff "TO RE-

VERSE COURT'S DIRECTION OR MOTION FOR JURY

TRIAL" hereby is

DENIED.

The motion of the plaintiff "TO

STRIKE THE MOTION TO SET AMOUNT OF ATTOR-

NEY'S FEES" hereby is

DENIED.

The Court hereby FINDS that $221.50

constitutes a reasonable attorney's fee

and related expenses incurred by the Uni-

ted States of America in its defense of

A-17

this action. Accordingly, judgment will

be entered by the clerk, denying the

pleintiff all relief herein and awarding

the defendant it costs of action, in-

cluding $221.50 in reasonable attorney's

fees and related expenses. Rule 58(1),

F.R.Civ.P.

ENTER:

C.G. Neese

United States Senior

Judge

District Judge by

designation and

assignment

A-18

APPENDIX E

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

HAROLD N. SISEMORE, and )

JACQUELINE E. SISEMORE, )

)

Plaintiff-Appellants )

)

v. )

Noe .85-5038

UNITED STATES OF AMERICA,and )

INTERNAL REVENUE SERVICE )

)

Defendants-Appellees )

MOTION TO PUBLISH OPINION

The United States of America through

its counsel, respectfully moves this Court

to publish its opinion of January 24,

1986, in the above captioned case, in

which appellants' petition for rehearing

was denied on April 18, 1986. [In support

of this motion counsel states as follows:

1. This case presented two questions

that have been the subject of extensive

litigation, in this Court and elsewhere

over the last two years--viz., whether an

A-19

amended return falls within the scope of

Section 6702 of the Internal Revenue Code

of 1954 for purposes of imposing a Section

6702 "frivolous return" penalty and whe-

ther Section 7430 of the Internal Revenue

Code prohibits an award of costs and at-

torneys' fees to the Government.

2. Although there are reported de-

cisions on these questions in other cir-

cuits (as indicated in this Court's opin-

ion of January 24, 1986), none are pre-

cisely on point on these questions, and

this Court has not discussea these issues

in a published opinion.

3. These questions have been lit-

igated extensively by these and other tax-

payers within this Circuit (see, e.g.,

Burlison v. United States (6th Cir.-No.

85-5846); Covington v. United States (6th

Cir. No. 85-5464); Kittrell v. United

States (6th Cir. No 85-5532) Harold N.

A-20

Sisemore v. United States (6th Cir. No.

85-5825); Donnelly L. Sisemore v. United

States (6th Cir. No. 85-5787); Dolson v.

United States (6th Cir. No. 85-5153); and

Himes v. Commissioner (6th Cir. No. 85-

5632);

4. Publication of this Court's opin-

ion of January 24, 1986, would serve to

eliminate any doubt taxpayers within this

Circuit might otherwise have as to whether

these questions have been authoritatively

resolved by this Court;

5. Finally, we believe the case sat-

isfies the criteria for publication set

forth in this Court's Local ule 24(a)(1)

(i) and (iii), in that (1) it establishes

a rule of law not previously established

in this Circuit, and (2) it discusses a

legal issue of continuing public interest.

WHEREFORE, the United States respect-

fully requests that the Court's Opinion in

A~21

this case of January 24, 1986, be released

for publication.

ROGER M. OLSEN

Acting Assistant Att.

Gen.

Tax Division

Department of Justice

Post Office Box 502

Washington, D.C. 20044

Dated: This 29th day of April, 1986.