THE TAX COURT CORRECTLY GRANTED SUMMARY JUDGMENT FOR THE COMMISSIONER UPHOLDING THE COMMISSIONER's PROPOSED COLLECTION ACTION WHERE TAXPAYER's ARGUMENTS WERE WITHOUT MERIT AND WHERE THERE WERE NO FACTS IN DISPUTE
Standard of Review
This Court reviews the Tax Court's grant of summary judgment de novo. Eisenberg v. Commissioner, 155 F.3d 50, 53 (2nd Circuit 1998).
A. Introduction
Within 60 days of making a tax assessment, the Commissioner must notify the taxpayer of the assessment and demand payment. I.R.C. § 6303. When a taxpayer neglects or refuses to pay a tax liability after assessment, notice, and demand, the Commissioner may collect by levy under I.R.C. § 6331, after first giving the taxpayer 30 days notice of intent to do so. See I.R.C. § 6331(d)(1) and (2).
A taxpayer receiving a final notice of intent to levy has the right to request a “collection due process” (CDP) hearing. I.R.C. §§ 6320(b), 6330(b); Treas. Reg. § 301.6330-1(b) (26 C.F.R.). During the CDP proceeding, the IRS generally is prevented from going forward with any levy. I.R.C. § 6330(e).
CDP hearings are conducted by the IRS Office of Appeals. I.R.C. § 6330(b); Treas. Reg. § 301.6330-1(a). The scope of a CDP hearing is defined by § 6330(c). See also I.R.C. § 6320(c). The Appeals Office must obtain verification from the Secretary “that the requirements of any applicable law or administrative procedure have been met.” I.R.C.
§ 6330(c)(1). A taxpayer may raise “any relevant issue relating to the unpaid tax or the proposed levy,” including spousal defenses (i.e., “innocent spouse” relief from joint liability under I.R.C. § 6015), challenges to the appropriateness of collection activities, and offers of collection alternatives (e.g., posting a bond, substitution of other assets, an installment agreement, or an offer in compromise). I.R.C. § 6330(c)(2)(A); Treas. Reg. § 301.6330-1(e)(3) (Q and A E6).
The taxpayer may also raise at the hearing “challenges to the existence or amount of the underlying tax liability” if he “did not receive any statutory notice of deficiency for such tax liability or did not otherwise have an opportunity to dispute such tax liability.” I.R.C. § 6330(d)(2)(B). See Roberts v. Commissioner, 329 F.3d 1224, 12271228 (11th Circuit 2003). A taxpayer may not raise an issue that was raised and considered in any previous administrative or judicial proceeding in which he participated meaningfully. I.R.C. § 6330(c)(4). The Appeals Office must also consider whether “any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary.” I.R.C. § 6330(c)(3)(C); see Treas. Reg. §§ 301.6330-1(e)(3) (Q and A E8), 301.6330-1(f)(1).
After the CDP hearing, the Appeals Office issues a notice of determination setting forth its findings and decision. Treas. Reg. § 301.6330-1(e)(3)(Q and A E8). A taxpayer may seek judicial review of the determination. I.R.C. § 6330(d). Jurisdiction lies in the Tax Court if the underlying taxes are the type of taxes (such as income taxes) that the Tax Court generally has jurisdiction to review. I.R.C. § 6330(d)(1). Otherwise, the taxpayer may seek review in the appropriate federal district court. Ibid.
In this case, taxpayer requested a CDP hearing, but did not actually contest the correctness of the tax liability or the appropriateness of the proposed collection action. As we will show, the Tax Court correctly granted summary judgment for the Commissioner because the arguments raised by taxpayer were without merit.
B. Taxpayer raised only groundless arguments
There is no statutory provision or other authority that would allow taxpayer to withhold payment of any portion of his federal income tax liability because he disagrees with the manner in which it might be spent by the Federal Government, however sincere his convictions in that respect may be. There is a long and uniform line of cases in this and other courts disallowing deductions or reductions of tax claimed by taxpayers for the portion of their taxes that they estimate is likely to be spent for military purposes, based on their religious, moral, or ethical objections to war. Browne v. United States, 176 F.3d 25 (2nd Circuit 1999) (taxpayers cannot withhold the portion of their tax liability that they calculate would be allocated to the Department of Defense); Adams v. Commissioner, 170 F.3d 173 (3rd Circuit 1999) (government not required to accommodate taxpayer's religious beliefs by ensuring that her tax payments do not fund the military); United States v. Ramsey, 992 F.2d 831, 833 (8th Circuit 1993) (there is no First Amendment right to avoid federal income taxes on religious grounds); Jenney v. United States, 755 F.2d 1384, 1387 (9th Circuit 1985) (taxpayers cannot withhold a portion of their tax liability based on their conscientious objection to war); Kahn v. United States, 753 F.2d 1208 (3rd Circuit 1985) (same); Barton v. Commissioner, 737 F.2d 822 (9th Circuit 1984) (there is no constitutional right to refuse to pay taxes based on a conscientious opposition to war); Lull v. Commissioner, 602 F.2d 1166, 1169 (4th Circuit 1979) (taxpayers may not claim deductions based on their conscientious religious objection to war). To the same effect are First v. Commissioner, 547 F.2d 45 (7th Circuit 1976); Autenrieth v. Cullen, 418 F.2d 586 (9th Circuit 1969); Kalish v. United States, 411 F.2d 606 (9th Circuit 1969); Farmer v. Rountree, 149 F.Supp. 327 (M.D. Tenn. 1956), aff'd per curiam, 252 F.2d 490 (6th Circuit 1958); Greenberg v. Commissioner, 73 T.C. 806, 812 (1980); Anthony v. Commissioner, 66 T.C. 367 (1976), aff'd without pub. opinion, 566 F.2d 1168 (3rd Circuit 1977); Egnal v. Commissioner, 65 T.C. 255, 263 (1975); Scheide v. Commissioner, 65 T.C. 455 (1975); Russell v. Commissioner, 60 T.C. 942, 947 (1973); Muste v. Commissioner, 35 T.C. 913 (1961).
Any possible remaining basis for claiming that tax liability might properly be avoided because of a sincerely held, conscientious objection to the uses to which public funds are put, was laid to rest by the Supreme Court's decision in United States v. Lee, 455 US 252 (1982). There, a member of the Old Order Amish sect sought to avoid payment of social security taxes on the basis of his religiously based opposition to participating in the social security system, and to contributing to such a public welfare system. There, as here, there was no question raised as to the sincerity or depth of the taxpayer's convictions in this regard. Nevertheless, the court made it clear that neither the First Amendment nor any other Constitutional or statutory provision permitted him to avoid the taxes in question. Indeed, in reaching that conclusion, the court specifically noted (albeit in dicta) that a taxpayer could not avoid income taxes based on his conscientious opposition to war or defense spending. 455 US at 260.
On appeal, taxpayer asserts for the first time (Br. 7-8, 10-11, 2226) that his claims must be addressed under the Religious Freedom Restoration Act of 1993 (RFRA), Pub. L. 103-141, 107 Stat. 1488 (codified at 42 USC §§ 2000bb, et seq.), Addendum, infra. This Court has twice addressed a similar contention, however, and has rejected it. Browne v. United States, 176 F.3d 25 (2nd Circuit 1999); Packard v. United States, 7 F.Supp.2d 143 (District of Connecticut 1998), aff'd without pub. opinion, 198 F.3d 234 (2nd Circuit 1999). See also Adams v. Commissioner, 170 F.3d 173 (3rd Circuit 1999).
Under RFRA, the government may not substantially burden a person's exercise of religion unless it shows that the burden is in furtherance of a compelling government interest, and that it is the least restrictive means of furthering that compelling government interest. 42 USC § 2000bb-1. In Browne, Packard, and Adams, the taxpayers asserted that RFRA required the government to accommodate their religious beliefs by ensuring that their tax payments did not fund the military. In Adams, the Third Circuit rejected this contention, relying on Lee, 455 US 252, and Hernandez v. Commissioner, 490 US 680 (1989), and a long line of cases “that have refused to recognize free exercise challenges to the payment of taxes or penalties imposed due to a refusal to pay taxes as a protest against the military activities of the United States.” 170 F.3d at 178. The court analyzed the government's compelling interest in collecting tax revenue and the least restrictive means of doing so, and concluded that the least restrictive means was to implement the tax collection system “in a uniform, mandatory way, with Congress determining in the first instance if exemptions are to [be] built into the legislative scheme.” 170 F.3d at 179. The court acknowledged that legislative changes can and do occur, but rejected the notion that exceptions on religious grounds should be carved out by the courts. 170 F.3d at 179-180.
In Browne, 176 F.3d at 26, this Court followed the Third Circuit's opinion in Adams in holding that the Brownes could be assessed penalties and interest where the IRS was forced to levy to collect the portion of their taxes that they withheld based on their religious objection to funding the Department of Defense. This Court rejected the claim that RFRA shielded the Brownes from penalties and interest, “because voluntary compliance is the least restrictive means by which the IRS furthers the compelling governmental interest in uniform, mandatory participation in the federal income tax system.” 176 F.3d at 26.
While acknowledging (Br. 23) that the decisions in Browne and Adams “might appear to foreclose an accommodation” in this case, taxpayer nonetheless argues (Br. 23-26), that under the Supreme Court's decision in Gonzales v. O Centro Espirita Beneficente Uniao do Vegetal, __ US __, 126 S. Ct. 1211 (2006), the Commissioner must present specific evidence that the compelling interest test is satisfied through application of the challenged law to the particular claimant – here, Mr. Jenkins – whose sincere exercise of religion is substantially burdened. Taxpayer's reliance on Gonzales is misplaced.
In Gonzales, a religious sect known as UDV brought suit seeking a preliminary injunction to prevent enforcement of the Controlled Substances Act, which banned its use of Hoasca, a tea containing a hallucinogen (DMT), in its religious ceremonies. The district court granted the preliminary injunction, and the court of appeals affirmed. In the Supreme Court, the government argued that it had a compelling interest in the uniform application of the Controlled Substances Act, which lists DMT under Schedule I because it is exceptionally dangerous, and that no exception should be made to accommodate the UDV. The Supreme Court held that RFRA requires the government “to demonstrate that the compelling interest test is satisfied through application of the challenged law ‘to the person’ – the particular claimant whose sincere exercise of religion is being substantially burdened.” 126 S. Ct. at 1220. The court held that DMT's listing under Schedule I was not sufficient to provide a categorical answer relieving the government of its burden under RFRA to make a more specific showing. 126 S. Ct. at 1221. And, because there is a long-standing exception to the Schedule I ban for religious use – peyote may be used by the Native American Church – the government could not preclude any consideration of a similar exception for the UDV. 126 S. Ct. at 1221-1222.
The Supreme Court also rejected the government's attempt to rely upon the Lee and Hernandez line of cases involving religion-based exceptions to application of federal tax laws, stating that “those cases strike us as quite different from the present one.” 126 S. Ct. at 1223. The court held that the cases the government attempted to rely upon were distinguishable from the case before it because (126 S. Ct. at 1223):
These cases [Lee, Hernandez, etc.] show that the Government can demonstrate a compelling interest in uniform application of a particular program by offering evidence that granting the requested religious accommodations would seriously compromise its ability to administer the program.
Here, the Government's argument for uniformity is different; it rests not so much on the particular statutory program at issue as on slippery-slope concerns that could be invoked in response to any RFRA claim for an exception to a generally applicable law.
The court concluded that although there may be instances when the need for uniformity precludes the recognition of exceptions to generally applicable laws under RFRA, the case before it did not seem to present such an instance, particularly given the long-standing exception for peyote. 126 S. Ct. at 1224. The court opined that ... “in fact the Government has not offered evidence demonstrating that granting the UDV an exemption would cause the kind of administrative harm recognized as a compelling interest in Lee, Hernandez, and Braunfeld [v. Brown, 366 US 599 (1961)].” 126 S. Ct. at 1224.
The Gonzales opinion clearly does not aid taxpayer's cause here. The Supreme Court distinguished the Lee and Hernandez line of cases as instances in which the government had demonstrated that granting an exemption would cause unacceptable administrative harm to a compelling government interest. 126 S. Ct. at 1224. There accordingly is no need in this case for the government to demonstrate that it has a compelling interest in enforcing the tax laws against this particular taxpayer. This Court has held that all taxpayers are required to comply with the tax laws, despite religion-based disagreements with the allocation of certain funds, and that RFRA does not affect that obligation because “voluntary compliance is the least restrictive means by which the IRS furthers the compelling governmental interest in uniform, mandatory participation in the federal income tax system.” Browne v. United States, 176 F.3d at 26.
Indeed, taxpayer himself acknowledged (A. 21) that the federal tax collection system would need to be changed through the enactment of legislation in order to achieve his goal of directing his tax dollars to entirely non-military government expenditures. Taxpayer has chosen to use the courts as a forum for protest and civil disobedience, essentially conceding that he has no hope of prevailing. He did not utilize the CDP hearing procedure for its intended purpose. He neither challenged the existence or amount of his tax liability, nor did he raise “any relevant issue relating to the unpaid tax or the proposed levy,” including spousal defenses (i.e., “innocent spouse” relief from joint liability under I.R.C. § 6015), challenges to the appropriateness of collection activities, or an offer of a collection alternative (e.g., posting a bond, substitution of other assets, an installment agreement, or an offer in compromise), as permitted in a CDP hearing under I.R.C. § 6330(c)(2)(A); Treas. Reg. § 301.6330-1(e)(3) (Q and A E6). In short, taxpayer did not raise any relevant issues in the CDP context. Because there were no genuine issues of material fact, the Tax Court correctly granted summary judgment for the Commissioner, holding that the proposed collection activity could proceed.