Getting to Appeals

Several years ago Les wrote a series of posts, here, here and here, about Facebook’s attempt to use the Taxpayer Bill of Rights (TBOR) to get to Appeals.  I discussed the Facebook case and others raising TBOR arguments in a law review article here.  Les wrote a post in September about proposed regulations addressing access to Appeals and he recently wrote a pair of posts, here and here, on the subject based on a panel discussion at the ABA Tax Section meeting.

This brings us to litigation recently brought in the 11th Circuit regarding the right of a taxpayer contesting a conservation easement case to go to Appeals.  In Rocky Branch Timberlands LLC v. United States, No. 22-12646 the taxpayer wanted to discuss a proposed assessment based on disallowing a conservation easement charitable contribution.  The IRS refused to refer the case to Appeals.  The taxpayer brought suit in district court.  After dismissal taxpayer brought the current appeal. 

After I wrote this post but before we published it, the 11th Circuit dismissed the appeal pursuant to 11th Circuit Rule 42-1(b) because the appellants failed to file a Civil Appeal Statement form with the required time frame.  As discussed below, this case may not have been headed to a successful conclusion for the taxpayers had they gotten a merits decision but this outcome points to the care litigants need to take in understanding and following the rules of the court in which they are practicing.   


Taxpayer relies on TBOR similar to Facebook but with a twist based on the Taxpayer First Act of 2019. Here is a copy of the complaint.  In the Summary of the Claim section of the complaint, taxpayer lays out the general basis for its case:

1. Plaintiffs bring this suit to challenge Defendants’ denial of Plaintiffs’ right to administrative review and to ask the Court to require Defendants to comply with the Congressionally mandated procedures enacted to safeguard all taxpayers’ rights. The primary question presented here is whether Defendants must comply with the laws as enacted by Congress, or whether the scope of Defendants’ authority to enforce the provisions of the Internal Revenue Code (“Code”) is so broad that it exceeds the statutorily created mandates imposed by Congress and the constitutional norms of due process. More specifically, the question is whether Defendants can ignore Code § 7803(e) and unilaterally deny Plaintiffs the right to independent appeal of Defendants’ proposed determinations.

2. In enacting Code § 7803(e) as part of the Taxpayer First Act of 2019 (“Taxpayer First Act”), Congress established an “Internal Revenue Service Independent Office of Appeals” (“Independent Appeals Office”). Taxpayer First Act of 2019, Pub. L. No. 116-25. Code § 7803(e) states that the Independent Appeals Office is to provide a process for resolving tax controversies without litigation on a fair and impartial basis that promotes a consistent application and interpretation of the Federal tax laws and enhances public confidence in the integrity and efficiency of the IRS.

3. Code § 7803(e), aptly titled “Right of Appeal,” requires the IRS to make the Independent Appeals Office resolution process “generally available to all taxpayers” and further requires the IRS to “prescribe procedures for protesting to the Commissioner of Internal Revenue a denial of a request [for a referral to the Independent Appeals Office].”

The case bears another similarity to Facebook in that the IRS requested an extension of the statute of limitations on assessment and Rocky Branch initially declined to give but later expressed willingness to provide. In Facebook, the taxpayer had granted several extensions but eventually grew tired of doing so.  In both cases the IRS relied on the lack of cooperation in extending the statute to deny the request to go to Appeals. 

The IRS moved to dismiss the case for lack of jurisdiction because the issuance of the FPAA and the filing of a Tax Court petition by Rocky Branch mooted the request to go to Appeals.  Additionally, it argued that the government had not waived sovereign immunity.   In denying the request that the IRS be ordered to send the case to Appeals, the district court first states that it cannot enjoin the IRS from issuing the FPAA because it had already done so.  Then, it addressed the request to order the rescinding of the FPAA.  It declined this request stating it had no authority to rescind the FPAA and doing so would violate the Anti-Injunction Act (AIA).  The court also denied the request to order the IRS to sign the statute of limitations extension.  With request that it compel the IRS to provide it with a review by Appeals, the court found the request moot and found sovereign immunity prevented it from issuing such an order.

Rocky Branch filed its brief with the 11th Circuit on October 19, 2022.  Here is a copy of the brief.  The brief very much frames the issues as ones of taxpayer rights:

1. Whether the IRS is subject to the laws created to address taxpayer abuses identified by Congress;

2. Whether the courts have the authority to enforce laws creating a taxpayer right to due process or whether the Anti-Injunction Act (“AIA”) bars a suit seeking to compel the IRS to comply with the law; and

3. Whether the IRS’s violation of the law and denial of statutorily created due process rights can be reviewed under the Administrative Procedures Act (“APA”). 

It is unclear if the case will make it to the stage of having the circuit court issue an opinion on the merits.  The Tax Section of the Department of Justice has filed a motion for summary affirmance citing to an order issued this summer affirming the dismissal of a case DOJ says is materially indistinguishable.  If the 11th Circuit agrees with DOJ on this, it can end the case without further action. 

Detour to discuss motion for summary affirmance (and Tax Court jurisdiction cases)

I was unfamiliar with motions for summary affirmance in appellate cases until one was filed in the case of Culp v. Commissioner earlier this summer seeking to knock out the Culps dismissal from Tax Court for filling a late Tax Court petition in a deficiency case.  I was stunned in that motion that the Appellate Section did not cite to the Boechler opinion.  The Third Circuit denied the motion quickly as discussed by Carl in a post here.  The Appellate Section filed a similar motion in the case of Allen v. Commissioner currently pending in the 11th Circuit with the same issue as in the Culp case.  This time a mention was made of Boechler in a footnote as the government explained it had no value or impact on deficiency jurisdiction in the Tax Court.  The court’s decision on that motion is still pending. 

The arguments in Culp and Allen and more recently in Frutiger, a Tax Court case involving whether the innocent spouse statute creates a jurisdictional time frame, indicate that the government believes the only path for a determination of jurisdiction in the Tax Court is through the Supreme Court.  The government sees no impact on jurisdiction even where the opinion in Boechler knocked out most of the arguments it makes in other areas.


Because I had never seen this motion before, I do not know how often it is made as a way to quickly dispose of an appeal.  I suspect that Rocky Branch may get knocked out quickly if it is indeed a carbon copy of the case the 11th Circuit dismissed this summer.  If it does not get knocked out through the motion, it faces an uphill battle as neither TBOR nor the Taxpayer First Act explicitly provides a path to the type of relief sought.  The fact that well represented and well-heeled taxpayers continue to make these arguments does suggest the quest to use TBOR for substantive relief continues to resonate.  Maybe one day it will land on a winning argument.

Unhappy Appraisers Suing the IRS

The IRS does not like conservation easements.  It views them as a form of abusive tax shelter.  Clinic clients don’t deduct conservation easements.  So, I am not writing here from personal experience.  Rather, I have gained this knowledge from reading the tax press and speaking to colleagues.

Obtaining an appraisal fulfills a necessary part of a claim for a charitable deduction of a conservation easement.  In its enforcement actions to end conservation easements, the IRS has taken action that displeases appraisers.  As a consequence, they brought suit against the IRS and certain employees.  The case of Benson v. IRS, No. 2:21-cv-0074 (N.D. Ga. 2022) does not end well for the appraisers because they failed to take the necessary steps to properly initiate a suit against the IRS.  We don’t know what might have happened if they had properly pursued their suit.


The IRS filed a motion to dismiss the complaint brought by the appraisers because they didn’t make proper service of the complaint.  The opinion starts with some background on conservations easements generally and the enforcement efforts of the IRS regarding conservation easements specifically.  As part of its enforcement effort in this area, the IRS subpoenaed substantial documentation from the appraisers involved in these cases which the appraisers alleged placed a significant strain on them.  The IRS also generally found their appraisals untrustworthy.

The appraisers involved in this suit brought alleging intimidation by the IRS and an effort by the IRS to use penalties to prevent them from properly appraising property.  They wanted to make the case a class action on behalf of all appraises working conservation easement cases.  Specifically, they brought five claims:

Plaintiffs first bring a claim under the Administrative Procedures [sic] Act (“APA”). Plaintiffs allege that Defendants have failed to abide by Executive Orders 13981 and 12892, which require transparency when drafting and issuing guidance documents. Plaintiffs allege that they were proximately harmed by “[t]he unauthorized expansion of regulatory powers regarding the administrative review of appraisals for donations of qualified real property” in five ways. First, “[t]he stifling and eliminating effect that Defendants’ refusal to act in a transparent manner in issuing guidance documents or reviewing donations.” Id. Second, “[t]he stifling and eliminating effect of the Defendants’ pattern and practice of ‘unfair surprise’ regarding audit practices, and administrative determinations for donations; and most pertinently unsupported penalty assessments.” Third, the loss of potentially conserved land caused by the elimination of appraisers due to “unsupported penalty assessments.” Fourth, is the cost of bringing this action. Finally, imposing these penalties amounts to an Eighth Amendment violation.

While the parties disagree over the merits of the matters raised, the IRS also sought to dismiss the case on procedural grounds because of a failure of service.  Federal Rule of Civil Procedure (FRCP) 4(c)(1) requires:

[a] summons must be served with a copy of the complaint. The plaintiff is responsible for having the summons and complaint served within the time allowed by Rule 4(m) and must furnish the necessary copies to the person who makes service.

FRCP 4(m) requires:

If a defendant is not served within 90 days after the complaint is filed, the court — on motion or its own after notice to the plaintiff — must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court must extend the time for service for an appropriate period.

The court noted:

Service of process is a jurisdictional requirement: a court lacks jurisdiction over the person of a defendant when the defendant has not been served.

The court explained how the service on one of the individual defendants failed because it did not meet the rules.  Plaintiffs here not only sued the IRS but sought to use Bivens to sue individual IRS employees involved in the program of pursuing conservation easements.  We discussed Bivens actions previously here and here.  They are difficult actions to bring but because of the failure of service, this case does not address that difficulty.  The court notes that at the time of its opinion here more than 400 days has passed since the filing of the suit without proper service on Ms. Ishee, one of the individual defendants.

In addition to the failure to properly serve Ms. Ishee, plaintiffs did not properly serve the United States.  FRCP 4(i)(2) governs service on the IRS and its employees.  The Court notes:

[t]o serve a United States agency or corporation, or a United States officer or employee sued only in an official capacity, a party must serve the United States and also send a copy of the summons and of the complaint by registered or certified mail to the agency, corporation, officer, or employee.

Thus, to properly serve the IRS, and Melissa L. Ishee, David Ables, Tommy Waldrup, Michelle March, and Ifeoma Okeke (“IRS Agent Defendants”), in their official capacities, Plaintiffs were required to serve the United States and send a copy of the summons and of the complaint to the IRS. To serve the United States, Plaintiffs must

(A)(i) deliver a copy of the summons and of the complaint to the United States attorney for the district where the action is brought — or to an assistant United States attorney or clerical employee whom the United States attorney designates in a writing filed with the court clerk — or

(ii) send a copy of each by registered or certified mail to the civil-process clerk at the United States attorney’s office;

(B) send a copy of each by registered or certified mail to the Attorney General of the United States at Washington, D.C.; and

(C) if the action challenges an order of a nonparty agency or officer of the United States, send a copy of each by registered or certified mail to the agency or officer.

Fed. R. Civ. P. 4(i)(1). The Docket reflects that on August 19, 2021 (139 days after the Complaint was filed) Plaintiffs sent a copy of the summons to the Civil Process Clerk for the United States Attorney’s Office for the Northern District of Georgia. Doc. No. [19]. The Docket does not show that Plaintiffs sent a copy to the Attorney General of the United States.

Because plaintiffs sought to bring a Bivens case, it sued the named persons in their individual capacity; however, it did so in their role as IRS agents.  This required the plaintiffs to serve them individually and to serve the IRS.  Here, the failure to serve the attorney general could not be waived by the individual defendants.  The court also stated that plaintiffs also failed to address the arguments about service made by the defendant.  A possible saving argument here for plaintiff is good cause; however, plaintiff did not make a good cause argument.  So, plaintiff’s dismissal stems not only from the technical failure to send a copy of the complaint to the attorney general but also from their failure to respond to the arguments raised about service or to allege good cause for their failure.

The dismissal here is without prejudice.  Perhaps they will make another run at suing.  The IRS has not given up its full throated enforcement effort against conservation easements.  So, the penalties and other problems these appraisers face have not ended.