Leroy Muncy v. CIR , 890 F.3d 724 ( 2018 )

United States Court of Appeals
For the Eighth Circuit
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No. 17-2576
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Leroy Muncy
lllllllllllllllllllllAppellant
v.
Commissioner of Internal Revenue
lllllllllllllllllllllAppellee
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Appeal from The United States Tax Court
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Submitted: March 29, 2018
Filed: May 16, 2018
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Before BENTON, BOWMAN, and KELLY, Circuit Judges.
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BENTON, Circuit Judge.
Leroy Muncy appeals the order of the Tax Court finding he owes additional
income taxes and penalties. On appeal, he challenges only the validity of the
Commissioner of Internal Revenue’s notice of deficiency (NOD). This court reviews
de novo, as a matter of law, whether the Tax Court had jurisdiction pursuant to a
validly issued NOD. See Bartman v. Comm’r, 446 F.3d 785, 787 (8th Cir. 2006)
(standard of review).
Muncy argues that the signer of the NOD did not have authority to “issue” it.
This court previously remanded for factual findings “whether [Janet A.] Miller[, the
IRS employee who purported to issue the NOD,] occupied a position that gave her
authority—under the delegation order in effect at the time the NOD was issued, or
under any other authorization—to issue Muncy the NOD.” Muncy v. Comm’r, 637
Fed. Appx. 276, 277 (8th Cir. 2016). The Tax Court made some general statements,
relying on its precedent. See Muncy v. Comm’r, T.C. Memo. 2017-83, 2017 WL
2211216, at *3 (May 17, 2017), citing Tarpo v. Comm’r, T.C. Memo. 2009-222,
2009 WL 3048627, at *4 (Sept. 24, 2009) and Batsch v. Comm’r, T.C. Memo. 2016-
140, 2016 WL 4006809, at *3 (July 26, 2016), aff’d, 695 Fed. Appx. 166 (8th Cir.
2017).
Muncy relies on a literal reading of Delegation Order 4-8, incorporated in the
Internal Revenue Manual.1 See Internal Revenue Manual § 1.2.43.9, 2011 WL
7320171 (2011). Delegation Order 4-8 authorizes certain employees to “sign and
send” NODs. § 1.2.43.9(2). See also § 1.11.2.2(1), 2011 WL 7321805 (2011) (“The
IRM is the primary, official source of IRS ‘instructions to staff’ relating to the
administration and operation of the Service.”). Among the listed employees are
“SB/SE Technical Services Revenue Agent Reviewers GS-12 and Tax Compliance
Officer Reviewers GS-09.” § 1.2.43.9(3). Miller’s position—Small Business/Self-
Employed (SB/SE) Technical Services Territory Manager—is not directly listed.
But Miller’s position is higher than, and supervisory of, both SB/SE Technical
Services positions directly listed in Delegation Order 4-8. The Manual section on the
“Organizational Structure” of “Technical Services” says that “Technical Services is
composed of seven territories that align with the seven SB/SE Examination
Compliance Areas . . . .” § 4.8.1.2(1), 2011 WL 7349301 (2011). “Each territory is
led by a Territory Manager.” § 4.8.1.2(3). There are “groups within each territory.”
1
Citations to the Internal Revenue Manual refer to the Manual in effect as of
September 7, 2011, the date the NOD was issued.
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Id. “Groups are composed of a Manager, Revenue Agent Reviewers, Tax Compliance
Officer Reviewers, Tax Examiners, and supporting clerical staff.” § 4.8.1.2(4)
(emphasis added). In sum, Territory Managers lead a staff that includes the Revenue
Agent Reviewers and Tax Compliance Officer Reviewers.
The Manual says, “Authority should be delegated directly to the lowest level
expected to take final action.” § 1.11.4.4.1(1), 2011 WL 7321882 (2011). This
means that as a general rule, “[e]very intervening line supervisory position up to and
including the Commissioner has the same authority.” § 1.11.4.4.1(1)(a). Because
Miller was in an intervening line supervisory position with respect to SB/SE
Technical Services Revenue Agent Reviewers and Tax Compliance Officer
Reviewers, she had authority to sign and send the NOD. See § 4.8.9.6.1(3), 2011 WL
7349726 (2011) (“Delegation Order 4-8 in IRM 1.2.43.9 delegates the authority to
sign statutory notices of deficiency to Technical Services Managers, Revenue Agent
Reviewers GS-12 and above, or Tax Compliance Officers GS-09 and above.”
(emphasis added)).
The NOD satisfies the statutory requirement that the deficiency be
“determine[d],” and the NOD “sen[t],” by someone “duly authorized by the Secretary
of the Treasury directly, or indirectly by one or more redelegations of authority, to
perform the function . . . .” See 26 U.S.C. §§ 6212(a); 7701(a)(11)(B);
7701(a)(12)(A)(i).
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The judgment of the Tax Court is affirmed.
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