Bruce Morgan v. United States

958 F.2d 950, 92 Cal. Daily Op. Serv. 2074, 69 A.F.T.R.2d (RIA) 901, 1992 U.S. App. LEXIS 3809, 1992 WL 43252

• Court: Court of Appeals for the Ninth Circuit
• Decided: March 11, 1992
• Docket: 90-16641
• Status: Published

Opinions

PER CURIAM:

Federal agents seized $191,900 in cash Morgan was carrying in his luggage when he landed at Oakland airport. He has never acknowledged ownership of the money. The IRS made a deficiency determination of $53,732 pursuant to section 6851(a), which provides for termination of the taxable year and immediate determination of the tax due, and section 6861(a), which authorizes immediate assessment of tax when collection will be jeopardized by delay.¹ In so doing, the IRS relied on a statutory presumption that collection of tax on cash amounts in excess of $10,000 held by persons who do not claim ownership and who are not able to identify the owner will be jeopardized by delay. Section 6867(a).

Section 6867 also allows the IRS to collect the tax from the possessor, because the actual taxpayer — the owner of the currency — is unknown. Thus, “the possessor of the cash shall be treated (solely with respect to such cash) as the taxpayer for purposes of chapters 63 and 64 and section 7429(a)(1).” Section 6867(b)(3) (emphasis added). Chapter 63 details assessment procedures and 64 does the same for collection; neither is implicated in this case. This appeal turns on section 7429.

Section 7429(a)(1) requires notice to the taxpayer “[wjithin 5 days after the day on which an assessment is made under section 6851(a) [or] 6861(a).... ” Sections 7429(a)(2) and (3) provide for administrative review and redetermination of the assessment within 30 days after the taxpayer is furnished with the notice required by section 7429(a)(1). Section 7429(b) authorizes judicial review of the assessment. The district court is directed to review the reasonableness of making the assessment and the appropriateness of the amount assessed.

A threshold question is whether we have jurisdiction to decide this appeal. Section 7429(f) provides that “[ajny determination made by a court under this section shall be final and conclusive and shall not be reviewed by any other court.” Although by its terms the statute seems to apply only to the district court’s decision as to “the reasonableness of the assessment and the appropriateness of its amount,” Zuluaga v. United States, 774 F.2d 1487, 1490 (9th Cir.1985) (Wiggins, J., concurring), we have applied the nonreviewability provision to cases where the district court makes a decision on the merits of the jeopardy assessment. See Stebco, Inc. v. United States, 939 F.2d 686, 688 (9th Cir.1990). Whether a dismissal is “on the merits” is determined by reference to FRCP 41(b). See Zuluaga, 774 F.2d at 1489. Here the district court dismissed Morgan’s action because he lacked standing; such a jurisdictional dismissal is not a decision on the merits,² and thus we are not precluded from reviewing it by section 7429(f).

Appellant argues that as a possessor of cash subject to assessment, he is entitled to seek judicial review of the IRS’s actions. But he is not a taxpayer; section 7429(b) says only “the taxpayer may bring a civil action against the United States” (emphasis added). Furthermore, section 6867(b)(3), which makes the possessor of cash a “taxpayer” for the limited purposes of assessment, collection and notice, applies only to subsection (a)(1) of section 7429. Had Congress desired to provide possessors with administrative or judicial review it would not have limited the definitional provision of section 6867(b)(3) to one narrow subsection — the notice provision — of section 7429.

Possessors, after all, are not prejudiced by an IRS determination of tax on cash in their possession: It is the owner of the money who stands to lose from an improper assessment. Classifying possessors as “taxpayers” for purposes of section 7429(a)(1) ensures that they are notified of the IRS proceedings, and the tax at the maximum rate (see section 6867(b)(2)) provides an incentive for them to admit ownership of the cash or encourage the real owner to step forward. See Commissioner v. Hendrickson, 873 F.2d 1018, 1021 (7th Cir.1989); Matut v. Commissioner, 858 F.2d 683, 686-87 (11th Cir.1988). Congress, however, has not chosen to extend to possessors a right to judicial review. Thus, appellant has no standing to challenge the jeopardy assessment in this case. See Hendrickson, 873 F.2d at 1021; Lavnikevich v. United States, 692 F.Supp. 1437, 1439 n. 1 (D.Mass.1988); Whiting v. Lewis, 57 A.F.T.R.2d 86-556, 86-557 (N.D.Fla.1985); Robrish v. United States, 579 F.Supp. 477, 478 (D.Mass.1983).

Appellant also complains that the notification of assessment was dated two days before the assessment itself, and thus violates section 7429(a)(l)’s requirement that the notice be provided “[wjithin 5 days after the day on which an assessment is made.” We note first that appellant has shown no prejudice — nor, we think, could he complain of being notified of an impending tax before it was assessed. See Loretto v. United States, 440 F.Supp. 1168, 1175 (E.D.Pa.1977). Furthermore, Webster’s defines “within,” when used as a preposition, as “a function word to indicate situation or circumstances in the limits or compass of: as ... before the end of.’’ Webster’s Ninth New Collegiate Dictionary 1355 (1984). Appellant concededly was provided notice before the end of the statutory period. In any event, appellant has no standing to raise this issue in district court, as he has directed us to no basis of jurisdiction other than section 7429(b) — which does not apply to possessors. Robrish, 579 F.Supp. at 478; but see Lavnikevich, 692 F.Supp. at 1440 (suggesting possessor may have standing to challenge sufficiency of notice).

Our decision does not leave appellant without a forum. Section 6867(b)(3) makes him a “taxpayer” for purposes of chapter 63, including section 6213(a)’s authorization for petitioning the Tax Court for a redeter-mination of the deficiency.

AFFIRMED.

1 . All statutory references are to the Internal Revenue Code, title 26 USC.

2 . “[A] dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction ... operates as an adjudication upon the merits.” FRCP 41(b) (emphasis added).