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Rivera v. Commissioner Internal Revenue Service

filed: March 31, 1992.

DELORES P. RIVERA; ROBERT PEASE; S. MADALENE PEASE; THOMAS A. DUFFY; ANN D. DUFFY; STANLEY DOWNS; JANAE DOWNS; GREGORY H. ABESON; ARLINE H. ABESON, PETITIONERS - APPELLANTS,
v.
COMMISSIONER INTERNAL REVENUE SERVICE, RESPONDENT - APPELLEE.



Appeal from the United States Tax Court. Tax Ct. Nos. 19577-81, 14410-82, 16381-82, 16463-82, 16504-82, 18015-82.

Before: Alarcon, Beezer and Rymer, Circuit Judges

MEMORANDUM

Abeson appeals a tax court decision upholding IRS deficiencies asserted against him. We affirm.

Abeson initially filed a tax court petition seeking a redetermination of deficiencies asserted by the IRS. The tax court upheld the IRS determinations, and Abeson filed a Motion for Reconsideration of Opinion With Trial De Novo on May 25, 1990. The tax court, on May 22, 1990, denied the motion except that two sentences of the opinion, referring to more than 150 stipulations allegedly executed by Abeson's attorney, Wegge, were deleted. On June 14, 1990, Abeson filed a Motion to Vacate Assignment, Opinion and Order of Special Trial Judge Peter J. Panuthos. In this motion, Abeson alleged that Judge Panuthos lacked the authority to hear this case, that Judge Panuthos engaged in misconduct and fraud, and that several witnesses committed perjury. The next day, the tax court denied this motion without comment.

On October 19, 1990, Abeson attempted to file a Motion to Revise Opinion and a Motion for Reconsideration for Trial De Novo, both of which essentially reasserted Abeson's prior allegations of perjury and fraud. These motions were not timely under the thirty-day time limit imposed by Tax Court Rules 161 and 162, and Abeson therefore filed Motions for Special Leave to file these two motions. The tax court denied these motions without Discussion on October 24, 1990.

Abeson now appeals the decisions entered against him. Abeson essentially argues that the tax court erred in rejecting the arguments he proffered in his various post-trial motions. Although the tax court did not state reasons for denying these motions, we will assume that the court considered and rejected Abeson's arguments on the merits.

We review the tax court's denial of these motions for abuse of discretion. See, e.g., Molloy v. Wilson, 878 F.2d 313, 315 (9th Cir. 1989) (denial of motion to vacate judgment will be reversed only upon clear showing of abuse of discretion); Transgo, Inc. v. AJAC Transmission Parts Corp., 768 F.2d 1001, 1014 (9th Cir. 1985) (denial of motion for new trial or motion to amend judgment reviewed for abuse of discretion), cert. denied, 474 U.S. 1059 (1986); Parkinson v. Commissioner, 647 F.2d 875, 876 (9th Cir. 1981) ("The Tax Court's denial of a motion for reconsideration will not be overturned on appeal absent a clear abuse of discretion.").

I. Use of a Special Trial Judge

Abeson argues that, because the initial tax court petitions were filed prior to October 25, 1982, the chief Judge of the tax court exceeded his statutory authority under 26 U.S.C. § 7443A(b)(4) in assigning Abeson's case to be heard by a special trial Judge. Abeson also argues that § 7443A(b)(4) violates the Appointments Clause of the Constitution, art. II, § 2, cl. 2. Abeson's counsel conceded in oral argument, however, that Freytag v. Commissioner, 111 S. Ct. 2631, 2638-39, 115 L. Ed. 2d 764, 779-88 (1991), is controlling, and that Freytag rejected both arguments.

Abeson next claims that the tax court erred by failing to make findings of fact required by 26 U.S.C. § 7459(b) when it rejected his challenge to the assignment of a special trial Judge. However, because whether the chief Judge had the authority to assign a special trial Judge is a legal issue, no factual findings were required in order to resolve it.*fn1

II. Perjury by Government Witnesses

Abeson next alleges perjury by three government witnesses and Tax Court Judge Ruwe. Abeson based his motion on testimony at trial and adduced no new evidence in support.

A. Testimony of B.J. Frazier

Abeson claims that Frazier committed perjury when she testified that her tax returns prepared by Berg & Allen had not been audited, when she concealed her 1984 testimony as a government witness in the prosecution of Treash, and when she claimed that she did not know Treash very well.

The Tax Court did not abuse its discretion in rejecting Abeson's motion, because Frazier did not testify that her Berg & Allen prepared tax returns had never been audited. She merely stated that she had never been audited by the IRS "with regards to that [Berg & Allen] tax shelter." Even though Frazier may have been audited in 1978, that does not establish that she lied when she testified that the IRS had never audited her Berg & Allen tax shelter, which was first used in the 1979 taxable year.

Second, Frazier did not conceal the fact that she testified as a witness in the Treash prosecution. Frazier testified that she assisted the government in its investigation and that she wore a "wire" in order to record a meeting with Treash.

Finally, Abeson made no showing that Frazier perjured herself when she testified that she did not know Treash very well. Abeson presented no evidence indicating that Frazier was concealing a more extensive relationship with Treash.

B. Testimony of IRS Special Agent Hessler

Abeson asserts that Hessler committed perjury by denying the existence of any grand jury investigation of Berg prior to 1981.

Hessler testified that he was unaware of any grand jury proceedings prior to 1981. During an earlier portion of his testimony, Hessler expressed concern over whether he could legally disclose information regarding the IRS's prior investigation of Berg. According to Abeson, Hessler's statements that he was unsure whether he could answer certain questions demonstrates that Hessler was aware of a 1978-79 grand jury investigation of Berg. This, claims Abeson, proves that Hessler lied when he later stated that he was unaware of other grand jury proceedings.

However, Hessler's earlier testimony merely demonstrates that he was concerned that answering certain questions might violate either Fed. R. Crim. P. 6(e) or 26 U.S.C. ยง 6103. Because Hessler's earlier testimony does not establish that he knew of a specific 1978-79 grand jury investigation, that testimony is not in conflict with his ...


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