John Q. Rodgers v. United States of America

NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN Q. RODGERS,
Plaintiff-Appellant,
v.
UNITED STATES OF AMERICA,
Defendant-Appellee.
No. 18-55009
D.C. No.
2:15-cv-09441-PA-AS
MEMORANDUM*
Appeal from the United States District Court
for the Central District of California
Percy Anderson, District Judge, Presiding
Argued and Submitted June 3, 2019
Portland, Oregon
Before: MURGUIA and HURWITZ, Circuit Judges, and ZIPPS,** District Judge.
John Q. Rodgers sued the United States, seeking a refund for partial
payments of tax return preparer penalties assessed under 26 U.S.C. § 6694(b).
After a bench trial, the district court entered judgment in favor of the United States,
finding that various understatements on the tax returns prepared by Rodgers were
* This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
** The Honorable Jennifer G. Zipps, United States District Judge for the
District of Arizona, sitting by designation.
FILED
JUN 21 2019
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS

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“willful” or done in “reckless or intentional disregard” of IRS rules or regulations.
See 26 U.S.C. § 6694(b)(2)(A), (B). Rodgers primarily makes two arguments on
appeal: (1) the district court erred by defining “willful” in § 6694(b)(2)(A) to
include “recklessness”; and (2) the district court lacked sufficient evidence to
sustain the penalties against him.
We have jurisdiction under 28 U.S.C. § 1291, and we affirm in part, reverse
in part, and remand to the district court for further proceedings.
1. We agree with Rodgers that the district court applied the wrong
definition of “willful” in § 6694(b)(2)(A). As we explained in Richey v. IRS, 9 F.3d
1407, 1411 (9th Cir. 1993), willfulness under § 6694(b)(2)(A) requires “a
conscious act or omission made in the knowledge that a duty is therefore not being
met.” Id. (quoting Pickering v. United States 691 F.2d 853, 855 (8th Cir. 1982)).
We further noted that the definition of “willful” in § 6694(b) is the “same” as the
definition used in 26 U.S.C. § 7206. Id. As the Supreme Court has explained, that
definition does not include recklessness. See United States v. Bishop, 412 U.S. 346,
354 (1973).
2. Because the district court applied the wrong definition of willful in §
6694(b)(2)(A), we remand to the district court to reconsider, in the first instance,
whether the penalties predicated solely on violations of § 6694(b)(2)(A)—the
penalties assessed for the tax returns of Rossmith, Ross Pac, and Freshtech—

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remain justified in light of the evidence adduced at trial.
3. However, we affirm the district court’s findings concerning the
penalties assessed under § 6694(b)(2)(B) for the Keller and Ross personal returns.
See 26 U.S.C. § 6694(b)(2)(B) (authorizing penalties based on “reckless or
intentional disregard” of tax “rules or regulations”). The district court found that
Rodgers knew the applicable rules; had all the information necessary to evaluate
and apply the rules; but, ultimately, failed to apply the rules, resulting in an
understatement on the Keller and Ross returns. The district court also considered
Rodgers’ explanation for failing to apply the rules—that he did so inadvertently—
and rejected it as not credible. The district court’s conclusion that Rodgers
recklessly or intentionally disregarded tax rules or regulations was based on an
application of the correct statutory standard, and was not clearly erroneous. See
Lentini v. Cal. Ctr. for the Arts, Escondido, 370 F.3d 837, 843 (9th Cir. 2004).
AFFIRMED in part, REVERSED in part, and REMANDED. Each party
shall bear its own costs.

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