Securities and Exchange Commission v. Nadel et al

Filing 1101

MOTION for clarification re 1100 Order on Motion for Miscellaneous Relief by United States Internal Revenue Service. (Harwell, Lacy)

UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
Securities and Exchange Comm’n,
Plaintiff,
vs.

Case no. 8:09-cv-87-T-26TBM

Arthur Nadel, et al.
Defendants.
______________________________/
UNITED STATES OF AMERICA’S MOTION FOR CLARIFICATION OF ORDER
AUTHORIZING RECEIVER’S EXECUTION AND SUBMISSION OF AMENDED
TAX RETURN OF ARTHUR NADEL
The United States of America hereby moves for clarification or
alternatively, reconsideration, of the Court’s order entered at Doc. No. 1100 (“the
Order”) in this matter, to the extent that it directed the Internal Revenue Service
“to accept and timely process the Amended Return [of Arthur Nadel], and deliver
any applicable tax refund resulting from the Amended Return to the Receiver in a
timely manner.” Doc. No. 1100 at 2. In support of its motion, the United States
refers to the memorandum of law below.
Legal Memorandum
On December 31, 2013, the Receiver in this case filed its Unopposed
Motion for Order (1) Authorizing Receiver to Execute and Submit Amended Tax
Return of Arthur Nadel; (2) Directing the Internal Revenue Service to Accept Tax
Return, (3) Directing the IRS to deliver any tax refund payable to Nadel to the
Receiver; and (4) Authorizing Receiver to Negotiate and Deposit Any Tax Refund

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Payable to Arthur Nadel (Doc. No. 1097; “the Motion”). The IRS is not a party to
this case, which was brought by the Securities and Exchange Commission (SEC)
as an initial matter. The Motion sought relief in the nature of an injunction
against the IRS and is styled as “unopposed,” although the Receiver did not
consult with either the United States Attorney’s Office or counsel for the IRS in
advance of its filing. Evidently, the Receiver consulted only with counsel for the
SEC about the Motion, but the SEC is an independent litigating agency that does
not represent the interests of any other federal agency such as the IRS. The
Court entered the Receiver’s proposed order on the morning of January 15, 2014
without the benefit of a response by the IRS. 1
The following phraseology of the Order raises issues requiring
clarification:
The IRS is directed to accept and timely process the Amended Return,
and deliver any applicable tax refund resulting from the Amended Return
to the Receiver in a timely manner.
IRS seeks two clarifications. 2 First, while IRS does not object to the Receiver
filing the return on behalf of Mr. Nadel, and further does not object to delivering

1

The Office of the United States Attorney, Attorney General, and IRS were
served by certified mail on December 31, 2013. Under Rule 3.01(a) and
Fed.R.Civ.P. 6(d), the response of the IRS would have been due by the close of
business on January 17, 2014.
2

Under Fed. R. Civ. P. 60(b), “[o]n motion and just terms, the court may relieve a
party or its legal representative from a final judgment, order, or proceeding for . . .
mistake, inadvertence, surprise, or excusable neglect; . . . [or] any other reason
that justifies relief.” Moreover, the Court has the inherent power “to reconsider,
rescind, or modify an interlocutory order for cause seen by it to be sufficient.”
Melancon v. Texaco, Inc., 659 F.2d 551, 553 (5th Cir. 1981); see also Toole v.

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any refund ultimately determined to be due to the Receiver, there are many
reasons why (in the abstract) a return may not be accepted by IRS. The Internal
Revenue Code (IRC) and its implementing regulations contain a number of
specific requirements for the form and content of returns, and the Court lacks
jurisdiction to render those portions of the IRC nugatory in advance. 26 U.S.C.
§ 6011; Treas. Reg. § 301.6011. We respectfully ask that the Court clarify that
its Order is not intended to nullify any statutory or regulatory requirement
governing the form and/or content of the Amended Return, except to the extent
explicitly addressed in the Order.
Second, federal law controls the timing for taxpayer claims to refunds and
the Court lacks jurisdiction to superimpose an amorphous “timeliness”
requirement upon the processing of the Amended Return and delivery of the
refund. See e.g., 26 U.S.C. §§ 6532(a)(1); 7422. Specifically, the potential size
of the refund sought in the Amended Return requires that it be reviewed and
approved by the congressional Joint Committee on Taxation. 26 U.S.C.
§ 6405(a). This review is expected to be time consuming and is not a process
that the IRS controls. In any event, sovereign immunity would preclude any
claim to a refund that is made prior to the expiration of those statutorily required
time periods. Accordingly, we respectfully ask that the Court clarify that its Order
shall not be interpreted to preempt the time limits that would apply under sections
6405(a), 6532 and 7422 of the IRC. At the very least, the Receiver should make
Baxter Healthcare, Inc., 235 F.3rd 1307, 1315 (11th Cir. 2000) (recognizing
“plenary power … to reconsider, revise, alter or amend [an] interlocutory order”).

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whatever specific timeliness claim he desires to make, when such a claim
appears to be ripe for review and legally available to him.
Local Rule 3.01(g) Certificate
The undersigned has consulted with counsel for the Receiver in this
matter concerning the relief that is sought here. The Receiver’s counsel could
not state his client’s position without seeing the Motion and the clarifications
sought.
Conclusion
For these reasons the IRS requests that the its Motion be granted and
that the Court clarify its earlier Order on the two issues addressed above
Respectfully submitted,
A. LEE BENTLEY, III
United States Attorney
/s/Lacy R. Harwell, Jr.
LACY R. HARWELL, JR.
Assistant United States Attorney
Fla. Bar No. 714623
400 N. Tampa St., Suite 3200
Tampa, Florida 33602
[phone]
Email: [e-mail]

Certificate of Service
I hereby certify that on January 28, 2014, I caused a true copy of the
foregoing to be filed using the Court’s CM/ECF filing system, which will send an
electronic notice of filing.
/s/Lacy R. Harwell, Jr.
LACY R. HARWELL, JR.
Assistant United States Attorney

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