                            NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                         JUN 21 2019
                                                                       MOLLY C. DWYER, CLERK
                                                                        U.S. COURT OF APPEALS
                            FOR THE NINTH CIRCUIT

JOHN Q. RODGERS,                                 No.    18-55009

                Plaintiff-Appellant,             D.C. No.
                                                 2:15-cv-09441-PA-AS
 v.

UNITED STATES OF AMERICA,                        MEMORANDUM*

                Defendant-Appellee.

                    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.
“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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