                                                                          FILED
                                                               United States Court of Appeals
                                                                       Tenth Circuit

                   UNITED STATES COURT OF APPEALS                    March 27, 2018
                                                                   Elisabeth A. Shumaker
                                TENTH CIRCUIT                          Clerk of Court



 LINDSAY MANOR NURSING
 HOME, INC.,

              Petitioner - Appellant,

 v.                                                     No. 17-9002
                                                        (Tax Court)
 COMMISSIONER OF INTERNAL                          (Docket No. 24596-14L)
 REVENUE,

              Respondent - Appellee.


                           ORDER AND JUDGMENT *


Before TYMKOVICH, Chief Judge, BACHARACH, and MORITZ, Circuit
Judges.


      This appeal arises from the Internal Revenue Service’s attempt to levy

unpaid taxes on Lindsay Manor, which operated a nursing home in Oklahoma.

Lindsay Manor challenged the proposed levy because, under 26 U.S.C.

§ 6343(a)(1)(D), levies should be released if they cause a taxpayer “economic

hardship.” Lindsay Manor claimed it qualified for such relief because the levy



      *
         This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
would leave it unable to provide adequate care to patients at the nursing home.

The Tax Court denied relief and Lindsay Manor appealed.

      Since this litigation started, however, circumstances have changed.

Lindsay Manor no longer operates any nursing homes in Oklahoma. As a

consequence, even if Lindsay Manor prevails on appeal, it will not receive

hardship relief. That is because the only basis upon which Lindsay Manor

requested this relief—its ability to care for its nursing home patients—no longer

exists. This appeal is therefore moot.

      Accordingly, we grant the government’s motion to dismiss this case as

moot and vacate the Tax Court’s decision.

                                I. Background

      Lindsay Manor Nursing Home, Inc. is an Oklahoma corporation owned by

Sam Jewell. In April 2014, the Internal Revenue Service sent Lindsay Manor a

“Final Notice of Intent to Levy” because it allegedly owed $122,836.40 in back

taxes. The notice told the company it could request a Collection Due Process

(CDP) hearing to challenge the proposed levy. Lindsay Manor did so. But

critically, Lindsay Manor did not challenge that it, in fact, owed the IRS these

taxes. Rather, it “challenged the appropriateness of the proposed levy on the

grounds of economic hardship.” 1 R., Vol. 1 at 102.


      1
          Lindsay Manor also asked to pay its owed taxes over time, pursuant to an
                                                                     (continued...)

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      Section 6343(a)(1)(D) provides that “[u]nder the regulations prescribed by

the Secretary, the Secretary shall release the levy” if, as relevant here, “the

Secretary has determined that such levy is causing an economic hardship due to

the financial condition of the taxpayer.” Elsewhere, the Code defines taxpayer as

“any person subject to any internal revenue tax.” 26 U.S.C. § 7701(a)(14). And

the definition of person includes both “an individual” and a “company or

corporation.” Id. § 7701(a)(1).

      Lindsay Manor thus argued it could qualify for hardship relief under

§ 6343(a)(1)(D). Specifically, it claimed the levy “would prevent it from being

able to carry on its trade or business (i.e., to provide adequate care and treatment

to its patients),” and leave it unable “to meet its payroll and other basic

necessities, which in turn would result in patients not receiving the needed care

from qualified healthcare providers.” R., Vol. 1 at 103. Lindsay Manor therefore

asked the IRS not to levy its account receivables, Medicaid and Medicare funding,

private pay, and bank accounts.

      An IRS Settlement Officer denied relief. Though the economic-hardship

provision applies to “taxpayers”—a term expressly defined to include both

corporations and individuals—the Officer nevertheless concluded the provision

applied only to individual taxpayers. He did so because a regulation, 26 C.F.R.


      1
       (...continued)
installment agreement, rather than in a lump sum.

                                          -3-
§ 301.6343-1, interprets § 6343(a)(1)(D)’s economic hardship provision to

exclude corporate taxpayers.

      Lindsay Manor appealed to the Tax Court, arguing the regulation was

invalid because it directly conflicted with the statute. The Tax Court was

unpersuaded. Applying the familiar two-step framework from Chevron v. Natural

Resources Defense Council, 467 U.S. 837, 842–43 (1984), the court upheld the

regulation. At Chevron step one, it found the statute ambiguous on whether the

economic-hardship provision applied to both individual and corporate taxpayers.

Id. And moving to step two’s deferential terrain, it concluded the regulation

reasonably limited relief to individual taxpayers. Lindsay Manor appealed to this

court, arguing the Tax Court erred by failing to invalidate 26 C.F.R.

§ 301.6343-1.

      While this appeal was pending, the government informed us that

circumstances on the ground had changed. Lindsay Manor currently does

not—and cannot—operate nursing homes in the State of Oklahoma. In short,

Lindsay Manor defaulted on lease payments it owed another company, Trinik. On

July 1, 2016—about nine months before the Tax Court issued its opinion—Trinik

filed a petition in the District Court of Oklahoma County, Oklahoma seeking the

appointment of a receiver over numerous corporations Sam Jewell owned,

including Lindsay Manor. The court granted the petition that same day. Its order

directed the receiver to thereafter “operate the Facilities as nursing facilities.”

                                          -4-
Mot. to Dismiss Ex. E. The receiver initially operated the nursing homes, but

subsequently entered into operation transfer agreements, under which third parties

took control of the nursing home facilities Lindsay Manor used to operate. What

is more, Oklahoma no longer lists Lindsay Manor as a licensed nursing home

facility.

       Because the basis upon which Lindsay Manor requested hardship relief

ceased to exist, the government moved to dismiss the case as moot. In response,

Lindsay Manor claimed a live controversy remains because it is still liable to the

IRS for the unpaid taxes. Alternatively, if we conclude this appeal is moot,

Lindsay Manor asks us to vacate the Tax Court’s decision.

                                   II. Analysis

       We conclude this case is moot, and we vacate the Tax Court’s decision.

       A.    Mootness

       “The constitutional mootness doctrine is grounded in the Article III

requirement that federal courts may only decide actual ongoing cases or

controversies.” Keller Tank Servs. II v. Comm’r, 854 F.3d 1178, 1193 (10th Cir.

2017). That a case presents a justiciable case or controversy at its inception does

not give us continual jurisdiction over the case. Rather, if at anytime during a

case’s (sometimes long) life a party lacks a “personal stake in the outcome of the

lawsuit . . . so the question decided affects the rights of the litigants,” the case is

moot. Id. Stated more simply, if “granting relief for the issues before the court”

                                          -5-
would have no “effect in the real world,” then the case is moot and must be

dismissed. Id.

      This case is moot because Lindsay Manor lacks a “personal stake in the

outcome of the lawsuit.” Id. The only issue on appeal is whether the Tax Court

erred by concluding 26 C.F.R. § 301.6343-1 permissibly limits 26 U.S.C.

§ 6343(a)(1)(D) to individual taxpayers. If we conclude the regulation is invalid

and the provision could, as a legal matter, apply to corporate taxpayers, we would

remand the case to the Tax Court to determine whether Lindsay Manor, as a

factual matter, is entitled to such relief. Yet before the IRS Settlement Officer

and the Tax Court, Lindsay Manor argued it qualified for economic hardship

relief only because imposing the levy would leave it unable to “provide adequate

care for its patients.” R., Vol. 1 at 103. This ground for relief no longer exists.

Ever since the appointment of the receiver in July 2016, Lindsay Manor has not

cared for any patients because it has not operated any nursing homes.

      Our resolution of this appeal, then, will not affect Lindsay Manor. We can

either affirm the Tax Court’s denial of economic hardship relief, or remand the

case. In both scenarios, Lindsay Manor will receive no relief under

§ 6343(a)(1)(D). Id. Lindsay Manor therefore lacks a “personal stake in the

outcome of the lawsuit,” and we must dismiss this appeal. Keller Tank Servs. II,

854 F.3d at 1193.




                                         -6-
       Lindsay Manor nevertheless contends a live controversy still exists because

it remains liable for over one-hundred thousand dollars of taxes. After all, it

emphasizes, the IRS still plans to come calling for this money when litigation

concludes. But Lindsay Manor’s tax liability has nothing to do with this case.

This appeal presents one merits issue related to the economic-hardship provision.

So if we decided this appeal’s merits, we would not address—and the decision

could not affect—Lindsay Manor’s underlying tax liability. This liability thus

does not make this case a live, justiciable controversy.

       Nor are we persuaded by the cases Lindsay Manor relies on to support this

tax-liability argument. It cites a number of cases, such as Willson v.

Commissioner, 805 F.3d 316, 320–21 (D.C. Cir. 2015), which stand for the

proposition that an appeal from the Tax Court is moot if no underlying tax

liability exists. But these cases do not prove the inverse—that a case cannot be

moot if tax liability still exists, regardless of whether that liability is at issue in

the case.

       Further, Lindsay Manor argues it could begin operating nursing homes

again by applying for a new license. This is plainly speculative. And speculation

cannot save a case from being moot. See F.E.R. v. Valdez, 58 F.3d 1530, 1533

(10th Cir. 1995); cf. City of Los Angeles v. Lyons, 461 U.S. 95, 111 (1983).




                                            -7-
      B.        Vacatur

      Lindsay Manor asks us to vacate the Tax Court’s decision because this case

became moot while the appeal was pending. We agree vacatur is appropriate, but

for a slightly different reason: this case was moot when the Tax Court published

its decision.

      “If an actual case or controversy ceases to exist during the course of tax

court proceedings, the tax court must dismiss the case as moot.” Willson, 805

F.3d at 320. This case became moot when the court appointed the receiver. After

that, Lindsay Manor no longer operated any nursing homes and consequently

could not receive economic-hardship relief. The Tax Court published its decision

on March 23, 2017—over six months after the receiver had been appointed and

after the case had become moot. Rather than deciding the case’s merits, then, the

Tax Court should have “dismiss[ed] the case as moot.” Id. Vacatur is therefore

appropriate.

                               III. Conclusion

      We therefore GRANT the government’s motion to DISMISS the case as

moot and VACATE the Tax Court’s decision.

                                      ENTERED FOR THE COURT


                                      Timothy M. Tymkovich
                                      Chief Judge



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