This case comes before the Court on Petitioner William William's application for writ of habeas corpus under 28 U.S.C. §2254, March 2, 2018. Williams is a state prisoner proceeding pro se.
Williams was one of a group of petitioners that joined in filing what they characterized as an “En Masse Petition for Writ of Habeas Corpus as per 28 U.S.C. § 2254 and Rule 20(a) and Rule 23 of the Federal Rules of Civil Procedure.” (Doc. 2). The “en masse” petitioners sought to challenge the constitutionality of the criminal charging process utilized against them by the State of Montana. Id. at 19-33.
Williams, and the additional petitioners, were notified that the Court would not allow them to proceed as a group and that separate cases would be opened for each. (Doc. 1 at 2-5). Petitioners were then ordered to respond individually to advise the Court whether or not they wished to proceed and, if so, petitioners were directed to each complete the Court's standard habeas form. Id. at 5-6. Williams did not respond to this Court's order.
Williams has moved this Court to be granted in forma pauperis status. (Doc. 3). Because there is no reason to delay this matter further, Williams's motion will be GRANTED.
In a Supplement to his Petition, Williams asks this Court to dismiss an Improper Influence in Official/Political Matters out of the Twentieth Judicial District, Lake County, in Cause No. DC-06-160. (Doc. 4 at 1). The argument is premised upon what Williams believes to be a faulty and unconstitutional state criminal charging process utilized in felony prosecutions. Id. Williams contends he was entitled to be prosecuted either following the empaneling of a grand jury or a preliminary probable cause hearing. Id.
But this Court is not able to provide Williams the relief sought. Federal district courts, as courts of original jurisdiction, do not serve as appellate tribunals to review errors allegedly committed by state courts. MacKay v. Pfeil, 827 F.2d 540, 543 (9th Cir. 1987); see also Atlantic Coast Line R. Co. v. Brotherhood of Locomotive Engineers, 398 U.S. 281, 296 (1970)(“lower federal courts possess no power whatever to sit in direct review of state court decisions”). It would be entirely inappropriate for this Court to review and dismiss the state convictions as suggested by Williams. To the extent that the Supplement (Doc. 4) is construed as a Motion to Dismiss, the motion is DENIED.
Williams does not have any past or current state appellate matters pending, thus, it does not appear that Williams ever attempted to raise his current claim before the state courts of Montana. Federal courts may not grant a writ of habeas corpus brought by an individual in custody pursuant to a state court judgment unless “the applicant has exhausted the remedies available in the courts of the State.” 28 U.S.C. §2254(b)(1)(A). The exhaustion requirement is grounded in the principles of comity and gives states the first opportunity to correct alleged violations of a prisoner's federal rights. Coleman v. Thompson, 501 U.S. 722, 731 (1991).
To meet the exhaustion requirement, a petitioner must (1) use the “remedies available, ” § 2254(b)(1)(A), through the state's established procedures for appellate review, O'Sullivan v. Boerckel, 526 U.S. 838, 845 (1999); (2) describe “the federal legal theory on which his claim is based, ” Davis v. Silva, 511 F.3d 1005, 1009 (9th Cir. 2008); and (3) describe “the operative facts . . . necessary to give application to the constitutional principle upon which the petitioner relies, ” Id. See also Gray v. Netherland, 518 U.S. 152, 162-63 (1996) (discussing Picard v. Connor, 404 U.S. 270 (1971) and Anderson v. Harless, 459 U.S. 4 (1982)). A petitioner must meet all three prongs of the test in one proceeding.


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Dennis G. Brewer, Inc., Vincent R. Kirst, Irving, for petitioner.
In this divorce case, petitioner, Wanda Faye Murff, was granted a divorce by the trial court from respondent, John Samuel Murff, after a non-jury trial. John Murff was dissatisfied with the trial court’s division of the community property and appealed to the court of civil appeals. That court reversed the judgment of the trial court and remanded the cause for a new trial, holding that the trial court abused its discretion in the division of the parties’ estate. 601 S.W.2d 116.
We granted Mrs. Murff’s Application for Writ of Error on all five asserted points of error. We have jurisdiction of the case because the holding of the court of civil appeals on the issue of whether fault may be considered in dividing the property, conflicts with Duncan v. Duncan, 374 S.W.2d 800 (Tex.Civ.App.—Eastland 1964, no writ) and on the issue of whether disparity in earning power or capacity may be considered in dividing the property, with In re Marriage of McCurdy, 489 S.W.2d 712 (Tex. Civ.App.—Amarillo 1973, writ dism’d). We reverse the judgment of the court of civil appeals and affirm the judgment of the trial court and hold the trial court did not abuse its discretion in dividing the parties’ property.
Mrs. Murff sought the divorce on three grounds: “no-fault” insupportability, and alternatively, adultery and cruel treatment, both “fault” grounds. Although the Decree of Divorce did not specify upon which ground the divorce was granted to Mrs. Murff, the Findings of Fact filed by the court stated that she had proved grounds under all three alternative grounds. In its division of the community estate of the parties, the trial court awarded the wife property valued by the trial court at $78,901, plus attorney’s fees of $8,500, and awarded the husband property valued at $73,600, plus $30,000 of husband’s claimed separate property. The trial court further found that by alternatively valuing the wife’s retirement and annuity at $47,090.55 instead of $8,000, the property awarded the wife would be $117,991.55, plus attorney’s fees of $8,500. The court of civil appeals found that the trial court abused its discretion in six particulars: (1) in giving consideration to “fault” of a spouse to justify a disparate division of the community property; (2) in giving consideration to disparity of “income” between spouses instead of considering a disparity of “need” between spouses; (3) in failing to consider an award of attorney’s fees to the wife against the husband as an element of the court’s division; (4) in failing to declare the identity of separate property and fix any charge thereon in favor of the community; (5) in failing to evaluate correctly the pension plans; and (6) in failing to divide the spouses’ property and in imposing an inequitable money judgment in lieu of division.
Mr. and Mrs. Murff had been married over 22 years at the time of the divorce hearing. They had a 21-year old daughter who attended college at the time. The wife was 46; the husband 47. Both spouses had worked full-time during their marriage. At the time of the divorce, the wife’s annual gross salary was $14,750 or $1,229 per month; her net monthly take-home pay was $927 per month. The husband’s annual gross salary was $26,715; his gross pay per month was approximately $2,200 from which deductions were made for taxes, insurance and retirement; however, taking into consideration the added “service incentive pay,” the husband’s gross pay per month was almost $3,000 per month. Both husband and wife were members of a pension plan with their employers.
In her second point of error, Mrs. Murff attacks the holding of the court of civil appeals that the trial court erred in considering a disparity in the income of the spouses. The court of civil appeals has held that only the cure of the “necessitous circumstances” or “probable future necessities” may be considered in arriving at a just and right division.
Numerous courts of civil appeals decisions have recognized that a trial court may consider the disparity of incomes or of earning capacities of the parties in dividing the estate of the parties. The cases cited in the margin recognize that community property need not be equally divided. In exercising its discretion the trial court may consider many factors and it is presumed that the trial court exercised its discretion properly. Bell v. Bell, 513 S.W.2d 20, 22 (Tex.1974). These cases further indicate that the trial court may consider such factors as the spouses’ capacities and abilities, benefits which the party not at fault would have derived from continuation of the marriage, business opportunities, education, relative physical conditions, relative financial condition and obligations, disparity of ages, size of separate estates, and the nature of the property. We believe that the consideration of such factors by the trial court is proper in making a “just and right” division of the property. Likewise, the consideration of a disparity in earning capacities or of incomes is proper and need not be limited by “necessitous” circumstances. Bokhoven, supra; Means, supra; Cooper, supra, Allen, supra.
We next address Mrs. Murff’s contention that the court of civil appeals erred in holding that the trial court’s award of a money judgment for $7,500 to her was an abuse of discretion because it was not used as a “device to avoid fractionating items in the estate to be divided.” We disagree with the court of civil appeals that the trial court abused its discretion. There was evidence that the wife had only $300 in funds on hand, but that the husband had substantial sums in savings before the separation that had disappeared by the time of trial. Some $1,400 of the money judgment represented unpaid court-ordered temporary alimony for the wife from the pendency of the divorce action prior to trial. We find no abuse of the trial court’s discretion under these facts. Garrett v. Garrett, 534 S.W.2d 381 (Tex.Civ.App.—Houston [1st Dist.] 1976, no writ); In re Marriage of Jackson, 506 S.W.2d 261 (Tex.Civ.App.—Amarillo 1974, writ dism’d).
In practical effect, a decree that the husband pay all of the wife’s attorney’s fees may be to award him less of the community estate than that awarded to the wife, but that alone does not condemn it. The attorney’s fee is but a factor to be considered by the court in making an equitable division of the estate, considering the conditions and needs of the parties and all of the surrounding circumstances.
We agree with the statement of the court of civil appeals in this case that it is not clear whether the award of attorney’s fees to the wife was taken into consideration by the trial court; however, there is likewise no indication in the trial court’s judgment, findings of fact or conclusions of law that it did not take them into consideration in making its division. The failure to list the attorney’s fees as “property” in the list of property awarded to the wife is no indication that they were not considered in the division, only that it was not considered “property.” In either event, in applying the Carle standard, we find no abuse of discretion in awarding to the wife her attorney’s fees under the circumstances of this case.
Mrs. Murff’s next point is that the court of civil appeals incorrectly found an abuse of discretion in the trial court’s failure to identify the separate property of the parties and determine any charges against such property for advances and improvements by the community estate. All of the property claimed as separate property by the husband was awarded to him, and we fail to perceive how the court of civil appeals could have concluded that he had been harmed by any such failure. Any error on the part of the trial court was harmless. Tex.R.Civ.P. 434.
Finally, we consider Mrs. Murff’s contention that the trial court correctly evaluated the pension plans of the parties and did not abuse its discretion in awarding each the anticipated benefits of these respective plans. The wife had been with her employer for 9 years and 11 months at the time of trial; ten years was required to vest her retirement rights. Prior to July 1, 1972, she had contributed to the employer’s annuity plan from which she would receive $15.21 per month upon retirement at age 65. Since that date, she has contributed to a new retirement fund which would pay her an additional $344 per month upon retirement at age 65. The employer’s insurance company placed a value of $2,500.55 on the annuity and $44,410 on the retirement.
In its findings of fact, the trial court placed a present value of $58,700 on the husband’s retirement and $8,000 on the wife’s retirement. Although the method of interpolation used by the trial court in determining the value of the wife’s retirement is not shown, it is clear that the value of the husband’s retirement far exceeded that of the wife’s. The husband could retire at age 55 at a much greater amount than the wife could at age 65. The trial court was not bound by the valuation placed on her retirement by the insurance company but could evaluate the pension plans under the circumstances based upon the differences in benefits in the plans, the amounts of contributions paid in and by whom, the expectancy of receiving the benefits, and other relevant information. The conclusion of the court of civil appeals that the wife’s retirement was valued at the current value of the benefits but the husband’s retirement was valued at the potential value of the benefits is without support in the record. The trial court in its findings of fact even measured the division of the property using the higher value for the wife’s retirement and found the division would award the wife far less than the 65% division of the total property she had requested. Using either the $8,000 figure or the sum of $2,580.55 and $44,510 as the value of the wife’s retirement, we hold that the trial court did not abuse its discretion in its division.
 Coote v. Coote, 592 S.W.2d 52 (Tex.Civ.App. —Ft. Worth 1979, writ ref’d n.r.e.); Erger v. Erger, 590 S.W.2d 186 (Tex.Civ.App.—Ft. Worth 1979, writ dism’d); Smith v. Smith, 569 S.W.2d 629 (Tex.Civ.App.—Tyler 1978, writ ref’d n.r.e.); Bokhoven v. Bokhoven, 559 S.W.2d 142 (Tex.Civ.App.—Tyler 1977, no writ); Clay v. Clay, 550 S.W.2d 730 (Tex.Civ. App.—Houston [1st Dist.] 1977, no writ); Smallwood v. Smallwood, 548 S.W.2d 796 (Tex. Civ.App.—Waco 1977, no writ); Benedict v. Benedict, 542 S.W.2d 692 (Tex.Civ.App.—Ft. Worth 1976, writ dism’d); Collins v. Collins, 540 S.W.2d 497 (Tex.Civ.App.—Tyler 1976, no writ); Dietz v. Dietz, 540 S.W.2d 418 (Tex.Civ. App.—El Paso 1976, no writ); Means v. Means, 535 S.W.2d 911 (Tex.Civ.App.—Amarillo 1976, no writ); Roberts v. Roberts, 535 S.W.2d 373 (Tex.Civ.App.—Tyler 1976, no writ); Garrett v. Garrett, 534 S.W.2d 381 (Tex.Civ.App.—Houston [1st Dist.] 1976, no writ); Bell v. Bell, 540 S.W.2d 432 (Tex.Civ.App.—Houston [1st Dist.] 1976, no writ); Cravens v. Cravens, 533 S.W.2d 372 (Tex.Civ.App.—El Paso 1975, no writ); Goren v. Goren, 531 S.W.2d 897 (Tex.Civ.App. —Houston [1st Dist.] 1975, writ dism’d); Smoak v. Smoak, 525 S.W.2d 888 (Tex.Civ. App.—Texarkana 1975, writ dism’d); Cunningham v. Cunningham, 515 S.W.2d 345 (Tex.Civ. App.—Corpus Christi 1974, no writ); Cooper v. Cooper, 513 S.W.2d 229 (Tex.Civ.App.—Houston [1st Dist.] 1974, no writ); Becknell v. D’Angelo, 506 S.W.2d 688 (Tex.Civ.App.—Ft. Worth 1974, writ dism’d); In re Jackson’s Marriage, 506 S.W.2d 261 (Tex.Civ.App.—Amarillo 1974, writ dism’d); In re Marriage of McCurdy, 489 S.W.2d 712 (Tex.Civ.App.—Amarillo 1973, writ dism’d); Maddox v. Maddox, 489 S.W.2d 391 (Tex.Civ.App.—Houston [1st Dist.] 1973, no writ); Miller v. Miller, 463 S.W.2d 477 (Tex. Civ.App.—Tyler 1971, writ ref’d n.r.e.); Roye v. Roye, 404 S.W.2d 92 (Tex.Civ.App.—Tyler 1966, no writ); Middlesworth v. Middlesworth, 380 S.W.2d 790 (Tex.Civ.App.—Ft. Worth 1964, no writ); Allen v. Allen, 363 S.W.2d 312 (Tex.Civ.App.—Houston 1962, no writ); Stanley v. Stanley, 294 S.W.2d 132 (Tex.Civ.App.— Amarillo 1956, writ ref’d n.r.e.) cert. denied, 354 U.S. 910, 77 S.Ct. 1296, 1 L.Ed.2d 1428; Ingham v. Ingham, 240 S.W.2d 409 (Tex.Civ. App.—Amarillo 1951, mand. overr.); Bush v. Bush, 237 S.W.2d 708 (Tex.Civ.App.—Amarillo 1950, no writ); Carter v. Carter, 231 S.W.2d 791 (Tex.Civ.App.—Galveston 1950, no writ); Venezia v. Venezia, 227 S.W.2d 881 (Tex.Civ. App.—Galveston 1950, no writ); Earnest v. Earnest, 223 S.W.2d 681 (Tex.Civ.App.—Amarillo 1949, no writ); Hendrick v. Hendrick, 222 S.W.2d 281 (Tex.Civ.App.—Amarillo 1949, no writ).

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Jeffrey Anderson, Asst. U.S. Atty. Madison, Wis. (argued), for plaintiff-appellee.
Stephen J. Eisenberg, Madison, Wis. (argued), for defendant-appellant.
A jury convicted Robert A. Levy of one count of conspiracy to distribute cocaine in violation of 21 U.S.C. § 846, and one count of aiding and abetting in the possession and distribution of cocaine in violation of 18 U.S.C. § 2. Pursuant to the Sentencing Guidelines, the district court sentenced him to two concurrent 120 month terms of imprisonment, to be followed by an eight-year period of supervised release. Levy now appeals both his conviction and sentence. We affirm.
Robert Levy and his wife, Hyacinth, owned and operated M & R Records, a retail music and novelty store located in Waukegan, Illinois. Based on information obtained from suspected cocaine distributor Randall Wagner, several federal and state law enforcement agents visited Mr. Levy on June 26, 1990 to question him about his involvement in a cocaine distribution scheme with Wagner, and to seek his cooperation in other drug-dealing investigations. At the time, Mr. Levy was on parole for a 1987 Illinois drug conviction. The agents had no warrant for Levy's arrest, but did possess a grand jury subpoena directing production of his business records. The agents also brought along a tape recording of an attempted cocaine transaction between Levy and Wagner.1 In addition, the agents carried with them copies of four money orders and a canceled check payable to Levy and drawn by Wagner.
The agents entered Levy's store at approximately 8:30 p.m. They approached the defendant, his wife and an employee and asked if Robert Levy was there. Robert Levy initially denied his identity because he thought the agents were process servers or bill collectors. Hyacinth Levy did identify herself as Robert Levy's wife. One of the agents then asked Mrs. Levy if he could speak to her outside. Once outside, the agents identified themselves and explained that they wanted to talk to her husband about his drug activities and obtain his cooperation in their investigation. They also told her they were not there to arrest anyone. In the meantime, Robert Levy had acknowledged his identity when the agents confronted him with his photograph. The agents then displayed their identification. At this point, Mrs. Levy joined her husband and the employee in the store. The agents told Robert Levy that they wished to speak with him privately. Mr. Levy declined, stating that he had no secrets to keep from his wife and friend. Mrs. Levy and the employee then remained in the store with Mr. Levy. The agents explained to Mr. Levy that he was not under arrest, that he would not be arrested that night, that he was under no obligation to speak with them, and that he was free to contact an attorney if he so desired. The agents informed Mr. Levy that they wanted to gain his cooperation in their investigation and that his cooperation would be reported to the United States Attorney. After the agents explained the purpose of their visit, Mr. Levy agreed to talk with them. The agents then proceeded to question Mr. Levy about his drug transactions with Wagner.
During the questioning, the agents played the tapes of the April 20, 1989 meeting with Wagner, and also showed Levy the copies of the four money orders and the check. Having been apprised of the seriousness of his predicament, Mr. Levy indicated that he would cooperate. He then admitted, among other things, that he had sold between six and eight pounds of cocaine between July 1, 1988 and March 21, 1989, and that the returned check and money orders were payments for cocaine. The interview was conducted in normal conversational tones in a relaxed atmosphere with both Mrs. Levy and the employee present throughout most of the interview. At the conclusion of the questioning, Mr. Levy was given business cards by two of the agents with the understanding that Mr. Levy would be getting in touch with them in a few days. The agents then departed at approximately 9:15 p.m.
On July 11, 1990, a grand jury returned a two-count indictment against Levy, charging him with: (1) conspiracy "by agreeing to knowingly and intentionally distribute cocaine on or about July 1, 1988, until on or about March 21, 1989," in violation of 21 U.S.C. § 846; and (2) aiding and abetting "in possession with intent to distribute ... cocaine," in violation of 18 U.S.C. § 2.
Before trial, Levy moved in limine that evidence of the April 20, 1989 "sting" transaction be held inadmissible, on the grounds that it did not qualify as prior bad act evidence within the meaning of Federal Rule of Evidence 404(b). He also moved to suppress the incriminating statements he made during his questioning by the drug enforcement agents on June 26, 1990, claiming that he made the statements involuntarily and without receiving the Miranda warnings. The court denied both motions. Thereafter on October 24, 1990, the government, pursuant to 21 U.S.C. § 851(a), notified Levy of its intent to seek enhancement of his sentence based on Levy's prior Illinois drug dealing conviction. Also included, in addition to the statutorily required notice, was the possibility of enhancement of any sentence based on the amount of cocaine involved (more than 500 grams). See 21 U.S.C. § 841(b)(1)(B)(ii)(II). The case proceeded to trial on October 29, 1990. Two days later, on October 31, 1990 the jury returned a verdict of guilty on both counts in the indictment.
At sentencing, on December 21, 1990, the court concluded that Levy had delivered 1,288 grams of cocaine to Wagner, basing its calculations primarily on the statements Levy made during his interview with the drug agents on June 26, 1990. Accordingly, Levy was assigned an offense level of 28 under the Sentencing Guidelines. However, his Guidelines range for incarceration of 97 to 121 months was altered because of the ten-year mandatory minimum which the court determined should be imposed pursuant to the sentencing enhancement provision in 21 U.S.C. § 841(b)(1)(B)(ii)(II). As a result, Levy was sentenced at the mandatory minimum--120 months on each count to run concurrently--with an eight year period of supervised release. This appeal followed.
Levy initially contends that the district court committed reversible error by admitting evidence of an attempted cocaine transaction with Wagner on April 20, 1989. The district court ruled that although the transaction fell through, it was nonetheless admissible under Rule 404(b) to show Levy's intent to distribute cocaine as charged in the indictment.2 Levy now challenges this ruling on three grounds: (1) the video and audio tapes of the April 20, 1989 conversation do not prove his intent to distribute cocaine because the transaction was never consummated; (2) the attempted transaction was not sufficiently similar to the crimes charged; and (3) even if the transaction was similar to the crime charged, the tapes were not probative of Levy's identity and would therefore unduly prejudice his defense. In addition, Levy asserts that the evidence of the April 20, 1989 conversation should not have been admitted because it was merely cumulative within the meaning of Federal Rule of Evidence 403. Both arguments fail.
To determine if such evidence is admissible, the district court must engage in a four-pronged analysis and evaluate whether (1) the evidence is directed toward establishing a matter in issue other than the defendant's propensity to commit the crime charged, (2) the evidence shows that the other act is similar enough and close enough in time to be relevant to the matter in issue, (3) the evidence is sufficient to support a jury finding that the defendant committed the similar act, and (4) the probative value of the evidence is not substantially outweighed by the danger of unfair prejudice.
871 F.2d at 620. See also United States v. Manganellis, 864 F.2d 528, 531-32 (7th Cir.1988); United States v. Rollins, 862 F.2d 1282, 1294 (7th Cir.1988), cert. denied, 490 U.S. 1074, 109 S.Ct. 2084, 104 L.Ed.2d 648 (1989). In reviewing decisions to admit evidence of prior bad acts based on this four-pronged analysis, the district court will only be reversed upon a showing that the court committed a clear abuse of discretion. United States v. Montoya, 891 F.2d 1273, 1284 (7th Cir.1989); United States v. Zapata, 871 F.2d at 621; United States v. Harrod, 856 F.2d 996, 999 (7th Cir.1988).
A suppression hearing was held at which testimony was received from drug agents, Mr. Levy, Mr. Levy's wife and their employee concerning the events surrounding the questioning of Mr. Levy on June 26, 1990. Based on the evidence submitted, the magistrate found that Mr. Levy was not in custody at the time of questioning and that his statements were neither the product of coercive police conduct nor made other than of his own free will. The district court adopted the magistrate's report and recommendation and specifically found that Mr. Levy was not in custody and therefore no Miranda warnings were required. Our examination of the record fully supports this conclusion.
Levy was not subjected to physical restraint which is ordinarily associated with a custodial interrogation. The atmosphere in the store was relaxed. The agents were in plain clothes and no weapons were displayed. There was no limitation on Levy's freedom of movement. Although both his wife and an employee briefly left the store on different occasions, Levy himself was never asked to leave--or not to leave the premises. Levy was repeatedly told that he would not be arrested that night, although the information they had would likely result in a revocation of his parole. The agents indicated they wanted to gain his cooperation and that his cooperation would be reported to the United States Attorney. He was specifically told that he was under no obligation to talk, and could leave at any time.
At the suppression hearing, the magistrate had the opportunity for a first hand evaluation of the credibility of the witnesses. Although Levy testified that he believed that he was under arrest at the time of the questioning, the magistrate discredited this testimony as of recent invention and inconsistent with his own witness. There is no indication that this credibility determination by the magistrate (adopted by the district judge) was clearly erroneous.
Under these circumstances, we hold that the district court did not err in deciding that Levy was not in custody when he made the incriminating statements and that there was no requirement to provide him with the Miranda warnings.
Levy also contends that the statement he gave was involuntary as the product of psychological coercion and intimidation. We disagree. " 'In contrast to the presumption of coercion that attends statements given during custodial interrogation in the absence of Miranda warnings, statements made during a noncustodial interrogation are not viewed with suspicion.' " Fazio, 914 F.2d at 956 (quoting United States v. Serlin, 707 F.2d 953, 958 (7th Cir.1983)). While the Supreme Court has recognized that even noncustodial interrogations " 'might possibly in some situations, by virtue of some special circumstances, be characterized as one where "the behavior of ... law enforcement officials was such as to overbear [a suspect's] will to resist and bring about confessions not freely self-determined," ' "6 this is not such a situation. The test for determining whether a confession is voluntary is whether "the defendant's will was overborne at the time he confessed." Id.
The record in this case does not support Levy's assertion that his will was overborne, or that his statement was the product of police coercion. In rejecting Levy's claim that his statements were induced by threats and improper interrogation techniques, the magistrate specifically found that "the interview was conducted in a nonthreatening environment, in a civil manner free of displays of force, intimidation or strong-arm tactics." The magistrate also found that Levy "appear[ed] to have responded in a calculated manner in furtherance of his own self-interest" to the agents' questions. These findings do not suggest the existence of "[c]oercive police activity," a necessary predicate to the finding that a confession is not voluntary within the meaning of the Due Process Clause of the Fourteenth Amendment. United States ex rel. Link v. Lane, 811 F.2d 1166, 1170 (7th Cir.1987).7 We accordingly conclude that Levy's statements on June 26, 1990 were voluntarily made to the drug agents.
From on or about July 1, 1988, until on or about March 21, 1989, ... ROBERT A. LEVY knowingly and unlawfully conspired and agreed with Randall E. Wagner and others ... to violate Title 21, United States Code, Sec. 841(a)(1) by agreeing to knowingly and intentionally distribute cocaine, a schedule II narcotic controlled substance.
Levy acknowledges that the government, pursuant to the requirements of 21 U.S.C. § 851(a),8 notified him before trial of its intention to seek enhancement of his sentence based on his prior felony conviction. That statutorily required notice also included the additional information that there was a possibility of an enhanced penalty based on the more than 500 grams of cocaine involved in the conspiracy. Nevertheless, he argues that because the indictment did not specifically allege that he was responsible for more than 500 grams of cocaine, the imposition of an enhanced penalty under § 841(b)(1)(B) is impermissible. To support this contention, Levy cites this court's decision in United States v. Paiz for the proposition that an indictment must apprise the defendant of the possibility that enhanced penalty provisions could apply. 905 F.2d 1014, 1033 (7th Cir.1990), cert. denied, --- U.S. ----, 111 S.Ct. 1319, 113 L.Ed.2d 252 (1991).
In Paiz, we considered whether an enhanced sentence could be imposed under § 841(b)(1)(B) for a conviction of a § 846 count if the amount of drugs involved is only alleged in the overt acts portion of the indictment. Relying on the Third Circuit's decision in United States v. Gibbs, 813 F.2d 596 (3rd Cir.), cert. denied, 484 U.S. 822, 108 S.Ct. 83, 98 L.Ed.2d 45 (1987), we held that although § 841(b)(1)(B) is a penalty provision which did not have to be alleged to obtain a conspiracy conviction, the defendant was nonetheless entitled to notice "of the possibility that enhanced penalty provisions could apply." Paiz, 905 F.2d at 1032-33. See also United States v. Acevedo, 891 F.2d 607, 611 (7th Cir.1989); United States v. Ocampo, 890 F.2d 1363, 1373 (7th Cir.1989). In Paiz, we did not set out alternative methods by which sufficient notice of § 841(b) enhancement might be given, nor, significantly, did we specify that such notice must be provided by the indictment itself. We only concluded that the indictment in that case, when viewed as a whole, comprising both overt acts and substantive counts, fairly informed Paiz that the amount of marijuana involved might subject him to the enhanced penalty provision of § 841(b)(1)(B). Paiz, 905 F.2d at 1033.
While we agree that Levy is entitled to receive notice of the possibility of an enhanced sentence based on the weight of the drugs involved, Paiz should not be construed to require that such notice be provided by the indictment. The issue regarding the weight of drugs under § 841(b) relates to the sentencing factor, not an element of the offense. Id. Because it is not an element of the offense, the quantity of drugs is not an issue for jury determination. As we have made clear, "facts germane only to sentencing are resolved by the judge not the jury." United States v. Smith, 938 F.2d 69, 70 (7th Cir.1991). By limiting our discussion in Paiz to the sufficiency of notice as provided by the indictment, we did not intend to discount the other means of notice concerning sentence enhancement which would meet due process requirements.
Indeed, there is a specific point at which disputed facts affecting only the length of a sentence are resolved. Rule 32 of the Federal Rules of Criminal Procedure and §§ 6A1.1 through 6A1.3 of the United States Sentencing Guidelines require the district court to give a defendant notice of factors which may be used to determine his sentence. Notice contemplated by the Rule and Guidelines comes post-conviction, not pretrial.
When the defendant receives notice of the facts upon which the district judge intends to rely for imposition of sentence, the defendant may dispute those facts and the court must provide a procedure by which the defendant is given an opportunity to be heard on those issues. See Rule 32(a)(1) and U.S.S.G. § 6A1.3. The defendant may contest any issue of fact (such as the quantity of drugs involved in an offense) which will affect his sentence.
The Sentencing Guidelines, of course, acknowledge that "... quantities of drugs not specified in the count of conviction may be considered in determining the offense level." U.S.S.G. § 2D1.1, comment (n. 12). The district judge may consider evidence from the trial in making his or her determination concerning drug quantities. However, even though a jury may return a special verdict regarding drug quantities, the district judge must make an independent determination on that issue. See Smith, 938 F.2d at 70.
There appears to us to be no difference between the application of the enhancement provisions under § 841(b) and the application of those enhancement factors found in the Sentencing Guidelines. "The elements of § 841(b) ... are to be considered by the court at sentencing after a jury finding of guilt." United States v. McNeese, 901 F.2d 585, 605 (7th Cir.1990). The same is true in the application of the Sentencing Guidelines.
In this case, Levy received notice of the possibility of enhancement of any sentence based on drug quantities five days in advance of trial. That pretrial notice involving enhancement for drug quantities was not required, but merely was additional information which accompanied the statutory notice of prior convictions which was required by § 851(a).
The notice provided to Levy concerning the possibility of enhancement of his sentence based on the quantity of the drugs involved was more than adequate. There is no indication that he lacked sufficient time or opportunity to contest the § 841(b)(1)(B) sentence enhancement factors at the time of sentencing. There was no infringement upon Levy's due process rights.
Levy makes two other challenges related to his sentencing: (1) the district court committed reversible error by denying him a two-level reduction for acceptance of responsibility; and (2) the district court's determination of the amount of cocaine was incorrect.
The district court specifically set forth, both at the sentencing hearing and in its written judgment, the reasons underlying its decision to deny Levy a reduction for acceptance of responsibility. The court found that Levy persisted in denying that he had distributed six pounds of cocaine, and also noted that the defendant's "belated remorse does not suggest the timeliness of conduct manifesting the acceptance of responsibility." We cannot say that this finding was clearly erroneous and therefore warrants reversal. See United States v. Brick, 905 F.2d 1092, 1095 (7th Cir.1990).
Levy's assertion that the district court incorrectly calculated the amount of cocaine involved is similarly flawed. The law is well-settled that the amount of cocaine involved in the conspiracy is a question of fact for the trial court's determination. United States v. Ocampo, 890 F.2d 1363, 1372-73 (7th Cir.1989). The most that Levy can establish in this case, however, is that another permissible view of the evidence exists; he simply questions the district court's decision to credit an officer's testimony that Levy admitted to delivering six to eight pounds of cocaine. Again, the district court is in the best position to evaluate the credibility of witnesses appearing before it. In this case, we have been given no reason to hold otherwise.
For the foregoing reasons, we AFFIRM Robert A. Levy's conviction and sentence.
We likewise reject Levy's assertion that his statements were involuntary because one of the officers told him that he would eventually be arrested. As the magistrate indicated, even assuming that the agent had made such a statement, it would not have been improper in light of United States v. Hocking because it would have been merely a "realistic appraisal of [the] defendant's predicament."
(a)(1) No person who stands convicted of an offense under this part shall be sentenced to increased punishment by reason of one or more prior convictions, unless before trial, or before entry of a plea of guilty, the United States attorney files an information with the court (and serves a copy of such information on the person or counsel for the person) stating in writing the previous convictions to be relied upon.


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Alvin C. Wilson a/k/a Alvin Wilson a/k/a Alvin Cornelious Wilson v. State of Mississippi; Jasper Circuit Court 1st District; LC Case #: 116-14-2; Ruling Date: 02/07/2018; Ruling Judge: Stanley Sorey; Majority Opinion: Coleman, J. Disposition: Affirmed. Jasper County taxed with costs of appeal. Votes: Randolph, C.J., Kitchens and King, P.JJ., Maxwell, Beam, Chamberlin, Ishee and Griffis, JJ., Concur.
William Ray Collins v. State of Mississippi; Harrison Circuit Court 1st District; LC Case #: B2401-99-565; Ruling Date: 10/21/1999; Ruling Judge: Kosta Vlahos; Disposition: William Ray Collins's pro se Application for Leave to Proceed in the Trial Court is denied. To Deny and Issue Sanctions Warning: Randolph, C.J., Coleman, Maxwell, Beam, Chamberlin, Ishee and Griffis, JJ. To Deny: Kitchens and King, P.JJ. King, P.J., Objects to the Order in Part with Separate Written Statement Joined by Kitchens, P.J. Order entered.
Skylar O'Kelly a/k/a Skylar Noel O'Kelly v. State of Mississippi; Oktibbeha Circuit Court; LC Case #: 2015-0100 CRH; Ruling Date: 08/05/2016; Ruling Judge: Lee Howard; Disposition: The Petition for Certiorari filed by the State of Mississippi is denied. To Deny: Kitchens and King, P.JJ., Coleman, Maxwell and Chamberlin, JJ. To Grant: Randolph, C.J., Beam and Ishee, JJ. Not Participating: Griffis, J. Order entered.
Jeremy Shane Fogleman a/k/a Jeremy Fogleman a/k/a Jeremy S. Fogleman v. State of Mississippi; Harrison Circuit Court 2nd District; LC Case #: B2402-15-242; Ruling Date: 08/18/2016; Ruling Judge: Roger Clark; Disposition: The State of Mississippi's Petition for Writ of Certiorari is granted. To Grant: Randolph, C.J., Coleman, Maxwell, Beam, Chamberlin and Ishee, JJ. To Deny: Kitchens and King, P.JJ. Not Participating: Griffis, J. Order entered.
Gregory Dunn a/k/a Gregory Todd Dunn v. State of Mississippi; Calhoun Circuit Court; LC Case #: CV2016-084; Ruling Date: 08/09/1994; Ruling Judge: John Gregory; Disposition: Gregory Dunn's Motion for Post-Conviction Relief is dismissed. Dunn is restricted from filing further applications for post-conviction collateral relief (or pleadings in that nature) that are related to this conviction and sentence in forma pauperis. The Clerk of this Court shall not accept for filing any further applications for post-conviction relief (or pleadings in that nature) from Dunn that are related to this conviction and sentence unless he pays the applicable docket fee. To Dismiss and Issue Sanctions: Beam, Chamberlin and Ishee, JJ. To Deny and Issue Sanctions: Randolph, C.J., Coleman, Maxwell and Griffis, JJ. To Dismiss: Kitchens and King, P.JJ. King, P.J., Objects to the Order in Part with Separate Written Statement Joined by Kitchens, P.J. Order entered.
Michael J. Malouf v. Lisa Evans d/b/a Lake Harbour Marine; Rankin Circuit Court; LC Case #: 16-196; Ruling Date: 02/14/2017; Ruling Judge: John Emfinger; Majority Opinion: Maxwell, J. Disposition: Reversed and Remanded. Appellee taxed with costs of appeal. Votes: Randolph, C.J., Kitchens and King, P.JJ., Coleman, Beam, Chamberlin and Ishee, JJ., Concur. Griffis, J., not participating.
Sidney Keith Austin Ferguson a/k/a Sidney Keith Austin a/k/a Sidney Keith Ferguson a/k/a Sydney Ferguson v. State of Mississippi; Grenada Circuit Court; LC Case #: 2016-106CR; Ruling Date: 01/27/2017; Ruling Judge: Joseph Loper, Jr.; Disposition: The Petition for Writ of Certiorari filed by the State of Mississippi is denied. To Deny: Randolph, C.J., Kitchens and King, P.JJ., Coleman, Maxwell, Beam, Chamberlin and Ishee, JJ. Not Participating: Griffis, J. Order entered.
Winfred Forkner v. State of Mississippi; Wilkinson Circuit Court; LC Case #: 00KR044(A); Ruling Judge: Lillie Sanders; Disposition: Winfred Forkner's Motion for Rehearing is denied. Kitchens, P.J., would grant. Griffis, J., not participating.

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Louie L. WAINWRIGHT, Director, Division of Corrections.
Abe Fortas, Washington, D.C., for petitioner.
Bruce R. Jacob, Tallahassee, Fla., for respondent.
J. Lee Rankin, New York City, for American Civil Liberties Union, amicus curiae, by special leave of Court.
George D. Mentz, Montgomery, Ala., for State of Alabama, amicus curiae.
'The COURT: Mr. Gideon, I am sorry, but I cannot appoint Counsel to represent you in this case. Under the laws of the State of Florida, the only time the Court can appoint Counsel to represent a Defendant is when that person is charged with a capital offense. I am sorry, but I will have to deny your request to appoint Counsel to defend you in this case.
'Asserted denial (of due process) is to be tested by an appraisal of the totality of facts in a given case. That which may, in one setting, constitute a denial of fundamental fairness, shocking to the universal sense of justice, may, in other circumstances, and in the light of other considerations, fall short of such denial.' 316 U.S., at 462, 62 S.Ct., at 1256, 86 L.Ed. 1595.
Treating due process as 'a concept less rigid and more fluid than those envisaged in other specific and particular provisions of the Bill of Rights,' the Court held that refusal to appoint counsel under the particular facts and circumstances in the Betts case was not so 'offensive to the common and fundamental ideas of fairness' as to amount to a denial of due process. Since the facts and circumstances of the two cases are so nearly indistinguishable, we think the Betts v. Brady holding if left standing would require us to reject Gideon's claim that the Constitution guarantees him the assistance of counsel. Upon full reconsideration we conclude that Betts v. Brady should be overruled.
The Sixth Amendment provides, 'In all criminal prosecutions, the accused shall enjoy the right * * * to have the Assistance of Counsel for his defence.' We have construed this to mean that in federal courts counsel must be provided for defendants unable to employ counsel unless the right is competently and intelligently waived.3 Betts argued that this right is extended to indigent defendants in state courts by the Fourteenth Amendment. In response the Court stated that, while the Sixth Amendment laid down 'no rule for the conduct of the states, the question recurs whether the constraint laid by the amendment upon the national courts expresses a rule so fundamental and essential to a fair trial, and so, to due process of law, that it is made obligatory upon the states by the Fourteenth Amendment.' 316 U.S., at 465, 62 S.Ct., at 1257, 86 L.Ed. 1595. In order to decide whether the Sixth Amendment's guarantee of counsel is of this fundamental nature, the Court in Betts set out and considered '(r)elevant data on the subject * * * afforded by constitutional and statutory provisions subsisting in the colonies and the states prior to the inclusion of the Bill of Rights in the national Constitution, and in the constitutional, legislative, and judicial history of the states to the present date.' 316 U.S., at 465, 62 S.Ct., at 1257. On the basis of this historical data the Court concluded that 'appointment of counsel is not a fundamental right, essential to a fair trial.' 316 U.S. at 471, 62 S.Ct., at 1261. It was for this reason the Betts Court refused to accept the contention that the Sixth Amendment's guarantee of counsel for indigent federal defendants was extended to or, in the words of that Court, 'made obligatory upon the states by the Fourteenth Amendment'. Plainly, had the Court concluded that appointment of counsel for an indigent criminal defendant was 'a fundamental right, essential to a fair trial,' it would have held that the Fourteenth Amendment requires appointment of counsel in a state court, just as the Sixth Amendment requires in a federal court.
We think the Court in Betts had ample precedent for acknowledging that those guarantees of the Bill of Rights which are fundamental safeguards of liberty immune from federal abridgment are equally protected against state invasion by the Due Process Clause of the Fourteenth Amendment. This same principle was recognized, explained, and applied in Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158 (1932), a case upholding the right of counsel, where the Court held that despite sweeping language to the contrary in Hurtado v. California, 110 U.S. 516, 4 S.Ct. 292, 28 L.Ed. 232 (1884), the Fourteenth Amendment 'embraced' those "fundamental principles of liberty and justice which lie at the base of all our civil and political institutions," even though they had been 'specifically dealt with in another part of the Federal Constitution.' 287 U.S., at 67, 53 S.Ct., at 63, 77 L.Ed. 158. In many cases other than Powell and Betts, this Court has looked to the fundamental nature of original Bill of Rights guarantees to decide whether the Fourteenth Amendment makes them obligatory on the States. Explicitly recognized to be of this 'fundamental nature' and therefore made immune from state invasion by the Fourteenth, or some part of it, are the First Amendment's freedoms of speech, press, religion, assembly, association, and petition for redress of grievances.4 For the same reason, though not always in precisely the same terminology, the Court has made obligatory on the States the Fifth Amendment's command that private property shall not be taken for public use without just compensation,5 the Fourth Amendment's prohibition of unreasonable searches and seizures,6 and the Eighth's ban on cruel and unusual punishment.7 On the other hand, this Court in Palko v. Connecticut, 302 U.S. 319, 58 S.Ct. 149, 82 L.Ed. 288 (1937), refused to hold that the Fourteenth Amendment made the double jeopardy provision of the Fifth Amendment obligatory on the States. In so refusing, however, the Court, speaking through Mr. Justice Cardozo, was careful to emphasize that 'immunities that are valid as against the federal government by force of the specific pledges of particular amendments have been found to be implicit in the concept of ordered liberty, and thus, through the Fourteenth Amendment, become valid as against the states' and that guarantees 'in their origin * * * effective against the federal government alone' had by prior cases 'been taken over from the earlier articles of the Federal Bill of Rights and brought within the Fourteenth Amendment by a process of absorption.' 302 U.S., at 324—325, 326, 58 S.Ct., at 152.
'We concluded that certain fundamental rights, safeguarded by the first eight amendments against federal action, were also safeguarded against state action by the due process of law clause of the Fourteenth Amendment, and among them the fundamental right of the accused to the aid of counsel in a criminal prosecution.' Grosjean v. American Press Co., 297 U.S. 233, 243—244, 56 S.Ct. 444, 446, 80 L.Ed. 660 (1936).
'(The assistance of counsel) is one of the safeguards of the Sixth Amendment deemed necessary to insure fundamental human rights of life and liberty. * * * The Sixth Amendment stands as a constant admonition that if the constitutional safeguards it provides be lost, justice will not 'still be done." Johnson v. Zerbst, 304 U.S. 458, 462, 58 S.Ct. 1019, 1022, 82 L.Ed. 1461 (1938). To the same effect, see Avery v. Alabama, 308 U.S. 444, 60 S.Ct. 321, 84 L.Ed. 377 (1940), and Smith v. O'Grady, 312 U.S. 329, 61 S.Ct. 572, 85 L.Ed. 859 (1941).
'The right to be heard would be, in many cases, of little avail if it did not comprehend the right to be heard by counsel. Even the intelligent and educated layman has small and sometimes no skill in the science of law. If charged with crime, he is incapable, generally, of determining for himself whether the indictment is good or bad. He is unfamiliar with the rules of evidence. Left without the aid of counsel he may be put on trial without a proper charge, and convicted upon incompetent evidence, or evidence irrelevant to the issue or otherwise inadmissible. He lacks both the skill and knowledge adequately to prepare his defense, even though he have a perfect one. He requires the guiding hand of counsel at every step in the proceedings against him. Without it, though he be not guilty, he faces the danger of conviction because he does not know how to establish his innocence.' 287 U.S., at 68—69, 53 S.Ct., at 64, 77 L.Ed. 158.
The Court in Betts v. Brady departed from the sound wisdom upon which the Court's holding in Powell v. Alabama rested. Florida, supported by two other States, has asked that Betts v. Brady be left intact. Twenty-two States, as friends of the Court, argue that Betts was 'an anachronism when handed down' and that it should now be overruled. We agree.
The judgment is reversed and the cause is remanded to the Supreme Court of Florida for further action not inconsistent with this opinion.
While I join the opinion of the Court, a brief historical resume of the relation between the Bill of Rights and the first section of the Fourteenth Amendment seems pertinent. Since the adoption of that Amendment, ten Justices have felt that it protects from infringement by the States the privileges, protections, and safeguards granted by the Bill of Rights.
Justice Field, the first, Justice Harlan, and probably Justice Brewer, took that position in O'Neil v. Vermont, 144 U.S. 323, 362—363, 370—371, 12 S.Ct. 693, 708, 711, 36 L.Ed. 450, as did Justices Black, Douglas, Murphy and Rutledge in Adamson v. California, 332 U.S. 46, 71—72, 124, 67 S.Ct. 1672, 1683, 1686, 91 L.Ed. 1903. And see Poe v. Ullman, 367 U.S. 467, 515—522, 81 S.Ct. 1752, 6 L.Ed.2d 989 (dissenting opinion). That view was also expressed by Justices Bradley and Swayne in the Slaughter-House Cases, 16 Wall. 36, 118—119, 122, 21 L.Ed. 394, and seemingly was accepted by Justice Clifford when he dissented with Justice Field in Walker v. Sauvinet, 92 U.S. 90, 92, 23 L.Ed. 678.1 Unfortunately it has never commanded a Court. Yet, happily, all constitutional questions are always open. Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188. And what we do today does not foreclose the matter.
But that view has not prevailed4 and rights protected against state invasion by the Due Process Clause of the Fourteenth Amendment are not watered-down versions of what the Bill of Rights guarantees.
In Bute v. Illinois, 333 U.S. 640, 68 S.Ct. 763, 92 L.Ed. 986 (1948) this Court found no special circumstances requiring the appointment of counsel but stated that 'if these charges had been capital charges, the court would have been required, both by the state statute and the decisions of this Court interpreting the Fourteenth Amendment, to take some such steps.' Id., at 674, 68 S.Ct., at 780. Prior to that case I find no language in any cases in this Court indicating that appointment of counsel in all capital cases was required by the Fourteenth Amendment.1 At the next Term of the Court Mr. Justice Reed revealed that the Court was divided as to noncapital cases but that 'the due process clause * * * requires counsel for all persons charged with serious crimes * * *.' Uveges v. Pennsylvania, 335 U.S. 437, 441, 69 S.Ct. 184, 186, 93 L.Ed. 127 (1948). Finally, in Hamilton v. Alabama, 368 U.S. 52, 82 S.Ct. 157, 7 L.Ed.2d 114 (1961), we said that '(w)hen one pleads to a capital charge without benefit of counsel, we do not stop to determine whether prejudice resulted.' Id., at 55, 82 S.Ct., at 159.
'Obviously Fourteenth Amendment cases dealing with state action have no application here, but if they did, we believe that to deprive civilian dependents of the safeguards of a jury trial here * * * would be as invalid under those cases as it would be in cases of a capital nature.' 361 U.S., at 246—247, 80 S.Ct., at 304, 4 L.Ed.2d 268.
I must conclude here, as in Kinsella, supra, that the Constitution makes no distinction between capital and noncapital cases. The Fourteenth Amendment requires due process of law for the deprival of 'liberty' just as for deprival of 'life,' and there cannot constitutionally be a difference in the quality of the process based merely upon a supposed difference in the sanction involved. How can the Fourteenth Amendment tolerate a procedure which it condemns in capital cases on the ground that deprival of liberty may be less onerous than deprival of life—a value judgment not universally accepted3—or that only the latter deprival is irrevocable? I can find no acceptable rationalization for such a result, and I therefore concur in the judgment of the Court.
I agree that Betts v. Brady should be overruled, but consider it entitled to a more respectful burial than has been accorded, at least on the part of those of us who were not on the Court when that case was decided.
I cannot subscribe to the view that Betts v. Brady represented 'an abrupt break with its own well-considered precedents.' Ante, p. 344. In 1932, in Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158, a capital case, this Court declared that under the particular facts there presented—'the ignorance and illiteracy of the defendants, their youth, the circumstances of public hostility * * * and above all that they stood in deadly peril of their lives' (287 U.S., at 71, 53 S.Ct., at 65)—the state court had a duty to assign counsel for the trial as a necessary requisite of due process of law. It is evident that these limiting facts were not added to the opinion as an after-thought; they were repeatedly emphasized, see 287 U.S., at 52, 57—58, 71, 53 S.Ct., at 58, 59—60, 65 and were clearly regarded as important to the result.
Thus when this Court, a decade later, decided Betts v. Brady, it did no more than to admit of the possible existence of special circumstances in noncapital as well as capital trials, while at the same time insisting that such circumstances be shown in order to establish a denial of due process. The right to appointed counsel had been recognized as being considerably broader in federal prosecutions, see Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461, but to have imposed these requirements on the States would indeed have been 'an abrupt break' with the almost immediate past. The declaration that the right to appointed counsel in state prosecutions, as established in Powell v. Alabama, was not limited to capital cases was in truth not a departure from, but an extension of, existing precedent.
The principles declared in Powell and in Betts, however, have had a troubled journey throughout the years that have followed first the one case and then the other. Even by the time of the Betts decision, dictum in at least one of the Court's opinions had indicated that there was an absolute right to the services of counsel in the trial of state capital cases.1 Such dicta continued to appear in subsequent decisions,2 and any lingering doubts were finally eliminated by the holding of Hamilton v. Alabama, 368 U.S. 52, 82 S.Ct. 157, 7 L.Ed.2d 114.
In noncapital cases, the 'special circumstances' rule has continued to exist in form while its substance has been substantially and steadily eroded. In the first decade after Betts, there were cases in which the Court found special circumstances to be lacking, but usually by a sharply divided vote.3 However, no such decision has been cited to us, and I have found none, after Quicksall v. Michigan, 339 U.S. 660, 70 S.Ct. 910, 94 L.Ed. 1188 decided in 1950. At the same time, there have been not a few cases in which special circumstances were found in little or nothing more than the 'complexity' of the legal questions presented, although those questions were often of only routine difficulty.4 The Court has come to recognize, in other words, that the mere existence of a serious criminal charge constituted in itself special circumstances requiring the services of counsel at trial. In truth the Betts v. Brady rule is no longer a reality.
This evolution, however, appears not to have been fully recognized by many state courts, in this instance charged with the front-line responsibility for the enforcement of constitutional rights.5 To continue a rule which is honored by this Court only with lip service is not a healthy thing and in the long run will do disservice to the federal system.
The special circumstances rule has been formally abandoned in capital cases, and the time has now come when it should be similarly abandoned in noncapital cases, at least as to offenses which, as the one involved here, carry the possibility of a substantial prison sentence. (Whether the rule should extend to all criminal cases need not now be decided.) This indeed does no more than to make explicit something that has long since been foreshadowed in our decisions.
In agreeing with the Court that the right to counsel in a case such as this should now be expressly recognized as a fundamental right embraced in the Fourteenth Amendment, I wish to make a further observation. When we hold a right or immunity, valid against the Federal Government, to be 'implicit in the concept of ordered liberty'6 and thus valid against the States, I do not read our past decisions to suggest that by so holding, we automatically carry over an entire body of federal law and apply it in full sweep to the States. Any such concept would disregard the frequently wide disparity between the legitimate interests of the States and of the Federal Government, the divergent problems that they face, and the significantly different consequences of their actions. Cf. Roth v. United States, 354 U.S. 476, 496—508, 77 S.Ct. 1304, 1315—1321, 1 L.Ed.2d 1498 (separate opinion of this writer). In what is done today I do not understand the Court to depart from the principles laid down in Palko v. Connecticut, 302 U.S. 319, 58 S.Ct. 149, 82 L.Ed. 288, or to embrace the concept that the Fourteenth Amendment 'incorporates' the Sixth Amendment as such.
On these premises I join in the judgment of the Court.
Of the many such cases to reach this Court, recent examples are Carnley v. Cochran, 369 U.S. 506, 82 S.Ct. 884, 8 L.Ed.2d 70 (1962); Hudson v. North Carolina, 363 U.S. 697, 80 S.Ct. 1314, 4 L.Ed.2d 1500 (1960); Moore v. Michigan, 355 U.S. 155, 78 S.Ct. 191, 2 L.Ed.2d 167 (1957). Illustrative cases in the state courts are Artrip v. State, 41 Ala.App. 492, 136 So.2d 574 (Ct.App.Ala.1962); Shaffer v. Warden, 211 Md. 635, 126 A.2d 573 (1956). For examples of commentary, see Allen, The Supreme Court, Federalism, and State Systems of Criminal Justice, 8 De Paul L.Rev. 213 (1959); Kamisar, The Right to Counsel and the Fourteenth Amendment: A Dialogue on 'The Most Pervasive Right' of an Accused, 30 U. of Chi.L.Rev. 1 (1962); The Right to Counsel, 45 Minn.L.Rev. 693 (1961).
Johnson v. Zerbst, 304 U.S. 458, 58 S.Ct. 1019, 82 L.Ed. 1461 (1938).
E.g., Gitlow v. New York, 268 U.S. 652, 666, 45 S.Ct. 625, 629, 69 L.Ed. 1138 (1925) (speech and press); Lovell v. City of Griffin, 303 U.S. 444, 450, 58 S.Ct. 666, 668, 82 L.Ed. 949 (1938) (speech and press); Staub v. City of Baxley, 355 U.S. 313, 321, 78 S.Ct. 277, 281, 2 L.Ed.2d 302 (1958) (speech); Grosjean v. American Press Co., 297 U.S. 233, 244, 56 S.Ct. 444, 446, 80 L.Ed. 660 (1936) (press); Cantwell v. Connecticut, 310 U.S. 296, 303, 60 S.Ct. 900, 903, 84 L.Ed. 1213 (1940) (religion); De Jonge v. Oregon, 299 U.S. 353, 364, 57 S.Ct. 255, 259, 81 L.Ed. 278 (1937) (assembly); Shelton v. Tucker, 364 U.S. 479, 486, 488, 81 S.Ct. 247, 251, 252, 5 L.Ed.2d 231 (1960) (association); Louisiana ex rel. Gremillion v. NAACP, 366 U.S. 293, 296, 81 S.Ct. 1333, 1335, 6 L.Ed.2d 301 (1961) (association); Edwards v. South Carolina, 372 U.S. 229, 83 S.Ct. 680 (1963) (speech, assembly, petition for redress of grievances).
E.g., Chicago, B. & Q.R. Co. v. Chicago, 166 U.S. 226, 235 241, 17 S.Ct. 581, 584—586, 41 L.Ed. 979 (1897); Smyth v. Ames, 169 U.S. 466, 522—526, 18 S.Ct. 418, 424—426, 42 L.Ed. 819 (1898).
E.g., Wolf v. Colorado, 338 U.S. 25, 27—28, 69 S.Ct. 1359, 1361, 93 L.Ed. 1782 (1949); Elkins v. United States, 364 U.S. 206, 213, 80 S.Ct. 1437, 1441, 4 L.Ed.2d 1669 (1960); Mapp v. Ohio, 367 U.S. 643, 655, 81 S.Ct. 1684, 1691, 6 L.Ed.2d 1081 (1961).
Robinson v. California, 370 U.S. 660, 666, 82 S.Ct. 1417, 1420, 8 L.Ed.2d 758 (1962).
Justice Brewer, in joining the opinion of the Court, abandoned the view that the entire Bill of Rights applies to the States in Maxwell v. Dow, 176 U.S. 581, 20 S.Ct. 448, 44 L.Ed. 597.
See Roth v. United States, 354 U.S. 476, 501, 506, 77 S.Ct. 1304, 1317, 1320, 1 L.Ed.2d 1498; Smith v. California, 361 U.S. 147, 169, 80 S.Ct. 215, 227, 4 L.Ed.2d 205.
Beauharnais v. Illinois, 343 U.S. 250, 288, 72 S.Ct. 725, 746, 96 L.Ed. 919. Cf. the opinions of Justices Holmes and Brandeis in Gitlow v. New York, 268 U.S. 652, 672, 45 S.Ct. 625, 632, 69 L.Ed. 1138, and Whitney v. California, 274 U.S. 357, 372, 47 S.Ct. 641, 647, 71 L.Ed. 1095.
The cases are collected by Mr. Justice Black in Speiser v. Randall, 357 U.S. 513, 530, 78 S.Ct. 1332, 1552, 2 L.Ed.2d 1460. And see, Ohio ex rel. Eaton v. Price, 364 U.S. 263, 274—276, 80 S.Ct. 1463, 1469—1470, 4 L.Ed.2d 1708.
It might, however, be said that there is such an implication in Avery v. Alabama, 308 U.S. 444, 60 S.Ct. 321, 84 L.Ed. 377 (1940), a capital case in which counsel had been appointed but in which the petitioner claimed a denial of 'effective' assistance. The Court in affirming noted that '(h)ad petitioner been denied any representation of counsel at all, such a clear violation of the Fourteenth Amendment's guarantee of assistance of counsel would have required reversal of his conviction.' Id., at 445, 60 S.Ct. at 322. No 'special circumstances' were recited by the Court, but in citing Powell v. Alabama, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158 (1932), as authority for its dictum it appears that the Court did not rely solely on the capital nature of the offense.
Portents of today's decision may be found as well in Griffin v. Illinois, 351 U.S. 12, 76 S.Ct. 585, 100 L.Ed. 891 (1956), and Ferguson v. Georgia, 365 U.S. 570, 81 S.Ct. 756, 5 L.Ed.2d 783 (1961). In Griffin, a noncapital case, we held that the petitioner's constitutional rights were violated by the State's procedure, which provided free transcripts for indigent defendants only in capital cases. In Ferguson we struck down a state practice denying the appellant the effective assistance of counsel, cautioning that '(o)ur decision does not turn on the facts that the appellant was tried for a capital offense and was represented by employed counsel. The command of the Fourteenth Amendment also applies in the case of an accused tried for a noncapital offense, or represented by appointed counsel.' 365 U.S., at 596, 81 S.Ct., at 770.
See, e.g., Barzun, In Favor of Capital Punishment, 31 American Scholar 181, 188—189 (1962).
Avery v. Alabama, 308 U.S. 444, 445, 60 S.Ct. 321, 84 L.Ed. 377.
E.g., Bute v. Illinois, 333 U.S. 640, 674, 68 S.Ct. 763, 780, 92 L.Ed. 986; Uveges v. Pennsylvania, 335 U.S. 437, 441, 69 S.Ct. 184, 185, 93 L.Ed. 127.
E.g., Foster v. Illinois, 332 U.S. 134, 67 S.Ct. 1716, 91 L.Ed. 1955; Bute v. Illinois, 333 U.S. 640, 68 S.Ct. 763, 92 L.Ed. 986; Gryger v. Burke, 334 U.S. 728, 68 S.Ct. 1256, 92 L.Ed. 1683.
E.g., Williams v. Kaiser, 323 U.S. 471, 65 S.Ct. 363, 89 L.Ed. 398; Hudson v. North Carolina, 363 U.S. 697, 80 S.Ct. 1314, 4 L.Ed.2d 1500; Chewning v. Cunningham, 368 U.S. 443, 82 S.Ct. 498, 7 L.Ed.2d 442.
See, e.g., Commonwealth ex rel. Simon v. Maroney, 405 Pa. 562, 176 A.2d 94 (1961); Shaffer v. Warden, 211 Md. 635, 126 A.2d 573 (1956); Henderson v. Bannan, 256 F.2d 363 (C.A.6th Cir. 1958).
Palko v. Connecticut, 302 U.S. 319, 325, 58 S.Ct. 149, 152, 82 L.Ed. 288.

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The Federal Trade Commission said Wednesday that despite collecting $60 million to $100 million in upfront fees from often-desperate clients in recent years, American Tax Relief rarely, if ever, delivered on its promises. NY Times article. FTC web site.
Persons engaged in a trade or business must report payments to another person of $600 or more in any tax year to the IRS. The 2010 Small Business Act provides that solely for purposes of Code § 6041(a), and except as provided in § 6041(h) (2), a person receiving real estate rental income is considered engaged in a trade or business of renting property, and consequently must report payments of $600 or more to a service provider, e.g., plumber, painter, or accountant, to the IRS and to the service provider (typically using Form 1099-MISC), effective in 2011. § 6041(h)(2) exceptions include de minimus rental income under IRS regulations, active military or intelligence service members, and where “substantially all” the rental income results from renting the individual’s principal residence on a “temporary” basis. The terms “substantially all” rental income and “temporary” basis are not defined and leave many situations open to question, e.g., renting while trying to sell a home for an extended period due to current market conditions. You must obtain the recipient’s tax id number for the information return, because failure to provide the number results in a substantial penalty.
Notice requirements for Internet and catalog retailers contained in OK H.B. 2359, Laws 2010, has been adopted by the Oklahoma Tax Commission and submitted to the governor and Legislature for approval. Remote sellers would be required to provide notice to customers that use tax may be due on purchases. Notice on a Web site would be required to appear on a page necessary to facilitate the transaction, and the inclusion of a prominent notice link worded in specified language would be sufficient. Invoice notice for Internet purchases would be required to occur on the electronic order confirmation. Notice in a catalog would be required to be part of the order form. For Internet purchases, notice on the checkout page would satisfy both the Web site and the invoice notice requirements. If a retailer were required to provide a similar notice for another state in addition to Oklahoma, the retailer would be permitted to provide a consolidated notice, so long as the notice contained the information required by Oklahoma. New language is added to the proposed rule that would prohibit remote sellers from displaying that no tax is due, unless the seller knew that a purchase was exempt, or unless the seller also displayed the required notice. “Display,” in this context, would include a summary of the transaction containing a line designated “sales tax” showing the amount of sales tax as “0.00” or “zero.” The second proposed version of the rule stated only that a non-collecting retailer would not be permitted to advertise on its retail Internet Web site or retail catalog that no tax was due on purchases for use in Oklahoma.
The amnesty is for delinquent tax liability (income, withholding, sales, privilege, severance, estate, liquor, cigarette and tobacco products) effective between September 1, 2010, and October 15, 2010, and for tax periods ending on or before December 31, 2008. Amnesty applies to interest and penalties if the delinquent tax liability is paid in full during the amnesty period. Amnesty is not available for certain liabilities that exist on or after September 1, 2010, such as audits, tax liabilities subject to administrative or judicial appeal, those in bankruptcy, or in criminal investigation or certain criminal or civil litigation. Taxpayers may contact the DOR at (785) 368-8222 to discuss eligibility, and applications may be made via telephone with a department agent.
The amnesty for any taxable period ending after June 30, 2002, and prior to July 1, 2009 runs from October 1, 2010, through November 8, 2010. On payment the department will abate and not seek to collect any interest or penalties that may apply and will not seek civil or criminal prosecution for any taxpayer for the period of time for which the amnesty was granted. Failure to pay all taxes due to the state during the amnesty period invalidates any amnesty granted. Amnesty is not available to taxpayers under criminal investigation or any civil or pending criminal litigation for nonpayment, delinquency, or fraud in relation to any state tax. Participation in the amnesty precludes a taxpayer from claiming a refund on an issue unrelated to the amnesty or for an overpayment of tax by taxpayers estimating a non-final liability. A taxpayer with a tax liability for the amnesty period that does not satisfy it during the amnesty program will be charged double the amount of any interest or penalty that would otherwise apply.
Two types of relief are available: (1) a filing extension for the smallest organizations (eligible to file Form 990-N); and (2) a voluntary compliance program for small organizations (eligible to file Form 990-EZ). IRS News Release 2010-87, 7/26/10.
Unless Congress acts, the individual marginal income tax rate reductions under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) will expire In less than six months. President Obama’s proposals to resurrect the top two pre-EGTRRA — individual rates of 36% and 39.6% after December 31, 2010 were recently reviewed by Congress’ Joint Committee on Taxation (JCT).
The IRS issued Notice 2010-53 (see news link) on July 14 containing updates for out-of-date addresses for filing various elections, statements, returns, and other documents. The new notice is effective for such documents filed on or after August 2, 2010. As a result of theIRS Restructuring and Reform Act of 1998, the IRS replaced its national, regional and district structure with organizational units that serve particular industries and taxpayer groups, so the addresses listed in the IRS’s previous notice had provided taxpayers with the addresses to file certain documents as a result of the IRS’s reorganization. However, many of the locations listed are now inaccurate.
The Digital Goods and Services Tax Fairness Act of 2010 (H.R. 5649), introduced by Reps. Rick Boucher, D-Va., and Lamar Smith, R-Texas on June 30, 2010, has been referred to the Judiciary Committee, would prohibit States and localities from imposing multiple or discriminatory taxes on the sale or use of digital goods or digital services. “Digital good” and “digital service” include any good or service delivered or transferred electronically to a customer, including those accessed or used remotely, but not a telecommunications service or an Internet access service, or an audio or video programming service that is provided by, or comparable to programming provided by, a radio or television broadcast station. All taxes on the sale or use of a digital medical service, digital education service, or digital energy management service would be prohibited.
A tax on the sale or use of a digital good or digital service would have to be imposed explicitly, could only be imposed on retail sales, not sales for resale, and only by the jurisdiction whose territorial limits encompass the customer’s “tax address.” Charges for digital goods or digital services that are bundled with charges for other goods and services could be taxed similarly, unless the seller’s books and records could identify the charges for the digital goods or digital services.
A tax on the sale or use of a digital good or digital service. A regulation or administrative ruling could not construe a tax on the sale or use of tangible personal property (or telecommunications, Internet access, or audio or video programming services) to apply to the sale or use of a digital good or digital service.
Oklahoma H.B. 2359, Laws 2010 required “noncollecting retailer” making sales of tangible personal property from a place of business outside Oklahoma for use in Oklahoma and which are not required to collect use tax, must provide notice on their retail Internet Web sites or retail catalogs, and onthier invoices provided to customers, that use tax is imposed and must be paid by the purchaser (unless an exemption applies) on the storage, use, or other consumption of the property in Oklahoma, effective after a corresponding emergency or permanent administrative rule takes eff ect.
The Oklahoma Tax Commission issued a proposed draft of an emergency sales and use tax rule that would govern the notice requirements. If a non-collecting retailer does not provide an invoice to a purchaser, it may send a confirmation e-mail containing the notice. The proposed rule would also apply to any “online auction website”. A “de minimis retailer,” currently defined as any non-collecting retailer that made less than $100,000 total gross sales in the prior year and reasonably expects less than $100,000 sales in the current year. Oklahoma Tax Commission, June 30, 2010.
The Main Street Fairness Act (H.R. 5660) to give member states of the Streamlined Sales and Use Tax (SST) Agreement collection authority over remote sellers was introduced in the U.S. House of Representatives on July 1, 2010 by Rep. William Delahunt, D-Mass., who sponsored similar legislation in the last several Congresses, and the bill has been referred to the Judiciary Committee. A companion bill is expected to be introduced shortly in the U.S. Senate by Sen. Mike Enzi, R-Wyo. Introduction of these bills has been expected since the current 111th Congress convened in January 2009, but has been delayed while the SST Governing Board engages in ongoing negotiations with stakeholders over the parameters of the required vendor compensation, small seller exception, and inclusion of communication services. In addition to the Agreement’s current requirements, the legislation would mandate the following: reasonable vendor compensation for all sellers, which may vary by the complexity of state law and the characteristics of sellers; a small seller exception to the collection requirement; application of the minimum simplification requirements to taxes on communication services; a path to SST membership for any federally recognized Indian tribe that complies with the Agreement; and judicial review of Governing Board actions by the U.S. Court of Federal Claims.
The Patient Protection and Affordable Care Act (PPACA) eliminates the exception to the reporting requirement for payments of $600 or more made to a corporation in the course of a trade or business, other than for corporations exempt from tax, applicable to payments made after December 31, 2011. Vendors must furnish, and businesses must collect, Taxpayer Identification Numbers (TINs), or the business must impose back-up withholding at 28% of the purchase price. Additionally, businesses will have to keep records of all purchases sorted by TIN and produce and transmit information reports. Busiesses must file Forms 1099 electronically if it makes qualifying purchases from at least 250 vendors during the calendar year.
Olson reported more than 19 million pieces of mail are returned to the IRS as undeliverable every year, including refunds, notices, letters, and other correspondence. Most non-certified mail returned to the agency is generally destroyed and no attempt is made to locate a current address or correct a faulty one. Only selected notices and letters (such as final notices and compliance letters) are processed to try to obtain a possible current address.
Mandatory e-filing for tax return preparers under the Worker, Homeownership and Business Assistance Act of 2009 (2009 Worker Act) will be phased-in over two years, and beginning	January 1, 2011 for preparers who anticipate preparing 100 or more federal individual or trust tax returns during the year; or	January 1, 2012 for preparers who anticipate preparing 11 or more federal individual or trust tax returns during the year. An individual income tax return for purposes of the 2009 Worker Acts e-file mandate encompasses any return of the tax imposed by Subtitle A on individuals, estates, or trusts.
An IRS spokesperson recently stated that IRS is continuing to follow an older decision by the Court of Appeals for the Federal Circuit that held that payments made to involuntarily terminated workers should be classified as “wages” for FICA tax purposes. IRS will not follow a recent pro-taxpayer district court decision to the contrary. Mary Gorman, Assistant Division Counsel, Office of Chief Counsel, for the IRS Small Business/Self-Employed Division, indicated during the Forum on Federal Payroll Issues at the American Payroll Association’s (APA) 28th Annual Congress, that IRS is still denying claims that seek a refund of FICA tax paid on severance payments. She said that IRS will appeal the district court case.
In 2002, the Court of Federal Claims held that severance pay was not subject to FICA. (CSX Corp. v. U.S., (Ct of Fed Cl 4/1/02) 89 AFTR 2d 2002-1935 (4/18/2002). Iin 2008, the Court of Appeals for the Federal Circuit reversed and held that the severance pay involved in the taxpayer’s various downsizing programs was subject to FICA. ((CSX Corp. v. U.S., (CA FC 3/6/2008) 101 AFTR 2d 2008-1120 (3/13/2008). In February of 2010, a federal district court ruled in U.S. v. Quality Stores, Inc., (DC MI 2/23/2010) 105 AFTR 2d 2010-1110 (3/04/2010) that payments made to involuntarily terminated workers by a company going out of business should not be classified as “wages” for FICA tax purposes. The district court said that “where severance payments are intended to serve the same purpose as Social Security benefits, i.e., support for workers in lieu of a lost ability to earn wages, the collection of social benefit taxes on the wage-replacement benefits makes little sense.” The court believed that the severance payments at issue were properly viewed as wage-replacement social benefits, not taxable remuneration for the employees’ services or wages. Therefore, the court reasoned that the severance payments were not subject to taxation for FICA purposes.
Taxpayers should consider filing a protective claim to preserve their opportunity to receive a refund if the courts were ultimately to decide that severance payments aren’t subject to FICA tax. Protective refund claims are filed to preserve a taxpayer’s right to claim a refund when the taxpayer’s right to the refund is contingent on future events (e.g., future litigation), and may not be determinable until after the statute of limitations expires. Without a protective refund claim, taxpayers will only have a three-year statute of limitations in which to seek a refund.
The Court of Appeals for the Seventh Circuit has reversed a Tax Court decision that invalidated Reg. §1.6015-5(b)(1), which provides that a spouse must request equitable relief under Code Sec. 6015(f) no later than two years from the first collection activity against the spouse. Lanz v. Comm., 105 AFTR 2d 2010-2780 (7th Cir. 6/08/2010).
“a systematic approach for engaging and involving Large and Mid-Size Business (LMSB) taxpayers in the tax examination process, from the earliest planning stages through resolution of all issues,” replacing IRS’s Audit Planning Process, and the LMSB Guide for Quality Examinations in Internal Revenue Manual §4.46 is being updated to reflect this change. In the Pub, IRS explains that the examination can generally be divided into 3 phases: planning, execution, and resolution.
Pre-exam analysis. The exam team gathers and reviews information about the taxpayer that is available publicly and within IRS.
Initial planning meeting. The exam team holds an initial planning meeting with the taxpayer, reviewing the preliminary risk analysis and the anticipated exam process for the issues identified.
Subsequent planning meetings. The exam team and the taxpayer discuss prior audit cycle or exam results, materiality thresholds relating to identification and selection of examination issues, other potential compliance issues and required compliance checks, affirmative issues and/or claims the taxpayer expects to file, strategies the parties will use for resolving compliance issues, and the use of a mid-cycle risk analysis.
A general overview of business activities.
A list of significant transactions for the current examination and any other information that is new and/or different from previous examination(s) (e.g., acquisitions, dispositions, tax shelters, accounting method changes – Forms 3115, etc.).
Access to general ledgers; a complete audit trail from these ledgers and financial statements to taxable income; identification and full description of all significant Schedule M-3 book/tax differences and the requisite supporting documentation; breakdown of all general ledger accounts aggregated in Schedule M-3, and reconciliation of Schedule M-3 items to disaggregated general ledger accounts; and any other tax reconciliation workpapers and/or other workpapers in accordance with the Service Policy outlined in IRM 4.10.20.3 ( Requesting Audit, Tax Accrual, or Tax Reconciliation Workpapers).
Financial information (such as the general ledger) in electronic format.
List of known and anticipated claims and requested audit adjustments (with all supporting documentation made readily available) to ensure that these items are included in the audit plan.
Exchange of additional transactional and financial information. The taxpayer provides the exam team with business and financial information on acquisitions, dispositions, accounting method changes, tax shelters, book-to-tax reconciliations, etc.
Finalizing the exam plan. The exam team develops and finalizes an examination plan that specifies the issues to be examined, time frames, personnel required, processes to be followed, and the respective responsibilities.
Changes to the exam scope. The exam team keeps the taxpayer aware of any potential scope and/or depth changes.
Ongoing monitoring. The exam team and the taxpayer regularly review their progress towards achieving the agreed upon milestones.
Discussion of issues. Once the examination of a compliance issue begins, the exam team explains to the taxpayer why the issue was selected for examination.
Information Document Requests (IDR). The exam team and the taxpayer reach agreement on the procedures for administering IDRs (e.g., notification, IDR content, time frames for IDR responses, etc.).
Confirming the facts. Before issuance of a Form 5701, Notice of Proposed Adjustment, the taxpayer and the exam team discuss the issues under the proposed adjustment. The taxpayer confirms the facts and clarifies its position.
Engaging specialists and experts. If appropriate, the exam team engages specialists (e.g., economists, engineers, and financial products experts), technical advisors, counsel and/or other experts.
Issue resolution strategies. The exam teams encourage the use of appropriate issue resolution strategies (i.e., Fast Track, Rules of Engagement, Early Referrals to Appeals, etc.) while exams are in progress.
Other issues. The exam teams discuss with taxpayers any potential identified issues that may warrant settlement initiative treatment.
Determining areas of agreement. The exam teams memorialize the final determinations of issues (i.e., agreed, unagreed, no change).
Next/final steps. The exam teams inform taxpayers of next steps in the examination process up through resolution of remaining issues, issuance of the final report and exam case closing.
The IRS also noted that LMSB “Quality Examination Process Reference Guide” (a tool for LMSB revenue agents and exam teams) is available.
The Tax Court in Wadleigh v. Comm. found that the automatic section 6321 tax lien continued in effect against taxpayer’s pension excluded from his chapter 7 bankruptcy estate even absent IRS filing of a notice of tax lien.
The Financial Accounting Standards Board is working to merge its generally accepted accounting principles (GAAP) with the International Accounting Standards Board standards, with an impact on the accounting for leases. Currently, American and foreign companies list many leases as footnotes in their financial statements. A new standard to be completed next year and enacted in 2013 that will require companies using GAAP to book leases as assets and liabilities on their balance sheets. Companies will record the cost of rent over the remaining term of the lease as a liability (reducing over the term) and their right to use the space as an asset. There will be no grandfathering under the rule, so any active leases will have to be recorded on the balance sheet.
Landlords will record the obligation to provide space as a liability and rents they are to receive as an asset. Landlords currently book their revenue as rental income, but under the new standard rents received will be recorded partly as interest income and partly as a reduction in the obligation to provide space.
A renewal option term must be included in the term and thus included on the balance sheet if it is likely that the lessee will execute the renewal option. Because this increases debt on the balance sheet, renewal options could become less popular. Retailers with contingent rents based on a percentage of sales will have to estimate their sales numbers over the entire term of the lease to book the contingent rent on their balance sheet. These estimates will have to be reviewed and adjusted annually. Having to estimate the likelihood of exercising a renewal option or future sales requires forecasting what the lessee is going to pay rather than their legal obligation to pay.
The new rule is meant to stop significant off-balance-sheet lease activity and remove many of the differences in the way companies account for property that they own and property they lease. It may most heavily affect companies already struggling under heavy debt loads, large retailers with hundreds or thousands of leases, and commercial banks with multiple branches. It may cause more companies to buy their offices and drive down demand for leased space, and shrink the length of leases to diminish the amount required to put on the balance sheet.
The IRS uses a taxpayer’s “address of record” when mailing certain notices and documents that the agency is required to send to taxpayer’s last known address, which is legally effective and binding even if the taxpayer never receives the notice because the address of record is incorrect. Taxpayers can verify the IRS has their correct address by calling the agency.
The IRS automatically updates taxpayer’s address after a return with a new address has been properly processed, generally 45 days. Rev. Proc. 2010-16 lists the returns that automatically update taxpayer’s address Certain forms are not considered returns and do not automatically update a taxpayer’s address, including: (1) Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, or (2) Form 2848, Power of Attorney.
The IRS automatically updates the taxpayer’s address of record with the address maintained in the USPS’s National Change of Address database when a taxpayer provides the U.S. Postal Service (USPS) with a new address.
Taxpayers must provide the IRS with “clear and concise” notice that they no longer wants the address provided on their most recently filed tax return as their address of record, or, if after a joint return is filed either taxpayer establishes a separate residence. Clear and concise notification may be made in writing, electronically or orally, and must include taxpayer’s full name, new address, old address, and taxpayer identification number. It can be accomplished by submitting Form 8822, Change of Address.
Taxpayer’s response with corrections marked on taxpayer’s address to IRS correspondence that solicits or requires taxpayer’s response constitutes clear and concise written notification.
Electronic notification can be provided using one of the secure applications found on www.irs.gov, but other forms of electronic notice, such as emailing an IRS email address, are not clear and concise notification.
The IRS maintains separate address records for gift, estate, and generation-skipping transfer (GST) tax returns so notification should identify whether any gift, estate, or GST tax returns are affected.
Sellers to Government and Exempt Entities Must Pay Sales Tax on Purchases.
Taxpayer provided nontaxable services to counties and municipalities in Missouri, and claimed that tangible personal property it purchased to perform those services was resold to the local governments, which are excluded from the sales tax, and was therefore not subject to tax. The Court held that the sale to the local governments was not a sale at retail because it was not subject to tax, and consequently, ICC could not claim the sale for resale exclusion and must pay tax on its purchases.
The Court relied primarily on two cases: Greenbriar Hills Country Club v. Director of Revenue, 935 S.W.2d 36 (Mo. banc 1996), and Westwood Country Club v. Director of Revenue, 6 S.W3d 885 (Mo. banc 1999). In Greenbriar Hills, the Court held that a private country club that only sold meals to its members and guests did not have to collect and remit tax on the sales of those meals because the statute only imposed tax on places “in which rooms, meals or drinks are regularly sold to the public.” Meals sold only to members and guests were excluded from the taxing statute. In Westwood, another private country club claimed it did not have to pay tax on its purchases of food used to sell meals to its members and guests because they were sales for resale. The Court held that because the sales of meals were excluded from tax, they did not constitute sales at retail. Because the sale for resale exclusion is contained in the definition of sale at retail, a transaction that is not a sale at retail cannot be a sale for resale. As the Court noted, Westwood invoked the principle of avoiding double taxation “to avoid being taxed even once.” 6 S.W.3d at 888.
This rationale is directly applicable here. ICC’s supply of the food and other consumables to the inmates will not be taxed due to application of the governmental sales exemption. As in Westwood, this disqualifies ICC from claiming the resale exemption, because the rationale for that exemption — the avoidance of double taxation — does not apply. Indeed, if ICC were correct in its argument that its purchases of consumables are not subject to tax because they will be served to inmates, but that its sales are not subject to tax because of the governmental tax exemption, then no tax would be imposed on the purchase, use or sale of these consumables at all. The purpose of the exemption is not to provide a special benefit to ICC that is not enjoyed by other taxpayers. As in Westwood, the taxpayer must pay a tax on its purchase of consumables where, as here, its resale of the consumables is not taxable.
The IRS recently announced more flexible offer-in-compromise (OIC) evaluation procedures for taxpayers who are unemployed or underemployed.
IRS personnel may use a taxpayer’s current lack of income or reduced income in the analysis of the taxpayer’s future ability to pay an OIC, effective March 10, 2010, for any OIC currently under consideration and OICs previously rejected that are in their appeal period or where the taxpayer has requested Appeals consideration. If a taxpayer is unemployed and is not expected to return to his or her previous occupation or level of earnings, IRS personnel are instructed to contact the taxpayer to discuss the expected future level of income, and should also allow anticipated increases in necessary living expenses and/or applicable taxes. If a taxpayer is long-term unemployed, the interim guidance instructs IRS personnel to use the taxpayer’s current income in the future income calculation. The same treatment applies to taxpayers who are long-term underemployed. The IRS did not remove the requirement that a taxpayer generally must include a nonrefundable 20% payment (in a lump sum offer) when submitting his or her offer. When submitting a periodic payment offer, the taxpayer must include the first proposed installment payment. The IRS also may be flexible for missed payments under an OIC or installment agreement where taxpayers have a record of compliance. IR-2010-29, SB/SE 05-0310-012.
An additional review must be initiated before rejection if the difference between taxpayer’s offer and IRS determined “reasonable collection potential” is solely attributable to a disagreement on real property equity.
Taxpayers are not required to include a 20% payment or periodic payments to change an accepted offer. Nospecific form is required (e.g., Form 656), but the proposal must be in writing. IRS employees are to review updated financial information and supporting documents and negotiate based on taxpayer’s current financial situation, recognizing how quickly circumstances change in the current economy.
The IRS posts information on its web site on the Health Coverage Tax Credit (“HCTC”).
In particular, the report cites IRS lien filing policies as the second most serious problem facing taxpayers. The IRS uses automated systems to file liens against taxpayers in a variety of situations, even when the taxpayer possesses minimal or no property and the lien will do little more than damage the taxpayer’s financial viability and access to credit. A study conducted by Olson’s office found no obvious causal relationship between the number of lien notices filed and the amount of overall revenue collected.