Inadequate Record Submissions as Grounds for Appellate Waiver: A New Benchmark in Procedural Compliance

Introduction

The case of Allen R. Davison and Sharon L. Davison v. Commissioner of Internal Revenue, decided by the United States Court of Appeals, Tenth Circuit on March 17, 2025, establishes a significant procedural benchmark in the context of appellate review. The appellants, who had previously raised challenges in tax court regarding deficiencies related to their 2004 and 2005 tax years, sought to use net operating losses (NOLs) from partnership entities to offset tax liabilities. However, these claims were ultimately undermined by their failure to submit adequate evidence and documentation, as well as their noncompliance with internal procedural rules during collection due process (CDP) hearings. This commentary examines the background, judgment summary, and detailed reasoning of the court, spotlighting the emerging principle that inadequate briefing and lack of precise record citations can result in an effective waiver of appellate review.

Summary of the Judgment

The judgment primarily affirms the Tax Court's earlier decision granting the Commissioner’s summary judgment motion. Key findings include:

The appellants’ joint tax returns for 2004 and 2005 reflected significant net losses and, as a result, no tax due. However, after an IRS audit and subsequent deficiency notices, discrepancies emerged in their claimed NOLs.
During CDP proceedings, the appellants were provided the opportunity to substantiate their NOL claims but failed to provide required documentation such as financial statements, Form 433-A, or corroborative evidence of claimed losses.
The Tax Court conclusively held that the provided tax returns and promissory notes were insufficient to substantiate the NOL claims, thereby upholding the IRS's determination.
The appellants’ failure to include precise record citations and detailed argumentative support in their appellate brief resulted in a waiver of appellate review.

Analysis

Precedents Cited

The judgment cites several precedents that illuminate the strict standards for appellate submissions. Noteworthy cases include:

Benavides & Co., P.C. v. Comm'r: This precedent was employed to reinforce that tax returns, on their own, are insufficient as evidence to substantiate claimed losses, as they merely represent a taxpayer’s position.
BRONSON v. SWENSEN: The court referenced this case to underscore that any burden-of-proof arguments not raised in the introductory appeal brief will not be considered.
Nixon v. City & Cnty. of Denver and Kelley v. City of Albuquerque: These cases emphasize the necessity of framing and developing an issue adequately in appellate briefs. The decision highlights that perfunctory or undeveloped arguments will not invoke appellate review.
STUMP v. GATES: This decision supports the notion that remedial attempts to strengthen an argument through a later reply brief are insufficient if initial briefing standards are not met.

Legal Reasoning

At the core of the court’s reasoning is a defense of procedural discipline. The judgment focuses on the appellants’ failure to comply with appellate briefing rules as prescribed by the Federal Rules of Appellate Procedure and the local rules of the Tenth Circuit. Key aspects of the court’s reasoning include:

Duty to Provide an Adequate Record: The court stressed that appellants must provide an exhaustive record on appeal, including complete appendices and precise record citations. The failure to do so can and did result in appellate review being waived.
Requirement for Record Citations: As established in Nixon and subsequent cases, appellate briefs must contain exact references to the record. The Davison appellants’ failure to offer such detailed citations, particularly on critical issues like the substantiation of NOL claims, undermined their arguments.
Responsibility to Frame and Develop Issues: The court rejected vague, generalized statements unsupported by legal authority. The case reiterates that a mere assertion of error, without a clearly developed argument referencing specific parts of the record, is insufficient to invoke appellate review.
Waiver of Appellate Review: The judgment signals a new standard emphasizing that inadequate appellate record submissions not only weaken the appellants’ arguments but also may result in an effective waiver of the right to appellate consideration altogether.

Impact on Future Cases and Legal Practice

This judgment is poised to affect future appellate proceedings in several significant ways:

Heightened Emphasis on Procedural Formalities: Appellants in future cases will be forced to meticulously adhere to appellate briefing rules. Clear documentation and precise record citations have now become critical, or the court may summarily dismiss arguments as waived.
Clarification on the Role of Evidence in NOL Claims: The decision reaffirms that tax returns and unsupported documentation cannot be used to substantiate NOL claims. This may guide future litigation, ensuring that substantive evidence and thorough documentation are presented to support contestable tax positions.
Discouragement of Late-Stage Corrections: The ruling discourages attempts to remedy deficiencies through late amendments or reply briefs. The decision clarifies that once a deficiency in the briefing has been established, the opportunity to raise significant contentions may be lost.
Increased Judicial Scrutiny on Appellant Briefs: Lower courts and appellate panels are likely to scrutinize briefs for adherence to record-related requirements more vigilantly, forming a de facto policy standard for legal practitioners preparing appellate submissions.

Complex Concepts Simplified

Several complex legal concepts are pivotal to this case:

Collection Due Process (CDP) Hearings: These hearings allow taxpayers to contest the IRS's collection actions. In this case, the Davisons’ inability to produce substantiating evidence during the CDP hearings greatly weakened their position.
Net Operating Loss (NOL) Claims: NOLs can be used to reduce taxable income in other years. However, the case emphasizes that simply stating a loss on a tax return does not meet the necessary evidentiary standard; objective and corroborative documentation is required.
Waiver of Appellate Review: This occurs when an appellant fails to meet procedural requirements, thereby forfeiting the opportunity to have the appellate court review the merits of a decision. This ruling underscores that failure to provide an adequate record and proper citations is tantamount to waiving appellate review.
Burden of Proof and Record Citations: Appellants carry the burden of persuasively presenting their case with explicit references to the record. Without detailed citations, the appellate court is not obligated to investigate or infer the intended arguments.

Conclusion

The decision in Allen R. Davison; Sharon L. Davison v. Commissioner of Internal Revenue establishes a critical precedent concerning appellate briefing standards. The court’s clear mandate—that appellants must furnish an adequately detailed appellate record with precise citations—serves as a stern warning against procedural noncompliance. Furthermore, the judgment reiterates that vague claims and undeveloped arguments will not suffice to overturn administrative determinations. As such, this case is significant in reminding legal practitioners of the critical balance between substantive and procedural compliance in appellate litigation, with failure on either front potentially resulting in the waiver of appellate review.

In summary, the judgment reinforces the necessity for rigorous adherence to procedural norms in appellate settings, thereby cementing a new benchmark in the evaluation of record submissions and argument development.