United States District Court, D. Nevada
JAMES C. SEXTON JR. AND ESQUIRE GROUP LLC, Plaintiffs,
KAREN L. HAWKINS, Director of Office Of Professional Responsibility, Internal Revenue Service, Department of Treasure, Defendant.
RICHARD F. BOULWARE, II United States District Judge.
the Court are Plaintiff James Sexton's Motion for
Judgment on the Pleadings (ECF No. 56) and Defendant Karen
Hawkins's Motion for Summary Judgment (ECF No. 59, 64).
This case arises from an investigation by the Office of
Professional Responsibility (OPR) for the Internal Revenue
Service (IRS) of Plaintiff James Sexton and his company,
Plaintiff Esquire Group LLC, regarding his status as a
practitioner for tax purposes. Compl. at 4.
Factual Allegations, Admitted by Defendant
Court finds the following facts to be undisputed. This case
arises from an investigation by the Office of Professional
Responsibility (OPR) for the Internal Revenue Service (IRS)
of Plaintiff regarding his status as a practitioner for tax
purposes. Plaintiff was previously a lawyer barred in South
Carolina. Id. at ¶ 8. In 2005, Sexton pleaded
guilty to four counts of mail fraud and one count of money
laundering. Id. at ¶ 9. Sexton was subsequently
disbarred in South Carolina and then suspended from
practicing before the IRS by OPR in 2008. Id. at
¶ 10. He has not challenged this suspension.
Id. at ¶ 10.
to and during his suspension, Sexton has offered professional
tax services as president of Esquire Group, LLC
(“Esquire”). Id. at ¶ 13. Sexton
assists with the preparation of tax returns for individual
clients of Esquire. Id. at ¶ 14. He also
performs various other duties within the scope of his
employment with Esquire, including management, marketing, and
client relations. Id. at ¶ 13. In September
2012, OPR received a complaint from Louise M. Kern, a former
client of Sexton and Esquire. Defs. Resp. to MSJ, ECF No. 59,
5. Sexton assisted Kern in preparing her tax returns for 2010
and 2011, and offered to send her a written memorandum
analyzing her options regarding her business' tax
obligations. Id. at 7. Before accepting Sexton's
offer, Kern found out about Sexton's disbarment, and
fired him in an email on September 12, 2012. Id. at
9. Following Kern's Complaint, OPR initiated an
investigation of whether Sexton was violating his suspension
from practicing before the IRS. Id.
October 2012 OPR wrote a letter to the Supreme Court of South
Carolina seeking information regarding Sexton's education
and the date upon which he first became licensed to practice
law in South Carolina. Id. at ¶ 18. On or about
February 25, 2013, OPR sent a request to Sexton, as president
of Esquire, for information related to an investigation of
alleged unauthorized practice by Sexton during his
suspension. Id. at ¶ 23. The letter's
reference line read, “Re: Suspected Practitioner
Misconduct Under Circular 230”, and represented the
onset of an OPR investigation. (ECF 1-1). Citing section
10.20(a)(3) of Treasury Department Circular No. 230
(Regulations Governing Practice before the Internal Revenue
Service) as the authority for its request, OPR requested a
wide range of information from Sexton, alleging that this
information was “required under section
10.2(a)(3)”. This included a request for detailed
information on Sexton's educational background; documents
related to the incorporation of Esquire Group and its entity
structure; a list of all members, employees, and independent
contractors of Esquire Group from the date of incorporation
to the present; “any and all documents…and all
information related to Esquire Group's business
plan”; and an array of detailed requests regarding
documents provided to clients “relating to the
preparation, the filing, and/or the submission of the
clients' Federal and State tax returns.” Sexton
requested OPR to limit the scope of its original request for
information. OPR amended its request for information in an
e-mail sent on April 12, 2013. Id. at ¶ 29.
Sexton's Complaint in this case seeks to determine
whether Defendants have jurisdiction or authority over him,
such that they can compel such disclosures from him, under 31
U.S.C. § 330.
seeks the following relief:
1) A declaratory judgment by the Court that Sexton is not a
practitioner as defined by federal law and that Defendants
lack statutory authority to enact, promulgate or enforce
demands or authority over him and/or his employer Esquire as
a result of Sexton's activities.
2) A declaratory judgment by the Court that Defendants and
their agents are prohibited from regulating the providing of
tax advice generally, except as specifically provided by
statute and conferred upon them by Congress.
3) A permanent injunction prohibiting Defendants or their
agents from seeking to enforce Section 10.20 of Circular 230
James Sexton and Esquire Group (Plaintiffs) filed their
Complaint against Defendant Hawkins on May 21, 2013. ECF No.
filed a Motion to Dismiss on August 16, 2013. ECF No. 20. The
Court held oral argument on this Motion on September 18,
2014. ECF No. 37. The Court later denied the Motion. ECF No.
42. Defendant appealed this decision on December 15, 2014.
ECF No. 46. The parties later voluntarily dismissed this
appeal. ECF No. 71.
filed a Motion for Judgment on the Pleadings on November 9,
2015. ECF No. 56. Defendant filed a Motion for Summary
Judgment on December 23, 2015. ECF No. 64.
Judgment on the Pleadings
Civ. P. 12 (c) provides that “After the pleadings are
closed--but early enough not to delay trial--a party may move
for judgment on the pleadings. “‘A judgment on
the pleadings is properly granted when, taking all the
allegations in the non-moving party's pleadings as true,
the moving party is entitled to judgment as a matter of
law.'” United States v. Teng Jiao Zhou,
815 F.3d 639, 642 (9th Cir. 2016) (quoting Fajardo v.
Cty. of L.A., 179 F.3d 698, 699 (9th Cir.1999)).
“Judgment on the pleadings is properly granted when
there is no issue ...