Petition for review of an arbitrator's decision by Louis
Jessica Horne, National Treasury Employees Union, Washington,
DC, argued for petitioner. Also represented by Larry Joseph
Adkins, Gregory O'Duden.
Alexander Orlando Canizares, Commercial Litigation Branch,
Civil Division, United States Department of Justice,
Washington, DC, argued for respondent. Also represented by
Robert Edward Kirschman, Jr., Loren Misha Preheim, Joseph H.
Wallach, Linn, and Hughes, Circuit Judges.
Hughes, Circuit Judge.
Sihota petitions for review of an arbitrator's decision
that reinstated her employment with the Internal Revenue
Service (IRS), but imposed a ten-day suspension and reduced
her back pay. Based on the current record, we cannot discern
what charges, if any, support the ten-day suspension and
reduction in back pay. Therefore, we vacate the
arbitrator's decision and remand for further proceedings.
Sihota was employed as a Lead Customer Service Representative
for the IRS, where she worked for over 25 years. In 2011, an
IRS audit determined Ms. Sihota filed her taxes improperly in
2003. Ms. Sihota reported a loss of income based on her
purported ownership of NKRS Transport, a trucking company.
The IRS audit, however, revealed NKRS Transport was actually
owned by Ms. Sihota's son. The IRS determined Ms. Sihota
underpaid $5, 341 in taxes.
and Ms. Sihota agreed to a tax settlement agreement for Ms.
Sihota's 2003 federal tax liability. In the agreement,
Ms. Sihota acknowledged she was not the owner of NKRS
Transport and had "acted negligently in obtaining a
refund . . . resulting in an underpayment of the tax required
to be shown on the income tax return in the amount of
$5341.00." J.A. 9. Pursuant to this agreement, Ms.
Sihota repaid the tax assessment and penalty.
Ms. Sihota understated her tax liability, the IRS also
terminated her employment with the agency. In September 2011,
the IRS issued a notice of proposed adverse action. In the
notice, the IRS proposed to terminate or otherwise discipline
Ms. Sihota based on multiple allegations, including willful
understatement of her tax liability, failure to accurately
state tax liability, and failure to timely pay tax liability.
removed Ms. Sihota in May 2012. The final removal letter
states "[a]ll reasons and specifications [stated in the
Notice of Proposed Adverse Action] are sustained." J.A.
83. The letter further notes Ms. Sihota was charged with
"either violating Section 1203(b)(9) of the IRS
Restructuring and Reform Act of 1998 . . . or provisions of
other laws, rules or regulations, including Title 5 CFR
Section 2635.809." Id. Section 1203(b)(9)
requires the IRS to terminate any employee who willfully
understates their federal tax liability, "unless such
understatement is due to reasonable cause and not willful
neglect." Internal Revenue Service Restructuring and
Reform Act of 1998, Pub. L. 105-206, § 1203, 112 Stat.
685, 721 (1998) (codified at 26 U.S.C. § 7804 note). And
5 C.F.R. § 2635.809 states "[e]mployees shall
satisfy in good faith their obligations as citizens,
including all just financial obligations, especially those
such as Federal, State, or local taxes that are imposed by
Ms. Sihota was removed from the IRS, the National Treasury
Employees Union (Union) invoked arbitration on her behalf. On
November 26, 2012, the Union requested a hearing for Ms.
Sihota's arbitration. That same day, counsel for IRS
responded by asking "[w]hat dates are you looking
at?" J.A. 39. The record, however, reflects no further
communications regarding Ms. Sihota's hearing until June
2015, when the Union contacted the arbitrator and requested a
hearing in January 2016. Id. at 41. The arbitration
hearing was ultimately held in July 2016-nearly four years
after the IRS contacted the Union about scheduling a hearing.
the July 2016 hearing, the Union conceded Ms. Sihota
"acted negligently in obtaining a refund," but
argued that "[a]cting negligently does not rise to the
level of acting willfully." J.A. 162. The Union asserted
the "only issue" before the arbitrator was
"whether or not the action was willful." J.A. 188.
According to the Union, the IRS "sustain[ed] the
[section] 1203(b)(9) portion of the charge, but they d[id]
not say that they [were] sustaining the secondary issue or
the in-the-alternative issue that [Ms. Sihota] violated other
laws, rules, or regulations." J.A. 188.
hearing, the arbitrator and IRS agreed the only disputed
issue was whether Ms. ...