Donald D. Bailey, Plaintiff-appellant, v. United States of America, Defendant-appellee, 117 F.3d 1424 (9th Cir. 1997)

Appeal from the United States District Court for the District of Arizona, No. CV-95-00267-RMB; Richard M. Bilby, District Judge, Presiding.

Before: SCHROEDER and KLEINFELD, Circuit Judges, and WALLACH.^***

MEMORANDUM^* 

We reject appellant's proposed construction of the words "if so used" in 26 U.S.C. § 6701(a) (3). Read in context, the language plainly applies to the inaccurate return that Bailey aided or assisted in preparing. Had the return been used, and the loss carried back, then it would have resulted "in an understatement of the liability for tax of another person." Id. That it was not so used, and that it would not have been so used if the IRS had noticed that the amended return had been filed too late, does not protect Bailey from the penalty. The reason is that the penalty applies where the return would have caused the harm "if so used," id., whether it was so used or properly would have been so used or not.

Bailey's remaining arguments are without merit. He claims that the documents could not have been used to understate the Pierces' tax liability, because their liability was already zero for the year 1987. This argument ignores the fact that tax losses can be carried to different tax years. Indeed, the Pierces applied for a refund for the years 1984-86 based on the losses generated in 1987. Bailey's argument that the calculation of the Pierces' tax liability was accurate was raised for the first time in his motion for reconsideration. The district court did not abuse its discretion by declining to consider the argument for the first time on reconsideration. See Intercontinental Travel Marketing, Inc. v. FDIC, 45 F.2d 1278, 1286 (9th Cir. 1995).

AFFIRMED.