Gerald Ware v. Commissioner of IRS , 499 F. App'x 957 ( 2012 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 12-11711
Non-Argument Calendar
________________________
Agency No. 10942-10
GERALD JAMES WARE,
MONICA SOMONIA WARE,
llllllllllllllllllllllllllllllllllllllllPetitioners - Appellants,
versus
COMMISSIONER OF IRS,
llllllllllllllllllllllllllllllllllllllllRespondent - Appellee.
________________________
Petition for Review of a Decision
of the U.S.Tax Court
________________________
(December 5, 2012)
Before JORDAN, WILSON and ANDERSON, Circuit Judges.
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PER CURIAM:
Appellants Gerald James Ware and Monica Somonia Ware, pro se
taxpayers, appeal the Tax Court’s order denying their motions for reconsideration
and to vacate or reverse the Tax Court’s order of dismissal. The Tax Court
dismissed the Wares’ claims for lack of jurisdiction under I.R.C. § 6213(a) and
Tax Court Rule 13(a). 26 U.S.C. § 6213(a); Tax Ct. R. 13(a). The Commissioner
argues that because the Wares did not receive a notice of deficiency, the Tax Court
lacked the jurisdiction to hear their case. The Wares argue that two letters from
the IRS, a March 22, 2010 change notice and a March 23, 2010 adjustment to their
income tax liability, ought to be considered de facto notices of deficiency. In the
alternative, the Wares assert that they are entitled to a notice of deficiency as a
matter of law. In addition, the Wares contend that the Tax Court should have
considered their whistleblower claims. The Commissioner argues that the Wares
never filed a whistleblower claim. After a review of the record and the briefs, we
affirm.
We have jurisdiction over this appeal under 26 U.S.C. § 7482(a), which
specifies that we review Tax Court decisions “in the same manner and to the same
extent as decisions of the district courts in civil actions tried without a jury.” 26
U.S.C. § 7482(a)(1). Accordingly, we review the Tax Court’s application of the
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Internal Revenue Code de novo and its findings of fact for clear error. See Estate
of Jelke v. Comm’r, 507 F.3d 1317, 1321 (11th Cir. 2007).
It is well-established that the Tax Court is a court of limited jurisdiction and
that it may exercise its jurisdiction only to the extent permitted by Congress. See
26 U.S.C. § 7442; Comm’r v. McCoy, 484 U.S. 3, 6, 108 S.Ct. 217, 98 L.Ed.2d 2(1987). Section 6213(a) of the Internal Revenue Code provides the Tax Court
with the jurisdiction to redetermine deficiencies assessed by the Commissioner.
See 26 U.S.C. § 6213(a). The Tax Court may only hear a deficiency case when the
Commissioner issues a notice of deficiency to the taxpayer and the taxpayer files a
timely petition for redetermination with the Tax Court. See 26 U.S.C. §6213(a);
Tax Ct. R. 13(a). Consequently, this case turns on whether the Wares received, or
were entitled to receive, a notice of deficiency.
The Wares argue that the March 22 and March 23 letters meet the criteria
for a notice of deficiency under 26 U.S.C. § 6212. The Internal Revenue Code
defines deficiency as the difference between the taxpayer’s liability and the
liability shown on the taxpayer’s return. 26 U.S.C. § 6211. The Commissioner is
authorized to send notice whenever he determines that “there is a deficiency in
respect of any tax imposed.” 26 U.S.C. § 6212(a). While the Code does not
prescribe a particular form for a deficiency notice, the notice at a minimum must
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“indicate that the IRS has determined that a deficiency exists for a particular year
and specify the amount of the deficiency.” Benzvi v. Comm’r, 787 F.2d 1541,
1542 (11th Cir. 1986). In essence, the notice of deficiency advises a person that
the Commissioner means to assess him. See id. at 1542. We turn to the question
of whether the letters constitute notices of deficiency.
We agree with the Appellee that the letters, individually and collectively, do
not amount to a notice of deficiency. The March 22 letter serves as a notice to the
Wares that the IRS reduced the amount of income tax withheld by the Wares in
2005. The letter states: “We changed your 2005 account to correct your total
federal income tax withheld.” The March 23 letter is a companion piece to the
previous day’s letter. It provides the Wares with an IRS-prepared Form 4549-A
that catalogues the reduction to the Wares’ adjusted tax liability. Because both
letters served merely to notify the Wares’ of the reductions in their adjusted tax
liability, they cannot be said to have notified the Wares of a deficiency—the
difference between their liability and the liability shown on their tax return. See
Benzvi, 787 F.2d at 1542. In other words, these letters addressed only the former,
and not its relationship to the latter.
We also agree with the Appellee that the Wares were not entitled to a notice
of deficiency. The Commissioner may assess an overstatement of credit for
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income tax withheld “in the same manner as in the case of a mathematical error
appearing upon the return . . . .” 26 U.S.C. § 6201(a)(3). When the Commissioner
assesses a mathematical or clerical error on a return, notice of the assessment
“shall not be considered as a notice of deficiency . . . and the taxpayer shall have
no right to file a petition with the Tax Court based on such notice . . . .” 26 U.S.C.
§ 6213(b)(1). It is clear from the record that the Commissioner assessed the Wares
for an overstatement of income tax withheld in 2005. In 2005 the Wares won a
jackpot playing a slot machine at the Imperial Palace Casino in Biloxi,
Mississippi. The stated amount of the jackpot was $993,728, the winnings to be
paid by International Game Technology (IGT). The Wares received $604,093.
The Wares maintain that IGT withheld $389,635 in federal income taxes, and
therefore they owe no taxes on their winnings. The Commissioner argues that the
Wares elected to receive a lump-sum of $604,093 rather than an annuity equaling
$993,728 in the aggregate. We need not settle this dispute to address the issues on
appeal. It is enough to say that the Commissioner assessed the Wares for an
overstatement of credit for income tax withheld, and that he determined the
overstatement to be due to a mathematical or clerical error. Consequently, the
letters from March 2010—in addition to reducing the Wares’ adjusted tax
liability—are also notices of assessment. Without a notice of deficiency, the Tax
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Court had no jurisdiction over the Wares. It also follows that the Tax Court could
not enjoin tax assessment and collection.
The Wares’ final argument is that the Tax Court had jurisdiction over their
whistleblower claim. 26 U.S.C. § 7623.1 Under §7623, the Secretary of the
Treasury may pay a reward to an individual for bringing information to the IRS
about the underpayment of taxes. A whistleblower must file a Form 211:
Application for Reward for Original Information. 26 C.F.R. § 301.7623-1(f). If
the whistleblower disputes the determination regarding an award, the
whistleblower may appeal the determination to the Tax Court within thirty days.
26 U.S.C. § 7623(b)(4). The Wares failed to file a Form 211. As a result, the
Secretary did not issue a determination on a whistleblower claim, and the Tax
Court could not hear the case.
In sum, the Wares received neither a notice of deficiency from the
Commissioner nor a whistleblower determination from the Secretary of the
Treasury. Because the Wares have not shown any statutory provision under which
1
Although the venue for most appeals from the Tax Court is geographically tied to a
petitioner’s legal residence, the normal route for a whistleblower claim is an appeal to the Court
of Appeals for the District of Columbia. See 26 U.S.C. § 7482(b)(1) (“If for any reason no
subparagraph of the preceding sentence applies, then such decisions may be reviewed by the
Court of Appeals for the District of Columbia.”). However, neither party suggested bifurcating
this case, and we agree that bifurcation would be inappropriate. See United States v. Horiri, 482
U.S. 64, 69 n.3, 107 S. Ct. 2246, 2250 n.3, 96 L.Ed.2d 51 (1987).
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the Tax Court had jurisdiction to consider their claims, we affirm the Tax Court’s
dismissal of their petition.
AFFIRMED.
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