Carol Gray v. CIR , 723 F.3d 790 ( 2013 )

In the
United States Court of Appeals
For the Seventh Circuit
Nos. 12-2574 & 12-2575
C AROL D IANE G RAY,
Petitioner-Appellant,
v.
C OMMISSIONER OF INTERNAL R EVENUE,
Respondent-Appellee.
Appeals from the United States Tax Court
Nos. 3260-08L, 27850-09L—Joseph H. Gale, Judge.
A RGUED A PRIL 30, 2013—D ECIDED JULY 23, 2013
Before F LAUM, W OOD , and H AMILTON, Circuit Judges.
H AMILTON, Circuit Judge. Carol Gray did not file
timely returns or pay income tax for the tax years 2001
through 2004. She filed returns only after the IRS came
calling in 2006, but even then did not pay the amounts
she reported she owed. As a result, the IRS told her that
it would impose liens and levies on her property and
impose statutory penalties for late filing and late pay-
ment. Gray exercised her option to challenge the liens,
levies, and penalties in a Collections Due Process (CDP)
2 Nos. 12-2574 & 12-2575
hearing. See 26 U.S.C. § 6330. Dissatisfied with the
results of the CDP hearing, Gray sought review in Tax
Court in two petitions for review, but she waited more
than 30 days to file both petitions. The court concluded
that it lacked jurisdiction because Gray’s two petitions
were untimely and dismissed them. Gray argues in
these consolidated appeals that the Tax Court erred by
applying the 30-day time limit. We affirm. The statute
explicitly creates a 30-day time limit for appealing CDP
determinations, see § 6330(d)(1), and no longer time
limit applies to Gray’s cases.
I. Factual and Procedural Background
Gray filed her income tax returns for the 2001 through
2004 tax years only after the IRS notified her in 2006 that
it planned to assess her tax liability for those tax years
on its own. The IRS accepted Gray’s calculations of the
taxes she owed, but it imposed statutory penalties for
late filing and late payment. See 26 U.S.C. § 6651. When
Gray did not pay the taxes or penalties, the IRS informed
her that it had filed liens and intended to impose levies
on her property. In response, Gray timely requested a
CDP hearing under 26 U.S.C. § 6330. At the hearing,
Gray argued that her statutory penalties should be elimi-
nated and the liens and levies withdrawn, but the
IRS rejected those arguments.
After the hearing, the IRS mailed Gray two “notices of
determination” approving the liens and levies to collect
her delinquent taxes. Gray then attempted to challenge
those determinations in the Tax Court. Both notices of
Nos. 12-2574 & 12-2575 3
determination informed Gray that she had 30 days to
file a petition in the Tax Court, and that the court
“cannot consider your case if you file late.” It is undis-
puted that Gray waited more than 30 days to file both
petitions in the Tax Court. The IRS mailed the first
notice, for the 2001, 2003, and 2004 tax years, on Decem-
ber 18, 2007. Gray’s petition to the Tax Court challenging
this decision was postmarked January 30, 2008, 43 days
after the notice of determination was issued. The IRS
mailed Gray the second notice of determination,
approving the levy to collect her delinquent taxes for
2002, on October 16, 2009. Gray’s petition to the Tax Court
challenging this decision was postmarked November 17,
2009, 32 days after the notice of determination was is-
sued. By statute, the postmark date is “deemed” the date of
delivery. See 26 U.S.C. § 7502(a).1
In the Tax Court, after the Commissioner and Gray
each received a continuance, the Commissioner moved to
dismiss for lack of jurisdiction because Gray filed her
two petitions too late. Gray opposed the motion pro se.
Then, four days before the hearing on the motion to
dismiss and nearly three years after filing the petitions
with the Tax Court, Gray moved for another continuance
so that she could find a lawyer. The court denied Gray’s
motion at the hearing, explaining that the timeliness
1
For unexplained reasons, the IRS dealt with 2001, 2003, and
2004 separately from 2002. Gray’s appeal relating to 2002
is docketed as No. 12-2575; her appeal concerning the other
years is docketed as No. 12-2574.
4 Nos. 12-2574 & 12-2575
issue was simple and that Gray had no excuse for
waiting until just days before the hearing to seek a con-
tinuance. Recognizing Gray’s pro se status, however, the
court allowed her to file supplemental briefs fleshing
out her legal arguments. Gray did so, repeatedly arguing
in voluminous submissions that the court should apply
either a 90- or 180-day time limit for filing the petitions.
The Tax Court concluded that her petitions were un-
timely. It reasoned that the 30-day deadline imposed by
26 U.S.C. § 6330(d)(1) applied rather than the 90-day
deadline of 26 U.S.C. § 6213(a) for challenging an assess-
ment, as Gray had argued. The court also rejected Gray’s
alternative argument that, because she had supposedly
sought abatement of interest, she was subject to a 180-
day time limit. See 26 U.S.C. § 6404(h). The judge
wrote that there was “not a scintilla of evidence” that
she requested abatement of interest. Having found that
Gray’s petitions were untimely filed, the Tax Court con-
cluded that it did not have jurisdiction.
II. Discussion
On appeal, Gray argues that the Tax Court should
not have concluded that it lacked jurisdiction. She main-
tains that the Tax Court should have applied the 90-day
time limit for challenging a “notice of deficiency,” 26 U.S.C.
§ 6213(a), rather than the 30-day time limit for appealing
a “notice of determination” after a CDP hearing, 26
U.S.C. § 6330(d)(1). The IRS should have used the 90-day
limit for deficiency challenges, she continues, because
by contesting the tax penalties, she essentially denied
that there was a “deficiency.”
Nos. 12-2574 & 12-2575 5
The Tax Court’s jurisdiction is limited. See 26 U.S.C.
§ 7442 (“The Tax Court and its divisions shall have
such jurisdiction as is conferred on them by this title”);
Comm’r v. McCoy, 484 U.S. 3, 7 (1987); Cleveland v. Comm’r,
600 F.3d 739, 741 (7th Cir. 2010). Unless a taxpayer
fulfills the statutory prerequisites for invoking the Tax
Court’s jurisdiction, including filing a timely petition
under section 6330(d)(1), the court must dismiss a peti-
tion for lack of jurisdiction. See Investment Research
Assocs., Inc. v. Comm’r, 126 T.C. 183, 187 (T.C. 2006) (Tax
Court’s jurisdiction under § 6330 depends upon timely
filing of a petition for review); McCune v. Comm’r, 115 T.C.
114, 117 (T.C. 2000) (same).
The parties discuss two provisions that a taxpayer can
use to invoke the Tax Court’s jurisdiction. The first is 26
U.S.C. § 6330, which applies to “notices of determination”
that the IRS issues to levy on a taxpayer’s property to
collect unpaid but reported tax liabilities. (Section 6320(c)
generally adopts the same procedures for IRS liens.)
Before levying on property, the IRS must notify a tax-
payer in writing of her right to a hearing to dispute the
payment obligation. 26 U.S.C. § 6330(a). The taxpayer
then has the option to request a CDP hearing. § 6330(b)(1).
If the taxpayer timely requests a hearing, an impartial
IRS appeals officer must review the grounds for relief
that the taxpayer raises. § 6330(b), (c). A taxpayer may
challenge penalties assessed for late payment and filing,
as Gray did here, or even the underlying tax liability, if
the taxpayer “did not receive any statutory notice of
deficiency for such tax liability or did not otherwise
have an opportunity to dispute such tax liability.”
6 Nos. 12-2574 & 12-2575
§ 6330(c)(2)(B). After the hearing, the IRS issues a notice
of determination, which is a ruling on whether the pro-
posed levy or lien is justified in light of the taxpayer’s
objections. See § 6330(c)(3). The taxpayer may, “within
30 days of a determination under this section, appeal
such determination to the Tax Court.” § 6330(d)(1).
A second way that a taxpayer may invoke the jurisdic-
tion of the Tax Court applies when the taxpayer receives
a “notice of deficiency.” A “deficiency” is the amount
the IRS determines that the taxpayer owes, minus any
amount the taxpayer may have reported on a tax re-
turn. See § 6211(a); Murray v. Comm’r, 24 F.3d 901, 903
(7th Cir. 1994). “Within 90 days . . . after the notice of
deficiency authorized in section 6212 is mailed . . . the
taxpayer may file a petition with the Tax Court for a
redetermination of the deficiency.” 26 U.S.C. § 6213(a); see
also § 6212 (authorizing IRS to send notice of deficiency
letters).
Gray’s appellate arguments make a simple issue unnec-
essarily complicated. Gray chose to have a CDP hearing
under § 6330 to challenge IRS levies, liens, and penalties.
The hearing outcome was not favorable to her. Section
6330 establishes that Gray had “30 days [after] a deter-
mination under this section [to] appeal such determina-
tion to the Tax Court.” 26 U.S.C. § 6330(d)(1). The
notices of determination explicitly informed Gray of this
30-day time limit, and that the Tax Court could not con-
sider untimely petitions. Gray concedes that she none-
theless waited more than 30 days before filing her peti-
tions in the Tax Court. Because she mailed her petitions
Nos. 12-2574 & 12-2575 7
more than 30 days after the notices of determination
were sent, the Tax Court lacked jurisdiction under § 6330.
Gray attempts to avoid this conclusion by arguing
that the 90-day limit under § 6213 for challenging “defi-
ciency” notices applies to her. When a taxpayer raises
in a CDP hearing an issue for which Congress has pro-
vided a more generous time limit, a taxpayer may
have more than 30 days to file a petition in Tax Court
concerning that issue. See Gray v. Comm’r, 138 T.C. 295, 305
(T.C. 2012) (in related case involving same taxpayer, 180-
day period applied to abatement-of-interest claim under
26 U.S.C. § 6404(h)); Raymond v. Comm’r, 119 T.C. 191, 193-
94 (T.C. 2002) (90-day period applied to spousal-
relief claim under 26 U.S.C. § 6015(e)(1)(A)).
Gray’s problem, though, is that she did not raise any
issues that would entitle her to a more generous time
limit in these cases. She concedes that the IRS did not
assess a deficiency, as that term is defined in § 6211.
A deficiency exists when a taxpayer underreports her
liabilities, but Gray never paid the amounts that she
reported herself (albeit several years late). See Gray v.
Comm’r, 140 T.C. No. 9, at *5 (T.C. 2013). The IRS
did not challenge the amounts Gray reported but
merely assessed penalties for late filing and payment.
See 26 U.S.C. § 6651(a)(1), (2). Although Gray chal-
lenged her penalties in the CDP hearing, these statutory
penalties (technically “additions to” tax) are not them-
selves deficiencies. See 26 U.S.C. § 6665(b)(1) (deficiency
procedures apply to statutory penalties only when the
penalties are themselves attributable to a deficiency);
8 Nos. 12-2574 & 12-2575
Wilson v. Comm’r, 118 T.C. 537, 540-41 (T.C. 2002); Estate
of Forgey v. Comm’r, 115 T.C. 142, 147 (T.C. 2000). The
IRS did not assert a deficiency or issue a notice of defi-
ciency. Such a notice is a prerequisite for the Tax Court’s
jurisdiction under § 6213. See Shepherd v. Comm’r, 147
F.3d 633, 634 (7th Cir. 1998); Murray, 24 F.3d at 903. Ac-
cordingly, section 6213 did not give Gray 90 days to file.
Gray next argues that she would have proven that
she had even more time — 180 days — to file her petition
if the Tax Court had allowed her more time to find
a lawyer. She bases her argument on 26 U.S.C.
§ 6404(h)(1), which sets a 180-day time limit for petitions
contesting the denial of abatement of interest. Under
our deferential standard of review of such matters of
docket management, see Kim v. Comm’r, 679 F.3d 623, 626-
27 (7th Cir. 2012) (Tax Court’s denial of motion for con-
tinuance reviewed for abuse of discretion), the Tax Court
did not abuse its discretion by denying Gray even
more time to find a lawyer to argue for the 180-day
limit. Gray had almost three years after starting her Tax
Court appeal in 2008, including two continuances, to
find a lawyer. Moreover, the Tax Court was solicitous
of Gray’s pro se status, allowing her to file several sup-
plemental briefs after the hearing to argue for a
more generous time limit.
In any case, we reject Gray’s premise that a lawyer
would have helped her persuade the Tax Court to apply
the 180-day limit of 26 U.S.C. § 6404(h)(1). Gray insists
that counsel would have offered evidence that she had
sought to abate interest at the CDP hearing. But nothing
Nos. 12-2574 & 12-2575 9
in the record of that hearing suggests that Gray actually
sought interest abatement for the 2001-2004 tax years.
Moreover Gray’s pro se status did not prevent her
from presenting pertinent evidence to the Tax Court,
where it existed. Indeed, despite proceeding pro se,
she persuaded the Tax Court in concurrent proceedings
before the same judge that she sought to abate interest
for the 1992-1995 tax years, and she thereby obtained
a longer filing period for her dispute over those tax years.
See Gray v. Comm’r, 138 T.C. 295, 303-05 (T.C. 2012).
The judgments of the Tax Court in these consolidated
appeals are A FFIRMED.
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