Gorospe v. Commissioner of Internal Revenue ( 2006 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
CONRAD GOROSPE; SHIRLEY 
GOROSPE,
No. 04-73277
Petitioners-Appellants,
v.  Tax Ct. No.
13116-02L
COMMISSIONER OF INTERNAL
OPINION
REVENUE,
Respondent-Appellee.

Appeal from a Decision of the
United States Tax Court
Argued and Submitted
April 5, 2006—Pasadena, California
Filed May 3, 2006
Before: Jerome Farris, Ferdinand F. Fernandez, and
Sidney R. Thomas, Circuit Judges.
Opinion by Judge Thomas
5015
GOROSPE v. COMMISSIONER OF INTERNAL REVENUE 5017
COUNSEL
A. Lavar Taylor, Santa Ana, California, for the appellants.
5018 GOROSPE v. COMMISSIONER OF INTERNAL REVENUE
Bridget M. Rowan, Anthony T. Sheehan, Johnathan S. Cohen,
Eileen J. O’Connor, United States Department of Justice,
Washington, D.C., for the appellee.
OPINION
THOMAS, Circuit Judge:
The appeal presents the question of whether the United
States Tax Court has plenary jurisdiction to hear all appeals
from collection due process (“CDP”) proceedings before the
Internal Revenue Service (“IRS”). We reaffirm the principle
that the Tax Court’s jurisdiction over appeals from CDP
determinations is limited to issues over which the Tax Court
would have had jurisdiction to consider the underlying tax lia-
bility.
I
When a taxpayer fails to pay his federal taxes, after the IRS
demands payment, the amount due becomes a “lien in favor
of the United States upon all property and rights to property,
whether real or personal, belonging to such person.” 26
U.S.C. § 6321. The lien does not become effective immedi-
ately. On the contrary, the lien is not effective until the IRS
has filed notice, 26 U.S.C. § 6323(f), and enforced the lien by
levying the property of the delinquent taxpayer, 26 U.S.C.
§ 6331(a). The IRS must also notify a taxpayer before impos-
ing a levy. 26 U.S.C. § 6331(d).
Once the IRS has notified a taxpayer of its intent to impose
a lien or a levy, the taxpayer has the right to a CDP hearing
before the IRS Office of Appeals, and is entitled to raise
defenses and to contest the levy or lien. 26 U.S.C.
§ 6330(c)(2)(A).1 After receiving a determination from the
1
Section 6320(c) looks to § 6330 for issues regarding hearings, review
of decisions, and suspensions. Therefore, we discuss the procedural
requirements as outlined in § 6330 in discussing both the liens and the
levy.
GOROSPE v. COMMISSIONER OF INTERNAL REVENUE 5019
IRS Office of Appeals, a taxpayer may seek judicial review,
either in the Tax Court or in district court. 26 U.S.C.
§ 6330(d). This appeal concerns the boundaries of the Tax
Court’s jurisdiction in CDP appeals.
In 1999, the IRS sought liens against Dr. Conrad and Shir-
ley Gorospe (“Taxpayers”) to collect their 1992, 1993, 1994,
and 1997 income taxes. It also sought a levy against Dr.
Gorospe to collect trust fund recovery penalties for taxes that
he withheld from his employees’ paychecks, but failed to pay
to the government. The IRS sent Taxpayers CDP notices, and
Taxpayers filed a timely request for a hearing before the IRS
Office of Appeals.
In 2002, the IRS Office of Appeals sent Taxpayers three
separate Notices of Determination. The first Notice sustained
the lien based on Taxpayers’ unpaid 1992-1994 income taxes.
The second Notice sustained the lien based on Taxpayers’
unpaid 1997 income taxes. The third Notice sustained the levy
based on the trust fund recovery penalties that Dr. Gorospe
owed.
Taxpayers appealed all three Determinations to the Tax
Court. The IRS moved to dismiss the appeal of the trust fund
recovery penalty determination, arguing that the Tax Court
lacked subject matter jurisdiction over the underlying tax lia-
bility. The Tax Court agreed, and dismissed Taxpayers’
appeal of the trust fund recovery penalty determination.
Taxpayers sought a Federal Rule of Civil Procedure 54(b)
determination from the Tax Court, which was denied.
Undaunted, they appealed the Tax Court’s dismissal of the
trust fund recovery penalty appeal to this court, and we dis-
missed for lack of appellate jurisdiction. Taxpayers then
entered into a stipulation with the IRS, in which they admitted
the validity of the income tax liens, and the Tax Court entered
final judgment. Taxpayers again seek review of the Tax
Court’s dismissal of their trust fund recovery penalty determi-
5020 GOROSPE v. COMMISSIONER OF INTERNAL REVENUE
nation appeal in this court. We review de novo the Tax
Court’s dismissal of an appeal for lack of subject matter juris-
diction. Estate of Branson v. Comm’r, 264 F.3d 904, 908 (9th
Cir. 2001).
II
[1] The Tax Court is an Article I “court of limited jurisdic-
tion and lacks general equitable powers.” Comm’r v. McCoy,
484 U.S. 3, 7 (1987) (per curiam). Its subject matter jurisdic-
tion is statutorily granted by 26 U.S.C. § 7442, and is defined
and limited by Title 26 of the United States Code. Estate of
Branson, 264 F.3d at 908. Thus, we must consider whether
Congress authorized the Tax Court to hear appeals of the IRS
Office of Appeals’s determinations in trust fund recovery pen-
alty cases. The plain language of 26 U.S.C. § 6330(d) requires
us to hold that Congress did not so intend.
We first “determine whether the language at issue has a
plain and unambiguous meaning with regard to the particular
dispute in the case. [Any] inquiry must cease if the statutory
language is unambiguous and the statutory scheme is coherent
and consistent.” Robinson v. Shell Oil Co., 519 U.S. 337, 340
(1997) (internal quotation marks omitted).
26 U.S.C. § 6330(d) states:
(d) Proceeding after hearing.
(1) Judicial review of determination. The
person may, within 30 days of a determina-
tion under this section, appeal such deter-
mination —
(A) to the Tax Court (and the Tax Court
shall have jurisdiction with respect to
such matter); or
GOROSPE v. COMMISSIONER OF INTERNAL REVENUE 5021
(B) if the Tax Court does not have juris-
diction of the underlying tax liability, to
a district court of the United States.
If a court determines that the appeal was to
an incorrect court, a person shall have 30
days after the court determination to file
such appeal with the correct court.
[2] Taking this language at face value, it is apparent that the
Tax Court does not have plenary jurisdiction over appeals of
CDP determinations. Rather, it has jurisdiction only where it
would have had jurisdiction to consider the underlying tax lia-
bility. Where the Tax Court would not have had jurisdiction
over the underlying tax liability, jurisdiction rests in the dis-
trict courts. Moore v. Comm’r, 114 T.C. 171, 175 (2000)
(“[s]ection 6330(d)(1)(A) and (B) provides for Tax Court
jurisdiction except where the Court does not normally have
jurisdiction over the underlying liability.”).2
2
To the extent that out-of-circuit precedent is persuasive, we note that
it overwhelmingly supports our interpretation of § 6330. See, e.g., Robi-
nette v. Comm’r, 439 F.3d 455, 458 (8th Cir. 2006) (“The statute also
affords a right of judicial review of the determination by the impartial
hearing officer, in either the Tax Court or a United States District Court,
depending on whether the Tax Court has jurisdiction. Id. § 6330(d)(1).”);
Voelker v. Nolen, 365 F.3d 580, 581 (7th Cir. 2004) (per curiam) (“The
presumption is that review should be sought in the Tax Court, but in cases
where the Tax Court lacks jurisdiction, the taxpayer may seek review in
the district court.”); Marino v. Brown, 357 F.3d 143, 146 (1st Cir. 2004)
(per curiam) (finding that the Tax Court has exclusive jurisdiction over
CDP determinations based on income tax liabilities and noting that the
district court would have had jurisdiction had the determination involved
employment tax liabilities); Borges v. United States, 317 F. Supp. 2d
1276, 1281 (D. N. M. 2004) (“Because the Tax Court does not have juris-
diction over employment tax liabilities, the district court is the proper
court in which to seek review of an administrative determination regarding
the assessment of employment taxes.”); Abu-Awad v. United States, 294
F. Supp. 2d 879, 886-887 (S.D. Tx. 2003) (“Because the Tax Court does
not have jurisdiction with respect to employment tax liability, the district
5022 GOROSPE v. COMMISSIONER OF INTERNAL REVENUE
[3] The flush language at the end of § 6330(d), which mod-
ifies both § 6330(d)(1)(A) and § 6330(d)(1)(B) and explains
what to do where an “appeal was to an incorrect court,” man-
dates this conclusion. It provides that “the district court can
determine that appeal should have been to [the Tax] Court,
and [the Tax Court] can determine that appeal should have
been to the district court.” Johnson v. Comm’r, 117 T.C. 204,
211 (2001) (Vasquez, J, concurring). If the Tax Court has ple-
nary jurisdiction, it would be impossible for an appeal in the
Tax Court to have been taken to “an incorrect court,” and the
flush language at the end of § 6330(d) would have been writ-
ten so as to apply only to cases in which a taxpayer attempts
to invoke the jurisdiction of the district courts.
[4] The conclusion that the Tax Court lacks jurisdiction
over CDP appeals where it would lack jurisdiction over the
underlying tax liability is also supported by “the broader con-
text of the statute as a whole.” Robinson, 519 U.S. at 341. In
other sections of the Tax Code, Congress explicitly provided
for exclusive jurisdiction in the district courts, with limited
concurrent jurisdiction in the Tax Court. See, e.g., 26 U.S.C.
§ 7429(b)(2)(A) (“Except as provided in subparagraph (B),
the district courts of the United States shall have exclusive
jurisdiction over any civil action for a determination under
this subsection.”). Had Congress intended to enact a similar
scheme in § 6330, it would have done so. Johnson, 117 T.C.
at 212 (Vasquez, J, Concurring). Moreover, 26 U.S.C.
§ 6015(e)(1)(A) also states that “the individual may petition
the Tax Court (and the Tax Court shall have jurisdiction)”,
but that provision has never been interpreted to give the Tax
Court unlimited jurisdiction. Johnson, 117 T.C. at 212-13. We
court is the proper court in which to file a complaint contesting the assess-
ment of employment taxes.”). Taxpayers’ arguments to the contrary, based
on Hoffman v. Comm’r, 119 T.C. 140 (2002), Landry v. Comm’r, 116 T.C.
60 (2001), Dogwood Forest Rest Home, Inc. v. United States, 181 F. Supp.
2d 554 (M.D. N.C. 2001), and ACT Restoration, Inc. v. United States,
1999 U.S. Dist. LEXIS 16015 (N.D. Fla. 1999), do not withstand scrutiny.
GOROSPE v. COMMISSIONER OF INTERNAL REVENUE 5023
will not ascribe different meaning to the identical language in
§ 6015 and § 6330. Thus, if the Tax Court’s jurisdiction is not
plenary under § 6015(e)(1)(A), it cannot be plenary under
§ 6330(d)(1)(A), either.
Taxpayers argue that despite the clear language of § 6330
and the Tax Code as a whole, § 6330(d)(1)(A) grants plenary
jurisdiction to the Tax Court to review CDP determinations,
regardless of the tax liability upon which they are based. They
dismiss the flush language following (d)(1)(B) because “the
failure of Congress to use the phrase ‘District Court’ instead
of ‘a court’ . . . must be viewed as an oversight.” However,
this argument ignores a fundamental precept of statutory
interpretation. We cannot dismiss the flush language as an
“oversight” because “[i]f Congress enacted into law some-
thing different from what it intended, then it should amend the
statute to conform it to its intent. It is beyond our province to
rescue Congress from its drafting errors, and to provide for
what we might think . . . is the preferred result.” Lamie v.
United States Trustee, 540 U.S. 526, 542 (2004).
Taxpayers also argue that a literal interpretation of § 6330
would strip the Tax Court of almost its entire grant of juris-
diction because the Tax Court has jurisdiction only over dis-
putes concerning unassessed taxes. Because CDP hearings
occur after taxes have been assessed, the argument goes, the
Tax Court would never have jurisdiction over the “underlying
tax liability.” Taxpayers’ argument proves too much: if the
Tax Court would never have jurisdiction of the underlying tax
liability, then the district court would always have concurrent
jurisdiction, and the flush language after § 6330(d)(1)(B)
would be superfluous. We will not interpret one provision of
a statute so as to render another provision surplusage. Freytag
v. Comm’r, 501 U.S. 868, 877 (1991) (“Our cases consistently
have expressed a deep reluctance to interpret a statutory pro-
vision so as to render superfluous other provisions in the same
enactment.” (internal quotation marks omitted)).
5024 GOROSPE v. COMMISSIONER OF INTERNAL REVENUE
[5] Finally, Taxpayers argue that the more efficient inter-
pretation of § 6330 would permit the Tax Court to hear
appeals of trust fund recovery penalty determinations when
those appeals are related to others properly before the Tax
Court. However, the plain language of the statute is clear, and
we are bound by it, regardless of our own notions of judicial
efficiency. The language of § 6330(d)(1)(A) does not suggest
— even slightly — that the Tax Court has supplemental juris-
diction over CDP determinations involving trust fund recov-
ery penalties when those determinations are related to other
claims properly before the Tax Court. Though providing a
single forum to resolve related tax disputes might be the more
efficient approach, we are not legislators, and we must decline
Taxpayers’ invitation to write a supplemental jurisdiction stat-
ute similar to 28 U.S.C. § 1367 into the Tax Code. See Lamie,
540 U.S. at 542.3
III
[6] Therefore, for these reasons, we must affirm the Tax
Court’s dismissal for lack of subject matter jurisdiction of
Taxpayers’ appeal of the trust fund recovery penalties deter-
mination.
AFFIRMED.
3
It is also worth noting that in this case, a holding that the Tax Court
has jurisdiction to hear appeals of CDP determinations involving trust
fund recovery penalties would not aid Taxpayers in their quest for judicial
efficiency. They stipulated with the IRS as to the validity of the determi-
nations based on their failure to pay income taxes in 1992-1994 and 1997.
Thus, the only issue remaining in their case concerns the trust fund recov-
ery penalties.