David Bruce Billings v. Commissioner ( 2006 )

127 T.C. No. 2
UNITED STATES TAX COURT
DAVID BRUCE BILLINGS, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6148-03. Filed July 25, 2006.
P’s wife did not report embezzlement income on their
joint 1999 return. After she was caught, P and she filed an
amended tax return that reported the embezzlement income. P
then applied for relief from joint and several liability
under IRC sec. 6015(f). The Commissioner issued a notice of
determination denying his request, and P filed a petition
under sec. 6015(e) to review the Commissioner’s
determination. P and R stipulated that no relief is
available under IRC sec. 6015(b) and (c). Held: Upon
reconsideration, we no longer adhere to our prior holding
that sec. 6015(e) gives us jurisdiction over such
nondeficiency stand-alone petitions. Ewing v. Commissioner,
118 T.C. 494 (2002), revd. 439 F.3d 1009 (9th Cir. 2006), no
longer followed.
Patrick Wiesner, for petitioner.
Vicki L. Miller, for respondent.
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OPINION
HOLMES, Judge: In 1999, Rosalee Billings began embezzling
money from her employer. She kept her husband in the dark about
her embezzlement and didn’t report the ill-gotten income on their
joint return. After she was caught in 2000, she confessed her
theft to him, and together they signed an amended joint return
that reported the stolen income and showed a hefty increase in
the tax owed. He asked the Commissioner to be relieved of joint
liability for the increased tax, but his request was refused
because he knew about the embezzled income when he signed the
amended return, and also knew that the increased tax shown on
that amended return was not going to be paid.
Billings began his case in our Court by filing a
“nondeficiency stand-alone” petition--“nondeficiency” because the
IRS accepted his amended return as filed and asserted no
deficiency against him, and “stand-alone” because his claim for
innocent spouse relief was made under section 6015 and not as
part of a deficiency action or in response to an IRS decision to
begin collecting his tax debt through liens or levies. The
particular part of section 6015 under which he seeks relief is
section 6015(f).1 This subsection is the only one available to
spouses against whom the IRS has not asserted a deficiency. In
1
Section references are to the Internal Revenue Code; Rule
references are to the Tax Court Rules of Practice and Procedure.
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Ewing v. Commissioner, 118 T.C. 494 (2002) (Ewing I),2 we held
that the Tax Court had jurisdiction over nondeficiency stand-
alone petitions like Billings’s. The Ninth Circuit has now
reversed us, Commissioner v. Ewing, 439 F.3d 1009 (9th Cir.
2006), revg. Ewing I, 118 T.C. 494, vacating 122 T.C. 32 (2004);
the Eighth Circuit has adopted the Ninth Circuit’s position,
Bartman v. Commissioner, 446 F.3d 785, 787 (8th Cir. 2006), affg.
in part, vacating in part T.C. Memo. 2004-93; and the Second
Circuit has questioned our decision, see Maier v. Commissioner,
360 F.3d 361, 363 n.1 (2d Cir. 2004), affg. 119 T.C. 267 (2002).
Billings's case is one of the large number of nondeficiency
stand-alone cases that began accumulating on our docket while
Ewing I was on appeal. We now revisit the question of whether we
have jurisdiction to review the Commissioner's decisions to deny
relief under section 6015(f) when there is no deficiency but tax
went unpaid.
Background
David Billings was well into a 30-year career at General
Motors when he married Rosalee in 1996. Rosalee herself was a
payroll clerk at South Kansas City Electric Company. The
Billingses kept two checking accounts, and while both were
2
There is yet another Opinion in this case--Ewing v.
Commissioner, 122 T.C. 32 (2004)--but it dealt with our power to
consider evidence outside the administrative record in reviewing
the Commissioner's decisions.
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jointly held, David and Rosalee each kept almost exclusive
control over one of them. In 1999, Rosalee began to transfer
money from the Electric Company’s payroll account into the
checking account that she controlled and into which she had her
own pay directly deposited.
Rosalee kept her embezzlement secret from her husband and
she did not report on their 1999 return the nearly $40,000 that
she had stolen. The Electric Company discovered the embezzlement
in December 2000, fired her, and then notified the authorities.
She told her husband what she had done and hired a lawyer,
Patrick Wiesner. (Wiesner also represented David in this case
and before the IRS.)
In his capacity as Rosalee’s lawyer, Wiesner advised her to
report the embezzlement income to the IRS on an amended return.
He told her that if she did, a sentencing judge would probably be
more lenient and might even depart from the U.S. Sentencing
Guidelines. But section 1.6013-1(a)(1) of the income tax
regulations created a problem. It prohibits spouses who have
already filed a joint return for a particular year from filing
amended returns changing their status to married-filing-
separately once the deadline to file returns has passed. The due
date for the Billingses’ 1999 tax year--April 15, 2000--was long
past, and so Wiesner told David (whether in Wiesner’s capacity as
Rosalee’s lawyer or as David’s is unclear) that David also had to
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sign the amended return, or risk having his wife face a longer
sentence in a more unpleasant facility. On March 19, 2001, David
signed the amended return.
That return included as taxable income the nearly $40,000
that Rosalee had embezzled in 1999. It also showed an increase
in tax of over $16,000. When David signed the amended return, he
knew that neither he nor his wife expected to be able to pay the
increased tax. Wiesner, however, suggested that David himself
might avoid liability for the extra tax by filing for innocent
spouse relief under section 6015. He even filled out the
required IRS form and had David sign it together with the amended
return. The Billingses sent that form to the IRS, but it was
never processed.
As the Billingses feared, Rosalee's embezzlement led to a
criminal charge--one count of wire fraud. Less than a month
later, in November 2001, she pleaded guilty. Her sentence
apparently reflected a downward departure for acceptance of
responsibility, though the probation officer who wrote the
sentencing report did not mention that the Billingses had filed
an amended return.3
3
David argues that it was filing the amended return that
led Rosalee to be sentenced to less than a year, which qualified
her for residence in a halfway house rather than imprisonment.
Although filing the amended return may well be one form of
accepting responsibility, we found nothing in sentencing
guideline precedents that suggests it was the only or most
(continued...)
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In 2002, the Billingses filed for bankruptcy and received a
discharge, which of course did not affect Rosalee’s obligation to
repay the money she’d embezzled or her own liability for the
unpaid 1999 taxes. 11 U.S.C. secs. 523(a)(1), 507(a)(8) (2000).
David retired from GM in 2003 and began collecting a pension,
though he continues to work two other jobs. He and his wife have
filed timely tax returns for later years as they came due.
As the IRS had not processed David’s original request for
relief, he filed another one. In November 2002, the IRS denied
his request for relief based on “all the facts and
circumstances,” but particularly because:
you failed to establish that it was
reasonable for you to believe the tax
liability was paid or was going to be paid
at the time you signed the amended return.
David appealed, and the IRS issued its final determination, again
denying him relief because he did not believe when he signed the
amended return that the tax would be paid.
The Commissioner argues:
Instead of filing an amended return, [Rosalee]
could have contacted respondent and informed
him of the unreported embezzlement income.
Once informed, respondent could have proceeded
with examination procedures and [Rosalee] could
have agreed to respondent’s determination of
additional tax.
3
(...continued)
persuasive form. We also note that the Billingses made these
decisions in late 2000, long before the Supreme Court held the
guidelines to be merely advisory. See United States v. Booker,
543 U.S. 220 (2005).
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Resp. Br. at 30. This would have led to the determination of a
deficiency and presumably allowed David to file a petition
seeking relief under a different part of section 6015. See,
e.g., Haltom v. Commissioner, T.C. Memo. 2005-209.
Even under section 6015(f), Billings’s position is not a
weak one. In Rosenthal v. Commissioner, T.C. Memo. 2004-89, the
petitioner was a widow who also had no knowledge of omitted
income (in her case, an unreported IRA distribution to her late
husband) when she signed the original return, but did know about
it when she signed the amended return that corrected that
omission. We found that the Commissioner had abused his
discretion by not giving her innocent spouse relief:
It is unpersuasive to argue, as does
respondent, that petitioner’s voluntary
filing of an amended 1996 return and her
attendant payment of the delinquent taxes
attributable to the omission of income
from the original 1996 return militate
against equitable relief simply because
she had to have known of the omission
before she filed the amended return and
made the payment.
Id.
Before this case was tried, Billings and the Commissioner
fully stipulated the facts under Rule 122. Billings was a
resident of Kansas when he filed his petition, which means an
appeal lies to the Tenth Circuit unless the parties stipulate
differently.
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Discussion
A married couple can choose to file their Federal tax return
jointly, but if they do, both are then responsible for the
return’s accuracy and both are jointly and severally liable for
the entire tax due. Sec. 6013(d)(3); Butler v. Commissioner, 114
T.C. 276, 282 (2000). This can lead to harsh results, especially
when one spouse hides information from the other, so Congress
enacted section 6015, which directs the Commissioner to relieve
qualifying “innocent spouses” from that liability. Sec. 6015(a).
An innocent spouse may seek either (1) relief from liability
under section 6015(b) if he can show that he was justifiably
ignorant of unreported income or inflated deductions, or (2) have
his tax liability allocated between himself and an estranged or
former spouse under section 6015(c). Billings, however, looks to
section 6015(f) for relief. Subsection (f) relief is available
only to a spouse who is ineligible for relief under subsections
(b) and (c) and who shows that "taking into account all the facts
and circumstances, it is inequitable to hold [him] liable for any
unpaid tax or any deficiency (or any portion of either).”
Billings and the Commissioner stipulated that he did not
qualify for relief under either section 6015(b) or (c) because no
deficiency was ever asserted against him and his wife. They were
right to do so, because both those subsections require a
deficiency as a condition of relief. See, e.g., Block v.
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Commissioner, 120 T.C. 62, 66 (2003). Understanding why the
Billingses owed tax but had no “deficiency” after they filed
their amended return requires a bit of explanation: Section
6211(a) defines a “deficiency” as the “amount by which the tax
imposed * * * exceeds * * * the amount shown as the tax by the
taxpayer upon his return.” (Emphasis added.) The Code itself
doesn’t tell us what effect the filing of an amended return has,
but the related regulation does. It states that “[a]ny amount
shown as additional tax on an ‘amended return’ * * * filed after
the due date of the return, shall be treated as an amount shown
by the taxpayer ‘upon his return’ for purposes of computing the
amount of the deficiency.” Sec. 301.6211-1(a), Proced. & Admin.
Regs. Because the Billingses’ amended 1999 return was filed well
after April 15, 2000, and the Commissioner accepted that return,
the increase in tax that it showed has to be treated as an amount
shown on their return.
That left Billings able to look only to subsection (f) for
relief, and when the Commissioner denied it to him, left him with
the problem of where to seek judicial review. He filed in our
Court and, under our decision in Ewing I, he was right to do so
because we had held that section 6015(e) gave us jurisdiction to
grant (f) relief in nondeficiency stand-alone cases like his.
Ewing I in turn built on two other cases. The first was
Butler, where we had to decide whether we had jurisdiction to
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review the Commissioner's decision to deny 6015(f) relief when a
taxpayer filed a petition to redetermine a deficiency asserted
against her. We concluded that we did, because we had for a very
long time treated claims for innocent spouse relief under old
section 6013(e), Act of Jan. 12, 1971, Pub. L. 91-679, 84 Stat.
2063, 2063-2064, repealed by Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec.
3201(e)(1), 112 Stat. 685, 740 (1998), as "affirmative defenses"
to the Commissioner's deficiency determination. Butler, 114 T.C.
at 287-288. This followed logically from our general rule that a
petition to redetermine a deficiency gives us jurisdiction over
the entire deficiency and not just the particular items listed in
the notice of deficiency.
So unless there had been some change in the law, a taxpayer
challenging a notice of deficiency could, after enactment of
section 6015, continue to argue that he was an innocent spouse.
What made Butler notable is that the Commissioner argued that
section 6015(e)4 was precisely such a change in the law--that
4
Sec. 6015(e) (as before the 2000 amendment):
SEC. 6015(e). Petition for Review by Tax Court.--
(1) In general.--In the case of an
individual who elects to have subsection (b)
or (c) apply--
(A) In general.--The individual
may petition the Tax Court (and the Tax
Court shall have jurisdiction) to
(continued...)
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this new section whose words seemed on their face to expand our
jurisdiction had an esoteric meaning that shrank it instead. We
disagreed, looking instead at the class of those covered by the
language of the section--individuals who elect to have subsection
(b) or (c) apply--and finding nothing in either section 6015(e)'s
language or its legislative history "that precludes our review of
the Commissioner's denial of equitable relief pursuant to section
6015(f) where the taxpayer has made the requisite election for
relief pursuant to section 6015(b) or (c)." Butler, 114 T.C.
290.
Just a short time later, we decided Fernandez v.
Commissioner, 114 T.C. 324 (2000). Fernandez, unlike Butler, was
a "stand-alone" case; i.e., one in which the claim for innocent
spouse relief was not raised as a defense to a deficiency but by
itself.5 In Fernandez, we held that section 6015(e) also gave us
jurisdiction over a stand-alone petition to review the
Commissioner's denial of relief under section 6015(f):
We first look to the prefatory language
contained in section 6015(e)(1) which states:
"in the case of an individual who elects to
have subsection (b) or (c) apply." We
conclude that this language does not contain
4
(...continued)
determine the appropriate relief
available to the individual under this
section if such petition is filed * * *
5
The Commissioner actually had asserted a deficiency
against Fernandez, though our opinion in the case wasn’t clear on
the point. See Ewing I, 118 T.C. 500.
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words of limitation that confine our
jurisdiction to review of an election under
subsections (b) and/or (c), as respondent
contends. Rather, we understand this
language to encompass the procedural
requirement applicable to all joint filers
seeking innocent spouse relief and,
therefore, states the prerequisite to seeking
our review of such relief.
Id. at 330.6
We reasoned that section 6015(e)'s jurisdictional grant to
determine "the appropriate relief available to the individual
under this section" meant that we could grant relief to a
deserving individual under any part of "this section"--meaning
relief under subsection (b), (c), or (f)--because the word
"section" includes all subsections. Id. at 331.
The problem we faced in Ewing I is that Congress amended
section 6015(e) in 2000. It now reads (emphases showing new
language):
SEC. 6015(e). Petition for Review by Tax Court.
(1) In general.--In the case of an
individual against whom a deficiency has been
asserted and who elects to have subsection
(b) or (c) apply--
(A) In general.--In addition to
any other remedy provided by law, the
individual may petition the Tax Court
(and the Tax Court shall have
6
The reference to “the procedural requirement applicable to
all joint filers seeking innocent spouse relief” alludes to
section 6015(f)(2), which establishes failure to win relief under
subsections (b) and (c) as a condition for relief under
subsection (f).
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jurisdiction) to determine the
appropriate relief available to the
individual under this section if such
petition is filed--
And here our problem began, because it might seem that the
inclusion of the first new phrase was the inclusion of a new
condition--that an individual seeking innocent spouse relief must
show that the Commissioner is asserting a deficiency against him.
We raised the problem sua sponte in Ewing I, but both the
Commissioner and Ewing took the position that the amendment did
not deprive us of jurisdiction. Ewing I, 118 T.C. 506.
Given the difficulty of the issue, we analyzed the question
at length, reasoning that
Equitable relief under section 6015(f) is,
and always has been, available in
nondeficiency situations. Under these
circumstances, the amendment to section
6015(e)(1) referring to situations where “a
deficiency has been asserted" and the
retention of the language in that same
section giving us jurisdiction over "the
appropriate relief available to the
individual under this section" creates an
ambiguity.
Id. at 504.
Having found an ambiguity, we then consulted the legislative
history and found nothing
indicating that the amendment of section
6015(e) * * * was intended to eliminate our
jurisdiction regarding claims for equitable
relief under section 6015(f) over which we
previously had jurisdiction. The stated
purpose for inserting the language "against
whom a deficiency has been asserted" into
section 6015(e) was to clarify the proper
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time for a taxpayer to submit a request to
the Commissioner for relief under section
6015 regarding underreported taxes.
Id. at 505.
On appeal, the Commissioner changed his mind about the
proper construction of the new language. The Ninth Circuit
agreed with him (and the dissent in Ewing I) that the first step
in our reasoning--finding that the amendment to section 6015(e)
was ambiguous--violated "the basic principle of statutory
construction that ‘a statute ought, upon the whole, to be so
construed that, if it can be prevented, no clause, sentence, or
word shall be superfluous, void, or insignificant.'" Ewing, 439
F.3d at 1014. It concluded that “the Tax Court lacked
jurisdiction because no deficiency had been asserted.” Id. at
1013. In Bartman, the Eighth Circuit adopted the Ninth Circuit’s
holding, though in doing so, it may have been somewhat imprecise
in its use of the terms “assertion,” “determination”, and
“assessment” of a deficiency. Id. at 787 (Tax Court has
jurisdiction over section 6015 petitions “only where a deficiency
has been asserted”); id. (Tax Court has no jurisdiction over
section 6015 petitions “where no deficiency has been determined
by the IRS”); id. at 788 (no Tax Court jurisdiction “because no
deficiency had been assessed against Bartman”).7
7
We construe Bartman’s holding to be the sentence “We agree
with the Ninth Circuit that the tax court lacks jurisdiction
(continued...)
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The opinions from the Eighth and Ninth Circuits create one
of the unique problems that our Court sometimes has to face--we
have always believed that Congress meant us to decide like cases
alike, no matter where in the nation they arose, so that our
precedents could be relied on by all taxpayers. Appeals from our
decisions, though, go to twelve different circuit courts and so
we have often had to react to appellate reversal by only one of
7
(...continued)
under § 6015(e) unless a deficiency was asserted against the
individual petitioning for review,” Bartman, 446 F.3d at 787.
Future cases may well show that Congress meant to give us
jurisdiction when a deficiency was “asserted” because it wanted
to allow taxpayers to petition for relief well before the IRS
sends out a notice of deficiency or makes an assessment--perhaps
as soon as issuance of a revenue agent’s report, or some other
time during an examination, when the IRS first “states that
additional taxes may be owed.” H. Conf. Rept. 106-1033, 1023
(2000), 2000-3 C.B. 304, 353 (quoted in Ewing I, 118 T.C.
504).
The terms “determination” and “assessment” are not
customarily regarded as synonyms in tax law. A “determination”
is the IRS’s final decision, see, e.g., secs. 6212(a),
6230(a)(3)(B). And an “assessment” is the specific procedure by
which the IRS officially records a liability, see sec. 6203,
triggering its power to collect taxes administratively. (The
Code generally bars the IRS from assessing taxes that are being
contested in our Court. See sec. 6213(a).)
We note too that, although notices of deficiency establish
jurisdiction in most of our cases, see Bartman, 446 F.3d at 787,
Congress has given us jurisdiction over cases in which there need
be no deficiency--for example, review of the Commissioner’s
determinations after IRS collection due process hearings. Sec.
6330(d)(1). However, because there was no deficiency lurking in
this case at all, we need not decide whether an “assertion of
deficiency” is synonymous with a “notice of deficiency,” much
less an “assessment”, in defining the limits of our jurisdiction
under section 6015(e). See generally sec. 1.6015-5(b)(5), Income
Tax Regs.
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them. We concluded early on that, when that happens, we should
keep deciding cases as we think right. Lawrence v. Commissioner,
27 T.C. 713, 717 (1957), revd. 258 F.2d 562 (9th Cir. 1958). And
although we also recognize an exception to that rule--we won’t
follow our precedent in a case appealable to a circuit where we
would surely be reversed, see Lardas v. Commissioner, 99 T.C.
490, 495 (1992), explaining Golsen v. Commissioner, 54 T.C. 742
(1970), affd. 445 F.2d 985 (10th Cir. 1971)--we do not always
wait for the Supreme Court to restore consistency in construing
the Tax Code when one or more circuit courts disagree with us.
As we said nearly fifty years ago, we have “no desire to ignore
or lightly regard any decisions of those courts,” and have “not
infrequently * * * been persuaded by the reasoning of opinions of
those courts to change [our] views on various questions being
litigated.” Lawrence, 27 T.C. 717.
The opinions in Ewing I and Bartman change the judicial
landscape, see Robinson v. Commissioner, 119 T.C. 44, 51 (2002),
and so we now reconsider our earlier reading of section 6015(e).
In Ewing I, we thought that reading the key phrase in the
amendment--“In the case of an individual against whom a
deficiency has been asserted”--as limiting our jurisdiction made
little sense if the remaining language, as we had construed it in
Butler and Fernandez, continued to allow us to grant subsection
(f) relief. This did not read the amendment entirely out of the
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statute, but led us to view it (especially in light of its
legislative history) merely as a new timing requirement aimed at
limiting speculative claims for innocent spouse relief. Cf.
Lamie v. United States Trustee, 540 U.S. 526, 534 (2004)
(cautioning against comparisons between amended statutes and
their predecessors to find ambiguity).
After the opinions in Ewing I and Bartman, however, this
reading becomes problematic, particularly when we consider that
“deficiency” itself has a defined meaning--the amount by which
the tax imposed by the Internal Revenue Code exceeds the amount
reported on a return, including an amended return. We now hold,
consistently with those opinions, that the phrase establishes a
condition precedent: A petitioner in this Court who seeks
judicial review of a denial of relief must show that the
Commissioner asserts that he owes more in tax than reported on
his return. By amending section 6015 the way it did, Congress
narrowed the class of individuals able to invoke our jurisdiction
under section 6015(e)(1)(A) to those “against whom a deficiency
has been asserted.” We cannot fairly read Congress’s phrasing of
this qualification as other than a clear, though perhaps
inadvertent, deprivation of our jurisdiction over nondeficiency
stand-alone petitions. Placing that circumscription where it
did, the “assertion of a deficiency” has become the “ticket to
Tax Court” that notices of deficiency are in redetermination
cases.
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We similarly continue to adhere to our reading in Ewing I of
the amendment’s legislative history as focused on the proper time
for a taxpayer to request innocent spouse relief from the IRS.
See Ewing I, 118 T.C. 504. But, though “the amendment was
certainly all about timing [it] was also all about deficiencies.
So it simply reinforces the idea that the elections in
subsections (b) and (c) are also all about deficiencies.”8 The
amendment’s history shows no indication that Congress was
thinking about nondeficiency relief under subsection (f) at all.
And, whatever the merits of using legislative history to overcome
the plain language of a statute, the merits of using the absence
of legislative history to overcome the plain language of the
statute must necessarily be weaker.9 Reasoning that a partial
repeal of our jurisdiction would have to be in the legislative
8
Camp, “Between a Rock and a Hard Place,” 108 Tax Notes
359, 368 (2005).
9
The taxpayer in Bartman noted in oral argument that there
is a presumption against implied repeals of federal jurisdiction,
citing, for example, United States v. Lahey Clinic Hosp., Inc.,
399 F.3d 1, 9 (1st Cir. 2005). See
http://www.ca8.uscourts.gov/oralargs/oaFrame.html (case no. 04-
2771). But that presumption is an application of the more
general presumption disfavoring implied repeal of one statute by
another--a presumption irrelevant here because it would amount to
using old section 6015(e) to rewrite the amendment, and one
should not use a “statute that no longer is on the books to
defeat the plain language of an effective statute.” Am. Bank &
Trust Co. v. Dallas County, 463 U.S. 855, 872-873 (1983); see
also 1A Sutherland Statutes and Statutory Construction, sec.
23:12 (6th ed.)(irreconcilable prior provision must yield to
amendment).
- 19 -
history to be effective is, we think, a misreckoning after Ewing
I and Bartman.
We therefore overrule our holding in Ewing I in light of
this subsequent precedent and now construe section 6015(e) as not
giving us jurisdiction over nondeficiency stand-alone
petitions.10 But if we now think the disputed phrase is not
ambiguous, its effect still seems to us anomalous. The
legislative history that we reviewed in Ewing I strongly hints
that limiting our jurisdiction was not the purpose Congress had
in mind in passing the amendment. Still, "Congress enacts
statutes, not purposes, and courts may not depart from the
statutory text because they believe some other arrangement would
better serve the legislative goals." In re Cavanaugh, 306 F.3d
726, 731-732 (9th Cir. 2002). Whatever "the gap in the section
6015 procedures that this case highlights is not one that can be
closed by judicial fiat." Drake v. Commissioner, 123 T.C. 320,
326 (2004).
Our reading today may also create some confusion--innocent
spouse relief under all subsections of 6015 will remain available
in this Court as an affirmative defense in deficiency
redetermination cases because of section 6213(a), as a remedy on
10
We stress that we are not revisiting our conclusion in
Butler that relief under section 6015(f) is not committed to the
Commissioner's unreviewable discretion, Butler, 114 T.C. 290.
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review of collection due process determinations because of
section 6330(d)(1)(A), and as relief in stand-alone petitions
when the Commissioner has asserted a deficiency against a
petitioner. But until and unless Congress identifies this as a
problem and fixes it legislatively by expanding our jurisdiction
to review all denials of innocent spouse relief, it is quite
possible that the district courts will be the proper forum for
review of the Commissioner's denials of relief in nondeficiency
stand-alone cases.11 Because, however, the 2000 amendment to
section 6015(e) eliminated our jurisdiction in such cases,
An order will be entered
dismissing the case for lack of
jurisdiction.
Reviewed by the Court.
HALPERN, THORNTON, and KROUPA, JJ., agree with this majority
opinion.
11
See generally 5 U.S.C. sec. 703 (2000) (review in absence
of special statutory proceeding); Owner-Operators Indep. Drivers
Association v. Skinner, 931 F.2d 582, 585 (9th Cir. 1991)
(default rule is review in federal district court under general
federal question jurisdiction).
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LARO, J., concurring: The Court today appropriately
overrules the opinion of the Court in Ewing v. Commissioner,
118 T.C. 494 (2002), revd. Commissioner v. Ewing, 439 F.3d 1009
(9th Cir. 2006). With that result, I concur.1 As I stated in my
dissent in Ewing v. Commissioner, supra at 510, the Court’s
opinion there, while reaching a practical result, disregarded the
obvious plain reading of section 6015(e)(1).2 In accordance with
such a plain reading, Congress has allowed the Court to review an
individual’s petition seeking equitable relief under section
6015(f) (equitable relief) only when: (1) The Commissioner has
1
I disagree with the lead opinion in this case in that it
sets forth dicta regarding jurisdiction in situations not before
the Court in this case.
2
Sec. 6015(e)(1) empowers the Court to review a taxpayer’s
stand-alone petition challenging the Commissioner’s determination
as to the taxpayer’s administrative claim for relief from joint
liability under sec. 6015. See generally Fernandez v.
Commissioner, 114 T.C. 324, 329 (2000) (coining the phrase
“stand-alone petition” to refer to a petition filed to invoke our
jurisdiction under sec. 6015(e)(1)). Sec. 6015(e)(1) provides in
relevant part:
SEC. 6015(e).
(1) In general.--In the case of an individual
against whom a deficiency has been asserted and who
elects to have subsection (b) or (c) apply–
(A) In general.--In addition to any
other remedy provided by law, the individual
may petition the Tax Court (and the Tax Court
shall have jurisdiction) to determine the
appropriate relief available to the
individual under this section if such
petition is filed * * * [timely.]
- 22 -
asserted a deficiency against the individual, (2) the individual
has affirmatively elected to have section 6015(b) or (c) apply,
and (3) the taxpayer has timely petitioned the Court to determine
the appropriate relief under section 6015.3 To the extent that
Congress has not provided the Court with jurisdiction to decide a
matter, the Court may not decide it. See Urbano v. Commissioner,
122 T.C. 384, 389 (2004); Fernandez v. Commissioner, 114 T.C.
324, 328 (2000).
I agree with the overruling of Ewing v. Commissioner,
118 T.C. 494 (2002), because that case was wrongly decided.
Section 6015(e)(1) is construed clearly and unambiguously on its
face to provide that the Court is authorized by that section to
decide a claim for equitable relief only where: (1) The
Commissioner has asserted a deficiency against the taxpayer,
(2) the taxpayer has affirmatively elected to have section
6015(b) or (c) apply, and (3) the taxpayer has timely petitioned
the Court to determine the appropriate relief under section 6015.
Accord Bartman v. Commissioner, 446 F.3d 785, 787 (8th Cir. 2006)
(“The language of § 6015(e)(1) is clear and unambiguous”), affg.
3
As discussed in Ewing v. Commissioner, 118 T.C. 494, 515
n.1, 519 (Laro, J., dissenting) (2002), revd. 439 F.3d 1009 (9th
Cir. 2006), Congress used the term “equitable relief” to refer to
the relief provided in sec. 6015(f). See also id. (discussing
the other two types of relief provided in sec. 6015(b) and (c)).
As also discussed, the equitable relief provided in sec. 6015(f)
was not available under former sec. 6013(e), but first arose
during consideration in the conference underlying the enactment
of sec. 6015. See id. at 515 n.1, 519, 522-526.
- 23 -
in part and vacating in part T.C. Memo. 2004-93; see Commissioner
v. Ewing, 439 F.3d at 1009, 1013 (9th Cir. 2006). Given such a
plain reading, it is improper for the Court to resort to the
legislative history of section 6015(e)(1) to change that reading.
In accordance with deeply ingrained principles of statutory
construction, the Court must apply section 6015(e)(1) according
to its terms,4 see Commissioner v. Soliman, 506 U.S. 168, 174
(1993); Garcia v. United States, 469 U.S. 70, 76 n.3 (1984);
Venture Funding, Ltd. v. Commissioner, 110 T.C. 236, 241-242
(1998), affd. without published opinion 198 F.3d 248 (6th Cir.
1999), and must not resort to the legislative history of the
statute to find ambiguities in its terms so as to apply those
terms inconsistently with their plain meaning, see Commissioner
v. Ewing, 439 F.3d at 1013. See Ewing v. Commissioner, 118 T.C.
at 511-514 (Laro, J., dissenting) (discussing the plain meaning
of the terms in section 6015(e)(1) vis-a-vis the reading given
those terms by the Court’s opinion in that case). Accordingly,
unless the Court finds that all three of the referenced
requirements have been met, section 6015(e)(1) does not allow the
4
Although the legislative history to a statute may
sometimes override the statute’s plain meaning interpretation and
lead to a different result where the statute’s history contains
unequivocal evidence of a clear legislative intent, see Consumer
Prod. Safety Commn. v. GTE Sylvania, Inc., 447 U.S. 102, 108
(1980); see also Allen v. Commissioner, 118 T.C. 1, 17 (2002),
the legislative history underlying sec. 6015(e)(1) supports the
conclusions set forth in this concurring opinion. See Ewing v.
Commissioner, 118 T.C. 522-526 (Laro, J., dissenting).
- 24 -
Court to review requests for equitable relief such as those
presented by petitioner and the taxpayer in Ewing v.
Commissioner, supra. While Congress allowed an individual to
qualify for equitable relief in the appropriate case, Congress
did not provide in section 6015(e)(1) that the Court could review
whether a case was appropriate in the absence of an assertion of
a deficiency against the individual, the individual’s request for
relief under section 6015(b) or (c), and the individual’s timely
petition to this Court. Whether it is more practical for this
Court to decide the appropriateness of such a claim is not for us
to opine. We must presume from a plain reading of the text of
section 6015(e)(1) that Congress intended that we not have
jurisdiction over such a petition and must give effect to the
will of Congress as expressed through those terms. See Conn.
Natl. Bank v. Germain, 503 U.S. 249, 253-254 (1992); Griffin v.
Oceanic Contractors, Inc., 458 U.S. 564, 570 (1982); Consumer
Prod. Safety Commn. v. GTE Sylvania, Inc., 447 U.S. 102, 108
(1980).
FOLEY, HAINES, GOEKE, and WHERRY, JJ., agree with this
concurring opinion.
- 25 -
CHIECHI, J., dissenting: With all due respect, I am not
persuaded by the United States Court of Appeals for the Ninth
Circuit (Ninth Circuit)1 or the United States Court of Appeals
for the Eighth Circuit (Eighth Circuit)2 that the Court erred in
holding in Ewing I that the Court had jurisdiction over the
taxpayer’s claim in that case for relief under section 6015(f).
Nor does the Court Opinion3 convince me that the Court should
overrule that holding in Ewing I.
Neither the Ninth Circuit nor the Eighth Circuit expresses
disagreement with, and the Court Opinion reaffirms, see Court op.
pp. 9, 12, 13, 17, 19, the Court’s conclusion in Ewing I that,
prior to the amendment in question of section 6015(e)(1),4 the
1
See Commissioner v. Ewing, 439 F.3d 1009 (9th Cir. 2006)
(Ewing II), revg. 118 T.C. 494 (2002) (Ewing I). In light of the
Ninth Circuit’s holding in Ewing II, the Ninth Circuit vacated
Ewing v. Commissioner, 122 T.C. 32 (2004), which addressed issues
unrelated to the jurisdictional issue that the Court considered
in Ewing I.
2
See Bartman v. Commissioner, 446 F.3d 785 (8th Cir. 2006)
(Bartman), affg. in part and vacating in part T.C. Memo. 2004-93;
see also Sjodin v. Commissioner, Fed. Appx. , 97 AFTR 2d
2006-2622 (8th Cir. 2006) (Sjodin), vacating and remanding per
curiam T.C. Memo. 2004-205.
3
I refer to the “Court Opinion”, and not to the “majority
opinion”, because a majority of the Court’s Judges did not join
the Opinion of the Court.
4
The phrase “against whom a deficiency has been asserted”
was added to sec. 6015(e)(1), effective on Dec. 21, 2000, by the
Consolidated Appropriations Act, 2001 (2001 Consolidated
Appropriations Act), Pub. L. 106-554, app. G, sec. 313, 114 Stat.
2763A-641 (2000). Essentially the same phrase was added to sec.
6015(c)(3)(B), effective on the same date, by the 2001
Consolidated Appropriations Act. Id. After that amendment, sec.
(continued...)
- 26 -
Court’s jurisdiction to review claims for relief under section
6015 was not limited to claims for relief from taxes that may or
may not have been underreported in returns, which taxpayers
raised in either “deficiency” cases commenced in the Court
pursuant to section 6213(a) or so-called stand-alone section 6015
“deficiency” cases, including so-called stand-alone section
6015(f) “deficiency” cases. That is to say, prior to the
amendment of section 6015(e)(1) by the 2001 Consolidated
Appropriations Act (amendment of section 6015(e)(1)), the Court’s
jurisdiction to review claims for relief under section 6015
included claims for relief under section 6015(f) from all or a
portion of any unpaid taxes (i.e., taxes not paid when returns
were filed) in so-called stand-alone section 6015(f)
“nondeficiency” cases.5 See Ewing v. Commissioner, 118 T.C. 494,
500-502 (2002), revd. 439 F.3d 1009 (9th Cir. 2006); see also
4
(...continued)
6015(c)(3)(B) provides:
(B) Time for election.--An election under this
subsection for any taxable year may be made at any time
after a deficiency for such year is asserted but not
later than 2 years after the date on which the
Secretary has begun collection activities with respect
to the individual making the election. [Emphasis
added.]
5
Relief is available under sec. 6015(f) if, “taking into
account all the facts and circumstances, it is inequitable to
hold the individual liable for any unpaid tax or any deficiency
(or any portion of either)”, and relief is not otherwise
available to the taxpayer under sec. 6015(b) or (c).
- 27 -
Fernandez v. Commissioner, 114 T.C. 324 (2000); Butler v.
Commissioner, 114 T.C. 276 (2000).
The question that the Court addressed sua sponte in Ewing I
was whether the amendment of section 6015(e)(1) deprived the
Court of its jurisdiction to review a claim for relief under
section 6015(f) from all or a portion of any unpaid tax in a
stand-alone section 6015(f) “nondeficiency” case. Ewing v.
Commissioner, supra at 503. In resolving that question, the
Court analyzed section 6015(e)(1) both before and after its
amendment by the 2001 Consolidated Appropriations Act.6 Id. at
502-507. In analyzing that section after its amendment, the
Court stated:
6
In analyzing sec. 6015(e)(1) as amended by the 2001
Consolidated Appropriations Act, the Court relied on the
following rules of statutory construction:
In interpreting section 6015(e), our purpose is to
give effect to Congress’s intent. * * * We begin with
the statutory language, and we interpret that language
with reference to the legislative history primarily to
learn the purpose of the statute and to resolve any
ambiguity in the words contained in the language. * * *
Usually, the plain meaning of the statutory language is
conclusive. * * * If the statute is ambiguous or
silent, we may look to the statute’s legislative
history to determine Congressional intent. * * *
Finally, because the changes to the relief from joint
and several liability rules “were designed to correct
perceived deficiencies and inequities in the prior
version” of the rules, this curative legislation should
be construed liberally to effectuate its remedial
purpose. * * *
Ewing v. Commissioner, 118 T.C. 503.
- 28 -
Our interpretation of section 6015(e) concerns the
new language “against whom a deficiency has been
asserted”. However, section 6015(e)(1)(A) still
contains the provision giving this Court jurisdiction
“to determine the appropriate relief available to the
individual under this section” (emphasis added), which,
as previously explained, we have held gives us
jurisdiction over the propriety of equitable relief
under section 6015(f). Equitable relief under section
6015(f) is, and always has been, available in
nondeficiency situations. Under these circumstances,
the amendment to section 6015(e)(1) referring to
situations where “a deficiency has been asserted” and
the retention of the language in that same section
giving us jurisdiction over “the appropriate relief
available to the individual under this section” creates
an ambiguity. Therefore, it is appropriate to consult
the legislative history of the amendment made by the
Consolidated Appropriations Act, 2001.
Id. at 503-504.
After having consulted the conference report accompanying
the amendment of section 6015(e)(1), H. Conf. Rept. 106-1033, at
1023 (2000), 2000-3 C.B. 304, 353, the Court concluded:
The conference report indicates that the language
“against whom a deficiency has been asserted” was
inserted into section 6015(e) to clarify the proper
time for making a request to the Commissioner for
relief from joint and several liability for tax that
may have been underreported on the return. Congress
wanted to prevent taxpayers from submitting premature
requests to the Commissioner for relief from potential
deficiencies before the Commissioner had asserted that
additional taxes were owed. Congress also wanted to
make it clear that a taxpayer does not have to wait
until after an assessment has been made before
submitting a request to the Commissioner for relief
under section 6015. Overall, the legislative history
indicates that Congress was concerned with the proper
timing of a request for relief for underreported tax
and intended that taxpayers not be allowed to submit a
request to the Commissioner regarding underreported tax
until after the issue was raised by the IRS.
- 29 -
There is nothing in the legislative history
indicating that the amendment of section 6015(e) by the
Consolidated Appropriations Act, 2001, was intended to
eliminate our jurisdiction regarding claims for
equitable relief under section 6015(f) over which we
previously had jurisdiction. The stated purpose for
inserting the language “against whom a deficiency has
been asserted” into section 6015(e) was to clarify the
proper time for a taxpayer to submit a request to the
Commissioner for relief under section 6015 regarding
underreported taxes. * * * [Fn. refs. omitted.]
Id. at 505.
Based upon the Court’s review of the language of section
6015(e)(1) both before and after its amendment by the 2001
Consolidated Appropriations Act, the legislative history of that
act, and relevant caselaw, the Court held in Ewing I that the
amendment of section 6015(e)(1) did not deprive it of its
jurisdiction to review the denial of equitable relief under
section 6015(f) with respect to unpaid tax in a stand-alone
section 6015(f) “nondeficiency” case. Id. at 505-506. The Ninth
Circuit reversed that holding in Ewing II. Shortly thereafter,
in Bartman, the Eighth Circuit expressed its agreement with the
Ninth Circuit.7
An appeal in this case normally would lie in the United
States Court of Appeals for the Tenth Circuit. Consequently, the
Court is not required to follow the opinions of the Ninth Circuit
in Ewing II and the Eighth Circuit in Bartman (and in Sjodin).
7
The Eighth Circuit followed Bartman in Sjodin v.
Commissioner, __ Fed. Appx. __, 97 AFTR 2d 2006-2622 (8th Cir.
2006).
- 30 -
Golsen v. Commissioner, 54 T.C. 742, 756-757 (1970), affd. 445
F.2d 985 (10th Cir. 1971). Nonetheless, because the Court
Opinion concludes that those opinions “change the judicial
landscape”, Court op. p. 16, it proceeds to reconsider Ewing I
and decides to overrule it.8
I turn first to the Court Opinion to explain why I am not
persuaded by that Opinion that the Court should overrule Ewing I.
In deciding to overrule the Court’s holding in Ewing I, the Court
Opinion concludes that that holding
becomes problematic, particularly when we consider that
“deficiency” itself has a defined meaning--the amount
by which the tax imposed by the Internal Revenue Code
exceeds the amount reported on a return, including an
amended return. We now hold, consistently with those
opinions [Ewing II and Bartman], that the phrase
[“against whom a deficiency has been asserted”]
establishes a condition precedent: A petitioner in
this Court who seeks judicial review of a denial of
relief must show that the Commissioner asserts that he
owes more in tax than reported on his return. By
amending section 6015 the way it did, Congress narrowed
the class of individuals able to invoke our
jurisdiction under section 6015(e)(1)(A) to those
“against whom a deficiency has been asserted.” We
cannot fairly read Congress’s phrasing of this
8
In overruling Ewing I and holding that the Court does not
have jurisdiction over the instant case, the Court Opinion
acknowledges that “Billings’s position is not a weak one.” Court
op. p. 7. Nonetheless, having held that the Court does not have
jurisdiction over the instant case, the Court Opinion directs
that an order be entered dismissing this case for lack of
jurisdiction. Court op. p. 20. In doing so, perhaps the Court
Opinion finds solace in its suggestion, which I consider to be an
inappropriate and questionable suggestion, that “it is quite
possible that the district courts will be the proper forum for
review of the Commissioner’s denials of relief in nondeficiency
stand-alone cases.” Court op. p. 20.
- 31 -
qualification as other than a clear, though perhaps
inadvertent, deprivation of our jurisdiction over
nondeficiency stand-alone petitions. Placing that
circumscription where it did, the “assertion of a
deficiency” has become the “ticket to Tax Court” that
notices of deficiency are in redetermination cases.
Court op. p. 17.
In asserting “that ‘deficiency’ itself has a defined
meaning--the amount by which the tax imposed by the Internal
Revenue Code exceeds the amount reported on a return, including
an amended return”, Court op. p. 17, the Court Opinion apparently
relies on section 301.6211-1(a), Proced. & Admin. Regs., see
Court op. p. 9. In maintaining that the term “deficiency” has
the meaning set forth in that regulation for all purposes of the
Code, including section 6015, the Court Opinion fails to
acknowledge, let alone discuss, a long line of cases holding that
the term “return” in the Code generally means the original
return.9 See, e.g., Badaracco v. Commissioner, 464 U.S. 386
(1984).10 The Court Opinion is wrong in maintaining that the
9
Perhaps the Court Opinion believes that the parties
implicitly agree that the meaning attributed by the Court Opinion
to the term “deficiency” in sec. 6015 is correct because they
“stipulated that * * * [petitioner] did not qualify for relief
under either section 6015(b) or (c) because no deficiency was
ever asserted against him and his wife.” Court op. p. 8.
Suffice it to say that the Court is not bound by any stipulation
of the parties as to the law. Godlewski v. Commissioner, 90 T.C.
200, 203 n.5 (1988); Sivils v. Commissioner, 86 T.C. 79, 82
(1986).
10
In Badaracco v. Commissioner, 464 U.S. 386, 393-394
(1984), the Supreme Court of the United States stated:
(continued...)
- 32 -
meaning of the term “deficiency” set forth in section 301.6211-
1(a), Proced. & Admin. Regs., applies for all purposes of the
Code.
10
(...continued)
Indeed, as this Court recently has noted, Hillsboro
National Bank v. Commissioner, 460 U.S. 370, 378-380,
n. 10 (1983), the Internal Revenue Code does not
explicitly provide either for a taxpayer’s filing, or
for the Commissioner’s acceptance, of an amended
return; instead, an amended return is a creature of
administrative origin and grace. Thus, when Congress
provided for assessment at any time in the case of a
false or fraudulent “return,” it plainly included by
this language a false or fraudulent original return.
In this connection, we note that until the decision of
the Tenth Circuit in Dowell v. Commissioner, 614 F.2d
1263 (1980), cert. pending, No. 82-1873, courts
consistently had held that the operation of § 6501 and
its predecessors turned on the nature of the taxpayer’s
original, and not his amended, return.8
8
The significance of the original, and not the
amended, return has been stressed in other, but
related, contexts. It thus has been held consistently
that the filing of an amended return in a nonfraudulent
situation does not serve to extend the period within
which the Commissioner may access a deficiency. See,
e.g., Zellerbach Paper Co. v. Helvering, 293 U.S. 172
(1934); National Paper Products Co. v. Helvering, 293
U.S. 183 (1934); National Refining Co. v.
Commissioner, 1 B. T. A. 236 (1924). It also has been
held that the filing of an amended return does not
serve to reduce the period within which the
Commissioner may assess taxes where the original return
omitted enough income to trigger the operation of the
extended limitations period provided by § 6501(e) or
its predecessors. See, e.g., Houston v. Commissioner,
38 T.C. 486 (1962); Goldring v. Commissioner, 20 T.C.
79 (1953). And the period of limitations for filing a
refund claim under the predecessor of § 6511(a) begins
to run on the filing of the original, not the amended,
return. Kaltreider Construction, Inc. v. United
States, 303 F.2d 366, 368 (CA3), cert. denied, 371 U.
S. 877 (1962).
- 33 -
I agree with the Court Opinion that in the instant case
there would be no “deficiency” extant after petitioner and his
spouse filed their joint amended return if the meaning of that
term in section 301.6211-1(a), Proced. & Admin. Regs., were
applicable for purposes of section 6015.11 However, the Court
Opinion does not consider, let alone answer, whether and why that
meaning, and not the meaning established in cases such as
Badaracco v. Commissioner, supra, should apply for purposes of
section 6015, including section 6015(e)(1).12 The term
“deficiency” that appears in section 6015(e)(1) in the phrase
11
That there would be no “deficiency” extant after
petitioner and his spouse filed their joint amended return if the
definition of that term in sec. 301.6211-1(a), Proced. & Admin.
Regs., were applicable for purposes of sec. 6015 does not answer
the question whether “a deficiency has been asserted” for
purposes of sec. 6015(e)(1). See discussion below. Nor does it
answer the question whether there is (1) a “deficiency”, or an
“understatement of tax”, for purposes of sec. 6015(b) or (2) a
“deficiency” for purposes of sec. 6015(c). Sec. 6015(b)(1)(B)
requires that there be an “understatement of tax” in the return
in order to obtain relief under sec. 6015(b). Sec. 6015(b)(1)(D)
refers to whether it is inequitable to hold the taxpayer liable
“for the deficiency in tax for such taxable year attributable to
such understatement”. Sec. 6015(b)(3) provides that the term
“understatement” is defined by sec. 6662(d)(2)(A). Sec.
6662(d)(2)(A) generally defines that term as the excess of “the
amount of the tax required to be shown on the return” over “the
amount of the tax * * * shown on the return”. Nothing in sec.
6015(b) requires that “a deficiency has been asserted”.
12
The Court Opinion’s ipse dixit that, for all purposes of
the Code, the only meaning of the term “deficiency” is that set
forth in sec. 301.6211-1(a), Proced. & Admin. Regs., not only
ignores caselaw holding to the contrary, it also disregards that
nothing in sec. 6015 requires a “deficiency” (or “understatement
of tax”) to continue to exist at any time after a taxpayer files
an original return.
- 34 -
“against whom a deficiency has been asserted” is not clear,
plain, or unambiguous. The Court’s consideration in Ewing I of
the legislative history of the amendment of section 6015(e)(1)
was proper.
Even assuming arguendo that the term “deficiency” that
appears in section 6015(e)(1) in the phrase “against whom a
deficiency has been asserted” were to have the meaning that the
Court Opinion says it has, the Court Opinion’s conclusions that
rest on that premise are nonetheless logically flawed. It is a
non sequitur for the Court Opinion to conclude that, because
“‘deficiency’ itself has a defined meaning--the amount by which
the tax imposed by the Internal Revenue Code exceeds the amount
reported on a return, including an amended return”, Court op. p.
17, the phrase “against whom a deficiency as been asserted”
(1) is “clear”, “plain”, and “not ambiguous”, Court op. pp. 17,
18, 19; (2) establishes a “condition precedent” to the Court’s
jurisdiction under section 6015, Court op. p. 17; and (3) results
in a “deprivation of our jurisdiction over nondeficiency stand-
alone petitions”, Court op. p. 17. The meaning that the Court
Opinion gives to the term “deficiency” that appears in section
6015(e)(1) in the phrase “against whom a deficiency has been
asserted” does not give meaning to that entire phrase; it only
gives the meaning that the Court says it has to the term
“deficiency” used in that phrase. The phrase “against whom a
- 35 -
deficiency has been asserted” is not clear, plain, or
unambiguous. Despite its assertions to the contrary, see Court
op. pp. 17, 18, 19, the Court Opinion acknowledges as much, see
Court op. p. 14 note 7. The Court’s consideration in Ewing I of
the legislative history of the amendment of section 6015(e)(1)
was proper.
In pointing out the Eighth Circuit’s interchangeable use in
Bartman of terms such as “assertion of a deficiency”,
“determination of a deficiency”, “issue of a notice of
deficiency”, and “assessment of a deficiency” (discussed below),
the Court Opinion states:
Future cases may well show that Congress meant to give
us jurisdiction when a deficiency was “asserted”
because it wanted to allow taxpayers to petition for
relief well before the IRS sends out a notice of
deficiency or makes an assessment--perhaps as soon as
issuance of a revenue agent’s report, or some other
time during an examination, when the IRS first “states
that additional taxes may be owed.” H. Conf. Rept.
106-1033, at 1023 (2000) (quoted in Ewing I, 118 T.C.
at 504).
The terms “determination” and “assessment” are not
customarily regarded as synonyms in tax law. A
“determination” is the IRS’s final decision, see, e.g.,
secs. 6212(a), 6230(a)(3)(B)). And an “assessment” is
the specific procedure by which the IRS officially
records a liability, see sec. 6203, triggering its
power to collect taxes administratively. (The Code
generally bars the IRS from assessing taxes that are
being contested in our Court. See sec. 6213(a).)
We note too that, although notices of deficiency
establish jurisdiction in most of our cases, see
Bartman, 446 F.3d at 787, Congress has given us
jurisdiction over cases in which there need be no
deficiency--for example, review of the Commissioner’s
- 36 -
determinations after IRS collection due process
hearings. Sec. 6330(d)(1). However, because there was
no deficiency lurking in this case at all,[13] we need
not decide whether an “assertion of deficiency” is
synonymous with a “notice of deficiency,” much less an
“assessment”, in defining the limits of our
jurisdiction under section 6015(e). * * *
Court op. p. 15 note 7; see also Court op. p. 14.
Despite assertions to the contrary that appear in the Court
Opinion, see Court op. pp. 17, 18, 19, the excerpt quoted above
leaves no doubt that the Court Opinion concludes that the phrase
“against whom a deficiency has been asserted” may have any one of
several possible meanings. The Court Opinion thus acknowledges
that that phrase is ambiguous. The internal inconsistency in the
Court Opinion as to whether the phrase “against whom a deficiency
has been asserted” is ambiguous is another material flaw in that
Opinion. Having concluded that that phrase is ambiguous, the
Court Opinion should have considered the legislative history of
the amendment of section 6015(e)(1), as the Court properly did in
Ewing I, in order to determine its meaning as used in section
6015(e)(1).
13
I disagree that “there was no deficiency lurking in this
case at all”. There was a “deficiency” with respect to the
original return filed by petitioner and his spouse. Nothing in
the Court Opinion adequately explains why that “deficiency” with
respect to the original return is not the “deficiency” in the
phrase “against whom a deficiency has been asserted” in sec.
6015(e)(1). Nor does anything in the Court Opinion adequately
explain why it apparently assumes that a “deficiency” must
continue to exist at the time a claim for relief under sec.
6015(b) is made. See discussion above and below.
- 37 -
Although the Court Opinion concludes that the phrase
“against whom a deficiency has been asserted” is ambiguous, see
Court op. p. 14 note 7, it also concludes, inconsistently, that
that phrase is “clear”, “plain”, and “not ambiguous”, Court op.
pp. 17, 18, 19. Having concluded, albeit inconsistently, that
the phrase “against whom a deficiency has been asserted” is not
ambiguous, the Court Opinion should have interpreted that phrase
according to its language. It did not. The Court Opinion holds
that the phrase “against whom a deficiency has been asserted”
requires that “A petitioner in this Court who seeks judicial
review of a denial of relief must show that the Commissioner
asserts that he owes more in tax than reported on his return.”
Court op. p. 17 (emphasis added). The Court Opinion’s holding
uses the present tense “asserts”. In contradistinction, section
6015(e)(1) uses “has been asserted”. By using the present tense,
which is not found in section 6015(e)(1) in the phrase “against
whom a deficiency has been asserted”, the Court Opinion reads
into that phrase a requirement that is not in that section.
Having read such a requirement into section 6015(e)(1), the Court
Opinion makes matters worse by failing to specify when the
taxpayer must satisfy that requirement. Thus, the Court Opinion
is unclear as to whether it requires a taxpayer who files a
petition with the Court seeking section 6015 relief to show, at
the time the taxpayer files the petition, thereafter during the
- 38 -
pendency of the section 6015 Court proceeding, and/or at some
other time, that “the Commissioner asserts that he [the taxpayer]
owes more in tax than reported on his [the taxpayer’s] return.”14
Court op. p. 17.
14
If the Court Opinion intends by its use of the present
tense “asserts” to impose a jurisdictional requirement that, at
the time a petition is filed and thereafter during the pendency
of the sec. 6015 Court proceeding, the Commissioner must be
asserting that the taxpayer “owes more in tax than reported on
his [the taxpayer’s] return”, such a holding would result in the
Court’s not having jurisdiction over a case in which “a
deficiency has been asserted” at some point in time in the
administrative process and an ultimate determination has been
made while the case is pending in a sec. 6015 Court proceeding
that there is no “deficiency”. I believe that any such result
would be wrong, even assuming arguendo that the Court Opinion
were correct that the phrase “against whom a deficiency has been
asserted” is a jurisdictional requirement.
Not only does the Court Opinion’s holding read out of sec.
6015(e)(1) the words “has been asserted” in the phrase “against
whom a deficiency has been asserted”, it reads into that phrase
the requirement that “the Commissioner” be asserting a
“deficiency”. Sec. 6015(e)(1) is silent, and thus ambiguous,
regarding who must have asserted the “deficiency”. If the Court
Opinion were correct that the phrase “against whom a deficiency
had been asserted” is “clear”, “plain”, and “not ambiguous”,
Court op. pp. 17, 18, 19, it would be inappropriate to consult
the legislative history of the amendment of sec. 6015(e) in order
to determine who must have asserted the “deficiency”. However,
it would be proper to consult the dictionary definition of the
word “assert”. The definition of the word “assert” in Webster’s
Third New International Dictionary Unabridged 131 (1993) is
“state or affirm positively”. Thus, petitioner could have
“asserted” for purposes of sec. 6015(e)(1) a “deficiency” when he
and his spouse filed their amended return and/or the Commissioner
could have “asserted” a “deficiency” when the Commissioner
assessed the increase in the tax shown in that amended return,
which was attributable to the “deficiency” with respect to the
original return. The point is that sec. 6015(e)(1) is not plain
or clear regarding who must have asserted a “deficiency”. It is
thus necessary to consult the legislative history of the
amendment of sec. 6015(e).
- 39 -
The only thing about the phrase “against whom a deficiency
has been asserted” that is beyond question is that it does not
require, as the Court Opinion does, more than that “a deficiency
has been asserted” at some point in time.15 The Court Opinion is
wrong to read the words “has been asserted” out of the phrase
“against whom a deficiency has been asserted” and to read the
word “asserts” into that phrase.
Although the Court Opinion declines to consider the
legislative history of the amendment of section 6015(e)(1) in
order to interpret the phrase “against whom a deficiency has been
asserted”, it nonetheless offers the following criticism of the
Court’s reliance on that legislative history in Ewing I:
The amendment’s history shows no indication that
Congress was thinking about nondeficiency relief under
subsection (f) at all. And, whatever the merits of
using legislative history to overcome the plain
language of a statute, the merits of using the absence
of legislative history to overcome the plain language
of the statute must necessarily be weaker. Reasoning
that a partial repeal of our jurisdiction would have to
be in the legislative history to be effective is, we
15
The Court Opinion seems to recognize as much when it
states:
Future cases may well show that Congress meant to give
us jurisdiction when a deficiency was “asserted”
because it wanted to allow taxpayers to petition for
relief well before the IRS sends out a notice of
deficiency or makes an assessment--perhaps as soon as
issuance of a revenue agent’s report, or some other
time during an examination, when the IRS first “states
that additional taxes may be owed.” * * *
Court op. p. 15 note 7.
- 40 -
think, a misreckoning after Ewing I and Bartman. [Fn.
ref. omitted.]
Court op. pp. 18-19.
The Court Opinion does not explain why “Reasoning that a
partial repeal of our jurisdiction would have to be in the
legislative history to be effective is * * * a misreckoning after
Ewing I and Bartman.” Id. In any event, I disagree with that
conclusion, even though I agree with the Court Opinion that the
legislative history of the amendment of section 6015(e)(1) does
not indicate that, in adding the phrase “against whom a
deficiency has been asserted”, Congress had in mind a stand-alone
section 6015(f) “nondeficiency” case. That is precisely the
point that the Court was making in Ewing I. In amending section
6015(e)(1), Congress had in mind only the proper timing of a
request for relief from underreported tax in a return, namely, a
“deficiency” situation. Ewing v. Commissioner, 118 T.C. 505.
Congress did not have in mind a stand-alone section 6015(f)
“nondeficiency” case when it amended section 6015(e)(1) by adding
the phrase “against whom a deficiency has been asserted”. Since
Congress did not have in mind such a case when it enacted the
amendment of section 6015(e)(1), Congress could not have had in
mind depriving, and Congress could not have intended to deprive,
the Court of the jurisdiction that the Court had over such a case
prior to that amendment. Id. at 504-505. If Congress had
intended to deprive the Court of the jurisdiction that it had
- 41 -
prior to the amendment of section 6015(e)(1) over a stand-alone
section 6015(f) “nondeficiency case”, it would have expressly and
clearly so stated in the legislative history of that amendment.
It did not. The silence of Congress is strident.16
I turn now to the Eighth Circuit’s opinion in Bartman to
explain why I am not persuaded by that opinion that the Court
should overrule Ewing I. As discussed above, the Court Opinion
points out, Court op. p. 14 note 7, that the Eighth Circuit in
Bartman interchangeably used terms such as “determination of a
deficiency”, “issue of a notice of deficiency”, and “assessed
deficiency”, even though those terms are not synonymous in the
Federal tax law. The Eighth Circuit in Bartman also
interchangeably used those terms with the phrase “a deficiency
has been asserted” in section 6015(e)(1), evidently having
concluded that all of those terms are synonymous in the Federal
tax law.17 As the legislative history of section 6015(e)(1)
16
Senators Feinstein and Kyl recently introduced S. 3523,
109th Cong., 2d Sess., sec. 1 (2006), that would clarify that the
Court has jurisdiction under sec. 6015(e) to review all claims
for relief under sec. 6015(f). In introducing that bill, Senator
Feinstein stated: “this bill clarifies the statute’s original
intent”. 152 Cong. Rec. S5962 (daily ed. June 15, 2006).
17
To illustrate, the Eighth Circuit stated in Bartman:
The IRS did not determine a deficiency against
Bartman for tax year 1997. Bartman cites Ewing v.
Comm'r, 118 T.C. 494, 2002 WL 1150775 (2002), where the
tax court found that it had jurisdiction to review a
petition from a denial of a request for § 6015 relief,
(continued...)
- 42 -
recognizes,18 those terms are not synonymous in the Federal tax
17
(...continued)
despite the fact that no notice of deficiency had been
issued. Since briefing and oral argument in this case,
however, the Ninth Circuit reversed the tax court and
held that the tax court has no jurisdiction under §
6015(e) to consider a petition for review where no
deficiency was determined by the IRS. Comm'r v. Ewing,
439 F.3d 1009, 1012-14 (9th Cir. 2006). We agree with
the Ninth Circuit that the tax court lacks jurisdiction
under § 6015(e) unless a deficiency was asserted
against the individual petitioning for review. The
language of § 6015(e)(1) is clear and unambiguous: an
individual may petition the tax court for review “[i]n
the case of an individual against whom a deficiency has
been asserted and who elects to have subsection (b) and
(c) apply....” 26 U.S.C. § 6015(e)(1) (emphasis
added). As such, we end our inquiry into the meaning
of the statute and apply its plain language.
Citicasters v. McCaskill, 89 F.3d 1350, 1354-55 (8th
Cir. 1996); Arkansas AFL-CIO v. FCC, 11 F.3d 1430, 1440
(8th Cir. 1993) (en banc). Applying the statute's
plain language, we hold that the tax court had no
jurisdiction to review Bartman's petition for review of
the IRS's denial of her tax year 1997 refund request
because no deficiency had been assessed against Bartman
for tax year 1997. [Emphasis added; fn. ref. omitted.]
Bartman v. Commissioner, 446 F.3d at 787-788.
18
The conference report accompanying the 2001 Consolidated
Appropriations Act states in pertinent part:
Timing of request for relief.--Confusion currently
exists as to the appropriate point at which a request
for innocent spouse relief should be made by the
taxpayer and considered by the IRS. Some have read the
statute to prohibit consideration by the IRS of
requests for relief until after an assessment has been
made, i.e., after the examination has been concluded,
and if challenged, judicially determined. Others have
read the statute to permit claims for relief from
deficiencies to be made upon the filing of the return
before any preliminary determination as to whether a
deficiency exists or whether the return will be
(continued...)
- 43 -
law. The Commissioner “determines that there is a deficiency” in
a document known as a “notice of deficiency” that the
Commissioner sends or issues to the taxpayer. See sec. 6212(a).
An “assessment” is the procedure by which the Commissioner
officially records a tax liability. See sec. 6203. However,
there are limitations on the authority of the Commissioner to
assess a “deficiency” that the Commissioner has “determined”.
See, e.g., secs. 6213, 6215. An “assessment” by the Commissioner
is required before the Commissioner may proceed to collect a tax
liability. See sec. 6502.
18
(...continued)
examined. * * * Congress did not intend that taxpayers
be prohibited from seeking innocent spouse relief until
after an assessment has been made; Congress intended
the proper time to raise and have the IRS consider a
claim to be at the same point where a deficiency is
being considered and asserted by the IRS. This is the
least disruptive for both the taxpayer and the IRS
since it allows both to focus on the innocent spouse
issue while also focusing on the items that might cause
a deficiency. * * * The bill clarifies the intended
time by permitting the election under [section 6015]
(b) and (c) to be made at any point after a deficiency
has been asserted by the IRS. A deficiency is
considered to have been asserted by the IRS at the time
the IRS states that additional taxes may be owed. Most
commonly, this occurs during the Examination process.
It does not require an assessment to have been made,
nor does it require the exhaustion of administrative
remedies in order for a taxpayer to be permitted to
request innocent spouse relief.
H. Conf. Rept. 106-1033, at 1022-1023 (2000), 2000-3 C.B. 304,
352-353.
- 44 -
Although the Eighth Circuit in Bartman interchangeably used
terms that are not synonymous in the Federal tax law, after a
careful reading of the Eighth Circuit’s opinion in Bartman (and
its opinion in Sjodin that relied on Bartman), I believe that the
Eighth Circuit in Bartman (and in Sjodin) construed the language
“a deficiency has been asserted” that appears in the phrase
“against whom a deficiency has been asserted” to mean “a
deficiency has been determined” by the Commissioner in a notice
of deficiency.19 In reaching that conclusion, the Eighth Circuit
19
Before the Eighth Circuit in Bartman began to use
interchangeably various terms that have different meanings in the
Federal tax law, see supra note 17, the Eighth Circuit stated:
Congress created the United States Tax Court “to
provide taxpayers with a means of challenging
assessments made by the Commissioner without first
having to pay the alleged deficiency. Without such a
forum, taxpayers would have to pay the asserted
deficiency and then initiate a suit in federal district
court for a refund.” Samuels, Kramer & Co. v. Comm'r,
930 F.2d 975, 979 (2d Cir. 1991). As an Article I
court, the tax court is a court of “strictly limited
jurisdiction.” Kelley v. Comm'r, 45 F.3d 348, 351 (9th
Cir. 1995). A notice of deficiency issued by the IRS
pursuant to § 6212 is the taxpayer's jurisdictional
“ticket to the Tax Court.” Bokum v. Comm'r, 992 F.2d
1136, 1139 (11th Cir. 1993) (quoting Stoecklin v.
Comm'r, 865 F.2d 1221, 1224 (11th Cir. 1989)); Spector
v. Comm'r, 790 F.2d 51, 52 (8th Cir. 1986) (per curiam)
(citing Laing v. United States, 423 U.S. 161, 165, 96
S. Ct. 473, 46 L. Ed. 2d 416 n. 4 (1976), and holding that
“the determination of a deficiency and the issue of a
notice of deficiency is an absolute precondition to tax
court jurisdiction”). Accordingly, the IRC provides
that the tax court has jurisdiction over petitions for
review from determinations regarding the availability
of § 6015 relief only where a deficiency has been
(continued...)
- 45 -
may have been misled by the position that the Government advanced
on appeal in Bartman (and in Sjodin).20 In the briefs that the
Government filed in Bartman (and in Sjodin),21 the Government
argued that the language “a deficiency has been asserted” that
appears in the phrase “against whom a deficiency has been
asserted” means “a deficiency has been determined” by the
Commissioner. As explained above, the Commissioner “determines
that there is a deficiency” in a document called a “notice of
deficiency” that the Commissioner sends to the taxpayer. The
legislative history of the amendment of section 6015(e)(1) belies
the position of the Government on appeal in Bartman (and in
Sjodin).22 See supra note 18.
19
(...continued)
asserted against the taxpayer. § 6015(e)(1).
Bartman v. Commissioner, 446 F.3d at 787.
I also read the Eighth Circuit’s opinion in Sjodin, which
relied on Bartman, as construing the language “a deficiency has
been asserted” to mean “a deficiency has been determined” by the
Commissioner in a notice of deficiency issued to the taxpayer.
Thus, the Eighth Circuit stated in Sjodin: “This circuit has
recently concluded [in Bartman] that the issuance of a deficiency
by the IRS is a prerequisite for tax court jurisdiction over a
petition for review from an IRS determination regarding relief
available under § 6015.” Sjodin v. Commissioner, __ Fed. Appx.
__, 97 AFTR 2d 2006-2622 (emphasis added).
20
The Government took the same position on appeal of Ewing I
to the Ninth Circuit.
21
See supra note 20.
22
See supra note 20.
- 46 -
In apparently adopting the position advanced to it by the
Government, the Eighth Circuit has not interpreted the phrase
“against whom a deficiency has been asserted” that it held was
“clear and unambiguous” and “plain,” Bartman V. Commissioner, 446
F.3d 785, 787, 788 (8th Cir. 2006), affg. in part and vacating in
part T.C. Memo. 2004-93, according to the language in that
phrase. Instead, it has construed that phrase and gave it a
meaning that is contrary to, and not apparent from, the language
in that phrase.23
I turn finally to the Ninth Circuit’s opinion in Ewing II to
explain why I am not persuaded by that opinion that the Court
should overrule Ewing I. According to the Ninth Circuit, the
language of the amendment of section 6015(e)(1) is “plain”,
Commissioner v. Ewing, 439 F.3d at 1013; “by interpreting the
23
The only reasonable alternative to my reading of the
Eighth Circuit’s opinion in Bartman is that, because of the
Eighth Circuit’s interchangeable use of various terms that are
not synonymous in the Federal tax law, that Court’s holding as to
the meaning of the phrase “against whom a deficiency has been
asserted” is ambiguous. In this connection, I note that the
Court Opinion states: “We construe Bartman’s holding to be the
sentence ‘We agree with the Ninth Circuit that the tax court
lacks jurisdiction under § 6015(e) unless a deficiency was
asserted against the individual petitioning for review’”. Court
op. pp. 14-15 note 7 (emphasis added). That statement of the
Court Opinion ignores what the Eighth Circuit stated its holding
to be in Bartman. The Eighth Circuit stated: “Applying the
statute’s plain language, we hold that the tax court had no
jurisdiction to review Bartman’s petition for review of the IRS’s
denial of her tax year 1997 refund request because no deficiency
had been assessed against Bartman for tax year 1997.” Bartman v.
Commissioner, supra at 788 (emphasis added).
- 47 -
statute as not requiring the assertion of a deficiency, the Tax
Court simply has written the language out of the statute”, id. at
1014; and by doing so, the Tax Court violated “the basic
principle of statutory construction that ‘a statute ought, upon
the whole, to be so construed that, if it can be prevented, no
clause, sentence, or word shall be superfluous, void, or
insignificant’”, id.
With respect to the Ninth Circuit’s conclusion in Ewing II
that the language “against whom a deficiency has been asserted”
is “plain”, the Court Opinion in the instant case and the Eighth
Circuit’s opinions in Bartman and Sjodin belie that conclusion.
With respect to the Ninth Circuit’s conclusions in Ewing II
that in Ewing I the Court wrote the language “against whom a
deficiency has been asserted” out of section 6015(e)(1), thereby
making that phrase “superfluous, void, or insignificant”, id.,
and violating a basic principle of statutory construction, id.,
that is not what the Court did in Ewing I. The Court found in
Ewing I that Congress added the phrase “against whom a deficiency
has been asserted” to section 6015(e)(1) in order to prevent a
taxpayer from making a claim for relief under section 6015 until
a “deficiency has been asserted” only in a situation where tax
may or may not have been underreported in a return, namely, only
in a “deficiency” situation. Ewing v. Commissioner, 118 T.C.
505. Thus, under Ewing I, in a case where tax may or may not
- 48 -
have been underreported in a return, and only in such a case,
must “a deficiency * * * [have] been asserted” in order for the
Court to have jurisdiction over such a case.24 See id.
Accordingly, Ewing I did not read the phrase “against whom a
deficiency has been asserted” out of section 6015(e)(1) as
amended by the 2001 Consolidated Appropriations Act and did not
make that phrase superfluous, void, or insignificant in violation
of a basic principle of statutory construction.
I am not persuaded by the Ninth Circuit’s opinion in Ewing
II, the Eighth Circuit’s opinions in Bartman and Sjodin, or the
Court Opinion in the instant case that the Court erred in Ewing
I. Consequently, I cannot in good conscience conclude that the
Court should overrule Ewing I, and I dissent.
COLVIN, COHEN, SWIFT, WELLS, GALE, and MARVEL, JJ., agree
with this dissenting opinion.
24
Ewing I was not a case where tax may or may not have been
underreported in a return. Ewing I was a case where the tax due
shown in the return was not paid, the Commissioner assessed such
unpaid tax, and the taxpayer sought relief under sec. 6015(f) in
a stand-alone sec. 6015(f) “nondeficiency” case. See Ewing v.
Commissioner, 118 T.C. 506.
- 49 -
VASQUEZ, J., dissenting: Respectfully, I do not believe we
should reverse our decision in Ewing v. Commissioner, 118 T.C.
494 (2002) (Ewing I), revd. 439 F.3d 1009 (9th Cir. 2006).
We have previously considered what we should do when an
issue comes before us a second time after a Court of Appeals has
reversed a prior Tax Court opinion on the same point. Lardas v.
Commissioner, 99 T.C. 490, 494 (1992). In Lawrence v.
Commissioner, 27 T.C. 713, 716-717 (1957), revd. 258 F.2d 562
(9th Cir. 1958), we decided that, although we should seriously
consider the reasoning of the Court of Appeals which reversed our
decision, we ought not follow the reversal if we believe it is
incorrect. See Lardas v. Commissioner, supra.
The Tax Court, being a tribunal with national
jurisdiction over litigation involving the
interpretation of Federal taxing statutes which may
come to it from all parts of the country, has * * *
[an] obligation to apply with uniformity its
interpretation of those statutes. That is the way it
has always seen its statutory duty and, with all due
respect to the Courts of Appeals, it cannot
conscientiously change unless Congress or the Supreme
Court so directs. [Lawrence v. Commissioner, supra at
719-720.]
This case is not governed by the Golsen doctrine. See Court
op. pp. 7, 16. In Ewing I, we interpreted the statute. If
Congress disagrees with that interpretation, then Congress can
revise the statute to provide otherwise. Neal v. United States,
516 U.S. 284, 295-296 (1996).
- 50 -
I do not believe that the opinions of the U.S. Courts of
Appeals for the Eighth and Ninth Circuit “change the judicial
landscape”. See Court op. p. 16. The reasoning and analysis of
the U.S. Courts of Appeals for the Eighth and Ninth Circuit is
essentially the reasoning and analysis of the dissent in Ewing I.
See Bartman v. Commissioner, 446 F.3d 785, 787-788 (8th Cir. May
2, 2006); Ewing v. Commissioner, 439 F.3d at 1013-1015; Ewing I,
supra at 510-528 (Laro, J., dissenting). These views (i.e., of
the U.S. Courts of Appeals for the Eighth and Ninth Circuit and
of the dissent in Ewing I) were before this Court in Ewing I;
they were given serious consideration; and they were rejected.
Accordingly, when a Court of Appeals reverses our original
decision but neither addresses any new arguments nor provides any
new analysis, as is the case herein, I do not believe we should
reverse our original decision. Respectfully, I dissent.
SWIFT, J., agrees with this dissenting opinion.
- 51 -
MARVEL, J., dissenting: Relying on what the Court’s Opinion
asserts is the plain meaning of prefatory language in section
6015(e)(1), the Court holds that it does not have jurisdiction
under section 6015(e)(1) to review the Commissioner’s
determination denying a taxpayer relief under section 6015(f) in
a nondeficiency case. Specifically, the Court’s Opinion
concludes that, in order for us to have jurisdiction over a
taxpayer’s petition for relief under section 6015, the taxpayer
must be a person “against whom a deficiency has been asserted and
who elects to have subsection (b) or (c) apply”. The Court bases
its holding that we have no jurisdiction to decide this case on
its conclusion that petitioner is not an individual “against whom
a deficiency has been asserted”. I disagree. Because I conclude
that petitioner is an individual “against whom a deficiency has
been asserted”, I contend that the Court’s Opinion deciding the
jurisdictional issue against petitioner is in error.
Congress enacted section 6015 in 1998 as part of the
Internal Revenue Service Restructuring and Reform Act of 1998,
Pub. L. 105-206, sec. 3201(a), 112 Stat. 734. As originally
enacted, section 6015(e)(1) provided, in pertinent part, that
(1) In general.--In the case of an individual who
elects to have subsection (b) or (c) apply--
(A) In general.--The individual may petition
the Tax Court (and the Tax Court shall have
jurisdiction) to determine the appropriate relief
available to the individual under this section
* * *
- 52 -
In 2001, Congress amended section 6015(e)(1), effective on
December 21, 2000 (2001 amendment). Consolidated Appropriations
Act, 2001, Pub. L. 106-554, app. G, sec. 313, 114 Stat. 2763A-641
(2000). As a result, section 6015(e)(1) currently provides, in
pertinent part,
SEC. 6015(e). Petition for Review by Tax Court.--
(1) In general.--In the case of an individual
against whom a deficiency has been asserted and
who elects to have subsection (b) or (c) apply--
(A) In general.--In addition to any
other remedy provided by law, the individual
may petition the Tax Court (and the Tax Court
shall have jurisdiction) to determine the
appropriate relief available to the
individual under this section * * *
The Court’s Opinion concludes that we do not have
jurisdiction because petitioner is not an individual against whom
a deficiency has been asserted. Court op. p. 17. The Court’s
Opinion explains that there is no deficiency because petitioner
reported the additional tax liability attributable to the
embezzlement income on an amended return, and an amount reported
on an amended return must be treated as an amount shown by the
taxpayer upon his return in calculating the amount of a
deficiency under section 6211(a). See sec. 301.6211-1(a),
Proced. & Admin. Regs.
In reaching its conclusion, the Court relies upon the
opinions of the Court of Appeals for the Ninth Circuit and the
- 53 -
Court of Appeals for the Eighth Circuit in Commissioner v. Ewing,
439 F.3d 1009 (9th Cir. 2006), revg. Ewing v. Commissioner, 118
T.C. 494 (2002) (Ewing I) and vacating 122 T.C. 32 (2004), and
Bartman v. Commissioner, 446 F.3d 785 (8th Cir. 2006), affg. in
part and revg. in part T.C. Memo. 2004-93. Both the Court of
Appeals for the Ninth Circuit and the Court of Appeals for the
Eighth Circuit concluded that the language added to section
6015(e)(1) by the 2001 amendment was clear and unambiguous and
that the 2001 amendment limited our jurisdiction in section
6015(f) cases to those cases in which a deficiency has been
asserted. However, the Court of Appeals for the Eighth Circuit
in Bartman appears to have equated the language “against whom a
deficiency has been asserted” to a requirement that a section
6015(f) case must arise from a deficiency determination by the
Commissioner. See Bartman v. Commissioner, supra at 787 (Tax
Court has no jurisdiction over a section 6015 petitioner “where
no deficiency was determined by the IRS”).
The language that Congress chose to add to section
6015(e)(1) in 2001 stops far short of requiring that the
Commissioner must actually have determined a deficiency. The
determination of a deficiency is a technical concept that refers
to the action taken by the Commissioner after he evaluates a
taxpayer’s tax situation and finally concludes that the taxpayer
erred either in making a return that understated his tax
- 54 -
liability or in failing to make a return at all. The
Commissioner “determines” a deficiency when he finally concludes
that the taxpayer has understated his tax liability and reflects
that determination in a notice of deficiency. See sec. 6212.
Before the Commissioner issues a notice of deficiency, an
extensive administrative examination or “audit” often occurs. It
begins when the Internal Revenue Service (the Service) selects a
taxpayer (in the case of a failure to file) or a taxpayer’s
return for examination and notifies the taxpayer of the
examination. At that point, the Service has usually taken no
position regarding the possible existence of a deficiency. The
Service typically will take no position regarding the existence
of a deficiency until the examination has been completed.
If the Service concludes that there is an understatement of
tax on a taxpayer’s return, it will usually issue a preliminary
report, commonly referred to as the 30-day letter. The 30-day
letter advises the taxpayer that the Service believes adjustments
are necessary to the taxpayer’s return and provides the taxpayer
with a listing of the adjustments and a calculation of the
taxpayer’s correct income tax liability. The 30-day letter will
also state the amount of the understatement that the Service
contends the taxpayer has made, and it will calculate the
- 55 -
deficiency and any additions to tax or penalties for which the
Service alleges the taxpayer is liable.
The 30-day letter gives the taxpayer an opportunity to
dispute the Service’s asserted tax deficiency administratively
and to contest the proposed imposition of any addition to tax or
penalty. The Commissioner usually will issue a notice of
deficiency after the administrative appeal process has been
completed and the case is unagreed, or after the time limit for
pursuing an administrative appeal has expired without taxpayer
action, or if the expiration of the period of limitations for
assessment is about to expire. A taxpayer who agrees to the
proposed deficiency or who voluntarily files an amended return
reflecting the proposed deficiency ordinarily does not receive a
notice of deficiency.
With this background in mind, we must turn to the actual
language of section 6015(e)(1) as amended. Although Congress is
well aware of the words it has used in other sections of the
Internal Revenue Code (the Code) to reflect that the Commissioner
has determined a deficiency and issued a notice of deficiency,
see sec. 6212(a), the words used by Congress in section
6015(e)(1) as amended do not contain any reference to a
determination of a deficiency by the Commissioner. Section
6015(e)(1) refers only to “an individual against whom a
deficiency has been asserted”. It does not require that the
- 56 -
Commissioner (or anyone else for that matter) must actually have
determined a deficiency. The pertinent language of section
6015(e)(1) as amended requires only that a deficiency must have
been asserted by someone, but it does not specify by whom or how
or when.
Because section 6015(e) as amended does not use the magic
words “determine a deficiency” or specify that the deficiency
must actually be asserted by the Commissioner, section 6015(e)(1)
as amended screams out for interpretation. If Congress had
intended to limit the right to petition this Court in section
6015 cases only to those taxpayers who had received a notice of
deficiency, it is beyond debate that Congress knew how to say so
clearly and unequivocally. The fact that Congress did not refer
to “an individual against whom a deficiency has been determined”
or to “an individual against whom the Commissioner has determined
a deficiency” is compelling evidence that Congress did not
intend, when it amended section 6015(e)(1), to limit the right to
petition this Court in section 6015 cases to those taxpayers to
whom the Commissioner had mailed a notice of deficiency.
This case illustrates why recourse to the legislative
history is warranted now and was warranted in Ewing I.
Petitioner filed a joint return for 1999 with his wife. On that
return, there is an understatement of tax attributable to the
erroneous items (unreported embezzlement income) of petitioner’s
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wife. Petitioner discovered the understatement after the joint
return was filed. On the advice of counsel, petitioner and his
wife filed an amended return for 1999 that reported the
previously unreported embezzlement income of petitioner’s wife
and calculated an additional income tax liability attributable to
the previously unreported embezzlement income. That additional
tax liability was not paid when petitioner and his wife filed the
amended return, nor has it been paid to date.
Although respondent was under no legal obligation to do so,
respondent processed the amended return1 and, without issuing a
notice of deficiency, assessed2 the additional tax liability
reported on the amended return. Subsequently, petitioner
submitted a second Form 8857, Request for Innocent Spouse Relief,
which respondent denied.3 Petitioner then filed a petition in
this Court seeking a review of respondent’s determination. It is
our jurisdiction over this petition that the Court’s Opinion
concludes is nonexistent.
1
See, e.g., Badaracco v. Commissioner, 464 U.S. 386 (1984).
2
Assessment is a technical term in the tax field. It is
generally used to describe the formal act of recording on the
records of the Internal Revenue Service a tax liability that has
been reported on a tax return, sec. 6201(a)(1), or that
otherwise has become final and/or assessable, sec. 6213(b), (c),
and (d). See sec. 6203.
3
Petitioner filed his initial Form 8857 when he filed his
amended return. However, respondent did not process that
request. A copy of the initial Form 8857 is not in the record.
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In order to apply section 6015(e)(1) to these facts, we must
first decide what the term “asserted” means. Section 6015(e)(1)
does not contain any definition, so, in accordance with accepted
principles of statutory construction, we apply the commonly
accepted definition. See, e.g., Muscarello v. United States, 524
U.S. 125, 127-132 (1998); Nw. Forest Res. Council v. Glickman, 82
F.3d 825, 833 (9th Cir. 1996); Keene v. Commissioner, 121 T.C. 8,
14 (2003). In Webster’s Third New International Dictionary, the
word “assert” means “to state or affirm positively, assuredly,
plainly or strongly” or, alternatively, “to demonstrate the
existence of”. Webster’s Third New International Dictionary 131
(1993). In Merriam Webster’s Collegiate Dictionary, the word
“assert” means “to state or declare positively and often
forcefully or aggressively” or, alternatively, “to demonstrate
the existence of”. Merriam Webster’s Collegiate Dictionary 69
(10th ed. 1997).
In order to apply section 6015(e)(1) to these facts, we must
also understand the term “deficiency”. The term is not defined
in section 6015. However, it is defined in section 6211(a).
Section 6211(a) provides:
(a) In General.--For purposes of this title in the
case of income, estate, and gift taxes imposed by
subtitles A and B and excise taxes imposed by chapters
41, 42, 43, and 44 the term “deficiency” means the
amount by which the tax imposed by subtitle A or B, or
chapter 41, 42, 43, or 44 exceeds the excess of--
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(1) the sum of
(A) the amount shown as the tax by
the taxpayer upon his return, if a
return was made by the taxpayer and an
amount was shown as the tax by the
taxpayer thereon, plus
(B) the amounts previously assessed
(or collected without assessment) as a
deficiency, over--
(2) the amount of rebates as defined in
subsection (b)(2), made.
Essentially, a deficiency, as defined in section 6211(a), is the
number remaining after the amount of tax shown on a taxpayer’s
return plus any amounts previously assessed as deficiencies
(minus refunds) is subtracted from the taxpayer’s correct tax
liability.
In order to ascertain whether a deficiency within the
meaning of section 6211 has been asserted, we must analyze
whether section 6211 requires us to examine the petitioner’s
original return or his amended return. The Court’s Opinion did
not make this analysis. Instead, the Court’s Opinion, apparently
relying on section 301.6211-1(a), Proced. & Admin. Regs.,
concluded that a deficiency must be calculated with reference to
the amended return.
I believe that, if an analysis had been performed, it would
have supported a conclusion that the references to “return” in
sections 6211 and 6015 are to the taxpayer’s original return and
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not to an amended return. An amended return is a document of
uncertain status under the Internal Revenue Code. There is no
statutory requirement to file an amended return in the Code. See
Badaracco v. Commissioner, 464 U.S. 386 (1984). There is no
regulatory or administrative requirement promulgated by the
Commissioner requiring a taxpayer to file an amended return. See
id. In fact, the Commissioner is not required to accept and
process an amended return. See, e.g., Dover Corp. & Subs. v.
Commissioner, 148 F.3d 70, 72-73 (2d Cir. 1998), affg. T.C. Memo.
1997-339 and T.C. Memo. 1997-340; Koch v. Alexander, 561 F.2d
1115, 1117 (4th Cir. 1977); Miskovsky v. United States, 414 F.2d
954 (3d Cir. 1969). The Commissioner will process an amended
return only when he chooses to do so. As the Court of Appeals
for the Fourth Circuit stated in Koch v. Alexander, supra at
1117:
There is simply no statutory provision authorizing
the filing of amended tax returns, and while the IRS
has, as a matter of internal administration, recognized
and accepted such returns for limited purposes, their
treatment has not been elevated beyond a matter of
internal agency discretion. [Fn. ref. omitted.]
There are many instances in which the Federal courts have
examined provisions of the Code and determined that a statutory
reference to “return” is to the taxpayer’s original return. In
Badaracco v. Commissioner, supra at 393, the United States
Supreme Court stated:
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Indeed, as this Court recently has noted, Hillsboro
National Bank v. Commissioner, 460 U.S. 370, 378-380,
n.10 (1983), the Internal Revenue Code does not
explicitly provide either for a taxpayer’s filing, or
for the Commissioner’s acceptance, of an amended
return; instead, an amended return is a creature of
administrative origin and grace. Thus, when Congress
provided for assessment at any time in the case of a
false and fraudulent “return,” it plainly included by
this language a false or fraudulent original return.
In this connection, we note that until the decision of
the Tenth Circuit in Dowell v. Commissioner, 614 F.2d
1263 (1980), cert. pending, No. 82-1873, courts
consistently had held that the operation of §6501 and
its predecessors turned on the nature of the taxpayer’s
original, and not his amended, return.8
8
The significance of the original, and not the
amended, return has been stressed in other, but
related, contexts. It thus has been held consistently
that the filing of an amended return in a nonfraudulent
situation does not serve to extend the period within
which the Commissioner may assess a deficiency. See,
e.g., Zellerbach Paper Co. v. Helvering, 293 U.S. 172
(1934); National Paper Products Co. v. Helvering, 293
U.S. 183 (1934); National Refining Co. v. Commissioner,
1 B.T.A. 236 (1924). It also has been held that the
filing of an amended return does not serve to reduce
the period within which the Commissioner may assess
taxes where the original return omitted enough income
to trigger the operation of the extended limitations
period provided by §6501(e) or its predecessors. See,
e.g., Houston v. Commissioner, 38 T.C. 486 (1962);
Goldring v. Commissioner, 20 T.C. 79 (1953). And the
period of limitations for filing a refund claim under
the predecessor of §6511(a) begins to run on the filing
of the original, not the amended, return. Kaltreider
Construction, Inc. v. United States, 303 F.2d 366, 368
(CA3), cert. denied, 371 U.S. 877 (1962).
The undisputed facts of this case establish that (1)
petitioner’s original return understated his and his wife’s
income tax liability for 1999, and (2) there was a deficiency in
income tax for 1999 resulting from that understatement. Given
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the commonly accepted definition of the term “assert”, I contend
that it is also clear that (1) petitioner and his wife “asserted”
the deficiency on their amended 1999 return, and (2) respondent
“asserted” the same deficiency when he assessed the additional
tax liability reported on petitioner’s amended 1999 return. If
one concludes, however, that the language of section 6015(e)(1)
is not clear because it is susceptible of more than one
interpretation as outlined above, then recourse to the
legislative history of section 6015(e)(1) as amended is
warranted.
In Ewing I, we reviewed the legislative history of the 2001
amendment to section 6015(e). After quoting pertinent language
in the conference report accompanying the Consolidated
Appropriations Act, 2001, see H. Conf. Rept. 106-1033, at 1023
(2000), we concluded as follows:
The conference report indicates that the language
“against whom a deficiency has been asserted” was
inserted into section 6015(e) to clarify the proper
time for making a request to the Commissioner for
relief from joint and several liability for tax that
may have been underreported on the return. Congress
wanted to prevent taxpayers from submitting premature
requests to the Commissioner for relief from potential
deficiencies before the Commissioner had asserted that
additional taxes were owed. Congress also wanted to
make it clear that a taxpayer does not have to wait
until after an assessment has been made before
submitting a request to the Commissioner for relief
under section 6015 * * * [Ewing v. Commissioner, 118
T.C. 505.]
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I contend that, in Ewing I, we properly relied on the legislative
history to interpret whether petitioner was “an individual
against whom a deficiency has been asserted” because the language
does not support a conclusion that a deficiency must actually
have been determined before a taxpayer may seek relief under
section 6015, and interpretation is necessary to ascertain the
meaning of section 6015(e)(1) as amended. I also contend that
the legislative history makes it clear that the assessment of tax
is one way, but not the only way, in which a deficiency may be
asserted.4
4
The Commissioner’s own regulations also are consistent with
the legislative history. After sec. 6015(e) was amended in 2001,
the Commissioner promulgated sec. 1.6015-5(b)(5), Income Tax
Regs., entitled “Time and manner for requesting relief”:
(5) Premature requests for relief.--The Internal
Revenue Service will not consider premature claims for
relief under §1.6015-2, 1.6015-3, or 1.6015-4. A
premature claim is a claim for relief that is filed for
a tax year prior to the receipt of a notification of an
audit or a letter or notice from the IRS indicating
that there may be an outstanding liability with regard
to that year. Such notices or letters do not include
notices issued pursuant to section 6223 relating to
TEFRA partnership proceedings. A premature claim is
not considered an election or request under §1.6015-
1(h)(5). [Emphasis added.]
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Because I believe we properly concluded in Ewing I that
section 6015(e)(1) as amended is ambiguous and that recourse to
the legislative history of the 2001 amendment was appropriate, I
respectfully dissent.
COHEN and SWIFT, JJ., agree with this dissenting opinion.