Mary Ann Kollar v. Commissioner

131 T.C. No. 12UNITED STATES TAX COURT
MARY ANN KOLLAR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 15928-05. Filed November 25, 2008.
P filed a joint 1996 Federal income tax return
reporting zero income tax liability. Before Dec. 20,
2006, P amended that return and paid the income tax
reported on the amended return. P did not pay any
statutory interest that had accrued as to that tax.
R assessed accrued interest, and P requested from R
equitable relief from the assessed interest pursuant to
sec. 6015(f), I.R.C. After R determined that P was not
entitled to the requested relief, P petitioned the
Court to review that determination under former sec.
6015(e)(1), I.R.C. Relying upon Billings v.
Commissioner, 127 T.C. 7 (2006), which held that former
sec. 6015(e)(1), I.R.C., did not give the Court
jurisdiction to decide a case such as this where R did
not assert a deficiency against a taxpayer requesting
relief under sec. 6015(f), I.R.C. (nondeficiency sec.
6015(f) case), R moved the Court to dismiss this case
for lack of jurisdiction. Before the Court decided
that motion, Congress enacted the Tax Relief and Health
Care Act of 2006, Pub. L. 109-432, div. C, sec. 408,
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120 Stat. 3061 (TRHCA sec. 408). TRHCA sec. 408(a) and
(c), 120 Stat. 3061, 3062, amended former sec.
6015(e)(1), I.R.C., to clarify that the Court has
jurisdiction to decide a nondeficiency sec. 6015(f)
case involving the taxpayer’s “liability for taxes
arising or remaining unpaid on or after” Dec. 20, 2006.
R argues that the Court continues to lack the requisite
jurisdiction because P paid her reported income tax
before Dec. 20, 2006, and the quoted word “taxes”
refers only to income tax and not to any related
interest.
Held: The quoted word “taxes” includes the
accrued interest related to P’s 1996 income tax; thus,
the Court has jurisdiction under sec. 6015(e)(1),
I.R.C., as amended by TRHCA sec. 408(a), to review R’s
denial of equitable relief under sec. 6015(f), I.R.C.,
from P’s liability for the accrued interest.
Jonathan P. Decatorsmith, for petitioner.
Gregory J. Stull, for respondent.
OPINION
MARVEL, Judge: Respondent moves the Court to dismiss this
case for lack of jurisdiction, asserting that the Court lacks
jurisdiction under section 6015(e)(1) to review respondent’s
determination that petitioner is not entitled to equitable relief
under section 6015(f) (section 6015(f) relief).1 Petitioner
requests section 6015(f) relief from her liability for accrued
interest owed with respect to her 1996 Federal income tax paid in
full before December 20, 2006. We decide whether section
1
Unless otherwise indicated, section references are to the
applicable versions of the Internal Revenue Code (Code).
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6015(e)(1) gives the Court jurisdiction to decide this case. We
hold it does.
Background
During 1996 petitioner was married to Robert J. Kollar. On
April 20, 1997, Mr. Kollar died unexpectedly. On October 21,
1997, petitioner filed a joint 1996 Federal income tax return on
behalf of herself and her deceased husband. The return reported
zero income tax liability.
On or about November 12, 1999, petitioner filed an amended
joint 1996 Federal income tax return on behalf of herself and her
deceased husband. The amended return reported an income tax
liability of $409,156, which petitioner paid with the return. On
January 3, 2000, respondent assessed the income tax reported on
the amended return and pursuant to section 6601 assessed
$98,417.37 of accrued interest owed on the untimely paid income
tax. That same day respondent issued to petitioner a notice and
demand for payment of the unpaid interest.
On or about July 25, 2000, petitioner filed Form 8857,
Request for Innocent Spouse Relief (And Separation of Liability
and Equitable Relief), requesting section 6015(f) equitable
relief from the unpaid interest. More than 5 years later,
respondent mailed to petitioner a notice of determination denying
her request. Thirty days after that mailing, petitioner through
a nondeficiency stand-alone petition asked the Court to review
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respondent’s determination.2 Petitioner resided in Illinois when
she petitioned the Court.
Discussion
In general, spouses who file a joint Federal income tax
return are each responsible for the accuracy of the return and
are jointly and severally liable for the tax reported or
reportable thereon. Sec. 6013(d)(3); Butler v. Commissioner,
114 T.C. 276, 282 (2000). In certain circumstances a spouse may
obtain relief under section 6015 from such liability. One type
of relief under section 6015 is provided in section 6015(f) as
equitable relief “for any unpaid tax or any deficiency (or any
portion of either)”.
This Court is a court of limited jurisdiction, and we may
exercise our jurisdiction only to the extent authorized by
Congress. See sec. 7442; Moore v. Commissioner, 114 T.C. 171,
175 (2000); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
2
In this Court an individual has three ways to request sec.
6015(f) relief. First, when an individual petitions the Court to
redetermine a deficiency, the individual may allege as an
affirmative defense that he or she is entitled to sec. 6015(f)
relief. Second, the individual may request sec. 6015(f) relief
in a collection case commenced under sec. 6330(d)(1). Third,
where an individual like petitioner has requested sec. 6015(f)
relief and the Commissioner has denied that request (or failed to
rule on the request within 6 months of its filing), the
individual may request sec. 6015(f) relief by filing a
stand-alone petition pursuant to sec. 6015(e)(1). See Drake v.
Commissioner, 123 T.C. 320, 323 (2004). In a nondeficiency case
commenced through the filing of a stand-alone petition, the only
relief under sec. 6015 available to the petitioning taxpayer is
sec. 6015(f) relief.
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Before December 20, 2006, former section 6015(e)(1) provided this
Court with jurisdiction to review the Commissioner’s denial of
relief under section 6015 only “In the case of an individual
against whom a deficiency has been asserted and who elects to
have subsection (b) or (c) apply”. In Billings v. Commissioner,
127 T.C. 7 (2006), we held that former section 6015(e)(1) did not
provide this Court with jurisdiction to review a nondeficiency
stand-alone petition for relief under section 6015; i.e., a
petition for relief under section 6015 filed by an individual
against whom the Commissioner had not asserted a deficiency.
Shortly thereafter, Congress amended former section 6015(e)(1) to
provide this Court with jurisdiction over such stand-alone
petitions by adding to that section the words “or in the case of
an individual who requests equitable relief under subsection
(f)”.3 See Tax Relief and Health Care Act of 2006, Pub. L.
3
As amended, sec. 6015(e)(1) provides in relevant 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, or in the case of an individual who
requests equitable relief under subsection (f)--
(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 * * *
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109-432, div. C, sec. 408(a), 120 Stat. 3061 (TRHCA sec. 408).4
This amendment applies “with respect to liability for taxes
arising or remaining unpaid on or after the date of the enactment
of this Act.” Id. sec. 408(c), 120 Stat. 3062. TRHCA was
enacted on December 20, 2006. See 120 Stat. 2922.
Respondent asserts that the amendment to former section
6015(e)(1) does not apply to the setting at hand because
petitioner paid her 1996 Federal income tax before December 20,
2006, and thus on or after that date petitioner had no remaining
unpaid tax for 1996 so as to trigger an application of the
amendment. According to respondent, the word “taxes” in TRHCA
section 408(c) refers only to income tax and does not refer to
any related interest. We disagree. Because TRHCA does not
define the word “taxes” for purposes of TRHCA section 408(c), we
apply that word in accordance with the meaning that we ascertain
was intended by Congress. See Conn. Natl. Bank v. Germain, 503
U.S. 249, 253-254 (1992); United States v. Am. Trucking
Associations, 310 U.S. 534, 542 (1940). Because Congress’s use
of the word “taxes” in TRHCA section 408(c) is in the setting of
4
TRHCA sec. 408 includes three subsections. Subsec. (a)
sets forth the amendment to sec. 6015(e)(1) just discussed.
Subsec. (b) sets forth seven “Conforming Amendments” to various
provisions of sec. 6015. Subsec. (c) sets forth the effective
date of TRHCA sec. 408, stating that “The amendments made by this
section shall apply with respect to liability for taxes arising
or remaining unpaid on or after the date of the enactment of this
Act.”
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Federal income tax and of various amendments that TRHCA section
408 made directly to section 6015, we believe that Congress’s
intent for the meaning of the word “taxes” is best gleaned from
Congress’s understanding of the firmly established meaning of
that word as used in the Code (and, as discussed below,
applicable to section 6015(f)) when TRHCA was enacted. See
Stewart v. Dutra Constr. Co., 543 U.S. 481, 487-488 (2005)
(applying the established meaning under general maritime law of
the word “seaman” where the applicable statute did not define
that word). We do not believe that Congress intended that the
word “taxes” have a meaning in the context of TRHCA section
408(c) different from its meaning in the context of the
provisions of the Code to which TRHCA section 408 relates.
As of the time when TRHCA was enacted, Congress had provided
specifically in sections 6601(e)(1) and 6665(a) that “tax” for
purposes of the Code included interest and penalties, except in
certain cases that are not relevant to our discussion.5 In
addition, Congress had provided in section 6015(b)(1) that the
5
Sec. 6601 generally sets forth rules for the payment of
interest on the underpayment of tax. Sec. 6601(e)(1) provides
that “Any reference in this title (except subchapter B of chapter
63, relating to deficiency procedures) to any tax imposed by this
title shall be deemed also to refer to interest imposed by this
section on such tax.” Sec. 6665 sets forth certain applicable
rules. Sec. 6665(a)(2) provides that “any reference in this
title to ‘tax’ imposed by this title shall be deemed also to
refer to the additions to tax, additional amounts, and penalties
provided by this chapter.”
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word “tax” included “interest, penalties, and other amounts”.6
Given these expansive definitions of the word “tax” for purposes
of the Code and the fact that we cannot fathom why Congress would
have chosen a narrower definition of the word “taxes” in the
setting of TRHCA section 408, a remedial provision designed to
benefit taxpayers who were precluded by Billings v. Commissioner,
supra, from having their claims to section 6015(f) relief decided
by this Court, we conclude that “taxes” as used in TRHCA section
408(c) includes the accrued interest at hand. See Leahy v.
Commissioner, 129 T.C. 71, 72 & n.3 (2007) (stating that the
reference in section 7463(f)(2) to the word “tax” includes
interest and penalties on account of sections 6601(e)(1) and
6665(a)); Petrane v. Commissioner, 129 T.C. 1, 4 (2007) (stating
that the reference in section 6015(f) to “tax” includes interest
and penalties on account of sections 6601(e)(1) and 6665(a)); see
also Helvering v. Bliss, 293 U.S. 144, 150-151 (1934) (stating
that remedial provisions should not be construed narrowly). We
are not unmindful that our conclusion as to the meaning of
“taxes” in TRHCA section 408(c) also fits squarely within an
ordinary, everyday meaning of “tax”. The noun “tax” denotes “a
charge usu. of money imposed by authority on persons or property
for public purposes”, Merriam-Webster’s Collegiate Dictionary
6
Sec. 6015(b)(1) allows a spouse who meets certain
requirements to “be relieved of liability for tax (including
interest, penalties, and other amounts)”.
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1208 (10th ed. 1999), and statutory interest payable on income
tax is as much such a “charge” as income tax is.
Respondent does not reference any legislative history
underlying TRHCA section 408 in support of a contrary conclusion;
nor do we read any such legislative history to lead to a contrary
conclusion. Respondent supports with two assertions his
conclusion that “taxes” in TRHCA section 408(c) includes only
income tax. First, respondent asserts, the Court in Washington
v. Commissioner, 120 T.C. 137, 158-159 (2003), acknowledged that
the “tax” referred to in section 6015(f) is simply the “tax
reported on the return, but not paid with the return.” Second,
respondent asserts, interest and penalties are not separate items
for which the Commissioner may grant a taxpayer relief under
section 6015(f); in other words, respondent asserts that a
taxpayer may receive relief under section 6015 from interest and
penalties only as a mechanical adjustment flowing from the
Commissioner’s granting of relief from income tax.
Respondent’s reliance on those two assertions to support his
conclusion is misplaced. First, respondent takes the quotation
from Washington out of context. In Washington, the Commissioner
argued that section 6015(f) applied only to the portion of tax
remaining uncollected after the effective date of that section.
We disagreed, relying upon the quoted text in the setting of that
case as partial support for our disagreement. We did not state
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as respondent now argues that the “tax” referred to in section
6015(f) is limited to the income tax reported on the return. In
fact, as discussed above, we have indicated to the contrary. See
Petrane v. Commissioner, supra at 4. Second, we read nothing in
section 6015(e)(1), nor has respondent pointed to any text in
that section, that persuades us to conclude that the
Commissioner’s ability to grant section 6015(f) relief from
interest and penalties without granting relief from income tax is
a function of our jurisdiction under section 6015(e)(1). To the
contrary, we conclude it is not. Cf. Demirjian v. Commissioner,
T.C. Memo. 2004-22 (holding that the taxpayer was not eligible
for section 6015(f) relief from accrued statutory interest with
respect to her 1989 Federal income tax, after holding that the
taxpayer had no unpaid income tax for that year); Rowe v.
Commissioner, T.C. Memo. 2001-325 (holding that the Court has
jurisdiction to review the Commissioner’s denial of section
6015(f) relief from additions to tax and penalties).
We hold that “taxes” in TRHCA section 408(c) includes the
accrued interest at hand and that we therefore have jurisdiction
over this case. We have considered all arguments for a contrary
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holding, and we reject all arguments not discussed herein as
without merit. Accordingly, to reflect the foregoing,
An appropriate order
will be issued.