Robert and Linda Yuen v. Commissioner

112 T.C. No. 12
UNITED STATES TAX COURT
ROBERT AND LINDA YUEN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16025-98. Filed March 19, 1999.
On Sept. 19, 1995, Ps filed a request for
abatement of interest with R for the taxable year 1990.
On Mar. 8, 1996, R notified Ps that their request for
abatement of interest was denied. On Jan. 16, 1998, Ps
resubmitted to R a request for abatement of interest
for the taxable year 1990, presenting the same claim
and basis for relief as their original request. On
Apr. 1, 1998, R informed Ps that R had "rejected" Ps'
attempt to resubmit their request for abatement of
interest on the ground that R had considered and denied
the request on Mar. 8, 1996. On Sept. 24, 1998, Ps
filed a petition with the Court seeking a review of R's
denial of their request for abatement of interest
pursuant to sec. 6404(g) I.R.C. R moved to dismiss the
petition for lack of jurisdiction.
Held: The Court lacks jurisdiction under I.R.C.
sec. 6404(g) to review a request for abatement of
interest that was filed by the taxpayer and denied by
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the Commissioner prior to the effective date of sec.
6404(g) I.R.C. See White v. Commissioner, 109 T.C. 96,
99 (1997). Held further: Because Ps' original request
for abatement of interest for 1990 was filed and denied
prior to the effective date of sec. 6404(g) I.R.C., Ps'
resubmission of their request for abatement of interest
on Jan. 16, 1998, does not provide a basis for Ps to
invoke the Court's jurisdiction pursuant to sec.
6404(g) I.R.C.
Robert and Linda Yuen, pro sese.
Laurel M. Robinson and Wendy Abkin, for respondent.
OPINION
COHEN, Chief Judge: This case was assigned to Chief Special
Trial Judge Peter J. Panuthos pursuant to section 7443A(b)(4) and
Rules 180, 181, and 183.1 The Court agrees with and adopts the
opinion of the Special Trial Judge, which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
PANUTHOS, Chief Special Trial Judge: This matter is before
the Court on respondent's Motion to Dismiss for Lack of
Jurisdiction. Respondent contends that the Court lacks
jurisdiction under section 6404(g) to consider the petition filed
in this case. As explained in greater detail below, we shall
grant respondent's motion.
1
Section references are to the Internal Revenue Code, as
amended. Rule references are to the Tax Court Rules of Practice
and Procedure.
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Background
On May 9, 1994, Robert and Linda Yuen (petitioners) filed a
petition for redetermination with the Court (assigned docket No.
7495-94S) contesting a notice of deficiency that respondent had
issued to petitioners for 1990. On March 15, 1995, the Court
entered a stipulated decision in docket No. 7495-94S, which
stated that petitioners are liable for a deficiency in income tax
for 1990 in the amount of $6,821 and that petitioners are not
liable for the accuracy-related penalty under section 6662. The
stipulated decision further stated that petitioners agreed to
waive the restrictions that normally would prohibit the
assessment and collection of the deficiency and statutory
interest until the decision of the Tax Court was final.
On or about September 19, 1995, petitioners filed with
respondent a Form 843, Claim for Refund and Request for
Abatement, requesting that respondent abate interest for the
taxable year 1990 in the amount of $2,453.69. Petitioners
asserted in their request that the "IRS had conceded its errors
during 1-18-95 meeting" and that petitioners' liability for
interest for 1990 had been compromised as part of the
negotiations leading to the entry of the stipulated decision in
docket No. 7495-94S. Petitioners further asserted that
respondent had acknowledged that the stipulated decision in
docket No. 7495-94S represented a compromise of petitioners'
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entire tax liability for 1990 when respondent accepted
petitioners' payment by check which contained the statement
"compromise settlement in full".
On or about October 23, 1995, respondent's Ogden Service
Center sent a letter to petitioners stating that petitioners'
request for abatement of interest for 1990 had been denied on the
ground that petitioners had failed to show that the interest
owing was attributable to an error or delay caused by an Internal
Revenue Service (IRS) employee performing a ministerial act. The
letter further stated that the decision entered in petitioners'
Tax Court case indicated that statutory interest would be
assessed.
On or about November 8, 1995, petitioners filed a protest of
the denial of their request for abatement of interest with
respondent's Fresno Appeals Office. Petitioners' protest
repeated the allegations contained in petitioners' Form 843 dated
September 19, 1995. On March 8, 1996, the Fresno Appeals Office
issued a detailed, three-page letter denying petitioners'
interest abatement request in full. Appeals Officer Paul Sivick
was listed as the contact person in the March 8, 1996, letter.
On May 12, 1997, respondent received a second Form 843 from
petitioners dated May 8, 1995. (There is no explanation in the
record for the 2-year lapse between the date the Form 843 was
purportedly signed and the date that respondent received it.) An
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internal document from the IRS dated July 29, 1997, indicates
that petitioners' interest abatement claim had previously been
filed and denied and that no further claims would be considered.
On August 27, 1997, petitioners wrote to respondent seeking to
appeal the disallowance of their interest abatement claim. In a
response dated December 10, 1997, John Tagliamento, Chief of the
Joint Compliance Branch in Fresno, informed petitioners that
their request for abatement of interest had been disallowed and
that petitioners would have to pay the interest and seek a refund
in the Federal District Court or the Court of Federal Claims.
However, a little more than a week later, Jerry Li, an IRS
employee with the San Francisco Appeals Office, wrote to
petitioners in response to an earlier telephone call. Mr. Li
informed petitioners that their request for abatement of interest
had been disallowed by Appeals Officer Sivick on March 8, 1996,
and that the Tax Court had jurisdiction to review such matters.
Mr. Li enclosed with his letter a sample of a final determination
letter disallowing a request for abatement of interest, inquired
whether petitioners had received such a letter, and provided
petitioners with the Court's address so they could request a form
petition.
On January 27, 1998, respondent's Fresno Appeals Office
received a third Form 843 from petitioners dated January 16,
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1998. On April 1, 1998, Appeals Officer Sivick wrote a letter to
petitioners which states in pertinent part:
I have been told by my National Office Liaison that I
am to reject your Form 843 Claim for abatement of
interest under Code Section 6404(e)(1). Back in 1996 I
considered a previous request for abatement of interest
and I made the decision that no interest should be
abated. It is the Service's position that claims
denied prior to the enactment of the provisions of the
Taxpayer's Bill of Rights 2 (July 30, 1996) will not be
given the opportunity to re-file their claims in an
attempt to petition the United States Tax Court.
Therefore this letter does not qualify as a Final
Determination Letter as I am merely notifying you that
your Form 843 is being rejected rather than denied
since you have already had the merits of your case
considered under the provisions of law in effect at the
time your claim was considered.
All of the Forms 843 that petitioners submitted to
respondent refer to the tax period as January 1 through December
31, 1990. All of the Forms 843 present the same claim, that the
settlement of docket no. 7495-94S, which concerned a deficiency
for the taxable year 1990, included a compromise of all taxes and
interest. The Form 843 submitted on January 27, 1998, seeks an
abatement of $3,051.90, in contrast to the original abatement
request which sought an abatement of $2,453.69. We assume that
the difference is the continual accrual of interest during the
intervening period.
On September 24, 1998, petitioners filed a petition in the
instant case seeking review of respondent's denial of their
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request for abatement of interest. At the time the petition was
filed, petitioners resided in San Francisco, California.
In response to the petition, respondent filed a Motion to
Dismiss for Lack of Jurisdiction on the ground that petitioners'
request for abatement of interest was filed and denied prior to
the effective date of section 6404(g). Petitioners filed an
objection to respondent's motion to dismiss asserting that their
petition is valid inasmuch as petitioners resubmitted their
request for abatement of interest to respondent after the
effective date of section 6404(g).
Discussion
The question presented is whether the Court has jurisdiction
pursuant to section 6404(g) to review respondent's rejection or
denial of petitioners' request for abatement of interest for
1990. The Tax Court is a court of limited jurisdiction, and we
may exercise our jurisdiction only to the extent authorized by
Congress. Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
Section 6404(g), codified under section 302(a) of the
Taxpayer Bill of Rights 2 (TBOR 2), Pub. L. 104-168, 110 Stat.
1452, 1457, provides in pertinent part as follows:
(g) Review of Denial of Request for Abatement of
Interest.--
(1) In general.--The Tax Court shall have
jurisdiction over any action brought by a taxpayer
who meets the requirements referred to in section
7430(c)(4)(A)(ii) to determine whether the
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Secretary's failure to abate interest under this
section was an abuse of discretion, and may order
an abatement, if such action is brought within 180
days after the date of the mailing of the
Secretary's final determination not to abate such
interest.
In sum, the Court is vested with jurisdiction to review the
Commissioner's denial of a taxpayer's request for abatement of
interest if the taxpayer files a petition with the Court within
180 days after the date that the Commissioner mails to the
taxpayer a valid final determination not to abate interest. See
sec. 6404(g)(1); Rule 280(b)(1); Banat v. Commissioner, 109 T.C.
92, 95 (1997).
Section 302(b) of TBOR 2, 110 Stat. 1458, provides that
section 6404(g) applies "to requests for abatement after the date
of the enactment of this Act." TBOR 2 was enacted on July 30,
1996.
The legislative history underlying section 6404(g) is
contained in H. Rept. 104-506, at 28 (1996), 1996-3 C.B. 49, 76,
which states:
Present law
Federal courts generally do not have the
jurisdiction to review the IRS's failure to abate
interest.
Reasons for change
The Committee believes that it is appropriate for
the Tax Court to have jurisdiction to review IRS's
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failure to abate interest with respect to certain taxpayers.
Explanation of provision
The bill grants the Tax Court jurisdiction to
determine whether the IRS's failure to abate interest
for an eligible taxpayer was an abuse of discretion.
The Tax Court may order an abatement of interest. The
action must be brought within 180 days after the date
of mailing of the Secretary's final determination not
to abate interest. An eligible taxpayer must meet the
net worth and size requirements imposed with respect to
awards of attorney's fees. No inference is intended as
to whether under present law any court has jurisdiction
to review IRS's failure to abate interest.
Effective date
The provision applies to requests for abatement
after the date of enactment.
The Commissioner's authority to abate interest assessments
attributable to errors and delays by an officer or employee of
the IRS originated with the enactment of section 6404(e) under
the Tax Reform Act of 1986 (TRA 1986), Pub. L. 99-514, sec.
1563(a), 100 Stat. 2085, 2762. The Commissioner is authorized to
abate interest accruing with respect to deficiencies or payments
for tax years beginning after December 31, 1978. See TRA 1986,
sec. 1563(b), 100 Stat. 2762.
Respondent maintains that we lack jurisdiction under section
6404(g) to review the rejection or denial of petitioners' request
for abatement of interest for 1990 on the ground that
petitioners' original request for abatement of interest was filed
and denied prior to July 31, 1996--before section 6404(g) went
into effect. Petitioners counter that the resubmission of their
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request for abatement of interest to respondent on January 16,
1998, and denial or rejection on April 1, 1998, provides a basis
for petitioners to invoke the Court's jurisdiction pursuant to
section 6404(g), notwithstanding that their original request for
abatement of interest was denied by respondent prior to July 31,
1996.
This case presents an issue concerning the Court's
jurisdiction under section 6404(g). Although we have not had the
opportunity to consider the specific question presented in this
case, we have analyzed the impact of the effective date of
section 6404(g) on the Court's jurisdiction under slightly
different circumstances.
In Banat v. Commissioner, supra at 94-95, we held that the
taxpayer had properly invoked the Court's jurisdiction pursuant
to section 6404(g) with respect to a request for abatement of
interest filed with the Commissioner prior to the effective date
of section 6404(g) but denied by the Commissioner after the
effective date of the provision. See Goettee v. Commissioner,
T.C. Memo. 1997-454. On the other hand, in White v.
Commissioner, 109 T.C. 96, 99 (1997), we held that the Court
lacked jurisdiction pursuant to section 6404(g) to review the
Commissioner's denial of a request for abatement of interest
where the request was filed and denied prior to the effective
date of section 6404(g). In White v. Commissioner, supra at 99-
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100, we declined to consider the taxpayers' argument that they
could resubmit their request for abatement of interest after July
30, 1996, and thereby qualify to invoke the Court's jurisdiction
under section 6404(g).
In sum, the Court has concluded that section 302(b) of TBOR
2, 110 Stat. 1458, which provides that section 6404(g) applies
"to requests for abatement after the date of the enactment of
this Act", limits the Court's jurisdiction to the review of the
denial of requests for abatement of interest where the denial
occurs after July 30, 1996. See White v. Commissioner, supra;
Banat v. Commissioner, supra.
Consistent with White v. Commissioner, supra, and Banat v.
Commissioner, supra, the Court lacks jurisdiction to review
respondent's March 1996 denial of petitioners' request for
abatement of interest filed in September 1995. Moreover, we
agree with respondent that petitioners' resubmission of their
request for abatement of interest to respondent on January 16,
1998, which presented the same claim and ground for relief as
their prior submissions, does not provide a basis for the Court
to exercise jurisdiction over the petition filed herein.
Although section 302(b) of TBOR 2 does not expressly address
whether a taxpayer may invoke the Court's jurisdiction by
resubmitting a previously denied request for abatement of
interest after the effective date of section 6404(g), we are not
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persuaded that Congress intended for section 6404(g) to confer
jurisdiction in these circumstances. Were we to hold otherwise,
the effective date provision, like a limitations period, would
fail to perform its purpose inasmuch as it could be defeated by
the simple expedient of filing in succession duplicative claims.
Cf. Trohimovich v. Commissioner, 776 F.2d 873 (9th Cir. 1985);
Huettl v. United States, 675 F.2d 239 (9th Cir. 1982).
Consequently, we reject petitioners' contention that the
resubmission of their request for abatement of interest and the
denial or rejection of their claim after the effective date of
section 6404(g) provides a basis for the Court to exercise
jurisdiction in this case.
The record in this case indicates that some of respondent's
agents may have given petitioners erroneous advice respecting
their right to file a petition for review with the Court.
Assuming for the sake of argument that petitioners were
erroneously advised to file the petition herein, erroneous advice
does not provide a basis for the Court to exercise jurisdiction
over a matter not authorized by statute. See Odend'hal v.
Commissioner, 95 T.C. 617, 624 (1990); Kraft v. Commissioner,
T.C. Memo. 1997-476.
Respondent presents an alternative argument that the Court
lacks jurisdiction on the ground that the April 1, 1998, letter
does not constitute a final determination within the meaning of
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section 6404(g)(1). In the April 1, 1998, letter, respondent
indicated that he was "rejecting" petitioner's claim and that the
letter was not a "denial" and did not constitute a "notice of
final determination letter". Consistent with our holding that
the Court lacks jurisdiction over a claim for abatement of
interest that has been resubmitted to respondent after having
been filed by a taxpayer and denied by respondent prior to the
effective date of section 6404(g)(1), we need not decide the
question of whether the April 1, 1998, letter constitutes a final
determination within the meaning of said provisions.
Consistent with the preceding discussion, we shall grant
respondent's Motion to Dismiss for Lack of Jurisdiction.
To reflect the foregoing,
An order will be entered
granting respondent's Motion
to Dismiss for Lack of Jurisdiction.