John Maier III v. Commissioner

119 T.C. No. 16UNITED STATES TAX COURT
JOHN MAIER III, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 5410-02. Filed November 20, 2002.
P filed a petition with the Court challenging R’s
administrative determination granting his former spouse
relief from joint and several liability on joint
returns pursuant to sec. 6015(f), I.R.C. R moved to
dismiss for lack of jurisdiction.
Held: The Court will grant R’s motion and dismiss
this case for lack of jurisdiction on the ground that R
did not issue a notice of deficiency to P, nor did R
make any other determination with regard to P that
would confer jurisdiction on the Court.
John Maier III, pro se.
Charles Hall and Scott E. Fink, for respondent.
- 2 -
OPINION
DAWSON, Judge: This case was assigned to Chief Special
Trial Judge Peter J. Panuthos, pursuant to the provisions of
section 7443A(b)(5) and Rules 180, 181, and 183.1 The Court
agrees with and adopts the opinion of the Chief 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. As explained in detail below, we shall grant
respondent’s motion to dismiss.
Background
John Maier III (petitioner) filed joint Federal income tax
returns with his then wife, Judith L. Maier (Ms. Maier), for the
taxable years 1990, 1991, 1992, 1993, and 1994. The Maiers
reported taxes due on their returns for the taxable years 1990,
1991, 1992, 1993, and 1994, but failed to pay all or part of such
taxes.
On December 22, 1995, the Maiers executed a separation
agreement. The separation agreement addressed the Maiers’
outstanding Federal and State income tax liabilities as follows:
1
Section references are to sections of the Internal
Revenue Code, as amended, and Rule references are to the Tax
Court Rules of Practice and Procedure.
- 3 -
SECTION NINE
PAYMENT OF JOINT DEBTS BY HUSBAND AND WIFE
All existing [debts] of the husband and wife shall
remain the joint obligations of the husband and wife.
The major joint debts of the parties are past due
income taxes, both federal and state. These
obligations, by operation of law, are joint obligations
and such obligations cannot be changed from being joint
obligations by the parties. Currently, the wife is
paying New York State for past income taxes and the
husband is making payments under a Chapter 13 plan and
the Federal taxes are the priority creditor. Both the
husband and wife recognize that it is in their best
interest to pay all such taxes as quickly as possible.
The husband and wife agree to use their best efforts to
pay such taxes and to continue to make payments as set
forth above. Should either party become unable to pay,
the other party shall be, as a matter of law, required
to pay all remaining unpaid taxes. However, any
payments made by one of the parties, either voluntarily
or involuntarily, shall not be reimbursed by the other
party.
* * * * * * *
SECTION EIGHTEEN
INCOME TAX RETURNS
The parties agree that commencing with the tax
year 1995 (due April 15, 1996), either party may file
separately unless both parties mutually agree to file
jointly. The parties agree that the husband and wife
shall remain jointly responsible without contribution
from the other to pay any deficiency in income taxes,
federal and state, relating to the marital income of
the parties for earlier years. Husband and wife shall
also remain jointly liable to pay any penalty or
interest arising from such income tax liability.
On December 29, 1995, a final judgment of divorce was
entered and filed by the Supreme Court of New York (County of
Schoharie). The Maiers’ marriage was terminated pursuant to the
- 4 -
final judgment of divorce. The final judgment of divorce stated
in pertinent part: “it is further ORDERED, ADJUDGED AND DECREED,
that the Separation Agreement dated December 22, 1995, be
incorporated in this decree and shall survive the same, and not
be merged within it”.
On December 22, 1999, Ms. Maier filed with respondent a Form
8857, Request For Innocent Spouse Relief, requesting relief from
joint and several liability for the taxable years 1990, 1991,
1992, 1993, and 1994. Respondent notified petitioner that Ms.
Maier had elected to claim relief from joint and several
liability and invited petitioner to submit to respondent
information relevant to Ms. Maier’s claim. Petitioner submitted
information to respondent by mail and spoke with respondent’s
representatives by telephone, but he was not permitted to present
his position in person.
On December 11, 2001, respondent issued two letters to
petitioner. In the first letter, respondent informed petitioner
that Ms. Maier’s claim for relief from joint and several
liability for the taxable year 1990 was not considered because
the period of limitations with regard to collection under section
6502 expired as to Ms. Maier on September 30, 2001. The letter
also stated: “Your collection statute has been extended to April
2, 2006 because of your bankruptcy filing. You are now the sole
person responsible for the repayment of the 1990 taxes.” In the
- 5 -
second letter, respondent informed petitioner that Ms. Maier’s
claim for relief from joint and several liability for the taxable
years 1991, 1992, 1993, and 1994 had been granted under section
6015(f).2
On December 24, 2001, respondent issued to petitioner a
notice of change to his account for the taxable year 1990 stating
that he owed $26,077.75, consisting of tax, a penalty for late
payment, and interest.
On March 6, 2002, petitioner filed a petition with the Court
styled “PETITION FOR DETERMINATION OF RELIEF FROM JOINT AND
SEVERAL LIABILITY ON A JOINT RETURN”.3 The petition states that
petitioner disagrees with respondent’s determination granting Ms.
Maier relief from joint and several liability for the taxable
years 1990 to 1994.
In response to the petition, respondent filed a motion to
dismiss for lack of jurisdiction. Respondent contends that the
Court lacks jurisdiction in this case because petitioner has not
filed a claim for relief from joint and several liability,
respondent has not issued to petitioner a notice of deficiency
2
Sec. 6015(f) provides that the Commissioner may grant a
taxpayer relief from joint and several liability on a joint
return if, taking into account all the facts and circumstances,
it is inequitable to hold the individual liable for any unpaid
tax or any deficiency, and the taxpayer is not eligible for
relief under subsec. (b) or (c).
3
At the time the petition was filed, petitioner resided in
Kingston, New York.
- 6 -
under section 6213(a), and respondent has not made any other
determination with regard to petitioner that would confer
jurisdiction upon the Court.
Petitioner filed an opposition to respondent’s motion to
dismiss. He contends that respondent’s administrative
determination granting Ms. Maier relief from joint and several
liability for the years 1990 to 1994 deprived him of due process
of law, is contrary to section 6015(g)(2), and, absent review by
this Court, he will be deprived of a judicial remedy.
Pursuant to notice, this matter was called for hearing at
the Court’s motions session in Washington, D.C. Petitioner and
counsel for respondent appeared at the hearing and offered
argument with regard to respondent’s motion to dismiss.
Discussion
Section 6013(d)(3) provides that if a husband and wife file
a joint Federal income tax return, “the tax shall be computed on
the aggregate income and the liability with respect to the tax
shall be joint and several.” However, section 6015(a) provides
that, notwithstanding section 6013(d)(3), an individual who has
made a joint return may elect to seek relief from joint and
several liability on such return. For a detailed discussion of
the legislative history of section 6015 (and its predecessor
section 6013), see Cheshire v. Commissioner, 115 T.C. 183, 188-
189 (2000), affd. 282 F.3d 326 (5th Cir. 2002).
- 7 -
The Tax Court is a court of limited jurisdiction, and we may
exercise our jurisdiction only to the extent authorized by
Congress. Sec. 7442; Judge v. Commissioner, 88 T.C. 1175, 1180-
1181 (1987); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
Congress vested the Court with jurisdiction to review a
taxpayer’s election to claim relief from joint and several
liability on a joint return under specified circumstances. See
King v. Commissioner, 115 T.C. 118, 121-122 (2000); Corson v.
Commissioner, 114 T.C. 354, 363-364 (2000). A taxpayer may seek
relief from joint and several liability on a joint return by
raising the matter as an affirmative defense in a petition for
redetermination invoking the Court’s deficiency jurisdiction
under section 6213(a). See Butler v. Commissioner, 114 T.C. 276,
287-289 (2000). In addition, a taxpayer may file a so-called
stand-alone petition seeking relief from joint and several
liability on a joint return where the Commissioner has issued a
final determination denying the taxpayer’s claim for such relief
or the Commissioner has failed to rule on the taxpayer’s claim
within 6 months of its filing. See sec. 6015(e)(1); Mora v.
Commissioner, 117 T.C. 279 (2001). Finally, a taxpayer may
request relief from joint and several liability on a joint return
in a petition for review of a lien or levy action. See secs.
6320(c), 6330(c)(2)(A)(i).
- 8 -
In the instant case, Ms. Maier filed a request for relief
from joint and several liability with regard to unpaid taxes that
she and petitioner reported on joint returns for the taxable
years 1990 through 1994. Following administrative proceedings,
respondent concluded: (1) Ms. Maier was not responsible for
unpaid taxes for 1990 on the ground the period of limitations on
collection had expired as to her, and (2) Ms. Maier qualified for
relief from joint and several liability under section 6015(f) for
the years 1991 through 1994. Having apparently obtained complete
relief administratively, Ms. Maier did not file a petition with
the Court.4
The parties are in agreement that respondent has not issued
a notice of deficiency to petitioner for the years in question.
Therefore, petitioner cannot invoke the Court’s deficiency
jurisdiction under section 6213(a). There likewise is no dispute
that petitioner did not file a Form 8857 requesting relief from
joint and several liability for any of the years in question, nor
has the Commissioner issued to petitioner a final determination
denying such relief. Consequently, the petition filed herein
cannot be characterized as a stand-alone petition under section
4
Had respondent denied Ms. Maier’s claim for relief under
sec. 6015(f), she would have had the opportunity to invoke the
Court’s jurisdiction to review the matter under subsec. (e). See
Ewing v. Commissioner, 118 T.C. 494 (2002) (holding the Court has
jurisdiction to determine whether equitable relief is available
to a taxpayer for underpayment of tax shown on a joint return).
- 9 -
6015(e)(1). Nor is there any indication that the petition was
filed for the purpose of obtaining review of a lien or levy
action under section 6320 or 6330.
Section 6015 does not contemplate either the action or the
relief requested in the petition filed herein. In particular,
section 6015(e)(1), titled “Petition For Review By Tax Court”,
provides in pertinent part that a petition may be filed with the
Court by an “individual * * * who elects” relief from joint and
several liability on a joint return. Consistent with this
provision, section 6015(e)(1)(A) provides that a petition must be
filed: (1) Within 90 days after the date the Secretary mails a
notice of final determination of relief to the individual; or (2)
if no notice of final determination is issued, no later than 6
months after the date an election is filed with the Secretary.
As previously discussed, petitioner has not filed an election
with respondent claiming relief from joint and several liability
on a joint return. It is thus clear that petitioner does not
qualify as an individual who may file a petition with the Court
under section 6015(e)(1).
Section 6015(e)(4) provides direction as to the nonelecting
or “other spouse”. The section provides in pertinent part that
the “Tax Court shall develop rules which provide the individual
* * * not making the election with adequate notice and an
opportunity to become a party to a proceeding”. (Emphasis
- 10 -
added.) Consistent with section 6015(e)(4), the Tax Court
promulgated Rule 325(b), which permits the “other individual” to
file a notice of intervention. Reading section 6015(e) as a
whole and in conjunction with Rule 325(b), it is clear that
intervention by a nonelecting spouse presumes an existing
proceeding (i.e., a deficiency, stand-alone, or collection review
proceeding) brought by an electing spouse. In the instant case,
there is no existing proceeding in which petitioner may
intervene.5
Petitioner contends that respondent’s administrative
determination granting Ms. Maier relief from joint and several
liability violates the principle of res judicata embodied in
section 6015(g)(2).6 Petitioner also contends that respondent
5
Our holding that sec. 6015(e) does not contemplate the
present action is borne out by the host of ancillary issues that
would arise if the Court were to exercise jurisdiction. From a
procedural standpoint, we note that sec. 6015 does not establish
a time limit within which a nonelecting spouse may file such an
action. Along the same lines, there is no provision describing
the impact, if any, that the Court’s review of such matters might
have on the rights of an electing spouse who is granted relief
from joint and several liability during the administrative
process. We do not believe that Congress intended to cloud the
process with such uncertainty and ambiguity.
6
Sec. 313(a)(2)(A) of the Consolidated Appropriations Act
of 2001, Pub. L. 106-554, 114 Stat. 2763, redesignated former
subsec. (g) as subsec. (h) and inserted after subsec. (f) a new
subsec. (g) which provides in pertinent part:
SEC. 6015(g) Credits And Refunds.--
* * * * * * *
(continued...)
- 11 -
must respect the State court’s final judgment of divorce under
the Full Faith and Credit Clause contained in Article IV of the
U.S. Constitution. In conjunction with these arguments,
petitioner avers that he should be permitted to maintain the
present action as a logical extension of the Court’s holdings in
cases such as King v. Commissioner, supra, and Corson v.
Commissioner, supra.
The cases that petitioner cites in support of the
proposition that he should be permitted to maintain this action
concern section 6015(h)(2) (formerly section 6015(g), see supra
note 6), which provides:
SEC. 6015(h). Regulations.--The Secretary shall
prescribe such regulations as are necessary to carry
out the provisions of this section, including--
* * * * * * *
(2) regulations providing the opportunity for an
individual to have notice of, and an opportunity to
participate in, any administrative proceeding with
respect to an election made under subsection (b) or (c)
by the other individual filing the joint return.
In Corson v. Commissioner, supra, the taxpayers filed with the
6
(...continued)
(2) Res Judicata.--In the case of any election
under subsection (b) or (c), if a decision of a court
in any prior proceeding for the same taxable year has
become final, such decision shall be conclusive except
with respect to the qualification of the individual for
relief which was not an issue in such proceeding. The
exception contained in the preceding sentence shall not
apply if the court determines that the individual
participated meaningfully in such prior proceeding.
- 12 -
Court a joint petition for redetermination challenging a joint
notice of deficiency for the taxable year 1981. After obtaining
separate counsel, the electing spouse filed an amendment to the
petition asserting her entitlement to relief from joint and
several liability under former section 6013(e). After both
taxpayers entered into separate stipulations with the
Commissioner conceding an income tax deficiency of $21,711 and
the application of increased interest under section 6621(c), the
Commissioner entered into a further stipulation with the electing
spouse granting her relief from joint and several liability under
section 6015(c). Upon learning of the second stipulation, the
nonelecting spouse declined to execute a stipulated decision for
submission to the Court, prompting the Commissioner to file a
motion for entry of decision. In denying the Commissioner’s
motion, the Court stated:
Section 6015(e)(1) is structured so that
administrative consideration (or failure to rule) will
precede any court action when innocent spouse status is
raised in a stand alone petition. Section 6015(g)(2),
in turn, contemplates an opportunity for the
nonelecting spouse to participate at the administrative
level. Section 6015(e)(4) then speaks of a similar
chance for participation should the matter move from an
administrative to a judicial forum. Hence, as a general
premise, we believe that these subsections, when read
together, reveal a concern on the part of the lawmakers
with fairness to the nonelecting spouse and with
providing him or her an opportunity to be heard on
innocent spouse issues. Presumably, the purpose of
affording to the nonelecting spouse an opportunity to
be heard first in administrative proceedings and then
in judicial proceedings is to ensure that innocent
spouse relief is granted on the merits after taking
into account all relevant evidence. After all, easing
- 13 -
the standards for obtaining relief is not equivalent to
giving relief where unwarranted.
Corson v. Commissioner, 114 T.C. at 365; see Hale Exemption Trust
v. Commissioner, T.C. Memo. 2001-89. Although we did not attempt
to determine “the precise contours of the rights granted to a
nonelecting spouse under section 6015(e),” our denial of the
Commissioner’s motion for entry of decision had the effect of
allowing the nonelecting spouse his day in Court. Corson v.
Commissioner, supra at 365.
In King v. Commissioner, supra, the Court delineated the
procedures under which a nonelecting spouse would be permitted to
intervene and challenge an electing spouse’s claim for relief
under section 6015. The circumstances in King differed from
those in Corson in that, while the Commissioner issued separate
notices of deficiency to the taxpayers, only the electing spouse
filed a petition for redetermination with the Court. The sole
issue raised in the electing spouse’s petition was her claim for
relief from joint and several liability under former section
6013(e). While the case was pending, Congress repealed former
section 6013(e) and enacted section 6015. Thereafter, the
Commissioner filed with the Court a report stating that the
Commissioner concluded that the electing spouse qualified for
relief under section 6015(b). The report further stated that the
Commissioner believed that the nonelecting spouse should be
notified of the action and be given an opportunity to participate
in the proceeding. After the Court directed service of a copy of
- 14 -
the petition and a copy of the Court’s Rule 325 on the
nonelecting spouse, the nonelecting spouse filed with the Court a
motion for leave to file notice of intervention (embodying notice
of intervention). The Court subsequently granted the nonelecting
spouse’s motion, stating:
We hold that whenever, in the course of any
proceeding before the Court, a taxpayer raises a claim
for relief from joint liability under section 6015, and
the other spouse (or former spouse) is not a party to
the case, the Commissioner must serve notice of the
claim on the other individual who filed the joint
return for the year(s) in issue. The notice shall
advise such other individual of his or her opportunity
to file a notice of intervention for the sole purpose
of challenging the petitioning individual's entitlement
to relief from joint liability pursuant to section
6015. Such notice shall include a copy of * * * Rule
325. The Commissioner shall at the same time file with
the Court a certification of such notice or, in a
stand-alone case brought under section 6015(e)(1)(A),
state in the answer that such notice has been provided.
See * * * Rule 324(a)(2). Any intervention shall be
made in accordance with the provisions of * * * Rule
325(b).
King v. Commissioner, 115 T.C. at 125.
The instant case differs fundamentally from Corson and King
in that the electing spouse (here Ms. Maier) did not file a
petition with the Court electing to claim relief under section
6015. Ms. Maier did not file such petition with the Court
because respondent granted her claim for relief under section
6015(f) at the close of the administrative process. In light of
this distinction, Corson and King do not support petitioner’s
contention that he should be permitted to invoke the Court’s
- 15 -
jurisdiction for the purpose of reviewing respondent’s
administrative determination.
Section 6015(h)(2) contemplates that petitioner be given
notice of, and the opportunity to participate in, administrative
proceedings addressing Ms. Maier’s election to claim relief from
joint and several liability.7 The record shows that petitioner
was notified of Ms. Maier’s claim and that he was permitted to
submit information to respondent relative to that claim.
Although petitioner remains dissatisfied with the level of
participation afforded him during the administrative process,
there is no directive in section 6015, or any other statutory
7
Sec. 1.6015-6(a)(1), Income Tax Regs., provides in
pertinent part:
§1.6015-6. Nonrequesting spouse’s notice and
opportunity to participate in administrative
proceedings.–-(a) In general–-(1) When the Secretary
receives an election under §1.6015-2 or 1.6015-3, or a
request for relief under §1.6015-4, the Secretary must
send a notice to the nonrequesting spouse’s last known
address that informs the nonrequesting spouse of the
requesting spouse’s claim for relief. The notice must
provide the nonrequesting spouse with an opportunity to
submit any information that should be considered in
determining whether the requesting spouse should be
granted relief from joint and several liability. A
nonrequesting spouse is not required to submit
information under this section. * * *
(2) The Secretary must notify the nonrequesting
spouse of the Secretary’s final determination with
respect to the requesting spouse’s claim for relief
under section 6015. * * *
Sec. 1.6015-6(b), Income Tax Regs., sets forth a
nonexclusive list of the matters that a nonrequesting spouse
might include in information submitted to the Secretary.
- 16 -
provision, vesting the Court with jurisdiction to review
respondent’s administrative determination to grant Ms. Maier
relief from joint and several liability.
Petitioner contends that, absent review by the Court, he
will be left without a judicial remedy. Whether petitioner truly
lacks a judicial remedy or not, it is well settled that the Court
may not rely on equitable considerations to expand its
jurisdiction beyond the parameters established by Congress. See
Commissioner v. McCoy, 484 U.S. 3, 7 (1987) (holding per curiam
that the Tax Court is "a court of limited jurisdiction and lacks
general equitable powers"); Healy v. Commissioner, 351 F.2d 602,
603 (9th Cir. 1965) (holding in the context of a late filing that
"no matter how allegedly inequitable the situation" the Tax Court
does not have the authority to excuse a taxpayer from
jurisdiction requirements in the statute); Axe v. Commissioner,
58 T.C. 256, 259 (1972). To the extent that petitioner believes
that he has suffered an injustice due to a flaw in the
controlling statutory provisions, his recourse may be to seek a
legislative remedy.
- 17 -
Accordingly, we shall dismiss this case for lack of
jurisdiction. To reflect the foregoing,
An order will be entered
granting respondent’s motion
to dismiss for lack of
jurisdiction.