Llwellyn Greene-Thapedi v. Commissioner

126 T.C. No. 1UNITED STATES TAX COURT
LLWELLYN GREENE-THAPEDI, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 7940-01L. Filed January 12, 2006.
In her original petition, P challenged R’s notice
of determination sustaining a proposed levy to collect
P’s 1992 income tax. She contended, among other
things, that R had failed to make a timely assessment
of her 1992 tax liabilities and had included excessive
interest accruals in her 1992 balance due; she sought a
refund of certain amounts previously paid with respect
to her 1992 account. After the petition was filed, P’s
1992 balance due was eliminated by R’s offset of P’s
1999 overpayment, pursuant to sec. 6402(a), I.R.C. P
amended her petition in the Tax Court, seeking an
increased refund. Held: Inasmuch as R agrees that
there is no unpaid 1992 tax liability upon which a levy
could be based and that no further collection action
should be taken, P’s challenges to the proposed levy
are moot. Held, further, this Court lacks jurisdiction
in this collection review proceeding to determine an
overpayment or to order a refund or credit of taxes.
Held, further, this case will be dismissed as moot.
- 2 -
Llwellyn Greene-Thapedi, pro se.
Robert T. Little and Michael F. O’Donnell, for respondent.
OPINION
THORNTON, Judge: Pursuant to section 6330(d), petitioner
seeks review of respondent’s determination to proceed with a
proposed levy.1
Background
When she petitioned this Court, petitioner resided in
Chicago, Illinois.
Stipulated Decision for 1992 Taxable Year
On June 5, 1997, in a prior deficiency proceeding involving
petitioner’s 1992 taxable year, this Court entered a stipulated
decision that petitioner had a $10,195 deficiency in income tax
due but owed no additions to tax or penalties. The parties
stipulated that interest would be assessed as provided by law and
that effective upon entry of the decision by the Court,
petitioner waived the restrictions contained in section 6213(a)
prohibiting assessment and collection of the deficiency (plus
statutory interest) until the decision of the Tax Court becomes
final.
1
All section references are to the Internal Revenue Code,
as amended.
- 3 -
Collection Action on 1992 Liability
Respondent contends that on December 19, 1997, petitioner’s
1992 deficiency was assessed and petitioner was sent a notice of
balance due (including accrued interest) of $14,514.53.
Petitioner disputes that any notice of balance due was ever sent.
In any event, petitioner made no payment on her 1992 deficiency
at that time.
On July 3, 2000, respondent sent petitioner a Form CP 504,
“Urgent!! We intend to levy on certain assets. Please respond
NOW.” (Form CP 504), for taxable year 1992, indicating that she
owed $23,805.53.2 By checks dated July 18, 2000, petitioner paid
respondent $14,514.53 on her 1992 account; i.e., the amount of
her balance as of December 19, 1997.3 Contemporaneously,
petitioner submitted to respondent a Form 12153, Request for a
Collection Due Process Hearing, dated July 18, 2000, with respect
to her 1992 tax year.4 On the Form 12153, petitioner complained
2
The Form CP 504 indicated that the $23,805.53 balance
included a “Penalty” of $2,622.56 and “Interest” of $4,298.30.
The $4,298.30 of “Interest” was apparently in addition to other
amounts of previously accrued interest.
3
One of the checks was for $10,195; the memo line on the
check states that it is for “Additional Tax 1992 Under Protest”.
The other check was for $4,319.53; the memo line states that this
amount is for “1992 Interest Assessment Under Protest”. A
transcript of petitioner’s account attached to the Form CP 504
sent to petitioner on July 3, 2000, showed the $4,319.53 amount
as an interest assessment that was made on Dec. 19, 1997.
4
The Appeals Office apparently treated this request as
(continued...)
- 4 -
that the balance shown on respondent’s Form CP 504 included
erroneous penalties and interest accruals.
On January 9, 2001, respondent issued petitioner a Final
Notice--Notice of Intent to Levy and Notice of Your Right to a
Hearing (the Final Notice) with respect to her 1992 income tax
liabilities, showing an assessed balance of $4,992.70, and
stating that this amount did not include accrued penalties and
interest.5 Petitioner submitted another Form 12153, dated
January 17, 2001, again requesting a hearing with respect to her
1992 taxable year and stating: “I do not owe the money. Notice
improper”.
Appeals Office Hearing and Notice of Determination
The Appeals Office hearing consisted of an exchange of
correspondence and telephone conversations. During the hearing,
petitioner contended that she was not liable for any interest
accruals between December 19, 1997, and July 3, 2000, on the
ground that she had not received the December 19, 1997, notice of
balance due and was not notified of any balance due until July 3,
2000. By Notice of Determination dated May 22, 2001,
4
(...continued)
premature, on the ground that petitioner had not yet received any
notice of Federal tax lien filing, final notice of intent to
levy, or notice of jeopardy levy with respect to taxable year
1992.
5
The record does not otherwise conclusively establish how
the $4,992.70 assessed balance was calculated.
- 5 -
respondent’s Appeals Office sustained the proposed collection
action.6
Tax Court Petition
On June 22, 2001, petitioner filed her petition in this
Court.7 The petition disputed, among other things, interest and
penalties with respect to her 1992 income tax liability and
requested this Court to order respondent to credit or refund what
she alleged to be her tax overpayment for 1992. The petition
also alleged that petitioner had failed to receive a meaningful
Appeals Office hearing as required by section 6330.
Respondent’s Motion for Partial Summary Judgment
On October 17, 2002, respondent filed a motion for partial
summary judgment with respect to the issue of whether petitioner
was afforded the opportunity for an Appeals Office administrative
hearing under sections 6320 and 6330. By Order dated February
25, 2003, this Court granted respondent’s motion for partial
6
The Notice of Determination also sustained a separate
collection action for petitioner’s 1997 taxable year. As
explained in the following note, that matter is now moot.
7
The original petition included taxable years 1991, 1992,
and 1997. By Order dated Sept. 13, 2001, this Court granted
respondent’s motion to dismiss for lack of jurisdiction as to
taxable year 1991 on the ground that petitioner had not been
issued a notice of determination with respect to that year. By
Order dated Feb. 24, 2003, this Court dismissed the collection
action as to taxable year 1997 as being moot, on the ground that
respondent had conceded that the disputed 1997 tax liability had
not been assessed and that respondent had erred in issuing a
final notice of intent to levy with respect to the 1997 taxable
year.
- 6 -
summary judgment, holding that “petitioner was provided with a
meaningful opportunity for a collection due process hearing in
this case.”
Petitioner’s Motion To Add 1999 Taxable Year to This Proceeding
Respondent’s just-described motion for partial summary
judgment indicated, among other things, that after the filing of
the petition, respondent had offset a $10,633 overpayment from
petitioner’s 1999 income tax account against petitioner’s 1992
tax liability, resulting in full payment of petitioner’s 1992
liability.8 On December 3, 2002, petitioner filed a motion for
leave to amend her petition to add taxable year 1999 to this
proceeding. In her motion, petitioner stated that she had been
“caught by surprise” by the information in respondent’s motion
that respondent had offset her 1999 overpayment against her
alleged 1992 tax liability. By Order dated January 30, 2003,
this Court denied petitioner’s motion for leave to amend her
petition. The Order stated:
Respondent contends, and we agree, that petitioner is
not permitted to dispute in this collection review
proceeding respondent’s application of an overpayment
8
The record does not conclusively establish when the offset
occurred. On brief, respondent proposes as a finding of fact
that the offset occurred on or about May 19, 2001, “subsequent to
the filing of the petition in this case.” (In fact, the original
petition was filed on June 22, 2001.) This proposed finding of
fact appears inconsistent with respondent’s responses to
petitioner’s interrogatories, in which respondent stated that the
offset occurred “during the week beginning October 6, 2002.”
- 7 -
to offset all or part of the tax due for taxable year
1992 although the latter year is otherwise subject to
review under section 6330. See, e.g., Trent v.
Commissioner, T.C. Memo. 2002-285.
District Court Refund Suit
Petitioner then filed a refund suit in the United States
District Court, Northern District of Illinois, Eastern Division,
claiming a refund of her 1999 overpayment. The United States
moved to dismiss on the ground that as a matter of law petitioner
has no claim for a 1999 overpayment because the credit against
the 1999 tax year no longer exists, having been applied against
petitioner’s outstanding 1992 tax liability pursuant to section
6402(a). By memorandum opinion and order entered December 11,
2003, the District Court denied the Government’s motion to
dismiss, on the ground that it could not determine as a matter of
law that petitioner’s 1999 overpayment did not exceed her 1992
liability, so that the Government’s section 6402(a) duty to
“refund any balance to such person” would not arise in the
District Court case. The District Court stated:
Finally, the Court is mindful that although the
Tax Court does not have concurrent jurisdiction over
the issues in the present suit, which relates to the
1999 tax year, see Statland v. United States, 178 F.3d
465, 470-71 (7th Cir. 1999), the Tax Court proceedings
related to Plaintiff’s 1992 tax liability will likely
resolve certain facts necessary to the resolution of
the present litigation. Therefore, this matter is
stayed pending the outcome of the Tax Court
proceedings.
- 8 -
Amended Petition
Petitioner subsequently filed an unopposed motion for leave
to file an amended petition in these Tax Court proceedings. In
her amended petition, petitioner contended that the Appeals
Office erred in determining that the proposed levy with respect
to her 1992 taxable year should proceed. She also challenged her
liability for the 1992 deficiency and associated interest on the
ground that respondent had failed to make timely notice and
demand for payment.
Discussion
This Court previously dismissed this case as to petitioner’s
taxable years 1991 and 1997, leaving only 1992 at issue.
Sometime after the petition was filed, respondent applied
petitioner’s 1999 overpayment to offset her 1992 tax liability.
Consequently, respondent no longer claims any amount to be due
and owing from petitioner with respect to her 1992 income tax
account. On supplemental brief respondent states that he
“intends to take no further collection action with respect to
* * * [petitioner’s] 1992 tax liability”. Accordingly,
- 9 -
respondent contends that this case should be dismissed as moot.9
For the reasons described below, we agree.
The Tax Court is a court of limited jurisdiction; we may
exercise jurisdiction only to the extent expressly authorized by
Congress. See, e.g., Henry Randolph Consulting v. Commissioner,
112 T.C. 1, 4 (1999). Our jurisdiction in this case is
predicated upon section 6330(d)(1)(A), which gives the Tax Court
jurisdiction “with respect to such matter” as is covered by the
final determination in a requested hearing before the Appeals
Office. See Davis v. Commissioner, 115 T.C. 35, 37 (2000).
“Thus, our jurisdiction is defined by the scope of the
determination” that the Appeals officer is required to make.
Freije v. Commissioner, 125 T.C. 14, 25 (2005).
The Appeals officer’s written determination is expected to
address “the issues presented by the taxpayer and considered at
the hearing.” H. Conf. Rept. 105-599, at 266 (1998), 1998-3 C.B.
9Neither party originally argued that this case was moot as
to petitioner’s taxable year 1992. Mootness, however, “is a
jurisdictional question, since article III, section 2 of the
Constitution limits jurisdiction of the Federal judicial system
to ‘cases’ and ‘controversies.’” Hefti v. Commissioner, 97 T.C.
180, 191 (1991), affd. 983 F.2d 868 (8th Cir. 1993). “The
failure to question our jurisdiction is not a waiver of the right
to do so, for if we lack jurisdiction over an issue, we do not
have the power to decide it.” Urbano v. Commissioner, 122 T.C.
384, 389 (2004). Accordingly, the Court has an independent
obligation to consider mootness sua sponte. North Carolina v.
Rice, 404 U.S. 244, 246 (1971). For this reason, the Court
directed the parties to file supplemental briefs addressing the
issue of whether this case should be dismissed as moot.
- 10 -
747, 1020. At the hearing, the Appeals officer is required to
verify that “the requirements of any applicable law or
administrative procedure have been met.” Sec. 6330(c)(1); see
sec. 6330(c)(3)(A).10 The Appeals officer is also required to
address whether the proposed collection action balances the need
for efficient tax collection with the legitimate concern that any
collection action be no more intrusive than necessary. Sec.
6330(c)(3)(C). The taxpayer may raise “any relevant issue
relating to the unpaid tax or the proposed levy”. Sec.
6330(c)(2)(A). The taxpayer is also entitled to challenge “the
existence or amount of the underlying tax liability” if he or she
“did not receive any statutory notice of deficiency for such tax
liability or did not otherwise have an opportunity to dispute
such tax liability.” Sec. 6330(c)(2)(B).
In Chocallo v. Commissioner, T.C. Memo. 2004-152, the
Commissioner had acknowledged that the tax liability he had been
trying to collect by levy had been improperly assessed, had
refunded previously collected amounts with interest, and had
agreed that there was no unpaid tax liability upon which a levy
could be based. Accordingly, this Court dismissed the case as
moot. The Court stated: “Our jurisdiction under section 6330 is
10
Although this language is somewhat open ended, the
legislative history clarifies that this required verification
pertains to legal and administrative requirements “for the
proposed collection action”. H. Conf. Rept. 105-599, at 264
(1998), 1998-3 C.B. 747, 1018.
- 11 -
generally limited to reviewing whether a proposed levy action is
proper.” Id. The Court declined to entertain the taxpayer’s
motion for sanctions against the Government, reasoning that the
taxpayer “has received all the relief to which she is entitled
under section 6330”. Id. Similarly, in Gerakios v.
Commissioner, T.C. Memo. 2004-203, we dismissed the collection
review proceeding as moot where the parties agreed that there was
no unpaid liability upon which a lien or levy could be based
after the taxpayer had paid the liability in full.
In the instant case, as in Chocallo and Gerakios, respondent
acknowledges that there is no unpaid liability for the
determination year upon which a levy could be based and has
stated that he is no longer pursuing the proposed levy.
Accordingly, in this case, as in Chocallo and Gerakios, the
proposed levy for petitioner’s 1992 tax liability is moot.
In the instant case, unlike in Chocallo, respondent does not
concede that the proposed levy was improperly made, nor has
respondent returned to petitioner the disputed amounts that have
been applied to satisfy petitioner’s 1992 account. These
circumstances, however, do not dictate a different result in this
case. In this case, unlike in Chocallo, respondent has collected
no amounts by levy. Respondent’s offset of petitioner’s 1999
overpayment against her 1992 tax account was pursuant to section
- 12 -
6402(a).11 An offset under section 6402 does not constitute a
levy action and accordingly is not a collection action that is
subject to review in this section 6330 proceeding. Bullock v.
Commissioner, T.C. Memo. 2003-5; see Boyd v. Commissioner, 124
T.C. 296, 300 (2005); sec. 301.6330-1(g)(2), Q&A-G3, Proced. &
Admin. Regs. (an offset is a nonlevy collection action that the
Internal Revenue Service may take during the suspension period
provided in section 6330(e)(1)).
In the instant case, unlike in Chocallo v. Commissioner,
supra, and Gerakios v. Commissioner, supra, there remains
unresolved petitioner’s claims for a refund. In her amended
petition, petitioner contends that she is not liable for the 1992
deficiency and associated interest on the ground that respondent
failed to assess the deficiency and mail her a timely notice and
demand to pay; alternatively, she contends that pursuant to
section 6601(c) she is not liable for interest accruals from the
period from July 5, 1997 (when she claims respondent was required
11
In her amended petition, petitioner requested that we
find that respondent was not authorized to credit her $10,633
income tax overpayment for 1999 against her 1992 account.
Petitioner has not pursued this argument on brief, and we deem
her to have abandoned it. See Nicklaus v. Commissioner, 117 T.C.
117, 120 n.4 (2001) (concluding that taxpayers abandoned
arguments and contentions asserted prior to the filing of their
brief where they failed to advance those arguments and
contentions on brief). Even if we had not concluded that
petitioner had abandoned this argument, however, we would
nevertheless conclude, for the reasons discussed supra, that we
lack authority to consider this matter pursuant to sec. 6330.
- 13 -
to make notice and demand for payment of her 1992 deficiency) to
July 3, 2000 (when respondent sent her Form CP 504 requesting
payment). On brief, petitioner contends that she is entitled to
a refund for:
all compound interest she paid for the period April 15,
1993 to July 18, 2000, all interest she paid for
periods during which interest was suspended or [sic]
July 5, 1997 to July 3, 2000; and for all sums that she
paid for penalties and additions and interest on such,
that were disallowed by the June 5, 1997 Tax Court
decision.
Petitioner’s claim for a refund arises, if at all, under
section 6330(c)(2), as an outgrowth of her challenge to the
existence and amount of her underlying 1992 tax liability.12
Pursuant to section 6330(c)(2), however, whatever right
petitioner may have to challenge the existence and amount of her
underlying tax liability in this proceeding arises only in
connection with her challenge to the proposed collection action.
Inasmuch as the proposed levy is moot, petitioner has no
independent basis to challenge the existence or amount of her
underlying tax liability in this proceeding.
More fundamentally, section 6330 does not expressly give
this Court jurisdiction to determine an overpayment or to order a
refund or credit of taxes paid. This Court has not previously
12
The right to challenge the existence and amount of
underlying tax liability encompasses the right to challenge the
existence and amount of disputed interest thereon. Urbano v.
Commissioner, 122 T.C. 384, 389-390 (2004).
- 14 -
addressed the question as to whether such jurisdiction arises
implicitly in collection review proceedings commenced in this
Court pursuant to section 6330.13 The legislative history of
this Court’s overpayment and refund jurisdiction in deficiency
proceedings is relevant in addressing this question.14
When our predecessor, the Board of Tax Appeals (the Board)
was created in 1924, it lacked jurisdiction to determine an
overpayment for the year in question in a deficiency
proceeding.15 Cf. Dickerman & Englis, Inc. v. Commissioner, 5
B.T.A. 633, 634-635 (1926). The Revenue Act of 1926, ch. 27, 44
Stat. 9, established the Board’s jurisdiction to determine an
overpayment in a deficiency proceeding. The Board still had no
jurisdiction, however, to order payment of any resulting refund.
Id. at 635-636; see United States ex rel. Girard Trust Co. v.
13
This Court has exercised its inherent equitable powers to
order the Commissioner to return to the taxpayer property that
was improperly levied upon, see Chocallo v. Commissioner, T.C.
Memo. 2004-152, and to require the Commissioner to provide to the
taxpayer a credit with respect to property that the Commissioner
had seized pursuant to a jeopardy levy but had improperly refused
to sell in compliance with the taxpayer’s request made pursuant
to sec. 6335(f), see Zapara v. Commissioner, 124 T.C. 223 (2005).
14
By “deficiency proceeding” we mean a proceeding filed in
Tax Court pursuant to sec. 6213 challenging a notice of
deficiency issued pursuant to sec. 6212(a).
15
But cf. Commissioner v. Gooch Milling & Elevator Co., 320
U.S. 418, 421 n.7 (1943) (noting the Board’s assumption of
jurisdiction, and the legislative revocation thereof, to
determine an overpayment for a nondeficiency year in unique
circumstances where the overpayment was netted against the
deficiency).
- 15 -
Helvering, 301 U.S. 540, 542 (1937). That situation persisted
until 1988 when Congress enacted section 6512(b), giving the Tax
Court jurisdiction to order the refund of overpayments determined
in deficiency proceedings.16 Technical and Miscellaneous Revenue
Act of 1988, Pub. L. 100-647, sec. 6244, 102 Stat. 3750. This
legislative history makes clear that Congress believed that
absent this legislative change the Tax Court lacked authority to
16
Sec. 6512(b)(2) provides:
Jurisdiction to enforce. If, after 120 days after a
decision of the Tax Court has become final, the
Secretary has failed to refund the overpayment
determined by the Tax Court, together with the interest
thereon as provided in subchapter B of chapter 67, then
the Tax Court, upon motion by the taxpayer, shall have
jurisdiction to order the refund of such overpayment
and interest. An order of the Tax Court disposing of a
motion under this paragraph shall be reviewable in the
same manner as a decision of the Tax Court, but only
with respect to the matters determined in such order.
Sec. 6512(b)(2), read in isolation, does not expressly
confine to deficiency proceedings the Tax Court’s jurisdiction to
enforce overpayments; read in the context of sec. 6512 as a
whole, however, that is clearly the effect. Sec. 6512(a)
describes limitations on claiming a refund or credit when a
petition is filed in Tax Court in response to a “notice of
deficiency”. Sec. 6512(b)(1) confers on the Tax Court
jurisdiction to determine an overpayment “if the Tax Court finds
that there is no deficiency and further finds that the taxpayer
has made an overpayment * * * or finds that there is a deficiency
but that the taxpayer has made an overpayment”. Pursuant to sec.
6512(b)(3), no credit or refund will be allowed unless the Tax
Court determines as part of its decision that (among other
things) the tax was paid “after the mailing of the notice of
deficiency”. Similarly, as more fully described in the following
note, the legislative history indicates that enactment of sec.
6512(b)(2) was in response to treatment under then-present law of
“a refund of a tax for which the IRS has asserted a deficiency.”
H. Conf. Rept. 100-1104, at 231 (1988), 1988-3 C.B. 473, 721.
- 16 -
order the refund of any overpayment.17 In this same legislation,
the Senate proposed to expand the Tax Court’s refund jurisdiction
by granting the Tax Court jurisdiction over tax refund actions
where the taxpayer already had a related deficiency proceeding
pending in Tax Court. H. Conf. Rept. 100-1104 (Vol. II), at 234
(1988), 1988-3 C.B. 473, 724. This proposal was rejected in
conference. See id. In describing “Present Law” as related to
this proposal, the conference report stated: “The Tax Court has
no jurisdiction to determine whether a taxpayer has made an
overpayment except in the context of a deficiency proceeding.”18
17
In describing the law as it existed before the enactment
of sec. 6512(b)(2), the conference report states:
The Tax Court has jurisdiction to determine that a
taxpayer is due a refund of a tax for which the IRS has
asserted a deficiency. However, if the IRS fails to
refund or credit an overpayment determined by the Tax
Court, the taxpayer must seek relief in another court.
[H. Conf. Rept. 100-1104, at 231 (1988), 1988-3 C.B.
473, 721.]
Describing the “Reasons for change”, the report of the Senate
Finance Committee states:
The committee believes that if the Tax Court
determines that a taxpayer is due a refund and the IRS
fails to issue that refund, the taxpayer should not
have to incur the additional time, trouble, and expense
of enforcing the Tax Court’s decision in another forum.
Rather, the taxpayer should be able to enforce the
decision in the court that entered the decision. [S.
Rept. 100-309, at 17 (1988).]
18
As discussed infra, this situation changed in 1996, with
the enactment of sec. 6404(h) (as currently designated), by the
Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 302(a), 110
(continued...)
- 17 -
Id. at 233, 1988-3 C.B. at 723. In the Taxpayer Relief Act of
1997, Pub. L. 105-34, sec. 1451, 111 Stat. 1054, Congress enacted
section 6512(b)(4), which clarifies that in determining an
overpayment pursuant to section 6512(b), the Tax Court has no
jurisdiction to “restrain or review any credit or reduction made
by the Secretary under section 6402.” See H. Conf. Rept. 105-
220, at 732 (1997), 1997-4 C.B. (Vol. 2) 1457, 2202 (stating that
this amendment “clarifies that the Tax Court does not have
jurisdiction over the validity or merits of the credits or
offsets that reduce or eliminate the refund to which the taxpayer
was otherwise entitled.”).
In sum, given that explicit statutory authority was required
before this Court acquired jurisdiction to determine overpayments
in deficiency cases, and given that additional explicit statutory
authority was required before this Court acquired, decades later,
jurisdiction to enforce such an overpayment, and given that
Congress later clarified legislatively that this overpayment
jurisdiction did not extend to reviewing credits under section
6402 (such as the credit of petitioner’s 1999 overpayment against
18
(...continued)
Stat. 1457 (1996). This Court has construed this provision,
which expressly cross-references sec. 6512(b), as conferring on
the Tax Court jurisdiction to determine the amount of a
taxpayer’s overpayment in a proceeding brought pursuant to sec.
6404(h) to review the IRS’s failure to abate interest. See
Goettee v. Commissioner, T.C. Memo. 2003-43.
- 18 -
her 1992 tax liability), we do not believe we should assume,
without explicit statutory authority, jurisdiction either to
determine an overpayment or to order a refund or credit of taxes
paid in a section 6330 collection proceeding.19 As discussed
below, this conclusion is reinforced by the absence in section
6330 of the traditional statutory limitations on the allowance of
refunds or credits of taxes.
Section 6511 contains detailed limitations on the allowance
of tax credits or refunds generally. Section 6511(a) sets out
the requisite time periods for filing a claim for credit or
refund.20 Section 6511(b)(2) limits the amount of tax to be
refunded to two so-called look-back periods: (1) For claims
filed within 3 years of filing the return, the refund is
19
We do not mean to suggest that this Court is foreclosed
from considering whether the taxpayer has paid more than was
owed, where such a determination is necessary for a correct and
complete determination of whether the proposed collection action
should proceed. Conceivably, there could be a collection action
review proceeding where (unlike the instant case) the proposed
collection action is not moot and where pursuant to sec.
6330(c)(2)(B), the taxpayer is entitled to challenge “the
existence or amount of the underlying tax liability”. In such a
case, the validity of the proposed collection action might depend
upon whether the taxpayer has any unpaid balance, which might
implicate the question of whether the taxpayer has paid more than
was owed.
20
Sec. 6511 requires a taxpayer to file a refund claim
“within 3 years from the time the return was filed or 2 years
from the time the tax was paid, whichever of such periods expires
the later, or if no return was filed by the taxpayer, within 2
years from the time the tax was paid.” Sec. 6511(a); see sec.
6511(b)(1); Commissioner v. Lundy, 516 U.S. 235, 240 (1996).
- 19 -
generally limited to the portion of the tax paid within the 3
years immediately before the claim was filed; (2) for claims not
filed within 3 years of filing the return, the refund is
generally limited to the portion of the tax paid during the 2
years immediately before the claim was filed. See Commissioner
v. Lundy, 516 U.S. 235, 240 (1996). Section 6512(b)(3) generally
incorporates these rules where taxpayers who challenge deficiency
notices in Tax Court are found to be entitled to refunds.
By contrast, section 6330 incorporates no such limitations
on the allowance of tax refunds or credits. There is no
indication that in enacting section 6330, Congress intended, sub
silentio, to provide taxpayers a back-door route to tax refunds
and credits free of these longstanding and well-established
limitations. Nor, in light of the detailed and comprehensive
codification of such limitations in sections 6511 and 6512(b), do
we believe that Congress would have intended that such
limitations should arise by inference in section 6330 with
respect to claims for tax refunds or credits as to which our
jurisdiction would similarly arise under section 6330, if at all,
only by inference. Consequently, we are led to the conclusion
that Congress did not intend section 6330 to provide for the
allowance of tax refunds and credits.
Petitioner’s claim for a refund is based at least partly on
her claim that she does not owe at least some of the assessed
- 20 -
interest, on the ground that respondent failed to make timely
notice and demand for payment of her 1992 deficiency. This Court
has held that in an appeal brought under section 6330(d), where
the existence and amount of the taxpayer’s underlying tax
liability is properly at issue, our jurisdiction allows us to
review the taxpayer’s claim for interest abatement pursuant to
section 6404, see Katz v. Commissioner, 115 T.C. 329, 340-341
(2000), as well as to redetermine the correct amount of the
taxpayer’s interest liability where the claim falls outside of
section 6404, see Urbano v. Commissioner, 122 T.C. 384, 389-393
(2004). In interest-abatement proceedings brought under section
6404(h), this Court has held that we have jurisdiction to
determine the amount of an overpayment pursuant to section
6404(h)(2)(B), which states: “Rules similar to the rules of
section 6512(b) shall apply for purposes of this subsection.”
See Goettee v. Commissioner, T.C. Memo. 2003-43.
We do not believe that petitioner’s refund claim is properly
construed as being predicated on a claim for interest abatement
pursuant to section 6404.21 But even if petitioner’s claim were
21
Neither in the administrative hearing nor in this Court
proceeding has petitioner expressly asserted any claim for
interest abatement pursuant to sec. 6404. The gist of her claim
is that respondent has erroneously or illegally assessed
interest, by failing to make timely notice and demand for payment
of her 1992 deficiency. A claim for interest abatement
predicated on allegations of erroneous or illegal assessment is
prohibited in an income tax case (such as the instant case), by
(continued...)
- 21 -
so construed, that circumstance would not affect our conclusion
that we lack jurisdiction under section 6330 to determine any
overpayment or to order a refund or credit. Unlike section
6404(h), section 6330 contains no cross-reference to the rules of
section 6512(b), nor does section 6330 cross-reference section
6404(h)(2)(B), which makes section 6512(b)-type rules applicable
only “for purposes of this subsection” (i.e., subsection (h) of
section 6404). Section 6404(h)(2)(B) illustrates that Congress
has acted infrequently to extend this Court’s overpayment
jurisdiction, and then only in a deliberate and circumscribed
manner. These considerations buttress our conclusion that we
should not assume overpayment jurisdiction in a section 6330(d)
proceeding absent express statutory provision.
We are mindful that the District Court has stayed
petitioner’s refund case with the expectation that this Court
21
(...continued)
virtue of sec. 6404(b), which provides: “No claim for abatement
shall be filed by a taxpayer in respect of an assessment of * * *
[income] tax imposed under subtitle A”. See Urbano v.
Commissioner, 122 T.C. at 395; see also Melin v. Commissioner, 54
F.3d 432 (7th Cir. 1995); Bax v. Commissioner, 13 F.3d 54, 58 (2d
Cir. 1993); Asciutto v. Commissioner, T.C. Memo. 1992-564, affd.
per order 26 F.3d 108 (9th Cir. 1994). Petitioner has not
alleged, and the record does not suggest, that she qualifies for
abatement of interest under the applicable version of sec.
6404(e), which would require unreasonable error or delay
resulting from a “ministerial act”. See Urbano v. Commissioner,
supra at 390 n.4 (describing the 1996 legislative amendment which
broadened the scope of sec. 6404(e) to include “managerial and
ministerial” acts, effective for interest accruing on
deficiencies for taxable years beginning after July 30, 1996).
- 22 -
would resolve certain relevant facts in this proceeding. Because
we lack jurisdiction in this proceeding to determine petitioner’s
1992 overpayment or to order a refund or credit of petitioner’s
1992 taxes, and because the proposed collection action for 1992
is now moot, no factual issue remains which would affect the
disposition of the case before us. For us to undertake to
resolve issues that would not affect the disposition of this case
would, at best, amount to rendering an advisory opinion. This we
decline to do. Cf. LTV Corp. v. Commissioner, 64 T.C. 589, 595
(1975) (declining to provide an advisory opinion as to the amount
of net operating losses (NOLs) in post-deficiency years in a
deficiency case in which respondent had conceded NOLs sufficient
to eliminate any deficiency for the year at issue).
For the reasons discussed, we shall dismiss this case as
moot.
An appropriate order of
dismissal will be entered.
Reviewed by the Court.
GERBER, COHEN, WELLS, HALPERN, CHIECHI, LARO, GALE, HAINES,
GOEKE, KROUPA, and HOLMES, JJ., agree with this majority opinion.
FOLEY, J., concurs in result only.
- 23 -
COLVIN, J., concurring: I accept as correct the majority’s
interpretation of the statute and our lack of jurisdiction in
this case. However, I write separately to highlight the fact
that the Commissioner’s offset authority can cause undesirable
consequences for taxpayers and the Court in collection review
proceedings under sections 6320 and 6330.
The majority holds that petitioner properly invoked the
Court’s jurisdiction under section 6330 by filing a timely
petition challenging respondent’s notice of determination
regarding the proposed collection of her tax liability for 1992.
The majority also holds that action was rendered moot because
petitioner later overpaid her Federal income tax for 1999, and
the Commissioner offset that overpayment by the amount of her
unpaid 1992 tax liability.
Typically in these situations, a taxpayer’s only remedy may
be to fully pay the tax, file a refund claim, and if
unsuccessful, institute a tax refund suit in Federal District
Court or the Court of Federal Claims. As a result, taxpayer
protections provided in sections 6320 and 6330, that is, the
right to administrative and judicial review of the Commissioner’s
collection actions, can quickly evaporate simply because the
taxpayer overpaid his or her taxes for another year.
The circumstances present here may recur in future cases.
The combination of the Commissioner’s authority to offset an
- 24 -
overpayment and the mootness doctrine may cause taxpayer
frustration and waste judicial resources. The dismissal of a
proceeding brought in this Court under section 6320 or 6330 due
to the offset of an overpayment may convince taxpayers that their
efforts during the administrative and judicial process were
wasted. Taxpayers may draw little solace from the fact that they
can reinstate their challenge to the Commissioner’s collection
action by filing a refund suit in another court.
MARVEL, WHERRY, and HOLMES, JJ., agree with this concurring
opinion.
- 25 -
VASQUEZ, J., dissenting: I respectfully disagree with the
conclusions of the majority primarily because I believe section
6330 provides the Court with jurisdiction to decide there is an
overpayment. Additionally, the majority states: “the proposed
levy for petitioner’s 1992 tax liability is moot.” Majority op.
p. 11. I do not believe, however, that the case is moot.
Rules of Statutory Construction
Remedial legislation should be construed broadly and
liberally to effectuate its purposes. Tcherepnin v. Knight, 389
U.S. 332, 336 (1967); Piedmont & N. Ry. Co. v. ICC, 286 U.S. 299,
311 (1932); see Washington v. Commissioner, 120 T.C. 137,
155-156, 158 (2003) (Washington II) (noting the Court’s
obligation to liberally construe the remedial provisions of the
Internal Revenue Service Restructuring and Reform Act of 1998
(RRA 1998), Pub. L. 105-206, 112 Stat. 685). Section 63301 is
remedial legislation. Katz v. Commissioner, 115 T.C. 329, 333
n.8 (2000) (“Congress enacted secs. 6320 (pertaining to liens)
and 6330 (pertaining to levies) to provide new protections for
taxpayers with regard to collection matters.”); S. Rept. 105-174,
at 67 (1998), 1998-3 C.B. 537, 603 (“The Committee believes that
taxpayers are entitled to protections in dealing with the IRS * *
* The Committee believes that following procedures designed to
1
Unless otherwise indicated, all section references are to
the applicable Internal Revenue Code, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
- 26 -
afford taxpayers due process in collections will increase
fairness to taxpayers.”).
Section 6330(d): Jurisdiction
Our collection action review jurisdiction is set forth in
section 6330(d). Section 6330(d) provides: “(1) Judicial Review
of Determination.--The person may, within 30 days of a
determination under this section, appeal such determination--(A)
to the Tax Court (and the Tax Court shall have jurisdiction with
respect to such matter)”. The requirements for exercising our
jurisdiction under section 6330 are that “we have general
jurisdiction over the type of tax involved, a ‘determination’ by
Appeals and a timely [filed] petition”. Lunsford v.
Commissioner, 117 T.C. 159, 161 (2001).
Petitioner filed a timely petition with the Court in this
case in response to the notice of determination. Accordingly, we
have jurisdiction over petitioner’s case, and the instant
controversy is within the jurisdiction of the Court. Id.; see
Woods v. Commissioner, 92 T.C. 776, 787 (1989). Once a taxpayer
invokes the jurisdiction of the Court, jurisdiction lies with the
Court and remains unimpaired until the Court has decided the
controversy. Naftel v. Commissioner, 85 T.C. 527, 529-530
(1985); Dorl v. Commissioner, 57 T.C. 720, 722 (1972), affd. 507
F.2d 406 (2d Cir. 1974).
- 27 -
The U.S. Court of Appeals for the Ninth Circuit recently
addressed mootness in the context of section 7436 (employment
classification) cases. Charlotte’s Office Boutique, Inc. v.
Commissioner, 425 F.3d 1203 (9th Cir. 2005), affg. 121 T.C. 89(2003). The Commissioner argued that there was no actual case or
controversy that a certain individual was an employee of the
taxpayer, and accordingly this deprived the Tax Court of
jurisdiction. Id. at 1206, 1207. In affirming that the Tax
Court had jurisdiction, the court noted: “the Commissioner’s
approach is contrary to the prevalent approach to subject-matter
jurisdiction and the few cases * * * [that have] considered the
Tax Court’s jurisdiction. * * * as a general matter a federal
court’s subject-matter jurisdiction is determined at the time it
is invoked.” Id. at 1208.
Additionally, the Commissioner’s concession of a deficiency
in a deficiency case does not deprive the Tax Court of
jurisdiction over the subject matter of that year; it is the
determination of a deficiency, rather than the existence of a
deficiency, that is dispositive as to our jurisdiction. Id. at
1209 (citing the Tax Court’s reasoning in the underlying case
concluding we had jurisdiction, in which we cited LTV Corp. v.
Commissioner, 64 T.C. 589 (1975), and Hannan v. Commissioner, 52
T.C. 787, 791 (1969)).
- 28 -
I do not believe that the Commissioner can unilaterally
deprive the Court of jurisdiction in section 6330 cases by merely
stating that he no longer intends to proceed with collection.
The congressional intent behind the enactment of section 6330 is
frustrated if the Commissioner can unilaterally deprive the Tax
Court of jurisdiction after directing the taxpayer to the Tax
Court by issuing the notice of determination. See id.Respondent’s statement that he will not proceed with
collection is not a concession that the taxes are not due. See
id. at 1208. A statement that does not change respondent’s
position on the amount of tax due for 1992 cannot deprive the
Court of the jurisdiction we acquired when petitioner filed her
petition for review of the notice of determination which
challenged the amount of the underlying tax liability. Id.
Although respondent states that he no longer intends to take
further collection action against petitioner, respondent’s
statement has no bearing on our jurisdiction. See id. at 1209;
LTV Corp. v. Commissioner, supra.
Petitioner contends that she is entitled to a refund of her
overpayment. Majority op. pp. 3-4, 12-13. Respondent argues
that he timely mailed the notice and demand, and therefore
petitioner is not entitled to an overpayment/refund larger than
- 29 -
he concedes.2 Id. Petitioner and respondent disagree about the
date of the first notice and demand, which affects the correct
computation of petitioner’s interest, which affects the correct
amount of petitioner’s underlying tax liability for 1992, which
affects the amount of petitioner’s overpayment and refund. Id.
Accordingly, there is no question as to the existence of an
actual case or controversy. See Charlotte’s Office Boutique,
Inc. v. Commissioner, supra at 1211.
Section 6330(c)(3): “Determination”
The “determination” that we have jurisdiction to review
under section 6330(d) is set forth in section 6330(c)(3). The
determination made “by an appeals officer under this subsection”
shall take into consideration “(A) the verification presented
under paragraph (1); (B) the issues raised under paragraph (2);
and (C) whether any proposed collection action balances the need
for efficient collection of taxes with the legitimate concern of
the person that any collection action be no more intrusive than
2
In his pretrial memorandum, dated Sept. 3, 2004,
respondent stated: “What remains at issue is the amount of the
refund for 1992 owed to the petitioner, which turns primarily on
when the notice and demand was sent to the petitioner for the
1992 tax liability.” At the recall of this case on Sept. 20,
2004, respondent stated: “There’s an overpayment on 1992. This
whole proceeding is about how large an overpayment Petitioner is
to receive.” Respondent continued: “we’re thinking that this is
a case that’s appropriate for a [Rule] 155 [computation] because
whichever way the Court rules, it will be necessary to do a
computation as to the amount of the refund. * * * I ballparked
the refund at something like $2,600 * * * and more if the
Petitioner wins.”
- 30 -
necessary.” Sec. 6330(c)(3); see Washington v. Commissioner, 120
T.C. 114, 126 (2003) (Washington I) (Halpern, J., concurring).
Thus, the components of subparagraphs (A), (B), and (C) of
section 6330(c)(3) are part of “the determination” of the Appeals
officer and “the determination” that the Tax Court has
jurisdiction over pursuant to section 6330(d)(1). See
Washington I, supra at 129 (Halpern, J., concurring); id. at 131
(Beghe, J., concurring). Accordingly, the section 6330
determination, and our review of the section 6330 determination,
consists of more than merely whether or not a notice of intent to
levy (or lien) should be sustained and whether the Commissioner
can proceed with collection. See also Washington I; Katz v.
Commissioner, 115 T.C. 329 (2000); Krueger v. Commissioner, T.C.
Memo. 2005-105; Skrizowski v. Commissioner, T.C. Memo. 2004-229;
sec. 301.6330-1(e)(3) Q&A-E8(i), -E11, Proced. & Admin. Regs.
At the hearing, petitioner contended that she was not liable
for any interest accruals between December 19, 1997, and July 3,
2000. Majority op. p. 4. In her requests for a hearing,
petitioner claimed that she did not owe the money respondent was
seeking to collect. Majority op. pp. 3-4. Accordingly, the
determination included whether petitioner was liable for any
interest accruals between December 19, 1997, and July 3, 2000,
and whether she did owe the money respondent sought to collect--
that when the 1999 overpayment was applied to 1992 there was an
- 31 -
“overpayment”3 of her 1992 liability. As there was a timely
petition from the notice of determination, we have jurisdiction
to review respondent’s determinations whether petitioner was
liable for interest accruals between December 19, 1997, and July
3, 2000, and whether there was an overpayment for 1992. Sec.
6330(c)(2)(A) and (B), (3), (d); see Meadows v. Commissioner, 405
F.3d 949, 952 (11th Cir. 2005).
Section 6511 and Overpayments in Section 6330 Cases
The majority seems to suggest that because section 6330 does
not incorporate the limitations contained in section 6511 that
section 6511 does not apply to section 6330 proceedings.
Majority op. pp. 18-19. This is contrary to our established
precedent.
In cases where the taxpayer argued that overpayments exist
for prior years that they thought should be used to reduce or
3
The U.S. Supreme Court has provided the following
definition of an “overpayment”: “any payment in excess of that
which is properly due.” Jones v. Liberty Glass Co., 332 U.S.
524, 531 (1947); Estate of Baumgardner v. Commissioner, 85 T.C.
445, 449-450, 460-461 (1985). “[A] tax is overpaid when a
taxpayer pays more than is owed, for whatever reason or no reason
at all.” United States v. Dalm, 494 U.S. 596, 609 n.6 (1990).
The term “overpayment” encompasses “erroneously”, “illegally”, or
“wrongfully” collected taxes. Id.The question of whether there is an overpayment is
independent of whether there is a deficiency. Bachner v.
Commissioner, 81 F.3d 1274, 1279 (3d Cir. 1996). The term
“overpayment” has the same meaning in this Court as in the U.S.
District Courts and the Court of Federal Claims. Sunoco, Inc. &
Subs. v. Commissioner, 122 T.C. 88, 99 (2004).
- 32 -
eliminate the unpaid tax for the years in issue, we have reviewed
those arguments. In Landry v. Commissioner, 116 T.C. 60 (2001),
Tedokon v. Commissioner, T.C. Memo. 2002-308, and Deaton v.
Commissioner, T.C. Memo. 2005-1, we considered whether section
6511 precluded the allowance of any portion of the taxpayers’
overpayment from prior years as a credit against the taxpayers’
tax liabilities for subsequent years that were the years in
issue--i.e., whether the overpayments were made within the
section 6511 look-back period. In none of these cases were the
overpayments made within the applicable look-back period.
Accordingly, we did not reach the issue of whether we had
authority to enter a decision that an overpayment exists.
Deciding an Overpayment Exists in Section 6330 Cases
When a taxpayer petitions this Court seeking review of the
Commissioner’s section 6330 determination regarding the
taxpayer’s underlying tax liability under section 6330(c)(2)(B),
we take jurisdiction over the entire underlying tax liability.
Cf. Estate of Mueller v. Commissioner, 101 T.C. 551, 556 (1993);
Naftel v. Commissioner, 85 T.C. at 533. The term “underlying tax
liability” includes both amounts assessed following the issuance
of a notice of deficiency and amounts “self-assessed” by
taxpayers. Montgomery v. Commissioner, 122 T.C. 1, 7-8 (2004).
When reviewing a determination regarding section
6330(c)(2)(B), the Court reviews the underlying tax liability.
- 33 -
Robinette v. Commissioner, 123 T.C. 85, 93 (2004); Washington I,
120 T.C. at 128 (Halpern, J., concurring). Where a challenge to
the existence or amount of a taxpayer’s underlying liability is
properly before the Court, “we should decide that challenge in
the same manner as we would redetermine a deficiency pursuant to
section 6214.” Washington I, supra at 129 (Halpern, J.,
concurring). Accordingly, when a taxpayer challenges the amount
of the underlying liability pursuant to section 6330(c)(2)(B),
our review of the underlying tax liability may lead to the
conclusion that the underlying tax liability should be lowered,
and such a finding presents the possibility of the existence of
an overpayment, as is the case herein.
Particularly as section 6330 cases involve a prepayment
posture and an opportunity to contest collection of the amount of
tax owed, and the tax must be paid in full as a prerequisite to
commencement of a refund suit brought in U.S. District Court or
the U.S. Court of Federal Claims, lack of jurisdiction to decide
an overpayment in section 6330 cases would leave taxpayers in a
“Catch-22” where their tax was overpaid but the period of
limitations on claiming the refund may have run, the look-back
rules of section 6511(b) may limit or eliminate the amount of the
- 34 -
refund,4 or res judicata5 may bar their claim. Flora v.
4
Notably, sec. 6330(e)(1) does not provide for the
suspension of the period of limitations for seeking a claim for
credit or refund pursuant to sec. 6511.
The very purpose of statutes of limitations in the tax
context is to bar the assertion of a refund claim after
a certain period of time has passed, without regard to
whether the claim would otherwise be meritorious. That
a taxpayer does not learn until after the limitations
period has run that a tax was paid in error, and that
he or she has a ground upon which to claim a refund,
does not operate to lift the statutory bar. [United
States v. Dalm, 494 U.S. 596, 609 n.7 (1990).]
It is very likely that after the time elapsed in the sec. 6330
proceedings most taxpayers’ refund claims would be barred by the
period of limitations contained in sec. 6511 or severely limited
or eliminated by the look-back rules of sec. 6511(b). This is so
because if taxpayers cannot obtain refunds as an outgrowth of a
sec. 6330 proceeding, as respondent suggests, no action taken by
a taxpayer as part of the sec. 6330 proceedings can be a claim
for refund pursuant to sec. 6511. See Commissioner v. Lundy, 516
U.S. 235, 249-250 (1996); Jackson v. Commissioner, T.C. Memo.
2002-44; sec. 301.6402-2(b)(1), Proced. & Admin. Regs.
5
The Supreme Court, in Commissioner v. Sunnen, 333 U.S.
591, 599 (1948), stated:
Income taxes are levied on an annual basis. Each year
is the origin of a new liability and of a separate
cause of action. Thus if a claim of liability or non-
liability relating to a particular tax year is
litigated, a judgment on the merits is res judicata as
to any subsequent proceeding involving the same claim
and the same tax year. * * *
Accordingly, because taxpayers can claim that they overpaid their
taxes (“paid more than was owed”) in a sec. 6330 case, majority
op. p. 18 note 19, the doctrine of res judicata might bar
taxpayers from initiating a refund suit in U.S. District Court or
the U.S. Court of Federal Claims. See Estate of Baumgardner v.
Commissioner, supra at 452; Newstat v. Commissioner, T.C. Memo.
2004-208 (res judicata applied to the overpayment claim in the
section 6330 case because it involved “the same cause of action”
(continued...)
- 35 -
United States, 357 U.S. 63 (1958); see Estate of Baumgardner v.
Commissioner, 85 T.C. 445, 453, 461 (1985).
Explicit Statutory Authority
1. Majority View
The majority narrowly construes the statute and concludes
that “explicit [specific] statutory authority” is necessary for
the Court to acquire jurisdiction. Majority op. pp. 17, 18. We
note, however, that when Congress wants to deny the Tax Court
jurisdiction over overpayments and refunds it knows how to do so.
Secs. 6214(b), 6512(b)(4); Revenue Act of 1926, ch. 27, sec.
274(g), 44 Stat. 56.
Section 6512(b)(4) states: “The Tax Court shall have no
jurisdiction under this subsection to restrain or review any
credit or reduction made by the Secretary under section 6402.”
Section 6330 contains no explicit statutory language limiting our
overpayment or refund jurisdiction. Accordingly, in the absence
of such explicit language, Congress did not deny us jurisdiction
to decide that there has been an overpayment.
The majority seems to acknowledge that from our inception
the Board did have jurisdiction to determine an overpayment in
certain circumstances. Majority op. p. 14 & note 15 (“When our
5
(...continued)
as the deficiency case); Lowy, Thoughts on Practicalities Of the
CDP Process, 107 Tax Notes 783 (May 9, 2005) (in cases involving
the underlying tax liability, “the doctrine of res judicata may
bar a refund action subsequent to the CDP process”).
- 36 -
predecessor, the Board of Tax Appeals (the Board) was created in
1924, it lacked jurisdiction to determine an overpayment for the
year in question in a deficiency proceeding” and citing, with a
signal indicating contradiction (“but cf.”), Commissioner v.
Gooch Milling & Elevator Co., 320 U.S. 418 (1943)). The
majority, however, does not acknowledge the fact that the Board
decided it had overpayment jurisdiction pursuant to the Revenue
Act of 1924, ch. 234, 43 Stat. 253 (which created the Board and
established its jurisdiction), which lacked explicit statutory
language granting the Board overpayment jurisdiction.
Furthermore, the majority contradicts its acknowledgment of the
Board’s conclusion that it had overpayment jurisdiction absent
explicit statutory authority by stating that “explicit statutory
authority was required before this Court acquired jurisdiction to
determine overpayments in deficiency cases”. Majority op. pp.
14, 17-18. A review of our overpayment jurisdiction explains why
the majority’s conclusion that the language of section 6330 does
not provide overpayment jurisdiction, because of the absence of
“explicit statutory authority”, is incorrect. Majority op. pp.
17, 18.
Our predecessor, the Board of Tax Appeals, was created by
section 900 of the Revenue Act of 1924. Revenue Act of 1924, ch.
234, sec. 900, 43 Stat. 336; Old Colony Trust Co. v.
Commissioner, 279 U.S. 716, 721 (1929); Williamsport Wire Rope
- 37 -
Co. v. United States, 277 U.S. 551, 562 n.7 (1928). The Revenue
Act of 1924 gave taxpayers the right to appeal to the Board “if,
after June 2, 1924, the Commissioner determined any assessment
should be made.” Barry v. Commissioner, 1 B.T.A. 156, 158
(1924); see Hickory Spinning Co. v. Commissioner, 1 B.T.A. 409,
410 (1925).
In Barry v. Commissioner, supra at 158, the Commissioner
contended that the Board’s jurisdiction was limited to the
deficiency determined for 1921, and the Board could not consider
the taxpayer’s overpayment claim for 1920 because “any decision
by the Board as to 1920 would be, in effect, deciding whether or
not the taxpayer is entitled to a refund.” The Board disagreed
and concluded that it had jurisdiction to consider the taxpayer’s
overpayment claim. Id. The Board reaffirmed that it had
overpayment jurisdiction pursuant to the language of the Revenue
Act of 1924 in Hickory Spinning Co. v. Commissioner, supra at
411, 412, Walker-Crim Co. Inc. v. Commissioner, 1 B.T.A. 599, 601
(1925), and Maritime Sec. Co. v. Commissioner, 2 B.T.A. 188, 193
(1925).6
6
The opinions in Barry v. Commissioner, 1 B.T.A. 156(1924), Hickory Spinning Co. v. Commissioner, 1 B.T.A. 409(1925), Walker-Crim Co. Inc. v. Commissioner, 1 B.T.A. 599(1925), and Maritime Sec. Co. v. Commissioner, 2 B.T.A. 188(1925), all were reviewed by the entire Board. Revenue Revision,
1925, Hearings before the Committee on Ways and Means House of
Representatives, 69th Cong. 860 (1925) (statement of J. Gilmer
Korner, Jr., Chairman Board of Tax Appeals).
- 38 -
Shortly after the Revenue Act of 1924 was enacted, Congress
held hearings regarding the Act and devoted 2 days of the
hearings to the Board of Tax Appeals. Revenue Revision, 1925,
Hearings before the Committee on Ways and Means House of
Representatives (1925 Hearings), 69th Cong. iii-iv (1925). Two
points Congress repeatedly heard were that (1) the Board was
overwhelmed and overworked by the amount of business it had to
transact and (2) the Board’s jurisdiction should be limited so
that it could continue to function. Id. at 10 (statement of Hon.
Andrew W. Mellon, Secretary of the Treasury), 854 (statement of
Dr. Joseph J. Klein), 870 (statement of J. Gilmer Korner, Jr.,
Chairman Board of Tax Appeals), 884 and 904 (statement of George
M. Morris, Secretary Special Committee on Taxation of the
American Bar Association), 934 (statement of A.W. Gregg,
Solicitor of Internal Revenue, Treasury Department).
Additionally, a former chairman of the Board of Tax Appeals
noted that the issue of the Board’s jurisdiction was of great
importance, that Congress’s grant of jurisdiction to the Board
was “somewhat indefinite and does not clearly define what cases
it may take jurisdiction of”, and that regarding certain
overpayment cases that the Board had heard: “As to those cases
the commissioner, before the board, has questioned the board’s
jurisdiction, and the board has held that it has jurisdiction.”
Id. at 922-923 (statement of Charles D. Hamel).
- 39 -
Subsequently, the Revenue Act of 1926, ch. 27, 44 Stat. 56,
was enacted. Section 274(g) of the Revenue Act of 1926
eliminated the overpayment jurisdiction the Board concluded it
had in Barry v. Commissioner, supra. Estate of Mueller v.
Commissioner, 101 T.C. at 558-559. The Supreme Court observed:
Before section 272(g) [of the Revenue Act of 1934,
48 Stat. 680] of the Internal Revenue Code was enacted,
the Board [of Tax Appeals] held that it had
jurisdiction to determine an overpayment for a year as
to which no deficiency had been found by the
Commissioner and to apply that overpayment against the
liability for the year as to which he found a
deficiency * * * . Appeal of E.J. Barry, 1 B.T.A. 156.
Soon thereafter, however, Congress passed section
274(g) of the Revenue Act of 1926 (now section 272(g)
of the Internal Revenue Code) taking such jurisdiction
away from the board. [Commissioner v. Gooch Milling &
Elevator Co., 320 U.S. 418, 421 n.7 (1943); emphasis
added.]
Congress, at the same time, also confirmed and clarified the
Board’s jurisdiction and authority to decide an overpayment.
Revenue Act of 1926, ch. 27, sec. 284(e), 44 Stat. 67.
Thus, in 1924, in Barry, the Board decided it had
overpayment jurisdiction, and Congress confirmed the Board’s
jurisdiction and authority to decide an overpayment in the
Revenue Act of 1926.
2. My View
My view advances our established precedent that “In view of
the statutory scheme as a whole, we think the substantive and
procedural protections contained in sections 6320 and 6330
reflect congressional intent that the Commissioner should collect
- 40 -
the correct amount of tax”. Montgomery v. Commissioner, 122 T.C.
at 10. In section 6330 cases, taxpayers should be able to claim
an overpayment, and the Court should be able to enter a decision
for an overpayment to ensure that the Commissioner collects no
more than the correct amount of tax.
Although the Tax Court has limited jurisdiction,7 section
6330 expanded the Court’s jurisdiction. Robinette v.
Commissioner, 123 T.C. at 99. The language of the statute
provides a broader remedy than the majority’s narrow
interpretation allows. Montgomery v. Commissioner, supra at 9.
The legislative history does not provide any specific
expression of Congressional intent to bar taxpayers, such as
petitioner, from raising an overpayment claim. Id. at 10. The
majority limits the remedies available to taxpayers by holding
that in section 6330 proceedings they cannot obtain a decision
that there is an overpayment. Furthermore, the majority does not
review petitioner’s challenge to the amount of her tax liability
for 1992 even though she properly raised this issue. Without a
clear jurisdictional prohibition or inability, it would be most
unjust to prohibit taxpayers from claiming an overpayment of the
7
Occasionally the Court has myopically seen its “limited
jurisdiction as reasons to be extra conservative in determining
the Tax Court’s jurisdiction.” Estate of Baumgardner v.
Commissioner, 85 T.C. at 456. This is not such an occasion,
especially given the remedial nature of the statute in question.
- 41 -
tax in this forum and require them to seek it in another. See
Estate of Baumgardner v. Commissioner, 85 T.C. at 446.
I do not believe that Congress intended, when enacting
section 6330, to expand this Court’s jurisdiction and at the same
time create a situation where choice of this forum would provide
such unfair results. See id. at 453. To narrowly interpret the
statute to prevent the Court from deciding an overpayment exists
frustrates our congressionally conferred jurisdiction.
As we noted in Estate of Baumgardner v. Commissioner,
supra at 457: “it is hard to imagine that Congress could have
intended to bifurcate an ‘overpayment’” and that “It is equally
hard to imagine that an ‘overpayment’ has a different meaning
depending upon the forum. Either of those approaches would force
some taxpayers to resolve a single tax controversy in two
different forums”, and this would duplicate costs for taxpayers.
The majority’s approach will force taxpayers to resolve a single
tax controversy in two different forums--assuming arguendo that
they were not so barred by the period of limitations, res
judicata, or prejudiced by having their claim being reduced or
eliminated by the look-back rules of section 6511(b).
I seek to find harmony in the statutory framework in order
to avoid acute injustice to taxpayers. “Considering the
overcrowded dockets in most Federal courts, we cannot be
insensitive to opportunities to avoid unnecessary litigation.”
- 42 -
Id. at 458. The majority merely punish (1) taxpayers whose cash
reserves make it impossible for them to pursue relief in a
District Court or the Court of Federal Claims, (2) taxpayers who
are too unsophisticated to realize that a suit in District Court
or the Court of Federal Claims could preserve his right to a
refund, and (3) taxpayers whose expected refund is too small in
relation to attorney’s fees and other costs to justify a suit in
District Court or the Court of Federal Claims. See Commissioner
v. Lundy, 516 U.S. 235, 263 (1996) (Thomas, J., dissenting).
Petitioner has properly invoked the jurisdiction of the
Court. By not deciding whether petitioner is entitled to an
overpayment we are leaving an essential issue unaddressed. See
Naftel v. Commissioner, 85 T.C. at 535. “The consequences of
omitting consideration of this issue might well require
additional hearings and evidence thus placing an undue burden on
the Court as well as the parties.” Id. “If we have jurisdiction
to resolve the * * * issue, we should not ask the taxpayer who
raises that issue at an Appeals Office hearing and in this Court
to go to another court to resolve that issue”. Washington I, 120
T.C. at 134 (Beghe, J., concurring). This is “inconsistent with
the goals of judicial and party economy embodied in the slogan
‘one-stop shopping’.” Id.- 43 -
Section 6404 and Section 6015(g)
The majority briefly addresses the fact that in section 6330
cases we have jurisdiction over section 6404 interest abatement,
and in interest abatement cases we have jurisdiction to find an
overpayment. Majority op. pp. 20-21. In addition to interest
abatement, in section 6330 proceedings taxpayers also may request
section 6015 relief. Sec. 6330(c)(2)(A)(i). Section 6015(g)
provides for refunds regarding section 6015(b) and (f) relief.
If we can hear section 6015 and section 6404 claims in
section 6330 proceedings, we should be able to enter decisions
for overpayments and order refunds as an outgrowth of the section
6330 proceedings as to the section 6015 and section 6404 claims.
See secs. 6015(g), 6404(i)(2)(B), 6512(b)(2). The interests of
justice would be ill served if the rights of taxpayers differed
according to the procedural posture of when the issue of the
taxpayers’ liability for the tax in issue is brought before the
Court. Cf. Ewing v. Commissioner, 122 T.C. 32, 42 (2004) (citing
Corson v. Commissioner, 114 T.C. 354, 364 (2000)). Identical
issues brought before a single tribunal should receive similar
treatment. Id. at 43.
The majority opinion creates a trap for the unwary.
Taxpayers who choose to litigate their section 6015 and section
6404 claims as part of a section 6330 proceeding cannot obtain
decisions of an overpayment or a refund in Tax Court. If those
- 44 -
same taxpayers had made claims for section 6015 relief or
interest abatement in a non-section 6330 proceeding, we could
enter a decision for an overpayment and could order a refund.
Secs. 6015(g), 6404(i)(2)(B), 6512(b)(2).
Section 6512(b)(2)
The majority states that section 6512(b)(2), which grants
the Tax Court authority to order the refund of an overpayment, is
limited to overpayments in deficiency proceedings. Majority op.
pp. 14-15. Congress added section 6512(b)(2) to the Code giving
us authority to order a refund of any overpayment. Estate of
Quick v. Commissioner, 110 T.C. 440, 443 (1998); Belloff v.
Commissioner, 996 F.2d 607, 613 (2d Cir. 1993), affg. T.C. Memo.
1991-350.
Accordingly, I believe that section 6512(b)(2) provides the
Court with jurisdiction to order the refund of any overpayment we
decide. I believe the legislative history cited by the majority
supports this view. Majority op. p. 16 note 17; see S. Rept.
100-309, at 17 (1988) (stating that the Tax Court should be able
to enforce a determination that a taxpayer is due a refund and
that the taxpayer should not have to incur additional time,
trouble, and expense of enforcing the refund in another forum).
Conclusion
Section 6330 cases are not merely about whether or not the
Commissioner can proceed with the proposed collection action.
- 45 -
Whether there is an overpayment has a direct bearing on whether
the Commissioner can proceed with the lien or levy at issue.
Meadows v. Commissioner, 405 F.3d at 952-953; Washington I, 120
T.C. at 120-121. The section 6330 determination includes the
issue of an overpayment if it is raised as a relevant issue or if
there is a challenge to the underlying liability. Sec.
6330(c)(2)(A) and (B), (3). Accordingly, I believe we have
jurisdiction to enter a decision that petitioner had an
overpayment in tax for the year at issue. Sec. 6330(d).
It would be illogical that we could conclude that the
Commissioner has collected too much money, but we could not enter
a decision that the taxpayer has overpaid his/her tax. The
majority’s interpretation of the statute conflicts with the
remedial purpose of section 6330.
If we could enter a decision for an overpayment, as I
propose, the issue of whether the Court has jurisdiction and
authority to order a refund would not yet be ripe for decision as
the overpayment decision would not yet be final. See secs.
6512(b)(2), 7481(a), 7483; Estate of Quick v. Commissioner, supra
at 443; O’Connor v. Commissioner, T.C. Memo. 1992-410. I note
that whether or not the Court is able to enforce our decision in
a section 6330 case that the taxpayer overpaid his/her taxes,
- 46 -
however, is not relevant to whether we have authority to enter a
decision for an overpayment.8
Respectfully, I dissent.
SWIFT, J., agrees with this dissenting opinion.
8
From our inception and for more than 60 years, the Tax
Court (and our predecessors) had jurisdiction to enter a decision
for an overpayment but could not order the Commissioner to credit
or refund the overpayment contained in our decisions. See Naftel
v. Commissioner, 85 T.C. 527, 533 (1985). In 1988, however,
Congress added sec. 6512(b)(2) to the Code, giving us authority
to order a refund of any overpayment. Belloff v. Commissioner,
996 F.2d 607, 613 (2d Cir. 1993), affg. T.C. Memo. 1991-350;
Technical and Miscellaneous Revenue Act of 1988, sec. 6244(a),
Pub. L. 100-647, 102 Stat. 3342, 3750. Accordingly, whether or
not the Tax Court has authority to enforce a decision for an
overpayment entered in a sec. 6330 case is simply not relevant to
our ability to enter such a decision.