DocketNumber: No. 13702-99
Citation Numbers: 2000 U.S. Tax Ct. LEXIS 24, 114 T.C. No. 18, 114 T.C. 268
Judges: Laro
Filed Date: 4/18/2000
Status: Precedential
Modified Date: 11/20/2020
*24 An appropriate order of dismissal for lack of jurisdiction will be entered.
R moves the Court to dismiss this case for lack of
jurisdiction, alleging that P, a corporation organized under
California law, lacked the capacity to file the petition
instituting this action. On Apr. 1, 1991, the State of
California Franchise Tax Board (the Board) suspended P's
corporate powers, rights, and privileges for failure to pay
State income taxes, and the Board did not relieve P of that
suspension until (and effective) Feb. 28, 2000. R issued P a
notice of deficiency on July 1, 1999, and P filed the subject
petition with the Court on Aug. 12, 1999.
HELD: We shall grant R's motion; under applicable State
law: (1) P lacked the power to initiate a lawsuit during the
time it was suspended, and (2) that power was not returned to P
until after the applicable 90-day period in which it was
required to file a petition with this Court.
*268 OPINION
LARO, JUDGE: Respondent*25 moves the Court to dismiss this case for lack of jurisdiction, arguing that petitioner lacked the capacity to file the subject petition with the Court because petitioner's corporate powers, rights, and privileges were under suspension when the petition was filed. Petitioner objects thereto, arguing primarily that: (1) Its suspension was improper, and (2) the fact that its status was recently revived means that it may maintain this action. Petitioner also argues that respondent has waived the right to assert the jurisdictional issue.
We shall grant respondent's motion. Unless otherwise indicated, section references are to the applicable provisions of the Internal Revenue Code. Rule references are to the Tax Court Rules of Practice and Procedure.
*269 BACKGROUND
David Dung Le, a.k.a David Van Le, incorporated petitioner under the laws of the State of California on or about December 22, 1982, using the name Dung Van Le, a medical corporation. On April 1, 1991, pursuant to applicable State law, see
On July 1, 1999, respondent issued petitioner a notice of deficiency. Petitioner, through its counsel, Wayne Hagendorf, filed its petition with the Court on August 12, 1999. On the date of filing, petitioner's mailing address and principal place of business were in Houston, Texas.
DISCUSSION
We must decide whether we have jurisdiction to decide this case. We are a legislatively created (Article I) Court, and, as such, our jurisdiction flows directly from Congress. See
Jurisdiction must be shown affirmatively, and petitioner, as the party invoking our jurisdiction in the case at bar, bears the burden of proving that we have jurisdiction over its case. See
The fact that respondent issued to petitioner a valid notice of deficiency is not in dispute. The parties focus on the second requirement; i.e., a timely petition. Given the fact that respondent issued the notice of deficiency to petitioner on July 1, 1999, petitioner, to invoke our jurisdiction, must have caused a proper petition to be filed with the Court on or before September 29, 1999. See sec. 6213(a). It is not enough*29 that petitioner may have simply caused to be forwarded to this Court within the statutory period a petition for filing. In regard to a corporate taxpayer such as petitioner, a proper filing requires that the taxpayer tendering (or causing to be tendered through an agent) a petition to the Court for filing must have the capacity to engage in litigation in this Court. See
Whether a corporation has the capacity to engage in litigation in the Tax Court is determined by applicable State law, *271 which, in this case, is the law of California. See
corporate powers, etc.
Except for the purposes of filing an application for exempt
status or amending the articles of incorporation as necessary
either to perfect that application or to set forth a new name,
the corporate powers, rights and privileges of a domestic
taxpayer may be suspended, and the exercise of the corporate
powers, rights and privileges of a foreign taxpayer in this
state may be forfeited, if any of the following conditions
occur:
(a) If any tax, penalty, or interest, or any portion
thereof, that is due and payable under Chapter 4 (commencing
with Section 19001) of Part 10.2, or under this part, either at
the time the return is required to be filed or on or before the
15th day of the ninth*31 month following the close of the income
year, is not paid on or before 6 p.m. on the last day of the
12th month after the close of the income year.
(b) If any tax, penalty, or interest, or any portion
thereof, due and payable under Chapter 4 (commencing with
Section 19001) of Part 10.2, or under this part, upon notice and
demand from the Franchise Tax Board, is not paid on or before 6
p.m. on the last day of the 11th month following the due date of
the tax. [
privileges
(a) Forfeiture or suspension of a taxpayer's powers,
rights, and privileges pursuant to
occur and become effective only as expressly provided in this
section in conjunction with
prior to the suspension of a taxpayer's corporate powers,
rights, and privileges. [1]
*32 * * * * * * *
*272 (c) The Franchise Tax Board shall transmit the names of
taxpayers to the secretary of state as to which the suspension
or forfeiture provisions of
applicable, and the suspension or forfeiture therein provided
for shall thereupon become effective. The certificate of the
secretary of state shall be prima facie evidence of the
suspension or forfeiture. [Cal. Rev. & Tax.
1992).]
name; reinstatement; prima facie evidence
Before the certificate of revivor is issued by the
Franchise Tax Board, it shall obtain from the secretary of state
an endorsement upon the application of the fact that the name of
the taxpayer then meets the requirements of subdivision (b) of
Section 201 of the Corporations Code [rules concerning clearance
of corporate name] in the case of a domestic taxpayer * * *.
Upon the issuance of the certificate by the Franchise Tax Board
*33 the taxpayer therein named shall become reinstated but the
reinstatement shall be without prejudice to any action, defense
or right which has accrued by reason of the original suspension
or forfeiture * * *. The certificate of revivor shall be prima
facie evidence of the reinstatement and the certificate may be
recorded in the office of the county recorder of any county of
this state. [
The Supreme Court of California construes
*273 We have in the record a certificate from the California secretary of state attesting that petitioner's powers, rights, and privileges were suspended on April 1, 1991, and that they continued to be suspended as of February 15, 2000. Petitioner does not dispute that the certificate means what it says but argues that its suspension should be given no effect because, it claims, the suspension was "improper" either ab initio or at least beginning in 1993. Petitioner asserts that the suspension was improper at the start because, it claims, it never received the notice required under
We are unpersuaded by petitioner's argument that its suspension was improper either*36 ab initio or beginning in 1993. The certificate of the secretary of state provides clearly that petitioner's corporate powers, rights, and privileges were suspended at least through the period from April 1, 1991, through February 15, 2000, and the Board's certificate of revivor states just as clearly that petitioner's rights, powers, and privileges were only restored effective February 28, 2000. Petitioner does not adequately dispute this prima facie evidence. Even assuming that the certificate of the secretary of state is not conclusive, an assumption that we make with much reservation, we give little weight to petitioner's bald *274 assertion that it never received the notice required under the statutory scheme. Nor do we believe that the Statement supports petitioner's assertion that it owed the Board nothing from April 15, 1993, through November 15, 1995. The Statement refers only to petitioner's 1993 tax year and does not otherwise indicate whether petitioner owed the Board any amount for prior years. On the basis of the two certificates, we conclude that petitioner was "suspended" on the date that Mr. Hagendorf filed a petition with this Court on its behalf and at all times through*37 September 29, 1999, the date on which the 90-day period under section 6213(a) expired. Accordingly, we hold that petitioner lacked the capacity under California law to validate that petition as a legal filing and that it lacked the authority to cause Mr. Hagendorf to file a valid petition on its behalf. Cf.
Nor are we persuaded by petitioner's argument that the current reinstatement of its powers as of February 28, 2000, means that it can continue to litigate this case. In
We disagree with petitioner's assertion. Petitioner's corporate status was not reinstated by the Board until 200 days *275 after the petition was filed, or, in other words, long after the expiration of the 90-day period in which the petition was required to be filed. See sec. 6213(a). The fact that petitioner's corporate status was not reinstated during that 90-day period is fatal to petitioner in that California law does not operate to toll a filing period from running during a period of suspension. See
The facts of this case are similar to the case of
The U.S. District Court dismissed the case, holding that the plaintiff lacked the capacity to file the underlying complaint by virtue of its suspension. Further, the court held, the later reinstatement of those powers was ineffective to validate the filing of the complaint because the antitrust period of limitations had expired before the powers were restored. The Court of Appeals for the Ninth Circuit affirmed both of the District Court's holdings. As to the latter holding that the plaintiff's untimely revival did not give it the capacity to sue, the Court of Appeals concluded that California law does not allow the corporate reinstatement to validate retroactively *276 the plaintiff's earlier filing. The expiration of the period of limitations before plaintiff's suspension was lifted acted as a bar to the plaintiff's maintaining the antitrust action.
We shall grant respondent's motion to dismiss the petition for lack of jurisdiction. In so doing, we are mindful that this Court has held repeatedly that
A case timely brought shall not be dismissed on the ground that
it is not properly brought on behalf of a party until a
reasonable time has been allowed after objection for
ratification by such party of the bringing of the case; and such
ratification shall have the same effect as if the case had been
properly brought by such party.
Those cases are not pertinent to our decision herein. In contrast to the taxpayers in those cases, petitioner did not have the requisite capacity to bring an action in this Court when the petition was first filed. Petitioner, therefore, neither was authorized, nor could it have authorized another, to file a timely petition in this matter. As a matter of fact, petitioner was barred by applicable law from commencing a lawsuit in this Court.
We have considered all remaining arguments*42 and, to the extent not addressed above, find them to be irrelevant or without merit. To reflect the foregoing,
An appropriate order of dismissal for lack of jurisdiction will be entered.
1.
preliminary notice; mailing
For the purposes of Part 11 (commencing with Section 23001)
of Division 2 only, a taxpayer shall not be suspended pursuant
to
preliminary to suspension which indicates that the taxpayer will
be suspended by a date certain pursuant to
The notice preliminary to suspension shall be mailed to the
taxpayer at least 60 days before the date certain.↩
community-electric-service-of-los-angeles-inc , 869 F.2d 1235 ( 1989 )
david-m-kelley-david-m-kelley-estate-of-nancy-i-kelley-deceased-v , 45 F.3d 348 ( 1995 )
Boyle v. Lakeview Creamery Co. , 9 Cal. 2d 16 ( 1937 )
Reed v. Norman , 48 Cal. 2d 338 ( 1957 )
Peacock Hill Ass'n v. Peacock Lagoon Construction Co. , 8 Cal. 3d 369 ( 1972 )
ABA Recovery Services, Inc. v. Konold , 244 Cal. Rptr. 27 ( 1988 )
Benton v. County of Napa , 277 Cal. Rptr. 541 ( 1991 )
Welco Construction, Inc. v. Modulux, Inc. , 120 Cal. Rptr. 572 ( 1975 )
Insurance Corp. of Ireland v. Compagnie Des Bauxites De ... , 102 S. Ct. 2099 ( 1982 )
Staffmore, LLC v. Comm'r , 106 T.C.M. 122 ( 2013 )
B G Painting, Inc. v. Comm'r , 111 T.C.M. 1282 ( 2016 )
Matthews v. Comm'r , 109 T.C.M. 1403 ( 2015 )
John C. Hom & Assocs. v. Comm'r , 140 T.C. 210 ( 2013 )
ABFA Trust v. Commissioner , 80 T.C.M. 588 ( 2000 )