CITATION: R.E. Neal, CA-11, 2009-1 ustc 50,216, Affirming the Tax Court, 90 TCM 161(2009-02-16)

SUMMARY: The Eleventh Circuit Court of Appeals held that the Tax Court did not err in refusing to limit its consideration to the administrative record and in conducting a trial de novo in an innocent spouse case. The Court of appeals also held that the Tax Court did not abuse its discretion in determining that the taxpayer was entitled to equitable relief under section 6015(f).

SECTION: 6015. Relief from joint and several liability on j

EXPLANATION: The taxpayer filed a petition in the Tax Court appealing the IRS`s denial of her request for innocent spouse. At a pre-hearing conference with the Tax Court, the Commissioner took the position that the Tax Court`s review was limited to the administrative record. The Commissioner contended that the Administrative Procedure Act (”APA”) governs all agency proceedings and thus, the scope of the Tax Court`s inquiry is confined strictly to the administrative record.

The Tax Court disagreed based on its previous decision in Ewing v. Commissioner, 122 T.C. 32 at 44 (2004), rev`d on other grounds, 439 F.3d 1009, 1014 (9th Cir. 2006), and stated that the Tax Court`s review and determination was not limited to the administrative record but was de novo.

The Tax Court had ruled that the APA`s record rule-limiting a reviewing court to the administrative record-does not supplant the Tax Court`s own longstanding trial de novo procedures and precedent. Tax Court reasoned that its trial de novo procedures for reviewing IRS decisions were “well-established” and “recognized by law” before the enactment of the APA in 1946. According to the Tax Court, its trial de novo procedures have remained virtually unchanged since the APA`s enactment, supporting its conclusion that the APA did not limit or repeal the Tax Court`s de novo review procedures.

The Tax Court further reasoned that the fact that the APA (enacted in 1946) predates § 6015 (enacted in 1998) does not change the result because § 6015 is “part and parcel” of the statutory framework for Tax Court review of IRS deficiency determinations. It is from this framework that the Tax Court`s de novo review procedures emanate. Accordingly, when Congress chose to use the same statutory language in § 6015 as it used in establishing the longstanding trial de novo procedure for deficiency actions, “it did so in full awareness of [the Tax Court`s] long history of de novo review,”, and did not intend to impose a different procedure. Thus, per § 559, “the APA does not disturb or supersede [the Tax] Court`s longstanding de novo judicial review procedures for cases involving spousal relief under section 6015.”

The Court of Appeals agreed with the Tax Court, holding that Congress`s use of the word “determine” and not “appeal” in § 6015(e)`s jurisdictional grant is significant. The Court of Appeals distinguished cite the Eighth Circuit`s decision in Robinette v. Commissioner, 439 F.3d 455, 461 (8th Cir. 2006), rev`g 123 T.C. 85 (2004), because that case involved a claim under § 6330 rather than § 6015(e) and (f). The Court of Appeals found that the “appeal” language in § 6330 is materially different from § 6015(e), which does not use the word “appeal” but instead authorizes the Tax Court to “determine” the appropriate relief. The Court of Appeals concluded that the different use of the terns showed that that Congress knew how to use the term “appeal” and that Congress meant something different when it authorized the Tax Court in § 6015(e) “to determine the appropriate relief available” to a taxpayer. In § 6330(d), Congress chose not to use the word “determine” or some derivation thereof and instead chose to vest the Tax Court with jurisdiction over a taxpayer`s “appeal.” For that reason, Robinette`s interpretation of § 6330 does not undercut, and in fact is consistent with, the Tax Court`s reading of § 6015.

SUMMARY: The Tax Court held that it lacked jurisdiction over an innocent spouse claim because the taxpayer had failed to file the petition within 90-days of the date of the IRS notice denying her application for innocent relief, even though at the time of the IRS issued the denial the law did not allow the filing of such petitions in the Tax Court. The Tax Court also held that it was not bound by a district court order allowing the taxpayer to file an untimely Tax Court petition.

Comment: “You don’t want the tax law pointy heads running the world.” Fred T. Goldberg, former IRS Commissioner, Wall Street Journal, December 20, 1989 A1, col.5, in opposition to a proposal to eliminate the jurisdiction of the federal districts courts over tax cases and instead place jurisdiction for all tax cases in the Tax Court. This decision is an example of why Mr. Goldberg’s comment still rings true today.

SECTION: 6015. Relief from joint and several liability on j

EXPLANATION: The IRS sent the taxpayer a notice of determination denying her request for innocent-spouse relief on April 27, 2006. She filed a petition seeking review of that notice more then a year later on August 9, 2007. The Code gives taxpayers only 90 days to file. The IRS sought dismissal of the petition for lack of jurisdiction.

The taxpayer argued that on the day that the Commissioner mailed his notice of determination, the Governments position was that the Tax Court lacked jurisdiction to review a standalone appeal of an innocent spouse claim. The governments position on that issue had already been endorsed by the Court of Appeals for the Eighth and Ninth Circuits. The Tax Court agreed that on the date the IRS denied the taxpayer’s request for innocent spouse relief, she could not have filed a legitimist petition with the Tax Court for review of that denial.

On December 20, 2006, Congress amended section 6015 to grant the Tax Court jurisdiction to hear section 6015(f) nondeficiency stand-alone cases. The amendment was effective for tax liabilities “arising or remaining unpaid on or after the date of the enactment.” The court acknowledged that the taxpayer’s liabilities were unpaid on and after the date of enactment.

In 2007, the IRS brought a collection action in federal district court. The taxpayer had raised the defense of innocent spouse in the collection action. The district court ruled that a claim of innocent spouse was not a defense to a lien enforcement action and dismissed her defense on July 9, 2007. However, on July 12, 2007 the district court stayed the dismissal order against the taxpayer and granted her 30 days to file a petition with the Tax Court.

In its order, the District Court explained that the special circumstances of this case–namely, the disordered state of the law in 2006–justified tolling the 90-day limit for filing petitions in the Tax Court.

CITATION: Hoyle v. Commissioner, 131 T.C. No. 13 (12-3-2008)(2008-12-02)

SUMMARY: The Tax Court held that it has jurisdiction to review whether or not an assessment was properly made even though that issue was not raised by the taxpayer during the course of the CDP hearing because IRC 6330(c)(1) requires that the IRS ascertain whether an assessment was properly made even if the taxpayer does not raise the issue in the course of a collection due process hearing.

SECTION: 6330. Notice and opportunity for hearing before le

EXPLANATION: The taxpayer timely filed a request for a collection due process (“CDP”) hearing after receiving a notice of the filing of a notice of federal tax lien (“NFTL”) from the IRS. The taxpayer did not raise the issue of whether the assessment of the tax was proper when he filed the CDP hearing request, nor at the CDP hearing itself. After receiving a determination upholding the filing of the NFTL, the taxpayer appealed to the Tax Court and claimed that the IRS had never sent him a notice of deficiency with regard to the assessment upon which the NFTL was based.

The Tax Court stated that under IRC section 6330(c)(1) the IRS “is required by the statute to verify that all legal requirements have been followed . . . including the section 6213(a) requirement of a duly mailed notice of deficiency.” The Tax Court then reasoned that this requirement causes the validity of the assessment to be “raised” at all CDP hearings even if not specifically raised by the taxpayer. The Tax Court then held it had jurisdiction to review the validity of the assessment because the issue of the validity of the assessment was deemed to have been raised at the CDP hearing even though not specifically raised by the taxpayer.

(1) the type of item in dispute;

(2) procedural prerequisites; and

(3) time limitations.

All three of the criteria must be met before the Tax Court will have jurisdiction to determine the disputed matter between a taxpayer and the IRS.

For example, the Tax Court has jurisdiction over income tax deficiencies (the item in dispute) but only if the IRS has properly issued a notice of deficiency (the procedural prerequisite) and the taxpayer filed a petition with the Tax Court within the required time (time limitation).

Similarly, the Tax Court has jurisdiction over a dispute involving an IRS levy or notice of federal tax lien (the item in dispute) but only if the taxpayer received an adverse determination with respect to a properly filed request for a Collection Due Process hearing (the procedural prerequisite) and the taxpayer filed a petition with the Tax Court within the required time (the limitation).

The list below sets forth the twenty five types of cases over which the Tax Court has jurisdiction along with citations to the provisions of the Internal Revenue Code (”IRC”) and the Tax Court Rules (”TCR”) that set forth the Court’s jurisdiction for those matters.

Income, Estate, and Gift Tax Deficiencies

IRC 6213(a)

TCR 13(a)(1)

Innocent Spouse Relief

IRC 6015(e)

TCR 320 to 325

Review of IRS Liens and Levies

IRC 6320

IRC 6330

TCR 330 to 334

Employee vs. Independent Contractor

IRC 7436

IRS Notice 98-43

TCR 290 to 295

Awards of Administrative Costs

IRC 7430(a)(1)

IRC 7430(b)(4)

IRC 7430(f)(2)

TCR 270 to 274

TEFRA Adjustment Cases

IRC 6227(c)

IRC .6228

TCR 240 to 251

TEFRA Readjustment Cases

IRC 6226

TCR 240 to 251

Enforcement of Overpayments

IRC 6512(b)

TCR 260

Redetermination of Interest

IRC 6215

TCR 261

Modification of Estate Tax Decision

IRC 7481(d)

IRC 6166

TCR 262

Litigation Costs Awards

IRC 7430

TCR 231 to 2323

Enjoin Pre-Mature Assessments

IRC 6512(b)(1)

TCR 55 and 260

Excise Tax Deficiencies - Chapt 41 to 44

IRC 6213(a)

TCR 13(a)(1)

Transferee Liability

IRC 6901(a)

IRC 6212(a)

IRC 6213(a)

TCR 13(a)(2)

Fiduciary Liability

IRC 6901(a)(1)(B)

IRC 6212(a)

IRC 6213(e)

TCR 13(a)(2)

Title 31 U.S.C. 3713(b)

Abatement of Interest

IRC 6404(i)

TCR 280 to 284

Woodral v. CIR, 112 T.C. No. 3 (01-12-99)

Retirement Plan Qualification - Declaratory Judgment

IRC .7476

TCR 210 to 218

Government Obligations Status - Declaratory Judgment

IRC 7478

TCR 210 to 218

Exempt Organization Status - Declaratory Judgment

IRC 7428

TCR 210 to 218

Estate Eligibility re Installments - Declaratory Judgment

IRC 7479

TCR 210 to 218

Gift Tax Valuation - Declaratory Judgment

IRC 7477

TCR 210 to 218

Oversheltered Return Adjustments - Declaratory Judgment

IRC 6234

TCR 310 to 316

Obtain Disclosure

IRC 6110

TCR 220 to 229

Restrain Disclosure

IRC 6110

TCR 220 to 229

Obtain Disclosure re Third Parties

IRC 6110

TCR 220 to 229

Copyright 1997 by Gary D. Borek - ALL RIGHTS RESERVED

SECTION: 6015. Relief from joint and several liability on joint return

CITATION: J.D. Simmons, TC Summary Opinion 2009-6

DATE: 2009-01-09

DOC TYPE: Cases

EXPLANATION: The IRS had granted relief under Code Sec. 6015(c) and argued that any refund to the wife should be limited to payments made up until the date of her request for innocent spouse relief. However, the court determined that relief under Code Sec. 6015(b) was more appropriate and she was entitled to a refund under Code Sec. 6015(g) Code Sec. 6015(b) provides full or apportioned relief from joint and several liability for tax to the extent that such liability is attributable to an understatement of tax.