Appleton v. Commissioner
135 T.C. 461
| Tax Ct. | 2010Background
- Movant, Government of the U.S. Virgin Islands, seeks to intervene under Rule 1(b) in petition to redetermine federal income tax deficiencies.
- Petitioner Arthur I. Appleton, Jr. was a bona fide Virgin Islands resident for 2002–2004 and filed Virgin Islands territorial returns under section 932(c)(2).
- Petitioner claimed the gross income exclusion under section 932(c)(4) and therefore did not file federal returns for 2002–2004; the Virgin Islands BIR audited those years with no adjustments.
- IRS issued a notice of deficiency for 2002–2004; respondent asserted the period of limitations under section 6501(a) remained open because petitioner did not file federal returns.
- Movant argued that allowing the federal period of limitations to run would threaten Virgin Islands sovereignty and the BIR’s administration; movant also sought intervention to protect its interests.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| May movant intervene as of right under Rule 24(a)(2)? | Movant has a direct, substantial interest that will be impaired. | Movant does not have a legally protectable interest. | Denied; movant lacks a significantly protectable interest. |
| May movant intervene permissively under Rule 24(b)(2)? | Intervention necessary to protect sovereign/administrative interests. | Intervention would delay and complicate proceedings without necessity. | Denied; court exercised discretion to deny intervention. |
| Is there an alternative remedy to intervention for movant? | Amicus participation would be insufficient to protect movant's interest. | Amicus brief can adequately represent movant's interests. | Granted; movant may file an amicus curiae brief. |
Key Cases Cited
- Wash. Elec. Coop., Inc. v. Mass. Mun. Wholesale Elec. Co., 922 F.2d 92 (2d Cir. 1990) (significantly protectable interest required for intervention)
- Cascade Natural Gas Corp. v. El Paso Natural Gas Co., 386 U.S. 129 (1967) (test for intervention framework)
- Kleissler v. U.S. Forest Serv., 157 F.3d 964 (3d Cir. 1998) (direct, substantial interest required)
- New Orleans Pub. Serv., Inc. v. United Gas Pipe Line Co., 732 F.2d 452 (5th Cir. 1984) (economic interest alone insufficient for intervention)
- Mountain Top Condo. Ass'n v. Dave Stabbert Master Builder, Inc., 72 F.3d 361 (3d Cir. 1995) (economic interest not alone sufficient)
- Cincinnati Transit, Inc. v. Commissioner, 55 T.C. 879 (T.C. 1971) (distinguishes intervention vs amicus in Tax Court)