Lead Opinion
This matter is before the Court on respondent’s motion to dismiss for lack of jurisdiction (the motion). Petitioners object. For the reasons stated, we shall grant the motion.
Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986, as amended (the Code), and all Rule references are to the Tax Court Rules of Practice and Procedure.
Background
The petition in this case was filed on October 14, 2003.
Petitioners’ principal assignment of error is that the IRS (respondent) erred in applying the overpayment to other taxes owed by petitioners without giving them the opportunity
Respondent did not answer the petition but, instead, made the motion. See Rule 36(a). In support of the motion, respondent argues that no statutory notice of deficiency, as authorized by section 6212 and required by section 6213(a) to form the basis for a petition to this Court, has been sent to petitioners with respect to 2002 (the taxable year in question), nor has respondent made any other determination with respect to 2002 that would confer jurisdiction on the Court. Replying to petitioners’ opposition to the motion, respondent points out that, in their papers opposing the motion, petitioners concede that no notice of deficiency or other determination was issued by respondent. Respondent argues that, on those grounds alone, the motion should be granted. Nevertheless, respondent addresses petitioners’ assignments of error. He denies that petitioners were entitled to a section 6330 hearing since the overpayment was applied to other taxes by way of offset and not by way of levy. The notice and hearing requirements of section 6330, he claims, apply only to proposed levy actions, and not to administrative offsets. Moreover, he claims that, since an offset is not a levy, there was no violation of any prohibition under section 6331(k)(2) that no levy with respect to unpaid tax may be made while an installment agreement for payment of such tax is in effect.
Discussion
I. Sections 6330 and 6331
Section 6331(a) authorizes the Secretary of the Treasury (Secretary) to levy against property and property rights
If a section 6330 hearing is requested, the hearing is to be conducted by the Commissioner’s Appeals Office, and, at the hearing, the Appeals officer conducting it must verify that the requirements of any applicable law or administrative procedure have been met. Sec. 6330(b)(1), (c)(2). The taxpayer may raise at the hearing any relevant issue relating to the unpaid tax or the proposed levy. Sec. 6330(c)(2).
After the hearing, the taxpayer has 30 days to appeal the determination of the Appeals officer to the appropriate court. Sec. 6330(d)(1). We have jurisdiction to review the Appeals officer’s determination where we have jurisdiction over the type of tax involved in the case. Sec. 6330(d)(1)(A). In Offiler v. Commissioner,
If a hearing is timely requested, section 6330(e)(1) suspends the levy action until the conclusion of the hearing and any judicial review. The section also overrides the so-called Anti-Injunction Act, section 7421(a), and permits proceedings in the proper court, including the Tax Court, to enjoin the beginning of a levy during the period the levy action is suspended.
II. Levy Versus Offset
A levy is distinguishable from an offset. See, e.g., Belloff v. Commissioner,
Based on the distinction between levy and offset, and the limitation of section 6330 to levy actions, we have held that the Commissioner’s application of a taxpayer’s overpayment for one taxable year to offset the taxpayer’s liability for another taxable year does not constitute a collection action that is subject to review under section 6330. Bullock v. Commissioner,
III. Petitioners’ Defense to the Motion
Petitioners’ defense to the motion rests on two propositions set forth in the petition: (1) In applying the overpayment to other taxes, respondent “effected an offset”, and (2) “a levy must be carried out to effect an offset”. They claim that, because the offset was by levy, respondent erred in not according them their rights under section 6330 to notice and a hearing. They pray that, on account of such error, the Court compel respondent to return the overpayment to them.
Petitioners argue that an offset can be effected only by levy. They believe that we erred in Bullock v. Commissioner, supra, in holding that offset is not a levy subject to the provisions of section 6330. Petitioners support their argument by pointing to the language of section 6331(i)(3)(B)(i). Section 6331(i) provides that no levy may be made during the pend-ency of proceedings for the refund of a divisible tax (e.g., any employment tax). In pertinent part, section 6331(i)(3)(B) provides: “Certain levies. This subsection shall not apply to — (i) any levy to carry out an offset under section 6402”.
By reference to the language of section 6331(i)(3)(B), a similar exception is incorporated into section 6331(k), which provides that no levy may be made while an offer in compromise is pending or an installment agreement is pending or in effect. Sec. 6331(k)(3)(A).
Petitioners sum up their argument as follows:
So there we have it. To carry out an offset[,] you must levy first. That is how the Commissioner acquires a taxpayer’s property, by levy. If a levy upon an overpayment were not required, and[,] as the Respondent contends, an[ ] offset has independent authority to operate without the predicate act of a levy, the statute would * * * [read differently].
Petitioners acknowledge that they received no notice of determination, but they ask us to overrule our holdings in Offiler v. Commissioner,
IV. Discussion
A. Section 6331(i)(3)(B)(i)
Both subsections (i) and (k) of section 6331 (as they presently read) were added to that section by the Internal Revenue Service Restructuring and Reform Act of 1998 (the 1998 Act), Pub. L. 105-206, secs. 3433(a), 3462(b), 112 Stat. 759, 765. S. Rept. 105-174 (1998), 1998-
We need not solve the puzzle of section 6331(i)(3)(B)(i), however, because we agree with respondent that we cannot grant petitioners the relief they request in any event.
B. Lack of Jurisdiction
As the Supreme Court observed in Owen Equip. & Erection Co. v. Kroger,
With respect to the content of the petition in an action brought under section 6330(d), Rule 331(b) provides that a copy of the notice of determination accompany the petition. We have described the notice of determination as the taxpayer’s “ticket” to the Tax Court. Weber v. Commissioner,
Petitioners argue that, if written notice of the taxpayer’s right to a hearing is a prerequisite to a levy, the Secretary cannot avoid court review of a levy by failing to give the requisite notice. What petitioners consider to be a levy in this case was respondent’s application of the overpayment to other taxes owed by petitioners. The irs notified petitioners of that action by a notice dated May 5, 2003 (the notice). The petition was filed on October 14, 2003. Our jurisdiction under section 6330(e)(1) to enjoin an improper levy is dependent on both a section 6330 determination and an appeal to this Court within 30 days of that determination. Sec. 6330(d)(1), (e)(1). Thus, even if we were to consider the notice as evidence of a concurrent section 6330 determination, petitioners failed to seek our review of that determination within 30 days of May 5, 2003, and, for that reason alone, we would be required to dismiss for lack of jurisdiction. See, e.g., Jones v. Commissioner,
V. Conclusion
We shall grant the motion since we have no jurisdiction to consider the errors assigned by petitioners.
To reflect the foregoing,
An order of dismissal for lack of jurisdiction will be entered.
Notes
The wrapper containing the petition has a postmark bearing the date Oct. 7, 2003.
A taxpayer receiving a notice of Federal tax lien has hearing rights similar to the hearing rights accorded a taxpayer receiving notice of intent to levy. See sec. 6320(c).
By letter dated Sept. 10, 2003 (the letter), the IRS rejected petitioners’ protest of the application of the overpayment to other taxes owed by them. The letter was in response to an IRS Form 9423, Collection Appeal Request (Form 9423), with accompanying correspondence, submitted by petitioners. In Offiler v. Commissioner,
Since petitioners do not rely on the exception to the so-called Anti-Injunction Act, sec. 7421(a), found in sec. 6331(k)(3)(A), we do not rule on its application or consider whether we have injunctive power under that provision.