Brian H. McLane v. CommissionerBrian H. McLane v. Commissioner
Held:
Brian H. McLane, pro se.*
Wendy Yan, Nancy M. Gilmore, and Elizabeth C. Mourges, for respondent.
MEMORANDUM OPINION
HALPERN, Judge: This case is before us to review a determination by the Internal Revenue Service Appeals Office (Appeals) to sustain a notice of Federal tax lien (NFTL) respondent issued to petitioner in regard to his taxable years ended December 31, 2006 and 2008. In his petition, petitioner made no assignment of error concerning his 2006 taxable year but alleged that an assessment of additional tax for his 2008 taxable year was invalid because the
Petitioner‘s 2008 return included a Schedule C, Profit or Loss From Business, reporting a net profit (gross income less deductible expenses) from his contracting business. Respondent‘s notice of deficiency disallowed almost all of the deductions petitioner claimed on his Schedule C. At a supplemental hearing that Appeals conducted after we remanded the case to allow for fuller consideration of petitioner‘s challenges to the validity of respondent‘s assessment for his 2008 year, petitioner presented documentation that led Appeals to allow about half of the deductions he had claimed on his 2008 Schedule C. Petitioner presented additional documentation at and after our trial of the case that led respondent to allow further deductions. Petitioner eventually established to respondent‘s satisfaction that he was entitled to deductions in amounts in excess of those claimed on his return. As a result, respondent now concedes that “petitioner‘s correct tax liability for 2008 is $0.00.” Respondent‘s concession
Although, as respondent observes, his abatement of petitioner‘s 2008 tax liability and release of the lien for that year is “the very relief that petitioner sought when he challenged the original * * * notice of determination“, petitioner is unsatisfied with that result and claims that he is entitled to a refund of tax for his 2008 taxable year. Thus, the only issue remaining for our consideration is our jurisdiction to determine and order a credit or refund of any overpayment petitioner might have made for 2008.
Background
Petitioner filed a Federal income tax return for the taxable year ended December 31, 2008, that reported a tax liability of $2,426. Respondent received petitioner‘s 2008 return on October 19, 2009.
Petitioner‘s 2008 return included a request for an installment agreement under which petitioner would pay his 2008 tax liability in monthly payments of $100. Between December 24, 2009, and October 14, 2010, petitioner made
In February 2013, respondent assessed petitioner additional tax of $23,615 for his 2008 taxable year. Petitioner, however, did not receive a notice of deficiency concerning that assessment.
After respondent issued petitioner the NFTL in March 2013, petitioner timely requested a collection due process (CDP) hearing. Following that hearing, respondent issued petitioner a notice of determination sustaining the NFTL. In response, petitioner, who then resided in Maryland, filed with this Court a “Petition for Lien Action Under Code Sections 6320(c) and 6330(d)“. That petition assigns no error in regard to petitioner‘s 2006 taxable year but asserts that respondent issued no notice of deficiency to him for 2008.
During a conference call with the parties on February 21, 2018, upon being apprised by respondent‘s counsel that the deductions respondent allowed as a result of petitioner‘s submission of additional documentation during and following trial had eliminated petitioner‘s tax liability for 2008, we asked the parties whether they objected to our entry of a decision upholding respondent‘s determination only in regard to petitioner‘s 2006 taxable year. While respondent‘s counsel voiced no
Petitioner‘s petition makes no claim that he overpaid his 2008 Federal income tax liability. Neither the case activity record printout concerning petitioner‘s CDP hearing nor respondent‘s notice of determination provides any indication that petitioner raised during that hearing the possibility that he was entitled to a refund of tax paid for 2008.
Because the postrial briefs the parties initially submitted did not address the question of our jurisdiction in a CDP case to determine and order the credit or refund of an overpayment, we requested the parties to submit supplemental briefs addressing the issue. Our request for supplemental briefs asked the parties to address, among other things, Appeals’ jurisdiction to consider refund claims.
Because of its view that the present case has potential significance “in the area of taxpayer rights and procedural efficiency“, the University of the District of Columbia David A. Clarke School of Law Tax Clinic moved for leave to file an amicus memorandum of law in support of petitioner. We granted the clinic‘s motion and filed the memorandum it had lodged with its motion.
I. Applicable Law
A. Relevant Statutory Provisions
B. Greene-Thapedi v. Commissioner
In Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006), we considered a petition to review the Commissioner‘s determination to collect by levy a taxpayer‘s 1992 tax liability, as established by a stipulated decision in a prior deficiency proceeding. After the taxpayer filed a petition to review the Commissioner‘s determination to uphold the proposed levy, the Commissioner offset that liability by applying against it an overpayment for the taxpayer‘s 1999 taxable year. We thus accepted the Commissioner‘s request to dismiss the case as moot.
In a footnote to our Opinion in Greene-Thapedi v. Commissioner, 126 T.C. at 11 n.19, we allowed for the possibility that our consideration in a CDP case of the taxpayer‘s possible overpayment might be “necessary for a correct and complete determination of whether the proposed collection action should proceed.” In a case unlike the one before us in Greene-Thapedi in which the taxpayer is entitled to challenge his underlying liability, we reasoned, “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.” Id.
The taxpayer in Greene-Thapedi v. Commissioner, 126 T.C. at 12 n.21, did not “expressly assert[] any claim for interest abatement pursuant to sec. 6404.” Moreover, the record before us in that case provided no evidence that the interest the taxpayer sought to have refunded had accrued as the result of an “unreasonable error or delay resulting from a ‘ministerial act‘.” Id. at 13 n.21. Therefore, we did not view the taxpayer‘s refund claim as “being predicated on a claim for interest abatement pursuant to section 6404.” Id. at 12. We added:
[E]ven if * * * [the taxpayer‘s] claim were 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) * * *. 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.
In a separate dissenting opinion joined by one other Judge, Judge Vasquez invoked the importance of construing remedial legislation broadly to implement its purposes and, on the basis of that principle, suggested that the Commissioner could not “unilaterally deprive the Court of jurisdiction in section 6330 cases by merely stating that he no longer intends to proceed with collection.” Id. at 15, 16-17 (Vasquez, J., dissenting). Granting the Commissioner that authority, he reasoned, would frustrate “[t]he congressional intent behind the enactment of section 6330“. Id. at 17 (Vasquez, J., dissenting).
Judge Vasquez also accused the majority in Greene-Thapedi of failing to acknowledge that this Court‘s predecessor, the Board of Tax Appeals, “decided it had overpayment jurisdiction pursuant to the Revenue Act of 1924” even though Congress had not granted the Board that jurisdiction in “explicit statutory language“. Id. at 21 (Vasquez, J., dissenting). He cited four cases that, in his view, exemplified the Board‘s exercise of its assumed overpayment jurisdiction: Barry v. Commissioner, 1 B.T.A. 156 (1924), Hickory Spinning Co. v. Commissioner, 1 B.T.A. 409 (1925), Walker-Crim Co. v. Commissioner, 1 B.T.A. 599 (1925), and Maritime Sec. Co. v. Commissioner, 2 B.T.A. 188 (1925).
Because the taxpayer before us in Greene-Thapedi v. Commissioner, 126 T.C. at 25 (Vasquez, J., dissenting), had “properly invoked” our jurisdiction, Judge Vasquez reasoned, our failure to address the taxpayer‘s entitlement to an underpayment left “an essential issue unaddressed.”
Finally, Judge Vasquez described the majority opinion in Greene-Thapedi as “creat[ing] a trap for the unwary.” Id. at 26 (Vasquez, J., dissenting). He elaborated:
Taxpayers who choose to litigate their section 6015 [innocent spouse] 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 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. * * *
II. Analysis
The case before us requires that we revisit the issue we addressed in Greene-Thapedi: whether we should infer jurisdiction not expressly granted to us by the applicable statutory provisions that allows us, in a CDP case brought under
A. Whether Greene-Thapedi Is Distinguishable
Petitioner attempts to differentiate challenges to the amount of a taxpayer‘s tax liability and those that relate to alleged failures by the Commissioner to follow the procedures required to collect that liability. He observes that the taxpayer in Greene-Thapedi had had a prior opportunity to contest before this Court her tax liability for the year in issue and that her claim for a refund of interest arose from her allegation that the Commissioner had not properly assessed the tax on which the interest accrued and timely issued to her a notice and demand for payment. On the basis of those observations, petitioner describes the refund claim of the taxpayer in Greene-Thapedi as an assertion that the Appeals officer had failed to verify under
Petitioner describes as “very limited” the overpayment jurisdiction he claims that we have in CDP cases. In particular, he argues that we have such jurisdiction
Because petitioner‘s argument rests on the mailing of a notice of deficiency not received by the taxpayer, he now accepts the premise that respondent mailed him a notice of deficiency for his 2008 taxable year--although that premise conflicts with the position he had consistently maintained before learning of his
We see no reason why the issuance of a notice of deficiency that petitioner never received should allow him to pursue a claim for refund that would otherwise have become time barred long before he manifested any awareness of it. Because respondent received petitioner‘s 2008 Federal income tax return on October 19, 2009, the period of limitations on a claim for refund of any of the $957 petitioner paid between December 24, 2009, and October 14, 2010, expired no later than October 19, 2012.3 See
A taxpayer‘s filing with this Court of a petition for redetermination in response to a notice of deficiency effectively tolls the period of limitations on any claim for refund for a year covered by the notice because the petition cuts off the taxpayer‘s right to seek a refund for the year in any other forum. See
Amicus’ efforts to distinguish Greene-Thapedi are similar to petitioner‘s and also unavailing. Like petitioner, amicus points to the receipt of a notice of deficiency by the taxpayer in Greene-Thapedi and her opportunity to contest the deficiency in this Court as factors that distinguish that case from the present one. Unlike petitioner, however, amicus offers us no reason why that distinction should make a difference. In particular, amicus misreads note 19 to our Opinion in Greene-Thapedi. In that footnote, we accepted the potential relevance of a taxpayer‘s payment of more tax than was owed--but not because we assumed we would have jurisdiction in such a case to determine the amount of the taxpayer‘s overpayment and order that it be credited or refunded. Instead, we saw the question as relevant only in that a taxpayer‘s overpayment would mean that he had
B. Whether Greene-Thapedi Is Correct
Amicus argues that we should overrule Greene-Thapedi if we find ourselves unable to distinguish it. Most of amicus’ arguments for overruling Greene-Thapedi appear in the dissenting opinion Judge Vasquez filed in that case. Having considered those arguments in issuing our Opinion in Greene-Thapedi, we might be justified in setting them aside without further explanation. Nonetheless, in response to amicus’ invitation that we reconsider those arguments, we will explain why we do not view them as grounds for overruling our established precedent.
1. Implementation of Congress’ Remedial Purpose
First, amicus argues, as did Judge Vasquez in Greene-Thapedi, that our holding in that case is contrary to
Petitioner and amicus both invoke our observation in Montgomery v. Commissioner, 122 T.C. 1, 10 (2004), that “the substantive and procedural protections contained in sections 6320 and 6330 reflect congressional intent that the Commissioner should collect the correct amount of tax“. If respondent ends up having collected too much tax from petitioner for 2008, however, it will not be because of respondent‘s misuse of his collection authority but instead because of
2. Need for Resolution of Continuing Controversy
Amicus suggests that petitioner‘s appeal of respondent‘s determination to sustain the NFTL for his 2006 and 2008 taxable years vests us with jurisdiction to resolve the parties’ “entire controversy“. Amicus reasons that the parties’ disagreement over whether we have jurisdiction to consider petitioner‘s claim for a refund of any overpayment he made for his 2008 taxable year means that we have jurisdiction to resolve that disagreement. Amicus explains:
[A]lthough Respondent has conceded to petitioner‘s substantiations of deductions for the tax year at issue, Respondent‘s concession should have no bearing on this court‘s jurisdiction because there remains a controversy between the parties which this Court must address. * * * Petitioner believes that he has made an overpayment of his income tax and is entitled to a refund of this amount. Respondent argues that, even if there is admittedly now an overpayment, the Tax Court lacks jurisdiction to decide the overpayment in a collection review proceeding. It follows that there remains a controversy which this Court should address, its jurisdiction having been properly invoked pursuant to [section] 6330(d)(1).
We readily agree that “[w]e have jurisdiction to determine our jurisdiction.” Buczek v. Commissioner, 143 T.C. 301, 307 (2014). But accepting that we have
3. Precedent for Imputing Jurisdiction
Amicus also repeats Judge Vasquez‘s claim in Greene-Thapedi that our predecessor, the Board of Tax Appeals, assumed overpayment jurisdiction under the Revenue Act of 1924 that the statute did not expressly grant it. Amicus urges us to follow our predecessor‘s example and “assume that * * * [we have] overpayment jurisdiction in collection review proceedings“.
In the cases to which amicus refers--the same cases to which Judge Vasquez referred in his dissent in Greene-Thapedi--the Board determined overpayments not for the purpose of ordering a credit or refund but instead as a necessary step in
If Appeals had the authority to consider refund claims and its determination in a particular case included the denial of a taxpayer‘s refund claim, our consideration of that claim might be an element of our review of Appeals’ determination under
Amicus also claims that our jurisdiction to consider refunds in innocent spouse cases brought under
4. Potential Concurrent Jurisdiction Under Multiple Code Sections
Wright illustrates that petitions ostensibly filed under
Since Wright properly raised the issue [of interest abatement] at the agency, it follows that the subsequent Notice of Determination--which did not grant Wright an abatement--was “the Secretary‘s final determination not to abate interest” under § 6404(h)(1). And because Wright appealed the Notice of Determination to the Tax Court within the time period required by § 6404(h)(1), the Tax Court had jurisdiction to determine whether Wright was entitled to an abatement,
[*29] and if he was, whether he made an overpayment and is entitled to a refund.
Wright v. Commissioner, 571 F.3d at 220.
The opinion of the Court of Appeals in Wright does not call into question Greene-Thapedi‘s central holding that a petition filed under
Although amicus accepts that Wright may be “distinguishable on several grounds“, it suggests that the Court of Appeals opinion in that case warns against a crabbed interpretation of the scope of our jurisdiction in CDP cases. We have already heeded that warning. In Gray v. Commissioner, 138 T.C. 295 (2012), we accepted that a petition ostensibly filed under
Our acceptance of the views expressed by the Court of Appeals in Wright is of no help to petitioner. Again, the Court of Appeals’ opinion in Wright does not conflict with Greene-Thapedi‘s central holding that
The refund petitioner seeks, however, is not grounded in a claim for abatement of interest. And, more generally, on the facts before us, we cannot view the petition filed in this case as one filed not only under
5. Disparate Treatment of Innocent Spouse Claims
Amicus also repeats Judge Vasquez‘s argument that our declining to exercise jurisdiction in a CDP case to determine and require the refund or credit of an overpayment would result in disparate treatment of innocent spouse claims depending on whether they were brought as stand-alone claims under
Instead of accepting that we cannot exercise in a CDP case overpayment jurisdiction grounded in a provision other than
Even if amicus’ premise were correct, the resulting disparate treatment of innocent spouse claims depending on their jurisdictional posture would be required by the applicable statutory provisions.
[*35] Amicus argues that “[t]he plain language of section 6512(b)(1) authorizes the Court to determine the existence of a deficiency or an overpayment in all cases other than small tax proceedings brought under section 7463, so long as the requirements of section 6512(b)(3)(A), (B), or (C) are met.” Cf. Greene-Thapedi v. Commissioner, 126 T.C. at 26 (Vasquez, J., dissenting) (“Congress added section 6512(b)(2) to the Code, giving us authority to order a refund of any overpayment.“). We disagree.
[I]f the Tax Court finds that there is no deficiency and further finds that the taxpayer has made an overpayment of income tax for the same taxable year * * * in respect of which the Secretary determined the deficiency, or finds that there is a deficiency but that the taxpayer has made an overpayment of such tax, the Tax Court shall have jurisdiction to determine the amount of such overpayment, and such amount shall, when the decision of the Tax Court has become final, be credited or refunded to the taxpayer. * * *
Thus, the plain terms of
7. Petitioner‘s Due Process Claim
Petitioner does not explicitly ask us to overrule Greene-Thapedi, but he implicitly criticizes our failure to exercise overpayment jurisdiction in that case when he suggests that respondent‘s retention of an acknowledged overpayment would violate due process. According to petitioner: “Where a tax is not owed, but the payment thereof (the overpayment) is retained by Respondent, the question arises whether that overpayment, the property of the taxpayer, has been taken from him without due process, in violation of the Fifth Amendment to the Constitution.” Whenever the statute of limitations bars a taxpayer from pursuing a claim for refund, however, it will result in the Commissioner‘s retention of an overpayment of tax. That result cannot be viewed as violating the taxpayer‘s due process rights because his loss of any refund to which he might have been entitled would arise from his own failure to claim the refund timely. Moreover, most of the payments
8. Inferences Drawn in Greene-Thapedi From the Absence in Section 6330 of a Cross-Reference to Section 6404(h)(2)(B) or 6512(b)
Petitioner also claims that the inferences we drew in Greene-Thapedi from the absence in
[*38] The notice of determination that petitioner asked us to review sustained an NFTL concerning respondent‘s efforts to collect amounts petitioner allegedly owed for his taxable years 2006 and 2008. Petitioner‘s petition assigned no error in regard to his 2006 taxable year, and in his supplemental brief he “concedes sustaining the lien for that year is appropriate.” Respondent concedes that petitioner is entitled to “abatement of * * * [his] 2008 liability and subsequent release of the lien on the 2008 tax year“. For the reasons explained above, we have no jurisdiction to consider petitioner‘s claim that he has overpaid his 2008 Federal income tax. Consequently, we will issue an order upholding the NFTL for 2006 and directing respondent to release the lien for 2008 and abate his assessment of tax against petitioner for that year as appropriate to reflect his concessions regarding petitioner‘s substantiation of deductions related to his contracting business.
An appropriate order and decision will be entered.