17 Employee Benefits Cas. (BNA) 1193 | Tax Ct. | 1993
1993 Tax Ct. Memo LEXIS 171" label="1993 Tax Ct. Memo LEXIS 171" no-link"="" number="1" pagescheme="<span class=">1993 Tax Ct. Memo LEXIS 171">*171 An order of dismissal for lack of jurisdiction will be entered.
MEMORANDUM OPINION
RAUM,
Petitioner invokes1993 Tax Ct. Memo LEXIS 171" label="1993 Tax Ct. Memo LEXIS 171" no-link"="" number="2" pagescheme="<span class=">1993 Tax Ct. Memo LEXIS 171">*172 the jurisdiction of this Court pursuant to
The disqualification of the plans for the year at issue rests upon the Commissioner's determination that the plans were not timely amended so as to be brought into compliance with the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, 96 Stat. 324, enacted September 3, 1982, the Tax Reform Act of 1984 (TRA), Pub. L. 98-369, 98 Stat. 494, enacted July 18, 1984, and the Retirement Equity Act of 1984 (REA), Pub. L. 98-397, 98 Stat. 1426, enacted August 23, 1984. 3
1993 Tax Ct. Memo LEXIS 171" label="1993 Tax Ct. Memo LEXIS 171" no-link"="" number="3" pagescheme="<span class=">1993 Tax Ct. Memo LEXIS 171">*173 Petitioner's principal place of business was in Kelso, Washington, when the petition with this Court was filed on its behalf. The petition was filed by Joseph P. Clawson, M.D., trustee and plan administrator. Joseph P. Clawson, M.D., Inc., P.S. (the employer) was a Washington professional service corporation with a principal place of business in Kelso, Washington, during the 1987 plan year.
The employer established the profit-sharing plan and trust on October 1, 1971, and the money purchase pension plan and trust on September 1, 1974, respectively. Both were amended August 31, 1976 (effective September 1, 1976) in order to comply with legislative changes enacted as part of the Employee Retirement Income Security Act of 1974 (ERISA), Pub. L. 93-406, 88 Stat. 829, enacted September 2, 1974. No other amendments were made to the plans comprising petitioner until April 22, 1988, when the employer adopted amendments to petitioner in order to bring it into compliance with the additional qualification requirements in section 401(a) that were added by TEFRA, TRA, and REA. 4
1993 Tax Ct. Memo LEXIS 171" label="1993 Tax Ct. Memo LEXIS 171" no-link"="" number="4" pagescheme="<span class=">1993 Tax Ct. Memo LEXIS 171">*174 However, the deadline as finally extended by the IRS for amending plans to comply with TEFRA was June 30, 1986.
On November 5, 1990, the District Director mailed to the employer a letter determining that petitioner failed to meet the requirements for tax qualification set forth in section 401(a) for the 1987 plan year. Although it had been informed in that letter of the right to appeal within 30 days, petitioner did not file any such administrative appeal from that determination. Thereafter, on February 7, 1991, a final nonqualification letter was issued to the employer restating the conclusion that the plans were not tax-qualified under section 401(a), obviously because they were not amended to comply with TEFRA, TRA, and REA before the applicable deadline. The letter also indicated that by failing to file an administrative appeal with the IRS, the employer (acting on petitioner's behalf) had not exhausted available administrative remedies and might thereby be precluded from seeking a declaratory judgment1993 Tax Ct. Memo LEXIS 171" label="1993 Tax Ct. Memo LEXIS 171" no-link"="" number="6" pagescheme="<span class=">1993 Tax Ct. Memo LEXIS 171">*176 from this Court, pursuant to
1993 Tax Ct. Memo LEXIS 171" label="1993 Tax Ct. Memo LEXIS 171" no-link"="" number="7" pagescheme="<span class=">1993 Tax Ct. Memo LEXIS 171">*177 In respondent's answer to the petition it is alleged that "petitioner has failed to exhaust administrative remedies as required by
Although (3) EXHAUSTION OF ADMINISTRATIVE REMEDIES. -- The Tax Court shall not issue a declaratory judgment or decree under this section in any proceeding unless it determines that the petitioner has exhausted administrative remedies available to him within the Internal Revenue Service. * * *
Failure to exhaust administrative remedies has been stated or held to be fatal to jurisdiction in a number of cases involving that requirement in
The result herein is not inconsistent with
1993 Tax Ct. Memo LEXIS 171" label="1993 Tax Ct. Memo LEXIS 171" no-link"="" number="13" pagescheme="<span class=">1993 Tax Ct. Memo LEXIS 171">*183 We conclude that there is an absence of jurisdiction here. Accordingly,
Footnotes
1. Except as otherwise indicated, all section references are to the Internal Revenue Code as in effect for the year in issue, and all Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. Since the trusts' exemption under sec. 501(a) follows automatically here from qualification under sec. 401(a), only sec. 401(a) need be considered.↩
3. The effective dates under TEFRA and TRA for the various legislative changes affecting pension plans were set forth in the individual statutory provisions under each of those Acts. While each of those individual provisions set forth their own separate effective dates, most of the TEFRA and TRA provisions were made effective for years beginning after December 31, 1983, and December 31, 1984, respectively. TEFRA, secs. 235-250, 96 Stat. 505-529; TRA, secs. 521-529, 98 Stat. 865-877. Most of the changes under REA were also made effective for years beginning after December 31, 1984. REA, sec. 302, 98 Stat. 1451. The deadlines for amending plans to conform with the various qualification requirements imposed by TEFRA, TRA, and REA have, however, been extended by the IRS to later dates, as explained hereinafter.↩
4. Petitioner conceded both on brief and in documents made part of the administrative record that the amendments required by TEFRA, TRA, and REA were not made until April 22, 1988.↩
5. The above statement describes the rule for plans with "compliance dates", i.e., dates for complying with TRA and REA, falling on or after June 30, 1986. Petitioner's compliance date for the year at issue is Aug. 31, 1987, and, therefore falls within this rule. The final deadline for plans whose compliance date was before June 30, 1986, was extended to June 30, 1986, by
Announcement 86-60 ,1986-19 I.R.B. 17↩ .6. For a discussion of the applicable deadline dates for amending plans to comply with TEFRA, TRA, and REA, see
.Stark Truss Co. v. Commissioner , T.C. Memo 1991-329↩ n.37. Petitioner does not challenge the validity of the applicable deadline or dispute that the revised plans which were intended to comply with the requirements of TEFRA, TRA, and REA, were submitted after the final deadline had passed. But it seeks relief primarily because there were alleged mitigating circumstances, including the fact that it had reasonably relied upon prior counsel, that the plans were promptly revised to be in compliance by new counsel, that the IRS had not given it warning of the necessity to modify the plans before the deadline notwithstanding extensive correspondence with the IRS, and that the plans in any event functioned properly. Reliance on such grounds has been held to be unavailing. See, e.g.,
;Stark Truss Co. v. Commissioner , T.C. Memo. 1991-329 ;Mills, Mitchell & Turner v. Commissioner , T.C. Memo. 1993-99 ;Hamlin Development Co. v. Commissioner , T.C. Memo. 1993-89 .Kollipara Rajsheker, M.D., Inc. v. Commissioner , T.C. Memo. 1992-628↩8. The IRS position in the answer was in accord with the Internal Revenue Manual, 5 Administration, Internal Revenue Manual (CCH), exhibits 7(11)83 and 7(13)63(8) at pp. 22,873-4,
23,464 ↩.9. Among the available administrative remedies was an appeal of the District Director's determination to the Appeals Office. See
26 C.F.R. sec. 601.201(0)(10)(i) (c↩ ), Statement of Procedural Rules. Also available to petitioner was a request that the matter be referred by the District Director to the national office of the IRS.10. See also
, 93 T.C. 79">85-86↩ (1989).McManus v. Commissioner , 93 T.C. 79">93 T.C. 7911. This case is similarly distinguishable from
, also a revocation case, which relied uponHamlin Development Co. v. Commissioner , T.C. Memo. 1993-89 (1983).Efco Tool Co. v. Commissioner , 81 T.C. 976">81 T.C. 976↩