DONNA M. SUTHERLAND, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3634-18.
UNITED STATES TAX COURT
Filed September 8, 2020.
155 T.C. No. 6
In 2010 P‘s husband was convicted of tax crimes. As part of a plea agreement he was required to file delinquent returns for 2005 and 2006. Just before his sentencing P signed joint returns with him for those years.
In August 2016 P filed a request for innocent spouse relief for 2005 and 2006. During the administrative review process P‘s representative concluded that R‘s Appeals officer was incorrectly applying the factors to determine P‘s eligibility for relief. At that time the scope and standard of review in this Court for stand-alone innocent spouse cases were de novo. See Porter v. Commissioner, 132 T.C. 203, 206-210 (2009). Believing that his client would fare better before this Court P‘s representative declined to make further evidentiary submissions, and on November 15, 2017, R issued a determination letter denying P‘s request for relief. On February 20, 2018, P filed a timely petition for review.
The Taxpayer First Act (Act), Pub. L. No. 116-25, sec. 1203, 133 Stat. at 988 (2019), added
On November 11, 2019, P filed a motion to remand. She contends that if
Held:
Held, further, because a de novo scope and standard of review apply to P‘s request, P‘s motion to remand would serve no useful purpose and will be denied for that reason.
David M. Klemm, Craig E. Reeder, and James H. Everett, for petitioner.
Carlton W. King and Nina P. Ching, for respondent.
OPINION
LAUBER, Judge: This stand-alone innocent spouse case is currently before the Court on petitioner‘s motion to remand. The Internal Revenue Service (IRS or respondent) opposes the motion, citing our holding in Friday v. Commissioner, 124 T.C. 220, 222 (2005), that we may not remand stand-alone innocent spouse cases. Petitioner asks that we reconsider that holding in light of Congress’ 2019 amendment adding
The Taxpayer First Act (Act), Pub. L. No. 116-25, sec. 1203, 133 Stat. at 988 (2019), added
Congress specified that the amendments effected by Act sec. 1203(b) “shall apply to petitions or requests filed or
Given the amendment‘s inapplicability, the scope and standard of review in this case remain de novo. See Porter v. Commissioner, 132 T.C. 203, 206-210 (2009). That being so, the premise for petitioner‘s request for a remand disappears, and a remand would serve no useful purpose. Because we will deny her remand motion for that reason, we need not address her request that we reconsider our holding in Friday as applied to cases governed by the amendment.
Background
The following facts are derived from the parties’ pleadings and motion papers, including the attached exhibits. These facts are stated solely for the purpose of ruling on the pending motion to remand and not as findings of fact in this case. See Whistleblower 769-16W v. Commissioner, 152 T.C. 172, 173 (2019). Petitioner resided in Massachusetts when she filed her petition.
In 2010 petitioner‘s husband was indicted for tax crimes. He pleaded guilty, and as part of his plea agreement he was required to submit delinquent tax returns for 2005 and 2006 (among other years). Petitioner avers that she did not have an independent filing obligation for 2005 or 2006 but believed she was required to file joint returns with her husband. She signed the returns, as he requested, in the courthouse cafeteria less than an hour before his sentencing on June 29, 2011.
On September 1, 2016, petitioner filed a Form 8857, Request for Innocent Spouse Relief, for 2005 and 2006. On that form she stated that she had signed the returns during a “confusing and emotional” period, that the returns had been prepared by her husband‘s accountant with no input from her, and that she simply signed the returns as instructed. She did not mark the box on the Form 8857 indicating that she had any mental or physical health problems
On April 24, 2017, petitioner received a preliminary determination denying her request, and she timely appealed. Her case was assigned to an Appeals officer (AO) in the IRS Appeals Office in Covington, Kentucky (Appeals Office). Petitioner appointed a representative to act on her behalf.
Following several conversations with the AO, petitioner‘s representative formed the view that the AO was not properly applying the factors governing petitioner‘s entitlement to relief and had made up his mind to deny her request. Believing that no further progress could be made at the Appeals Office and that his client would receive a de novo scope of review in this Court, the representative declined to submit additional evidence. The AO accordingly closed the case and on November 15, 2017, issued a determination letter denying petitioner‘s request.
After timely petitioning this Court, petitioner filed on November 11, 2019, a motion to remand. She contends that the amended scope of review ordained by
Discussion
A. Innocent Spouse Relief
Married taxpayers may elect to file a joint Federal income tax return.
“Under procedures prescribed by the Secretary” such relief may be available if “taking into account all the facts and circumstances, it is inequitable to hold the individual liable for any unpaid tax or any deficiency (or any portion of either).”
B. Scope and Standard of Review
In 2019 Congress made two amendments to
Any review of a determination made under this section shall be reviewed de novo by the Tax Court and shall be based upon--
(A) the administrative record established at the time of the determination, and
(B) any additional newly discovered or previously unavailable evidence.
Act sec. 1203(a)(2) added
A request for equitable relief under this subsection may be made with respect to any portion of a liability that--
(A) has not been paid, provided that such request is made before the expiration of the applicable period of limitation under section 6502, or
(B) has been paid, provided that such request is made during the period in which the individual could submit a timely claim for refund or credit of such payment.
Act sec. 1203(b) specified that these amendments “shall apply to petitions or requests filed or pending on or after the date of the enactment of this Act.” We must decide how the effective date provision applies to this case.2
C. The Effective Date for Subsection (e)(7)
On its face the effective date provision is ambiguous. “[P]etitions or requests filed or pending” could mean “petitions filed or pending, or requests filed or pending.” Alternatively, it could mean “petitions filed or requests pending.” If the former reading is adopted, so that “pending” modifies both “petitions” and “requests,”
This is an example of structural (also called syntactic) ambiguity. It arises where a sentence is susceptible to more than one meaning because of the way the words or phrases are organized. See Catherine Anderson, Essentials of Linguistics, ch. 9.1, Ambiguity (2018) (ebook), https://essentialsoflinguistics.pressbooks.com/chapter/9-2-ambiguity/ (last visited Aug. 6, 2020). Clues to the meaning of such sentences can be supplied by the context and by other linguistic and interpretive tools.
For example, assume a municipal ordinance that is effective for “cars or boats parked or docked” at a city marina after a specified date. This provision would logically be interpreted to refer to “cars parked or boats docked.” That is because each adjective comfortably modifies only one noun.
On the other hand, assume a sales tax that is effective for “cars or trucks sold or leased” after a specified date. Unless the context suggested otherwise, this provision would likely be interpreted to refer to “cars sold or leased, or trucks sold or leased.” Both adjectives comfortably modify both nouns, and it would be odd to have different tax treatment for similar transactions involving similar vehicles.
We conclude that Act sec. 1203(b) more closely resembles the first example above. We have discovered no instance in which Congress, either in the Code or in an uncodified effective date provision, has used the phrase “petition(s) pending” when referring to ongoing matters in our Court. And interpreting Act sec. 1203(b) to refer to “petitions filed [in this Court] or requests pending [with the IRS]” on or after the effective date makes logical sense in light of the statutory context.
Needless to say, the Code regularly refers (in various ways) to “petition(s) filed” in this Court.3 Effective date provisions
statutory amendments to whether a petition has been filed in our Court.4 But a search for instances in which “petition” appears within 10 words of “pending” yields only one result--the effective date provision for
When Congress intends to refer to ongoing matters in our Court, it has invariably used phrases like “cases pending” or “proceedings pending.”5 And the absence from the Code of the phrase “petitions pending” makes linguistic sense. “Pending” means “remaining undecided” or “awaiting decision.” Black‘s Law
Dictionary (11th ed. 2019). A request is properly described as “pending” until a decision is made whether it will be granted or denied. Similarly, a petition for writ of certiorari is properly described as “pending” because the Supreme Court has discretion to grant or deny it.
But this Court has no discretion to accept or reject a taxpayer‘s petition. The petition is filed, and the case remains pending until we issue a decision. Thus, when Congress in effective date provisions has intended to refer to ongoing litigation in this Court, it has referred to “pending cases” or “pending proceedings” but never to “pending petitions.”6
review in our Court. Act sec. 1203(a)(2), containing new
The canon against superfluity confirms this result. Under this canon, in deciding on the proper interpretation of statutory text, “[i]t is our duty ‘to give effect, if possible, to every clause and word of a statute.‘” Duncan v. Walker, 533 U.S. 167, 174 (2001) (quoting United States v. Menasche, 348 U.S. 528, 538-539 (1955)). We are thus “reluctan[t] to treat statutory terms as surplusage’ in any setting.” Id. (quoting Babbitt v. Sweet Home Chapter, Cmtys. for a Great Ore., 515 U.S. 687, 698 (1995)).
If we were to ignore Congress’ customary usage of the term “pending” and read that term as modifying both “petitions” and “requests“--so that subsections (e)(7) and (f)(2) would apply respectively to “petitions filed or pending” and “requests filed or pending” on or after the effective date--then the word “filed” would
be rendered superfluous. Under this reading,
But if that was the result Congress wished to achieve, it could have referred simply to “petitions or requests pending” on or after the effective date. The universe of “petitions or requests pending” on or after July 1, 2019, is the same as the universe of “petitions filed or pending” and “requests filed or pending” on or after that date. Put simply, this alternative reading leaves no work for the word “filed” in the effective date provision, in direct conflict with our established practice of giving effect “to every clause and word of a statute.” See, e.g., Klein v. Commissioner, 149 T.C. 341, 355 (2017) (citing Lamie v. U.S. Tr., 540 U.S. 526, 534 (2004), and Negonsott v. Samuels, 507 U.S. 99, 106 (1993)).
For these reasons, we conclude that Act sec. 1203(b) should be interpreted to make
this, where the petition was filed before the effective date but the case remained pending in this Court thereafter. This interpretation is consistent with the textual and structural evidence discussed above. It also has the merit of preventing inequitable results that Congress presumably would have wished to avoid when prescribing the transition to the amended scope of review ordained by
For every request for innocent spouse relief pending with the IRS on or after July 1, 2019, the taxpayer had the opportunity to adjust her evidentiary submissions in light of the fact that the scope of our review would be limited to the administrative record (apart from newly discovered or previously unavailable evidence). And for most or all petitions filed in this Court on or after July 1, 2019, the taxpayer would have completed the administrative process after that date and have been aware of the need to fully develop the administrative record.7
July 1, 2019, but the case remained pending in this Court thereafter--a sort of “gotcha” could occur. The taxpayer would have gone through the administrative process believing that the scope of review in this Court was de novo. But she would then learn, once the time came for trial, that the scope of review was not de novo and that she could be prejudiced for not having made a more complete administrative record.
By amending the statute to provide that this Court‘s review would be limited to the administrative record (apart from previously unavailable or newly discovered evidence), Congress incentivized taxpayers to cooperate with the IRS by building a complete record during the administrative process. By making Act sec. 1203(a) of the Act effective “on or after” July 1, 2019, Congress gave the amendments prospective effect only. But if the revised scope of review in
In sum, using the linguistic tools at our disposal, considering the amendment‘s overall context, and applying the anti-surplusage canon, we conclude that the effective date provision is best interpreted to make
petition on February 20, 2018, more than 16 months before the amendment took effect. We accordingly hold that
D. Motion To Remand
This Court has previously declined to remand stand-alone innocent spouse cases under
Because we hold that
would serve no useful purpose). That being so, we have no need to address her request that we reconsider our holding in Friday as applied to cases that are governed by the amended statute.
In consideration of the foregoing,
An appropriate order will be issued.
Reviewed by the Court.
FOLEY, GALE, THORNTON, GUSTAFSON, PARIS, MORRISON, KERRIGAN, BUCH, NEGA, PUGH, ASHFORD, URDA, COPELAND, JONES, TORO, and GREAVES, JJ., agree with this opinion of the Court.