Lead Opinion
OPINION
This case is before us on the Court’s own motion to dismiss for lack of jurisdiction as to one of the additions to tax determined by respondent in the notice of deficiency. The issue for decision is whether under the facts
Seth Edward Young, Jr., the decedent, died on March 9, 1977. Under section 6075(a), the estate tax return was due December 9, 1977. It was received by the Internal Revenue Service Center at Austin, Tex., on September 11, 1978. The return reported a balance due (net estate tax) of $59,751.66. Of this amount, $8,843.25 was paid with the return.
' After examining the decedent’s estate tax return, respondent issued a statutory notice in which he determined the following deficiency in estate tax and additions to tax:
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The addition to tax under section 6651(a)(2) was measured by the amount shown as tax on the return (less that part of the tax paid therewith).
In their petition, the petitioners disputed the deficiency and both additions to tax and prayed that the Court redetermine that neither the deficiency nor the additions are due. However, they did not claim any overpayment. In his answer, the respondent admitted that the deficiency and the additions are in dispute and prayed that the Court approve his determination as set forth in the statutory notice.
The parties subsequently tried this case and briefed the issues on the merits, specifically including the issue involving the addition to tax for late payment under section 6651(a)(2). Neither at trial nor on brief did either party suggest that we might lack jurisdiction to hear and decide that issue.
As a preliminary matter, we note that this Court can proceed in a case only if it has jurisdiction and that either party, or the Court sua sponte, can question jurisdiction at any time. Brown v. Commissioner,
We turn now to the issue before us. There is no question that this Court is a court of limited jurisdiction. Medeiros v. Commissioner,
Section 6213 confers jurisdiction on this Court to redetermine deficiencies in income, estate, gift, and certain excise taxes. Estate of DiRezza v. Commissioner,
The addition to tax for late payment under section 6651(a)(2)
Section 6214(a).
In view of the foregoing, we think that the jurisdiction conferred by section 6214(a) is merely complementary to the jurisdiction conferred by section 6213. Cf. Koufman v. Commissioner,
Our conclusion that section 6214(a) does not provide an independent basis for the exercise of jurisdiction over the addition to tax in question is also supported by the fact that section 274(e) of the Revenue Act of 1926 was enacted 2 years after the Board of Tax Appeals was created. As previously stated, section 900(e) of the Revenue Act of 1924 gave the Board jurisdiction to redetermine a deficiency determined by the Commissioner in a statutory notice. Section 275 of that
Finally, our conclusion that section 6214(a) does not provide an independent basis for the exercise of jurisdiction over the addition to tax in question is also supported by the language of section 6659(b). The latter section provides that the deficiency procedures described in subchapter B of chapter 63 do not apply to any addition to tax under section 6651 except to the extent that the addition is attributable to a deficiency. We said previously that the addition to tax for late payment under section 6651(a)(2) is not, by definition, attributable to a deficiency. (See, however, note 10 infra, and the related text.) Section 6214(a) falls within subchapter B of chapter 63. Accordingly, if that section were viewed as providing an independent basis for the exercise of jurisdiction, it would contradict the express language of section 6659(b), which clearly provides that the deficiency procedures are not applicable.
Hannan v. Commissioner. —In Hannan, respondent issued a putative statutory notice in which he determined "income tax deficiencies” and additions to tax for late filing. In reality, the "deficiencies” merely represented the underpayment of taxes reported by the taxpayers on their returns, and not adjustments
Fractionalizing litigation. — If the Commissioner determines additions to tax under section 6651(a)(1) and (a)(2), the taxpayer can avoid them by establishing that the failure to timely file and the failure to timely pay were due to reasonable cause and not due to willful neglect. See sec. 301.6651-1(c), Proced. & Admin. Regs. Given the fact that this Court has unquestioned jurisdiction over that portion of a late-filing addition which is attributable to a deficiency (sec. 6659(b)(1); Estate of DiRezza v. Commissioner,
Our holding that this Court does not have jurisdiction to redetermine the late-payment addition is confined to the facts of the case before us. Thus, we do not hold that this Court lacks such jurisdiction under section 6512(b)(1) if the taxpayer has made an overpayment of that addition.
Finally, we recognize that in certain prior cases, we redetermined the addition to tax for late payment under section 6651(a)(2) without considering the jurisdictional issue presently before us. See Estate of Rapelje v. Commissioner,
To reflect the foregoing,
An order dismissing the late-payment addition for lack of jurisdiction will he issued.
Reviewed by the Court.
Notes
Unless otherwise indicated, all section references are to the Internal Revenue Code of 1954 as amended and in effect at the time of the issuance of the statutory notice (Sept. 9, 1981).
SEC. 6659. APPLICABLE RULES.
(a) Additions Treated as Tax. — Except as otherwise provided-in this title—
(1) The additions to the tax, additional amounts, and penalties provided by this chapter shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes;
(2) Any reference in this title to "tax” imposed by this title shall be deemed also to refer to the additions to the tax, additional amounts, and penalties provided by this chapter.
(b) Procedure for Assessing Certain Additions to Tax. — For purposes of subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, and certain excise taxes), subsection (a) shall not apply to any addition to tax under section 6651, 6654, or 6655; except that it shall apply—
(1) in the case of an addition described in section 6651, to that portion of such addition which is attributable to a deficiency in tax described in section 6211; or
(2) to an addition described in section 6654 or 6655, if no return is filed for the taxable year.
We note that the Economic Recovery Tax Act of 1981 redesignated sec. 6659 as sec. 6660, applicable to returns filed after Dec. 31, 1981. Sec. 722(a)(1), (4), Pub. L. 97-34, 95 Stat. 172, 341, 342. In turn, the Tax Equity and Fiscal Responsibility Act of 1982 redesignated sec. 6660 as sec. 6662. Sec. 323(a), (c), Pub. L. 97-248,96 Stat. 324,613,615, applicable to returns the due date (determined without regard to extension) for filing of which is after Dec. 31, 1982.
The post-1939 legislative history of sec. 6659 is recounted in DiRezza v. Commissioner,
SEC. 6651. FAILURE TO FILE TAX RETURN OR TO PAY TAX.
(a) Addition to the Tax. — In the case of failure—
* * * * * * *
(2) to pay the amount shown as tax on any return specified in paragraph (1) [principally returns required under authority of subchapter A of chapter 61 (other than part III thereof relating to information returns)] on or before the date prescribed for payment of such tax (determined with regard to any extension of time for payment), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount shown as tax on such return 0.5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 0.5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate; * * *
The addition for late payment was enacted by sec. 943(a) of the Tax Reform Act of 1969, Pub. L. 91-172, 83 Stat. 487, 727-728, because of congressional concern over the increasing failure by taxpayers to timely pay the taxes shown as owing on their returns. In this regard, the Senate Finance Committee report provides as follows:
"Present law. — Under present law, in the case of a failure to pay income tax when due, simple interest at 6 percent, payable annually, must be paid on the unpaid amount. Present law also provides a 5 percent per month penalty, up to a maximum of 25 percent, on the amount required to be shown on a return (less amounts already paid) if a taxpayer fails to file a return on the date it is due, unless the failure is due to reasonable cause and not to willful neglect.”
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"General reasons for change. — Since the current cost of borrowing money is substantially in excess of the 6 per cent interest rate provided by the code, it is to the advantage of taxpayers in many cases to file a return on the due date but not to pay the tax shown as owing on the return. For the period the tax remains unpaid, the taxpayer is borrowing from the Government the amount of the tax at a' 6 percent rate of interest.”
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"Although full information is not available, borrowings of this type may be occurring on a substantial scale.”
[S. Rept. 91-552 (1969), 1969-
See also Conf. Rept. 91-782 (1969), 1969-
SEC. 6211. DEFINITION OF A DEFICIENCY.
(a) In General. — For purposes of this title in the case of income, estate, and gift taxes imposed by subtitles A and B and excise taxes imposed by chapters 41,42,43,44, and 45 the term "deficiency” means the amount by which the tax imposed by subtitle A or B, or chapter 41, 42, 43, 44, or 45 [i.e., the amount required to be shown as tax on the return by the taxpayer] exceeds the excess of—
(1) the sum of
(A) the amount shown as the tax by the taxpayer upon his return, if a return was made by the taxpayer and an amount was shown as the tax by the taxpayer thereon, plus
(B) the amounts previously assessed (or collected without assessment) as a deficiency, over—
(2) the amount of rebates * * * made.
[Emphasis added.]
SEC. 6214. DETERMINATIONS BY TAX COURT.
(a) Jurisdiction as to Increase of Deficiency, Additional Amounts, or Additions to the Tax. — Except as provided by section 7463 [relating to small tax cases], the Tax Court shall have jurisdiction to redetermine the correct amount of the deficiency even if the amount so redetermined is greater than the amount of the deficiency, notice of which has been mailed to the taxpayer, and to determine whether any additional amount, or addition to the tax should be assessed, if claim therefor is asserted by the Secretary at or before the hearing or a rehearing.
In the discussion which follows above, we focus on whether sec. 6214(a) provides an independent basis for the exercise of jurisdiction over the addition to tax in question.
"The Board shall have jurisdiction to redetermine the correct amount of the deficiency even if the amount so redetermined is greater than the amount of the deficiency, notice of which has been mailed to the taxpayer, and to determine whether any penalty, additional amount or addition to the tax should be assessed, if claim therefor is asserted by the Commissioner at or before the hearing or rehearing.”
As can be seen by comparing the preceding footnote with the above, sec. 6214(a) is virtually identical with sec. 274(e) of the Revenue Act of 1926.
The Revenue Act of 1926 also enacted sec. 274(f), the predecessor of sec. 6212(c)(1), which restricted the issuance of additional notices of deficiency. Sec. 274(f), Revenue Act of 1926, ch. 27,44 Stat. 9,56. That section provided as follows:
"If after the enactment of this Act the Commissioner has mailed to the taxpayer notice of a deficiency * * * , and the taxpayer files a petition with the Board within the time prescribed * * * , the Commissioner shall have no right to determine any additional deficiency in respect of the same taxable year, except in the case of fraud, and except as provided in subdivision (e) of this section [quoted immediately above] * * * ”
Sec. 275 of the Revenue Act of 1924, ch. 234, 43 Stat. 253, 298, provided as follows:
(a) If any part of any deficiency is due to negligence, or intentional disregard of rules and regulations but without intent to defraud, 5 per centum of the total amount of the deficiency (in addition to such deficiency) shall be assessed, collected, and paid in the same manner as if it were a deficiency * * *
(b) If any part of any deficiency is due to fraud with intent to evade tax, then 50 per centum of the total amount of the deficiency (in addition to such deficiency) shall be so assessed, collected, and paid * * *
That part of the Revenue Act of 1924 dealing with payment, collection, and refund of tax and penalties (part V of tit. II, ch. 234, 43 Stat. 253, 295-303) did not include any addition to tax for late filing in the case of a deficiency. Compare sec. 3176 of the Revised Statutes, as amended by sec. 1003, Revenue Act of 1924, ch. 234, 43 Stat. 253, 339-340, which authorized the Commissioner to "add to the tax 25 per centum of its amount” in the case of a taxpayer’s failure to timely file a return.
We note, however, that reasonable cause sufficient to excuse the late-payment addition is not necessarily the same as reasonable cause sufficient to excuse the late-filing addition. Sec. 301.6651—1(c)(1), Proced. & Admin. Regs.
SEC. 6512. LIMITATIONS IN CASE OF PETITION TO TAX COURT.
(b) Overpayment Determined by Tax Court.—
(1) Jurisdiction to Determine.— * * * if 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, of gift tax for the same calendar year or calendar quarter, of estate tax in respect of the taxable estate of the same decedent, of tax imposed by chapter 41, 42, 43, or 44 \yith respect to any act (or failure to act) to which such petition relates, or of tax imposed by chapter 45 for the same taxable period, 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.
See sec. 6659(a)(2), quoted supra in note 2.
In that case the late-payment addition would arguably be attributable to a deficiency. However, there would be nothing against which to measure it. See Johnson v. Commissioner,
Concurrence Opinion
concurring: I agree with the holding of the majority wherein it decides that this Court lacks jurisdiction. The majority carefully éxamines the deficiency procedures, including the statutory framework based upon the definition of a "deficiency.” It concludes that the addition to tax in the instant case is beyond the scope of our jurisdiction because it is not attributable to a "deficiency,” as defined in section 6211(a).
I agree with the analysis by the majority, but point out, however, that it is totally inconsistent with the holding of the majority in Scar v. Commissioner,
The definition of a "deficiency” contained in section 6211(a) does not require a different conclusion. As we see it, this definition simply outlines the method by which a notice of deficiency should be constructed and does not affect the jurisdiction of this Court. * * *
In the instant case, the sole issue before the Court is decided upon the definition of a "deficiency” contained in section 6211(a). For the reasons set forth in detail in my dissenting opinion in Scar v. Commissioner, supra at 869-879, I concur with the majority in the instant case and conclude that the definition of a "deficiency” is inextricably related to the jurisdiction of this Court.
Concurrence Opinion
concurring: Section 6651(a)(2) was added to the Code by section 943(a) of the Tax Reform Act of 1969 (Pub. L. 91-172, 83 Stat. 487, 727). The legislative history of the 1969 Act does not indicate that the Congress considered the question of whether an addition to the tax under section 6651(a)(2) is to be subject to redetermination by this Court. As is apparent in the instant case, the conclusion we reach may result in fractionalizing litigation in some circumstances. Because of the provisions of section 6651(c)(1)(A), coordinating the amounts of additions to tax under paragraphs (1) and (2) of section 6651(a), in appropriate cases, we may have to calculate the amount of a section 6651(a)(2) addition, even though we do not have jurisdiction to redetermine the addition.
From the foregoing, one might conclude that, if the Congress had recognized the question, then the Congress might well have given us jurisdiction over the addition to tax under section 6651(a)(2).
The majority opinion explains very well what the statute means and arrives at the correct result under the statute. I join that opinion, even though I believe that judicial administration would be improved if the Congress were to amend the statute to give this Court jurisdiction in cases such as the instant one.
This could have been accomplished by giving this Court jurisdiction generally or by using a technique that the Congress used with regard to claims for refund of certain excise taxes on gasoline and lubricating oil (i.e., giving this Court jurisdiction only in a case over which we would have had jurisdiction even without this issue). See secs. 39 and 6211(b)(4), enacted by secs. 809(c) and 809(d)(5)(A) of the Excise Tax Reduction Act of 1965, Pub. L. 89-44, 79 Stat. 136, 167, 168.
See O. W. Holmes, "The Theory of Legal Interpretation,” 12 Harv. L. Rev. 417, 419 (1899): "We do not inquire what the legislature meant; we ask only what the statute means.”
Dissenting Opinion
dissenting: Generally, resort to legislative history is only justified where the face of the statute is inescapably ambiguous. Sehwegmann Bros. v. Calvert Distillers Corp.,
A contrary interpretation of section 6214(a) would be inconsistent with a number of prior decisions of this Court in which jurisdiction over a section 6651(a)(2) addition to the tax was assumed. See Estate of Bennett v. Commissioner,
A contrary interpretation of section 6214(a) also produces the unfortunate and inefficient result that a taxpayer faced with the not uncommon situation of an income tax deficiency,
The majority errs in concluding that section 6214(a) is merely complementary to section 6659(b). The independent jurisdictional status of section 6214(a) is illustrated by this Court’s jurisdiction over the section 6651(a)(1) addition to tax. Consider a hypothetical situation where a notice of income tax deficiency is issued and where no addition to tax is included in the notice. The taxpayer files a timely petition in this Court, and in the course of the litigation, the Commissioner files an amended answer in which he for the first time asserts an addition to tax under section 6651(a)(1).
The majority correctly would conclude that Tax Court jurisdiction in that hypothetical situation over the section 6651(a)(1) addition to tax would be proper but would incorrectly conclude that section 6659(b)(1) would be the basis therefor. To the contrary, because section 6659(b)(1) mandates that additions to tax under section 6651(a)(1) must comply with the deficiency procedures of subchapter B of chapter 63, jurisdiction on the basis of section 6659(b)(1) could not be asserted in the absence of the mailing of a notice of deficiency under sections 6211 and 6212 asserting the section 6651(a)(1) addition to tax.
Why then, in the hypothetical situation, would jurisdiction over the section 6651(a)(1) addition to tax be proper? It is because of the additional and independent grant of jurisdictional authority which is given to this Court in section 6214 over additions to tax which are not set forth in a notice of deficiency. Thus, it is in spite of, not because of, the provisions of section 6659(b) that this Court would have jurisdiction over the section 6651(a)(1) addition in the above example.
The majority opinion also incorrectly argues that under any interpretation other than the one adopted therein, section
Accordingly, I would find that the clear language of section 6214 provides this Court with jurisdiction over each of the three additions to tax set forth in section 6651(a)(1), (2), and (3).
For the above reasons, I respectfully dissent.