Inverworld, Ltd. v. Commissioner of Internal Revenue

eligibili future they though base only, even program on GSL participation

ty for The Secre rates. past default schools’ least, a are, very at the tary’s regulations the Act interpretation permissible accept. are bound are ones therefore De Resources Natural v. U.S.A. Chevron 842-43, Council, 467 U.S. fense (1984). 2781-82, L.Ed.2d S.Ct. construed, reg Act, nor the so Neither abrogate participating ulations themselves govern federal schools’ contracts legally have the schools ment because participation in future interest protectible The decision program. in the GSL Court, accordingly, is District Affirmed. LTD.,

INVERWORLD, Appellant, INTERNAL OF COMMISSIONER REVENUE, Appellee. 92-1058. No. Appeals, States United Circuit. of Columbia District 13, 1992. Argued Oct. 24, 1992. Nov. Decided Barry Kingham,

T. City, New York Rosenthal, whom Samuel Washington, D.C., brief, appellant. Greene, Kenneth L. Attorney, Dept, of Justice, Peterson, Shirley with whom D. Gen., Atty. Allen, Asst. Gary R. Atty., Dept, Justice, D.C., Washington, 'appellee. the brief for MIKVA, Judge, Before Chief WALD and EDWARDS, Judges. Circuit Opinion for the Court filed Circuit Judge WALD.

Opinion concurring part concurring judgment filed Chief Judge. MIKVA.

WALD, Judge: Circuit InverWorld, (“InverWorld”), Cay- Ltd. corporation, man Islands appeals a decision denying of the Tax Court leave to amend its to redetermine tax deficiencies specifically in order to corporate contest 1984, 1985, income tax deficiencies for 1986. Because motion InverWorld’s expiration statutory made after the period in which a new claim could filed Court, in the Tax that court could origi- allow the amendment if InverWorld’s already put corporate nal The income tax claims issue. Tax Court found indication in Inver- original petition World’s disputed accordingly taxes had been amend, denied motion thereby effectively denying InverWorld’s claim as to those taxes. We affirm.

I. BACKGROUND

While the substantive interstices daunting in- Internal Revenue Code deed, procedure the collection of straightforward. prosaically most taxes is If of Internal Revenue the Commissioner “Commissioner”) (the that a determines owed, she taxpayer paid has not all taxes taxpayer. mails a notice 6212(a). 26 U.S.C. days from the date of the then has 90 (or mailed to days if the notice is notice Withholding Tax “Annual States) to file failure the United address outside Returns.” by peti- action Commissioner’s “redetermine” tioning the Notice”) (the notice The other “Second 6213(a). In 26 U.S.C. deficiency. See mailed to Inver- the Commissioner may not collect the Commissioner general, have deter- “We opened as follows: World day period or this 90 during money (increase) is a mined there , has filed petition timely filed a after tax_” Second No- The your income a Unless id. Court. See Tax the with corporate in- throughout tice referred for Tax Court petitions the- timely accompanying tax matters. come redeterminatiqn ' deficiency, specific Changes Tax referred Statement-Income jurisdiction however, the 1120F, corporation in- foreign the to Form claim, the Commis- taxpayer’s the over Explanation of And the come tax return. id.; taxes.1 See the free to sioner collect pen- Adjustments advised InverWorld 41(a) (“No amendment R. Tax Ct. also see for failure to file assessed had been alties expiration after allowed shall be Returns.” “Income Tax ... which petition the filing time for taxes because Asserting that it owed no the on Court conferring jurisdiction involve engage in a business hot trade it did would not otherwise matter which over a States, peti- InverWorld the United within peti- the under its come within for a redetermination the tioned Tax file.”). on tion as then 3, 1990. For December on of deficiencies scheme, Commis- the this Pursuant however, reasons, Inver- unexplained cover, two mailed, separate sioner only to the referred First World’s Sep- on to InverWorld deficiency notices alleged as deficien- and the amounts Notice (the notices 7, One 1990. tember Notice was Only the First therein.2 cies “In with Notice”) began: accordance “First petition. to the as an exhibit attached revenue existing internal provisions however, Inver- petition, Throughout determination laws, given notice deficiencies alleged referred World withholding income liability for your to withhold relating to failure as ones years ended taxable for the as source tax by third but income taxes owed 31, 1984, 31, December December involving fashion as general in more rather 31, 1986, discloses December See, e.g., “income dispute tax.” over $21,- $16,697,809.00 and $8,071,168.00, (“The ¶ as deter- deficiencies Petition at same First This 610,869.00, respectively.” for income mined the Commissioner refer- other several Notice also contained tax_”). theOn “State- withholding taxes. ences to petition was silent Because InverWorld’s Changes,” table ment-Income corporate income tax subject Commissioner how the notice which showed Notice, alleged in the Second deficiency, deficiencies alleged tallied the total corpo- assumed the Commissioner to Form alluded Commissioner opposed to income deficiencies —as “Expla- An rate tax return form. withholding tax withholding tax deficiencies —were accompanying Adjustments” nation of Thus, February in contest. InverWorld alleged that also Statement run, he is- statutory period in the form of after income gross “had received demand- three Assessment sued Notices the United within from sources interest corpo- some million aliens,” ing payment $900 and noted States nonresident set out in income taxes —the amounts rate imposed penalties that additional par- Both beginning First Notice. deficiency, alleged at the how- taxpayer pays the 1. If a are stated ever, agree actual a refund in the amounts sue for ties then she 28 U.S.C. InverWorld or the Claims Court. the First Notice. district court elsewhere in 1346(a)(1). mix-up it contested since this confused original petition. itsm correct amounts peti- in InverWorld’s mentioned 2. The amounts set out actually amounts differed from the tion asserting original additionally accrued plus Notice con- the Second penalties. tained sufficient indications of an interest dispute intent tax deficien- quickly Predictably, reacted cies to vest the Tax Court collec- protection from immediate to seek over those claims. nine-digit February sum. On tion of this 19, 1991, in the Tax it filed a motion Analysis II. peti- original redetermination to amend its corporate income tax tion to include the A. Jurisdiction deficiencies for which the Commissioner getting Before to InverWorld’s sub January payment.3 now demanded On claims, stantive we must address denied InverWorld’s question jurisdiction threshold of our own petition. its Because it motion to amend Although to hear this par neither appeal. a new late for to add was too InverWorld ty challenged jurisdiction, our we raised point, this the Tax Court had to claim at sponte requested the issue sua brief original petition had decide whether the ing by on it because several of jurisdiction invoked the court’s already sibling split our circuits are on whether tax issue. While corporate over the income parties may appeal Tax Court orders which policy in favor the Tax Court announced a dispose of one or more but all construing original petition liberally, Compare v. claims. Wilson Commission petition “con- it stated that the still must er, 1317, (9th Cir.1977) (per F.2d 1318 564 indicating specif- objective facts that a tain curiam) (finding appealable a Tax Court is contested be- ic determination denying taxpayer’s order motion to amend petition respect fore it is treated as a to contest a in an addi determination.” A could year), tional cert. sub denied nom. Mercer partic- jurisdiction Tax over a invoke Commissioner, 832, v. 439 U.S. minimum, if, deficiency only at a it ular (1978) 58 L.Ed.2d 127 v. with Schrader deficien-, of the indicated: the amount Commissioner, (6th 916 F.2d cies the Commissioner determined the tax- curiam) Cir.1990) (holding (per that court owed; (2) payer the amount of that debt jurisdiction lacked to review Tax Court’s contesting; (3) the grant year of of motion to dismiss one years dispute. in Because InverWorld’s multiyear petition) Yaeger v. and Estate of petition did not even mention Second Commissioner, (2d 801 F.2d Cir. any of defi- much less contest Notice 1986)(holding jurisdiction that court lacked therein, alleged the Tax Court de- ciencies grant taxpayer’s to review Tax Court’s original petition cided that InverWorld’s affecting year of a to dismiss one motion corporate could not meet this test as to the multiple year dispute the’ Tax because tax deficiencies. The Tax Court income disposed of the “entire Court had not allusion to “in- also found InverWorld’s case”). effortlessly, Ultimately, but original petition insuffi- come taxes” in its down on the side of the Ninth Circuit come to manifest an intent to contest cient jurisdiction find that we have over Notice’s determinations. Second appeal. such Tax refusal to allow Inver- . gov- Our in this context precludes any further ac- World to amend 7482(a)(1), erned 26 U.S.C. § in that forum on the income tion part: states in relevant withholding tax tax claims. Appeals ... Court, The United States Courts of pending the Tax claim is still before jurisdiction to review attempting to shall have exclusive InverWorld is now however. amend, in the of the Tax Court ... denial of its motion to the decisions appeal the denying sought temporary the release of the Tax Court's order also restrain- 3. petition. injunction Col- ing preliminary InverWorld’s motion to amend order and postponed on have been Court for the District of lection activities United States District relief, agreement parties. and an basis of an between Columbia. That court denied upon Appellant appeal Brief of 4 n. 1. to this court was dismissed as moot required rule is not Paper that the Smith extent as the same and to manner same Moreover, strictly, statute). applied ac- civil court in the district decisions many result rule would Paper jury. Smith without tions tried example, deni- final undeniably orders —for 7482(a)(1) have held § courts Several (the issue intervene of motions to als decisions over all provides final cases) be- prior of the several —not See, Ryan v. Com e.g., Court. trial the end appealable until- coming Cir.1982) (3d missioner, F.2d error, requiring and, if found then ap that a court (“Numerous cases hold Perhaps repeated. trials entire long as as peals consider approach has reason, Paper the Smith of the decision a final out of arises denying review often most applied v. Commission Court.”); Dixon Estate of final, id. interlocutory, not orders. See Cir.1982) (“The (9th 386, 388 er, 666 F.2d of the circuits reasoning studying After (not final is that thrust Paper adopted the Smith either that have Tax Court are interlocutory) orders unnecessary rejected it approach or original); Estate (emphasis appealable.”) finality unworkable, we believe F.2d Smith of 668 the criterion order should be Cir.1981); v. Commission (3d Wilson As jurisdiction. 7482(a)(1)appellate Cir.1977) (9th (per 1317, 1318 er, F.2d proceed- subsequent our discussion v. Mercer curiam), sub nom. denied cert. shows, course avoids case ings in this 832, 99 S.Ct. Commissioner, 439 U.S. parties and to both great inconvenience Louisville (1978); see also L.Ed.2d 127 58 the intent way conflict with any does not v. Supply Co. Builders 7482(a)(1). . drafters § Cir.1961). (6th 333, 339 F.2d 294 familiar general principles Applying courts, language in relying on Other un- court of district however, appeals from 7459(c),4 found have 26 U.S.C. § question there is der 28 U.S.C. § exists jurisdiction 7482(a)(1) that § is in this case decision that the a formal has determina when there unequivocal has made (or court final. That deficiency of a by the. Tax tion that, the inade- because determination “proceed entire thereof) or when lack petition, In- original quacy InverWorld’s jurisdic lack for dismissed has been ing” juris- invoke Tax Court failed to verWorld v. Smith See, e.g., Commissioner tion. corporate income Cir.1955) over 126, 129(1st diction Inc., F.2d 222 Paper, left nothing There is deficiency claim. tax to strike motion taxpayer’s (order granting to that to be done to his answer amendment Commissioner’s legally relief, claim rest because not reviewable was on action collection subject to immediate the Tax in front remained “proceeding” court district A similar deficiency.5 to be find no reason can Court). But we final under considered would be in decision of decision definition lieve completely has court because the deal 1291 appears to 7459(c) provision § § —a generally claim. disposed of deci on which date exclusively with the Mackey, 351 U.S. Sears, v.Co. Roebuck & way meant to rendered—in sions L.Ed. 1297 deci over those appellate limit claims not all (dismissal of but some controlling provi sions; 7482(a)(1)is the § example, in 1291). For final under review. See appellate dealing with sion Co., 623 Loan Finance v. (noting Lockett General Smith, F.2d at Estate of Court, of the Tax in the records be entered provision states: 4. That upon to be rendered be held shall the decision (except a decision the Tax decision of A entry. of such the date jurisdiction) lack of dismissing proceeding for a upon the date that be rendered be held to shall an order argument oral said at counsel 5. InverWorld's deficien- specifying amount action of collection initiation IRS’s that the Court.... of the Tax cy the records is entered in Inver- led tax income proceeding for court dismisses a the Tax [I]f . this court. relief from to seek World shall to that effect jurisdiction, an order lack Cir.1980), (5th Fifth court must Circuit be balanced to determine finali F.2d context). of leave to ty a district court’s denial in this found InverWorld’s interest party to be a complaint to add obvious; amend in an appeal immediate is the most the statute of limita- final decision because (and if deny jurisdiction, similarly we separate bar a tions had run taxpayers) pay situated must immediately (“[T]he at 1129-80 district suit. See id. an entire without review of a plaintiff’s] denial of motion to court’s [the potentially erroneous Tax Court determina effectively terminates amend [his] point tion until some later when the Tax circumstance, we hold claim.... In this entirely Court has resolved an different finally adjudicat- court has district deficiency claim. The Commissioner also claim_”). Analogous plaintiff’s] ed [the allowing believes that now will Ninth to find reasoning has lead the Circuit in prompt serve his interest resolution of final a similar Tax Court decision disputes. Finally, public judicial tax 7482(a)(1). In Wilson Commis- likely resources are more if be saved we sioner, the court found jurisdiction. if accept deny than we Should dismissal for lack of delay ultimately review but overturn “a year multiyear one jurisdictional finding, the Tax Court’s cause of action.” final decision [that] second trial would be with the F.2d at 1318. expenditure judicial attendant of additional course, the decision not to entertain Of resources that consolidation of these claims corporate tax amendments would be designed place. to avoid the first eventually appealable at the end of the Tax Resins, Tenneco Inc. v. Reeves Broth Cf. “proceeding” pending, now still but Inc., 1508, 1512(Fed.Cir.1984) ers, F.2d withholding tax limited to InverWorld’s (finding denial of a motion to amend final claims. It is indeed that fact appeal purposes largely because the diverge two other circuits to convinced possibility of a second trial contravened from the rationale. See Schrader Wilson principles judicial economy). of Additional 361, Commissioner, 916 F.2d v. ly, contrary do Yaeger, to Estate we not of Cir.1990) curiam); (6th (per Yae Estate of ruling think that favor of Commissioner, (2d 96, 801 F.2d 98 ger v. litigants trying here create havoc for would Cir.1986). appealability may future While proper to determine the time to file an prag making essentially relevant in appeal. 801 F.2d at Yaeger, Estate See of to a decision is judgment matic as whether taxpayers among 98. Confusion and law final, Gillespie v. United see States Steel yers will result if the court does not 152-53, 308, 148, 85 S.Ct. Corp., 379 U.S. A any clear-cut rule at all. establish (1964), find, 311, 13 L.Ed.2d 199 we in this bright-line appeal from rule that allows an situation, injustice that the to the one not all a denial of over but (as well as the inconvenience to the Com pro separate claims in a Court) by and the Tax caused missioner guidance litigants and the explicit vide the essentially delaying appeal an from what is seek. Commissioner of claim far out a dismissal pointed courts have to fact Some weighs possible inconvenience to an analogous to the Tax lacks a rule hearing separate appeals. Court appellate court two 54(b),6see Schrader, (argu Federal Rule of Civil Procedure 916 F.2d at 363 Cf . 97, 98, F.2d at as an parties Yaeger, to the and the Estate 801 ing that convenience decision, designated, 54(b) provides: other form of however 6. Rule adjudicates all the claims or which fewer than present- than one claim for relief is When more rights than all the and liabilities of fewer direct the ed in an action ... court any action as to shall not terminate the entry judgment but of a final as to one or more parties, and the order or other of the claims or parties only upon of the claims or fewer than all any subject at to revision just form of decision is express there is no determination that an entry judgment adjudicating express time before the delay upon reason for direction rights all and liabilities of entry judgment. all the claims and the In the absence of direction, any parties. order or determination and such 874 only to erwise; was intended phrase this one such as a decision indication of Tax Court of review scope district alter 54(b) requires a Rule final. granted. Con- appeal is on once an judgment decisions entry of a final direct court in 1948 certify an what is now amended gress § claims and of several one we v. before to Dobson completed response claim on the appeal 239, find the do not 88 L.Ed. it. But 320 U.S. may review Rule rule similar of Tax Court held that review (1943), Tax Court which absence finality determi our extremely limited 54(b) relevant to be all was at decisions finali 54(b) not “create” does at 246. Rule id. at S.Ct. nation. deferential. already it does where describing ty explicit in Congress was for court a district exist, allows merely adding the reason as the sole case and to final a decision mally to decree phrase: in consoli final decisions determine Internal Section § 7482] [now immediate subject to proceeding dated for court review provides Code Revenue Wright, Arthur 10 Charles

appeal. See A. time From the decisions. Mary Kane, Prac R. Miller K. Federal & was established appellate review this (2d ed. Procedure, tiCE until the Dob- Act of 1926 the Revenue apply 54(b) does 1983) generally (“Rule there had decision son final under Section are not to orders the Tax review of that the suggestion Sears, 28_”). In Roebuck Title 1291 of limited any more decisions 427, 76 S.Ct. 351 U.S. Mackey, & Co. of decisions appellate review than the (1956), Supreme L.Ed. 1297 It District Courts. the United States enactment of repeatedly stressed that, ap- courts assumed mecha more flexible 54(b) provided Rule Court, questions of the Tax peal from determining final when nism for questions fully reviewable law alter it did not appealed, but could be sort subject to same fact were finality: the enactment concept of basic appeals prevailed review limited relaxation 54(b) a limited “authorized Rule District Courts. States from the United that, multiple practice former case, in the Dobson Supreme to be actions, the claims all claims ... however, rule law created a new appeal could be before finally decided _ restores provision ... This upon decision final from a entertained re- power to courts circuit (em 434, at 899 at 76 S.Ct. Id. of them.” from the view cases 435, at 76 S.Ct. at id. original); phasis as extent the same to same manner amended, “does not (Rule 54(b), as 899 other cases— to review power it has decision, each required finality relax the nontax cases cases—com- tax or whether claim, appeal- to render individual as an in a tried case ing a District Court from 438, at 901 at able”); also id. see jury. a without any stat supersede 54(b).] (“[Rule does Judiciary on the jurisdiction.”). the Committee Views controlling appellate ute to Respect to Senate Amendments impact on whether 54(b) no with Thus, has Rule Cong.Rec. reprinted re in 94 to allow sufficiently final H.R. a decision manner” Thus, the same (1948). the “in view. courts to bind phrase intended for 54(b) invoked also been Rule determining procedure for any particular to finality, that, regardless of proposition immediately ap- decisions which final in appeal in this allowing an immediate pealable. 7482(a)(l)’sinjunction contravenes stance § 7482(a)(1)is with if read Finally, even § to same manner “in the that review ap- for harmonizing procedures eye an to court review district extent” as the same deci- district court Court and pealing Tax is based argument This decisions. re- sions, arguably favors immediate manner” “in the same false premise of this Court determinations view immediate availability an refers 54(b), rely we Rule Under says oth- sort. history legislative But its appeal. “dispatcher”— court to act as a sistent Congress’ district intent ap to allow releasing during the peals some final from final decisions where there is proceeding, holding course of a some just “no reason delay.” Fed.R.Civ.P. for later review at the end of the up 54(b); entire supra see page 873 (finding that proceeding. Sears, Roebuck, See 351 U.S. injustice caused delay outweighs incon Obviously, at 899. S.Ct. possibly venience of hearing appeals two out, pointed Yaeger Estate court see one); cases such as this Wilson, 564 cf. dispatcher, F.2d at such a absent an F.2d at (citing 54(b) Rule as support appeal immediate of the Tax Court decision for the proposition that a Tax Court deci aspects here will differ in some from the sion dismissing some but not all the tax way in appeal which district court is payer’s claim was immediately appealable). But, course, processed, the same would say It is harder the same of the Second opposite adopted by be true of the rule opposite Sixth Circuit’s rule which de allowing Second and ap Sixth Circuits: lays appeal finally of all decided claims peal of a Tax Court decision if it until the conclusion of the proceed entire disposes oper of an “entire case” will ing. ate “in the same manner” as an sum, decision, In this is a final and we judicially district court decision. Short of are aware of statutory or policy bar 54(b) Court, imposing Rule on the Tax requires, otherwise that us § precisely can never attain the same manner appeal. to decline the of review from both courts. Of the two choices, allowing immediate review of Tax B. The Merits dispose entirely sep Court decisions that 1. The Tax “Objective- Indica- arate claims seems to be more consistent tion” Test general congressional with the intent be 7482(a)(1). claims that According hind to the Su Court erred in finding that Court, juris it had no preme the enactment of the original grant diction to 54(b) proposed designed Rule in 1939 was to relax original petition. amendment to its “single judicial theory unit” Inver World dispute does not required all claims in an action to be dis that, premise amendment, posed qualify claim before could be re Sears, Roebuck, original petition viewed. must U.S. at have contained Thus, objective some Congress 76 S.Ct. at 898. when indication of its intent to “in inserted the the same manner” lan tax deficiencies. guage 7482(a)(1) 1948, Rather, into primary objection see Pub.L. is to the Tax 80-773, (1948), No. that, 62 Stat. display Court’s determination such already employing indication, district courts were original petition system more flexible which allowed final must contain specific several elements—the decisions on some claims to appealed assessed, amount prior disposition contested, to of all If claims. amount years dispute. and the in Congress’ aim was to treat the Tax Court Mindful understanding our much possible, 7482(a)(1) as like district courts as it requires the same scope of re likely have locked the Tax Court view of Tax Court cases those as from “single judicial theory court, into the unit” which decisions of the supra district see already page been discarded for the district we review the Tax Court’s for Admittedly, any hybrid system courts. general applicabili we mulation of this test of adopt time, will different from ty be our review of At de novo. the same we are district court decisions because in the dis aware that the Tax Court deserves some judge trict court the trial essentially significant expertise has deference for its unreviewable discretion to determine allegations which what barebones are essential to appealed final decisions can supply deficiency immediate notice-in tax cases. See Yet, ly. Vukasovich, we believe that the more liberal Inc. broadly (9th Cir.1986) rule we have chosen (emphasizing is con F.2d by errors committed specific of the is ments context in this though review

that, even Commissioner; (7) clear and concise Tax the to defer should courts novo, circuit de allega- the on which of facts exper- statements uniformity and when Court - based; (8) an attached are Applying error tions significant). concerns tise (9) a deficiency; and Tax notice copy the of the find principles, both mere list is a reason- This is a relief.8 rule for prayer indication Court’s components scope of of the the hortatory enumeration interpreting test for able it rules the court's and petition; well-pleaded original redetermination peti- practice of the "[fjailure Tax Court prior warn specifically with is consistent requirements applicable satisfy to procedure. tion and case.” of the for dismissal Tax ground ’ many of importantly, 34(a). More R.Ct. Rules Tax Court Consistency a. emphasized items, including those these Tax the InverWorld, relying long viewed here, been have Tax the 31(a),7 R. Tax Ct. see pleading, notice use the Tax Court’s to' invoke amake must Tax Court the argues that the hear case. authority to J. Marvin pe- a of whether determination case-by-case Stephen Junghans C. M. Garbis, & Paula of an indications sufficient contains tition ¶ 5.04, Litigation Struntz, Tax Federal deficiency determination a to contest intent (“This information (1985) [listed rules any general formulate may not and 34(b)(3)] essential through 34(b)(1) Rule in all to be elements specific require or the of whether determination the only the sees But InverWorld petitions. petition- the hear The bottle. of the empty half court, statutory a it is Because case. er’s more and extensive other rules also contain narrowly its construe must the petition. for a valid requirements specific case, and it will a authority to hear contain, a 34(b)mandates Rule rea- equitable enlarge its (1) petitioner’s things: among other fails to assert petitioner if the sons address, and business, mailing place hearing before a basis adequate mail- number; (2) the date identification of its certain court.”). By mandating and the IRS deficiency notice ing of the juris- tomet invoke rules be basic most issued; (3) the amount from office middle a steers diction, (4) amount alleged; inquiry that hoc ad course between for which year(s) contested; (5) the rigid adherence and (6) state- endorses alleged; concise deficiency was and, made; if from different nation plead- purpose "The 31(a) states: 7. Rule determination, approxi- fair Commissioner’s the Court parties and give ings controversy. controversy taxes and mate amount the matters notice of each and positions." (4) and concise statements respective Clear for their basis alleges to petitioner every error which 34(b) states: 8. Rule the Commissioner have committed liability action deficiency or a petition in liabili- or the determination ... contain shall ty.... than other petitioner case of (1) In the statements (5) lettered concise Clear legal petitioner’s name corporation, allega- petitioner bases facts on which petition- case of residence: er, error, .... tions of or place of business principle its name sought by the setting relief prayer forth A cases, and, in all agency: office principal petitioner. mailing and identifica- address petitioner’s address, mailing tele- signature, (7) The number.... tion peti- petitioner or each of each phone number deficiency or the notice (2) date of The _ counsel, tioner’s showing allegations proper liability, or other lia- deficiency or (8) copy of notice the A Court, City and the jurisdiction - be, may shall which bility, the case as Revenue of the Internal the office State petition, with to the appended notice. the which issued Service any state- much so be included there shall liability, deficiency or the amount The as is material notice accompanying the ment be, Com- the determined the case assignments of by the issues raised tax, year or missioner, the the the nature error.... the determi- for which periods other years or requirements emphasized precise listed in the rules. Court the to all the factors that entirely only is not consis- a course upon Such petition relies here: “The does not the Tax Court’s rules but seems tent with indicate the amounts of the deficiencies eminently reasonable as well. against subsidiary], determined nor [the Moreover, the agree do not with amounts of the deficiencies we Inver- subsid- [the that the Tax ob assertion iary] contesting, World’s nor years dispute in loggerheads is at jective indication test subsidiary].” as to Id. at 149. Simi- [the principles of notice its announced with larly, Commissioner, in O’Neil v. 66 T.C. pleading. The Tax Court has forced (1976), the Tax Court found that'it did form, petitioners to follow technical not have year over one of a legal theory, pro plead any particular multiyear dispute largely because there allegations support vide detailed factual no alleged was mention of the deficiencies in its redetermination claim order to invoke year (even for that in petition though merely required jurisdiction. It has that the notice of year for that easily accessible information—the amount attached). at See id. 107. money Commissioner thinks owes, taxpayer taxpayer much the how attempting In to undermine the test an- owes, period thinks she and for what here, nounced —be InverWorld relies on lan- in petition. included somewhere These guage from Tool v.Co. Commission- Efco straightforward requirements seem mini er, (1983), 81 T.C. 976 to the effect that mally necessary dispute to frame the be long will be found as as there is Commissioner, and the tween comply” appli- “reasonable effort to with i.e., provide notice of what is at issue. cable rules. Id. at 982. But the only court Wright Miller, supra, & Cf. noting made statement that all after (modern pleading notice contem still necessary information petition plates will refer to the gave adequate and that it notice. See id. sum, upon). In see no occurrences sued we Here, the Tax Court has decided that there objective tension between the Tax Court’s adequate objective was no notice—no indi- concept rule and the essential indication cation of intent to contest—because of pleading. notice of certain absence basic facts in the petition. Obviously, that determination is Consistency b. with Tax Prece- not inconsistent with the Tool court’s dent Efco willingness finding jurisdic- to be flexible alleges further that the test tion after a certain of notice is threshold articulated the Tax here is invalid reached. prior it is inconsistent with because Although agree precedent. Similarly, the im- InverWorld overstates prior lay specif- Tax Court cases out the port language in Scott v. Commission- here, test ic indication articulated er, (1943), proclaiming T.C. 726 all of the cases cited to us are consistent engage Tax Court would a “fair con- ruling in this case. petition.” struction of the whole Id. at 729. Thus, newly the Tax Court’s announced case, In that all facts merely appropriate amounts to an standard petition. dispute centered around extrapolation prior from For exam- cases. places statements made in other whether Normac, ple, in Inc. v. imply pray- were sufficient to (1988), granted T.C. (a type er for a certain of relief determina- part to dismiss a con- motion overpayment tion that there had been an testing alleged against deficiencies a sub- deficiency). not.just thát there was no sidiary grounds the familiar Thus, language the cited shows original petition any-objec- did not contain parts at all the Tax Court will look indication of an intent to tive equitable; it does petition in an effort to be against subsidiary. determination made doing, imply at 147-50. In so the Tax not that central facts need See id. pre- general in to statement that it contested “all in- petition in the order somewhere instead, tax”; jurisdiction.9 must serve come it demonstrate an independent challenge type intent to each objective rule indication The Tax Court’s liability. assuredly tax InverWorld did prior rules and cases. in its is accord with original petition. do All its the did not include petition InverWorld’s Since objective sug- indications in the document in- allegations corporate as to specific to gest said are that InverWorld intended contest that the come tax jurisdiction, i.e., to necessary deficiency, confer withholding the minima one to correctly declined entertain Inver- deficiency alleged in the tax First Notice.10 claim. corporate tax World’s Only withholding the amounts tax mentioned, deficiency only the First Totality Approach 2. The petition, and the Notice was attached undertake the were we to Even alleged petition specifically that the Com- petition of the whole open-ended review determining missioner erred that Inver- seeks, still we would be that InverWorld withholding file had to tax re- World agree to with the Court that inclined circumstances, turns.11 Under the we have objective indication simply is “there difficulty finding that there was no little support to conclusion” whatsoever [the] objective of an intent to indication contest to intended that InverWorld tax corporate income deficiencies as- tax deficiencies. The corporate income in the Second serted Notice InverWorld’s argument on this thrust of InverWorld’s original petition. of the umbrella term score is that the use provided petition “income tax” in its that it to con wished indication III. Conclusion liability assessed because test both might sympathize with Inver- While we to responsibility withhold plight—the heavy penalty World’s assessed tax for others and the due in income money formulating origi- its inadvertence corporate in for its own liability assessed petition—the nal separate quite These two come taxes. petition and the was circumscribed however, tax, with different statu types of reasonably can construed claims it to tory principles governing sources and By any reading, have noticed. Inver- Liquidating Co. v. Commis law. S-K See original petition did not evince an (1975). It World’s

sioner, fol 64 T.C. rely challenge corporate on a intent income to lows that InverWorld out, points "receipt” belonging point to a does to one recent case of income InverWorld 9. challenge predicates indicia an intent to nonresident alien withholding one where presence liability 26 U.S.C. were found without tax 1441(a). emphasizes also articulated this case. Trus InverWorld the criteria Commissioner, (CCH) accompanying the Notice used kowsky v. 55 T.C.M. Statement First case, however, (1988). is a the word “income tax.” But the use of that memorandum That (the general "special judge" opinion trial which has no term in the Statement table that computed) precedential how was can- effect. See Nico showed (1977) ("[W]e withholding consider neither not override the clear references T.C. throughout Opinions beginning rulings that notice. nor Memorandum revenue controlling precedent.”). this Court to emphasizes 11.Finally, InverWorld petition alleges in its answer to its “ad- also First Notice Commissioner InverWorld 10. allegations petition that re- "hybrid" mitted” the in the that referred to both liability. withholding generally to "income tax" But taxes and ferred thus that income merely responded the Commissioner "admits” to document reference invoked portion unpersuaded. that set the amounts types of We are over both tax. liability. withholding the Tax Court First No- of found, tax As relies on the fact . reading alleged that "ad- had "received" in- the most reasonable tice come, that InverWorld simply withholding predicated mission” is that the Commissioner tax and that funds, agreeing set receipt paying that the amounts out but on income But, causing paid. were correct. it to be Commissioner Accordingly, tax deficiencies. cuits split decision they whether juris- have Court is diction to hear Tax Court orders which dispose more, of one all, but not Affirmed. claims, and camp neither clearly has the argument. better of the MIKVA, Judge, concurring part Chief concurring judgment: Finally, this case is an especially poor merits, judgment deciding I concur in the vehicle for jurisdictional issue. but I do riot believe it was Because both want us to decide the merits, complex the court to take on the on the issue of we do not have the jurisdiction in benefit of an presentation order to reach the- merits in adversarial jurisdictional ago problem, this As we stated terms supple- two and the case. Services, mental Ferry addressing Cross-Sound briefs Inc. v. the' issue are not “C., illuminating. I. C. ‘when the merits of a Secretary case are Navy Avrech, clearly against 676, 678, party seeking 418 U.S. invoke jurisdiction, jurisdictional court’s L.Ed.2d 1033 (per curiam) question especially (skipping directly difficult and far- to the merits and reaching, inadequacies “leavpng] and the in the rec a future casé the resolution of jurisdictional briefing poor ord or make the case a vehic issue” because “even the diligent most deciding jurisdictional question, le for and zealous advocate could find his dampened rule on the merits without reach ardor somewhat argu- ing ing’ jurisdictional question.” jurisdictional 934 F.2d issue where the decision (D.C.Cir.1991), foreordained.”) on the merits is quoting Adams v. ... Vance, (D.C.Cir. 570 F.2d 954 n. 7 Consequently, I wholly while concur with 1978). majority’s analysis merits, I

This case has all the make attributes that bypass jurisdictional question pretermission jurisdictional ap- issue and “leave those issues another day.” all, propriate. First of InverWorld’s claim (Stewart, J., Id. 94 S.Ct. at 3040 holding that the Tax Court erred in concurring). did not

corporate tax obviously deficiencies is so

groundless that our decision on the merits virtually foregone conclusion. Sec-

ond, majority opinion demonstrates, as the jurisdictional question particularly sibling intricate and unsettled. cir- Our

Case Details

Case Name: Inverworld, Ltd. v. Commissioner of Internal Revenue

Court Name: Court of Appeals for the D.C. Circuit

Date Published: Nov 24, 1992

Citation: 979 F.2d 868

Docket Number: 92-1058

Court Abbreviation: D.C. Cir.