This is an appeal from a decision of the United States Tax Court permitting the Internal Revenue Service (“IRS”) to levy the property of Petitioner-Appellant Alfred Martin. For the reasons discussed below, we AFFIRM the judgment of the tax court. We hold that the filing of a petition for redetermination suspends the running of the statute of limitations for the IRS to assess a taxpayer’s income tax, even when the petition is not authorized by the taxpayer and includes only the notice
BACKGROUND 1
I. The Manhattan Group Partnerships
Before 1980, Marlin and his then-wife Amilu became limited partners in Winchester Oil, one of a group of twenty tax shelters known as the Manhattan Group Partnerships. The IRS disallowed the losses claimed by the limited partners of these partnerships.
See Krause v. Comm’r,
With approximately 2,000 related cases involving alleged tax deficiencies of $2 billion at stake, representatives of the partnerships and the IRS litigated a test case — known as the Elektra/Hemisphere tax litigation — in the tax court.
See Krause,
While the test case was pending, the general partners of the Manhattan Group Partnerships hired a law firm to file petitions with the tax court on behalf of any of the limited partners interested in redetermining their tax liability. One of the lawyers who handled these cases was Jeffrey Berg. 2
II. The Notices of Deficiency and Petitions
Before they divorced in 1981, Martin and Amilu filed a joint federal income tax return for 1980. The IRS conducted an examination of this return. During the examination, Martin signed a form extending the time during which the IRS could assess his 1980 taxes. The form stated that if the IRS were to mail a notice of deficiency to Martin, the time for the IRS to assess his 1980 taxes would not end until sixty days after any period during which making an assessment would be otherwise prohibited (i.e., as discussed below, if Martin were to file a petition in response to the notice, then the time for the IRS to assess the tax would end sixty days after the tax court’s resolution of the resulting ease).
Before completing the 1980 examination, the IRS mailed a notice of deficiency for 1981 and 1982 to Martin in May 1986. Martin received the notice of deficiency and wrote to the law firm, attaching a copy of the 1981/1982 notice of deficiency. In July 1986, the law firm sent a letter to Martin and Amilu informing them that a petition had been filed on their behalf. 3 The petition, which was given docket number 32146-86, sought a redetermination of Martin’s 1981 and 1982 income tax deficiencies.
In June 1988, Steven Covalt — a certified public accountant (“CPA”) who had prepared the 1980 return for Martin and Ami-lu and whom Martin had authorized as his representative before the IRS — wrote a letter to the law firm stating that the IRS had sent a Notice of Deficiency for 1980 to Martin and Amilu. Covalt also wrote a letter to Arthur Robb, a CPA whom Martin had retained as his accountant when he moved to Virginia, in which Covalt enclosed a copy of the 1980 Notice of Deficiency to ensure that Robb knew that the IRS had sent it to Martin.
In August 1988, attorney Berg filed a petition on behalf of both Martin and Ami-lu seeking a redetermination of their 1980 tax liability. Berg attached to the petition a copy of the notice of deficiency that the IRS had sent to Amilu, but not a copy of the notice of deficiency that the IRS had sent to Martin. The petition was given docket number 22961-88. In September 1988, the law firm sent a letter to Robb with copies of the two petitions filed on Martin’s behalf. The law firm did not send a copy of the letter to Martin.
In May 1996, Berg wrote to Martin and Amilu asking for instructions on how to proceed with settlement in the “Elek-tra/Hemisphere Tax Court Litigation, Docket No. 22961-88.” Docket number 22961-88 involved the 1980 petition. In his response to the letter, Martin referred to the same docket number, stated that he was prepared to pay his half of the income tax liability, and said that Amilu was responsible for the remaining half of the tax liability.
In August 1996, Berg’s law firm partner wrote to Martin and Amilu, again asking for joint instructions on how to proceed in the tax court case with docket number 22961-88. In his response, Martin also referenced docket number 22961-88, and enclosed a check for $50,000 toward a good faith settlement. The law firm forwarded Martin’s check to the IRS as payment against potential tax liability for 1980. However, in a subsequent letter to the law firm about the same $50,000 payment, Martin used docket number 32146-86, which was the docket number related to his 1981/1982 petition. Nevertheless, Martin later sent or received nine other letters that referred to docket number 22961-88.
In 1999, Martin filed a motion in tax court seeking to dismiss the proceeding resulting from the 1980 petition, contending that the tax court lacked jurisdiction over him because he had not filed or ratified the petition. The tax court concluded that Martin did not file, authorize, or ratify the filing of the 1980 petition, and granted Martin’s request to be dismissed from the case arising from the 1980 petition.
See Martin v. Comm’r,
III. The Proceedings Below
Although the tax court dismissed Martin from the case challenging the amount of Martin and Amilu’s 1980 tax liability, that amount remained outstanding, and the IRS began the process of collecting it. In November 2000, the IRS assessed income tax of $56,771 and interest of approximate
One year later, in November 2001, the IRS issued a final notice to Martin, alerting him of the IRS’s intent to levy. Martin timely requested a pre-levy hearing. After the hearing, the IRS’s appeals office concluded that the IRS had met all legal and procedural requirements for issuing a notice of intent to levy. Thus, the appeals office concluded that the statute of limitations had not expired prior to the IRS’s assessment of Martin’s 1980 income tax liability.
In August 2002, Martin timely appealed the determination of the IRS’s appeals office to the tax court. Martin argued that the 1980 petition was insufficient to suspend the running of the statute of limitations because Martin did not authorize or ratify the filing of the petition, and that the petition was defective because it did not attach a copy of the notice of deficiency that had been sent to Martin at his Virginia address.
The tax court ruled in favor of the IRS, concluding that although Martin did not authorize the 1980 petition and Martin’s copy of the notice of deficiency was not attached, the petition placed a “proceeding in respect of the deficiency” on the tax court’s docket and therefore suspended the running of the statute of limitations for assessment. The tax court denied Martin’s motion for reconsideration and motion to vacate. This appeal followed.
DISCUSSION
The tax court had jurisdiction over this dispute pursuant to 26 U.S.C. § 6330(d). We have jurisdiction over Martin’s appeal from the tax court’s decision. See 26 U.S.C. § 7482(a); Fed.R.App. P. 13(a). We review the tax court’s factual findings for clear error and its rulings of law de
novo. See Anderson v. Comm’r,
I. The Impact of Filing an Unauthorized Petition
As discussed below, we conclude that the statute of limitations for the IRS to assess Martin’s 1980 income tax was suspended when Berg filed a petition for a redetermination of Martin’s 1980 tax liability, even though Martin did not authorize Berg to file such a petition. Thus, the IRS’s assessment of tax against Martin was timely, and the IRS therefore may levy Martin’s property to collect the assessed tax.
A. Legal Framework
Title 26, United States Code § 6501 generally requires that the IRS assess an income tax deficiency within three years after a taxpayer files a return. See 26 U.S.C. § 6501(a). Before assessing an income tax deficiency, the IRS must first issue a notice of deficiency and allow a taxpayer ninety days to file a tax court petition. See id. § 6212(a); id. § 6213(a). After such a petition has been filed with the tax court, the IRS may not assess income tax against the taxpayer until the tax court’s decision has become final. See id. § 6213(a).
The IRS’s mailing of a notice of deficiency to a taxpayer suspends the running of the statute of limitations for assessment “for the period during which the Secretary is prohibited from making the assessment ...
(and in any event, if a proceeding in respect of the deficiency is placed on the docket of the Tax Court, until the decision of the Tax Court becomes
final),
and for 60 days thereafter.” Id.
§ 6503(a)(1) (emphasis added). Thus, the plain text of § 6503(a)(1) provides that placing a proceeding in respect of a deficiency on the
Section 6213 also buttresses this reading of § 6503. The IRS is barred by the plain text of § 6213 from assessing a deficiency after a petition “has been filed with the Tax Court.” Id. § 6213(a). If the statute of limitations were to continue to run after the filing of a petition with the tax court that resulted in the placement of a proceeding on the court’s docket, in some instances the IRS would be forced to stand idly by during the course of litigation while the statute of limitations for assessment expired. There is no authority indicating that Congress intended such an extreme result.
The legislative history of § 6503(a)(1) sheds further light on the meaning of the circumstances in which the running of the statute of limitations may be suspended. The predecessor to § 6503(a)(1), § 277 of the Internal Revenue Code of 1939, was first enacted as § 277 of the Revenue Act of 1928, ch. 852, 45 Stat. 791, 857. The legislative history of § 277 of the Revenue Act of 1928 addresses the impact that a defective petition may have on the limitations period:
[U]nder the provisions of the bill, the running of the limitation period on assessments is suspended while an appeal is pending before the Board [of Tax Appeals, the predecessor to the tax court]. Subsequently the Board may dismiss the appeal on the ground that the petition was not filed within the 60-day period or, for example, because the paper filed within the period was not sufficient to constitute a petition. The decision dismissing the appeal may not be made until months after the proceeding was begun and there is some question whether in such cases the statute of limitations on assessment is actually suspended during the pendency of the proceeding. It is specifically provided in section 277 that the limitations period shall be suspended, if any proceeding is placed on the docket of the Board, until the decision of the Board in respect thereof becomes final and for 60 days thereafter.
H.R. Rep. 2, 70th Cong., 1st Sess. (1927), 1939-1 C.B. (Part 2) 384, 399-400; see also S. Rep. 960, 70th Cong., 1st Sess. (1928), 1939-1 C.B. (Part 2) 409, 431 (same).
While we have not yet addressed the issue, a number of courts have held that the filing of a tax court petition suspends the running of the statute of limitations for assessment — even when the petition is defective and is subsequently dismissed for lack of jurisdiction. In
American Equitable Assurance Co. v. Helvering,
Even though the Board dismissed this proceeding ... for want of jurisdiction ..., the placing of the proceeding upon its docket gave it whatever right to act is involved in determining whether or not the petition was sufficient to give it jurisdiction to decide the matter on the merits. At any rate, a proceeding had been commenced which required the Board of Tax Appeals to make a decision though not necessarily on the merits. Because the effect of the passage of time would be the same whether the Board made its decision on the merits or on some other ground, if the period stated in the statute of limitations meantime expired, it is reasonable to believe that Congress did not intend to have the time a proceeding was pending before the Board counted any more when the decision was a dismissal for want of jurisdiction than when it was not.
Id.
The Ninth Circuit recently reaffirmed the reasoning of
American Equitable Assurance Co. See O’Neill v. United States,
We conclude that [the tax matters partner’s] petition, although later dismissed as defective, served to suspend the limitation period because there was an existing unresolved matter before the Tax Court. Therefore, the Commissioner could not have brought an assessment until the decision of the Tax Court was final.... Once the Tax Court decision was final, whether on jurisdictional grounds or on the merits, the limitation period began running again. Because the Commissioner assessed the tax within the applicable limitation period, the assessment was not time-barred.
Id. at 806.
In
United States v. Shahadi,
the very language of § 277 refutes the argument. For the clause suspending the statute during the period the Commissioner is barred from action is immediately followed by the parenthetical clause “(and in any event, etc.).” Taxpayer’s reading of the statute is persuasive only if the parenthentical [sic] clause is regarded as a nullity.
Id. at 58. After analyzing the legislative history of § 277 of the Internal Revenue Code of 1939, the Third Circuit concluded that its decision was supported by other cases holding that the statute of limitations is tolled “when matters are being litigated in the Tax Court under any circumstances.” Id. at 59 (citing cases).
Finally, in
Eversole v. Commissioner,
B. Application
In this case, Martin filed his 1980 federal income tax return on April 15, 1981. On December 6, 1983, before the expiration of the three-year period for assessment authorized by 26 U.S.C. § 6503, Martin signed an IRS form extending the time to assess tax. This extension was to last until a short time after one of a number of different events occurred; one such event was the IRS mailing a notice of deficiency. On June 7, 1988, the IRS mailed a notice of deficiency to Martin at his last known address. Berg timely filed a petition on Martin’s behalf with the tax court on September 6, 1988. This petition placed on the docket of the tax court a proceeding in respect of the deficiency within the meaning of 26 U.S.C. § 6503.
The tax court dismissed the proceeding for lack of jurisdiction on June 27, 2000. This dismissal order became final on September 25, 2000. Because 26 U.S.C. § 6503 states that placing the proceeding on the docket of the tax court suspended the limitations period until the decision of the tax court became final, and for sixty days thereafter, the statute of limitations for assessment was tolled through November 24, 2000 — sixty days after September 25, 2000. The IRS assessed Martin’s 1980 federal income tax liability on November 20, 2000 — four days before the expiration of the statute of limitations. Thus, the
American Equitable Assurance Co., O’Neill, Shahadi,
and
Eversole
make clear that the fact that the 1980 petition was subsequently dismissed for lack of jurisdiction has no impact on the tolling of the statute of limitations.
See Am. Equitable Assurance Co.,
Martin’s attempt to distinguish
Ever-sole
— and, by extension,
American Equitable Assurance Co., O’Neill,
and Shahadi— is without merit. Martin notes that in
Eversole
the improper party was the decedent taxpayer’s widow and the former administrator of his estate. Martin argues that in the case at bar, the improper party was an “interloper.” Martin ignores the fact that Berg was Martin’s counsel in a case involving his 1981 and 1982 deficiencies, and thus was hardly an interloper.
8
More importantly, Martin ignores the fact that the reasoning of
Eversole
— as well as the reasoning of
American Equitable Assurance Co., O’Neill,
and
Shahadi
— does not suggest that the case can be distinguished on the basis of the relationship of the person who puts the dispute on the tax court’s docket to the subject of the proceeding.
See, e.g., Eversole,
Martin’s reliance on
Kirch v. United States,
There was no reason that the IRS should have suspected that something was amiss with the filing that Berg made on Martin’s behalf and refrained from waiting for the tax court proceedings to conclude before attempting to assess Martin’s tax liability. Tax court rules permit petitions to be signed by either a taxpayer or the taxpayer’s attorney.
See
Tax Court Rule
Moreover, two years before filing the 1980 petition, Berg had filed an authorized petition on Martin’s behalf for tax years 1981 and 1982. After filing the 1980 petition, Berg sent a $50,000 payment to the IRS for application to that liability. Berg and his law firm had filed similar petitions for many other taxpayers. 9 Thus, it would have been reasonable for the IRS to presume that the 1980 petition was valid.
Martin’s tax liability for 1980 has grown from approximately $50,000 to over $500,000 as a result of interest and penalties. 10 Martin argues that for seventeen years he had no reason “to think that anything was amiss or still pending with respect to his 1980 tax liability ... [and that] a staggering amount of interest continued to accrue against him since 1981, through no fault of his own.”
However, the increase in Martin’s liability is solely the fault of Martin and his agents. Both of the accountants on whom Martin relied — one of whom prepared Martin’s 1980 return and was authorized as Martin’s representative before the IRS — received a copy of the 1980 notice of deficiency after it was mailed in 1988. Thus, Martin should have learned about the deficiency in 1988, and his contention that he had no reason for seventeen years to think that anything was amiss is without merit. Moreover, Martin sent a $50,000 payment to the law firm to forward to the IRS for application to his 1980 tax liability. Martin noted in the letter accompanying the payment that it was only a partial payment.
See Martin v. Comm’r,
11. The Impact of Filing a Petition Omitting the Notice of Deficiency Mailed to the Taxpayer
Martin argues that because Berg attached to the 1980 petition only the notice of deficiency that the IRS sent to Amilu, the petition was not filed with respect to Martin’s share of the joint deficiency. As a result, Martin argues that the petition failed to suspend the running of the statute of limitations. 12
Martin’s argument fails for a number of reasons. First, Martin’s argument is erroneous to the extent that it conflates conferring jurisdiction with the placing of a petition on the docket of the tax court.
American Equitable Assurance Co., O’Neill, Shahadi,
and
Eversole
make clear that only the latter is necessary to suspend the running of the statute of limitations for assessment.
See American Equitable Assurance Co.,
Second, Berg’s failure to attach the notice of deficiency mailed to Martin along with the notice of deficiency mailed to Amilu did not deprive the tax court
of
jurisdiction over Martin or result in the filing of a case that was not “in respect of’ Martin’s deficiency. In order for the tax court to exercise jurisdiction over a dispute involving a particular deficiency, the IRS must issue a valid notice of deficiency, and a timely petition must be filed on the taxpayer’s behalf.
Frieling v. Comm’r,
Martin argues that the joint 1980 tax return that he filed with Amilu gave rise to two separate deficiencies — one for himself, and one for Amilu — and suggests that a separate notice of deficiency must be attached for each taxpayer involved in a case addressing a deficiency in a joint return. This argument is unpersuasive. In the
Thus, Berg’s failure to attach a copy of the notice of deficiency that the IRS had mailed to Martin to the petition that Berg filed on Martin’s behalf did not deprive the tax court of jurisdiction over the proceeding resulting from the petition or mark the proceeding as one that was not “in respect of’ Martin’s 1980 deficiency. However, even if the failure to attach the notice of deficiency to the petition had rendered the petition defective and deprived the tax court of jurisdiction over the proceeding resulting from the petition, that result would not have impacted the tolling of the statute of limitations for assessment, for merely placing a proceeding on the docket is sufficient to suspend the running of the statute of limitations. Accordingly, the IRS’s assessment was not barred by the statute of limitations, and the IRS’s attempt to levy Martin’s property was therefore proper.
CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the tax court.
Notes
. The facts in this case are not in dispute, as the parties submitted the case to the tax court fully stipulated.
. In this opinion, we refer to the law firm hired by the general partners of the Manhattan Group Partnerships, and a successor firm that handled the same work, as "the law firm.”
.Amilu was subsequently dismissed from the case for lack of jurisdiction.
.
American Equitable Assurance Co.
was decided under § 277 of the Revenue Act of 1928.
See
. If the IRS believes that the collection of a tax deficiency is in jeopardy due to delay, the IRS may assess and collect the tax immedi
. A widow who had served as the administrator of her husband’s estate signed the petition in her individual capacity, rather than in her capacity as administrator.
See Eversole,
. Like
Shahadi, see
. We do not hold that Berg’s authority to file the 1981/1982 petition also provided him with authority to file the 1980 petition. Rather, we note that with respect to the 1980 petition, Berg fell into the middle ground between being authorized to file the petition and being a mere '‘interloper.”
. The law firm represented more than 4,000 limited partners and filed more than 14,000 petitions on those limited partners’ behalf.
. Martin’s 1980 federal income tax underpayment totaled $56,771. As of November 2001, when the IRS notified Martin of its intent to levy, interest and penalties brought the amount that Martin owes to $511,650.68.
. Martin’s argument that he thought the $50,000 would be applied to his 1981 and 1982 tax liability is without merit. The Fourth Circuit rejected Martin's argument in an appeal from an earlier tax court decision,
see Martin,
. The tax court rejected a similar argument to the one that Martin now advances in a case involving Martin’s request for litigation costs.
See Rothhammer v. Comm’r,
. Martin failed to include a copy of the 1980 petition in the record. Accordingly, we draw our knowledge of the contents of that petition from the tax court's description of the petition in Rothhammer.
The tax court’s opinion in the case at bar buttresses our conclusion as to the contents of the 1980 petition. The tax court noted that the 1980 "petition clearly conformed to all three requirements” in
InverWorld, Ltd. v. Commissioner,