SCOTUS Reports

Tag: Jurisdiction

  • Donlan v. Commissioner, 164 T.C. No. 3 (2025): Electronic Signatures and Jurisdiction in Tax Court

    Donlan v. Commissioner, 164 T. C. No. 3 (U. S. Tax Court 2025)

    In a significant ruling on electronic signatures, the U. S. Tax Court upheld its jurisdiction over a case filed using its online petition generator. The court ruled that a taxpayer’s name in the signature block of an electronically filed petition constitutes a valid signature, rejecting the Commissioner’s motion to dismiss for lack of jurisdiction. This decision clarifies the validity of electronic filings in tax disputes and supports pro se litigants’ access to the court.

    Parties

    Robert Donlan, Jr. and Kegan Donlan (Petitioners) v. Commissioner of Internal Revenue (Respondent).

    Facts

    On July 22, 2024, the Commissioner mailed a Notice of Deficiency to Robert and Kegan Donlan. The Donlans timely filed a Petition with the U. S. Tax Court on October 21, 2024, using the Court’s online petition generator. This generator produces a petition without handwritten signatures, instead displaying a block with the typewritten names and contact information of the petitioners. On December 3, 2024, the Commissioner filed an Answer and a Motion to Dismiss for Lack of Jurisdiction, asserting that the petition was not properly signed.

    Procedural History

    The Commissioner filed a Motion to Dismiss for Lack of Jurisdiction, arguing that the absence of handwritten signatures on the electronically filed petition deprived the Court of jurisdiction. The Donlans did not respond to the Motion. The standard of review for jurisdictional issues is de novo.

    Issue(s)

    Whether a petition filed electronically through the Tax Court’s online petition generator, which lacks a handwritten signature but includes the petitioners’ names in the signature block, is properly signed under Tax Court Rule 23(a)(3), thereby conferring jurisdiction to the Court.

    Rule(s) of Law

    Tax Court Rule 23(a)(3) states: “A person’s name on a signature block on a paper that the person authorized to be filed electronically, and that is so filed, constitutes the person’s signature. ” The Court’s electronic filing instructions further clarify that the combination of the DAWSON username and password serves as the signature of the individual filing the document.

    Holding

    The U. S. Tax Court held that a petition filed using the Court’s online petition generator, which includes the petitioners’ names in the signature block, is properly signed under Tax Court Rule 23(a)(3). Consequently, the Court has jurisdiction over the Donlans’ Petition.

    Reasoning

    The Court’s reasoning focused on interpreting Tax Court Rule 23(a)(3) and its electronic filing instructions. The Court emphasized that the rule explicitly deems a person’s name in the signature block of an electronically filed document as a valid signature if the person authorized the filing. The Court also considered the practical implications of electronic filings, noting that the majority of taxpayers represent themselves and that the online petition generator was designed to facilitate access to the Court. The Court rejected the Commissioner’s argument that handwritten signatures are required, pointing out that other courts and the IRS also accept electronic signatures. The Court’s analysis highlighted the policy of promoting access to justice through electronic means and clarified that the lack of a handwritten signature does not invalidate an electronically filed petition.

    Disposition

    The Court denied the Commissioner’s Motion to Dismiss for Lack of Jurisdiction, affirming its jurisdiction over the Donlans’ Petition.

    Significance/Impact

    This case significantly impacts the practice of tax law by affirming the validity of electronic signatures in Tax Court petitions. It clarifies that the Court’s online petition generator meets the signature requirement, thereby facilitating pro se litigation and promoting access to justice. The decision aligns with broader trends toward electronic filing and may influence other courts to adopt similar interpretations of electronic signatures. It also underscores the importance of clear court rules and instructions in guiding litigants through the electronic filing process.

  • Belagio Fine Jewelry, Inc. v. Commissioner, 162 T.C. No. 11 (2024): Non-Jurisdictional Nature of Filing Deadlines in Tax Court

    Belagio Fine Jewelry, Inc. v. Commissioner, 162 T. C. No. 11 (U. S. Tax Court 2024)

    The U. S. Tax Court ruled that the 90-day filing deadline for petitions challenging employment tax determinations under I. R. C. § 7436 is not jurisdictional. Belagio Fine Jewelry, Inc. filed its petition one day late, prompting the Commissioner’s motion to dismiss for lack of jurisdiction. The court, applying the Supreme Court’s ‘clear statement’ rule, determined that the deadline is a non-jurisdictional claim-processing rule, potentially subject to equitable tolling. This decision clarifies the procedural nature of filing deadlines in tax disputes, affecting how such deadlines are treated in future cases.

    Parties

    Belagio Fine Jewelry, Inc. (Petitioner) v. Commissioner of Internal Revenue (Respondent). The case originated in the U. S. Tax Court, docketed as No. 35762-21.

    Facts

    Belagio Fine Jewelry, Inc. , did not file quarterly employment tax returns for the years 2016 and 2017. Following an audit, the Commissioner issued a notice of employment tax determination on August 24, 2021, asserting that Belagio had an employee during the audit periods and assessing deficiencies in employment taxes, additions to tax, and penalties. The notice specified that the last day to file a petition with the Tax Court was November 22, 2021. Belagio mailed its petition via FedEx Express Saver on November 18, 2021, but it arrived at the court on November 23, 2021, one day after the deadline.

    Procedural History

    The Commissioner filed a motion to dismiss for lack of jurisdiction on March 2, 2022, arguing that the 90-day period to file a petition under I. R. C. § 7436 is jurisdictional. Belagio objected, asserting that the deadline is a nonjurisdictional claim-processing rule subject to equitable tolling. The Tax Court, in its opinion filed on June 25, 2024, denied the Commissioner’s motion, holding that the 90-day filing deadline is not jurisdictional.

    Issue(s)

    Whether the 90-day deadline under I. R. C. § 7436(b)(2) for filing a petition for redetermination of employment status is a jurisdictional requirement or a nonjurisdictional claim-processing rule?

    Rule(s) of Law

    The Supreme Court has established that a statutory deadline is jurisdictional only if Congress ‘clearly states’ that it is so. The analysis involves examining the statute’s text, context, and historical treatment. Jurisdictional requirements typically speak in terms of the court’s power to hear a case, whereas claim-processing rules direct parties to take certain procedural steps without affecting the court’s authority.

    Holding

    The Tax Court held that the 90-day deadline for filing a petition for redetermination of employment status under I. R. C. § 7436(b)(2) is not jurisdictional. The court reasoned that the text of the statute does not reference the court’s jurisdiction, and the context and historical treatment of the statute do not support a jurisdictional interpretation.

    Reasoning

    The court’s reasoning was structured around the Supreme Court’s ‘clear statement’ rule for determining whether a statutory deadline is jurisdictional. First, the court analyzed the text of I. R. C. § 7436(b)(2), noting that it does not use the term ‘jurisdiction’ and focuses on the consequences to the taxpayer rather than the court’s power. The court emphasized that the use of the word ‘initiated’ in the statute indicates the commencement of a proceeding rather than a limitation on the court’s authority.

    Second, the court examined the statutory context, highlighting the separation of the jurisdictional grant in § 7436(a) from the filing deadline in § 7436(b)(2). The court found no clear tie between the two provisions, further supporting a nonjurisdictional reading. Additionally, the court noted the limited applicability of the 90-day deadline, which only applies when the Commissioner sends a notice via certified or registered mail, suggesting it is unusual for a jurisdictional requirement to have such exceptions.

    Third, the court reviewed the historical treatment of the statute, finding no Supreme Court precedent directly addressing the jurisdictional nature of the 90-day deadline. The court also dismissed prior Tax Court and circuit court opinions as ‘drive-by jurisdictional rulings’ lacking in-depth analysis. The court concluded that the prior-construction canon did not apply, as the statute had not been amended since the relevant judicial interpretations.

    The court’s analysis led to the conclusion that the 90-day deadline is a nonjurisdictional claim-processing rule. The court reserved judgment on whether the deadline could be subject to equitable tolling, indicating that this issue would be addressed in a future appropriate motion.

    Disposition

    The Tax Court denied the Commissioner’s motion to dismiss for lack of jurisdiction, holding that the 90-day deadline for filing a petition under I. R. C. § 7436(b)(2) is not jurisdictional.

    Significance/Impact

    This decision clarifies the procedural nature of filing deadlines in tax disputes, particularly those involving employment tax determinations. By holding that the 90-day deadline under I. R. C. § 7436(b)(2) is not jurisdictional, the court has opened the possibility for equitable tolling in such cases, potentially affecting how taxpayers and the IRS approach similar disputes in the future. The ruling aligns with the Supreme Court’s recent emphasis on limiting the use of the term ‘jurisdictional’ to requirements that genuinely affect a court’s adjudicatory authority. This decision may influence the treatment of similar deadlines in other areas of tax law and could prompt further litigation on the applicability of equitable tolling to nonjurisdictional deadlines in the Tax Court.

  • Dodson v. Commissioner, 162 T.C. No. 1 (2024): Timeliness of Tax Court Petition under I.R.C. § 6213(a)

    Dodson v. Commissioner, 162 T. C. No. 1 (U. S. Tax Ct. 2024)

    In Dodson v. Commissioner, the U. S. Tax Court ruled that a petition filed within the deadline specified in an initial notice of deficiency was timely, despite a subsequent corrected notice specifying an earlier deadline. The decision underscores the enforceability of the last sentence of I. R. C. § 6213(a), ensuring taxpayers can rely on the IRS’s specified petition filing date, even if later corrected. This ruling clarifies taxpayer rights and IRS obligations in deficiency proceedings.

    Parties

    Douglas Dodson and Rebecca Dodson, Petitioners, v. Commissioner of Internal Revenue, Respondent. Petitioners were the taxpayers challenging the notice of deficiency, while the Respondent was the Commissioner of Internal Revenue asserting the deficiency.

    Facts

    On October 7, 2021, the Commissioner mailed a notice of deficiency (first notice) to Douglas and Rebecca Dodson for their 2017 taxable year, specifying December 5, 2022, as the last day to file a petition. The following day, October 8, 2021, the Commissioner mailed a second notice of deficiency (second notice) purporting to correct the first notice, specifying January 6, 2022, as the new deadline. The Dodsons filed their petition on March 3, 2022, which was within the deadline specified in the first notice but after the deadline in the second notice and the 90-day period from the mailing of the first notice.

    Procedural History

    The Commissioner filed a Motion to Dismiss for Lack of Jurisdiction on June 29, 2023, arguing that the Dodsons’ petition was untimely under I. R. C. § 6213(a). The Dodsons contended that their petition was timely under the last sentence of § 6213(a), which allows a petition to be treated as timely if filed on or before the last date specified in the notice of deficiency. The Tax Court considered the issue of jurisdiction and the applicability of § 6213(a).

    Issue(s)

    Whether a petition filed within the deadline specified in an initial notice of deficiency is timely under the last sentence of I. R. C. § 6213(a), despite a subsequent corrected notice specifying an earlier deadline?

    Rule(s) of Law

    The last sentence of I. R. C. § 6213(a) states: “Any petition filed with the Tax Court on or before the last date specified for filing such petition by the Secretary in the notice of deficiency shall be treated as timely filed. ” Additionally, I. R. C. § 6212(d) allows the Secretary, with taxpayer consent, to rescind a notice of deficiency, but without such consent, the original notice remains valid for purposes of § 6213(a).

    Holding

    The Tax Court held that the Dodsons timely filed their petition pursuant to the last sentence of I. R. C. § 6213(a), and thus, the court had jurisdiction over the case. The petition was filed before the deadline specified in the first notice of deficiency, which was not rescinded and remained valid.

    Reasoning

    The court reasoned that the first notice of deficiency was valid and not rescinded, as there was no evidence of mutual consent between the Dodsons and the Commissioner to rescind it. The last sentence of § 6213(a) was enacted to allow taxpayers to rely on the IRS’s specified petition filing date, which in this case was December 5, 2022. The court rejected the Commissioner’s arguments based on Smith v. Commissioner and Rochelle v. Commissioner, as those cases dealt with notices lacking specified petition filing dates, unlike the first notice in this case. The court emphasized that the statutory text of § 6213(a) was clear and did not require consideration of prejudice or representation by counsel. The court’s interpretation aligned with the congressional intent to assist taxpayers in determining their filing deadlines and to allow reliance on the IRS’s computation of those deadlines.

    Disposition

    The Tax Court denied the Commissioner’s Motion to Dismiss for Lack of Jurisdiction, affirming that the Dodsons’ petition was timely filed under the last sentence of I. R. C. § 6213(a).

    Significance/Impact

    This decision reinforces the enforceability of the last sentence of I. R. C. § 6213(a), providing clarity and security for taxpayers in deficiency proceedings. It underscores that taxpayers can rely on the IRS’s specified petition filing date in a notice of deficiency, even if the IRS later attempts to correct that date. The ruling may impact how the IRS handles notices of deficiency and corrections thereof, ensuring that taxpayers are not disadvantaged by subsequent changes to filing deadlines. It also highlights the importance of clear statutory language in protecting taxpayer rights and maintaining the integrity of Tax Court jurisdiction.

  • Madiodio Sall v. Commissioner of Internal Revenue, 161 T.C. No. 13 (2023): Application of I.R.C. § 7451(b) to Extend Filing Deadlines

    Madiodio Sall v. Commissioner of Internal Revenue, 161 T. C. No. 13 (U. S. Tax Ct. 2023)

    In a landmark ruling, the U. S. Tax Court applied I. R. C. § 7451(b) for the first time, extending the deadline for filing a tax petition when the court was closed on the due date. The decision affirmed that if a filing location is inaccessible, the filing period is tolled, ensuring taxpayers’ rights to contest deficiencies even when court closures occur on filing deadlines.

    Parties

    Madiodio Sall, as Petitioner, filed a petition against the Commissioner of Internal Revenue, as Respondent, in the United States Tax Court. The case was designated as Docket No. 26815-22.

    Facts

    The Commissioner issued a notice of deficiency to Madiodio Sall and Ramatoulaye Fall for the tax years 2017 and 2018, dated August 25, 2022, and mailed on August 26, 2022. The 90th day after mailing fell on November 24, 2022, Thanksgiving Day, a federal holiday. The notice specified November 25, 2022, as the last day to file a petition with the U. S. Tax Court, which was a Friday. However, the Tax Court was administratively closed on that day. Madiodio Sall, residing in Colorado, mailed his petition on November 28, 2022, and it was received and filed by the Court on December 1, 2022. The Commissioner moved to dismiss the case for lack of jurisdiction, arguing that the petition was untimely filed.

    Procedural History

    The Commissioner issued a notice of deficiency, and Madiodio Sall filed a petition challenging the deficiency within the extended deadline as per I. R. C. § 7451(b). The Commissioner then moved to dismiss the case for lack of jurisdiction due to an allegedly untimely filing. The Tax Court, in its first application of I. R. C. § 7451(b), determined that the filing deadline was extended due to the inaccessibility of the court on November 25, 2022, and denied the Commissioner’s motion to dismiss.

    Issue(s)

    Whether I. R. C. § 7451(b) extends the deadline for filing a petition with the U. S. Tax Court when the court is closed on the due date, specifically when the closure is due to an administrative decision?

    Rule(s) of Law

    I. R. C. § 7451(b) provides that if a filing location is inaccessible or otherwise unavailable to the general public on the date a petition is due, the period for filing the petition is tolled for the number of days within the period of inaccessibility plus an additional 14 days. I. R. C. § 7503 extends the deadline to the next day that is not a Saturday, Sunday, or legal holiday if the deadline falls on such a day.

    Holding

    The U. S. Tax Court held that I. R. C. § 7451(b) applies to extend the deadline for filing a petition when the court is closed on the due date. Consequently, Madiodio Sall’s petition, filed within 14 days after the period of inaccessibility, was timely, and the Commissioner’s motion to dismiss for lack of jurisdiction was denied.

    Reasoning

    The court reasoned that I. R. C. § 7451(b) was designed to ensure that taxpayers are not disadvantaged by the inaccessibility of filing locations. The court noted that the closure of the Tax Court’s Washington, D. C. office on November 25, 2022, constituted a full-day closure, triggering the application of § 7451(b). The court rejected the Commissioner’s argument that the availability of the electronic filing system negated the inaccessibility of the physical office, emphasizing the statutory language’s focus on the filing location’s availability to the general public. The court calculated the extension by adding one day of inaccessibility to the 14-day tolling period, resulting in a new deadline of December 12, 2022. Since Sall’s petition was filed on December 1, 2022, it was deemed timely. The court also underscored its responsibility to determine jurisdiction independently of the parties’ agreements, citing precedent that the court’s jurisdiction is not subject to the parties’ concessions.

    Disposition

    The U. S. Tax Court denied the Commissioner’s motion to dismiss for lack of jurisdiction, finding Madiodio Sall’s petition to be timely filed under the extended deadline provided by I. R. C. § 7451(b).

    Significance/Impact

    This decision marks the first application of I. R. C. § 7451(b) by the U. S. Tax Court, clarifying its scope and effect. It establishes a precedent that administrative closures of the Tax Court extend the filing deadline, protecting taxpayers’ rights to contest deficiencies even when court closures coincide with filing deadlines. The ruling emphasizes the importance of physical access to filing locations and may influence future interpretations of statutory deadlines in other federal courts. The case also reinforces the principle that courts must independently determine jurisdiction, unaffected by the parties’ agreements or concessions.

  • Nutt v. Commissioner, 160 T.C. No. 10 (2023): Timeliness of Electronic Filing in Tax Court

    Nutt v. Commissioner, 160 T. C. No. 10 (U. S. Tax Ct. 2023)

    In Nutt v. Commissioner, the U. S. Tax Court ruled that electronic filings must be received by the court before the deadline in the court’s time zone. Roy and Bonnie Nutt filed their petition one minute past midnight Eastern Time, which was still the previous day in their Central Time Zone. The court dismissed their case for lack of jurisdiction, emphasizing the importance of adhering to the court’s time zone for filing deadlines. This ruling clarifies the jurisdictional limits on electronic filing times in tax disputes.

    Parties

    Roy A. Nutt and Bonnie W. Nutt, petitioners, filed their case against the Commissioner of Internal Revenue, respondent, in the United States Tax Court. They represented themselves (pro se) throughout the proceedings.

    Facts

    The Commissioner of Internal Revenue mailed a notice of deficiency to Roy and Bonnie Nutt on April 14, 2022, which was dated April 18, 2022, and stated that the last day to file a petition with the Tax Court was July 18, 2022. On June 7, 2022, the Commissioner sent another letter reducing the deficiency amount but reaffirming the July 18, 2022, deadline. The Nutts, residing in Alabama (Central Time Zone), electronically filed their petition via the Tax Court’s electronic case management system (DAWSON) at 12:05 a. m. Eastern Time on July 19, 2022, which was still 11:05 p. m. on July 18, 2022, in their time zone. The Commissioner moved to dismiss the case for lack of jurisdiction due to the untimely filing of the petition.

    Procedural History

    The Commissioner mailed the notice of deficiency to the Nutts on April 14, 2022, setting a deadline of July 18, 2022, for filing a petition. On July 19, 2022, the Nutts electronically filed their petition, which was received by the Tax Court at 12:05 a. m. Eastern Time. The Commissioner filed a Motion to Dismiss for Lack of Jurisdiction on September 1, 2022, arguing that the petition was untimely under I. R. C. § 6213(a). The Tax Court ordered the Nutts to file an objection, which they did not do. The court ultimately dismissed the case for lack of jurisdiction due to the untimely filing of the petition.

    Issue(s)

    Whether a petition filed electronically with the United States Tax Court is considered timely when it is filed after the deadline in the court’s time zone but before the deadline in the petitioner’s time zone?

    Rule(s) of Law

    Under I. R. C. § 6213(a), a petition must be filed within 90 days after the notice of deficiency is mailed, or by the date specified in the notice if later. The timely mailing rule under I. R. C. § 7502 does not apply to electronic filings. Rule 22(d) of the Tax Court Rules of Practice and Procedure states that a paper is considered timely filed if it is electronically filed at or before 11:59 p. m. , Eastern Time, on the last day of the applicable period for filing.

    Holding

    The Tax Court held that the Nutts’ petition was untimely because it was filed after the deadline in the court’s Eastern Time Zone, despite being filed before the deadline in the Nutts’ Central Time Zone. Therefore, the court lacked jurisdiction over the case and dismissed it.

    Reasoning

    The Tax Court’s reasoning focused on the statutory and regulatory framework governing the timeliness of petitions. The court emphasized that the timely mailing rule under I. R. C. § 7502 does not apply to electronic filings, and therefore, the petition must be received by the court before the deadline as specified in the court’s time zone. The court cited Rule 22(d), which explicitly states that electronic filings must be received by 11:59 p. m. Eastern Time to be considered timely. The court also drew parallels with Federal Rule of Civil Procedure 6(a) and other federal court decisions, such as Justice v. Town of Cicero, Ill. , and McCleskey v. CWG Plastering, LLC, which similarly held that electronic filings must adhere to the time zone of the court where the case is pending. The court rejected the notion that extending the filing deadline based on the petitioner’s time zone would be permissible, as it would effectively extend the number of days available for filing, contrary to established legal principles.

    Disposition

    The Tax Court dismissed the case for lack of jurisdiction due to the untimely filing of the petition.

    Significance/Impact

    Nutt v. Commissioner establishes a clear precedent for the timeliness of electronic filings in the United States Tax Court, emphasizing that such filings must adhere to the court’s Eastern Time Zone deadline. This ruling has significant implications for taxpayers who file electronically, as it underscores the need to be aware of and comply with the court’s time zone when filing petitions. The decision also aligns with broader federal court practices regarding electronic filing deadlines, ensuring consistency in the application of time-sensitive filing requirements across different jurisdictions. This case may influence future Tax Court rules and practices regarding electronic filing, potentially leading to further clarification or amendments to ensure clarity and fairness in the filing process.

  • Thomas Shands v. Commissioner of Internal Revenue, 160 T.C. No. 5 (2023): Jurisdiction in Whistleblower Award Claims under I.R.C. § 7623(b)

    Thomas Shands v. Commissioner of Internal Revenue, 160 T. C. No. 5 (2023)

    In Thomas Shands v. Commissioner of Internal Revenue, the U. S. Tax Court ruled it lacked jurisdiction to review a whistleblower’s claim for a nondiscretionary award under I. R. C. § 7623(b). The court determined that the creation of the IRS’s Offshore Voluntary Disclosure Initiative (OVDI) and taxpayer participation in it did not constitute an “administrative or judicial action” required for the court’s jurisdiction. This decision clarifies the scope of the Tax Court’s authority over whistleblower claims, emphasizing the necessity of IRS action based on the whistleblower’s information.

    Parties

    Thomas Shands (Petitioner) v. Commissioner of Internal Revenue (Respondent). Shands was the appellant at the Tax Court level, seeking review of the IRS Whistleblower Office’s denial of his claim for a whistleblower award.

    Facts

    Thomas Shands filed a whistleblower claim with the IRS Whistleblower Office (WBO) seeking a nondiscretionary award under I. R. C. § 7623(b) for his alleged contribution to the success of the 2011 Offshore Voluntary Disclosure Initiative (OVDI). Shands claimed his cooperation with federal agents in the arrest and subsequent guilty plea of Swiss banker Renzo Gadola spurred widespread participation in OVDI, leading to significant tax collections. The WBO denied Shands’s claim, asserting that the IRS did not proceed with an administrative or judicial action based on information Shands provided. Shands appealed the denial to the Tax Court.

    Procedural History

    Shands filed his whistleblower claim in 2012, and the WBO denied it in 2016. Shands appealed to the Tax Court in 2016. The Commissioner moved to dismiss for lack of jurisdiction, arguing that the IRS did not proceed with an action based on Shands’s information. The Tax Court granted the Commissioner’s motion to dismiss, finding it lacked jurisdiction under I. R. C. § 7623(b)(4) because no administrative or judicial action was taken by the IRS based on Shands’s information.

    Issue(s)

    Whether the creation of the IRS’s Offshore Voluntary Disclosure Initiative (OVDI) and taxpayer participation in OVDI constitute an “administrative or judicial action” under I. R. C. § 7623(b)(1), thereby conferring jurisdiction on the Tax Court to review the WBO’s denial of Shands’s whistleblower claim?

    Rule(s) of Law

    I. R. C. § 7623(b)(1) provides for nondiscretionary whistleblower awards when the IRS proceeds with an “administrative or judicial action” based on information provided by the whistleblower. Treasury Regulation § 301. 7623-2(a) defines “administrative action” as a civil or criminal proceeding that may result in collected proceeds and “judicial action” as a proceeding in any court that may result in collected proceeds. The Tax Court’s jurisdiction to review whistleblower award determinations is limited to cases where the IRS has proceeded with such an action.

    Holding

    The Tax Court held that it lacked jurisdiction to review the WBO’s denial of Shands’s whistleblower claim because the creation of OVDI and taxpayer participation in it did not constitute an “administrative or judicial action” under I. R. C. § 7623(b)(1) and Treasury Regulation § 301. 7623-2(a).

    Reasoning

    The court’s reasoning centered on the statutory and regulatory definitions of “administrative or judicial action. ” The court relied on the D. C. Circuit’s decision in Li v. Commissioner, which held that the Tax Court lacks jurisdiction over a whistleblower claim if the IRS has not proceeded with an administrative or judicial action based on the whistleblower’s information. The court found that the creation of OVDI did not constitute a “proceeding against any person” as required by the regulation, nor did taxpayer participation in OVDI constitute such an action. The court also rejected Shands’s argument that the regulations should not apply retroactively to his claim, citing the D. C. Circuit’s ruling in Bergerco Canada v. U. S. Treasury Department, which upheld the application of new regulatory criteria to pending applications. The court concluded that Shands failed to meet his burden of proving jurisdiction, and thus, the court could not review the WBO’s denial.

    Disposition

    The Tax Court granted the Commissioner’s motion to dismiss for lack of jurisdiction and dismissed Shands’s appeal.

    Significance/Impact

    This decision clarifies the jurisdictional limits of the Tax Court in reviewing whistleblower award claims under I. R. C. § 7623(b). It underscores that the creation of IRS programs like OVDI and taxpayer participation in such programs do not constitute the requisite “administrative or judicial action” for Tax Court jurisdiction. The ruling may deter future whistleblower claims based on the indirect effects of their information on IRS programs, focusing instead on direct enforcement actions. It also reinforces the deference given to Treasury Regulations in defining statutory terms, impacting how whistleblower claims are evaluated and processed by the IRS and the Tax Court.

  • Coggin v. Commissioner, 157 T.C. 12 (2021): Jurisdictional Limits on Tax Court in Innocent Spouse Relief Claims

    Coggin v. Commissioner, 157 T. C. No. 12 (2021)

    In Coggin v. Commissioner, the U. S. Tax Court ruled on its jurisdiction over innocent spouse relief claims when a District Court has jurisdiction over related refund claims. The Tax Court dismissed the case for tax years 2001-07 due to the District Court’s jurisdiction over those years but retained jurisdiction for 2008-09. The decision clarifies the jurisdictional boundaries between the Tax Court and District Courts in handling innocent spouse relief under I. R. C. sec. 6015.

    Parties

    Alice J. Coggin, the petitioner, filed a petition against the Commissioner of Internal Revenue, the respondent. In the related District Court action, Coggin was the plaintiff and the United States was the defendant, which also filed a counterclaim against Coggin.

    Facts

    Alice J. Coggin and her late husband, Phillip Ray Coggin, Sr. , filed joint tax returns for the years 2001-09. After her husband’s death, Coggin discovered these joint filings and subsequently filed individual returns for the same period, seeking refunds for 2001-07. The IRS disallowed her refund claims for 2003, 2004, and 2007. Coggin then filed a refund suit in the U. S. District Court for the Middle District of North Carolina for years 2001-07, while the United States filed a counterclaim against her for remaining balances due for 2002-09. Coggin sought innocent spouse relief under I. R. C. sec. 6015 for 2001-09 and filed a petition with the U. S. Tax Court after the IRS denied her request.

    Procedural History

    The District Court granted summary judgment to the United States, dismissing Coggin’s refund claims for 2001-07 but retained jurisdiction over the counterclaim. The case was stayed pending administrative review of Coggin’s innocent spouse relief request. Coggin filed a petition with the Tax Court for innocent spouse relief for 2001-09, which the Commissioner moved to dismiss for lack of jurisdiction due to the ongoing District Court case. The Tax Court granted the motion in part for years 2001-07 and denied it for 2008-09.

    Issue(s)

    Whether the Tax Court has jurisdiction to determine a taxpayer’s claim for innocent spouse relief under I. R. C. sec. 6015 when a District Court has jurisdiction over a related refund suit for some of the same tax years?

    Rule(s) of Law

    Section 6015(e)(3) of the Internal Revenue Code provides that if a suit for refund is filed in a District Court or the Court of Federal Claims, the Tax Court loses jurisdiction over the taxpayer’s action under section 6015 to the extent the District Court or the Court of Federal Claims acquires jurisdiction over the taxable years that are the subject of the refund suit.

    Holding

    The Tax Court held that it lacked jurisdiction over Coggin’s innocent spouse relief claims for tax years 2001-07 due to the District Court’s jurisdiction over those years in the refund suit. However, the Tax Court retained jurisdiction over Coggin’s claims for 2008-09 because the District Court did not have jurisdiction over those years due to non-payment of the full tax liability.

    Reasoning

    The Tax Court’s reasoning focused on the statutory language of I. R. C. sec. 6015(e)(3), which dictates that the Tax Court loses jurisdiction over years subject to a refund suit in another court. The court interpreted this to mean that the District Court’s jurisdiction over the refund claims for 2001-07 precluded the Tax Court from hearing the innocent spouse relief claims for those years. For 2008-09, the court noted that the District Court did not have refund jurisdiction because full payment was not made, thus allowing the Tax Court to retain jurisdiction. The court also considered principles of comity and the District Court’s anticipation that the Tax Court would proceed on the claims within its jurisdiction.

    Disposition

    The Tax Court granted the Commissioner’s motion to dismiss for lack of jurisdiction with respect to tax years 2001-07 and denied the motion with respect to tax years 2008-09.

    Significance/Impact

    The decision in Coggin v. Commissioner clarifies the jurisdictional interplay between the Tax Court and District Courts in cases involving innocent spouse relief under I. R. C. sec. 6015. It underscores the importance of understanding the sequence and scope of legal actions when pursuing tax relief, particularly when multiple courts may have jurisdiction over different aspects of the same tax liability. The ruling provides guidance on the jurisdictional limits of the Tax Court when a refund suit is pending in another court, which is significant for taxpayers seeking relief from joint and several tax liabilities.

  • Vera v. Commissioner, 157 T.C. No. 6 (2021): Jurisdiction Over Multiple Innocent Spouse Relief Determinations

    Vera v. Commissioner, 157 T. C. No. 6 (U. S. Tax Court 2021)

    In Vera v. Commissioner, the U. S. Tax Court ruled that it has jurisdiction to review a second final determination from the IRS denying innocent spouse relief, even if the first denial was upheld due to an untimely petition. This decision clarifies that the court’s jurisdiction is triggered by the issuance of a final determination on the merits, regardless of prior determinations or errors in the process. The ruling ensures taxpayers have a clear path to judicial review in innocent spouse cases, impacting how such relief requests are handled by the IRS.

    Parties

    Nilda E. Vera, the petitioner, sought innocent spouse relief from the Commissioner of Internal Revenue, the respondent, concerning tax liabilities for the years 2010 and 2013. Vera represented herself (pro se), while the Commissioner was represented by Miriam C. Dillard and A. Gary Begun.

    Facts

    Nilda E. Vera filed joint tax returns with her spouse for the years 2010 and 2013. In 2010, the Commissioner assessed a deficiency as a joint liability. For 2013, there was an underpayment of tax, which was also assessed as a joint liability. In early 2015, Vera requested innocent spouse relief for 2013, which the Commissioner denied in a final determination in March 2016. Vera’s petition against this denial was dismissed as untimely in docket No. 14550-16. In November 2016, Vera submitted another request for innocent spouse relief, this time for 2010, but also re-raised her 2013 claim. The Commissioner issued a second final determination in March 2019, denying relief for both 2010 and 2013 on the merits. Vera timely filed a petition challenging this determination, leading to the present case.

    Procedural History

    Vera’s initial request for innocent spouse relief for 2013 was denied by the Commissioner in March 2016. Vera filed a petition challenging this denial, but it was dismissed for lack of jurisdiction due to the petition being filed one day late. In November 2016, Vera submitted another request for innocent spouse relief, ostensibly for 2010, but included documents related to 2013. The Commissioner issued a second final determination in March 2019, denying relief for both 2010 and 2013. Vera timely filed a petition challenging this determination, and the Commissioner moved to dismiss for lack of jurisdiction as to 2013. The Tax Court reviewed the Commissioner’s motion and the validity of the second final determination.

    Issue(s)

    Whether the U. S. Tax Court has jurisdiction to review the Commissioner’s second final determination denying innocent spouse relief for 2013, following a prior denial and dismissal of Vera’s petition for that year due to untimeliness?

    Rule(s) of Law

    Under section 6015(e) of the Internal Revenue Code, taxpayers may petition the Tax Court to review the Commissioner’s final determination on innocent spouse relief. The court has jurisdiction to determine the appropriate relief available. The regulations under section 6015 generally limit claimants to a single qualified request per tax year, but exceptions exist, and the Commissioner may issue a second final determination under certain circumstances.

    Holding

    The U. S. Tax Court held that it has jurisdiction to review the Commissioner’s second final determination denying innocent spouse relief for both 2010 and 2013, as the determination was unambiguous in denying relief on the merits for both years.

    Reasoning

    The court reasoned that the Commissioner’s second final determination for 2013, despite the prior denial and dismissal of Vera’s petition, was a valid predicate for the court’s jurisdiction. The court relied on its caselaw, which emphasizes that jurisdiction is established by the issuance of a final determination on the merits, regardless of prior determinations or errors. The court cited cases like Barnes v. Commissioner, which distinguished between final determinations and letters denying reconsideration, and Comparini v. Commissioner, which allowed for successive petitions based on subsequent determinations. The court also noted that the Commissioner’s determination letter for 2013 was unambiguous in denying relief on the merits, and the court’s jurisdiction is not defeated by the Commissioner’s characterization of the inclusion of 2013 as an error. The court’s analysis focused on the face of the notice, consistent with its approach in deficiency, whistleblower, and collection cases.

    Disposition

    The court denied the Commissioner’s motion to dismiss for lack of jurisdiction as to 2013, affirming its jurisdiction over both 2010 and 2013 based on the second final determination.

    Significance/Impact

    Vera v. Commissioner is significant for clarifying the Tax Court’s jurisdiction over multiple final determinations in innocent spouse relief cases. The decision ensures that taxpayers have a clear path to judicial review, even after a prior denial, if the Commissioner issues a subsequent final determination on the merits. This ruling may influence the IRS’s handling of innocent spouse relief requests and its issuance of final determinations, as it underscores the importance of unambiguous notices and the court’s jurisdiction over such notices. The case also aligns with the court’s broader approach to jurisdiction in tax cases, emphasizing the primacy of the notice’s content over procedural errors or prior determinations.

  • McCrory v. Commissioner, 156 T.C. No. 6 (2021): Jurisdictional Limits of Tax Court in Whistleblower Award Cases

    McCrory v. Commissioner, 156 T. C. No. 6 (U. S. Tax Court 2021)

    In McCrory v. Commissioner, the U. S. Tax Court ruled it lacked jurisdiction over a whistleblower’s petition challenging a preliminary award recommendation under I. R. C. § 7623(a). The court clarified that only a final determination, not a preliminary award, triggers its jurisdiction, impacting how whistleblowers can challenge IRS decisions on awards.

    Parties

    Suzanne J. McCrory, the Petitioner, filed pro se against the Commissioner of Internal Revenue, the Respondent, in the U. S. Tax Court, docket number 9659-18W.

    Facts

    Suzanne J. McCrory submitted 21 Forms 211 to the IRS Whistleblower Office (WBO), alleging underreported tax obligations by 21 taxpayers. The WBO, after using her information to collect proceeds from two taxpayers, sent McCrory a preliminary award recommendation under I. R. C. § 7623(a) of $962. 92. McCrory did not accept or reject this recommendation but instead requested access to the administrative file, which was denied. She then filed a petition with the Tax Court, seeking review of the preliminary award recommendation.

    Procedural History

    McCrory filed a petition in the U. S. Tax Court to review the preliminary award recommendation under I. R. C. § 7623(a). The Commissioner moved to dismiss for lack of jurisdiction, arguing that the preliminary award recommendation was not a “determination” as required for Tax Court jurisdiction under I. R. C. § 7623(b)(4). The Tax Court granted the Commissioner’s motion to dismiss, holding that it lacked jurisdiction because no final determination had been issued.

    Issue(s)

    Whether a preliminary award recommendation under I. R. C. § 7623(a) constitutes a “determination” within the meaning of I. R. C. § 7623(b)(4), thereby conferring jurisdiction on the U. S. Tax Court?

    Rule(s) of Law

    I. R. C. § 7623(b)(4) grants the U. S. Tax Court jurisdiction over appeals of determinations regarding whistleblower awards under paragraphs (1), (2), or (3) of § 7623(b). The court has held that jurisdiction is established when the Commissioner issues a written notice that embodies a final administrative decision regarding the whistleblower’s claims in accordance with established procedures.

    Holding

    The U. S. Tax Court held that a preliminary award recommendation under I. R. C. § 7623(a) does not constitute a “determination” within the meaning of I. R. C. § 7623(b)(4). Therefore, the court lacked jurisdiction over McCrory’s petition because no final determination had been issued.

    Reasoning

    The court reasoned that a preliminary award recommendation does not represent a final administrative decision because the award amount remains subject to change based on a final determination of tax. The letter explicitly stated that the award was preliminary and subject to revision, indicating it was not a final decision. The court referenced prior cases, such as Whistleblower 4496-15W v. Commissioner, which established that a determination occurs when the award amount is finalized, typically upon issuance of an award check. McCrory’s failure to accept the preliminary award and the absence of a final decision letter or award check further supported the court’s conclusion that no determination had been made. The court also noted its limited jurisdiction under § 7623(b)(4) and its inability to intervene in the administrative process or compel a final decision.

    Disposition

    The U. S. Tax Court granted the Commissioner’s motion to dismiss for lack of jurisdiction, as no determination under I. R. C. § 7623(b)(4) had been issued to McCrory.

    Significance/Impact

    This ruling clarifies that the U. S. Tax Court’s jurisdiction over whistleblower award disputes is limited to final determinations, not preliminary recommendations. It underscores the procedural requirements whistleblowers must follow to challenge IRS decisions on awards and highlights the court’s inability to intervene in ongoing administrative processes. The decision impacts the strategic considerations of whistleblowers in pursuing claims and challenges related to their awards.

  • Wiley Ramey v. Commissioner of Internal Revenue, 156 T.C. No. 1 (2021): Timeliness of Collection Due Process Hearing Requests

    Wiley Ramey v. Commissioner of Internal Revenue, 156 T. C. No. 1 (2021)

    In Wiley Ramey v. Commissioner of Internal Revenue, the U. S. Tax Court ruled that the IRS’s mailing of a notice of intent to levy to a taxpayer’s last known address by certified mail triggers the 30-day period for requesting a Collection Due Process (CDP) hearing, regardless of whether the taxpayer personally receives it. The court dismissed the case for lack of jurisdiction because the taxpayer’s request for a hearing was untimely, highlighting the strict statutory requirements for CDP hearings and the implications for taxpayers’ rights to judicial review.

    Parties

    Wiley Ramey, the petitioner, represented himself pro se throughout the litigation. The respondent, Commissioner of Internal Revenue, was represented by Joanne H. Kim, Justine S. Coleman, and Jordan S. Musen.

    Facts

    Wiley Ramey had a tax debt of $247,033 for the taxable years 2012 to 2016. On July 13, 2018, the IRS sent a Notice LT11 (Notice of Intent to Levy and Notice of Your Right to a Hearing) to Ramey at his address, 9520 Castillo Drive, San Simeon, CA, via certified mail, return receipt requested. This address was shared with several businesses. The notice was left at the address on July 16, 2018, by a USPS letter carrier and signed for by an individual named Joel, who was not Ramey’s employee or authorized to receive his mail. Ramey received the notice shortly before the 30-day deadline but submitted his request for a CDP hearing on August 16, 2018, which was after the deadline of August 13, 2018.

    Procedural History

    The IRS treated Ramey’s request as untimely and offered an equivalent hearing under section 301. 6330-1(i)(1) of the Treasury Regulations. After the equivalent hearing, IRS Appeals issued a decision letter sustaining the notice of intent to levy. Ramey petitioned the U. S. Tax Court for review. The Commissioner filed a Motion to Dismiss for Lack of Jurisdiction, which was later supplemented with additional evidence of service. An evidentiary hearing was held on July 31, 2020. The court granted the Commissioner’s motion, dismissing the case for lack of jurisdiction due to the untimely request for a CDP hearing.

    Issue(s)

    Whether mailing a notice of intent to levy to a taxpayer’s last known address by certified mail, return receipt requested, starts the 30-day period for requesting a CDP hearing under I. R. C. sec. 6330, even if the taxpayer does not personally receive the notice because the address is shared by multiple businesses and the notice is left with someone unauthorized to receive the taxpayer’s mail.

    Rule(s) of Law

    I. R. C. sec. 6330(a)(2) requires that the notice of intent to levy be sent to the taxpayer’s last known address by certified or registered mail, return receipt requested. Treasury Regulation section 301. 6330-1(a)(3), Q&A-A9, states that “Notification properly sent to the taxpayer’s last known address * * * is sufficient to start the 30-day period within which the taxpayer may request a CDP hearing. * * * Actual receipt is not a prerequisite to the validity of the CDP Notice. “

    Holding

    The U. S. Tax Court held that the mailing of the notice of intent to levy to Ramey’s last known address by certified mail, return receipt requested, started the 30-day period for requesting a CDP hearing under I. R. C. sec. 6330, despite Ramey not personally receiving the notice due to the shared address and unauthorized receipt by a third party. As a result, Ramey’s request for a CDP hearing was untimely, and the court lacked jurisdiction to review the case.

    Reasoning

    The court’s reasoning focused on the statutory and regulatory requirements for initiating the 30-day period for requesting a CDP hearing. The court emphasized that the statute and regulations do not require actual receipt of the notice, only that it be sent to the taxpayer’s last known address by certified or registered mail, return receipt requested. The court rejected Ramey’s argument that the notice was deficient because he did not personally receive it, finding that the IRS complied with the statutory requirements by properly addressing and sending the notice. The court also noted that Ramey’s choice to share an address with multiple businesses did not change the IRS’s obligation under the statute. The court’s analysis included a review of prior case law and statutory interpretation, reinforcing the strict adherence to the 30-day deadline and the implications for judicial review.

    Disposition

    The U. S. Tax Court dismissed the case for lack of jurisdiction due to Ramey’s untimely request for a CDP hearing.

    Significance/Impact

    This case underscores the strict statutory requirements for initiating the 30-day period for requesting a CDP hearing under I. R. C. sec. 6330. It clarifies that the IRS’s responsibility is fulfilled by sending the notice to the taxpayer’s last known address, regardless of actual receipt. This ruling may impact taxpayers who share addresses with other entities, emphasizing the importance of timely action upon notification of IRS actions. The decision also highlights the limited jurisdiction of the U. S. Tax Court in reviewing CDP cases, reinforcing the procedural nature of these hearings and the consequences of missing statutory deadlines. Subsequent cases may reference this decision to interpret the notice requirements under I. R. C. sec. 6330 and related regulations.