The opinion
T.C. Memo. 1998-363
UNITED STATES TAX COURT
DAI HO AND YOUNG H. CHO, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 3188-98. Filed October 7, 1998.
Ps filed a claim (Form 843) with R in May 1997 seeking
an abatement of interest for the taxable year 1992. Having
received no response from R, Ps filed a petition with the
Court in February 1998 seeking a review of the request for
abatement pursuant to sec. 6404(g), I.R.C. R filed a motion
to dismiss for lack of jurisdiction on the basis that no
notice of final determination had been issued under sec.
6404(g) which would form the basis for jurisdiction.
Held: There is nothing in sec. 6404(g) or the
legislative history of this provision (in contrast to sec.
6532(a)), which imposes a time limit within which the
Secretary must act or permits the filing of a petition with
this Court, where the Secretary fails to act. Held,
further, in the absence of a final determination denying
petitioners' request for abatement of interest, the Court
lacks jurisdiction to proceed under sec. 6404(g).
Mark Kotlarsky, for petitioners.
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Barbara B. Franklin, for respondent.
MEMORANDUM OPINION
COHEN, Chief Judge: This case was assigned to Chief Special
Trial Judge Peter J. Panuthos, pursuant to the provisions of
section 7443A(b)(4) and Rules 180, 181, and 183.1 The Court
agrees with and adopts the opinion of the Special Trial Judge,
which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
PANUTHOS, Chief Special Trial Judge: This matter is before
the Court on respondent's Motion to Dismiss for Lack of
Jurisdiction. Respondent contends that the Court lacks
jurisdiction under section 6404(g) to consider the petition filed
in this case. As explained in greater detail below, we will
grant respondent's motion.
Background
On or about May 28, 1997, petitioners filed with respondent
a Form 843, Claim for Refund and Request for Abatement,
requesting that respondent abate interest for the taxable year
1992 in excess of $172,000. On November 26, 1997, after several
months passed with no response from respondent, petitioners wrote
to Nancy Givens (Ms. Givens) at respondent's Problems Resolution
1
Section references are to the Internal Revenue Code, as
amended. Rule references are to the Tax Court Rules of Practice
and Procedure.
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Office in Richmond, Virginia, requesting that Ms. Givens locate
their Form 843 and provide petitioners with a response to their
request for abatement. Petitioners were informed that they would
receive a response from the Problems Resolution Office in 4 to 6
weeks.
On February 20, 1998, after receiving no response from the
Problems Resolution Office, petitioners filed a petition with the
Court seeking to invoke the Court's jurisdiction to review
respondent's denial of their request for abatement of interest
pursuant to section 6404(g).
On March 9, 1998, petitioners received a handwritten letter
from Ms. Givens, along with a Letter 569(DO) issued by the
District Director in Richmond, Virginia. Ms. Givens' handwritten
note, which includes an apology for her delayed response, states
that, although petitioners' request for abatement of interest was
being disallowed as set forth in the Letter 569(DO), respondent
did correct a computational error in the amount of $2,331.94 for
which petitioners would receive a refund in 4 to 5 weeks. The
Letter 569(DO) states in pertinent part:
We have examined your claim and propose the following:
* * * * * * *
Full disallowance, as shown in the enclosed examination
report or on the back of this letter. If you accept
our findings, please sign and return the enclosed Forms
2297 and 3363.
* * * * * * *
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If you do not accept our findings, we recommend
that you request a conference with our Appeals Office.
The Letter 569(DO) further states that a review of petitioners'
file indicates that there was no delay due to a ministerial act
of an Internal Revenue Service employee that would allow for an
abatement of interest pursuant to section 6404(e).
On May 26, 1998, respondent filed a motion to dismiss this
case for lack of jurisdiction on the ground that, at the time
that the petition was filed, respondent had not made a final
determination to deny petitioners' request for abatement of
interest. Petitioners in turn filed an opposition to
respondent's motion to dismiss asserting that the Court should
exercise its jurisdiction in this case under section 6404(g) on
the ground that respondent unreasonably delayed providing
petitioners with a response to their request for abatement of
interest. Relying on a similar procedure established with
respect to refund claims under section 6532(a), petitioners
contend that, where respondent does not respond to a request for
abatement of interest within 6 months of the filing of such
request, the Court should treat respondent's inaction as a final
determination to deny the request for purposes of the Court's
jurisdiction under section 6404(g).
This matter was called for hearing at the Court's motions
session in Washington, D.C. Counsel for both parties appeared at
the hearing and presented argument with respect to the pending
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motion. During the hearing, counsel for petitioners submitted to
the Court as an exhibit a letter that petitioners had recently
received from Appeals Officer Samuel E. Fish assigned to
respondent's Baltimore Appeals Office. The letter, dated August
20, 1998, states that petitioners' request for abatement of
interest had been transferred from the Richmond Appeals Office to
the Baltimore Appeals Office to ensure impartiality in the review
process insofar as the Richmond Appeals Office may have
contributed to alleged delays giving rise to petitioners' request
for abatement of interest. The letter further states that,
although there is no basis for granting petitioners' request for
abatement of interest, petitioners cannot invoke the Court's
jurisdiction to review the matter until respondent issues a final
determination letter denying petitioners' request.
At the hearing, respondent informed the Court that a final
determination letter would be issued to petitioners at some time
in the near future depending upon the result of an appeals
conference with petitioners.
Discussion
The question presented is whether the Court has jurisdiction
pursuant to section 6404(g) to review the Commissioner's failure
to grant petitioners' request for abatement of interest for 1992.
The Tax Court is a court of limited jurisdiction, and we may
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exercise our jurisdiction only to the extent authorized by
Congress. Naftel v. Commissioner, 85 T.C. 527, 529 (1985).
Section 6404(g), enacted as section 302(a) of the Taxpayer
Bill of Rights 2 (TBOR 2), Pub. L. 104-168, 110 Stat. 1457
(1996),2 provides in pertinent part as follows:
(g) Review of Denial for Abatement of Interest.--
(1) In General.--The Tax Court shall have
jurisdiction over any action brought by a taxpayer who
meets the requirements referred to in section
7430(c)(4)(A)(ii) to determine whether the Secretary's
failure to abate interest under this section was an
abuse of discretion, and may order an abatement, if
such action is brought within 180 days after the date
of the mailing of the Secretary's final determination
not to abate such interest.
In sum, the Court is vested with jurisdiction to review the
Commissioner's denial of a taxpayer's request for abatement of
interest if the taxpayer files a petition with the Court within
180 days after the date that the Commissioner mails to the
taxpayer a valid final determination not to abate interest. Sec.
6404(g)(1); Rule 280(b); Banat v. Commissioner, 109 T.C. 92, 95
(1997).
Section 302(b) of TBOR 2, 110 Stat. 1458, provides that
section 6404(g) applies "to requests for abatement after the date
2
Sec. 6404(g) subsequently was redesignated sec. 6404(i)
under the Internal Revenue Service Restructuring and Reform Act
of 1998, Pub. L. 105-206, secs. 3305(a) and 3309(a), 112 Stat.
743, 745, effective with respect to tax years beginning after
Dec. 31, 1997.
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of the enactment of this Act." TBOR 2 was enacted on July 30,
1996.
The legislative history underlying section 6404(g), which is
contained in H. Rept. 104-506, at 28 (1996), 1996-3 C.B. 49, 76,
states:
Present law
Federal courts generally do not have the
jurisdiction to review the IRS's failure to abate
interest.
Reasons for change
The Committee believes that it is appropriate for
the Tax Court to have jurisdiction to review IRS's
failure to abate interest with respect to certain
taxpayers.
Explanation of provision
The bill grants the Tax Court jurisdiction to
determine whether the IRS's failure to abate interest
for an eligible taxpayer was an abuse of discretion.
The Tax Court may order an abatement of interest. The
action must be brought within 180 days after the date
of mailing of the Secretary's final determination not
to abate interest. An eligible taxpayer must meet the
net worth and size requirements imposed with respect to
awards of attorney's fees. No inference is intended as
to whether under present law any court has jurisdiction
to review IRS's failure to abate interest.
Effective date
The provision applies to requests for abatement
after the date of enactment.
Respondent maintains that we lack jurisdiction under section
6404(g) to consider the petition filed in this case on the ground
that respondent has not issued a final determination letter to
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petitioners. Petitioners counter that respondent should be
required to grant or deny a request for abatement of interest
within a reasonable amount of time and that respondent's failure
to act in this case should be treated as the equivalent of a
denial of petitioners' request for abatement of interest.
In Bourekis v. Commissioner, 110 T.C. 20 (1998), the
taxpayers filed a petition with the Court in which they attempted
to invoke the Court's jurisdiction under section 6404(g) based on
the assertion that the Court should treat a notice of deficiency
issued to the taxpayers as the Commissioner's final determination
letter under section 6404(g). The Commissioner moved to dismiss
and to strike the petition for lack of jurisdiction insofar as
the petition referred to the Court's jurisdiction under section
6404(g). In granting the Commissioner's motion to dismiss, we
first noted that the Commissioner's final determination letter
under section 6404(g) "is a prerequisite to the Court's
jurisdiction and serves as a taxpayer's 'ticket' to the Tax
Court." Bourekis v. Commissioner, supra at 26; see Kraft v.
Commissioner, T.C. Memo. 1997-476. Further, relying on the body
of judicial opinions holding that, for a document to qualify as a
valid notice of deficiency under section 6213(a), the
Commissioner must intend for the letter to constitute a notice of
deficiency, we held that the Commissioner likewise must intend
for a letter to constitute a notice of final determination under
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section 6404(g). Bourekis v. Commissioner, supra at 26. Because
the Commissioner did not intend for the notice of deficiency
issued to the taxpayers in Bourekis to be considered a final
determination letter under section 6404(g), we granted
respondent's motion to dismiss for lack of jurisdiction and to
strike.
Consistent with Bourekis v. Commissioner, supra, we are
obliged to dismiss this case for lack of jurisdiction on the
ground that respondent has not issued a final determination
letter to petitioners within the meaning of section 6404(g).
Nevertheless, petitioners' contention that respondent should be
obliged to act within a reasonable amount of time with respect to
a request for abatement of interest merits further discussion.
Although we stand by the basic proposition set forth in
Bourekis v. Commissioner, supra, that a notice of deficiency
under section 6213(a) and a final determination letter under
section 6404(g) share many important characteristics, there is an
important distinction between the two notices. In particular,
under the scheme of sections 6201(e) and 6211-6213, and in the
absence of a waiver by the taxpayer pursuant to section 6213(d),
the Secretary generally must issue a notice of deficiency prior
to the assessment of a deficiency of income, estate, gift, and
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certain excise taxes.3 After assessment, the Secretary may
proceed to collect assessed amounts, including interest, subject
to other provisions of the Internal Revenue Code. Thus, in the
case of taxes which are subject to the deficiency procedures as
described in section 6211(a), the Secretary is motivated to issue
a notice of deficiency, since he is otherwise prohibited from
assessing and collecting a deficiency in tax. In contrast,
section 6404(g) involves a situation where the Secretary has
previously assessed and possibly collected a tax, penalty, and
interest, and the taxpayer requests that the assessment for
interest be abated and that any overpayment be refunded. In this
connection, a taxpayer's request for abatement of interest is
similar to a refund claim. In fact, section 6404(g)(2)(B)
provides that rules similar to those of section 6512(b) (which
permit the Tax Court to order a refund of an overpayment and
interest) shall apply for purposes of section 6404(g).
With this background, we return to petitioners' contention
that the Court should impose a 6-month deadline upon respondent
(similar to the 6-month rule imposed under section 6532 with
respect to claims for refund) within which respondent is obliged
to either grant or deny a taxpayer's request for abatement of
3
Sec. 6213(a) refers to secs. 6851, 6852 and 6861
(termination and jeopardy assessments) which are exceptions to
the normal deficiency procedures and not relevant to our
discussion herein.
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interest.4 Petitioners' argument has a certain appeal,
guaranteeing a taxpayer the right of judicial review under
section 6404(g). However, in contrast to section 6532(a),
Congress did not provide a remedy within section 6404(g) where
the Secretary fails to act on a request for abatement of interest
within a reasonable time. Neither the plain language of section
6404(g) nor the legislative history suggests a basis for imposing
a time limit within which the Secretary is obliged to act with
respect to a request for abatement of interest. Because the
Court clearly lacks the authority to graft such a time limit onto
section 6404(g), petitioners' remedy lies with Congress, not with
this Court.
Consistent with Bourekis v. Commissioner, supra, we will
grant respondent's motion to dismiss for lack of jurisdiction.
In short, in the absence of a final determination denying
petitioners' request for abatement of interest, the Court lacks
jurisdiction to proceed under section 6404(g).
To reflect the foregoing,
An order will be entered
granting respondent's Motion
to Dismiss for Lack of
Jurisdiction.
4
Sec. 6532(a)(1) provides that no suit or proceeding under
sec. 7422(a) shall be begun before the expiration of 6 months
from the date of filing a claim unless the Secretary renders a
decision within that time, nor after the expiration of 2 years
from the mailing of the notice of disallowance.