The opinion
Chabot, J. concurring: I join in the majority opinion, which reaches the correct result and does so for the correct reasons.
In general, the appropriate time to decide whether to overrule a position this Court took in another case is when the reexamination would lead to a different result in the current case. In the instant case, we reach the same result under the majority opinion as we would reach if we overruled the position we took in Zackim v. Commissioner, 91 T.C. 1001 (1988), revd. 887 F.2d 455 (3d Cir. 1989); accordingly, the instant case does not appear to be the appropriate vehicle for considering whether we should overrule or affirm our Zackim position. I write separately nevertheless, because others have chosen to use the instant case as the vehicle for urging that we overrule our Zackim opinion, and, if we must deal with the matter in the instant case, then I would reaffirm our Court-reviewed opinion in Zackim.
I. Summary
The statute does not, on its face, specify the result in the instant case. In order to determine how the statute should be applied, it must be interpreted, and this is to be done in the context of other provisions of the Code and in the context of the legislative history. The majority’s analysis in the instant case, and in Zackim, is consistent with the text of the statute, the context of the statute, and the legislative history of the statute. The interpretation advanced by those who would overrule our opinion in Zackim creates opportunities for manipulation by either respondent or petitioners, with concomitant injustices, and ignores the context and legislative history.
II. The Statute
Section 6212(a) provides that “If the Secretary determines that there is a deficiency” of income tax, then the Secretary is authorized to send a notice of deficiency to the. taxpayer. Section 6212(c) 1 provides that if the Secretary has sent a notice of deficiency, and the taxpayer has filed a timely Tax Court petition, then “the Secretary shall have no right to determine any additional deficiency of income tax for the same taxable year”. The statute then sets forth five exceptions to this prohibition on determining additional deficiencies, as’ follows: (A) Fraud, (B) claims asserted in the Tax Court, (C) mathematical or clerical errors, (D) termination assessments, and (E) jeopardy assessments. The statute then lists cross-references to four Code provisions which permit “assessment as a deficiency notwithstanding the prohibition of further deficiency letters”, as well as to a provision in title 11 of the U.S. Code.
Section 6212(c) does not state what is to happen if respondent makes a determination that falls within one or more of these listed exceptions and cross-references. In particular, section 6212(c) does not itself state how the doctrine of res judicata is to be applied in any of these instances.
Res judicata is a judicial doctrine. If the Congress did not mean to modify this doctrine in this setting, then the section 6212(c)(1) exception as to fraud would permit respondent to issue the second notice of deficiency, but the doctrine of res judicata would preclude respondent from getting a hearing on the merits. This would render the statutory fraud exception language essentially meaningless. We are to avoid such constructions. E.g., Ratzlaf v. United States, 510 U.S. _ , _, 114 S. Ct. 655, 659 (1994). Accordingly, in the majority opinion we have interpreted the statutory language to set aside res judicata to some extent. There remains the question of whether, in the case of fraud, res judicata is to be set aside in all instances or only in certain instances.
Because the words of the statute do not deal with the res judicata problem, we proceed to consult the context and legislative history.
III. The Context and Legislative History
It is well established that we may look to the legislative history of a statute where the statute is ambiguous. In addition, we may seek out any reliable evidence as to legislative purpose even where the statutory language appears to be clear. United States v. American Trucking Associations, 310 U.S. 534, 543-544 (1940); U.S. Padding Corp. v. Commissioner, 88 T.C. 177, 184 (1987), affd. 865 F.2d 750 (6th Cir. 1989); Huntsberry v. Commissioner, 83 T.C. 742, 747-748 (1984); J.C. Penney Co. v. Commissioner, 37 T.C. 1013, 1017 (1962), affd. 312 F.2d 65 (2d Cir. 1962). Where a statute appears to be clear on its face, we require unequivocal evidence of legislative purpose before construing the statute so as to override the plain meaning of the words used therein. Huntsberry v. Commissioner, 83 T.C. at 747-748 ; see Pallottini v. Commissioner, 90 T.C. 498, 503 (1988), and cases cited therein.
The rules set forth in section 6212(c) clearly are not intended to operate in isolation; rather they are intended to be part of a highly detailed and well-articulated structure. The basic elements of section 6212(c) were enacted in the Revenue Act of 1926 as part of the substantial revision of the Board of Tax Appeals charter. See generally Dubroff, The United States Tax Court; An Historical Analysis 109-164 (1979).
Section 274(a) of the Revenue Act of 1926, ch. 27, 44 Stat. 55 , provides that “If * * * the Commissioner determines that there is a deficiency” of income tax, then the Commissioner is authorized to send a notice of deficiency to the taxpayer. Section 274(f) of the Revenue Act of 1926, 44 Stat. 56 , 2 provides that if the Commissioner has sent a notice of deficiency, and the taxpayer has filed a timely Board of Tax Appeals petition, then “the Commissioner shall have no right to determine any additional deficiency in respect of the same taxable year”. The statute then sets forth four exceptions to this prohibition on determining additional deficiencies, as follows: (A) Fraud, (B) claims asserted in the Board of Tax Appeals, (C) jeopardy assessments, and (D) mathematical errors.
In describing how the 1926 Act’s revised deficiency procedure was to work, the report of the Senate Finance Committee stated as follows (S. Rept. 52, 69th Cong., 1st Sess. 27-28 (1926), 1939-1 C.B. (Part 2) 332, 353):
Under the existing law and the House bill the 5 per cent and 50 per cent additions to the tax in case of negligence or fraud are to be assessed and collected in the same manner as if they were a deficiency, i.e., can only be assessed after the taxpayer has been sent a notice by registered mail. It sometimes occurs that after the deficiency letter has been sent out fraud or negligence is for the first time discovered by the commissioner. In order to avoid the necessity of sending out a second notice to the taxpayer in such cases and other similar cases, it is provided in section 274 (e) that the board shall have jurisdiction upon the appeal from the original deficiency letter to determine whether any penalty, additional amount, or addition to the tax should be assessed, whether or not the commissioner has asserted such claim in the deficiency letter or in his pleadings. If the fraud is discovered after the board’s decision, the commissioner can send notice thereof, on which the taxpayer can appeal to the board. [Emphasis added.]
Although the Senate Finance Committee, the Senate floor, and the conference committee made some changes in the statutory language, these changes did not affect what was described in the Senate Finance Committee report excerpt set forth supra.
Thus, as the Congress viewed the interrelationship of subsections (f) and (e) of section 274 of the Revenue Act of 1926, which appear in present law as sections 6212(c)(1) and 6214(a), (1) “If the fraud is discovered after the * * * [Tax Court’s] decision,” then the Commissioner can send a second notice of deficiency, but (2) otherwise, the Commissioner is to claim the fraud addition to tax and the additional deficiency in the first proceeding before the Tax Court.
The Congress enacted these provisions as an integrated whole and gave us explicit instructions as to how these provisions were to be coordinated.
In Zackim v. Commissioner, 91 T.C. 1001 (1988), the Commissioner knew about the fraud before decision was entered in the first case, but did not proceed under section 6214(a) to ask for the addition to tax. We held that, although the statute permitted respondent to issue a second notice of deficiency, the doctrine of res judicata precluded the Commissioner from showing that the taxpayer’s deficiencies or additions to tax were greater than the amounts determined and entered in the first case.
In the instant case, respondent knew about the alleged fraud before decision was entered in the first docket, and did proceed under section 6214(a) to raise the fraud issue in that docket. However, petitioners opposed respondent’s motion to raise the fraud issue, and we agreed with petitioners and denied respondent’s motion. We hold in the instant case that res judicata does not preclude respondent from proceeding in a second case under these circumstances. The question raised in Judge Swift’s concurring opinion as to respondent’s knowledge as of February 11, 1991, as distinguished from respondent’s knowledge as of May 8, 1991, does not affect the legal analysis. Both dates were before entry of decision. There does not appear to have been any prejudice to petitioners, such as extensive preparations for an imminent trial, because of the 3-month delay between the February 11, 1991, hearing and the May 8, 1991, motion filing. Thus, under the majority opinion’s analysis of the law, and contrary to Judge Swift’s contention, the 3-month difference between the two dates is irrelevant.
Similarly, the 'contentions regarding the statute of limitations appear to be beside the point. Section 6212(c)(1) does not deal with the statute of limitations. The explanatory committee reports do not deal with the statute of limitations. There is no indication that the Congress’ policy as to section 6212(c)(1), and section 274(f) of the Revenue Act of 1926, is related to the statute of limitations. We have no reason to believe that the Congress would have acted differently in the Revenue Act of 1926 if the fraud statute of limitations had been 10 years, or 20 years, rather than the “at any time” language appearing in paragraphs (1) and (2) of section 6501(c). We note that the relevant language of paragraph (3) of section 6501(c), relating to failure to file a tax return, is the same as that in paragraphs (1) and'(2), yet the Congress did not make a section 6212(c) exception for failure to file a tax return.
Judge Swift suggests that our recent opinion in Hemmings v. Commissioner, 104 T.C. 221 (1995), is inconsistent with our opinion in Zackim v. Commissioner, supra. I disagree. Firstly, Hemmings does not involve a fraud determination, and so it does not provide any support for the doctrine that a fraud determination is somehow a separate cause of action for res judicata purposes; it does not even address the question. Secondly, the opinion in Hemmings explains the differences between the nature of a refund suit in a District Court and a deficiency proceeding in the Tax Court. These differences, which relate to the different origins of the two types of proceedings, have little to do with the situation in Zackim and the instant case, where both suits are deficiency proceedings in the Tax Court. Thirdly, as we pointed out in Hemmings v. Commissioner, 104 T.C. at 234 , the question there involved depended on whether the Government’s later contention constjtuted a compulsory counterclaim in the refund suit. In Zackim we held that, on the facts there present, the Commissioner had what was the functional equivalent of a compulsory counterclaim. Thus, Hemmings is consistent with this Court’s opinion in Zackim.
In summary, when the Congress first enacted the provisions we seek to interpret, in 1926, the Congress told us when the Commissioner was to use the predecessor of section 6212(c) and when the Commissioner was to use the predecessor of section 6214(a). The relationship of those two provisions has remained essentially unchanged the last 69 years. This relationship essentially precludes gamesmanship and abuses by the Commissioner and taxpayers alike. Our Court-reviewed opinion in Zackim v. Commissioner, supra, and the instant majority opinion combine to give proper effect to this congressionally expressed relationship.
Hamblen, Cohen, Whalen, and Halpern, JJ., agree with this concurring opinion. SEC. 6212. NOTICE OF DEFICIENCY.
(c) Further Deficiency Letters Restricted.—
(1) General RULE. — If the Secretary has mailed to the taxpayer a notice of deficiency as provided in subsection (a), and the taxpayer files a petition with the Tax Court within the time prescribed in section 6213(a), the Secretary shall have no right to determine any additional deficiency of income tax for the same taxable year, of gift tax for the same calendar year, of estate tax in respect of the taxable estate of the same decedent, of chapter 41 tax for the same taxable year, of chapter 43 tax for the same taxable year, of chapter 44 tax for the same taxable year, of section 4940 tax for the same taxable year, of chapter 42 tax (other than under section 4940) with respect to any act (or failure to act) to which such petition relates, or of chapter 45 tax for the same taxable period except in the case of fraud, and except as provided in section 6214(a) (relating to assertion of greater deficiencies before the Tax Court), in section 6213(b)(1) (relating to mathematical or clerical errors), in section 6851 or 6852 (relating to termination assessments), or in section 6861(c) (relating to the making of jeopardy assessments).
(2) Cross references.—
For assessment as a deficiency notwithstanding the prohibition of further deficiency letters, in the case of—
(A) Deficiency attributable to change of treatment with respect to itemized deductions, see section 63(e)(3).
(B) Deficiency attributable to gain on involuntary conversion, see section 1033(a)(2), (C) and (D).
(C) Deficiency attributable to gain on sale or exchange of principal residence, see section 1034(j).
(E) Deficiency attributable to activities not engaged in for profit, see section 183(e)(4).
For provisions allowing determination of tax in title 11 cases, see section 505(a) of title 11 of the United States Code.
The later amendment of this provision by sec. 1941(b)(2)(F) of the Omnibus Trade and Competitiveness Act of 1988, Pub. L. 100-418, 102 Stat. 1107, 1323, does not affect the instant case.
SEC. 274.
(f) If after the enactment of this Act the Commissioner has mailed to the taxpayer notice of a deficiency as provided in subdivision (a), and the taxpayer files a petition with the Board within the time prescribed in such subdivision, the Commissioner shall have no right to determine any additional deficiency in respect of the same taxable year, except in the case of fraud, and except as provided in subdivision (e) of this section or in subdivision (c) of section 279. If the taxpayer is notified that, on account of a mathematical error appearing upon the face of the return, an amount of tax in excess of that shown upon the return is due, and that an assessment of the tax has been or will be made on the basis of what would have been the correct amount of tax but for the mathematical error, such notice shall not be considered, for the purposes of this subdivision or of subdivision (a) of this section, or of subdivision (d) of section 284, as a notice of a deficiency, and the taxpayer shall have no right to file a petition with the Board based on such notice, nor shall such assessment or collection be prohibited by the provisions of subdivision (a) of this section.