“If the taxpayer fails to file a Tax Court petition during this ninety day period, the Tax Court lacks jurisdiction to consider the deficiency”
How later courts described this case
- “If the taxpayer fails to file a Tax Court petition during this ninety day period, the Tax Court lacks jurisdiction to consider the deficiency”
- specifically citing and quoting Judge Sterrett 's dissent, at 1370 note 12
- providing an example of a clearly insufficient notice of deficiency without such a declaration
- deficiency notice is adequate if it states amount of deficiency and tax year involved
Written by the judges who cited it.
The opinion
Chabot, J, concurring: Tax returns are not supposed to be merely negotiation documents. Similarly, notices of deficiency are not supposed to be merely negotiation documents. Each such document has legal consequences. Each such document ought to be prepared with care, as befits documents the mere mailing of which has significant legal consequences.
The notice of deficiency in the instant case clearly was not prepared with care. The notice ignores petitioners’ tax return, which had been filed about 33 months earlier. The notice asserts petitioners’ involvement in a tax shelter in which petitioners were not involved and disallows a deduction which petitioners did not claim. Finally, the notice applies a marginal tax rate of 70 percent to determine the tax deficiency.
The notice acknowledges the likelihood of errors, at least as to those flowing from ignoring petitioners’ tax return, but seeks to excuse respondent’s precipitous action because this action was taken "In order to protect the government’s interest and since your original income tax return is unavailable at this time”.
Respondent should not seek to excuse his failure to do his job properly by claiming that his irresponsible actions are taken "to protect the government’s interest”. The Congress has defined the Government’s interest. Part of that definition of the Government’s interest (as distinct from the tax collector’s interest) is the statute of limitations. The Congress has determined that respondent ordinarily has 3 years to mail an income tax notice of deficiency. If respondent needs more time to complete the process of auditing and sending a meaningful notice of deficiency, then respondent should ask the Congress for a longer statute of limitations. If respondent needs more auditors, then respondent should ask the Congress for the funds necessary to hire and train more auditors. If respondent needs more computer capability, then respondent should ask the Congress for the funds and authority necessary to secure the expanded computer capability and to provide appropriate training programs for his computer personnel.
When respondent sent the notice of deficiency in the instant case, he had all the information necessary to show that the statements in the notice of deficiency were incorrect and that these errors were material. Almost 8 months after mailing the notice of deficiency, respondent got around to acknowledging that he already had the information which showed that his notice of deficiency was wrong. Respondent abused his authority both by acting hastily to send the notice of deficiency and by acting leisurely to acknowledge his earlier error. Notwithstanding this abuse, the notice of deficiency meets all the formal requirements that this Court has hitherto specified for such documents. Accordingly, I agree with the majority’s analysis as to petitioners’ motion to dismiss for lack of jurisdiction, and with their denial of this motion.
Rule 41(a), Tax Court Rules of Practice and Procedure, provides that, in the circumstances of the instant case, respondent was permitted to amend his answer within 30 days after it was served. "Otherwise a party may amend his pleading only by leave of court or by written consent of the adverse party; and leave shall be given freely when justice so requires.” (Emphasis supplied.)
The issue in dispute in the instant case is already before this Court because of another notice of deficiency and another petition for a different year and so, regardless of how we decide the motions before us in the instant case, this Court will be put to the trouble of deciding the issue and petitioners will be put to the trouble of presenting their view as to this issue. If it were not for this fortuitous event, I would conclude that justice did not require us to grant respondent’s motion for leave to file an untimely amendment to his answer. Because of the peculiar facts in the instant case, I join in the majority’s conclusion that respondent’s motion should be granted.
Respondent should be aware that a long history of abuse of governmental powers has in the past caused courts to overrule prior analysis as to the effects of such abuse. Perhaps the most striking illustration of the courts’ finally becoming "fed up” with.such abuse is with regard to the admissibility of illegally obtained evidence. See, e.g., discussion in Linkletter v. Walker, 381 U.S. 618, 636-637 (1965). Respondent’s action in the instant case, taken "to protect the government’s interest”, has very nearly injured the Government’s interest. If respondent continues to take such precipitous action in the future, it is likely that the Government’s interest will be severely injured.
Shields, J., agrees with this concurring opinion.