# Petition for Writ of Certiorari — Spector v. Commissioner > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_2313%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1986 - **Citation:** 479 U.S. 884 ## Text a e Supreme Court, U.S 86.210 FILED AUG F% 1986 No. _t JOSEPH F. SPANIOL, UR, [as Bada VV IN THE Supreme Court of the United States OCTOBER TERM, 1986 W. M. SPECTOR, et al., Petitioners, COMMISSIONER OF INTERNAL REVENUE, Respondent. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT MARTIN A. SCHAINBAUM A PROFESSIONAL LAW CORPORATION MARTIN A. SCHAINBAUM KATHLEEN A. MILLER One Market Plaza Steuart Street Tower, Suite 2310 San Francisco, CA 94105 (415) 777-1040 JAMES E. RITCHIE Ore Market Plaza Steuart Street Tower, Suite 2310 San Francisco, CA 94105 (415) 777-1040 ATTORNEYS FOR PETITIONERS BEST AVAILABLE COPY QUESTIONS PRESENTED i. Whether the Tax Court committed error as a matter of law in granting Respondent=-Appellee's Motion to Dismiss for Lack of Jurisdiction. 2. Whether the notification letters, issued by Respondent-Appellee pursuant to Revenue Procedure 83- 78, 1983-2 C.B. 595 constitute "notices of deficiency" within the contemplation of 26 U.S.C. Section 6212 and 6213. wins TABLE OF CONTENTS ) REPORTS OF OPINIONS....... eecee PUMLSOLCTION 006 eee eee eee ewene STATUTES INVOLVED. «.ccccsccecves STATEMENT OF THE CASE..cccssees ROSIE 6.6 6 & 4 Oe KHER eee THE TAX COURT COMMITTED ERROR AS A MATTER OF LAW BY GRANTING THE GOVERNMENT'S MOTION TO DISMISS TAXPAYER'S CONSOLIDATED PETITION FOR LACK OF JURISDICTION........ THE IRS LETTERS, DATED NOVEMBER 2, 1984, ARE "POST-FILING" RATHER THAN "PRE-FILING" NOTIFICATION LBTIORM ec cccecvevewentssaecwe IRS REVENUE PROCEDURE 83-78, 1983-2 C.B. 595 (MODIFIED BY REV. PROC. 84-84, 1984-2 C.8. ‘968bi to be notices of deficiencies. See Leher v. Commissioner, 52 T.C. 358, 363-365 (1969). We do not agree with petitioners that all that remains for respondent to do is to make a mathematical 5 Petitioners argue that our opinion in Scar v. Commissioner, 18 T.C. 855 (1983), requires that the letters in this case be treated as notices of deficiencies. In Scar the taxpayer received a letter that was intended by the Commissioner to be a notice of deficiency. The letter stated clearly that it was a notice of deficiency and that determination had been made. The letter also provided an amount. The issue in Scar involved whether the notice was valid because of the errors contained in it. We held that the notice was valid because it was proper in form although it contained substantive errors. In contrast, the letters received by petitioners here were not intended by respondent to be notices of deficiencies. In addition, as stated previously, the letters did not purport to be notices of deficiencies and they did not state that a determination had been made or provide an amount. We think our Scar opinion provides no support for petitioners' position in this case. -lia- calculation. Subsequent to the issuance of the PFN letters, respondent may decide that other adjustments should be made to petitioners' returns and may even decide that petitioners are entitled to overpayments; or respondent may decide upon audit of the returns that no adjustments should be made. The bottom line is that respondent has not yet examined petitioners' returns and has not made any determination. This case is not controlled by Laing v. United States, 423 U.S. 161 (1976). The Supreme Court held in Laing that taxpayers who are subject to a termination assessment must receive a notice of deficiency. It said that a taxpayer should be afforded access to the courts when the termination occurred because substantial rights were -l2a- affected. Under section 6851, as it existed for the years covered by Laing, when a termination occurs, the taxpayer's taxable year is closed and the tax is due immediately. In sharp contrast, PFN letters have no immediate effect upon the substantial rights of petitioners except to warn them of the possible disallowance of deductions and to encourage them to reevaluate the propriety of any deductions they may clain. In Estate o c Vv. Commissioner, T.C. Memo. 1981-259, the taxpayers received a "30-day letter" which informed them of adjustments to their tax return. They were given the opportunity to agree to the adjustments, to provide aaditional information, or to request a conference. They were also -l13a- informed that if they did not respond within 30 days, a notice of deficiency would be issued. This Court concluded that a 30-day letter merely proposes adjustments and is therefore not a notice of deficiency because it is not a final determination. PFN letters do not even rise to the level of a 30-day letter. They certainly do not constitute notices of deficiencies. Accordingly, we hold that the pre- -l4a- filing notification letters® in this case are not notices of deficiencies, ’” which are required by sections 6212(a) and 6213(a) as prerequisites to this Court's jurisdiction. Therefore, we 6 PFN letters were recently discussed in Mid-South Music Corp. v. U.S. Dept. of the Treasury, 579 F. Supp. 481 (M.D. Tenn. 1983). In that case the taxpayer sued the Government and the District Director for civil damages. The taxpayer alleged that the issuance of a PFN letter was not procedurally correct and therefore deprived him of due process. It also alleged that the issuance of the letter violated the nondisclosure provisions of section 6103(a). The District Court granted the government's motion to dismiss, stating that it was unaware of any provision in the Internal Kevenue Code that precluded the issuance of PFN letters, and that the letters were a reasonable method utilized by the Secretary as part of his broad latitude to collect taxes. 7 To hold otherwise would open the floodgates for almost any communication between the Internal Revenue Service and a taxpayer to be treated as a notice of deficiency. With regard to PFN letters alone, as of April 30, 1985, approximately 22,629 have been issued by the Internal Revenue Service. -15a- will grant respondent's motion to dismiss for lack of jurisdiction. An_ appropriate order wil: d. -l6a- UNITED STATES COURT OF APPEALS FOR THE EIGHTH CIRCUIT No. 85-2133 W. M. Spector and James M. Stokes, Appellants, Appeal from the United States Tax Court Ve. Commissioner of Internal Revenue, +e eee + + + + Appellee. Submitted: April 15, 1986 Filed: May 7, 1986 Before LAY, Chief Judge, McMILLIAN, Circuit Judge, and HANSON,! Senior District Judge. 1 The Honorable William C. Hanson, United States Senior District Judge for the Northern and Southern Districts of Iowa, sitting by designation. PER CURIAM. W.M. Spector and James Stokes appeal from an order of the Umited States Tax Court dismissing for lack of jurisdiction a consolidated petition for determination of purported deficiencies. We affirm. On November 2, 1984, the Internal Revenue Service (IRS) sent appellants a letter notifying them of the IRS' belief that any deductions or credits derived from investments in a tax shelter known as the "Liberty Financial 1983 Government Securities Trading Strategy" would not be allowable. The letter indicated that the IRS had not yet reviewed appellants' tax returns to determine whether appellants had claimed such deductions or credits. -18a- Because the tax court is a court of limited jurisdiction, Page v. Commissioner, 297 F. 2d 733, 734 (8th Cir. 1962) (per curiam), the determination of a deficiency and the issuance of a notice of deficiency is an absolute precondition to tax court jurisdiction. Laing v. United States, 423 U.S. 161, 165 n.4 (1976). In this case, the tax court properly dismissed the petition because the notification letter was not a notice of deficiency. We note that the Fourth Circuit has recently rejected arguments identical to appellants' arguments in the present case that the letters constituted notices of deficiencies raised by other taxpayers appealing the consolidated tax court petition. Eggleston v. Commissioner, No. 85- 1966 (4th Cir. Apr. 9, 1986). As the Fourth Circuit noted: a -19a- Converting a sow's ear into a silk purse is acknowledgedly difficult. Seeking to convert into a notice of deficiency an Internal Revenue Service letter warning the petitioners that an attempt to utilize, for income tax purposes, a specific "tax shelter" would result in a redetermination leading to an assessment of a deficiency or a reduction or elimination of a refund amounts to an effort of equal audacity and equal futility. Eggleston v. Commissioner, slip op. at 3. We have reviewed the record and find no error. Accordingly, we affirm on the basis of the tax court opinion. ee 8th Cir. R. 14. A true copy. ATTEST: CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT -20a- [To be published. ] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385018_2313%3A1. Public record. Not legal advice.