TAX COURT OPINION

Case: M.L. Murphy Enterprises, Inc.
Docket Number: 12435-08L
Judge: Colvin
Opinion Type: bench
Filed: 03/18/2009
Pages: 6

UNITED STATES TAX COURT WASHINGTON, D .C . 2021 7 M .L . MURPHY ENTERPRISES, INC . , Petitioner , V . Docket No . 12435-08 L COMMISSIONER OF INTERNAL REVENUE , Respondent . STAT . S .T . ~7U O R D E R Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it i s ORDERED that the Clerk of the Court shall transmit herewith to petitioner and to respondent a copy of the page s of the transcript of the trial of the above case before Special' -Trial Judge Lewis R .*Carluzzo at Los Angeles, California, on February 13, 2009, containing his oral findings of fact and opinion rendered at the conclusion of trial . In accordance with the oral findings of fact and opinion, an appropriate order will be entered granting respondent's motion and dismissing this case for lack of jurisdiction . (Signed ) Lewis R. Carluzzo Special Trial Judg e Dated : Washington, D .C . March 18, 2009 SERVED Mar 19 2009 3 1 Bench opinion by Special Trial Judge Lewis R . Carluzzo 2 M .L . Murphy Enterprises, Inc . v . Commissione r .3 Docket No . 12435-08L February 13, 200 9 4 The Court has decided to render oral findings of 5 fact and opinion in this case, and the following represents 6 the Court's oral findings of fact and opinion . 7 Section . references contained in this bench opinion 8 are to the Internal Revenue Code of 1986, as amended, i n 9 effect for the relevant period . Rule references are to the 10 Tax Court Rules of Practice and Procedure . 11 By Order dated October 6, 2008, this sectio n 12 6330(d) proceeding was assigned pursuant to the provisions 13 of section 7443A(b)(4) of the Internal Revenue Code of 1986, 14 as amended, and was conducted in accordance with Rules 180, 15 181, and 182 of the Tax Court Rules of Practice an d 16 Procedure . 17 This bench opinion is made pursuant to th e 18 authority granted by section 7459(b) of the Internal Revenue 19 Code of 1986, as amended, and Rule 152 of the Tax Cour t 20 Rules of Practice and Procedure . 21 This case is before the Court on Respondent's 22 Motion to . Dismiss for Lack of Jurisdiction, filed July 14, 23 2008 . Petitioner's response and objection to Respondent's 24 motion was filed August 7, 2008 . Respondent's reply t o 25 Petitioner's response and objection was filed September 5, Heritage Reporting Corporatio n (202) 628-4888 4 1 2008, and Petitioner's reply to Respondent's reply was filed 2 September 19, 2008 . 3 A hearing was conducted on Respondent's motion on 4 February 10, 2009, in Los Angeles, California . Elaine T . 5 Fuller appeared on behalf of Respondent and presente d 6 argument in support of the motion . Robert S . Schriebman 7 appeared on behalf of Petitioner and opposed the motion . 8 A brief recitation of the undisputed fact s 9 relevant to the dispute be the parties is all that is 10 necessary . In a Notice of Determination Concerning 11 Collection Action(s) Under Section 6320 and/or 6330, dated 12 May 15, 2008, Respondent determined certain collection 13 actions were appropriate with respect to Petitioner's then 14 outstanding -- certain of Petitioner's then outstanding tax 15 liabilities . On May 21, 2008, a timely petition was filed 16 in response to that notice of deficiency . See section 17 6330(d) . The dispute between the parties centers ove r 18 Petitioner's capacity to have filed, or to have authorized 19 the filing of the petition at the time it was filed . See 20 Rule 60(c) . 21 The parties agree that the capacity of a taxpayer 22 to initiate a proceeding in this Court is determined under 23 State law, and they further agree that California law 24 controls . It is also clear that at the time the petition 25 was filed, Petitioner's "powers, rights, and privileges" Heritage Reporting Corporatio n (202) 628-4888 IS, 5 1 were suspended by the California Franchise Tax Board and 2 that the suspension continued until a date outside of the 3 period prescribed in section 6330(d) . 4 Although there is no agreement on the poin t 5 between the parties, it appeared that Petitioner's "powers, 6 rights, and privileges" were restored merely by the filing 7 of an Application for Revivor by Petitioner's counsel when 8 he was alerted to the suspension as a result of the motion 9 here under consideration . 10 This case is not the first time this Court ha s 11 been presented with a question regarding our jurisdiction in 12 a case initiated by a California corporation whose "powers, 13 rights and privileges" were suspended at the time th e 14 petition was filed . See e .g ., Le v . Commissioner , 114 T .C . 15 268 (2000), affd 88 A .F .T .R . 2d 2001-7347 (9th Cir . 2001) . 16 Applying the same California law as applicable here, in Le, 17 we dismissed the case for lack of jurisdiction becaus e 18 pursuant to that California law, the taxpayer had n o 19 capacity to initiate a civil action at the time the petition 20 was filed . Furthermore, we did so without considering the 21 circumstances that gave rise to-the suspension . 22 Similar to the taxpayer in Le, Petitioner' s 23 corporate powers were restored while the case was pending, 24 but after the statutory . period prescribed for filing the 25 petition had expired . The similarities between this cas e Heritage Reporting Corporation (202) 628-4888 6 1 and Le suggests that Respondent's motion is well made and 2 should easily be resolved, except Petitioner-advances an 3 argument here that if advanced in Le by the taxpayer was not 4 specifically considered by the Court in that case, that i s 5 whether the doctrine of "substantial compliance" would allow 6 the Court to proceed as though Petitioner's corporate powers 7 had not been suspended as of the date that the petition i n 8 this case was filed . 9 Relying upon Sade Shoe Co . v . Oshin & Snyder , 217 10 Cal . App .3d 1509 (1990), Petitioner argues that the doctrine 11 of substantial compliance, in effect, operates to validates 12 corporate acts performed during the period that th e 13 corporate powers had been suspended if, at the time of those 14 acts, the corporation-had-substantially complied with al l 15 requirements necessary to have had it's corporate powers 16 restored . Assuming, without finding, that at the time the 17 petition was filed in this case, Petitioner ha d 18 substantially complied with all such requirements, w e 19 consider whether the doctrine of substantial compliance has 20 any effect here, and for the following reasons, as well as 21 for the reasons set forth more fully in the transcript of 22 the February 10, 2008 proceedings, find that it does not . 23 As we view the matter, the doctrine of substantial 24 compliance as articulated in Sade Shoe cannot be applied to 25 cure a jurisdictional problem . See Traub Co . v . Coffe e Heritage Reporting Corporation (202) 628-4888 4 a 7 1 Break Service, Inc ., 66 Cal .2d 368, 371 (1967) . As we have 2 noted in Fisher v . Commissioner , T .C . Memo . 2008-256 , 3 questions of our-jurisdiction are resolved by a "snapshot in 4 time" as of the date the petition was filed . In this case, 5 it is clear that when the petition was filed, as well as for 6 the entire period prescribed by section 6330(d), Petitione r lacked the capacity under California law to have initiated this proceeding . That'being so, it follows that we ar e 9 without jurisdiction . 10 To reflect the foregoing , an appropriate orde r 11 will be entered granting Respondent ' s motion and dismissing 12 the case for lack of jurisdiction . 13 This concludes the Court ' s oral findings of fact 14 and opinion in this case . 15 (Whereupon , at 9 :50 a .m, the bench opinion in the 16 above-entitled matter was concluded . ) 17 18 19 // 2 0 21 22 // 2 3 24 25 Heritage Reporting Corporation (202) 628-4888