Case Name: Jerry L. KEENAN; Cynthia S. Keenan, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee
Court: United States Court of Appeals for the Ninth Circuit
Jurisdiction: United States
Decision Date: 2017-03-29
Citations: 685 F. App'x 622
Docket Number: No. 15-70997
Parties: Jerry L. KEENAN; Cynthia S. Keenan, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee,
Judges: Before: FERNANDEZ, MURGUIA, and WATFORD, Circuit Judges.
Reporter: West's Federal Appendix
Volume: 685
Pages: 622–623

Head Matter:
Jerry L. KEENAN; Cynthia S. Keenan, Petitioners-Appellants, v. COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee,
No. 15-70997
United States Court of Appeals, Ninth Circuit.
Submitted March 14, 2017 San Francisco, California
Filed March 29, 2017
Ira B. Stechel, Esquire, Wormser, Kiely, Galef & Jacobs LLP, New York, NY, Russell Dale Stanaland, Attorney, Stanaland & Associates, San Francisco, CA, for Petitioners-Appellants
Gilbert Steven Rothenberg, Esquire, Deputy Assistant Attorney General, Richard Farber, Esquire, Supervisory Attorney, DOJ—U.S. Department of Justice, Tax Division/Appellate Section, Washington, DC, Robert R. Di Trolio, Esquire, Clerk, U.S. Tax Court, Washington, DC, William J. Wilkins, Chief Counsel, Internal Revenue Service, Washington, DC, for Respondent-Appellee
Before: FERNANDEZ, MURGUIA, and WATFORD, Circuit Judges.
The panel unanimously finds this case suitable for decision without oral argument. Fed. R. App. P. 34(a)(2).

Opinion:
MEMORANDUM
Jerry and Cynthia Keenan (hereafter "Taxpayers") appeal the decision of the United States Tax Court that determined the deficiency in their income tax for 2003 and the amount of the accuracy-related penalty thereon issued after the Tax Court had entered an order precluding them from filing a motion to be relieved from the effect of a stipulation. We vacate the decision and remand for further proceedings.
As relevant here, Taxpayers entered into a stipulation with the Commissioner of Internal Revenue ("Commissioner") that they would be bound by the ultimate decision in the then pending case of Curcio v. Commissioner, Tax Court Docket No. 1768-07, regarding the manner of calculation of the adjustment and redetermination of "the tax consequences of participation in the 'Benistar 419 Advantage Plan."' In that stipulation, they also agreed that "the applicability of the penalty under I.R.C. § 6662(a)" would be determined "in the same manner that such penalty" was determined in Curcio. After the issues were decided in a manner adverse to their position, Taxpayers sought to be relieved from their stipulation insofar as it related to the penalty. The parties agree that a taxpayer can be relieved from the effect of a stipulation when "manifest injustice would result." Bail Bonds by Marvin Nelson, Inc. v. Comm'r, 820 F.2d 1548, 1547 (9th Cir. 1987); see also Tax Ct. R. 91(e); cf. United States v. Baker, 790 F.2d 1437, 1438 (9th Cir. 1986) (defining manifest injustice in the area of "postsentencing motions").
Here, in its order of December 3, 2014, the Tax Court determined that any motion by the Taxpayers to set aside the stipulation would be untimely because of their failure to comply with its order "served January 23, 2014, in which they were ordered to show cause in writing why decision should not be entered based on the stipulation to be bound by the Curcio case." That foreclosed the filing of a motion to set aside the stipulation. However, the Tax Court overlooked the fact that the January 23, 2014, order directed that Taxpayers' response should be filed on a date after the Commissioner filed "a proposed decision." The Commissioner did not file that proposed decision before the December 3, 2014, order was issued. Thus, the Tax Court's decision was based upon a clear factual error, and resulted in an abuse of discretion. See Bail Bonds, 820 F.2d at 1547; see also United States v. Hinkson, 585 F.3d 1247, 1261-63 (9th Cir. 2009) (en banc). Because the Tax Court's order essentially precluded the Taxpayers from presenting their position to that court in any meaningful way, we are unable to hold that they did not suffer prejudice fi'om the court's error.
VACATED and REMANDED. Costs are to be taxed against the Commissioner.
This disposition is not appropriate for publication and is not precedent except as provided by 9th Cir. R. 36-3.
. Order and Decision dated January 5, 2015.
. Order dated December 3, 2014.
. See Curcio v. Comm'r, 689 F.3d 217, 229 (2d Cir. 2012), cert. denied, — U.S. —, 133 S.Ct. 2826, 186 L.Ed.2d 884 (2013).
. As the Tax Court noted in its January 5, 2015, order, it based its decision on the fact that the Taxpayers did not file a motion, detail unusual facts, or file affidavits. While the Taxpayers did submit some limited argument about the merits of their proposed position on the stipulation, the Tax Court's order of December 3, 2014, left the Tax Court with a record from which it did not and could not "detail its reasoning" in that regard. See Estate of Trompeter v. Comm'r, 279 F.3d 767, 770 (9th Cir. 2002).