Opinion ID: 779825
Heading Depth: 2
Heading Rank: 2

Heading: jurisdiction

Text: 8 During the tax years in question, I.R.C. § 6404(e)(1) provided: 9 In the case of any assessment of interest on — 10 (A) any deficiency attributable in whole or in part to any error or delay by an officer or employee of the Internal Revenue Service (acting in his official capacity) in performing a ministerial act, or 11 (B) any payment of any tax described in section 6212(a) to the extent that any error or delay in such payment is attributable to such an officer or employee being erroneous or dilatory in performing a ministerial act, 12 the Secretary may abate the assessment of all or any part of such interest for any period. For purposes of the preceding sentence, an error or delay shall be taken into account only if no significant aspect of such error or delay can be attributed to the taxpayer involved, and after the Internal Revenue Service has contacted the taxpayer in writing with respect to such deficiency or payment. 26 U.S.C. § 6404(e)(1) (1989). 1 13 Prior to 1996, § 6404 did not contain any provision for judicial review of IRS decisions regarding the abatement of interest. In Argabright v. United States, 35 F.3d 472 (9th Cir.1994), therefore, we stated that § 6404(e)(1) gives the Commissioner complete discretion to determine whether or not to abate interest in situations in which all or part of the interest owed by the taxpayer is due to delay caused by IRS personnel. Id. at 474-75. We accordingly held that, pursuant to the Administrative Procedure Act, 5 U.S.C. § 701(a), which bars judicial review if precluded by statute or if agency action is committed to agency discretion by law, judicial review is not available for agency action taken pursuant to 26 U.S.C. § 6404(e)(1). Id. at 475-76. 2 14 In 1996, however, Congress amended the statute, adding what is now § 6404(h), granting the tax court jurisdiction to determine whether the Secretary's failure to abate interest constituted an abuse of discretion. 3 Pub.L. No. 104-168, § 302, 110 Stat. 1452, 1457-58 (1996). The legislative history indicates that then-current law did not give federal courts jurisdiction to review the IRS' refusal to abate interest, but that Congress decided it was appropriate for the tax court to review such decisions. H.R.Rep. No. 104-168, at 28 (1996), reprinted in 1996 U.S.C.C.A.N. 1143, 1151. 15 The tax court therefore now has jurisdiction to determine whether the IRS' denial of a request to abate interest is an abuse of discretion pursuant to § 6404(h). Our jurisdiction to review decisions of the tax court rests on I.R.C. § 7482(a), which, we conclude, includes decisions regarding the IRS' refusal to abate interest. Cf. Estate of Kunze v. Comm'r, 233 F.3d 948, 950 (7th Cir.2000) (stating that the court had jurisdiction over an appeal of the tax court's review of a denial of an abatement under § 7482(a)). 4 Argabright's holding that judicial review is not available for IRS decisions pursuant to § 6404(e)(1) consequently has been undermined by subsequent legislation and, to that extent, is no longer good law. See United States v. Gonzalez-Torres, 273 F.3d 1181, 1187 (9th Cir.2001) (reasoning that we are not bound by the decision of a prior three-judge panel if subsequent legislation has undermined that decision); see also Benny v. United States Parole Comm'n, 295 F.3d 977, 983 (9th Cir.2002) (We are bound by decisions of prior panels unless an en banc decision, Supreme Court decision or subsequent legislation undermines those decisions.). 16 One further wrinkle, however, is that the amendment granting jurisdiction to the tax court applies to requests for abatement made after the date of its enactment, which was July 30, 1996. Pub.L. No. 104-168, § 302(b), 110 Stat. at 1458. Miller's request for abatement was made in May 1996 and was denied in November 1998. 17 In Banat v. Comm'r, 109 T.C. 92, 1997 WL 438301 (1997), the tax court addressed whether judicial review was available for a request for abatement of interest that was submitted prior to the effective date of the amendment but was not denied until after July 31, 1996. The court noted that the amendment clearly did not apply to requests for abatement made and denied prior to July 31, 1996, citing its decision in White v. Comm'r, 109 T.C. 96, 1997 WL 438057 (1997). Banat, 109 T.C. at 94-95. It reasoned, however, that the purpose of the amendment was to provide increased protection of taxpayer rights and that it would be inconsistent with that intent to deny judicial review to taxpayers whose requests are continuing, considered, and denied after the date of enactment. Id. at 95. It therefore held that the denial of a request that was pending with the IRS after July 30, 1996 was subject to judicial review. Id. 18 We agree with the reasoning of Banat and therefore conclude that the amendment granting jurisdiction to the tax court applies to Miller's request for abatement, which was submitted in May 1996, but was not denied until November 1998. The tax court therefore properly exercised jurisdiction over Miller's petition and we have jurisdiction to review the tax court's decision under 26 U.S.C. § 7482(a).