Court Opinion

ID: 4485637
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:33:50.951632+00
Date Added: 2024-06-11T14:54:07.146959
License: Public Domain

KORNER, J., dissenting: While I agree for the most part with what the Court says in its majority opinion here, I do not agree with its final disposition of this matter, and accordingly, I must dissent. Likewise, I am unable to agree with Judge Williams’ proposed disposition. I agree with Judge Williams’ dissent that the time to test the propriety of respondent’s using the procedure provided by section 6867 should be the time of the seizure. At that time, I think this record is clear that respondent knew that Matut did not claim the ownership of the cash, but it was equally unclear to respondent who the true owner was.1 Thus, the requirements of section 6867(a) were satisfied, and respondent was justified in doing what he did in the first instance. Thereafter, respondent properly sent a notice of deficiency to “Albert Matut as the Possessor of Certain Cash.” Sec. 6861(b). As we decided in our first opinion herein, reported at 84 T.C. 803 (1985) (hereinafter Matut I), respondent’s action under section 6867 created a new and fictitious taxpayer, Albert Matut as Possessor of Cash, as distinct from Albert Matut, personally.2 It was this new and fictitious taxpayer to whom the notice of deficiency was sent and who had the right to petition this Court for a redetermination of that deficiency, and he did so. In our second opinion, reported at 86 T.C. 686 (1986) (hereinafter Matut II), we went on to hold that with the case in this posture, even though Lignarolo as claimant could not be allowed to intervene in the proceeding as a party-petitioner, he should be allowed to intervene to assert his rights to the cash (see and compare Sampson v. Commissioner, 81 T.C. 614 (1983)), and that we had the jurisdiction to determine the true owner. In the trial resulting from Matut II, Lignarolo came forward and proved to the Court’s satisfaction that COINPA was the true owner of the funds at the time of seizure and that Lignarolo was its authorized agent. As the result of the majority’s determination of these matters herein (Matut III), it is now known that COINPA was the true owner of the money, and that the present petitioner was not. What, then, should the Court do at this point? In my opinion, the path is clear. Where such a determination has been made — and the majority has made it — the only thing this Court should do is to enter a decision of overpayment in the amount of $87,500 in favor of the petitioner who is before us, and against whom such an assessment has been made. Respondent then has the right, under section 6867(c), to issue a statutory notice of deficiency against the true owner, in conjunction with applying the provisions of sections 6851 and 6861, with the effective date of such action dating back to the original action against this petitioner. See H. Rept. 97-760 (Conf.) (1982), 1982-2 C.B. 654, quoted in footnote 4 of the majority opinion. The rights of both respondent and the true owner of the cash are thus preserved. Under section 6867(c), respondent, now knowing the true owner of the cash, is in a position to make a determination of deficiency against COINPA, if respondent deems it advisable, not only as to the particular cash here in question, but as to all of COINPA’s taxable income for the given year. See Matut II, 86 T.C. at 691. COINPA, on the other hand, being in receipt of a statutory notice of deficiency, has the right to come to this Court and have its entire tax liability for the year determined. Sec. 6213. Both a valid statutory notice and a timely petition are jurisdictional in this Court (Shelton v. Commissioner, 63 T.C. 193 (1974)), and there is no authority for this Court to substitute COINPA as the party petitioner in the case before us. The only petitioner we have before us in this case is the fictitious taxpayer “Albert Matut as Possessor of Certain Cash.” He is the one from whom the money was taken, and it is he against whom the tax was assessed. Accordingly, it is he in whose favor a decision of overpayment should be entered in this case. What respondent does, or does not do, hereafter under section 6867(c) with respect to COINPA, or any person whom respondent deems to be the true owner of the cash, is not our concern, and we have no right to dictate respondent’s actions in this regard. Having determined that an erroneous assessment was made against the wrong taxpayer, however, which we have done here, it necessarily follows that we should enter a decision of overpayment in his favor. Having done that, our duty is discharged and we have no further interest in the matter until the time that a proper petition is filed with us on behalf of some other taxpayer — perhaps COINPA — to whom respondent has issued a valid notice of deficiency under section 6867(c). I think that this is what the statute intended. To say that the petition herein must be dismissed for lack of jurisdiction, as the majority does, simply makes a nullity of this whole proceeding. If we must dismiss for lack of jurisdiction, then the deficiency determined against this petitioner must stand, although we have determined that he is not the proper taxpayer. Furthermore, since respondent now has, and will presumably keep, the money, respondent has no interest in pursuing the taxpayer whom we have determined to be the true owner, and will just let matters stand. The true owner is thus effectively prevented from coming to this Court and getting a redetermination of his tax liability. I do not think that Congress intended such a result in enacting section 6867. Accordingly, I respectfully dissent. Sterrett, Jacobs, and Gerber, JJ., agree with this dissent.  As the majority opinion points out, the Palm Beach County, Florida, sheriffs department returned the excess money to Lignarolo only later, and after litigation, and the majority has now determined that COINPA was the true owner, with Lignarolo as its authorized agent. But this clarification only came after the time of seizure.   Such juridical or fictitious persons are not unknown to the law in general, nor to the tax law in particular, e.g., corporations, trusts, estates. See secs. 6601, 7701(a)(1).