Court Opinion

ID: 4337054
Source: CourtListenerOpinion
Date Created: 2018-11-14 03:09:06.763189+00
Date Added: 2024-06-11T14:20:14.971726
License: Public Domain

130 T.C. No. 7

                UNITED STATES TAX COURT

           MORTON L. GINSBERG, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 11585-07L.            Filed April 28, 2008.

     P filed a complaint with District Court seeking
review of R’s determination to proceed with collection
of a trust fund recovery penalty. The District Court
remanded the case to R’s Appeals Office, which issued a
supplemental determination notice. The Pension
Protection Act of 2006, amending sec. 6330(d), I.R.C.
to expand this Court’s jurisdiction over sec. 6330,
I.R.C. determinations, became effective with respect to
determinations made after a date that fell between the
dates of the original determination notice and the
supplemental determination notice. P filed a petition
with this Court in response to the supplemental
determination notice.

     Held: We lack jurisdiction to review R’s
determinations in the supplemental determination
notice. The supplemental notice relates back to the
original notice and is not a new determination for
purposes of the effective date of amended sec. 6330(d),
I.R.C.
                                - 2 -

     Neil L. Prupis, for petitioner.

     Steven W. Ianacone, for respondent.

                               OPINION

     KROUPA, Judge:    This case is before the Court on

respondent’s Motion to Dismiss for Lack of Jurisdiction, filed

October 5, 2007.   Petitioner filed a petition to review

respondent’s determinations in a supplemental determination

notice that petitioner is liable for the trust fund recovery

penalty for the periods ending June 30, 1991, December 31, 1991,

September 30, 1992, March 31, 1994, and September 30, 1994 (the

relevant periods).    This issue arises because the supplemental

determination notice was issued after the effective date of the

amendment to section 6330(d)(1)1 and after petitioner had

originally filed a complaint with Federal District Court at a

time when only the District Court had subject matter jurisdiction

over the trust fund liabilities.    We conclude that we lack

jurisdiction to review respondent’s determinations set forth in

the supplemental determination notice because we did not have

jurisdiction to review the determinations in the original

     1
      All section references are to the Internal Revenue Code,
unless otherwise indicated.
                               - 3 -

determination notice.   We shall therefore grant respondent’s

motion to dismiss for lack of jurisdiction.

                            Background

     Petitioner is a real estate investor who controlled real

estate holdings through many partnerships and corporations.     At

least five of the entities petitioner controlled accrued payroll

tax liabilities.   Petitioner had a chief financial officer to

handle various financial matters such as tax liabilities.     The

chief financial officer failed to carry out his duties and

embezzled funds from petitioner.   Petitioner asserts that part of

the embezzled funds included the unpaid payroll taxes.

     Respondent sent petitioner a Final Notice of Intent to Levy

on March 25, 1999, to collect trust fund recovery penalties under

section 6672 for the relevant periods.   Petitioner requested a

hearing.   After the hearing, respondent issued a determination

notice (the original determination notice) on June 20, 2003, in

which respondent sustained the proposed levy action for

petitioner’s liabilities for the trust fund recovery penalty,

among other things.

     Petitioner disputed the original determination notice by

filing a complaint with the United States District Court for the

District of New Jersey (District Court).   Petitioner could file a

complaint only with the District Court because the Tax Court

lacked jurisdiction over trust fund liabilities.   The District
                               - 4 -

Court remanded the matter to respondent’s Appeals Office and

dismissed the case in a consent order on October 5, 2005.    The

District Court directed that upon remand, the Appeals Office

should consider petitioner’s challenges to the existence or

amount of the underlying liability.    The consent order further

provided that petitioner’s rights under section 6330 would be

impaired in no way.

     Respondent’s Appeals Office held a supplemental hearing with

petitioner.   The Appeals Office issued petitioner a supplemental

determination notice on April 26, 2007, in which respondent

sustained the proposed levy action for petitioner’s liabilities

for the trust fund recovery penalty with certain adjustments.

Petitioner filed a petition with this Court contesting the

determinations in the supplemental determination notice on May

23, 2007.   Petitioner resided in Florida at the time he filed the

petition.   Petitioner also filed another complaint with the

District Court contesting the determinations in the supplemental

determination notice.

     Respondent filed a motion to dismiss this case for lack of

jurisdiction.   Respondent asserts that the supplemental

determination notice is not a new determination and that

jurisdiction remains with the District Court.    Respondent argues

that the District Court has jurisdiction notwithstanding the

amendment to section 6330(d) giving the Tax Court exclusive
                               - 5 -

jurisdiction over all section 6330 determinations made after

October 16, 2006.

     Petitioner states in his response to respondent’s motion

that he filed simultaneous suits in this Court and with the

District Court because he was uncertain about which court had

jurisdiction after the amendment to section 6330(d).

                            Discussion

     We now consider whether we have jurisdiction to review

respondent’s determination in the supplemental determination

notice.   This is the first time we have been asked to consider

whether we have jurisdiction to review a supplemental

determination notice where the amendments to section 6330(d)

giving us exclusive jurisdiction became effective between the

issuance of the original determination notice and the issuance of

the supplemental determination notice.    We begin by explaining

the scope of our jurisdiction under section 6330 and Congress’

recent expansion of that jurisdiction.

     A taxpayer must receive written notice of the right to

request a hearing before the Commissioner may levy upon any

property or property right of the taxpayer.    Sec. 6330(a).   If

the taxpayer requests a hearing, an Appeals officer holds the

hearing and then makes a determination.    Sec. 6330(b)(1), (c)(3).

The taxpayer may seek judicial review of the Appeals officer’s

determination within 30 days of its issuance.    Sec. 6330(d)(1).
                               - 6 -

Tax Court Jurisdiction On or Before October 16, 2006

     This Court is a court of limited jurisdiction, and we may

exercise judgment only to the extent authorized by Congress.

Naftel v. Commissioner, 85 T.C. 527, 529 (1985).   Before the

enactment of the Pension Protection Act of 2006 (PPA), Pub. L.

109-280, 120 Stat. 780, the Tax Court had jurisdiction to review

an Appeals officer’s determinations only in those cases where the

Tax Court had jurisdiction over the underlying tax liability.

Callahan v. Commissioner, 130 T.C. ____, ____ (2008) (slip. op.

at 2-3); Zapara v. Commissioner, 126 T.C. 215, 227 (2006); Katz

v. Commissioner, 115 T.C. 329, 338-339 (2000).   The Tax Court

lacks jurisdiction over trust fund recovery penalties in

deficiency cases.   Moore v. Commissioner, 114 T.C. 171, 175

(2000); Medeiros v. Commissioner, 77 T.C. 1255 (1991).

Accordingly, we could not review the Commissioner’s

determinations to collect this type of tax until the PPA became

effective for determinations made after October 16, 2006.   PPA

sec. 855, 120 Stat. 1019; see Rustam v. Commissioner, T.C. Memo.

2005-42.

Tax Court Jurisdiction After October 16, 2006

     The PPA expanded our jurisdiction to include review of the

Commissioner’s collection activity, regardless of the type of

underlying tax involved, for determinations made after October

16, 2006.   PPA sec. 855; Perkins v. Commissioner, 129 T.C. 58, 63

n.7 (2007).   Accordingly, we now have jurisdiction to review all
                               - 7 -

appeals of collection determinations made after October 16, 2006.

Callahan v. Commissioner, supra.

Determination Notices and Supplemental Determination Notices

     The supplemental determination in this case was made after

the effective date of October 16, 2006, but the original

determination was made before the effective date.    Petitioner

appealed the original determination to the District Court, and

the District Court remanded the case to the Appeals Office.    This

case presents the unique situation where the effective date of

the PPA falls between an original determination notice appealable

to District Court and a supplemental determination notice.

     A taxpayer is entitled to only one notice of intent to levy

and only one hearing per taxable period.    Sec. 6330(a)(1),

(b)(2); see also Drake v. Commissioner, T.C. Memo. 2006-151,

affd. 511 F.3d 65 (1st Cir. 2007).     A hearing under section 6330

may consist of one or more written or oral communications between

an Appeals officer and the taxpayer.    Sec. 301.6330-1, Proced. &

Admin. Regs.   Taxpayers do not have a right to any further or

additional hearing.   H. Conf. Rept. 105-599, at 266 (1998), 1998-

3 C.B. 747, 1020.   Any further hearing that a taxpayer has is a

supplement to the initial hearing, and the two hearings together

constitute the hearing under section 6330(d).     Drake v.

Commissioner, supra (citing Parker v. Commissioner, T.C. Memo.

2004-226).
                                - 8 -

     It follows that this hearing, which may actually consist of

several meetings or other written or oral communications, yields

only one determination.    See sec. 6330(c)(3), (d)(1).    This

determination may be supplemented by a supplemental determination

notice, if the matter is remanded to Appeals after the initial

determination.    The supplemental determination notice is merely a

supplement to the original determination notice and relates back

to the original determination notice.2   It is not a new

determination and does not provide the taxpayer any additional

appeal rights.3

     We conclude that the supplemental determination notice

relates back to the original determination notice dated June 30,

2003.    As the original determination notice was issued before

October 16, 2006, we do not have jurisdiction to review

respondent’s determination because we lack jurisdiction to review

the underlying tax liability.    See Moore v. Commissioner, supra

     2
      The Office of Chief Counsel at the Internal Revenue Service
(IRS) has issued a Notice providing guidance to IRS personnel in
situations like this one. Chief Counsel Notice CC-2007-001 (Oct.
13, 2006). The Notice states that the District Court has
jurisdiction because the supplemental determination notice
supplements the original determination notice.
     3
      We also decide today Kelby v. Commissioner, 130 T.C. ___
(2008), holding that the determination we review is the original
determination notice as supplemented by all subsequent
determination notices, and that the original determination notice
is rendered moot to the extent supplanted by the subsequent
determination notices. If we do not have jurisdiction to review
the original determination notice, however, the issuance of a
supplemental determination notice does not give us jurisdiction.
                                 - 9 -

at 175.   We shall therefore grant respondent’s motion to dismiss

for lack of jurisdiction.

     To reflect the foregoing,

                                               An appropriate order of

                                         dismissal for lack of

                                         jurisdiction will be entered.