Court Opinion

ID: 4332479
Source: CourtListenerOpinion
Date Created: 2018-11-14 00:43:04.444787+00
Date Added: 2024-06-11T14:47:56.601468
License: Public Domain

113 T.C. No. 20

                     UNITED STATES TAX COURT

            HENRY RANDOLPH CONSULTING, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent

     Docket No. 6838-98.                Filed October 19, 1999.

          P has moved to dismiss this case for lack of
     jurisdiction on the ground that the Notice of
     Determination Concerning Worker Classification Under
     Section 7436 is invalid for failure to identify by name
     the individuals determined by respondent to be
     employees. Held: The notice is not invalid, and P's
     motion is denied.

     George W. Connelly, Jr., Linda S. Paine, and William O.

Grimsinger, for petitioner.

     M. Kathryn Bellis, for respondent.
                               - 2 -

                              OPINION

     COHEN, Chief Judge:   In Henry Randolph Consulting v.

Commissioner, 112 T.C. 1 (1999) (Randolph Consulting I), we

considered and granted respondent's Motion to Dismiss for Lack of

Jurisdiction and to Strike as to the Amounts of Employment Taxes

Proposed for Assessment by the Respondent for the years in issue.

The case is now before the Court on Petitioner's Motion for

Judgment on the Pleadings, which is more properly characterized

as petitioner's motion to dismiss for lack of jurisdiction, on

the ground that respondent did not issue a valid notice of

determination concerning worker classification under section

7436.   Unless otherwise indicated, all section references are to

the Internal Revenue Code in effect for the years in issue.

     As we discussed in detail in Randolph Consulting I, on

March 19, 1998, respondent mailed to petitioner a Notice of

Determination Concerning Worker Classification Under Section

7436.   That notice stated in part:    "We have determined that the

individual(s) listed or described on the attached schedule are to

be legally classified as employees for purposes of federal

employment taxes."   The attachments to the notice of

determination did not include a list of the individuals by name.

They did include, however, a copy of Examination Changes--Federal

Unemployment Tax for 1995 (Form 4667) and Employment Tax

Examination Changes Report for 1994 and 1995 (Form 4668),
                                 - 3 -

detailing respondent's wage adjustments for “4 employees” (1994)

and “6 employees” (1995) and included calculations of the amounts

to be assessed.

     After the Court granted respondent's Motion to Dismiss for

Lack of Jurisdiction and to Strike as to the Amounts of

Employment Taxes Proposed for Assessment by the Respondent,

respondent's Answer was filed.    Attached to the Answer was a list

of individuals that respondent determined should be reclassified

as employees of petitioner.   Petitioner then filed its motion,

arguing that the notice is invalid because the list of

individuals was not part of the notice of determination sent to

petitioner in March 1998.   Petitioner asserts: "The shortcoming

is tantamount to failure to specify the amount of the determined

deficiency anywhere in a Notice of Deficiency in a case under

I.R.C. Section 6212."

     Respondent argues that the standard to be applied to a

notice of determination is whether it advises the taxpayer that

respondent has determined that, for specified time periods, some

or all of its workers are to be reclassified as employees and

that the notice in this case meets that standard.    Respondent

acknowledges that petitioner's analogy between the notice of

determination and a notice of deficiency is reasonable inasmuch

as the form of neither is prescribed by statute.    Respondent

contends, however, that petitioner overreaches the scope of the
                               - 4 -

analogy in equating the list of workers reclassified with the

amount of a deficiency.   Respondent notes that section 7522,

effective for notices sent on or after January 1, 1990, provides

certain requirements for the statutory notice but also provides

that "inadequate description" of the amount "shall not invalidate

such notice."

     Section 6212 is not among those sections referred to in

section 7436(d), which provides that the principles of certain

other sections shall apply to cases arising under section 7436.

Nonetheless, we agree with the parties that a general analogy to

cases involving deficiency notices is useful.   We do not agree

with petitioner, however, that those cases suggest that the

notice in this case is fatally defective.

     We need not discuss every case cited by either party.

Specifically, discussions of circumstances in which the Court

will or will not examine events occurring prior to the time a

notice was sent are not useful here.   Inasmuch as petitioner

acknowledges that it has not been misled and asserts that "this

is not a question of being misled," we need not discuss cases in

which inconsistencies in a notice arguably created confusion.

Nor need we discuss cases in which the notice showed on it face

that there was no determination, such as Scar v. Commissioner,

814 F.2d 1363 (9th Cir. 1987), revg. 81 T.C. 855 (1983), or cases

limiting the application of Scar, such as Clapp v. Commissioner,
                                 - 5 -

875 F.2d 1396 (9th Cir. 1989).    Petitioner argues that none of

the cases cited by respondent are on point, but petitioner has

cited no case that held invalid a notice analogous to the notice

in issue here.

     Petitioner relies on ipse dixit and on the bald assertion

that "the statutory scheme in this case is clear and Respondent

has manifestly violated it."   We are not persuaded.   The

statutory scheme provides to taxpayers a remedy not previously

available, to wit, an opportunity to have employment status

disputes resolved in this Court.    See Randolph Consulting I,

supra at 9-10.   As in other cases within our jurisdiction, the

notice of that determination is the taxpayer's "ticket to the Tax

Court".   The notice sent to petitioner is the "Notice of

Determination Concerning Worker Classification Under Section

7436" that permits the taxpayer to seek relief in this Court.      It

specifically states that the determination described in section

7436 has been made.   As we held in Randolph Consulting I, we do

not have jurisdiction to determine the amount of taxes owing.      In

any event, attachments to the notice sent to petitioner

calculated the amounts to be assessed.    The failure to attach the

list of named individuals that respondent determined to be

employees is not incurable.    It was cured in this instance by the

attachment to the Answer, and no prejudice to petitioner can be

asserted plausibly.
                                - 6 -

     There is nothing on the face of the notice that suggested no

determination was made prior to the time the notice was sent.

There is no dispute that the name of the taxpayer and the

affected tax periods are set forth in the notice.   In Randolph

Consulting I, 112 T.C. at 12, we concluded that section 7436 is

more like the declaratory judgment provisions than like the

deficiency jurisdiction under which we may redetermine the amount

of tax due.    Petitioner has not cited, and we have not found, any

declaratory judgment case in which a notice of determination was

held inadequate.   (Cases involving a taxpayer's attempt to invoke

our jurisdiction on the basis of a document that was not a notice

of final determination have been dismissed on respondent's

motions.   See AHW Corp. v. Commissioner, 79 T.C. 390 (1982); New

Community Senior Citizen Housing Corp. v. Commissioner, 72 T.C.

372 (1979).)

     Petitioner's contention that the notice is invalid for

failure to specify the individual or individuals whose status has

been determined, therefore, is only comparable or analogous to

arguments by taxpayers that a notice was invalid for failure to

explain the adjustments, failure to cite statutory provisions on

which respondent relied, or inconsistencies in the notice.    The

cases have held that none of the asserted inadequacies

invalidates the notice.   See, e.g., Campbell v. Commissioner, 90

T.C. 110 (1988); Mayerson v. Commissioner, 47 T.C. 340, 348-349
                              - 7 -

(1966); St. Paul Bottling Co. v. Commissioner, 34 T.C. 1137

(1960).

     In conclusion, petitioner has not provided any statutory

language, case law, or convincing reason to invalidate the notice

in this case.

                                      An order denying petitioner's

                              motion will be issued.