Court Opinion

ID: 7805216
Source: CourtListenerOpinion
Date Created: 2022-08-31 16:01:26.691409+00
Date Added: 2024-06-11T16:29:58.762216
License: Public Domain

Appellate Case: 22-9001     Document: 010110732174        Date Filed: 08/31/2022    Page: 1
                                                                                   FILED
                                                                       United States Court of Appeals
                       UNITED STATES COURT OF APPEALS                          Tenth Circuit

                              FOR THE TENTH CIRCUIT                           August 31, 2022
                          _________________________________
                                                                           Christopher M. Wolpert
                                                                               Clerk of Court
  TERESA G. MURPHY,

        Petitioner - Appellant,

  v.                                                          No. 22-9001
                                                          (CIR No. 13970-19)
  COMMISSIONER OF INTERNAL                              (United States Tax Court)
  REVENUE,

        Respondent - Appellee.
                       _________________________________

                              ORDER AND JUDGMENT*
                          _________________________________

 Before PHILLIPS, MURPHY, and EID, Circuit Judges.
                    _________________________________

       Teresa Murphy, pro se, appeals from an adverse decision of the Tax Court. The

 Tax Court held that her Social Security income is taxable and that she owes back taxes.

 Murphy disagrees and appeals. We have jurisdiction to review the Tax Court’s decision

       *
         After examining the briefs and appellate record, this panel has determined
 unanimously that oral argument would not materially assist in the determination of
 this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is therefore
 ordered submitted without oral argument. This order and judgment is not binding
 precedent, except under the doctrines of law of the case, res judicata, and collateral
 estoppel. It may be cited, however, for its persuasive value consistent with
 Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
Appellate Case: 22-9001        Document: 010110732174        Date Filed: 08/31/2022       Page: 2

 under I.R.C. § 7482(a)(1) “in the same manner and to the same extent as decisions of the

 district courts . . . tried without a jury.”

        In 2019, the Commissioner of Internal Revenue determined that Murphy had

 underreported her Social Security income on her 2016 tax return. The Commissioner

 issued her a deficiency notice for that year. Murphy timely appealed to the Tax Court.

 The Tax Court held a trial and issued a decision agreeing with the Commissioner. The

 Tax Court found that the Social Security benefits were taxable and Murphy owed $3,437

 as part of her 2016 taxable income. Murphy filed a motion to vacate and included her

 notice of appeal (“NOA”) as an attachment to her motion on February 14, 2022. The Tax

 Court denied her motion to vacate on March 30, 2022 and ordered that her NOA be

 deemed filed as of February 14, 2022. (“ORDERED that petitioner’s motion to vacate,

 filed on February 14, 2022, is denied. It is further ORDERED that the Clerk of Court is

 directed to file the notice of appeal as of the date of petitioner’s motion to vacate in this

 case.”).

        We review the Tax Court’s legal conclusions de novo and its findings of fact for

 clear error. Consol. Mfg., Inc. v. C.I.R., 249 F.3d 1231, 1236 (10th Cir. 2001). Murphy

 makes one legal argument in her opening brief: Her Social Security benefits are tax-

 exempt because, in her view, they are part of her employer-provided disability benefits.

 But because our jurisdiction is predicated on a timely filed NOA, we start by addressing

                                                2
Appellate Case: 22-9001     Document: 010110732174          Date Filed: 08/31/2022       Page: 3

 our jurisdiction. See Okon v. C.I.R., 26 F.3d 1025, 1026 (10th Cir. 1994) (parties have 90

 days to appeal a final Tax Court decision).

        As mentioned, Murphy attached her NOA to her motion to vacate. Thus, her NOA

 was initially mis-filed. But the Tax Court caught this issue when it denied her motion to

 vacate on March 30th, 2022. So the Tax Court ordered that the NOA be deemed filed as

 of February 14, 2022. Her NOA was therefore timely filed as of this date, and the

 Commissioner hasn’t argued otherwise. We therefore conclude that we have jurisdiction.1

        Turning to the merits of Murphy’s appeal, Murphy explains that she is a former

 employee of Cigna Health, and her disability benefits from Cigna were supposed to be

 tax-exempt. Importantly, Cigna has a policy of reducing the Cigna-provided disability

 benefits by the amount of an employee’s Social Security benefits. And the offset amount

 is paid by the Social Security Administration. Even so, Murphy believes that her Social

 Security benefits shouldn’t be taxed.

        Murphy’s argument fails to grapple with the plain text of I.R.C. § 86. This is the

 relevant provision of the Internal Revenue Code that led to an adverse decision against

 her in the Tax Court. The Tax Court found that I.R.C. § 86(a) treats her Social Security

 income as taxable, at least in part. See R. Vol. 2 at 64 (explaining that “section 86

 provides that a taxpayer whose modified adjusted gross income plus one-half of the

        1
          We note that we have discretion to give effect to a prematurely filed NOA.
 Davison v. C.I.R., No. 20-9002, 2022 WL 2196884, at *3 (10th Cir. June 17, 2022).
 So even if Murphy’s NOA was prematurely filed before her motion to vacate was
 resolved, we would exercise our jurisdiction to address the merits of this otherwise
 straightforward case.
                                               3
Appellate Case: 22-9001     Document: 010110732174         Date Filed: 08/31/2022     Page: 4

 Social Security benefits received exceeds an ‘adjusted base amount’ of $34,000 must

 include 85% of the Social Security benefits, including Social Security Disability benefits,

 into gross income.” (citing Reimels v. C.I.R., 123 T.C. 245, 247 (2004), aff’d, 436 F.3d

 344 (2d. Cir. 2006)). Courts have held that I.R.C. § 86(a) means exactly what it says. See,

 e.g., Green v. C.I.R., 262 F. App’x 790, 790 (9th Cir. 2007) (“The plain language of

 I.R.C. § 86(a) expressly includes Social Security benefits as taxable income.”). And we

 are bound to apply federal statutes as they are written. Thompson R2-J Sch. Dist. v. Luke

 P. ex rel. Jeff P., 540 F.3d 1143, 1155 (10th Cir. 2008) (“Our job, however, is to apply

 the law as Congress has written it[.]”).

        The Tax Court didn’t err in finding Murphy’s Social Security income to be

 taxable. And it’s of no legal consequence for tax purposes that Cigna reduces its

 employer-provided disability benefits by the amount of an employee’s Social Security

 income. We therefore affirm the Tax Court.2

                                               Entered for the Court

                                               Gregory A. Phillips
                                               Circuit Judge

        2
         Murphy also tells us that, on various occasions, IRS employees told her that
 her view of the law was correct. It’s unclear whether Murphy believes this is relevant
 to her position on appeal. In any event, Murphy would be mistaken in giving legal
 weight to these discussions because “statements by individual IRS employees cannot
 bind the Secretary.” Sidell v. Comm’r, 225 F.3d 103, 111 (1st Cir. 2000) (citations
 omitted).
                                              4