Court Opinion

ID: 9914956
Source: CourtListenerOpinion
Date Created: 2024-01-03 20:02:56.895757+00
Date Added: 2024-06-11T13:15:44.393554
License: Public Domain

United States Tax Court

                              162 T.C. No. 1

          DOUGLAS DODSON AND REBECCA DODSON,
                       Petitioners

                                     v.

            COMMISSIONER OF INTERNAL REVENUE,
                        Respondent

                                —————

Docket No. 3657-22.                                 Filed January 3, 2024.

                                —————

             R mailed a notice of deficiency (first notice) to Ps
      specifying a deadline for filing a petition to redetermine the
      determined deficiency. The specified deadline was over one
      year from the date on which R mailed the first notice. One
      day later, R mailed a second notice of deficiency (second
      notice) to Ps that purported to correct the deadline for filing
      a petition. Ps filed their Petition for review of the first
      notice before the petition filing deadline specified in the
      first notice but after the petition filing deadline specified in
      the second notice and after the 90-day period for filing a
      petition provided by the first sentence of I.R.C. § 6213(a).

             Held: Ps timely filed their Petition pursuant to the
      last sentence of I.R.C. § 6213(a), and we have jurisdiction
      over this case.

                                —————

David R. Jojola and Derek W. Kaczmarek, for petitioners.

Vivian Bodey, Lewis A. Booth, Estevan D. Fernandez, and Sharmeen
Ladhani, for respondent.

                            Served 01/03/24
                                         2

                                    OPINION

       MARVEL, Judge: This case is before us for disposition of
respondent’s Motion to Dismiss for Lack of Jurisdiction (Motion to
Dismiss), filed June 29, 2023. Respondent contends that we lack
jurisdiction under section 6213(a) 1 because petitioners filed their
Petition more than 90 days after respondent mailed petitioners a notice
of deficiency (first notice) on October 7, 2021, and a corrected notice of
deficiency (second notice) on October 8, 2021. Petitioners argue that we
nonetheless have jurisdiction pursuant to the last sentence of section
6213(a), which provides: “Any petition filed with the Tax Court on or
before the last date specified for filing such petition by the Secretary in
the notice of deficiency shall be treated as timely filed.” Resolution of
the parties’ contentions requires us to decide, as a matter of first
impression, whether the last sentence of section 6213(a) requires us to
treat a taxpayer’s petition as timely filed when it is filed (1) before the
petition filing date specified in the notice of deficiency that forms the
basis for the taxpayer’s petition but (2) after the date specified for filing
in a later-issued corrected notice of deficiency and (3) after the 90-day
period for filing a petition provided by the first sentence of section
6213(a). For the reasons stated herein, we decide this issue in favor of
petitioners and treat their Petition as timely filed under the last
sentence of section 6213(a).

                                   Background

       On October 7, 2021, respondent mailed the first notice to
petitioners for their 2017 taxable year. Tracking information for two
copies of the first notice reflects the delivery of both copies in
Alamogordo, New Mexico, on October 12, 2021, by the U.S. Postal
Service (USPS). The first notice bears a stamped date specifying
December 5, 2022, as the last day to file a petition. Petitioners filed
their Petition on March 3, 2022. The Petition attached a copy of the first
notice and no other notice of deficiency. Petitioners resided in New
Mexico when they filed their Petition. Unless otherwise agreed by the
parties in writing, venue for an appeal is the U.S. Court of Appeals for
the Tenth Circuit. See § 7482(b)(1)(A), (2).

       Respondent has also produced the second notice, which he mailed
to petitioners on October 8, 2021, and which purports to be a corrected

       1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C., in effect at all relevant times.
                                           3

version of the first notice. The second notice bears a stamped date
specifying January 6, 2022, as the last day to file a petition. The second
notice is accompanied by a cover sheet stating: “PREVIOUS NOTICE
SENT WITH INCORRECT DATE. CORRECTED NOTICE WITH
CORRECT DATES.” The second notice does not differ from the first
notice in any other material respect. 2 Petitioners state that they did not
receive the second notice.        Petitioners have produced tracking
information for two copies of the second notice reflecting the departure
of the notice copies from USPS’s El Paso, Texas, distribution center on
October 13, 2021, without any indication that USPS ever delivered them
to petitioners. Petitioners filed their Petition in this case on March 3,
2022, which is 147 days after respondent mailed the first notice and 146
days after respondent mailed the second notice.

                                     Discussion

       We are a court of limited jurisdiction, and we may exercise
jurisdiction only to the extent expressly provided by statute. See Naftel
v. Commissioner, 85 T.C. 527, 529 (1985). We have jurisdiction to
determine whether we have jurisdiction over a particular case. See
Stewart v. Commissioner, 127 T.C. 109, 112 (2006) (citing Brannon’s of
Shawnee, Inc. v. Commissioner, 69 T.C. 999, 1002 (1978)). Regardless
of the parties’ views as to our jurisdiction, we must determine for
ourselves whether we have jurisdiction. See Charlotte’s Off. Boutique,
Inc. v. Commissioner, 121 T.C. 89, 102 (2003), supplemented by T.C.
Memo. 2004-43, aff’d, 425 F.3d 1203 (9th Cir. 2005).

       Our jurisdiction in a case for the redetermination of a deficiency
depends on the issuance of a valid notice of deficiency to the taxpayer
and the timely filing of a petition by the taxpayer. See Monge v.
Commissioner, 93 T.C. 22, 27 (1989); Normac, Inc. v. Commissioner, 90
T.C. 142, 147 (1988); see also Sanders v. Commissioner, No. 15143-22,
161 T.C. (Nov. 2, 2023); Hallmark Rsch. Collective v. Commissioner, 159
T.C. 126 (2022). Generally, the petition must be filed within 90 days
after the notice is mailed (not counting Saturday, Sunday, or a legal
holiday in the District of Columbia as the last day). 3 See Sanders v.

        2 Certain pages appear in a different order in the second notice in comparison

to the first notice.
       3 Section 6213(a) provides a 150-day filing period for a notice of deficiency

addressed to a person outside the United States, but that provision is not at issue here
because both the first and second notices were addressed to petitioners at their New
Mexico residence.
                                          4

Commissioner, No. 25868-22, 160 T.C., slip op. at 5 (June 20, 2023). This
filing deadline is jurisdictional, and equitable tolling does not apply. See
Hallmark Rsch. Collective, 159 T.C. at 166–67.

        The last sentence of section 6213(a), which was enacted in the
Internal Revenue Service Restructuring and Reform Act of 1998 (RRA),
Pub. L. No. 105-206, § 3463(b), 112 Stat. 685, 767, provides: “Any
petition filed with the Tax Court on or before the last date specified for
filing such petition by the Secretary in the notice of deficiency shall be
treated as timely filed.” RRA § 3463(a), 112 Stat. at 767, is an uncodified
provision of law stating that the “Secretary of the Treasury or the
Secretary’s delegate shall include on each notice of deficiency under
section 6212 of the Internal Revenue Code of 1986 the date determined
by such Secretary (or delegate) as the last day on which the taxpayer
may file a petition with the Tax Court.” See Smith v. Commissioner, 114
T.C. 489, 491 (2000), aff’d, 275 F.3d 912 (10th Cir. 2001). Both provisions
apply to notices mailed after December 31, 1998. RRA § 3463(c), 112
Stat. at 767.

       Section 6212(d) permits the Secretary, with the consent of the
taxpayer, to rescind any notice of deficiency mailed to the taxpayer.
Among other consequences, a rescinded notice “shall not be treated as a
notice of deficiency for purposes of . . . section 6213(a)” and “the taxpayer
shall have no right to file a petition with the Tax Court based on such
notice.” § 6212(d). Rev. Proc. 98-54, § 5.07, 1998-2 C.B. 529, 530, states
that a “properly executed Form 8626 (or a document as provided in
section 5.06 of this revenue procedure) is the only way that a notice of
deficiency may be rescinded.” 4

       The Petition in this case attached the first notice. The first notice
unambiguously determines a deficiency against petitioners and is
therefore valid. See Dees v. Commissioner, 148 T.C. 1, 6 (2017) (“[I]f the
notice is sufficient to inform a reasonable taxpayer that the
Commissioner has determined a deficiency, our inquiry [as to the
notice’s validity] ends there; the notice is valid.”). Petitioners filed their
Petition before December 5, 2022, the last day specified in the first
notice for filing a petition in this Court. This is sufficient to comply with
the last sentence of section 6213(a), which in the words of the Tenth

         4 Rev. Proc. 98-54, § 5.06, 1998-2 C.B. at 530, states that “[a]lthough use of

Form 8626 is preferred,” if certain enumerated criteria are met, “a document that
reflects agreement by the taxpayer and the [Internal Revenue] Service to rescind the
notice of deficiency, pursuant to [section] 6212(d), may be used in lieu of Form 8626.”
                                          5

Circuit means that “if a notice indicates a petition date that is more than
90 days after the date of mailing, that date controls.” Smith v.
Commissioner, 275 F.3d at 916.

         The record discloses no consent by petitioners to a rescission of
the first notice in any manner, let alone in a form complying with Rev.
Proc. 98-54. Absent a rescission with petitioners’ consent, the first
notice continued to “be treated as a notice of deficiency for purposes
of . . . section 6213(a),” see § 6212(d), including for purposes of the last
sentence of section 6213(a). Accordingly, respondent’s issuance of the
second notice without petitioners’ consent did not have the effect of
rescinding the first notice, either in whole or in part. See Hanashiro v.
Commissioner, T.C. Memo. 1999-78, slip op. at 10 (“The rescission of a
notice of deficiency requires mutual consent by the Commissioner and
the taxpayer, and such mutual consent must be objectively apparent.”);
Slattery v. Commissioner, T.C. Memo. 1995-274, 69 T.C.M. (CCH) 2953,
2956 (“Clearly, the statute requires mutual consent by the Secretary and
the taxpayer to effect a rescission of a notice of deficiency. We know of
no authority deeming a notice of deficiency rescinded in absence of a
formal rescission.” (Footnote omitted.)). As soon as respondent mailed
the first notice to petitioners on October 7, 2021, respondent could no
longer unilaterally rescind the first notice.

       The restriction on nonconsensual rescissions found in section
6212(d), unlike the restriction on further deficiency letters found in
section 6212(c), is not limited to situations where the Secretary
determines an additional deficiency of income tax (or certain other
taxes) for the same taxable year. 5 Our straightforward conclusion,
derived from the plain text of sections 6213(a) and 6212(d), is that we
are required to treat the Petition as timely filed. Accordingly, we will
do so.    This is not a case where a taxpayer petitions us for
redetermination of a deficiency in a notice that purports to correct a
prior notice of deficiency, a circumstance for which we express no view
on the application of the last sentence of section 6213(a).

        5 Section 6212(c) does not have any bearing on the outcome in this case because

the second notice, in relation to the first notice, did not purport to determine any
additional deficiency of income tax for the same taxable year. See Richardson v.
Commissioner, 76 T.C. 512, 530 (1981) (“Section 6212(c) restricts [the Commissioner’s]
right to determine an additional deficiency when a timely petition has been filed with
the Tax Court.” (Emphasis added.)), aff’d, 693 F.2d 1189 (5th Cir. 1982). Instead, as
its cover sheet makes clear, the second notice purported only to modify the date
specified for filing a petition in this Court.
                                     6

       Respondent makes a number of arguments to resist this
straightforward conclusion, but none of them is availing. Respondent
relies on our holdings in Smith and in Rochelle v. Commissioner, 116
T.C. 356 (2001), aff’d per curiam, 293 F.3d 740 (5th Cir. 2002). This
reliance is misplaced.

       In Smith, 114 T.C. at 490, we considered the validity of a notice
of deficiency that did not specify a date in the section of the notice titled
“Last Day to File a Petition With the United States Tax Court.” Neither
did the notice specify a date in the section of the notice titled “Letter
Date.” Id. Within the 90-day period for filing a petition, the Internal
Revenue Service (IRS) sent a letter to the taxpayers’ counsel providing
the missing dates and the taxpayers timely filed their petition. Id. We
held that “where [the IRS] failed to put the petition date on the notice,
and [the taxpayers] nevertheless received the notice and filed a petition
in a timely manner, such notice was valid.” Id. at 492. While the notice
of deficiency did not satisfy the requirement of RRA § 3463(a) that it
specify the last day on which the taxpayer may file a petition, we
reasoned that the failure did not prejudice the taxpayers because the
IRS “mailed, and [the taxpayers] received, the notice prior to the
expiration of the period of limitations. Moreover, [the taxpayers] filed a
petition in a timely manner.” Smith, 114 T.C. at 490. We specifically
noted that Congress did not specify what consequences should follow
from the IRS’s failure to provide the last day for filing a petition in the
notice of deficiency. Id.

       The Tenth Circuit affirmed our decision in Smith, concluding that
the notice of deficiency was valid because the taxpayers were not
prejudiced. Smith v. Commissioner, 275 F.3d at 915–16. It observed
that the taxpayers received their notice of deficiency well in advance of
the deadline for filing a petition; filed their petition in a timely manner;
did not claim that the notice’s failure to include the information
impaired their ability to file a petition; and received assistance from the
IRS in determining the last day for filing a petition. Id. In addition the
Tenth Circuit stated:

      The Senate Finance Committee’s report on the [RRA]
      states that the purpose of [RRA] section 3463 is to ensure
      that taxpayers do not miss their filing deadlines because of
      simple miscalculation: “The Committee believes that
      taxpayers should receive assistance in determining the
      time period within which they must file a petition in the
      Tax Court and that taxpayers should be able to rely on the
                                     7

      computation of that period by the IRS.” S. Rep. 105–174,
      at 90 (1998), quoted in Rochelle v. Comm’r, 116 T.C. 356,
      360, 2001 WL 548942 (2001). The statute further advances
      this purpose by providing that, if a notice indicates a
      petition date that is more than 90 days after the date of
      mailing, that date controls. Pub.L. 105–206, § 3463(b), 112
      Stat. 685, 767.

Id.

        In Rochelle, 116 T.C. at 358, the taxpayer and the Commissioner
each moved to dismiss the case for lack of jurisdiction, albeit on different
grounds. The taxpayer argued that the notice of deficiency, which did
not specify the last day for filing a petition, was invalid. Id. at 357–58.
The Commissioner argued that the taxpayer’s petition, which the
taxpayer mailed 143 days after the mailing of the notice of deficiency,
was untimely filed. Id. at 358. We concluded that the notice was valid.
Id. at 358–61. We observed the taxpayer was not prejudiced by the
notice’s failure to specify the last day for filing a petition because “[t]he
notice clearly stated that the petition had to be filed within 90 days of
the mailing of the notice,” id. at 360, “the necessity of filing a timely
petition was emphasized in underscored type,” id., and the taxpayer did
not “claim that his failure to timely file his petition was a product of a
miscalculation of the filing period,” id. at 361. We also concluded that,
despite the last sentence of section 6213(a), the taxpayer did not timely
file his petition because the last sentence of section 6213(a) “requires the
petition to be filed on or before the last date specified in the notice of
deficiency. Because the last date for filing a timely Tax Court petition
was not specified by the deficiency notice in this case, the petition could
not be filed on or before any such date.” Rochelle, 116 T.C. at 362
(emphasis added).

       Smith and Rochelle have no application here. Smith concerned
only the validity of a notice of deficiency, not the timeliness of a petition
filing. The first notice in this case, unlike the notices in Smith and
Rochelle, expressly stated the last day petitioners could file a petition, a
distinction we acknowledged in Rochelle. The last sentence of section
6213(a) expressly provides the treatment of a petition filed pursuant to
a notice of deficiency that specifies a petition filing date. In contrast,
neither RRA § 3463(a) nor any other law expressly addresses the
treatment of a petition filed pursuant to a notice of deficiency lacking a
petition filing date, the situation we confronted in Smith and Rochelle.
                                    8

       Congress could have used narrower means to advance the
purposes motivating the enactment of the last sentence of section
6213(a), but it did not. The last sentence of section 6213(a) advances the
avowed congressional purpose of enabling taxpayers to rely on the IRS’s
computation of the period for filing a petition, which is more than
enough legislative history for us to hang our hat on, proverbially
speaking. It is not our role to question Congress’s choice of means in
this regard. See Rochelle, 116 T.C. at 368 (Chabot, J., dissenting) (“It is
not at all unusual for the Congress to act more broadly than the confines
of the problem described in the legislative history; the Congress has
done so in many different areas of the tax law.”). Likewise, we see no
warrant in the statutory text for considering whether petitioners are
represented by counsel or prejudiced by the first notice, as respondent
would have us do.

       Respondent repeatedly characterizes the petition filing date on
the first notice as an “obvious mistake,” but this characterization is
misleading. As recognized by the Tenth Circuit, a taxpayer may timely
file a deficiency petition by meeting the requirements of the first
sentence of section 6213(a) or, alternatively, the last sentence of section
6213(a). See Smith v. Commissioner, 275 F.3d at 916 (“[I]f a notice
indicates a petition date that is more than 90 days after the date of
mailing, that date controls.”). Here, the petition filing date on the first
notice had independent legal effect, and petitioners were permitted to
rely on it regardless of whether they retained counsel and regardless of
whether prejudice would result from applying another deadline.
Respondent’s position in this case attempts to create uncertainty about
the meaning of the last sentence of section 6213(a) where there is none.

                               Conclusion

      Petitioners timely filed their Petition in accordance with section
6213(a). Accordingly, we have jurisdiction over this case, and we will
deny respondent’s Motion to Dismiss.

      We have considered all of the parties’ arguments and, to the
extent they are not discussed herein, find them to be irrelevant, moot,
or without merit.

      To reflect the foregoing,

      An appropriate order will be issued.