Court Opinion

ID: 4474693
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:11:06.027122+00
Date Added: 2024-06-11T14:51:04.322217
License: Public Domain

Swift, J., respectfully dissenting: In the past 7-plus years, we have dealt with new issues raised in collection cases efficiently and summarily (generally via summary judgment), and we have done so without limiting our authority or our jurisdiction. The door that Magana v. Commissioner, 118 T.C. 488, 493-494 (2002), left only slightly open for issues involving unusual situations and spousal defenses has not in any way impeded our summary disposition post Magana of a large majority of collection cases. Indeed, it is estimated that approximately 8 out of 10 collection cases already are disposed of by this Court via summary proceedings. The Magana rule that section 6330(c)(2) issues not raised with respondent’s Appeals Office generally will not be considered by this Court was based on a judicially crafted standard of review (namely, abuse of discretion) and on the simple logic that Appeals Office discretion could not have been involved (let alone an abuse of that discretion) where an issue was not raised at the Appeals Office collection hearing. This abuse of discretion standard of review is not set forth in the statutory language of section 6320 or 6330. Rather this standard of review is based on one sentence in the legislative history.1  The Treasury regulations on which the majority opinion relies do not speak in terms of our authority or jurisdiction, and the Commissioner by regulation cannot add to or restrict our authority or our jurisdiction. No appellate court or other Federal trial court has criticized our Magana opinion, and neither party in this case expressly asks us to overrule or to modify Magana. The Tax Court has been given a mandate from Congress, indeed recently an exclusive one,2 to review respondent’s collection procedures. We have taken this mandate seriously and, where the occasion has demanded it, either put a stop to the collection process altogether or remanded the matter for further review by respondent’s Appeals Office. By its reading of section 301.6320-l(f)(2), Q&A-F5, Proced. & Admin. Regs., the majority opinion effectively places on us a jurisdictional restriction (i.e., that we have no authority to consider an issue unless the issue was first raised during the Appeals Office collection hearing). We. must be reminded of what we said in Minahan v. Commissioner, 88 T.C. 492, 505 (1987): “When the regulation interpreting a statute is written by the very agency whose ‘abusive actions or overreaching’ were intended to be deterred by that statute, we must be especially vigilant to insure that the regulation ‘harmonizes with the plain language of the statute, its origins, and its purpose.’” The majority’s interpretation of the statutory provisions and of respondent’s regulations is particularly unfortunate here where it is clear that we would have “de novo” review over the “matter” that the estate now seeks to raise (namely, the underlying tax liability). Emphasis on the word “matter” is appropriate because that is what the statute governing our jurisdiction says. Section 6330(d)(1)(A) provides as follows: SEC. 6330(d). Proceeding After Hearing.— (1) Judicial review of determination. — The person may, within 30 days of a determination under this section, appeal such determination— (A) to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter) * * *. [Emphasis supplied.] Although titled “Judicial review of determination” the statutory language in subparagraph (A) that grants our jurisdiction uses the word “matter”, not “determination”. If Congress intended to limit our authority or our jurisdiction to issues raised in the Appeals Office hearing or contained in the notice of determination, Congress certainly could have said that. But Congress did not — it granted us jurisdiction over the “matter”, clearly a broader term. Indeed, a broader interpretation is consistent with the legislative history. The legislative history states that where the underlying tax liability is properly at issue the reviewing court shall proceed on a de novo basis, and the legislative history does not preclude review de novo of the underlying tax liability where it was not raised at the Appeals Office hearing. Thus, as to issues to be reviewed de novo, the paragraph of the legislative history quoted in the majority opinion is inclusive, not exclusive. The Court’s authority or jurisdiction over issues to be reviewed de novo should not be limited to issues raised at the Appeals Office hearing. For example, our review of a net operating loss (nol) carryback that arises after a collection Appeals Office hearing should not be precluded on the basis of our lack of authority or jurisdiction. In the context of deficiency cases, the Court often has continued a case in order to allow respondent to audit an NOL carryback that did not arise until after the petition was filed. The majority opinion could be read to raise a serious question as to our authority or jurisdiction to remand any case for further Appeals Office hearing on an issue that has not been raised at the initial Appeals hearing, in spite of the fact that, in some of our collection cases, respondent’s Appeals Office appears to have made a determination where there was no hearing at all. See, e.g., Lunsford v. Commissioner, 117 T.C. 183 (2001). Magana v. Commissioner, 118 T.C. 488 (2002), prudently left open the possibility that we might consider issues not raised at Appeals because unusual situations may arise where it would make little sense not to consider such issues. The majority opinion, p. 114, states: We note that our jurisdiction pursuant to section 6330(d) differs from our jurisdiction under section 6213(a). This and other courts have been heading in this direction for some time now — distinguishing section 6320 and section 6330 proceedings from deficiency proceedings — and it calls into question some of our early decisions that described how sections 6320 and 6330 operate. Our early caselaw regarding sections 6320 and 6330 was based on similarities to tax deficiency proceedings, not on differences. For example, in Davis v. Commissioner, 115 T.C. 35, 41-42 (2000), we concluded that Appeals Office collection hearings under sections 6320 and 6330 should be handled in the same manner that traditional Appeals Office hearings involving tax deficiencies have been handled, as follows: Hearings at the Appeals level have historically been conducted in an informal setting. [Citing sec. 601.106(c), Statement of Procedural Rules.] When Congress enacted section 6330 and required that taxpayers be given an opportunity to seek a pre-levy hearing with Appeals, Congress was fully aware of the existing nature and function of Appeals. Nothing in section 6330 or the legislative history suggests that Congress intended to alter the nature of an Appeals hearing so as to compel the attendance or examination of witnesses. When it enacted section 6330, Congress did not provide either Appeals or taxpayers with statutory authority to subpoena witnesses. The references in section 6330 to a hearing by Appeals indicate that Congress contemplated the type of informal administrative Appeals hearing that has been historically conducted by Appeals and prescribed by section 601.106(c), Statement of Procedural Rules. The nature of the administrative Appeals process does not include the taking of testimony under oath or the compulsory attendance of witnesses. We therefore hold that a hearing before Appeals pursuant to section 6330 does not include the right to subpoena witnesses. [Citations and fn. ref. omitted.] The regulation on which the majority opinion relies under section 6320 is identical to the regulation under section 6330, and one might argue that the majority’s holding herein applies equally to section 6330 levy cases.3 Our concerns regarding the majority opinion are even more obvious in the context of section 6330 collection cases. Spousal defenses are specifically mentioned in section 6330(c)(2)(A)(i) as issues that can be raised in both section 6320 lien and section 6330 levy cases. Assume that a petitioner in a section 6330 levy case failed to raise a spousal defense before Appeals but now wishes to raise a spousal defense in the section 6330 Tax Court proceeding. The majority opinion would deny our authority in the section 6330 case to consider the spousal defense. However, section 6015 would allow the petitioner to file an election for spousal relief under section 6015.4 Once the section 6015 election is filed, the restriction on respondent’s collection action imposed by section 6015(e)(1)(B) would go into effect. Section 6015(e) provides in part as follows: SEC. 6015(e). Petition for Review by Tax Court.— (1) In general. — In the case of an individual against whom a deficiency has been asserted and who elects to have subsection (b) or (c) apply, or in the case of an individual who requests equitable relief under subsection (£)— (B) Restrictions applicable to collection of assessment.— (i) In general. — Except as otherwise provided in section 6851 or 6861, no levy or proceeding in court shall be made, begun, or prosecuted against the individual making an election under subsection (b) or (c) or requesting equitable relief under subsection (f) for collection of any assessment to which such election or request relates until the close of the 90th day referred to in subparagraph (A)(ii), or, if a petition has been filed with the Tax Court under subpara-graph (A), until the decision of the Tax Court has become final. The above provision would prohibit any levy until the section 6015 election is finally resolved. Thus, any final decision in the section 6330 case allowing the levy to proceed would be unenforceable against the electing spouse until the section 6015 matter was resolved. This probably would be reason to stay the section 6330 case pending outcome of the section 6015 matter. However, if the section 6330 case were not stayed and we entered a decision authorizing the levy action, the levy still would be prohibited until resolution of the section 6015 election. See sec. 6015(e)(l)(B)(i). Indeed, the section 6015 election might eventually result in a separate section 6015(e) stand-alone case before us, and we might be called upon to enjoin levy action that we previously author- . ized in the section 6330 case.5 Does this make any sense? The advantage of the ruling in Magana v. Commissioner, 118 T.C. 488 (2002), is that it gives us the latitude to deal with unusual situations as they arise rather than follow a wooden rule that may produce undesirable results. Lastly, the statutory language of section 6330(d)(2)(B) refers to a “change in circumstances” and makes it clear that, certainly in the context of a levy case, a change in a taxpayer’s circumstances may affect an Appeals Office determination and may justify a result different from that reached in the initial Appeals Office determination. The facts before us in this case involve a significant change in circumstances (i.e., a taxpayer has died and has been replaced as the party in interest by the decedent’s estate, which did not exist at the time of the initial Appeals Office hearing and which therefore could not have been present and could not have raised any issue at the hearing). The majority’s holding that we have no authority or jurisdiction even to consider whether the taxpayer’s death might be covered by the exception preserved in Magana v. Commissioner, supra at 494, for “unusual illness or hardship, or other special circumstance” handcuffs this Court from considering and reviewing a change in a taxpayer’s circumstance, even though the change of circumstance has occurred after the Appeals Office hearing is final and while the case is pending before us. The majority opinion may force this Court, in such a situation, to proceed — without any ability to remand the case to respondent’s Appeals Office — and to decide a case based on issues and facts raised in the initial Appeals Office hearing and in complete disregard of the significant change in circumstances. What, for example, if while involved in a pending collection case a taxpayer wins a lottery? Would respondent expect us in deciding the case — perhaps deciding whether to approve an installment agreement or an offer in compromise — to ignore the taxpayer’s change in financial condition? I believe it to be unnecessary, inappropriate, and erroneous for us to base our holding herein on lack of authority or jurisdiction and to eliminate the special circumstances exception of Magana v. Commissioner, supra. Colvin, Wells, Laro, and Vasquez, JJ., agree with this dissenting opinion.   In Sego v. Commissioner, 114 T.C. 604, 609-610 (2000), and Goza v. Commissioner, 114 T.G. 176, 181-182 (2000), In first adopting the abuse of discretion standard, we relied on H. Conf. Rept. 105-599, at 266 (1998), 1993-3 C.B. 747, 1020, which provided as follows: The conferees expect the appeals officer will prepare a written determination addressing the issues presented by the taxpayer and considered at the hearing. * * * Where the validity of the tax liability was properly at issue in the hearing, and where the determination with regard to the tax liability is part of the appeal, no levy may take place during the pendency of the appeal. The amount of the tax liability will in such cases be reviewed by the appropriate court on a de novo basis. Where the validity of the tax liability is not properly part of the appeal, the taxpayer may challenge the determination of the appeals officer for abuse of discretion. * * *    Sec. 6330(d)(1) was amended by the Pension Protection Act of 2006, Pub. L. 109-280, sec. 855(a) and (b), 120 Stat. 1019, to give this Court exclusive jurisdiction to hear appeals from respondent’s Appeals Office notices of determination in collection matters issued after Oct. 16, 2006.    Sec. 301.6320-1(0(2), Q&A-F5, and sec. 301.6330-1(0(2), Q&A-F5, Proced. & Admin. Regs., in effect for the year in issue in the instant case, contain identical language, as follows: Q-F5. What issue or issues may the taxpayer raise before the Tax Court or before a district court if the taxpayer disagrees with the Notice of Determination? A-F5. In seeking Tax Court or district court review of Appeals’ Notice of Determination, the taxpayer can only request that the court consider an issue that was raised in the taxpayer’s CDP hearing. Consistent with the Pension Protection Act of 2006, Pub. L. 109-280, sec. 855(a), 120 Stat. 1019, giving the Tax Court exclusive jurisdiction over both sec. 6320 and sec. 6330 collection cases, the above regulations have been updated and the language of former Q&A-F5 has been moved to Q&A-F3. Current sec. 301.6320-1(0(2), Q&A-F3, and sec. 301.6330-1(0(2), Q&A-F3, Proced. & Admin. Regs., contain identical language, as follows: Q-F3. What issue or issues may the taxpayer raise before the Tax Court if the taxpayer disagrees with the Notice of Determination? A-F3. In seeking Tax Court review of a Notice of Determination, the taxpayer can only ask the court to consider an issue, including a challenge to the underlying tax liability, that was properly raised in the taxpayer’s CDP hearing. An issue is not properly raised if the taxpayer fails to request consideration of the issue by Appeals, or if consideration is requested but the taxpayer fails to present to Appeals any evidence with respect to that issue after being given a reasonable opportunity to present such evidence.    The election can be made not later than 2 years after respondent has begun collection activity. Sec. 6015(b)(1)(E), (c)(3)(B). A notice of intent to levy is considered the initiation of a collection activity. Sec. 1.6015-5(b), Income Tax Regs.    The Court’s authority to enjoin a levy is provided in sec. 6015(e)(l)(B)(ii).