Court Opinion

ID: 4332078
Source: CourtListenerOpinion
Date Created: 2018-11-14 00:31:15.025614+00
Date Added: 2024-06-11T14:47:45.419538
License: Public Domain

112 T.C. No. 1

                     UNITED STATES TAX COURT

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

     Docket No. 6838-98.                 Filed January 6, 1999.

               R determined, in a notice mailed to P,
          that some of P's workers were employees and
          that P was not eligible for relief under sec.
          530 of the Revenue Act of 1978, Pub. L. 95-
          600, 92 Stat. 2763, 3855, for certain taxable
          periods. R attached to the notice a proposed
          agreement to assessment of tax resulting from
          R's determination. P filed a petition
          seeking our redetermination under sec. 7436,
          I.R.C., of R's determination, including the
          amounts of tax R proposed to assess.

               Held: We lack jurisdiction to decide
          the amount of P's employment tax and income
          tax withholding liability for the taxable
          periods in issue.

     George W. Connelley, Jr., Linda S. Paine, and

William O. Grimsinger, for petitioner.

     M. Kathryn Bellis, for respondent.
                                - 2 -

                               OPINION

     COLVIN, Judge:   This case is before the Court on

respondent's motion to dismiss for lack of jurisdiction as to the

amounts of employment tax1 liability for the periods in issue.

We will grant respondent's motion for the reasons stated below.

     Neither party requested a hearing, and we conclude that none

is necessary to decide respondent's motion.

                              Background

     Petitioner is a sole proprietorship, the principal place of

business of which is in Birmingham, Alabama.

     Respondent's agents audited petitioner's Federal Insurance

Contributions Act and income tax withholding tax returns (Forms

941) for March 31 to December 31, 1994, and March 31 to December

31, 1995, and petitioner's Federal Unemployment Tax Act tax

return (Form 940) for 1995.    On March 19, 1998, respondent mailed

to petitioner a Notice of Determination Concerning Worker

Classification Under Section 7436 which said in part:

          As a result of an employment tax audit, we are
     sending you this NOTICE OF DETERMINATION CONCERNING
     WORKER CLASSIFICATION UNDER SECTION 7436. 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
     under subtitle C of the Internal Revenue Code and that
     your (sic) are not entitled to relief from this

     1
       For convenience, we use the term "employment tax" to refer
to taxes under the Federal Insurance Contributions Act (FICA),
secs. 3101-3125, the Federal Unemployment Tax Act (FUTA), secs.
3301-3311, and income tax withholding, secs. 3401-3406 and 3509.
     Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the taxable periods in issue.
Rule references are to the Tax Court Rules of Practice and
Procedure.
                              - 3 -

     classification pursuant to section 530 of the Revenue
     Act of 1978 with respect to such individual(s). This
     determination could result in employment taxes being
     assessed against you.

     Respondent attached to the notice of determination an

Agreement to Assessment and Collection of Additional Tax and

Acceptance of Overassessment (Excise or Employment Tax) (Form

2504) in which respondent proposed that petitioner consent to

immediate assessment and collection of $53,194.87 in tax,

consisting of the following amounts:

     1.   $27,814.58 for March 31 to December 31, 1994, under the

FICA, secs. 3101-3125, and for income tax withholding, secs.

3401-3406 and 3509;

     2.   $22,776.29 for March 31 to December 31, 1995, under the

FICA and for income tax withholding; and

     3.   $2,604.00 for 1995, under the FUTA, secs. 3301-3311.

     The form also proposed that petitioner agree to the

following:

          I consent to the immediate assessment and
     collection of any additional tax and penalties and
     accept any overassessment (decrease in tax and
     penalties) shown above, plus any interest provided by
     law.
          I understand that by signing this agreement, I am
     waiving the restrictions on assessment provided in
     section 7436(d) and 6213(a) of the Internal Revenue
     Code of 1986, and that I will not be able to contest
     the issues covered by this agreement in the United
     States Tax Court.

     Respondent attached to the notice of determination a copy of

Examination Changes -- Federal Unemployment Tax for 1995 (Form

4667), and Employment Tax Examination Changes Report for 1994 and

1995 (Forms 4668), detailing respondent's calculations of the
                                   - 4 -

amounts of assessment to which respondent proposed that

petitioner agree.

       Petitioner filed a petition seeking our review of

respondent's notice of determination.        In it, petitioner contends

that petitioner's service providers are not employees; petitioner

is entitled to treatment under section 530(a) of the Revenue Act

of 1978, Pub. L. 95-600, 92 Stat. 2763, 2855; respondent's

computation of proposed employment tax and income tax withholding

due is incorrect; and, if respondent's determinations are

sustained, the correct liabilities can be recomputed under Rule

155.       Petitioner also contends that the notice of determination

is void because, in the notice, respondent did not identify the

individuals whose worker classification was being determined.

Respondent filed a motion to dismiss for lack of jurisdiction as

to the amounts of tax respondent proposed to assess.       Respondent

also moved to strike from the petition petitioner's claim that,

if respondent's determinations are sustained, the correct

liabilities can be recomputed under Rule 155.

                                Discussion

       The parties dispute whether we have jurisdiction under

section 74362 to decide the amounts of tax for which petitioner

       2
       Sec. 7436 was added to the Internal Revenue Code by sec.
1454(a) of the Taxpayer Relief Act of 1997, Pub. L. 105-34, 111
Stat. 788, 1055, effective Aug. 5, 1997. Before enactment of
sec. 7436, the Tax Court lacked jurisdiction to decide worker
classification disputes arising under subtitle C of the Code.
See secs. 6211-6213. Before the enactment of sec. 7436, judicial
review of IRS assessment of employment taxes or related penalties
was available only if a taxpayer paid a divisible part of the
                                                   (continued...)
                                 - 5 -

would be liable if we sustain to any extent respondent's

determination that petitioner's workers are employees and that

petitioner is not entitled to relief under section 530 of the

Revenue Act of 1978.

     Petitioner contends that our jurisdiction is provided by

section 7436(a), (c), and (d), and that this result is consistent

with logic and public policy (e.g., the convenience of the

parties and judicial economy).    Respondent contends that we lack

jurisdiction under section 7436 to decide amounts of employment

tax due.

     To decide this issue, we first consider the following issues

relating to the text of section 7436:    (1) Whether section

7436(a) provides jurisdiction over amounts of employment tax due;

and (2) whether jurisdiction over amounts is provided by section

7436(d), which incorporates into section 7436 the principles of

several provisions governing our deficiency jurisdiction, or by

section 7436(c), which makes the small case procedures under

section 7463 available for cases under section 7436 if less than

$10,0003 is in dispute.

     2
      (...continued)
assessment, filed a claim for refund, and filed a refund suit in
Federal district court or the Court of Federal Claims to recover
amounts paid. See sec. 7422; 28 U.S.C. sec. 1291 (1994).
     3
       Sec. 3103(b)(1)   of the IRS Restructuring and Reform Act of
1998, Pub. L. 105-206,   112 Stat. 685, 731, amended sec.
7436(c)(1) to increase   the limit from $10,000 to $50,000 per
quarter, effective for   proceedings commenced after July 22, 1998.
                                  - 6 -

     Next, we consider whether our interpretation of section 7436

is altered by (1) its legislative history, (2) a comparison of

section 7436 to provisions authorizing us to issue declaratory

judgments (sections 7428, 7476, 7477, 7478, and 7479), (3) the

fact that respondent attached a proposed consent to assess

employment tax due to the notice, or (4) petitioner's contention

that it would be illogical to provide jurisdiction over worker

classification issues without providing jurisdiction to decide

the amounts of employment tax and income tax withholding

liability, e.g., from the standpoint of convenience of the

parties or judicial economy.

A.   Section 7436

     1.     Section 7436(a)

     We may only exercise jurisdiction that is expressly

permitted or provided by statute.     Trost v. Commissioner, 95 T.C.
560, 565 (1990); Judge v. Commissioner, 88 T.C. 1175, 1180-1181

(1987).    Section 7436(a)4 expressly grants jurisdiction to this

     4
         Sec. 7436(a) provides:

     SEC. 7436.     PROCEEDINGS FOR DETERMINATION OF EMPLOYMENT
                    STATUS

          (a) Creation of Remedy.--If, in connection with an
     audit of any person, there is an actual controversy
     involving a determination by the Secretary as part of
     an examination that--

                 (1) one or more individuals performing
            services for such person are employees of
            such person for purposes of subtitle C, or

                  (2) such person is not entitled to the
                                                       (continued...)
                                - 7 -

Court (if certain conditions are met) to decide whether service

providers are employees or independent contractors for purposes

of subtitle C (Employment Taxes and Collection of Income Tax),

and whether section 530 of the Revenue Act of 1978 applies.

Section 7436(a) does not expressly give us jurisdiction to decide

any other matter, such as the amount of a taxpayer's employment

tax liability that results from respondent's worker

classification determination.   This contrasts with our deficiency

jurisdiction under section 6213, which expressly permits us to

redetermine the "amount" of a deficiency in cases involving

income, gift, estate, or certain other taxes, albeit not

including employment taxes.   Sec. 6211(a).   Section 7436(a) more

closely parallels our authority to make declaratory judgments

(sections 7428, 7476, 7477, 7478, and 7479).    Those provisions

each specify a subject matter, but do not state that we may

decide the amount of tax due.   See paragraph C, below, for a

comparison of section 7436 with the declaratory judgment

provisions.   Also, the last sentence of section 7436(a) makes our

redetermination reviewable as a decision.     This provision would

be unnecessary if we were redetermining a deficiency.    Cf. sec.

     4
      (...continued)
          treatment under subsection (a) of section 530 of
          the Revenue Act of 1978 with respect to such an
          individual,

     upon the filing of an appropriate pleading, the Tax
     Court may determine whether such a determination by the
     Secretary is correct. Any such redetermination by the
     Tax Court shall have the force and effect of a decision
     of the Tax Court and shall be reviewable as such.
                                   - 8 -

7459(c).    Thus, based on the text of section 7436(a), we conclude

that we lack jurisdiction to decide the amounts of tax due in

cases arising under section 7436.

     2.     Section 7436(d)

     Section 7436(d)5 provides that "the principles" of sections

6213(a), (b), (c), (d), and (f), 6214(a), 6215, 6503(a), 6512,

and 7481 apply to cases that arise under section 7436.    Section

7436(d) does not expressly state that it provides any

jurisdiction.    However, petitioner contends that the references

to several deficiency procedure provisions in section 7436(d)

create, or imply that we have, jurisdiction to decide the amount

of its employment tax liability for the periods in issue.

Petitioner also contends that the references in section 7436(d)

are surplusage if we do not have jurisdiction to decide the

amount of employment taxes owed for those years.

     5
         Sec. 7436(d) provides as follows:

            (d) Special Rules.--

                 (1) Restrictions on assessment and collection
            pending action, etc.--The principles of
            subsections (a), (b), (c), (d), and (f) of
            section 6213, section 6214(a), section 6215,
            section 6503(a), section 6512, and section
            7481 shall apply to proceedings brought under
            this section in the same manner as if the
            Secretary's determination described in
            subsection (a) were a notice of deficiency.

                 (2) Awarding of costs and certain
            fees.--Section 7430 shall apply to proceedings
            brought under this section.
                               - 9 -

     We disagree.   Each of the references in section 7436(d) to

deficiency procedures can be read to have a rational purpose even

if we lack jurisdiction over the amounts in dispute in section

7436 cases.   The following chart briefly describes each provision

listed in section 7436(d), and states how the principle of each

listed section could apply to a section 7436 case even if we lack

jurisdiction to decide amounts of tax due.

    Provisions Listed In       Possible Application Of Principles
        Sec. 7436(d)             Of That Section To Sec. 7436
Sec. 6213(a). The              The Commissioner may not assess
Commissioner may not assess    employment tax during the time
tax for the years in issue     that the taxpayer may file a
during the time a taxpayer     petition under section 7436 in
may file a petition or         this Court, and, if a petition is
while we have jurisdiction.    filed, until the decision is
                               final.
Sec. 6213(b). The              The Commissioner may assess tax
Commissioner may assess tax    relating to worker classification
related to mathematical        issues or mathematical errors on a
errors on a return, refund     return, refund adjustments, or any
adjustments, or any amount     amount paid, and a taxpayer may
paid. A taxpayer may ask       ask the Commissioner to abate the
the Commissioner to abate      assessment.
assessment of mathematical
or clerical errors.
Sec. 6213(c). The              The Commissioner shall assess and
Commissioner shall assess      collect tax related to worker
and collect tax if the         classification issues if the
taxpayer does not timely       taxpayer does not timely file a
file a petition.               petition under sec. 7436.
Sec. 6213(d). A taxpayer       The taxpayer may consent to
may consent to an              assessment of employment tax.
assessment.
Sec. 6213(f)(1). The time      The time to file a petition under
to file a petition is          section 7436 is suspended if the
suspended if a taxpayer        taxpayer seeks relief under title
files for bankruptcy under     11.
title 11 of the U.S. Code.
                              - 10 -

Sec. 6214(a). We have         We may decide worker
jurisdiction to redetermine   classification claims raised by
a deficiency in an amount     the Commissioner that are not
which is greater than the     included in the notice of
amount stated in the notice   determination (e.g., a claim
of deficiency.                regarding the status of additional
                              persons alleged to be employees)
                              if such claims relate to the
                              taxpayer and taxable periods in
                              the notice of determination.
Sec. 6512(b). The             The Commissioner shall recognize
Commissioner shall credit     the status of workers as decided
or refund to the taxpayer     by the Tax Court. If the
any overpayment of tax when   Commissioner fails to do so within
our decision becomes final.   120 days after the decision of the
We have jurisdiction to       Tax Court becomes final, then we
decide a taxpayer's motion    may issue an order requiring the
to require the Commissioner   Commissioner to do so.
to refund an overpayment of
tax if the motion is filed
more than 120 days after
the decision becomes final.
Secs. 6215 and 6503.          The running of the time to assess
Certain circumstances         employment tax is suspended while
suspend the running of the    a section 7436 case is pending and
time to assess tax (e.g.,     resumes when our decision is
when the Commissioner mails   final. The Commissioner's
a notice of deficiency), or   authority to assess employment tax
cause it to resume running.   resumes when the bar to assessment
The Commissioner may assess   is lifted and the running of the
the deficiency that we        time to assess resumes.
redetermine after our
decision is final and
require the taxpayer to pay
that amount on notice and
demand.
                               - 11 -

Sec. 7481. Our decision        A decision under section 7436
becomes final 90 days after    becomes final under the same
it is entered; when the        circumstances.
time to file a petition for
certiorari expires if our
decision has been affirmed
or the appeal dismissed and
no petition for certiorari
has been filed; a petition
for certiorari is denied;
or 30 days after the
Supreme Court mandates that
our decision be affirmed or
the appeal dismissed.

     The principles of each of the deficiency procedure sections

listed in section 7436(d) reasonably apply to section 7436 cases

even if we lack jurisdiction over amounts in dispute in section

7436 cases.   Thus, section 7436(d) does not create, or imply that

we have, jurisdiction to decide the amounts of employment tax due

in a case arising under section 7436.

     3.   Application of Small Case Procedures to Cases Arising
          Under Section 7436

          We will next consider whether references in section

7436(c)6 to "amounts in dispute" and the small case procedures

     6
      Sec. 7436(c) provides:

          (c) Small case procedures

               (1) In general.--At the option of the
          petitioner, concurred in by the Tax Court or a
          division thereof before the hearing of the case,
          proceedings under this section may
          (notwithstanding the provisions of section 7453)
          be conducted subject to the rules of evidence,
          practice, and procedure applicable under section
          7463 if the amount of employment taxes placed in
          dispute is $10,000 or less for each calendar
          quarter involved.

                (2) Finality of decisions.--A decision
                                                     (continued...)
                              - 12 -

under section 7463 provide, or imply that we have, jurisdiction

under section 7436 to decide amounts of tax due.

     A taxpayer may elect to have the small case procedures under

section 7463 apply to a case brought under section 7436 if the

"amount of employment taxes placed in dispute" is $10,000

($50,000 after July 22, 1998) or less.   Sec. 7436(c)(1).   Section

7436(c) does not expressly state that it provides any

jurisdiction.   However, petitioner contends that section

7436(c)(1) would not require the Court to review the

Commissioner's calculation that less than $10,000 ($50,000 after

July 22, 1998) is in dispute unless we have jurisdiction to

decide the amount of a taxpayer's employment tax liability.

     We disagree.   We must know the amount placed in dispute to

decide whether a taxpayer may elect under section 7436(c) to have

the small case procedures of section 7463 apply.   However, the

fact that we must consider the amount in dispute for that purpose

does not provide, or imply that we have, jurisdiction to decide

the amount of the taxpayer's employment tax liability for the

periods in issue.

     6
      (...continued)
          entered in any proceeding conducted under this
          subsection shall not be reviewed in any other
          court and shall not be treated as a precedent for
          any other case not involving the same petitioner
          and the same determinations.

               (3) Certain rules to apply.--Rules similar to
          the rules of the last sentence of subsection (a),
          and subsections (c), (d), and (e), of section 7463
          shall apply to proceedings conducted under this
          subsection.
                               - 13 -

     Section 7436(c)(3) provides that rules similar to those in

section 7463(a) (last sentence), (c), (d), and (e) apply to cases

under section 7436(c)(3).   Each of those rules has a rational

purpose.   The following chart briefly describes each provision

listed in section 7436(c)(3), and states how rules similar to

each of those provisions could apply to a case brought under

section 7436 even if we lack jurisdiction to decide amounts of

tax due.

       Provisions Listed        Possible Application Of The Rules
         In Sec. 7463            Of That Section To Sec. 7436(c)
Sec. 7463(a) (last              We must include similar
sentence). We must include      information in an opinion
a brief summary of reasons      deciding a case brought under
for our opinion to comply       section 7436(c).
with secs. 7459(b) and 7460.
Sec. 7463(c). If a taxpayer     We may not find that more workers
elects to have the small        were employees or that the
case procedures apply, we       taxpayer was eligible for more
may enter a decision only       relief under section 530 of the
for amounts placed in           Revenue Act of 1978 than would
dispute of $10,000 or less      cause the amount in dispute to
per year ($50,000 after July    exceed $10,000 ($50,000 after
22, 1998).                      July 22, 1998).
Sec. 7463(d). Before a          Either party may ask that use of
decision is entered, any        the small case procedures be
party may ask that small        discontinued if the request is
case procedures not apply if    made before a decision is entered
there are reasonable grounds    and if there are reasonable
to believe that more than       grounds to believe that more than
$10,000 is in dispute or was    $10,000 ($50,000 after July 22,
overpaid ($50,000 after July    1998) is potentially in dispute.
22, 1998).
Sec. 7463(e). The amount of     We must include proposed
deficiency in dispute           additions to tax and penalties
includes additions to tax       when calculating the amount in
and penalties.                  dispute under section 7436(c).

     The rules provided in each of the sections listed in section

7436(c)(3) reasonably apply to section 7436 cases even if we lack
                                - 14 -

jurisdiction under section 7436 to decide the amounts of

employment tax due.    Thus, we conclude that section 7436(c) does

not provide, or imply that we have, jurisdiction to decide the

amount of employment tax due in a case arising under section

7436.

     4.     Conclusion Based on the Text of Section 7436

     Petitioner contends that if we read section 7436(a), (c),

and (d) together, section 7436 provides jurisdiction to decide

amounts of employment tax liability.     We disagree.   We see no

difference in the meaning of section 7436 whether each subsection

is analyzed separately or the entire section is analyzed as a

whole.    Based on the text of section 7436(a), (c), and (d) we

conclude that we lack jurisdiction to decide the amounts of tax

due in cases arising under section 7436.

B.   Legislative History

     Petitioner contends that the legislative history of section

7436 shows that Congress intended for us to have jurisdiction to

decide amounts of employment tax liability.     We disagree.

     Nothing in the legislative history conflicts with our

construction of section 7436.    The House and Senate committee

reports accompanying enactment of section 7436 use the same terms

to describe our jurisdiction as appear in section 7436(a).      Both

reports said that Congress intended to create jurisdiction for us

to decide certain employment status disputes, and neither report

states that we have jurisdiction to decide amounts in dispute.
                               - 15 -

H. Rept. 105-148, at 640 (1997); S. Rept. 105-33, at 304 (1997).

The House report states:

                    Explanation of Provisions

          The bill provides that, in connection with the
     audit of any person, if there is an actual controversy
     involving a determination by the IRS as part of an
     examination that (a) one or more individuals performing
     services for that person are employees of that person
     or (b) that person is not entitled to relief under
     section 530 of the Revenue Act of 1978, the Tax Court
     would have jurisdiction to determine whether the IRS is
     correct. For example, one way the IRS could make the
     required determination is through a mechanism similar
     to the employment tax early referral procedures.[7]
          The bill provides for de novo review (rather than
     review of the administrative record). Assessment and
     collection of the tax would be suspended while the
     matter is pending in the Tax Court. Any determination
     by the Tax Court would have the force and effect of a
     decision of the Tax Court and would be reviewable as
     such; accordingly, it would be binding on the parties.
     Awards of costs and certain fees (pursuant to section
     7430) would be available to eligible taxpayers with
     respect to Tax Court determinations pursuant to the
     bill. The bill also provides a number of procedural
     rules to incorporate this new jurisdiction within the
     existing procedures applicable in the Tax Court.

H. Rept. 105-148, supra at 639-640.     The Senate report is

essentially the same.   S. Rept. 105-33, supra at 304-305.

     The last sentence of the explanation states that section

7436 provides several procedural rules to incorporate this new

jurisdiction into the existing procedural rules which apply to

cases before our Court.    H. Rept. 105-148, supra at 640; S. Rept.

105-33, supra at 305; see H. Conf. Rept. 105-220, at 734 (1997).

     7
       See Announcement 97-52, 1997-2 I.R.B. 22; Announcement 96-
13, 1996-12 I.R.B. 33.
                               - 16 -

The reports do not state that section 7436(c) and (d) provide

procedural rules, but it appears that those are the procedural

rules referred to in this legislative history.

     Petitioner contends that the legislative history for section

7436 shows that we have jurisdiction to decide the amounts of

employment tax due for the workers whose status is before the

Court.   We disagree.   The legislative history states that

Congress intended that we decide "certain"8 and not all employment

tax disputes, and does not state that we should decide any issues

other than those specified in section 7436(a).

C.   Section 7436 Compared to Declaratory Judgment Provisions

     Petitioner points out that section 7436 differs in several

ways from the declaratory judgment provisions (sections 7428,

7476, 7477, 7478, 7479), and contends that this shows that

Congress intended to provide jurisdiction to decide the amounts

of employment tax due.    Petitioner points out that section 7436

and the declaratory judgment provisions differ in that (1)

section 7436(a) uses the term "determination", and the

declaratory judgment provisions state "make a declaration"; (2)

section 7436 incorporates the principles of several sections that

pertain to deficiency procedures, and the declaratory judgment

     8
       The House and Senate committee reports stated as reasons
for change:

                It will be advantageous to taxpayers to
           have the option of going to the Tax Court to
           resolve certain disputes regarding employment
           status. [H. Rept. 105-148, at 639 (1997); S.
           Rept. 105-33, at 304 (1997); emphasis added.]
                              - 17 -

provisions do not; and (3) declaratory judgment proceedings are

generally based on the administrative record, Rule 217(a), while

a proceeding under section 7436 is de novo.    H. Rept. 105-148,

supra at 640; S. Rept. 105-33, supra at 304.

     Petitioner also points out that we may not know the identity

of all taxpayers affected by our decision in a declaratory

judgment case.   For example, when we decide that an organization

does not qualify under section 501(c)(3), many taxpayers who have

made contributions to the organization and are affected by the

decision are unknown to the Court.     Petitioner contends that this

shows that cases arising under section 7436 are unlike

declaratory judgment cases because we know the identity of the

taxpayer in a case brought under section 7436.

     In response, respondent points out that section 7436 and the

declaratory judgment provisions are similar in that, for example,

(1) our jurisdiction in a case brought under section 7436 and in

a declaratory judgment case is triggered by respondent's issuance

of a notice of determination, see secs. 7428(a)(1), 7476(a)(1),

7477(a), 7478(a)(1), 7479(a); (2) section 7436 and the

declaratory judgment provisions have as subsection (a) "Creation

of remedy" and as subsection (b) "Limitations"; (3) section 7436

and the declaratory judgment provisions specifically require an

actual controversy involving a determination by the Secretary;

(4) section 7436 and the declaratory relief provisions include

"Petitioner" as subsection (b)(1) and have a subsection which
                               - 18 -

limits the time to file a petition in the Tax Court; and (5)

after stating the prerequisites for the type of determination,

section 7436 and the declaratory judgment provisions state:

"upon the filing of an appropriate pleading, the Tax Court may"

decide a specified issue or issues, without specific reference to

the amount of tax liability that results from that decision.

     Petitioner is right that section 7436 differs in some ways

from the declaratory judgment provisions.    However, we agree with

respondent that section 7436 is more like the declaratory

judgment provisions, which specify a subject matter over which we

have jurisdiction, but do not state that we may decide the amount

of tax due.   This contrasts with our deficiency jurisdiction

under section 6213, under which we may redetermine the "amount"

of tax due.   Sec. 6211(a).   Thus, a comparison of the declaratory

judgment provisions with section 7436 supports our conclusion

that section 7436 does not provide jurisdiction to decide amounts

of employment tax due.

D.   Whether It Would Be Illogical To Give Us Jurisdiction To
     Decide Worker Classification Status Without Jurisdiction To
     Decide Amounts of Tax Due

     Petitioner contends that it would be illogical to give us

jurisdiction to decide worker classification issues without

jurisdiction to decide amounts of tax due.   Petitioner points out

that if we lack jurisdiction to decide amounts of employment tax

due, a taxpayer would be required to go to a second judicial

forum to dispute those amounts.   Petitioner contends that

limiting our jurisdiction violates logic and public policy (e.g.,
                               - 19 -

the convenience of the parties and judicial economy).    We

disagree.    First, we do not acquire jurisdiction from theories

based on public policy, convenience of the parties, or judicial

economy.    See Trost v. Commissioner, 95 T.C. 565; Judge v.

Commissioner, 88 T.C. 1180-1181; Axe v. Commissioner, 58 T.C.
256, 259 (1972).    Although petitioner contends that a broader

grant of jurisdiction might have provided an additional

efficiency regarding the resolution of worker classification

disputes, we believe section 7436 does not give us that

authority.

     Second, section 7436 provides a reasonable and helpful

alternative to litigating worker classification cases in other

courts even if it does not provide jurisdiction to decide the

amounts of employment tax due.    Before section 7436 was enacted,

the U.S. District Courts and Court of Federal Claims had refund

jurisdiction over employment classification, entitlement to

relief under section 530 of the Revenue Act of 1978, and other

employment tax issues.    Congress found that disputes with the

Internal Revenue Service over worker classification and

entitlement to relief under section 530 of the Revenue Act of

1978 have been difficult for many taxpayers and decided to

provide for judicial review of these issues before this Court on

a prepayment basis.    See sec. 7436(d); H. Rept. 105-148, supra;

S. Rept. 105-33, supra.    Once these issues are decided, we

believe the parties will be much more likely to reach an

agreement about amounts of tax owing, if any.    A Tax Court
                               - 20 -

decision on worker classification issues will facilitate a final

resolution of the controversy.

E.   Whether the Attachment of a Consent To Assess Tax to the
     Notice of Determination Conflicts With Respondent's
     Contention That We Lack Jurisdiction To Decide the Amount of
     Employment Tax Due

     Petitioner points out that respondent attached a calculation

of the amount of tax that petitioner owes to the notice of

determination and contends that this is inconsistent with

respondent's position that we lack jurisdiction to decide amounts

of employment tax due.   Respondent contends that the calculation

to which petitioner refers is included only to show whether

petitioner may elect the small case procedures under section

7436(c).   Respondent's explanation is reasonable; a calculation

of amounts due is necessary if the small case procedures are to

apply for cases in which up to $10,000 ($50,000 after July 22,

1998) is in dispute.    The notice of determination and attachments

thereto do not create jurisdiction not otherwise provided by

statute to decide whether the amount of tax proposed to be

assessed is correct.

F.   Conclusion

     We conclude that we lack jurisdiction under section 7436 to

decide the amount of petitioner's employment tax liability for

the periods in issue.    For the foregoing reasons, we will grant

respondent's motion to dismiss for lack of jurisdiction and to

strike.
                                          An appropriate order

                                     will be issued.