Court Opinion

ID: 4475822
Source: CourtListenerOpinion
Date Created: 2020-01-16 21:11:42.726252+00
Date Added: 2024-06-11T14:53:53.841422
License: Public Domain

Ofper, </., dissenting: On the theory on which this proceeding is being dismissed, a taxpayer could be bankrupted by a sufficiently successful application for relief under section 722. It is conceded that the deficiencies in income tax result solely from respondent’s partial allowance, already made administratively, of petitioner’s 722 claim. The refund due thereon will, however, not be paid to petitioner because it has the temerity to contest the disallowance of the balance. If it were willing to settle for what respondent has already allowed it, it would not be required to make any payment of taxes, since the 722 allowance will more than offset the income tax deficiency. The two are inextricably interconnected and should be disposed of together, either administratively or after litigation, so that a taxpayer will not be required to make a payment he does not owe, and then have to wait until the termination of a possibly protracted lawsuit before he gets back what belonged to him in the first place. There is nothing in the statute or in our rules to prevent this. The present proceeding is not being dismissed for lack of jurisdiction. If such a position were possible, it might be said that the Tax Court is helpless to avoid it. Cf. American Coast Line, Inc., 6 T. C. 67, affd. (C. A. 2) 159 F. 2d 665; Mutual Lumber Co., 16 T. C. 370. But this dismissal is for lack of prosecution, and the lack of prosecution is based. on the assumption that no issue exists with respect to the income tax deficiencies. There is at least a question as to the proper amount of this item and if, as I think, the course of justice requires that we retain the proceeding until both types of liability are finally determined, there is no reason why we could not do so. In spite of intimations to the contrary, this is not at all like a situation where the entire 722 claim is hanging in the balance, for at least two reasons. First, the partial administrative allowance of the 722 claim assures this petitioner that some payment — in fact one sufficient to discharge any income tax liability — will eventually occur. Second, the only reason it can be said, if at all, that there are no standard issues here is that the income tax deficiencies result solely from that same partial allowance of the 722 claim. Failure to dismiss this proceeding would hence create no authority whatever for the retention of jurisdiction in any other situation. The suggestion that the equities are on the side of respondent and that a contrary conclusion would interfere with tax collections seems to me wide of the mark. Eespondent is seeking to collect a tax which is admittedly due though the amount is uncertain, while refusing to make payment of a greater amount which is also admittedly due. On balance, the taxpayer is the creditor, not the debtor. Protecting it from the collection of something which will later inevitably require reimbursement to it seems to be a highly just and equitable procedure.