Hinck v. United States

• Decision Date: 21 May 2007
• Docket Number: No. 06–376.,06–376.
• Citation: 127 S.Ct. 2011,2007 I.R.B. 1032,75 USLW 4352,550 U.S. 501,167 L.Ed.2d 888
• Parties: John F. HINCK, et ux., Petitioners, v. UNITED STATES.
• Court: U.S. Supreme Court

550 U.S. 501

2007-47 I.R.B. 1032

127 S.Ct. 2011

167 L.Ed.2d 888

75 USLW 4352

John F. HINCK, et ux., Petitioners,

v.UNITED STATES.

No. 06–376.

Supreme Court of the United States

Argued April 23, 2007.

Decided May 21, 2007.

Syllabus^*

A 1986 amendment to the Internal Revenue Code permits the Treasury Secretary to abate interest that accrues on unpaid federal income taxes if the interest assessment is attributable to Internal Revenue Service (IRS) error or delay. 26 U.S.C. § 6404(e)(1). Subsequently, the federal courts uniformly held that the Secretary's decision not to abate was not subject to judicial review. In 1996, Congress added what is now § 6404(h), which states that the Tax Court has “jurisdiction over any action brought by a taxpayer who meets the requirements referred to in section 7430(c)(4)(A)(ii) to determine whether the Secretary's failure to abate ... was an abuse of discretion, and may order an abatement, if such action is brought within 180 days after the date of the mailing of the Secretary's final determination not to abate ... .” § 6404(h)(1). Section 7430(c)(4)(A)(ii) in turn incorporates 28 U.S.C. § 2412(d)(2)(B), which refers to individuals with a net worth not exceeding $2 million and businesses with a net worth not exceeding $7 million. The IRS denied petitioner Hincks' request for abatement of interest assessed in 1999 for the period March 21, 1989, to April 1, 1993. The Hincks then filed suit in the Court of Federal Claims seeking review of the refusal to abate. The court granted the Government's motion to dismiss, and the Federal Circuit affirmed, holding that § 6404(h) vests exclusive jurisdiction to review interest abatement claims in the Tax Court.

Held: The Tax Court provides the exclusive forum for judicial review of a failure to abate interest under § 6404(e)(1). This Court's analysis is governed by the well-established principle that, in most contexts, “ ‘a precisely drawn, detailed statute pre-empts more general remedies,’ ” EC Term of Years Trust v. United States, ante, at 433, 127 S.Ct. 1763, 167 L.Ed.2d 729 (2007); it is also guided by the recognition that when Congress enacts a specific remedy when none was previously recognized, or when previous remedies were “problematic,” the remedy provided is generally regarded as exclusive, Block v. North Dakota ex rel. Board of Univ. and School Lands, 461 U.S. 273, 285, 103 S.Ct. 1811, 75 L.Ed.2d 840.Section 6404(h) fits the bill on both counts. In a single sentence, it provides a forum for adjudication, a limited class of potential plaintiffs, a statute of limitations, a standard of review, and authorization for judicial relief; it was also enacted against a backdrop of decisions uniformly rejecting the possibility of any review of the Secretary's § 6404(e)(1)determinations. Though Congress failed explicitly to define the Tax Court's jurisdiction as exclusive, it is quite plain that the terms of § 6404(h)—a “precisely drawn, detailed statute” filling a perceived hole in the law—control all requests for review of § 6404(e)(1) decisions,including the forum for adjudication. The Hincks correctly argue that Congress's provision of an abuse-of-discretion standard removed one of the obstacles courts had held foreclosed judicial review of such determinations, but Congress did not simply supply this single missing ingredient in enacting § 6404(h). Rather, it set out a carefully circumscribed, time-limited, plaintiff-specific provision, which also precisely defined the appropriate forum. This Court will not isolate one feature of this statute and use it to permit taxpayers to circumvent the other limiting features in the same statute, such as a shorter statute of limitations than in general refund suits or a net-worth ceiling for plaintiffs eligible to bring suit. Taxpayers could “effortlessly evade” these specific limitations by bringing interest abatement claims as tax refund actions in the district courts or the Court of Federal Claims, disaggregating a statute Congress plainly envisioned as a package deal. EC Term of Years Trust, ante, at 434, 127 S.Ct. 1763, 167 L.Ed.2d 729. Equally unavailing are the Hincks' contentions that reading § 6404(h) to vest exclusive jurisdiction in the Tax Court impliedly repeals the pre-existing jurisdiction of the district courts and Court of Federal Claims, runs contrary to the structure of tax controversy jurisdiction, and would lead to the “unreasonable” result that taxpayers with net worths exceeding the specified ceilings would be foreclosed from seeking judicial review of § 6404(e)(1) refusals to abate. Pp. 2016 – 2018.

446 F.3d 1307, affirmed.

ROBERTS, C.J., delivered the opinion for a unanimous Court.

Thomas E. Redding, Houston, TX, for petitioners.

Jonathan L. Marcus, Washington, DC, for respondent.

Paul D. Clement, Solicitor General, Counsel of Record, Eileen J. O'Connor, Assistant Attorney General, Thomas G. Hungar, Deputy Solicitor General, Jonathan L. Marcus, Assistant to the Solicitor General, Kenneth L. Greene, Bethany B. Hauser, Attorneys Department of Justice, Washington, D.C., for respondent.

Thomas E. Redding, Counsel of Record, Teresa J. Womack, Sallie W. Gladney, Redding & Associates, P.C., Houston, TX, for Petitioners.

Chief Justice ROBERTS delivered the opinion of the Court.

Bad things happen if you fail to pay federal income taxes when due. One of them is that interest accrues on the unpaidamount. Sometimes it takes a while for the Internal Revenue Service (IRS) to determine that taxes should have been paid that were not. Section 6404(e)(1) of the Internal Revenue Code permits the Secretary of the Treasury to abate interest—to forgive it, partially or in whole—if the assessment of interest on a deficiency is attributable to unreasonable error or delay on the part of the IRS. Section 6404(h) allows for judicial review of the Secretary's decision not to grant such relief. The question presented in this case is whether this review may be obtained only in the Tax Court, or may also be secured in the district courts and the Court of Federal Claims. We hold that the Tax Court provides the exclusive forum for judicial review of a refusal to abate interest under § 6404(e)(1), and affirm.

I

The Internal Revenue Code provides that if any amount of assessed federal income tax is not paid “on or before the last date prescribed for payment,” interest “shall be paid for the period from such last date to the date paid.” 26 U.S.C. § 6601(a). Section 6404 of the Code authorizes the Secretary of the Treasury to abate any tax or related liability in certain circumstances. As part of the Tax Reform Act of 1986, Congress amended § 6404 to add subsection (e)(1), which, as enacted, provided in pertinent part:

“In the case of any assessment of interest on ... any deficiency attributable in whole or in part to any error or delay by an officer or employee of the Internal Revenue Service (acting in his official capacity) in performing a ministerial act ... the Secretary may abate the assessment of all or any part of such interest for any period.” 26 U.S.C. § 6404(e)(1) (1994 ed.).

In the years following passage of § 6404(e)(1), the federal courts uniformly held that the Secretary's decision not to grant an abatement was not subject to judicial review. See, e.g.,Argabright v. United States, 35 F.3d 472, 476 (C.A.9 1994); Selman v. United States, 941 F.2d 1060, 1064 (C.A.10 1991); Horton Homes, Inc. v. United States, 936 F.2d 548, 554 (C.A.11 1991); see also Bax v. Commissioner, 13 F.3d 54, 58 (C.A.2 1993). These decisions recognized that § 6404(e)(1) gave the Secretary complete discretion to determine whether to abate interest, “neither indicat[ing] that such authority should be used universally nor provid[ing] any basis for distinguishing between the instances in which abatement should and should not be granted.” Selman, supra, at 1063. Any decision by the Secretary was accordingly “committed to agency discretion by law” under the Administrative Procedure Act, 5 U.S.C. § 701(a)(2), and thereby insulated from judicial review. See, e.g.,Webster v. Doe, 486 U.S. 592, 599, 108 S.Ct. 2047, 100 L.Ed.2d 632 (1988); Heckler v. Chaney, 470 U.S. 821, 830, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985).

In 1996, as part of the Taxpayer Bill of Rights 2, Congress again amended § 6404, adding what is now subsection (h). As relevant, that provision states:

“Review of denial of request for abatement of interest

“(1) In general.

“The Tax Court shall have jurisdiction over any action brought by a taxpayer who meets the requirements referred to in section 7430(c)(4)(A)(ii) to determine whether the Secretary's failure to abate interest under this section was an abuse of discretion, and may order an abatement, if such action is brought within 180 days after the date of the mailing of the Secretary's final determination not to abate such interest.” 26 U.S.C. § 6404(h)(1) (2000 ed., Supp. IV).

Section 7430(c)(4)(A)(ii) in turn incorporates 28 U.S.C. § 2412(d)(2)(B), which refers to individuals with a net worth not exceeding $2 million and businesses with a net worth not exceeding $7 million. Congress made subsection (h) effective for all requests for abatement submitted to the IRS after July 30, 1996, regardless of the tax year involved. § 302(b), 110 Stat. 1458.¹

II

In 1986, petitioner John Hinck was a limited partner in an entity called Agri–Cal Venture Associates (ACVA). Along with his wife, petitioner Pamela Hinck, Hinck filed a joint return for 1986 reporting his share of losses from the partnership. The IRS later examined the tax returns for ACVA and proposed adjustments to deductions that the partnership had claimed for 1984, 1985, and 1986. In 1990, the IRS issued a final notice regarding the partnership's returns, disallowing tens of millions of dollars of deductions. While the partnership sought administrative review of this decision, the Hincks, in May 1996, made an advance remittance of $93,890 to the IRS toward...