David Dung Le, M.D., Inc. v. Comm'r of Internal Revenue, No. 13702–99.

CourtUnited States Tax Court
Writing for the CourtLARO
Citation114 T.C. 268,114 T.C. No. 18
Decision Date18 April 2000
Docket NumberNo. 13702–99.
PartiesDAVID DUNG LE, M.D., INC., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

114 T.C. 268
114 T.C. No. 18

DAVID DUNG LE, M.D., INC., Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

No. 13702–99.

United States Tax Court.

April 18, 2000.


Corporate taxpayer petitioned for redetermination of deficiencies. IRS moved to dismiss for lack of jurisdiction based on corporation's suspension. The Tax Court, Laro, J., held that: (1) suspended corporation lacked power to initiate lawsuit, and (2) power was not returned until after period for filing Tax Court petition.

Motion granted.

Judgment affirmed, 22 Fed.Appx. 837.

R moves the Court to dismiss this case for lack of jurisdiction, alleging that P, a corporation organized under California law, lacked the capacity to file the petition instituting this action. On Apr. 1, 1991, the State of California Franchise Tax Board (the Board) suspended P's corporate powers, rights, and privileges for failure to pay State income taxes, and the Board did not relieve P of that suspension until (and effective) Feb. 28, 2000. R issued P a notice of deficiency on July 1, 1999, and P filed the subject petition with the Court on Aug. 12, 1999.Held: We shall grant R's motion; under applicable State law: (1) P lacked the power to initiate a lawsuit during the time it was suspended, and (2) that power was not returned to P until after the applicable 90–day period in which it was required to file a petition with this Court.Wayne Hagendorf, for petitioner.

David R. JoJola and Igor S. Drabkin, for respondent.

OPINION
LARO, J.

Respondent moves the Court to dismiss this case for lack of jurisdiction, arguing that petitioner lacked the capacity to file the subject petition with the Court because petitioner's corporate powers, rights, and privileges were under suspension when the petition was filed. Petitioner objects thereto, arguing primarily that: (1) Its suspension was improper, and (2) the fact that its status was recently revived means that it may maintain this action. Petitioner also argues that respondent has waived the right to assert the jurisdictional issue.

We shall grant respondent's motion. Unless otherwise indicated, section references are to the applicable provisions of the Internal Revenue Code. Rule references are to the Tax Court Rules of Practice and Procedure.

Background

David Dung Le, a.k.a David Van Le, incorporated petitioner under the laws of the State of California on or about December 22, 1982, using the name Dung Van Le, a medical corporation. On April 1, 1991, pursuant to applicable State law, see Cal. Rev. & Tax.Code secs. 23301 and 23302 (West 1992 & Supp.1999), the State of California Franchise Tax Board (the Board) suspended petitioner's corporate powers, rights, and privileges for failure to pay State income taxes. The State of California secretary of state certified through a document entitled “DOMESTIC CORPORATION CERTIFICATE OF FILING AND SUSPENSION” that petitioner's corporate powers, rights, and privileges were suspended on April 1, 1991, and that they continued to be suspended as of February 15, 2000. On February 28, 2000, the Board issued to petitioner a “CERTIFICATE OF REVIVOR” providing in relevant part that petitioner, effective February 28, 2000, “has been relieved of suspension * * * and is now in good standing with the Franchise Tax Board.”

On July 1, 1999, respondent issued petitioner a notice of deficiency. Petitioner, through its counsel, Wayne Hagendorf, filed its petition with the Court on August 12, 1999. On the date of filing, petitioner's mailing address and principal place of business were in Houston, Texas.

Discussion

We must decide whether we have jurisdiction to decide this case. We are a legislatively created (Article I) Court, and, as such, our jurisdiction flows directly from Congress. See Freytag v. Commissioner, 501 U.S. 868, 870, 111 S.Ct. 2631, 115 L.Ed.2d 764 (1991); Kelley v. Commissioner, 45 F.3d 348, 351 (9th Cir.1995), affg. T.C. Memo.1990–158; Neilson v. Commissioner, 94 T.C. 1, 9, 1990 WL 61 (1990); Naftel v. Commissioner, 85 T.C. 527, 529, 1985 WL 15396 (1985); see also sec. 7442. Whether we have jurisdiction to decide a matter is an issue that a party, or this or an appellate court sua sponte, may raise at any time. The failure to question our jurisdiction is not a waiver of the right to do so, for if we lack jurisdiction over an issue, we do not, and never did, have the power to decide it. See Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982); see also Brown v. Commissioner, 78 T.C. 215, 217–218, 1982 WL 11188 (1982), and the cases cited therein.

Jurisdiction must be shown affirmatively, and petitioner, as the party invoking our jurisdiction in the case at bar, bears the burden of proving that we have jurisdiction over its case. See Fehrs v. Commissioner, 65 T.C. 346, 348, 1975 WL 3030 (1975); Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 180, 1960 WL 1136 (1960); National Comm. to Secure Justice, Etc. v. Commissioner, 27 T.C. 837, 839, 1957 WL 918 (1957). In order to meet its burden, petitioner must establish affirmatively all facts giving rise to our jurisdiction. See Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, supra at 180; Consolidated Co. v. Commissioner, 15 B.T.A. 645, 651 (1929). Petitioner must establish that: (1) Respondent issued to it a valid notice of deficiency, and (2) it, or someone authorized to act on its behalf, filed with the Court a timely petition. See Rule 13(a), (c); Monge v. Commissioner, 93 T.C. 22, 27, 1989 WL 75172 (1989); Fehrs v. Commissioner, supra at 348; National Comm. to Secure Justice, Etc. v. Commissioner, supra at 839. See generally sec. 6213(a) (a taxpayer such as petitioner must file with the Court a petition for redetermination within 90 days from the date of the notice of deficiency).

The fact that respondent issued to petitioner a valid notice of deficiency is not in dispute. The parties focus on the second requirement; i.e., a timely petition. Given the fact that respondent issued the notice of deficiency to petitioner on July 1, 1999, petitioner, to invoke our jurisdiction, must have caused a proper petition to be filed with the Court on or before September 29, 1999. See sec. 6213(a). It is not enough that petitioner may have simply caused to be forwarded to this Court within the statutory period a petition for filing. In regard to a corporate taxpayer such as petitioner, a proper filing requires that the taxpayer tendering (or causing to be tendered through an agent) a petition to the Court for filing must have the capacity to engage in litigation in this Court. See Rule 60(c); see also Brannon's of Shawnee, Inc. v. Commissioner, 71 T.C. 108, 111, 1978 WL 3328 (1978); Condo v. Commissioner, 69 T.C. 149, 151, 1977 WL 3763 (1977); Wheeler's Peachtree Pharmacy, Inc. v. Commissioner, supra at 180; National Comm. to Secure Justice, Etc. v. Commissioner, supra at 839.

Whether a corporation has the capacity to engage in litigation in the Tax Court is determined by applicable State law, which, in this case, is the law of California. See Rule 60(c); see also Brannon's of Shawnee, Inc. v. Commissioner, supra at 111; Condo v. Commissioner, supra at 151. On the basis of our review of that law, we conclude that petitioner lacked the requisite capacity to litigate as of the date of the petition. See Condo v. Commissioner, supra; Rosa v. Commissioner, T.C. Memo.1996–322; see also Community Elec. Serv., Inc. v. National Elec. Contractors Association, Inc., 869 F.2d 1235 (9th Cir.1989). The following three sections of the California annotated code are relevant to our determination:

§ 23301. Delinquency; suspension or forfeiture of corporate powers, etc.

Except for the purposes of filing an application for exempt status or amending the articles of incorporation as necessary either to perfect...

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89 practice notes
  • Ewing v. Comm'r of Internal Revenue, No. 1940–01.
    • United States
    • United States Tax Court
    • May 31, 2002
    ...Congress. Freytag v. Commissioner, 501 U.S. 868, 870, 111 S.Ct. 2631, 115 L.Ed.2d 764 (1991); David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 269, 2000 WL 387659 (2000), affd. 22 Fed. Appx. 837 (9th Cir.2001); see also sec. 7442. When the Court lacks jurisdiction over an issue, the......
  • Culp v. Comm'r of Internal Revenue, 14054-21
    • United States
    • United States Tax Court
    • February 15, 2022
    ...jurisdiction must be affirmatively shown by the party seeking to invoke that jurisdiction. See David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff'd, 22 Fed.Appx. 837 (9th Cir. 2001); Romann v. Commissioner, 111 T.C. 273, 280 (1998); Fehrs v. Commissioner, 65 T.C. 346, ......
  • John C. Hom & Assocs., Inc. v. Comm'r, 140 T.C. No. 11
    • United States
    • United States Tax Court
    • May 7, 2013
    ...and was not reinstated until April 2012, shortly before trial. Under the same scenario, in David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268 (2000), aff'd, 22 Fed. Appx. 837 (9th Cir. 2001), interpreting California law, we concluded that the Court lacked jurisdiction. That case is con......
  • Fontanez v. Comm'r of Internal Revenue, 10154-21
    • United States
    • United States Tax Court
    • January 18, 2022
    ...jurisdiction must be affirmatively shown by the party seeking to invoke that jurisdiction. See David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff'd, 22 Fed.Appx. 837 (9th Cir. 2001); Romann v. Commissioner, 111 T.C. 273, 280 (1998); Fehrs v. Commissioner, 65 T.C. 346, ......
  • Request a trial to view additional results
102 cases
  • Ewing v. Comm'r of Internal Revenue, No. 1940–01.
    • United States
    • United States Tax Court
    • May 31, 2002
    ...Congress. Freytag v. Commissioner, 501 U.S. 868, 870, 111 S.Ct. 2631, 115 L.Ed.2d 764 (1991); David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 269, 2000 WL 387659 (2000), affd. 22 Fed. Appx. 837 (9th Cir.2001); see also sec. 7442. When the Court lacks jurisdiction over an issue, the......
  • Culp v. Comm'r of Internal Revenue, 14054-21
    • United States
    • United States Tax Court
    • February 15, 2022
    ...jurisdiction must be affirmatively shown by the party seeking to invoke that jurisdiction. See David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff'd, 22 Fed.Appx. 837 (9th Cir. 2001); Romann v. Commissioner, 111 T.C. 273, 280 (1998); Fehrs v. Commissioner, 65 T.C. 346, ......
  • John C. Hom & Assocs., Inc. v. Comm'r, 140 T.C. No. 11
    • United States
    • United States Tax Court
    • May 7, 2013
    ...and was not reinstated until April 2012, shortly before trial. Under the same scenario, in David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268 (2000), aff'd, 22 Fed. Appx. 837 (9th Cir. 2001), interpreting California law, we concluded that the Court lacked jurisdiction. That case is con......
  • Fontanez v. Comm'r of Internal Revenue, 10154-21
    • United States
    • United States Tax Court
    • January 18, 2022
    ...jurisdiction must be affirmatively shown by the party seeking to invoke that jurisdiction. See David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff'd, 22 Fed.Appx. 837 (9th Cir. 2001); Romann v. Commissioner, 111 T.C. 273, 280 (1998); Fehrs v. Commissioner, 65 T.C. 346, ......
  • Request a trial to view additional results

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