Ewing v. Comm'r of Internal Revenue

• Citation: 118 T.C. 494,118 T.C. No. 31
• Decision Date: 31 May 2002
• Docket Number: No. 1940–01.,1940–01.
• Parties: Gwendolyn A. EWING, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: United States Tax Court

118 T.C. 494

118 T.C. No. 31

Gwendolyn A. EWING, Petitioner

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

No. 1940–01.

United States Tax Court.

May 31, 2002.

Taxpayer petitioned for review of IRS' denial of innocent spouse relief from joint and several liability for income tax. The IRS moved to dismiss for lack of jurisdiction. The Tax Court, Ruwe, J., held that: (1) Court had jurisdiction to determine whether equitable relief was available to taxpayer for underpayment of tax shown on joint return, and (2) taxpayer's petition was timely filed.

Motion denied.

Thornton, J., dissented.

Laro, J., dissented and filed an opinion, in which Whalen and Foley, JJ., joined. Karen L. Hawkins, for petitioner.

Thomas M. Rohall, for respondent.

OPINION

RUWE, J.

P and H filed a joint return. A portion of the tax shown on the return was not paid. R has not asserted a deficiency against P or H. P submitted to R a request for relief from joint and several liability under sec. 6015, I.R.C. R mailed a notice of determination denying P relief under sec. 6015(b), (c), and (f), I.R.C. The notice of determination was not mailed to P's last known address. P actually received the notice of determination by the 88th day after the notice was mailed. The envelope containing P's petition was postmarked 92 days after the mailing of the notice of determination. The petition was received and filed 99 days after the date R mailed the notice of determination. The petition was filed more than 6 months after P submitted her request for relief to R.

Held: We have jurisdiction to determine whether P is entitled to equitable relief under sec. 6015(f), I.R.C., regarding the underpayment of tax shown on P's joint return.

Held, further: P's petition was timely filed under sec. 6015(e)(1)(A), I.R.C. In accordance with sec. 6015(e)(1)(A), I.R.C., P's petition was filed more than 6 months after the date she submitted her request for relief to R. R failed to mail his notice of determination to P's last known address pursuant to sec. 6015(e)(1)(A), I.R.C. The misaddressed notice of determination prejudiced P's ability to file her petition within 90 days after the mailing of R's notice of determination.

This case is before the Court on respondent's Motion to Dismiss for Lack of Jurisdiction. Respondent's motion is based on the ground that the petition was not timely filed. We held a hearing on respondent's motion during which we raised sua sponte the issue of whether we lack jurisdiction under section 6015(e) ¹ to review respondent's denial of equitable relief pursuant to section 6015(f) where no deficiency has been asserted.

The Tax Court may exercise jurisdiction only to the extent authorized by Congress. Fernandez v. Commissioner, 114 T.C. 324, 328, 2000 WL 565108 (2000); Gati v. Commissioner, 113 T.C. 132, 133, 1999 WL 601010 (1999). ² Whether this Court has jurisdiction is fundamental and may be raised by a party or on the Court's own motion. Fernandez v. Commissioner, supra at 328; Naftel v. Commissioner, 85 T.C. 527, 530, 1985 WL 15396 (1985).

Background

Petitioner and her husband filed a joint tax return for 1995. They reported tax due on their return but did not pay the full amount reported. Respondent has not asserted a deficiency against either petitioner or her husband for 1995.

On February 2, 1999, petitioner filed a Form 8857, Request for Innocent Spouse Relief (And Separation of Liability and Equitable Relief), requesting “equitable relief” for a portion of the amount of the unpaid tax liability shown on the 1995 joint return. On October 31, 2000, respondent mailed a Notice of Determination Concerning Relief From Joint and Several Liability Under Internal Revenue Code Section 6015 (notice of determination). In the notice of determination, respondent listed the type of relief requested as relief under section 6015(b), (c), and (f). Respondent determined that petitioner was entitled to “no relief from tax under section 6015” because petitioner had knowledge of the liability and was still married and living with her husband. The notice of determination was not sent to petitioner's last known address.

Petitioner filed a petition to this Court pursuant to section 6015(e) seeking review of respondent's denial of relief from joint and several liability. The petition was received and filed on February 7, 2001, 99 days after the date respondent mailed the notice of determination. The envelope containing the petition was postmarked January 31, 2001, 92 days after the date respondent mailed the notice of determination. The date shown on the petition was January 27, 2001, 88 days after the date respondent mailed the notice of determination.

Discussion

Under present law, there are three primary jurisdictional bases upon which this Court may review a claim for relief from joint and several liability. First, a claim may be raised as an affirmative defense in a petition for redetermination of a deficiency filed pursuant to section 6213(a). Butler v. Commissioner, 114 T.C. 276, 287–288, 2000 WL 502841 (2000). A second basis upon which we may exercise jurisdiction is contained in section 6015(e). This provision allows a spouse who has requested relief to petition the Commissioner's denial of relief, or to petition the Commissioner's failure to make a timely determination. Such cases are referred to as “stand alone” cases, in that they are independent of any deficiency proceeding. Fernandez v. Commissioner, supra at 329. A third situation where we may exercise jurisdiction to determine relief from joint and several liability is where the issue is properly raised in a collection proceeding under sections 6320 and 6330.³ In the instant case, petitioner's claim for relief from joint and several liability was made in a “stand alone” petition filed pursuant to section 6015(e).

I. Election Requirement in Section 6015(e)

In Fernandez v. Commissioner, supra at 330, we interpreted the then existing prefatory language in section 6015(e)(1)—“in the case of an individual who elects to have subsection (b) or (c) apply”—to encompass a procedural requirement applicable to all joint filers seeking relief from joint liability. We noted that section 6015(f) provides an additional opportunity for relief to those taxpayers who do not otherwise meet the requirements of subsections (b) or (c). Fernandez v. Commissioner, supra at 330. Petitioner is seeking relief under section 6015(f). Section 6015(f) permits relief from joint and several liability where “it is inequitable to hold the individual liable for any unpaid tax or any deficiency (or any portion of either)”. (Emphasis added.) Congress did not limit equitable relief under section 6015(f) to situations where a deficiency has been asserted. H. Conf. Rept. 105–599, at 254–255, 1998–3 C.B. 747, 1008–1009. However, a prerequisite for relief under section 6015(f) is that relief is not available under section 6015(b) or (c), which deal with deficiency situations. Sec. 6015(f)(2); Fernandez v. Commissioner, 114 T.C. at 330–331. Thus, in every case where the taxpayer submits a request to the Commissioner for relief under section 6015, and such request includes a claim for relief under section 6015(f), the Commissioner must first examine both subsections (b) and (c) to determine whether relief is available under those subsections before determining whether relief is available under section 6015(f). Respondent therefore treated petitioner's request for relief under section 6015 as an election under section 6015(b), (c), and (f).⁴

II. Jurisdiction Over Claims Involving Underpayment of Tax

The first issue for decision is whether this Court has jurisdiction under section 6015(e) to review the denial of a request for relief from joint and several liability where no deficiency has been asserted. Both petitioner and respondent agree that we have such jurisdiction.

A. Background of Section 6015

In order to decide this jurisdictional issue, it is necessary to review the evolution of the pertinent statutory provisions and caselaw. Congress enacted section 6015 in 1998 as part of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub.L. 105–206, sec. 3201(a), 112 Stat. 734. ⁵ As originally enacted, section 6015(e) provided, in pertinent part:

SEC. 6015(e). Petition for Review by Tax Court.—

(1) In general.—In the case of an individual who elects to have subsection (b) or (c) apply—

(A) In general.—The individual may petition the Tax Court (and the Tax Court shall have jurisdiction) to determine the appropriate relief available to the individual under this section * * * [Emphasis added.] Section 6015(f) provides:

SEC. 6015(f). Equitable Relief.—Under procedures prescribed by the Secretary, if-

(1) taking into account all the facts and circumstances, it is inequitable to hold the individual liable for any unpaid tax or any deficiency (or any portion of either); and

(2) relief is not available to such individual under subsection (b) or (c), ⁶

the Secretary may relieve such individual of such liability. [Emphasis added.]

In two cases decided while the above-quoted statutory language of section 6015(e) was still in effect, we held that this Court had jurisdiction to review denials of requests for relief from joint and several liability pursuant to section 6015(f) in both deficiency and “stand alone” proceedings. In Butler v. Commissioner, 114 T.C. 276, 2000 WL 502841 (2000), we addressed the issue of whether we have authority to review a denial of relief under section 6015(f) where a claim for relief from joint and several liability was raised as an affirmative defense in a petition for redetermination of a deficiency filed pursuant to section 6213(a). We interpreted the term “under this section” in section 6015(e)(1)(A) to include all subsections of section 6015. Butler v. Commissioner, supra at 289–290. We found nothing in section 6015(e) that precluded our review of the Commissioner's denial of equitable relief...