Pollock v. Comm'r of Internal Revenue

• Decision Date: 12 February 2009
• Docket Number: No. 17755–07.,17755–07.
• Citation: 132 T.C. 21,132 T.C. No. 3
• Parties: Arlene L. POLLOCK, Petitioner v. COMMISSIONER of INTERNAL REVENUE, Respondent.
• Court: U.S. Tax Court

132 T.C. 21

132 T.C. No. 3

Arlene L. POLLOCK, Petitioner

v.COMMISSIONER of INTERNAL REVENUE, Respondent.

No. 17755–07.

United States Tax Court.

Feb. 12, 2009.

P sought relief from joint liability for unpaid taxes under sec. 6015, I.R.C. R sent her a notice of determination denying relief, but at a time before Congress gave the Tax Court jurisdiction to review such denials. R then sought to collect the taxes in a lien-enforcement action. This prompted the District Court hearing the lien-enforcement action to invoke the doctrine of equitable tolling and give P 30 days to file a petition with the Tax Court. P filed her petition within the time limit set by the District Court's order. R moved to dismiss for lack of jurisdiction because P filed her petition more than 90 days after R had mailed the notice of determination to her.

Held: We are not barred from reviewing the District Court's order.

Held, further: Sec. 6015, I.R.C., sets a jurisdictional time limit which may not be equitably tolled. The Tax Court has no jurisdiction to review P's petition.

Jason Grimes, for petitioner.¹

Leonard Provenzale, for respondent.

OPINION

HOLMES, Judge:

The IRS sent Arlene Pollock a notice of determination denying her request for innocent-spouse relief on April 27, 2006. She filed a petition seeking review of that notice more then a year later on August 9, 2007. The Code gives taxpayers only 90 days to file. Pollock waited 469 days. Do the math, the Commissioner tells us, and dismiss her petition for lack of jurisdiction.

Not so fast, says Pollock. On the day that the Commissioner mailed his notice of determination, the Government's position was that the Tax Court lacked jurisdiction to review it. This position had already been endorsed by the Ninth Circuit,² and would be again five days later by the Eighth Circuit. ³ On July 25, 2006, two days before Pollock's 90–day window would shut, we ourselves decided that we had no jurisdiction.⁴ And on August 25, 2006, the Chief Counsel of the IRS told his lawyers to move to dismiss any such petitions still pending before us for lack of jurisdiction. Congress later amended the Code to give us jurisdiction and made the change effective for all taxes “arising or remaining unpaid on or after [December 20, 2006].” ⁵ Pollock's taxes remain unpaid to this day. How can the usual 90–day limit apply to her?

The question presented: Must we dismiss Pollock's case for failure to file a petition with us when we would have had no jurisdiction over it?

Background

Pollock married in 1986, and had two children. She has an eighth-grade education and was a stay-at-home mom for most of the marriage. Differences between her and her husband grew and became irreconcilable, and they divorced in November 2000, with Pollock getting the family's home. Left behind from the marriage was an enormous tax debt—for the years 1995–99, the Pollocks jointly owed a total of $183,331, which with interest has grown to over $400,000. Neither Pollock paid and, between August 2001 and May 2002, the IRS sent them notices that it had filed federal tax liens (NFTLs) against them.

It is from this debt that Pollock seeks relief. That liability is hers because the Code makes spouses who sign a joint return jointly and severally liable for any tax due. Sec. 6013(d)(3).⁶ But relief is available in some cases under section 6015. And one way for a spouse to win relief under that section is to show that, “taking into account all the facts and circumstances, it is inequitable to hold [her] liable for any unpaid tax or any deficiency (or any portion of either).” Sec. 6015(f)(1). Our jurisdiction over such nondeficiency stand-alone petitions ⁷ brought under section 6015(f) was unclear in 2006.

Even before that, back in 2002 when the Commissioner sent his last NFTL to the Pollocks, we were already analyzing our jurisdiction over such cases. In Ewing v. Commissioner, 118 T.C. 494 (2002) ( Ewing I), we held—at the suggestion of the government—that we did have jurisdiction.⁸ Our initial analysis did not go unnoticed. In 2004 the Second Circuit expressed doubt. Maier v. Commissioner, 360 F.3d 361, 363 n. 1 (2d Cir.2004), affg. 119 T.C. 267 (2002). The Government then changed its mind and argued that we had no jurisdiction when Ewing I was appealed. In February 2006, the Ninth Circuit agreed with the Government's new position. Commissioner v. Ewing, 439 F.3d 1009 (9th Cir.2006), revg. Ewing I, vacating 122 T.C. 32 ( Ewing II ). Pollock began the process that would lead to this case sometime between Ewing I and the Ninth Circuit's reversal by filing a Form 8857 with the IRS.⁹

On April 27, 2006, four months after the Ninth Circuit ruled in Ewing, the IRS mailed a notice of determination denying innocent-spouse relief to Pollock. Prominently featured on its first page was a warning that she had only 90 days to file a petition challenging it. But where? The notice said Tax Court, but just days after the Commissioner mailed the notice to Pollock, the Eighth Circuit in Bartman v. Commissioner, 446 F.3d 785, 787 (8th Cir.2006), affg. in part, vacating in part T.C. Memo.2004–93, adopted the Ninth Circuit's position. The final blow came on July 25, 2006, when we revisited the question and agreed with these circuit courts that we did not have jurisdiction over cases like Pollock's. See Billings v. Commissioner, 127 T.C. 7 (2006). Two days later, Pollock's 90–day deadline for filing with us expired. She had at this point never filed a petition contesting the IRS's denial of relief with us or any other court.

Later that summer, the IRS's Office of Chief Counsel notified IRS attorneys about how they should handle section 6015(f) nondeficiency stand-alone cases after Billings. IRS Chief Counsel Notice CC–2006–020 (Aug. 25, 2006). This notice instructed IRS attorneys to file motions to dismiss for lack of jurisdiction in all nondeficiency stand-alone cases. Id. Although this was already happening with success (as the Ninth Circuit's ruling in Ewing proved), this notice coordinated the effort and changed the IRS's previous official stance that we had jurisdiction over these cases. IRS Office of Chief Counsel Notice CC–2006–020 (Aug. 25, 2006); see supra n. 8.

A month later, the Department of Justice began a collection suit against the Pollocks by filing a lien-enforcement action in the Southern District of Florida. The Government's goal was to collect more than $378,000 in income-tax debt from both Pollocks, and more than $318,000 in an unpaid trust-fund-recovery penalty owed by Pollock's former husband alone.¹⁰ If the Government won, it would be able to foreclose on the home transferred to Pollock during the divorce settlement.

On December 20, 2006, Congress amended section 6015 to grant us jurisdiction to hear section 6015(f) nondeficiency stand-alone cases. TRHCA, div. C, sec. 408(a), (c); sec. 6015(e)(1)(A). The amendment was effective for tax liabilities “arising or remaining unpaid on or after the date of the enactment.”

In 2007, the Commissioner moved for summary judgment against Pollock and her former husband in District Court. Pollock argued that she is entitled to innocent-spouse relief under section 6015(f), but everyone now acknowledges that this is not a defense to a lien-enforcement action.¹¹ On July 9, 2007, the District Court granted summary judgment against Pollock's former husband. But on July 12 the same court stayed the case against Pollock and granted her 30 days to bring a claim for relief before our Court.

In its order, the District Court explained that the special circumstances of this case—namely, the disordered state of the law in 2006—justified tolling the 90–day limit:

Ms. Pollock's failure to file a petition in the ninety-day window is excusable, given the uncertainty in the law over this issue. I find that the ninety-day review period for 6015(f) petitions is analogous to the ninety-day window for filing a complaint with the EEOC in Title VII cases. In that situation, the Supreme Court has held that the filing window is a “requirement subject to waiver, estoppel, and equitable tolling.” Zipes v. TWA, 455 U.S. 385, 393 (1982). Waiver and equitable tolling should also be available to those seeking review of a denial of innocent spouse relief, although like the Title VII cases, it should be granted sparingly. See Baldwin County Welcome Center v. Brown, 466 U.S. 147, 151 (1984).

Ms. Pollock's situation merits either a waiver or tolling of the ninety-day time period for filing a petition for review with the tax court. The uncertain state of the law on the jurisdiction of the tax court at the time she would have had to file the petition excuses her failure to file. * * *

United States v. Pollock, No. 06–80903 (S.D.Fla., July 12, 2007) (order staying case, granting defendant Arlene Pollock 30 days to file for relief in United States Tax Court).

Pollock filed her petition with us by the deadline set in the District Court's order, and we must now decide whether we have jurisdiction to hear her case. She has been a Florida resident throughout, and we held oral argument in Miami on the Commissioner's motion to dismiss this case for lack of jurisdiction.

Discussion

Our Court is one of limited jurisdiction, and we hear only those cases Congress tells us we can. Sec. 7442; Kluger v. Commissioner, 83 T.C. 309, 314 (1984). Like other federal courts, however, we do have jurisdiction in all cases to decide whether we have jurisdiction. Kluger, 83 T.C. at 314–15. And in this particular case we look at four questions:

• What weight do we give to the District Court's order?

• Is section 6015(e)'s deadline for filing petitions with us a jurisdictional limit or a statute of limitations?

• Can we construe section 6015(e) to give us jurisdiction over this case?

• Does the effective date of the law granting us jurisdiction apply to Pollock's case in a way that would give us jurisdiction?

I. The District Court's Order and Law of the Case

We...