Rosenberg v. Commissioner
| Decision Date | 30 September 1985 |
| Docket Number | Docket No. 28854-82. |
| Parties | Harry Rosenberg and Phyllis M. Rosenberg v. Commissioner. |
| Court | U.S. Tax Court |
Philip Adams, 1901 Avenue of the Stars, Los Angeles, Calif., for the petitioners. Darren M. Larson, for the respondent.
PANUTHOS, Special Trial Judge:1
This case is before the Court on respondent's Motion for Partial Summary Judgment filed pursuant to Rule 121.2 By his motion,3 respondent seeks a determination that this Court does not have jurisdiction to consider petitioners' contention that the deficiency determined against them should be credited to the extent of refund checks issued by respondent but not received by petitioners. For each of the years at issue petitioners claim that any refund check issued to them was cashed over their forged endorsements by their former attorney, Charles Berg.
Respondent issued a statutory notice of deficiency on September 21, 1982. The notice determined deficiencies against petitioners as follows:
Year Deficiency
1975 ............ $3,446.00
1976 ............ $4,096.00
1977 ............ $4,193.00
1978 ............ $5,122.00
1979 ............ $3,602.00
In his notice of deficiency respondent determined that petitioners were not entitled to claimed investment credits and losses generated by a limited partnership known as Vinque. The limited partnership was created to acquire and distribute master recordings.
Petitioners' tax returns for the years 1978 and 1979 were prepared by Berg, or persons connected with his office, and the address shown on the form was attorney Charles Berg's address. The Application for Tenative Refund (Form 1045) sought to carryback unused investment credits from the year 1979 to the years 1975, 1976, and 1977. The 1978 and 1979 Federal income tax returns claimed losses from Vinque. Thus, petitioners claimed overpayments for which respondent issued refund checks. Petitioners never received some or all of the refund checks which they expected as a result of their participation in the limited partnership. Petitioners claim that Berg received the proceeds of the refund checks.4
Rule 121 provides that a party may move for summary judgment upon all or any part of the legal issues in controversy so long as there is no genuine issue of material fact. Rule 121(b) provides that "a decision shall *** be rendered if the pleadings, answers to interrogatories, depositions, admissions, and any other acceptable materials *** show that there is no genuine issue as to any material fact and that a decision may be rendered as a matter of law." The Rule further provides that "partial summary adjudication may be made which does not dispose of all issues in the case." Elkins v. Commissioner Dec. 40,514, 81 T. C. 669, 674 (1983). The burden of proving that there is no genuine issue of material fact is on the moving party. Take v. Commissioner Dec. 41,153, 82 T. C. 630, 633 (1984); Graf v. Commissioner Dec. 40,123, 80 T. C. 944, 946 (1983); Espinoza v. Commissioner Dec. 38,853, 78 T. C. 412, 416 (1982). Therefore, respondent must prove that the Tax Court lacks jurisdiction to consider the question of petitioners' missing refund checks.
In addition, we must view the factual materials and inferences drawn therefrom in the light most favorable to the party opposing the motion. Estate of Gardner v. Commissioner Dec. 42,293, 82 T. C. 989, 990 (1984); Elkins v. Commissioner, supra; Jacklin v. Commissioner Dec. 39,278, 79 T. C. 340, 344 (1982). As a result, the facts set forth herein are taken from petitioners' pleadings, both admitted and denied, and the attorney's affidavit in opposition to respondent's motion. The facts are viewed in the terms most favorable to petitioner. Estate of Gardner v. Commissioner, supra.
It is well settled that the Tax Court is a court of limited jurisdiction, and we may exercise our jurisdiction only to the extent authorized by Congress. Section 7442;5 Commissioner v. Gooch Milling & Elevator Co. 43-2 USTC ¶ 9673, 320 U. S. 418 (1943); Kluger v. Commissioner Dec. 41,480, 83 T. C. 309, 314 (1984); Medeiros v. Commissioner Dec. 38,485, 77 T. C. 1255, 1259 (1981). It is equally true that, generally, once a petitioner invokes the jurisdiction of the Court, jurisdiction lies with the Court and remains unimpaired until the Court has decided the controversy. Dorl v. Commissioner Dec. 31,284, 57 T. C. 720, 722 (1972), affd. 74-2 USTC ¶ 9826 507 F. 2d 406 (2d Cir. 1974).6
The question of the Court's jurisdiction is fundamental and must be addressed when raised by a party or on the Court's own motion. See Estate of Young v. Commissioner Dec. 40,602, 81 T. C. 879, 880-881 (1983); Midland Mortgage Co. v. Commissioner Dec. 36,779, 73 T. C. 902, 905 (1980); Intervest Enterprises, Inc. v. Commissioner Dec. 31,569, 59 T. C. 91, 94 (1972); Goldstein v. Commissioner Dec. 20,561, 22 T. C. 1233, 1236 (1954).7 If we find that we do not properly have jurisdiction to consider an issue, then despite a party's choice of the Tax Court as a forum to settle the dispute, we may not decide the issue. Wheeler's Peachtree Pharmacy, Inc. v. Commissioner Dec. 24,429, 35 T. C. 177, 179 (1960); Shelton v. Commissioner Dec. 32,842, 63 T. C. 193 (1974); Herbert Brush Manufacturing Co. v. Commissioner Dec. 6770, 22 B. T. A. 646, 647 (1931).
In general, Tax Court jurisdiction exists only if a valid statutory notice of deficiency has been issued by the Commissioner and a timely petition has been filed therefrom. Sections 6212 and 6213; Rules 13 and 20; Midland Mortgage Co. v. Commissioner, supra at 907.8 It is not the actual existence of a deficiency on which the Court's jurisdiction is based, rather it is the Commissioner's determination of a deficiency which provides the basis for our jurisdiction. Hannan v. Commissioner Dec. 29,693, 52 T. C. 787, 791 (1969); Interest Enterprises, Inc. v. Commissioner, supra at 95.
A deficiency is generally defined as an amount by which the income, gift, or estate tax due under the law exceeds the amount of such tax shown on the return. Section 6211;9 Bregin v. Commissioner Dec. 37,173, 74 T. C. 1097, 1102 (1980). A deficiency is neither a theory nor an intangible concept. Veeder v. Commissioner 1 USTC ¶ 446, 36 F. 2d 342, 343 (7th Cir. 1929).10 An instance in which the issuance of a statutory notice of deficiency does not confer jurisdiction on the Court occurs when a notice of deficiency is erroneously issued after payment of the tax. Bendheim v. Commissioner 54-2 USTC ¶ 9446, 214 F. 2d 26, 28 (2d Cir. 1954); Anderson v. Commissioner Dec. 16,692, 11 T. C. 841, 843 (1948).11
We have jurisdiction to decide not only whether the Commissioner's determination of a deficiency was correct, but also whether a taxpayer's claim that he has overpaid is correct. Russell v. United States 79-1 USTC ¶ 9367, 592 F. 2d 1069, 1071 (9th Cir. 1979); Estate of Parshelsky v. Commissioner 62-1 USTC ¶ 9460, 303 F. 2d 14, 22 (2d Cir. 1962). Section 6512(b) (1) gives the Court jurisdiction to determine an overpayment.12 Respondent argues that because Congress has developed a separate statutory scheme for recovery of stolen or forged refund checks, the Court cannot consider petitioner's claim of overpayment, even though excess withholding credits are included in the definition of an overpayment13 and even though the Court has jurisdiction to determine an overpayment. We do not agree that our jurisdiction is barred by this separate statutory scheme.
In determining the amount of an overpayment for the year in which the Commissioner has determined a deficiency, we may take into account payments made by a taxpayer through withholding or by payment of estimated income tax. If these payments exceed the income tax liability for the year in controversy, then an overpayment exists. Keefe v. Commissioner Dec. 18,006, 15 T. C. 947, 955-956 (1950). In fact we recently held that our jurisdiction to determine an overpayment includes the power to consider interest as part of an overpayment. Estate of Baumgardner v. Commissioner Dec. 42,372, 85 T. C. — (filed Sept. 11, 1935).
We have previously faced a problem similar to the one presented in the instant case. See Bolnick v. Commissioner Dec. 27,413, 44 T. C. 245 (1965). In Bolnick, we held that we would consider the amount claimed by taxpayers on their return as an overpayment, despite the fact that respondent's records indicated a refund check had been issued. In that case, taxpayers maintained that they never received a refund of $778.90 for the taxable year for which respondent had determined a deficiency. We received evidence on the issue and ultimately concluded that there was an overpayment. For our purposes, the important fact is not that the Court decided that taxpayers had made an overpayment; instead, what is significant is the fact that the Court considered taxpayers' claim.14 In reaching this conclusion we stated that:
Our jurisdiction is precisely circumscribed by statute and we can only determine the amount of a deficiency or of an overpayment in income tax — or of both — for the taxable year for which respondent has determined a deficiency. Sec. 6512(b), I. R. C. 1954. But in determining the amount of an overpayment, albeit for the same year for which we may determine a deficiency, we are to take into account payments made by the taxpayer by withholding and by payments on declaration of estimated tax, and if the total of such payments exceeds income tax liability for the year in controversy, we are to determine an overpayment. Ernest J. Keefe Dec. 18,006, 15 T. C. 947 (1950). Bolnick v. Commissioner, supra at 258.15
We do have jurisdiction to determine whether or not petitioners received their refund checks, and if not, whether the amount due them in refunds constitutes an overpayment or reduces the deficiency. Since the function of this...
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