Snow v. Comm'r
| Decision Date | 17 June 2014 |
| Docket Number | Docket No. 6838-95,142 T.C. No. 23,Docket No. 6839-95 |
| Parties | DOUGLAS P. SNOW AND DEBORAH J. SNOW, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent DOUGLAS P. SNOW, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
In 1993 R mailed notices of deficiency regarding Ps' 1987 and 1990 tax years. In 1995 Ps filed petitions with the Court. Ps moved to dismiss for lack of jurisdiction alleging that the notices of deficiency had not been mailed to Ps' last known address and were therefore invalid. R also moved to dismiss for lack of jurisdiction because the petitions were untimely. These cases were assigned to a Special Trial Judge who wrote an initial report granting Ps' motions to dismiss. Because of the amounts in issue, the decisions in these cases were required by statute to be made by a regular Judge. After the Special Trial Judge submitted his initial report for review, the report was rewritten to grant R's motions to dismiss rather than Ps' motions. A regular Judge adopted the rewritten report and then entered orders dismissing for lack of jurisdiction on Oct. 15, 1996. See Snow v. Commissioner, T.C. Memo. 1996-457. The orders, which are treated as decisions, became final on Jan. 13, 1997.
In August 2005 the Court informed Ps that the initial report of the Special Trial Judge had proposed to grant Ps' motions. The Court sent Ps a copy of the initial report. This notification was in reaction to Ballard v. Commissioner, 544 U.S. 40 (2005). On July 3, 2013, Ps filed motions for leave to file motions to vacate the orders of dismissal that had become final on Jan. 13, 1997.
Held: As a general rule, the finality of a Tax Court decision is absolute; the recognized exceptions are when there has been a fraud on the Court or when the decision was void because the Court did not have jurisdiction to enter the decision. Here there was no fraud on the Court and the Court clearly had jurisdiction to decide whether we had jurisdiction to redetermine the deficiencies involved. Ps' motions will be denied.
Jonathan P. Decatorsmith, for petitioners.
George W. Bezold, for respondent.
RUWE, Judge: The matter before us concerns petitioners' motions for leave to file motions to vacate orders of dismissal.1 The motions were filed on July 3, 2013. The orders of dismissal that petitioners' motions seek to vacate were entered on October 15, 1996, pursuant to our opinion in Snow v. Commissioner, T.C. Memo. 1996-457.
The petitions in these cases were filed in 1995 regarding notices of deficiency for the taxable years 1987 and 1990. The notices of deficiency had been mailed in May 1993.
Shortly after the petitions were filed, the parties each moved to dismiss for lack of jurisdiction. Petitioners alleged that the notices of deficiency were invalid because they had not been sent to petitioners' last known address as required by section 6212.2 Respondent alleged that the notices of deficiency had been sent to petitioners' last known address, and were valid, but that the petitions had not been filed within the 90-day period following the dates on which the notices of deficiency had been mailed as required by section 6213(a). The Court granted respondent's motions to dismiss, holding that the notices of deficiency were valid and the petitions were untimely.
Section 7459(c) provides that "if the Tax Court dismisses a proceeding for lack of jurisdiction, an order to that effect shall be entered in the records of the Tax Court, and the decision of the Tax Court shall be held to be rendered upon the date of such entry." "[A]n order of dismissal for lack of jurisdiction is treated asthe Court's decision." Stewart v. Commissioner, 127 T.C. 109, 112 (2006). Section 7481(a)(1) provides that the decision of the Tax Court becomes final upon the expiration of the time allowed for filing an appeal. Section 7483 provides that a notice of appeal must be filed within 90 days after the decision of the Tax Court is entered. Petitioners did not appeal, and the Court's decisions became final on January 13, 1997.
Petitioners' motions for leave to file motions to vacate come over 16 years after the decisions in these cases became final. Petitioners, however, argue that special circumstances warrant vacating these decisions. These circumstances require some explanation.
The decisions in these cases were entered by Judge Dawson and were based on an opinion of Special Trial Judge Goldberg with which Judge Dawson agreed.3 See Snow v. Commissioner, T.C. Memo. 1996-457. Pursuant to section 7443A, the Chief Judge may assign certain types of cases to be heard by a Special Trial Judge. In cases such as petitioners', which involved disputed deficienciesexceeding $10,000,4 section 7443A required a presidentially appointed judge (hereinafter regular Judge) to make the decision. See Rules 180, 181, and 183 as they existed prior to amendment in 2005. At the time the instant cases were decided, it was the practice of the Court to have the report of a Special Trial Judge in such a case submitted to the Chief Judge, who would then assign it to a regular Judge for review, adoption, and entry of decision. If, upon review, the regular Judge disagreed with the Special Trial Judge's report, the two would confer and changes might be made through a collaborative process. See Ballard v. Commissioner, 544 U.S. 40, 57 (2005).
The Special Trial Judge's initial report in these cases, which was submitted to the Chief Judge pursuant to Rule 183(b), had proposed to grant petitioners' motions to dismiss for lack of jurisdiction because the notices of deficiency had not been properly sent to petitioners' last known address. In arriving at this conclusion, the initial report emphasized certain facts and circumstances that occurred after the mailing of the notices of deficiency.
After the Special Trial Judge submitted his initial report to the Chief Judge, the report was rewritten. The rewritten report explained that the appropriate test for deciding whether the notices were properly addressed was whether, at the timethe notices of deficiency were mailed, the Internal Revenue Service (IRS) knew or should have known that petitioners had moved to a new address. See Ward v. Commissioner, 907 F.2d 517 (5th Cir. 1990), rev'g 92 T.C. 949 (1989); Pomeroy v. United States, 864 F.2d 1191 (5th Cir. 1989); Monge v. Commissioner, 93 T.C. 22 (1989). Using this analysis, the revised report considered facts occurring after the mailing of the notices of deficiency to be irrelevant and held that the notices of deficiency had been mailed to petitioners' last known address. As a result, the revised report held that the notices of deficiency were valid and that respondent's motions to dismiss should be granted because the petitions were untimely. Judge Dawson then adopted the revised report, which appears at T.C. Memo. 1996-457, and, on October 15, 1996, entered the orders (decisions) granting respondent's motions to dismiss for lack of jurisdiction.
In accordance with Rule 183 in effect from 1983 to 2005, it was the Tax Court's practice to treat a Special Trial Judge's initial report submitted to the Chief Judge for adoption and decision by a regular Judge as an internal document. Therefore, Special Trial Judges' initial reports were not made available to the parties. Only the adopted reports and the decisions were served on the parties. See Ballard v. Commissioner, 544 U.S. at 45-46.
Years later, in 2005, a case handled under Rule 183 as it existed from 1983 to 2005 was heard by the United States Supreme Court. In Ballard, the Supreme Court held that for purposes of appealing a Tax Court decision, the parties were entitled to have access to a copy of the Special Trial Judge's initial report. The Supreme Court held that this was required because an appellate court could not otherwise review whether the regular Judge had properly followed Rule 183, which required that the regular Judge give due regard to the fact that the Special Trial Judge had the opportunity to evaluate the credibility of witnesses and give the Special Trial Judge's findings of fact the presumption of correctness. Neither Ballard nor Rule 183 required the reviewing Judge to always accept the findings of the Special Trial Judge. Rule 183 permitted the reviewing Judge to modify or reject the Special Trial Judge's report in whole or in part after giving it due regard and the presumption of correctness.
In reaction to the 2005 Ballard opinion, the Tax Court revised its Rules so as to prospectively provide the parties a copy of the initial report of the Special Trial Judge and allow them to comment on that report before it was reviewed by a regular Judge. See Rule 183 effective September 20, 2005, and Amendments to Rules of Practice and Procedure of the United States Tax Court, with explanatory notes. 125 T.C. 339, 342-347. The Court also attempted to find initial copies ofSpecial Trial Judges' reports that had previously been submitted for review and adoption. The initial reports which could be found were then served on the parties. The initial report of Special Trial Judge Goldberg was served on petitioners by an order dated August 19, 2005.5
Petitioners' motions that are now under consideration were filed almost 8 years after petitioners first learned of the Special Trial Judge's initial report and over 16 years after the decisions had become final. Petitioners allege that after receiving the Special Trial Judge's initial report in August 2005 they began exploring all options to obtain representation for the purpose of vacating the decisions that had been entered in 1996. Petitioners state that they contacted numerous attorneys, foundations, Senators, and Congressmen in their effort, but to no avail. They allege that it was not until late in 2012 that they were able to obtain their current counsel who filed the motions now under consideration in July 2013.
Respondent opposes peti...
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