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NO ORAL ARGUMENT HAS BEEN SET FOR MARCH 19,2015
14-1004
FINAL BRIEF OF APPELLANTS
UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA
LISA A. EDWARDS & JOSEPHP. THOMAS,
Appellants, v.
COMMISSIONER OF INTERNAL REVENUE,
Appellee.
APPEAL OF FINAL INCOME TAX DECISION OF THE U.S. TAX COURT
January 19, 2019 BRUCEE.GARDNER,ESQ Counsel for Appellants The Gardner Law Firm, P.C. 1101 Pennsylvania Ave NW
Suite 600 Washington, D.C. 20004
(202) 271-0552
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 1 of 49
CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASE
A. PARTIES AND AMICI
1. The parties who have appeared before the U.S. Tax Court in this
case are individuals, Joseph P. Thomas and Lisa A. Edwards, and the
Commissioner of the Internal Revenue Service.
2. No intervenors or amici appearances have occurred so far in this
case.
B. RULINGS UNDER REVIEW
On December 16, 2013 Special Trial Judge, Lewis R. Carluzzo, in
Lisa A. Edwards & Joseph P. Thomas v. Commissioner of Internal
Revenue, Docket #23392-12 dismissed petitioners' and respondent's motions
to dismiss for lack of jurisdiction on the issue of whether deficiency notices
were issued to the taxpayers as "moot". The judge's sua sponte dismissal
order did not state the grounds for the court's lack of jurisdiction. In
addition, the Tax Court failed to accept its jurisdiction under 26 U.S.C.
§6330(d)(1) to address the illegal levy part of this case. Furthermore,
petitioners' Motion for an A ward of Reasonable Administrative & Litigation
Costs was denied on the grounds that they were not the prevailing party in
the litigation.
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It must be noted at the hearing held on May 15,2013, respondent
acquiesced to the granting of petitioner's cross motion to dismiss for lack of
jurisdiction on the deficiency issue and in an order dated June 13, 2013,
Judge Carluzzo "dismissed the case for lack of jurisdiction upon the ground
that there has been no showing that a notice of deficiency has been issued to
either petitioner for any of the years placed in dispute in the petition."
C. RELATED CASES
The case for review was not previously before this Court or any other court
except the U.S. Tax Court from which it was appealed.
I certify that the above information is accurate and correct.
January 19, 2015 Is/Bruce E. Gardner Bruce E. Gardner, Esq.
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TABLE OF CONTENTS
I. CERTIFICATE AS TO PARTIES, RULING, & RELATED CASES ....................................................... .i
II. TABLE OF AUTHORITIES ............................................ vi
A. Cases ................................................................... vi
B. Statutes ................................................................. vii
C. Other Authorities ..................................................... viii
D. Glossary ............................................................... viii
III. JURISDICTIONAL STATEMENT .................................... x
A. Basis of Tax Court's Subject Matter Jurisdiction .................. x
1. Redetermine Tax Deficiency ............................................. x
2. Enjoin Illegal Tax Assessments & Levies ........................... x
3. Levy Collection Action ....................................................... x
4. Award of Attorney Fees & Costs ........................................ x
B. Basis for the Court of Appeal's Jurisdiction ....................... xi
C. Filing Dates Establishing Timely Appeal Of Final Order ........ xii
IV. STATEMENT OF ISSUES PRESENTED FORREVIEW ........ .l
V. STATEMENT OF THE FACTS ....................................... 2
A. Sua Sponte Dismissal Did Not State Grounds For Dismissal.. .. 2
B. Procedure History Regarding Tax Deficiency ............................ 3
C. IRS Resumed Illegal Collection Actions .................................... 6
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D. Award of Attorney Fees & Costs .......................................... 8
VI. SUMMARY OF ARGUMENTS ....................................... 9
A. Tax Court Has Jurisdiction To Determine Whether Taxpayers' Rights To Access The Court Were Violated
By The IRS ................................................................................ 9
B. Litigation Costs Motion Was Based On June 13, 2013 ........ .10
VII. ARGUMENT ............................................................ 12
A. Standard ofReview .................................................................. 12
B. Grounds For Jurisdictional Dismissal Must Be Stated By Court. ........................................................................ 12
1. Judge Stated Ground For Jurisdictional Dismissal.. ........... .l3
2. Judge Did Not State Grounds For Jurisdictional Dismissal. ............................................................................. 14
3. Appellate & Tax Courts State Grounds For Jurisdictional Dismissals ..................................................... 15
4. Stating Grounds For Dismissal Fosters Compliance With Tax Laws ..................................................................... 16
C. The Limited Motion To Vacate Was Only To Allow The Court To Determine The Attorney Fees Claim .................. 17
D. Tax Court Has Jurisdiction To Review The IRS Appeals Office's Arbitrary Determination Not To Issue A Determination Letter .................................................................. 20
E. Taxpayers Are Entitled To Award Of Litigation Costs .............. 23
1. The Material Facts In Pietanza Exist In This Case .............. 24
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2. The Commissioner Has Accepted The Law Established by Pietanza ........................................................................... 26
3. Appellants Were The Prevailing Parties In The Tax Court. ................................................................ 27
VIII. CONCLUSION ........................................................... 27
CERTIFICATE OF COMPLIANCE WITH RULE 32(a) ............. 29
CERTIFICATE OF SERVICE ...................................................... 30
ADDENDUM
1. Order and Order Of Dismissal For Lack of Jurisdiction Dated, December 16, 2013 .................................................. 31
2. Order dated August 9, 2013 .................................................. 34
3. Order of Dismissal, dated June 13, 2013 ............................. .36
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II. TABLE OF AUTHORITIES
A. Table Cases
Butti v. Commissioner, T.C. Memo. 2008-82 ....................................... 25
Gardner v. United States, 211 F.3d 1305 (D.C. Cir. 2000) ................. .10, 17
Goza v. Commissioner, 114 T.C. 176 (2000) ...................................... 22
Hebert v. National Academy of the Sciences, 974 F.2d 192 (D.C. Cir. 1992) .................................................... .12
Hori v. US., 782 F.2d 227 (D.C. Cir.1986) ....................................... 12
Jones v. Lujar, 883 F.2dc1031 (D.C. Cir. 1989) .......................................... 12
Koener v. Commissioner, T.C. Memo 1997-144 .......................................... 25
Monge v. Commissioner, 92 T.C. 22 (1989) .............................................. .14
* Pietanza v. Commissioner, 92 T.C. 729 (1989), affd. without published opinion , 935 F.2d 1282 (3rd Cir. 1991) ................ 9, 12, 14, 15, 16, 24, 25, 26, 27, 28
*Pickell v. Commissioner, T.C. Memo 2008-60 ....................................... 9, 23
Pyo v. Commissioner, 83 T.C. 626 (1984) .......................................... 14, 16
Sego v. Commissioner, 114 T.C. 604 (2000) ................................................ 21
*Shelton v. Commissioner, 63T.C. 193 (1974) ....................... .ix,14, 15, 16
Steel Co v. Citizens for a Better Environment, 583U.S. 83 (1998) ......... ix, 10
United States v. Zolla, 724 F.2d 808 (9th Cir. 1984) .................................... 24
*Welch v. United States, 678 F.3d 1371 (Fed.Cir. 2012) ........................................ 15, 16, 24, 25, 27,28
Woodral v. Commissioner, 112 T.C. 19 (1999) ............................................ 22
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Authorities upon which we chiefly rely are marked with asterisks.
B. Table of Statutes
26 U.S.C. §6212(a) ........................................................................ 3, 8
26 U.S.C. §6212(b) .................................................... .3, 4, 12, 13,28
26 U.S.C. §6213(a) ................................ .ix, 1, 4, 8, 9, 10, 12, 17, 20, 28
26 U.S.C. §6214(a) ............................................................ .ix, 9, 13
26 U.S.C. §6330 .................................................................. X' 8, 21
26 U.S.C. §6330(a) .......................................... 3, 4, 9, 13, 14, 15, 23
26 U.S.C. §6330(b) ...................................................................... 9
26 u.s.c. §6330(d) ...................................................................... 9
26 U.S.C. §6330(d)(1) ................................................... X, 3,7, 13, 20
26 U.S.C. §6330(e)(l) ........................................................... x, 6, 22
26 u.s.c. §7430 ......................................................... 2, 4, 8, 19, 23
26 U.S.C. §7430(c)(4) ................................................................. 12
26 U.S.C. §7430(c)(4)(B) ..................................................... .11, 27
26 U.S.C. §7430(c)(4)(B)(i) ........................................................ 27
26 U.S.C. §7430(c)(4)(B)(iii) ...................................................... 12, 27
26 U.S.C. §7482 ..................................................................... X, 9
26 U.S.C. §7483 ..................................................................... xi
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C. Table of U.S. Tax Court Rules & Other Authorities
Rule 34(b) ................................................................. 18
IRM §8.1.1.1(2)(A) .................................................................. 7, 21
IRM §8.22.4.2(15) ......................................................................... 6
IRM §4.8.9.11 .......................................................................... 9, 26
IRM §446.2 .................................................................................. 24
GLOSSARY
D.C.= Washington, D.C.
IRC= Internal Revenue Code/ 26 U.S.C.
IRS = Internal Revenue Service/Commissioner
IRM- Internal Revenue Manual
L= lines
T.C. =U.S. Tax Court
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III. JURISDICTIONAL STATEMENT
"Every court has judicial power to hear and determine, and inquire
into, its own jurisdiction and to decide all questions, the decision
of which is necessary to determine the questions of jurisdiction. "
Shelton v. Commissioner, 63 T.C. 193, 198 (1974); Steel Co. v.
Citizens for a Better Environment, 583 U.S. 83, 96 (1998). Where
jurisdiction is lacking because the IRS failed to issue a proper
notice of deficiency, the Tax Court will dismiss on that ground.
Shelton at 196.
A. Basis of Tax Court's Subject Matter Jurisdiction
1. Redetermine Tax Deficiency
26 U.S.C. § 6214(a) grants the U.S. Tax Court jurisdiction to
redetermine the correct amount of an income tax deficiency.
26 U.S.C. § 6213(a), grants the U.S. Tax Court jurisdiction to
redetermine the deficiency and determine whether a deficiency
notice was mailed to the taxpayer's before the tax deficiency is
assessed and assets are levied.
2. Enjoin Illegal Tax Assessments & Levies
Section §6213(a) also grants the Tax Court authority to enjoin an
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IRS assessment or levy that is not preceded by mailing a
deficiency notice to the taxpayers.
3. Levy Collection Action.
26 U.S.C. §6330(d)(l) grants the U.S. Tax Court jurisdiction
to review cases involving IRS levy actions.
26 U.S.C. §6330(e)(l) grants the Tax Court the authority to
enjoin a levy or proceeding when a timely administrative IRS
appeal has been filed under (d)( 1) with respect to matters related to
an unpaid or proposed levy action.
4. Award of Attorney Fees & Costs
26 U.S.C§. 7430(f)(l) provides the court has the authority to award
reasonable litigation costs and administrative costs in connection
with the determination, collection, or refund of any tax, interest, or
penalty to the prevailing party.
B. Basis for the Court of Appeal's Jurisdiction
26 U.S.C.§7482 grants the United States Court of Appeals with
exclusive jurisdiction to review the decisions of the Tax Court.
26 U.S.C. §7483 provides "review of a decision of the Tax
Court shall be obtained by filing a notice of appeal with the clerk
of the Tax Court within 90 days after the decision of the Tax Court
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is entered."
C. Filing Dates Establishing Timely Appeal Of Final Order.
On December 16, 2013, the Tax Court entered a final order in
the case of Lisa A. Edwards & Joseph P. Thomas v.
Commissioner of Internal Revenue, Docket #23392-12 . Said final
order disposed of all the parties' claims. On January 6, 2014 the
taxpayers timely filed their notice of appeal.
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IV. STATEMENT OF ISSUES PRESENTED FOR REVIEW.
1. Whether the judge is required to comply with established precedent
set by the Tax Court and state the grounds for the dismissal for lack of
jurisdiction since the grounds have legal significance to determine whether
the taxpayers were afforded their statutory rights to due process of law and
their petition was merely filed late or the IRS' tax assessments and levies are
illegal pursuant to IRC § 6213(a) because no deficiency notices were ever
created or mailed to them.
2. Whether the taxpayers' "limited motion to vacate" the June 13,
2013 order granted by the court on August 9, 2013 allowed the judge to
substantially change that order and issue a new order to dismiss for lack of
jurisdiction without explanation, thereby mooting the taxpayers' litigation
costs claims.
3. Whether the Tax Court had jurisdiction under 26 U.S.C. §6330(d)
(1) to review levy actions for the 2008 tax year when an administrative IRS
appeal was timely was held but the IRS' Appeals Office intentionally failed
to issue a determination letter after the March 19, 2013 collection due
process hearing was held.
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4. Whether the taxpayers are entitled to an award of litigation costs
pursuant to 26 U.S.C.§7430 when they satisfied all the requirements of the
statute and Appellee has conceded the taxpayers are entitled to litigation
costs even though the amount to be awarded is contested.
V. STATEMENT OF THE FACTS
A. Sua Sponte Dismissal Did Not State Grounds For Dismissal.
This case involves Judge Carluzzo sua sponte dismissal of this case for
lack of jurisdiction. The sua sponte dismissal was made after a limited
motion to vacate was filed so the taxpayers' Motion for an Award of
Reasonable Administrative & Litigation Costs could be considered. At
the August 7, 2013 hearing the judge stated he would not change his
June 13, 2013 order when he was reviewing the taxpayer's litigation cost
claim. [217,Ll-4]. However, the judge materially changed the grounds
for his jurisdictional dismissal. The judge also denied the taxpayers'
motion for litigation costs even though they satisfied all the requirements
of26 U.S.C. §7430 and the litigation cost portion of the motion was
uncontested by Appellee except as to the amount of the award the
taxpayers were entitled to receive. [229, ftn5; 234]
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B. Procedure History Regarding Tax Deficiency.
The procedural history of this case and the facts are clear and
basically not in dispute. Appellant, Joseph P. Thomas is a retired
detective of the District of Columbia Metropolitan Police Department
and his estranged spouse is a medical billing clerk. On September 17,
2012, taxpayers, Lisa A. Edwards and Joseph P. Thomas filed a U.S.
Tax Court petition concerning the 2007 and 2008 1 tax years. [1-12]
Their joint petition was filed because the IRS violated their rights to
due process of law. First, the IRS took the taxpayers' assets prior to
mailing them deficiency notices for either the 2007 or 2008 tax years as
mandated by IRC §6212(b). The IRS' actions denied the taxpayers an
opportunity to be heard prior to the taking of their assets which was
prohibited by§6213(a). Second, the IRS seized the taxpayers' income tax
refund checks, wages, and bank accounts prior to mailing them a Final
Notice of Intent to Levy as required by IRC §6330(a) and §6331(d)(l)
for either the 2007 or 2008 tax years. Subsequently, the IRS mailed
taxpayer Thomas a Final Notice of Intent To Levy for the 2008 tax year
but it never mailed the taxpayers a 2007 levy notice.
1 Only Appellant Thomas petitioned the Tax Court for the 2008 tax year.
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The relief requested in the taxpayers' petition were authorized by IRC
§6213(a) and §6330(a) except the award for attorney fees which was
authorized under IRC §7430. The taxpayers specifically requested the
Tax Court to hold that no deficiency notices for either the 2007 or 2008
tax years had been mailed to them, thereby, voiding the August 16, 2010
tax assessments made by the IRS for those tax years, enjoin the IRS from
future collection action against them for said tax years, order the return
of the money taken based on the illegal tax assessments, as well as,
award attorney fees. [11-12].
The IRS filed a motion to dismiss the taxpayers' petition because it
was filed late. The IRS' motion to dismiss alleged deficiency notices
were sent to the taxpayers but was silent on its failure to issue Final
Notices of Intent To Levy to the taxpayers prior to levying their assets.
The taxpayers' opposed the IRS' motion and filed a cross motion to
dismiss on the grounds that the IRS never created the deficiency notices
for either the 2007 or 2008 tax years and therefore could not have mailed
them to the taxpayers, as required by IRC §6212(b ). [25-84; 85-13 8].
The IRS filed an opposition to the taxpayers' cross motion but at the May
15, 2013 hearing acquiesced to the granting of the taxpayers' motion.
[168,L3-4]. The IRS' failure to mail Final Notices of Levy was never
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answered by the government.
At the May 15, 2013 hearing, Judge Carluzzo granted the taxpayers'
motion to dismiss on the grounds "that there has been no showing that a
notice of deficiency has been issued to either petitioner for any of the
years placed in dispute in the petition." [171-172]. The Order of
Dismissal was dated June 13, 2013. The issue concerning the IRS'
failure to mail the taxpayers a Final Notice of Levy for the 2007 and
2008 remained before the tax court for consideration. [166,L16-21.]
On July 11, 2013, the taxpayers filed a timely Motion for an Award of
Reasonable Administrative and Litigation Costs. [176-200]. The Tax
Court required the June 13, 2013 dismissal order be vacated before the
tax court would consider the attorney fee award, even though, the fee
request was stated in the taxpayers' prayer for relief. [206,L.7-18; 173-
175].
On July 11, 2013, the taxpayers also requested "an Order to vacate the
Order of Dismissal dated June 13, 20 13 for the limited purpose of
considering their Motion For An Award of Reasonable Administrative &
Litigation Costs, .... " [emphasis added] [173-175]. A hearing was held
on August 7, 20 13 on the motion to vacate and the related attorney fee
claim. By order dated August 9, 2013 the Tax Court granted the
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taxpayers' limited request to vacated the June 13, 2013 order so it could
consider the attorney fees motion. [201-202].
On December 16, 2013, Judge Carluzzo issued an order denying the
taxpayers' motion for attorney fees, dismissing the case sua sponte for
lack of jurisdiction without stating why the court lacked jurisdiction , and
held the taxpayers' and the IRS' motion to dismiss for lack of jurisdiction
was moot. [250-252]. Since the judge did not state the grounds for
dismissal, the IRS took the position that it was not barred from pursuing
collection enforcement actions against the taxpayers and it seized more
of the taxpayers' assets. The sua sponte dismissal also dismissed the IRS'
failure to issue the taxpayers' Final Notices of Intent to Levy for the 2007
and 2008 tax years which the government never filed a response to. [1]
C. IRS Resumed Illegal Collection Actions.
On or about June 9, 2014, the IRS seized $5,552.22 of Joseph
Thomas' 2013 income tax refund despite the fact a Request for a
Collection Due Process (CDP) Hearing for the 2008 tax year had been
pending since September 21, 2012.[78-79]. Pursuant to 26 U.S.C.
§6330(e)(1) and IRM §8.22.4.2(15) the timely filed CDP hearing request
suspended all collection enforcement actions by the IRS until that matter
was resolved but that tax law also did not stop the IRS from levying.
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Even though the IRS Appeals Office held a hearing on that CDP
request on March 19, 2013 after the Tax Court petition was filed, no
determination letter was ever issued to taxpayer Thomas so he could
appeal an unfavorable decision to the Tax Court. [163,L 12-22.] On
October 25, 2013, the IRS took the position that the CDP proceeding was
moot because the 2008 tax year was currently before the tax court. [228].
However, the issue before the tax court had been dismissed on June 13,
2013, yet no determination letter was ever issued by appeals to allow the
taxpayer to exercise his rights under IRC §6630(d)(l). [164,168]
At the May 15, 2013 hearing, the court was informed of the
September 21, 2012 CDP hearing request and it stated that matter may
come up down the road when a Notice of Determination for 2008 was
issued. [164-168]. IRM 8.1.1.1(2A) states the Appeals Office ensures a
prompt conference and prompt decision to accomplish its mission. It has
been about 2 years since the CDP hearing request was made by taxpayer
Thomas, it has been over 1 year since the hearing was held, and taxpayer
Thomas still has not received a decision during that time, while the IRS
continued to illegally take his money.
When the IRS was contacted about the refund seizure they stated the
taking of the taxpayer's 2013 refund was an "offset" that is not
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considered a collection action barred by IRC §6330. Yet the IRS never
established a notice of deficiency was ever created and mailed to this
taxpayer for the 2008 tax year, as required by IRC §6212(b) &§ 6213(a),
to establish a valid August 16, 2010 tax assessment upon which the IRS
could use to seize this taxpayer's tax refund. The judge's sua sponte
ruling, was a back door way of approving the IRS' failure to prove it
created the deficiency notices that were required to be mailed to the
taxpayers. The ruling opened the door for the IRS' illegal collection
actions to continue.
D. Award of Attorney Fees & Costs
The taxpayers satisfied all the requirement of §7430 and based on the
June 13, 2013 order and the Pietanza2 case they were the prevailing party
in the litigation. The IRS did not contest the taxpayers' entitlement to
litigation costs but contested the amount to be awarded. [229, ftn5].
In response to the taxpayers' attorney fee motion, Judge Carluzzo
reversed the position he took in the June 13, 2013 order that no
deficiency notices had been sent to the taxpayers and instead dismissed
the case sua sponte for lack of jurisdiction without stating why the court
2 Pietanza v. Commissioner, 92 T.C. 729 (1989), ajjid without published opinion, 935 F.2d 1282 (3rd Cir. 1991).
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 20 of 49
lacked jurisdiction. Furthermore, the judge stated the taxpayers' reliance
on Pietanza, a case in which the Commissioner has acquiesced and is
specifically cited in his Internal Revenue Manual §4.8.9.11, is misplaced
because the IRS' position was "substantially justified". Yet, the IRS
never produced the deficiency notices it alleged were mailed to the
taxpayers.
VI. SUMMARY OF ARGUMENT
A. Tax Court Has Jurisdiction To Determine Whether Taxpayers' Rights To Access The Court Were Violated By The IRS.
The Tax Court has jurisdiction over cases when the IRS fails to issue
taxpayers notices of deficiency to prevent them from seeking
redeterminations of the deficiency. 26 U.S.C. § 6214(a) ; 26 U.S.C.§
6213( a). Similarly the Tax Court has jurisdiction over cases when the IRS
levies a taxpayer's assets without first issuing a Final Notice of Intent to
Levy to prevent them from appealing the IRS collection action or obtaining
a letter of determination. 26 U.S.C. § 6330(a),(b),(d). Finally, the Tax Court
has jurisdiction over cases when the IRS Appeals Office denies the taxpayer
his statutory rights to obtain judicial review ofthe IRS' levy actions by not
promptly issuing a letter of determination. Pickell v. Commissioner, T.C.
Memo 2008-60; 26 U.S. C. § 6330( d). All of those situations have occurred
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in this case but the tax court judge refused to accept subject matter
jurisdiction to determine its jurisdiction over any of those matters, which
resulted in multiple violations of the taxpayers' statutory and U.S.
Constitutional rights to due process of law.
It is well settled that subject matter jurisdiction is the power given to
the courts to declare the law and when jurisdiction does not exist, the only
function remaining for the court is stating the grounds for dismissing the
action. Steel Co. v. Citizens for a Better Environment, 583 U.S. 83,94
(1998). In this case, the judge's sua sponte dismissal warranted an
explanation of why he decided the court lacked jurisdiction on issues in this
case, especially, with regards to the redetermination of the tax deficiency. If
no deficiency notices were created to mail to the taxpayers then §6213(a)
prohibited the tax assessments and levies against the taxpayers which made
the IRS' action unlawful. On the other hand, if the notices were mailed to
the taxpayers then their petition would be late and they would have no
prepayment redress in Tax Court. Gardner v. US, 211 F.3d 1305, 1312
(D.C. Cir. 2000). So it was important for the judge to state why the court
lacked jurisdiction.
B. Litigation Costs Motion Was Based On June 13,2013.
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The taxpayers' motion for attorney fees was based on the Tax Court's
June 13, 2013 order that there was no showing the IRS issued notices of
deficiency for the 2007 or 2008 tax years. The "limited motion to vacate"
the June 13, 2013 order did not allow the judge to change that order but
rather to consider the motion for attorney fees and incorporate in it that
order. The judge stated he would not change his order. [217,L14, 3-4.] For if
the judge was allowed to substantially change the order, as he did, in favor
of the IRS then the taxpayers would not be the prevailing party.
Furthermore, in light of the fact the taxpayers' prayer for relief requested
attorney fees, the judge could have allowed the taxpayers 30 days from the
May 15, 2013 hearing date to submit their motion for attorney fees and
incorporate both decisions in his June 13, 2013 order but he did not.
The IRS agreed that the taxpayers were "the prevailing party" in the
litigation based on the June 13, 2013 order and the taxpayers were entitled
to attorney fees for litigation costs. [229,ftn5]. The amount of the attorney
fees was being negotiated between the parties prior to the judge's December
16, 2013 sua sponte dismissal.
The tax court judge stated "respondent established that his position in
the proceeding is substantially justified. See sec. 7430(c)(4)(B)". However,
the IRS never argued that issue in response to the litigation costs, the IRS
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 23 of 49
asserted only that its administrative position was substantially justified and
the taxpayers were not entitled to an award of administrative costs. The
Third Circuit's affirmation of the Tax Court's decision in Pietanza and
§7430 (c)(4)(B)(iii) support a determination that the IRS' litigation position
was not substantially justified. The judge did not reference §7430 (c)(4)(B)
(iii) in his order, even though, it appears he disagreed with the precedent set
by the Tax Court and approved by the Third Circuit Court of Appeals in
Pietanza.
VII. ARGUMENT
A. Standard of Review
Issues of law are reviewed de novo. Jones v. Lujan, 883 F.2d 1031,
1037 (D.C. Cir.1989); Herbert v. National Academy of the Sciences, 974
F.2d 192, 197 (D.C. Cir. 1992); Hori v. US, 782 F.2d 227, 241 (D.C. Cir.
1986); The issues for appellate review involves interpretation and
application of the statutes stated in the jurisdictional section of this brief as
well as, 26 U.S.C §6212(b), §6630(a); 26 U.S.C. §7430(c)(4) and the due
process clause of the U.S. Constitution.
B. Grounds For Jurisdictional Dismissal Must Be Stated By Court.
The IRS determined the taxpayers owed tax deficiencies of$9,606.00
and $12,933.47 respectively for the 2007 and 2008 tax years. IRC §6213(a)
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requires the IRS to mail the taxpayers notices of deficiency or it is
prohibited from assessing the tax and levying assets to collect the tax. The
deficiency notices allow the taxpayer to contest the IRS' determination
without first paying the tax. IRC §6330(a) states no levy can be made
unless the IRS has notified the taxpayer of their right to a hearing. The
taxpayers never received the deficiency notices or Final Notices of Intent to
Levy but the tax was illegally assessed and illegally levied their assets. The
taxpayers filed a petition with the Tax Court for a redetermination that no
taxes were owed the IRS because the §6212 (b) deficiency notices had not
been mailed to them. In addition, the §6330(a) notices had not been mailed
to the taxpayers so the IRS was prohibited from taking their assets. The Tax
Court had jurisdiction to decide its jurisdiction of the above issues based on
26 U.S.C. § 6214(a), §6213(a) and §6330(d)(1). The judge was required to
state the grounds for the jurisdictional dismissal in order to prevent the IRS
from continuing to violate the tax laws and to comply with the statutory
notice requirements.
1. Judge Stated Ground For Jurisdictional Dismissal.
The Tax Court has jurisdiction to determine whether it has
jurisdiction. Pyo v. Commissioner, 83 T.C. 626, 632 (1984). The Tax Court
has jurisdiction to determine the reason why it does not have jurisdiction.
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 25 of 49
Monge v. Commissioner, 92 T.C. 22, 27 (1989). When at any time and in
any manner it is presented to the Court that it does not have jurisdiction, the
Court must examine and state the grounds for its jurisdiction or lack thereof.
Shelton v. Commissioner, 63 T.C. 193, 198 (1974). Judge Carluzzo held a
hearing on the tax deficiency motions, adhered to precedent established by
the Tax Court and issued an order dated June 13, 2013 in favor of the
taxpayers. The order stated the grounds for the jurisdictional dismissal was
that the IRS made no showing that deficiency notices for either tax year had
been issued to the taxpayers. The grounds for the jurisdictional dismissal
had independent legal significance.
The results of the June 13, 2013 order meant the IRS' August 16,
2012 tax assessments were invalid, the levy actions were illegal, and the
money seized from the taxpayers based on the invalid tax assessments
· would be returned to them. Shelton at 197.
2. Judge Did Not State Grounds For Jurisdictional Dismissal.
In light of the fact the taxpayers prevailed on the most significant
litigation issue they sought attorney fees from the IRS. To have the attorney
fee claim considered the taxpayers were required to get the June 13, 2013
dismissal order vacated. They submitted a limited request for an order to
vacate the dismissal so Judge Carluzzo could consider the attorney fee
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 26 of 49
claim. However, on December 16, 2013, the judge denied the claim and
then sua sponte dismissed the entire case for lack of jurisdiction without
stating the grounds for either the tax deficiency or section 6330(a) dismissal.
The effect of the judge's order validated the IRS' illegal tax
assessments and its illegal levy actions by not affecting the validity of
deficiency notices the IRS alleged they created and mailed to the taxpayers,
which they never proved. Shelton at 197; Pietanza 736. The dismissal also
gave the IRS additional time to create deficiency notices where none
previously existed. The order did not address why the judge elected not to
follow the precedent set by the Tax Court in Pietanza, that the IRS had to
produce a copy of the deficiency notice and the date it was mailed to
prevail. Id. at 736; Welch v. US. 678 F.3d 1371 (Fed. Cir. 2012). This order
did not acknowledge the IRS' acquiesced to the granting the taxpayers'
motion to dismiss made at the May 15, 2013 hearing or that the
Commissioner cites the Pietanza case in his manual for his employees to
follow. [20,L3-4]. The order also does not address the fact that the IRS
never alleged they mailed the section 6330(a) notices to the taxpayers prior
to taking levy actions against them.
3. Appellate & Tax Courts State Grounds For Jurisdictional Dismissals.
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 27 of 49
The Tax Court and various federal appellate courts who have
addressed tax deficiency notice issues have all stated the grounds for the
court's lack of subject matter jurisdiction. Pietanza 735; Welch v. US, 678
F.3d 1371 (Fed.Cir.2012); Pyo; Shelton at 195. The Tax Court in Pietanza
stated "Our task is to decided whether we lack jurisdiction because no
statutory notice of deficiency has been issued or because a valid notice was
issued but the petition was not timely." Id at 735; Shelton at 195. "If
jurisdiction is lacking because of respondent's failure to issue a valid notice
of deficiency, we will dismiss the case on that ground, rather than for lack of
a timely filed petition." Id . Thus, it is imperative to state the grounds for
lack of jurisdiction to determine the parties rights and whether the IRS has
complied with the tax laws. Otherwise, the IRS would not be compelled to
comply with the statutory notice requirements which in turn would prevent
taxpayers from exercising their due process rights before the Tax Court,
where they can resolve tax matters prior to payment. The alternative would
require taxpayers to prepaid the tax, if they could, and file refunds claims in
the District or Claims Courts because the IRS violated the tax laws.
4. Stating Grounds For Dismissal Fosters Compliance With Tax Laws.
In Gardner, this Court has addressed the issue that §6213(a)
establishes "the Service's authority and responsibility to send a notice of
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 28 of 49
deficiency to a taxpayer prior to initiating proceedings to assess the
deficiency". Gardner v. US., 211 F.3d 1305, 1311 (D.C. Cir. 2000).
In Gardner, this Court stated the purpose of §6213(a) is to preserve
the taxpayer's right to litigate his tax liability in Tax Court before paying the
tax." Id. In addition, §6213(a) flatly prohibits the Service from making an
assessment and levying until a notice of deficiency is mailed to the taxpayer.
Id. 1312. "[T]he purpose of the statute which created the Tax Court, ... was to
provide taxpayers with means of obtaining a judicial determination of their
tax liabilities without having to pay the deficiencies first." Shelton at 197.
That purpose would be defeated if the grounds for the jurisdictional
dismissal is not stated and the taxpayers are forced to seek relief in the
District or Claims Court or forfeit the relief because of their inability to pay.
Thus, the grounds for jurisdictional dismissals in this case were required to
be stated by the judge.
C. The Limited Motion To Vacate Was Only To Allow The Court To Determine The Attorney Fees Claim.
The taxpayers stated on pages 10, 11, and 12 of their September 17,
2012 petition that they wanted the Court to award them attorney fees if they
prevailed in this case. Tax Court Rule 34(b) provides requests for litigation
cost are not to be included in the petition.[208,L11-17]. The attorney fee
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 29 of 49
claim was not discussed at the May 15, 2013 hearing and was not mentioned
in the court's June 13, 2013 order.
On July 11, 2013 the taxpayers filed a motion for an order to vacate
the Order of Dismissal dated June 13, 2013 for the limited purpose to have
their Motion For An Award of Reasonable Administrative & Litigation
Costs considered by the court.[176-200]. The IRS did not oppose the motion
to vacate and the court held a hearing on that motion on August 7, 2013.
At the August 7, 2013, hearing the court recognized the petitioners
agreed with the court's June 13, 2013 grounds for dismissal but they wanted
the court to consider awarding them litigation costs. [206 L 7-11] The court
stated mechanically the petitioners had no opportunity to actually make
a request for litigation costs because a hearing was held then an Order
of Dismissal followed. [206 L 7-1 OJ. The court also stated there was a
difference in vacating a judgment in a deficiency case and collection case,
where there is an opinion resolving the substantive issues, and in the current
case dismissed for lack of jurisdiction. In the current case, the IRS has not
produced the deficiency notices they alleged were mailed to the petitioners.
[209,L6-25]. Granting the motion to vacate would allow the IRS at least an
additional 60 days to find the deficiency notices it claims were lost in the
mail by the Memphis Service Center and supplement its motion to dismiss
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 30 of 49
on the grounds the petition was late since no ruling would exists. [21 0,
211,L 3-7].
During the hearing petitioners informed the court they had been
discussing the attorney fees issue with the IRS and to date it had not been
resolved. [212, L,3-4]. A review of 26 U.S.C. §7430 and the Tax Court
rules do not state a Motion to Vacate has to be filed for the court to consider
an award of litigation costs. We submit the attorney fees are collateral
issues to the merits that can be addressed separately. Furthermore, the Equal
Access to Justice Act, which 26 U.S.C. §7430 was patterned after, does not
require the decision be vacated but rather the attorney fees claim must be
submitted within 30 days from the date of the decision. [212,L6-25].
It would be unfair for the IRS to be allowed to revisit the underlying
merits of the case while the court is considering the motion for attorney fees.
[212,L15-18]. The court should have been able to rule on the motion for
attorney fees without having to vacate the underlying ruling like the U.S.
District Court does when applying 26 U.S.C. §7430. However, the court
stated it did not see how it could do that. [215L25; 216L23-25].
The motion to vacate was limited to allow the court only to determine
attorney fees. The judge stated, " I am not going to revisit what I've
already ordered under what has thus far been presented." [217 ,L 3-4]. The
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 31 of 49
petitioners reasonably relied on the judge's statement in their decision to go
forward with their motion to vacate. No new evidence was presented to the
judge from the date of the August 7, 2013 hearing through the December
16, 2013 order of dismissal, yet the judge materially changed the substance
of his dismissal order by not restating the grounds why the court lacked
jurisdiction over petitioners' deficiency and collection cases. The judge
should be bound by his statement that he was not going to revisit his June
13th order absent new evidence from the IRS. Accordingly, the June 13th
order should be reinstated and supplemented to specifically state "the
August 16, 2010 tax assessments for the 2007 and 2008 tax years violate
IRC §6213(a) and all money taken from the taxpayers based on those tax
assessment must be returned to them."
D. Tax Court Has Jurisdiction To Review The IRS Appeals Office's Arbitrary Determination Not To Issue A Determination Letter.
Section 6330(d)(1) grants the Tax Court jurisdiction to review
determinations made by the Appeals Office in connection with the section
6330 hearings. We submit the Tax Court also has jurisdiction to review
cases in which a §6330 hearing occurred and the Appeal Office made a
determination not to issue a determination letter to prevent the taxpayer
from seeking review of its decision. Sego v. Commissioner, 114 T.C. 604,
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 32 of 49
610 (2000) [IRS cannot defeat Tax Court review of the determination letter
by deliberately refusing to issue it to the taxpayer.]
Internal Revenue Manual § 8 .1.1.1 (2 )(A) states the Appeals Office
will provide a prompt conference and prompt decision in each case. On
April20, 2012, the IRS levied taxpayer Thomas' U.S. Senate Federal Credit
Union account. On July 7, 2012, the IRS levied this taxpayer's retirement
wages from the District of Columbia Metropolitan Police Depatiment.
[161,L17-25]. On August 20, 2012 the taxpayer's counsel called the IRS for
an explanation of the levies since no deficiency notice had been issued and
no Final Notice of Intent to Levy had been issued. On August 24, 2012, the
IRS mailed the taxpayer a Final Notice of Intent to Levy for the 2008 tax
year and the same day the IRS took the taxpayer's 2011 tax refund. [76;162
L,7-15].
On September 12, 2012, Appellant Thomas timely filed a request for
a collection due process hearing for the 2008 tax year.[78-79]. On March
19, 2013, the CPD hearing was held. Based on conversations with the
Settlement Officer months later, he stated no determination letter would be
issued while the 2008 tax year matters were pending before the Tax Court.
However, the Tax Court case was dismissed on June 13,2013 and no
determination letter was ever issued.
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 33 of 49
On October 25, 2013, IRS counsel filed a response to petitioners'
motion for attorney fees. Page 7 of that response states Appellant Thomas'
CDP proceeding is "moot" because it was filed after the taxpayers
September 17, 2012 Tax Court petition was filed. [228] Yet, the
Settlement Officer has not issued a determination letter on the pending case
and on June 9, 2014 the IRS took Appellant Thomas' 2013 tax refund.
Section 6330(e) (1) states levy action will be suspended while the
case is in Appeals but the levy action have not been suspended and the
Appeal Office deliberately refuses to issue the letter of determination so the
taxpayer can exercise his right of Tax Court review. In reviewing the
actions of determination letters issued by the IRS Appeals Office, the Tax
Court has the authority to review them de nov with respect to the underlying
liability and for abuse of discretion with respect to all other determinations.
Goza v. Commissioner, 114 T.C. 176, 181-182 (2000); Sego at 610. The IRS
Appeals Office has made an arbitrary, capricious, determination not founded
in fact or law to deny Appellant Thomas' a formal determination letter.
Woodral v. Commissioner, 112 T.C. 19, 23 (1999). The Appeals Office
determination not to issue a determination letter must be reviewable before
the Tax Court in the same way the Tax Court can review tax deficiency
matters when the IRS fails to issue taxpayers notice of deficiencies. Pickell
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 34 of 49
v. Commissioner, T.C. 2008-60.
In Pickell, no notice of determination was issued to the taxpayer
because he did not respond to the final notice of intent to levy mailed to his
last known address. The Tax Court in Pickell held it did not have
jurisdiction and stated the grounds for dismissal would allow the IRS to
either levy the taxpayer's assets or invalidate the notice of levy. In this case,
taxpayer Thomas received the §6330( a) final notice of intent to levy and
timely filed a CDP hearing request, as well as, attended the administrative
hearing but no determination letter was issued. Accordingly, this Court
should hold the 2008 levy on taxpayer Thomas is invalid and all assets taken
from him including his tax refunds should be returned to him forthwith.
E. Taxpayers Are Entitled To Award Of Litigation Costs.
On July 11, 2013 the taxpayers filed a motion for administrative and
litigation costs pursuant to IRC §7430. The taxpayers satisfied all the IRC
§7430 requirements for their attorney fee claim. The IRS filed a response to
the taxpayer's motion on October 25, 2013 and agreed the taxpayers were
entitled to litigation costs but contested the amount. By order dated
December 16, 2013, Judge Carluzzo denied all the taxpayer's claims for
attorney fees.
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 35 of 49
The judge did not follow the precedent followed by the Tax Court in
Pietanza as his basis for denying the claim. The issue in Pietanza was
whether the deficiency notice was ever created. The judge incorrectly relied
upon the 9th Circuit decision in Zolla3 where the issue was did the IRS mail
the deficiency notice to the taxpayer's last known address. Like Pietanza,
the taxpayers in this case asserted the deficiency notices never existed so the
IRS had the burden of both producing a copy of the deficiency notices
prepared to be mailed and proving that the notices were actually mailed to
the taxpayers' last known address. Pietanza 736; Welch at 1379, 1382. The
IRS could not produce a copy of the deficiency notice prepared to the
taxpayers so there was no presumption that U.S. Postal Form 3877 produced
by the IRS was evidence that the deficiency notices were mailed to the
taxpayers. Pietanza 736; Welch at 1380
In addition, the Form 3877 submitted by the IRS was defective and
therefore unreliable because it was not prepared in accordance with Internal
Revenue Manual4462.2. The IRS manual requires Form 3877 be certified
and stamped "Statutory Notice of deficiencies for the year(s) indicated have
been sent to the following taxpayers". Pietanza at 747. Thus the Form 3877
produced by the IRS at best indicated nothing more than an envelope was
3 United States v. Zolla, 724 F.2d 808 (9th Cir. 1984)
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 36 of 49
mailed to the taxpayers.Jd 742.
1. The Material Facts In Pietanza Exist In This Case.
Judge Carluzzo elected not to follow the precedent set by the full Tax Court
and approved by the Third Circuit in Pietanza. He stated on page 3 of his
order that the holding in Pietanza was limited to "the unusual facts present"
in that case. However the material facts present in Pietanza also exist in this
case. In Pietanza, as here, the Commissioner :
1. lost the administrative file,
2. had no copies of a notice of deficiency,
3. did not establish a final notice of deficiency ever existed,
4. relied on Postal Service Form 3877, &
5. the taxpayers' counsel received no communications from the IRS prior to filing the petition of the existence of a notice of deficiency despite numerous letters written to the IRS requesting the basis for the collection oftaxes.Jd. 747, 732-733; Butti v. Commissioner, T.C. Memo 2008-82: Welch at 1380.
The Federal Circuit in Welch also follows the Pietanza case and
stated, "Abstract references to office procedures not tied to either an
identifiable notice of deficiency or clear evidence of the mailing of the same
are insufficient to give rise to a presumption of official regularity." Id at
1382. In this case, the IRS provided a declaration from an IRS supervisor
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 37 of 49
in the technical services branch in Baltimore, Maryland to describe
how deficiency notices in general are processed but she had no personal
knowledge of the existence or creation of the 2007 and 2008 deficiency
notice allegedly prepared for Appellants. [19-22]
In this case, as in Koerner, no other postal records, such as Postal
Service Form 3849, showing the delivery or attempted deliver of the article
listed on Form 3877 were presented. Koerner v. Commissioner, T.C. 1997-
144; Welch 13 81. Thus, there is no material difference between the facts and
issues in Pietanza and this case. Accordingly, the judge was required to
follow the precedent established by the Tax Court in Pietanza as the basis of
his decision and he did not!
2. The Commissioner Has Accepted The Law Established by Pietanza,
A review of Internal Revenue Manual4.8.9.11 shows the
Commissioner specifically cites the Pietanza case in this section of his
manual. IRM 4.8.9.11 states: "A copy [of the notice of deficiency] is kept in
the case file as evidence that the notice of deficiency was sent to the
taxpayer. See Pietanza v. Commissioner, 92 T.C. 729 (1989). The file is
then retained by the issuing office pending its ultimate disposition."
3. Appellants Were The Prevailing Parties In The Tax Court.
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 38 of 49
Judge Carluzzo states in his order that the taxpayers are not entitled to
litigation costs because they are not the prevailing party. He viewed the
IRS' position to be substantially justified and cited §7430(c)(4)(B). Section
7430( c)( 4)(B)(i) states:
A party shall not be treated as the prevailing party in a proceeding to which subsection (a) applies if the United States establishes that the position of the United States in the proceeding was substantially justified.
Subsection (iii) states:
In determining for purposes of clause (i) whether the position of the United States was substantially justified, the court shall take into account whether the United States has lost in court of appeal for other circuits on substantially similar issues.
On the issue of whether the notice of deficiency ever existed or was created,
the IRS lost on that issue in the Third Circuit in Pietanza and the Federal
Circuit in Welch. That is the same issue in this case. Even though Judge
Carluzzo may not agree with those decisions, the Tax Court follows those
decisions, the Commissioner accepts those decisions, and the IRS did not
argue its position was substantially justified with regards to the litigation
portion of this case. [229 ftn5] Accordingly, the taxpayers are entitled to
litigation costs. The amount to be awarded and whether any administrative
costs should be awarded have yet to be determined.
CONCLUSION
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 39 of 49
This Court should state the grounds for the dismissal of Appellants'
Tax Court case was the IRS did not issue them the statutorily required
deficiency notice, IRC §6212(b), for either the 2007 or 2008 tax year.
Pursuant to §6213(a) the August 16, 2010 tax assessments for the 2007 and
2008 tax years are invalid, as well as, the levies and offsets made pursuant
to those tax assessments. Thus all money taken from the taxpayers based
on those invalid August 16, 2010 tax assessments must be returned to the
Appellants within 90 days from the date of this decision.
With regard to the award of litigation cost this Court should hold
Appellants were the prevailing party and the IRS' litigation position was not
substantially justified in light of the Pietanza and Welch cases. This case
should be remanded to the Tax Court with instructions to determine the
amount of the litigation costs to be awarded the Appellants and whether any
administrative costs should be awarded and, if so, determine the amount of
the award.
January 20, 2015
Respectfully submitted,
Is/Bruce E. Gardner Bruce E. Gardner, Esq. Counsel for Appellants The Gardner Law Firm, P.C. 1101 Pennsylvania Ave NW 600 Washington, D.C. 20004 (202) 217-0552 [email protected]
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 40 of 49
UNITED STATES COURT OF APPEALS For The District of Columbia Circuit
LISA A. EDWARDS & } JOSEPH P. THOMAS, }
Appellants } Docket No. 14-1004 }
v. } }
COMMISSIONER OF INTERNAL REVENUE, } }
Appellee }
CERTIFICATE OF COMPLIANCE WITH RULE 32(a)
1. This brief complies with the type-volume limitation of
Fed.R.App.P. 32(a)(7)(B) this brief contains 6,219 words, excluding the
parts of the brief exempted by Fed.R.App.P.32(a)(7)(B)(iii).
2. This brief complies with the typeface requirements ofFed.R.App.P.
32(a)(5) and the type style requirements ofFed.R.App.P. 32(a)(6) because
this brief has been prepared in a proportionally spaced type face using
Microsoft Word version 97-2003 in 14 point font size in Times Roman.
January 20, 2015 Is/ Bruce E. Gardner Bruce E. Gardner, Esq. Counsel for Appellants The Gardner Law Firm, P.C. 1101 Pennsylvania Ave NW Suite 600 Washington, D.C. 20004 (202) 271-0552 [email protected]_
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 41 of 49
CERTIFICATE OF SERVICE
I, hereby certify that on the 20th day of January, 2015, I electronically
filed the Reply Brief with the Clerk of the Court of the United States Court
of Appeals for the District of Columbia by using the appellate CM/ECF
system. I further certify that counsel for the Appellee, identified below, is
a registered CM.ECF user and she will be served by the appellate CM/ECF
system:
Janet A. Bradley, Esquire DOJ-Tax Division, P.O. Box 502 Washington, D.C. 20044
January 20, 2015 Is/ Bruce E. Gardner Bruce E. Gardner
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 42 of 49
... :..
UNITED STATES TAX COURT WASHINGTON, DC 20217
.. ·-
LISA A. EDWARDS & JOSEPH P. THOMAS, ) )
Petitioner, ) )
v. ) Docket No. 23392-12. )
CO:IVIIVITSSIONER OF INTERNAL REVENUE, ) )
Respondent )
ORDER AND ORDER OF DISMISSAL FOR LACK OF JURISDICTION
As has been noted in opinions and orders to numerous to count, this Comt is a court of limited jurisdiction. Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The various areas over which we have jurisdiction are specified in various provisions of the Internal Revenue Code of 1986. With few exceptions, none of which are relevant here, the Commissioner must make a specific statutorily described determination with respect to a taxpayer's Federal tax liability for a specific period before the taxpayer is entitled to challenge that determination, or seek relief :frem that determination, in this Court. According to petitioners, no such determinations have been made with respect to petitioners' 2007 and 2008 Federal income tax liabilities1 that respondent apparently is trying to collect. The absence of any such determinations did not deter the filing of the petition in this matter, however, which in essence, challenges not so much a "detennination" as that tenn is used in a jurisdictional context, but the validity of certain assessments.
According to respondent, the assessments challenged by petitioners were validly 1nade after they failed to petition this Court in response to notices of deficiency properly issued and mailed to them years ago (notices). See sees. 6212(a) and (b), 6213(a).2 Respondent's claim in this regard is supported by a U.S.
1For convenience we refer to the 2007 and 2008 Federal income tax liabilities as petitioners' liabilities, even though the 2008liability relates only to Mr. Thomas.
2Section references are to the Internal Revenue Code of 1986, as amended.
SERVED Dec 16 2013
31 nnl" 'la
PA USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 43 of 49
Thomas v. Commissioner J)ocket~o. 23392-12
-2-
Postal Service Form 3877. The details of the relevant events and respondent's position with respect to those events are set forth in respondent's Motion to Dismiss for Lack of Jurisdiction, filed November 28, 2012. According to respondent, because the administrative file has been lost in the mail, respondent is unable to present a copy of either of the notices. According to respondent, no other detenninations have been made with respect to petitioners' 2007 and 2008 Federal income tax liabilities that could support the Court's jtrrisdiction over those liabilities, a point not in dispute. However, petitioners dispute respondent's claim that the notices were issued. Petitioners' Cross Motion to Dismiss for Lack of Jurisdiction Based on Respondent's Failure to Issue a Notice of Deficiency, filed January 17, 2013, is based upon the ground that respondent has not issued a notice of deficiency for either year placed in issue.
The parties also dispute what document(s) are evidenced by the Form 3877. As noted, according to respondent they are notices of deficiency; according to petitioners they are something else. What is clear in this matter is that the Court has no jurisdiction over petitioners' 2007 and 2008 Federal income tax liabilities, and that was clear frorn the allegations in and attachments to the petition, and equally as clear in the Order of Dismissal for Lack of Jurisdiction, entered June 13, 2013, and vacated on August 9, 2013, so that petitioners' Motion for an Award of Reasonable Administrative & Litigation Costs, filed August 9, 2013, which is now before the Court, can be considered.
In general, and subject to numerous requirements and conditions which need not be discussed, section 7430 provides, as relevant here, that a "prevailing party" is entitled to recover from respondent reasonable litigation expenses incurred in connection with a proceeding in this Court. For purposes of section 7430, a prevailing party is defined to mean the party who has substantially prevailed with respect to: (1) the amount in controversy, or (2) the most significant issue or set of issues presented. See sec. 7 430( c)( 4 )(A). A party is not treated as a prevailing party, however, if respondent establishes that his position in the proceeding is substantially justified. See sec. 7430(c)(4)(B).
Because the above-referenced order of dismissal grants petitioners' motion, they apparently believe themselves to be prevailing parties for purposes of section 7430. We disagree, if only because we view respondent's position to be ·substantially justified.
32
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 44 of 49
Thomas v. Commissioner Docket No. 23392-12
.., -:>-
Respondent's records and the materials attached to respondent's jurisdictional motion strongly suggest that notices of deficiency for 2007 and 2008 have been issued to petitioners, even though the existence ofthose notices of deficiency cannot be supported by a review of a copy of them. After all, such evidence is routinely submitted and relied upon in cases in which a party has raised ajurisdictional issue. See, e.g., U.S. v. Zolla, 724 F.2d 808 (9th Cir. 1984). To the extent that petitioners consider that Pietanza v. Commissioner, 92 T.C. 729 (1989), aff'd without published opinion, 935 F.2d 1282 (3d Cir. 1991) is inapposite, they are tnistaken. In Pietanza the Court specifically noted that its holding was limited to "the unusual facts presenf' in that case. Pietanza v. Commissioner, 92 T.C. at 736.
Because we consider respondent's position in this case to be substantially justified, petitioners are not treated as the "prevailing party" for purposes of section 7430. It follows they are not entitled to the relief that section contemplates.
Premises considered, and because it is clear from the submission of the parties that the Court is without jurisdiction in this matter, is it
ORDERED that, sua sponte, this case is dismissed for lack of jurisdiction. It is further
ORDERED the petitioners' Motion for an Award of Reasonable Administrative & Litigation Costs, filed August 9, 2013, is denied. It is further
ORDERED that respondent's motion to dismiss for lack of jurisdiction and petitioners' motion to dismiss for lack of jurisdiction are moot.
ENTERED: DEC 16 2013
(Signed) Lewis R. Carluzzo Special Trial Judge
33
,_
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 45 of 49
UNITED STATES TAX COURT WASHINGTON, DC 20217
LISA A. EDWARDS & JOSEPH P. THOMAS, ) )
Petitioners, ) )
v. ) Docket No. 23392-12 )
CO:M:MISSIONER OF INTERNAL REVENUE, ) )
Respondent. )
ORDER
By Order ofDismissal entered Jtme 13,2013, this case was dismissed for lack of jurisdiction upon the ground that "there has been no showing that a notice of deficiency has been issued to either petitioner for any of the years placed in dispute in the petition." The case is now before the Court on petitioners' Motion to Vacate Order of Dismissal, filed July 11, 2013. Petitioners' motion is intended to allow for the filing of petitioners' Motion for an Award ofReasonable Administrative and Litigation Costs, lodged July 11, 2013.
A hearing was conducted on petitioners' motion to vacate on August 7, 2013, in Washington, D.C. Counsel for the parties appeared and were heard. At the hearing, as well as by notice filed July 31, 2013, the Court was advised that respondent does not object to petitioners' motion.
Premises considered, and consistent with the matters addressed at the hearing, it is
ORDERED that petitioners' motion to vacate is granted.· It is further
OREDERED that the above-referenced Order of Dismissal is vacated and set aside. It is further
SERVED Aug 09 2013
34 DOC 24
PA USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 46 of 49
Thomas v. Commissioner I>ocket~o.23392-12
-2-
ORDERED the respondent's Motion to Dismiss for Lack of Jurisdiction, filed November 28, 2012, and Petitioners' Cross Motion to Dismiss for Lack of Jurisdiction Based on Respondent's Failure to Issue Notice of Deficiency, filed January 17, 2013, are held in abeyance. It is further
ORDERED that the Clerk of the Court file, as of the date of this Order, petitioners' Motion for an Award of Reasonable Administrative and Litigation Costs, lodged July 11, 2013. It is further
ORDERED that respondent's response to petitioners' Motion for an Award of Reasonable Administrative and Litigation Costs is due on or before October 8, 2013.
Dated: Washington, D.C. August 9, 2013
(Signed) Lewis R. Carluzzo Special Trial Judge
35
USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 Page 47 of 49
UNITED STATES TAX COURT WASHINGTON, DC 20217
LISA A. EDWARDS & JOSEPH P. THOMAS, ) )
Petitioner, ) )
v. ) Docket No. 23392-12 )
CON.fMISSIONER OF INTERNAL REVENUE, ) )
Respondent. )
ORDER OF DISMISSAL
This case for the redeterminations of deficiencies is before the Court on respondent's motion to dismiss for lack of jurisdiction, filed November 28,2012, and petitioners' cross-motion to dismiss for lack of jurisdiction, filed January 17, 2013. Respondent's motion is based upon the ground that the petition was not filed within the.period prescribed by I.R.C. section 6213(a); petitioners' motion is based upon the ground that a notice of deficiency has not been issued to either petitioner for the any of the years placed in dispute in the petition.
The motions were called for hearing in Washington, D.C., on May 15, 2013. _. At the hearing respondent withdrew his objection to petitioners' cross-motion. Premises considered, and for reasons set .forth more fully in the transcript of the
· proceedings, it is
ORDERED that respondent's motion is denied;. It is further
ORDERED that petitioners' cross-motion is granted. It is further
ORDERED that this case is dismissed for lack of jurisdiction upon the
SERVED Jun 13 2013
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Thomas v. Commissioner Docket No. 23392-12
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ground that there has been no showing that a notice of deficiency has been issued to either petitioner for any of the years placed in dispute in the petition.
ENTERED: JUN 13 2013
(Signed) Lewis R. Carluzzo Special Trial Judge
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