United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Decided October 16, 2009
No. 08-1253
WILLIAM DAVID JAMIESON AND JUDITH A. JAMIESON,
APPELLANTS
v.
COMMISSIONER OF INTERNAL REVENUE SERVICE,
APPELLEE
Appeal from the United States Tax Court
William David Jamieson and Judith A. Jamieson, pro se,
were on the briefs for appellants.
Robert W. Metzler and Melissa Briggs, Attorneys, U.S.
Department of Justice, were on the brief for appellee. John A.
Nolet, Attorney, entered an appearance.
Before: ROGERS and KAVANAUGH, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: William David and
Judith A. Jamieson are United States citizens who lived in
Canada in 2003, earned Canadian income and paid Canadian
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taxes on that income. On their U.S. income tax return for that
year, they claimed foreign tax credits of $95,132 against their
reported U.S. tax liability of $96,429, resulting in a net U.S.
liability of $1297. They did not compute any alternative
minimum tax (“AMT”) liability under 26 U.S.C. § 55, noting
on their return their position that a tax treaty between the
United States and Canada precluded any such liability. The
Commissioner of Internal Revenue rejected this position and,
applying 26 U.S.C. § 59(a)(2)’s limit on foreign tax credits for
AMT purposes, calculated that the Jamiesons owed $6078 in
alternative minimum tax. The Tax Court, finding our decision
in Kappus v. Commissioner, 337 F.3d 1053 (D.C. Cir. 2003),
to be materially indistinguishable from this case, sustained the
Commissioner’s determination. See Jamieson v.
Commissioner, 95 T.C.M. (CCH) 1430 (T.C. 2008). We
affirm.
The Convention with Respect to Taxes on Income and on
Capital, U.S.-Can., Sept. 26, 1980, T.I.A.S. No. 11,087,
provides as follows:
[D]ouble taxation shall be avoided as follows: In
accordance with the provisions and subject to the
limitations of the law of the United States (as it may be
amended from time to time without changing the general
principle hereof), the United States shall allow to a citizen
or resident of the United States . . . as a credit against the
United States tax on income the appropriate amount of
income tax paid or accrued to Canada.
Id. art. XXIV, para. 1.
A later act, the Tax Reform Act of 1986, limited the
foreign tax credit for AMT purposes to 90% of the taxpayer’s
AMT liability. See Pub. L. No. 99-514, § 701(a), 100 Stat.
2320, 2337 (codified as amended at 26 U.S.C. § 59(a)(2)),
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repealed in relevant part by American Jobs Creation Act of
2004, Pub. L. 108-357, § 421, 118 Stat. 1418, 1514. The
Senate Finance Committee explained the new limitation as
follows: “[T]he committee believes that taxpayers should not
be permitted to use the credit to avoid all minimum tax
liability . . . . [I]t is fair to require at least a nominal tax
contribution from all U.S. taxpayers with substantial
economic incomes.” S. Rep. No. 99-313, at 520 (1986),
quoted in Jamieson, 95 T.C.M. (CCH) at 1432.
In Kappus, two U.S. citizens living in Canada challenged
26 U.S.C. § 59(a)(2)’s limitation on foreign tax credits for
AMT purposes, arguing that it “was in direct conflict with the
U.S.-Canada Tax Treaty.” 337 F.3d at 1054. In that case the
IRS had proposed a reconciliation of the statute and treaty, a
reconciliation that would have sustained the IRS’s tax
assessment. We assumed in favor of the taxpayer that the
IRS’s proposed reconciliation was incorrect, and then held
that the limitation in § 59(a)(2) was controlling over the treaty
because it was “last-in-time.” We rejected the taxpayers’
contention that protocols amending the treaty in 1995 and
1997 (thus post-dating enactment of § 59(a)(2)), which related
entirely to issues other than those covered by § 59(a)(2), made
the treaty last-in-time. See 337 F.3d at 1058-60.
The Jamiesons propose to distinguish Kappus by
asserting a reconciliation in favor of the taxpayers, which
Kappus, deciding for the government, could not have assumed
away. Specifically, they argue that we could reconcile the
treaty and the statute by allowing the taxpayers to claim
foreign tax credits after their entire U.S. tax liability
(including AMT) has been calculated. In their view,
taxpayers first calculate their tax liability in accordance with
the provisions of the Internal Revenue Code, including the
90% limitation on foreign tax credits for AMT purposes. If
the tax liability thus calculated results in any double taxation,
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then the treaty tax credits may be applied to reduce U.S. tax
liability. Appellants’ Br. at 27-28. Under this reading
§ 59(a)(2) normally would affect the total tax liability only of
taxpayers who worked in a foreign country that, unlike
Canada, did not have a treaty with the United States limiting
“double taxation.”
We find this interpretation implausible. Section 59(a)(2)
does not on its face suggest that it was intended to have such a
narrow impact. Nor do the Jamiesons cite any persuasive
authority for the proposition that a revenue statute saying that
a given credit “shall not exceed” a certain limit may be
construed only to limit the amount that a taxpayer calculates
provisionally, allowing the taxpayer to ignore the limit when
later calculating his or her legally binding tax due. Cf.
Telecom*USA, Inc. v. United States, 192 F.3d 1068, 1072
(D.C. Cir. 1999) (“[A] taxpayer who seeks a deduction bears
the burden of demonstrating a clear entitlement.”).
Moreover, to the extent that there might be any ambiguity
about whether Congress intended § 59(a)(2) to apply to
taxpayers in countries with which the United States has
“double taxation” treaties, Congress resolved that ambiguity
with the Technical and Miscellaneous Revenue Act of 1988
(“TAMRA”), Pub. L. No. 100-647, 102 Stat. 3342. There it
provided that certain amendments made by the Tax Reform
Act of 1986, including those made by its title VII (of which
§ 59(a)(2) was a part), “shall apply notwithstanding any treaty
obligation of the United States in effect on the date of the
enactment of the [1986 Tax] Reform Act.” Id. § 1012(aa)(2)
(codified at 26 U.S.C. § 861 note) (emphasis added). We
found in Kappus that “TAMRA thus made it crystal clear that
Congress intended the 90% cap on the AMT foreign tax credit
to supercede any preexisting treaty obligation with which it
conflicted.” 337 F.3d at 1058. That finding completely
precludes the Jamiesons’ suggestion that the statutes and
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treaty can be reconciled with an interpretation favorable to
their position.
The judgment of the tax court is therefore
Affirmed.