T.C. Memo. 1997-454
UNITED STATES TAX COURT
JOHN G. GOETTEE, JR., and MARIAN GOETTEE, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 26591-96. Filed October 6, 1997.
John G. Goettee, Jr., and Marian Goettee, pro se.
Pamela S. Wilson and Helen F. Rogers, for respondent.
MEMORANDUM OPINION
PANUTHOS, Chief Special Trial Judge: This matter is before
the Court on respondent's Motion to Dismiss for Lack of
Jurisdiction and respondent's Motion for Partial Summary
Judgment. Respondent asserts that the Court lacks jurisdiction
pursuant to section 6404(g) to review respondent's denial of
petitioners' requests for abatement of interest.1 In the
1
All section references are to the Internal Revenue Code
as amended, unless otherwise indicated. All Rule references are
to the Tax Court Rules of Practice and Procedure.
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alternative, respondent seeks partial summary judgment that
section 6404(e) does not provide authority for respondent to
abate interest assessed against petitioners for the taxable year
1978.
Background
On October 23, 1995, petitioners filed Forms 843 (Claim for
Refund and Request for Abatement) requesting that respondent
abate interest for the taxable years 1978, 1979, 1981, 1982, and
1983. On February 5, 1996, respondent issued a letter to
petitioners proposing to disallow petitioners' requests for
abatement of interest. Petitioners immediately requested further
administrative review and the matter was assigned to Appeals
Officer Samuel E. Fish.
Upon review of the matter, Appeals Officer Fish advised
petitioners that, in order to preserve their right for review in
the Tax Court, petitioners should withdraw their original
requests for abatement and file new requests after July 30, 1996.
Although petitioners did not formally withdraw their original
requests for abatement, respondent concedes that petitioners'
original requests were never formally disallowed. In any event,
on October 3, 1996, petitioners filed a second set of requests
for abatement consistent with the advice of Appeals Officer Fish.
On November 13, 1996, respondent issued a notice of disallowance
to petitioners stating that petitioners' requests for abatement
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of interest were only partially allowed insofar as respondent
agreed to abate interest accruing during the period October 4,
1995 to September 20, 1996--which for the most part coincided
with the period that petitioners' requests for abatement were
under consideration by respondent.
On December 6, 1996, petitioners filed with the Court a
petition for review of respondent's denial of their requests for
abatement of interest.2 After filing an answer to the petition,
respondent filed a Motion for Partial Summary Judgment that
petitioners' request for abatement respecting the taxable year
1978 was properly denied on the ground that respondent lacks the
authority to abate interest for the taxable year 1978.3
Petitioners filed an opposition to respondent's Motion for
Partial Summary Judgment.
This matter was called for hearing at the Court's motions
session held in Washington, D.C. Counsel for respondent appeared
at the hearing and raised the argument that the Court lacks
jurisdiction under section 6404(g) to consider the petition filed
2
At the time the petition was filed, petitioners resided
at New Windsor, Maryland.
3
At the hearing of this matter, counsel for respondent
stated that respondent had erred insofar as the Nov. 13, 1996,
notice of disallowance provides for the abatement of a portion of
the interest assessed against petitioners for the taxable year
1978. However, counsel for respondent stated that respondent
would not attempt to reverse the erroneous abatement.
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herein. Petitioner John G. Goettee, Jr., appeared at the hearing
and offered argument in opposition to respondent's position.
Following the hearing, respondent filed a Motion to Dismiss
for Lack of Jurisdiction and a memorandum in support of the
motion. Petitioners filed an objection to respondent's motion to
dismiss, to which respondent filed a reply.
Discussion
As a preliminary matter, we must decide whether the Court
has jurisdiction over this matter. The Tax Court is a court of
limited jurisdiction, and we may exercise our jurisdiction only
to the extent authorized by Congress. Naftel v. Commissioner, 85
T.C. 527, 529 (1985).
Section 6404(g), codified under section 302(a) of the
Taxpayer Bill of Rights 2 (TBOR 2), Pub. L. 104-168, 110 Stat.
1452, 1457 (1996), provides the Tax Court with authority to
review the Commissioner's denial of a taxpayer's request for
abatement of interest. Section 6404(g) provides in pertinent
part as follows:
(g) Review Of Denial Of Request For Abatement Of
Interest.--
(1) In General.--The Tax Court shall have
jurisdiction over any action brought by a taxpayer who
meets the requirements referred to in section
7430(c)(4)(A)(ii) to determine whether the Secretary's
failure to abate interest under this section was an
abuse of discretion, and may order an abatement, if
such action is brought within 180 days after the date
of the mailing of the Secretary's final determination
not to abate such interest. * * *
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Section 302(b) of TBOR 2, 110 Stat. 1458, provides that section
6404(g) applies "to requests for abatement after the date of the
enactment of this Act." TBOR 2 was enacted on July 30, 1996.
Respondent maintains that we lack jurisdiction to review the
denial of petitioners' requests for abatement of interest on the
ground that petitioners' original requests for abatement of
interest were filed prior to July 31, 1996. Respondent further
contends that, despite the Appeals officer's advice to the
contrary, petitioners may not refile their requests for abatement
after July 30, 1996, for the purpose of invoking the Court's
jurisdiction.
In Banat v. Commissioner, 109 T.C. 92 (1997), we considered
the question of the Court's jurisdiction to review the
Commissioner's denial of a request for abatement of interest
where the request was filed prior to July 31, 1996, but denied by
the Commissioner after July 30, 1996. The Commissioner took the
position that the Court lacked jurisdiction to review the denial
of the request for abatement in question because the request had
been filed prior to July 31, 1996. In rejecting the
Commissioner's position, we concluded that section 302(b) of TBOR
2, which establishes the effective date of section 6404(g),
allows the Court to exercise its jurisdiction with respect to
requests for abatement of interest pending on July 31, 1996. We
concluded that the Commissioner's interpretation of the provision
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was overly restrictive and inconsistent with Congress' intent "to
provide for increased protections of taxpayer rights in complying
with the Internal Revenue Code and in dealing with the Internal
Revenue Service (IRS) in its administration of the tax laws." H.
Rept. 104-506, at 22 (1996). Banat v. Commissioner, supra at 95.
But cf. White v. Commissioner, 109 T.C. 96 (1997) (the Court
lacks jurisdiction to review a request for abatement of interest
that was both filed and denied prior to July 31, 1996).
Consistent with our holding in Banat v. Commissioner, supra,
we reject respondent's contention that we lack jurisdiction to
review the denial of petitioners' requests for abatement. In
particular, there is no dispute that petitioners' requests for
abatement were pending on July 31, 1996. Further, on November
13, 1996, respondent issued a notice of disallowance to
petitioners that constitutes a final determination to partially
deny petitioners' requests for abatement pursuant to section
6404(e). In light of petitioners' timely petition for review, we
hold that petitioners properly invoked the Court's jurisdiction
pursuant to section 6404(g). See Rule 280(b)(2).
We now turn to respondent's Motion for Partial Summary
Judgment that petitioners are not entitled to abatement of
interest for the taxable year 1978 on the ground that respondent
lacks authority to abate interest for that year.
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Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials. Florida Peach Corp. v.
Commissioner, 90 T.C. 678, 681 (1988). Summary judgment may be
granted with respect to all or any part of the legal issues in
controversy "if the pleadings, answers to interrogatories,
depositions, admissions, and any other acceptable materials,
together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that a decision may be
rendered as a matter of law." Rule 121(b); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d 965 (7th
Cir. 1994); Zaentz v. Commissioner, 90 T.C. 753, 754 (1988);
Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The moving
party bears the burden of proving that there is no genuine issue
of material fact, and factual inferences will be read in a manner
most favorable to the party opposing summary judgment. Dahlstrom
v. Commissioner, 85 T.C. 812, 821 (1985); Jacklin v.
Commissioner, 79 T.C. 340, 344 (1982).
Petitioners' requests for abatement of interest are based
upon section 6404(e)(1) which provides authority for the
Commissioner to abate the assessment of interest and deficiency
attributable to errors and delays by an officer or employee of
the Internal Revenue Service in performing a ministerial act.4
4
Although not at issue here, we observe that sec. 6404(d)
and (e)(2) also provides authority for the Commissioner to abate
assessments of interest. Sec. 6404(d) applies where the
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Section 6404(e) was enacted under the Tax Reform Act of 1986,
Pub. L. 99-514, sec. 1563(a), 100 Stat. 2085, 2762, and applies
to interest accruing with respect to deficiencies or payments for
tax years beginning after December 31, 1978. See Tax Reform Act
of 1986, Pub. L. 99-514, sec. 1563(b), 100 Stat. 2085, 2762.
Petitioners object to respondent's Motion for Partial
Summary Judgment on the ground that the assessment for interest
for the taxable year 1978 is attributable to the disallowance of
net operating losses arising in 1980 and 1981 that petitioners
carried back to the taxable year 1978.
Based upon our review of section 6404(e), we hold that
respondent lacks the authority to grant a request for abatement
of interest for the taxable year 1978. Although the deficiency
that respondent assessed against petitioners for the taxable year
1978 is attributable to the disallowance of net operating losses
for later years, it nevertheless is clear that the interest in
question, which is computed from the due date of petitioners' tax
return for 1978, is attributable to tax due for the 1978 taxable
year. See Bankamerica v. Commissioner, 109 T.C. 1 (1997); Fluor
assessment is attributable in whole or in part to a mathematical
error if the return was prepared by an officer or employee of the
Internal Revenue Service acting in his official capacity to
provide assistance to taxpayers in the preparation of income tax
returns, and sec. 6404(e)(2) applies with respect to the
assessment of interest on an erroneous refund of $50,000 or less
where the taxpayer has not caused the erroneous refund.
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Corp. v. United States, ___ F.3d ___ (Fed. Cir. 1997), and cases
discussed therein.
We are obliged to apply the law as written. Because section
6404(e) does not grant authority to the Commissioner to abate
interest accruing on deficiencies for tax years beginning before
January 1, 1979, we decline to graft on to the provision an
exception for interest assessed as the result of the disallowance
of the carryback of net operating losses to the 1978 taxable
year. Consequently, we shall grant respondent's Motion for
Partial Summary Judgment.
To reflect the foregoing,
An order will be issued
denying respondent's Motion to
Dismiss for Lack of Jurisdiction
and granting respondent's Motion
for Partial Summary Judgment.