113 T.C. No. 20
UNITED STATES TAX COURT
HENRY RANDOLPH CONSULTING, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 6838-98. Filed October 19, 1999.
P has moved to dismiss this case for lack of
jurisdiction on the ground that the Notice of
Determination Concerning Worker Classification Under
Section 7436 is invalid for failure to identify by name
the individuals determined by respondent to be
employees. Held: The notice is not invalid, and P's
motion is denied.
George W. Connelly, Jr., Linda S. Paine, and William O.
Grimsinger, for petitioner.
M. Kathryn Bellis, for respondent.
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OPINION
COHEN, Chief Judge: In Henry Randolph Consulting v.
Commissioner, 112 T.C. 1 (1999) (Randolph Consulting I), we
considered and granted respondent's Motion to Dismiss for Lack of
Jurisdiction and to Strike as to the Amounts of Employment Taxes
Proposed for Assessment by the Respondent for the years in issue.
The case is now before the Court on Petitioner's Motion for
Judgment on the Pleadings, which is more properly characterized
as petitioner's motion to dismiss for lack of jurisdiction, on
the ground that respondent did not issue a valid notice of
determination concerning worker classification under section
7436. Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect for the years in issue.
As we discussed in detail in Randolph Consulting I, on
March 19, 1998, respondent mailed to petitioner a Notice of
Determination Concerning Worker Classification Under Section
7436. That notice stated in part: "We have determined that the
individual(s) listed or described on the attached schedule are to
be legally classified as employees for purposes of federal
employment taxes." The attachments to the notice of
determination did not include a list of the individuals by name.
They did include, however, a copy of Examination Changes--Federal
Unemployment Tax for 1995 (Form 4667) and Employment Tax
Examination Changes Report for 1994 and 1995 (Form 4668),
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detailing respondent's wage adjustments for “4 employees” (1994)
and “6 employees” (1995) and included calculations of the amounts
to be assessed.
After the Court granted respondent's Motion to Dismiss for
Lack of Jurisdiction and to Strike as to the Amounts of
Employment Taxes Proposed for Assessment by the Respondent,
respondent's Answer was filed. Attached to the Answer was a list
of individuals that respondent determined should be reclassified
as employees of petitioner. Petitioner then filed its motion,
arguing that the notice is invalid because the list of
individuals was not part of the notice of determination sent to
petitioner in March 1998. Petitioner asserts: "The shortcoming
is tantamount to failure to specify the amount of the determined
deficiency anywhere in a Notice of Deficiency in a case under
I.R.C. Section 6212."
Respondent argues that the standard to be applied to a
notice of determination is whether it advises the taxpayer that
respondent has determined that, for specified time periods, some
or all of its workers are to be reclassified as employees and
that the notice in this case meets that standard. Respondent
acknowledges that petitioner's analogy between the notice of
determination and a notice of deficiency is reasonable inasmuch
as the form of neither is prescribed by statute. Respondent
contends, however, that petitioner overreaches the scope of the
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analogy in equating the list of workers reclassified with the
amount of a deficiency. Respondent notes that section 7522,
effective for notices sent on or after January 1, 1990, provides
certain requirements for the statutory notice but also provides
that "inadequate description" of the amount "shall not invalidate
such notice."
Section 6212 is not among those sections referred to in
section 7436(d), which provides that the principles of certain
other sections shall apply to cases arising under section 7436.
Nonetheless, we agree with the parties that a general analogy to
cases involving deficiency notices is useful. We do not agree
with petitioner, however, that those cases suggest that the
notice in this case is fatally defective.
We need not discuss every case cited by either party.
Specifically, discussions of circumstances in which the Court
will or will not examine events occurring prior to the time a
notice was sent are not useful here. Inasmuch as petitioner
acknowledges that it has not been misled and asserts that "this
is not a question of being misled," we need not discuss cases in
which inconsistencies in a notice arguably created confusion.
Nor need we discuss cases in which the notice showed on it face
that there was no determination, such as Scar v. Commissioner,
814 F.2d 1363 (9th Cir. 1987), revg. 81 T.C. 855 (1983), or cases
limiting the application of Scar, such as Clapp v. Commissioner,
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875 F.2d 1396 (9th Cir. 1989). Petitioner argues that none of
the cases cited by respondent are on point, but petitioner has
cited no case that held invalid a notice analogous to the notice
in issue here.
Petitioner relies on ipse dixit and on the bald assertion
that "the statutory scheme in this case is clear and Respondent
has manifestly violated it." We are not persuaded. The
statutory scheme provides to taxpayers a remedy not previously
available, to wit, an opportunity to have employment status
disputes resolved in this Court. See Randolph Consulting I,
supra at 9-10. As in other cases within our jurisdiction, the
notice of that determination is the taxpayer's "ticket to the Tax
Court". The notice sent to petitioner is the "Notice of
Determination Concerning Worker Classification Under Section
7436" that permits the taxpayer to seek relief in this Court. It
specifically states that the determination described in section
7436 has been made. As we held in Randolph Consulting I, we do
not have jurisdiction to determine the amount of taxes owing. In
any event, attachments to the notice sent to petitioner
calculated the amounts to be assessed. The failure to attach the
list of named individuals that respondent determined to be
employees is not incurable. It was cured in this instance by the
attachment to the Answer, and no prejudice to petitioner can be
asserted plausibly.
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There is nothing on the face of the notice that suggested no
determination was made prior to the time the notice was sent.
There is no dispute that the name of the taxpayer and the
affected tax periods are set forth in the notice. In Randolph
Consulting I, 112 T.C. at 12, we concluded that section 7436 is
more like the declaratory judgment provisions than like the
deficiency jurisdiction under which we may redetermine the amount
of tax due. Petitioner has not cited, and we have not found, any
declaratory judgment case in which a notice of determination was
held inadequate. (Cases involving a taxpayer's attempt to invoke
our jurisdiction on the basis of a document that was not a notice
of final determination have been dismissed on respondent's
motions. See AHW Corp. v. Commissioner, 79 T.C. 390 (1982); New
Community Senior Citizen Housing Corp. v. Commissioner, 72 T.C.
372 (1979).)
Petitioner's contention that the notice is invalid for
failure to specify the individual or individuals whose status has
been determined, therefore, is only comparable or analogous to
arguments by taxpayers that a notice was invalid for failure to
explain the adjustments, failure to cite statutory provisions on
which respondent relied, or inconsistencies in the notice. The
cases have held that none of the asserted inadequacies
invalidates the notice. See, e.g., Campbell v. Commissioner, 90
T.C. 110 (1988); Mayerson v. Commissioner, 47 T.C. 340, 348-349
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(1966); St. Paul Bottling Co. v. Commissioner, 34 T.C. 1137
(1960).
In conclusion, petitioner has not provided any statutory
language, case law, or convincing reason to invalidate the notice
in this case.
An order denying petitioner's
motion will be issued.