T.C. Memo. 2000-350
UNITED STATES TAX COURT
SAMUEL AND BERNICE BOONE TRUST, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16141-99L. Filed November 13, 2000.
On its 1997 income tax return, P reported zero tax
liability and claimed a refund resulting from claimed
income tax withholding credits. R paid P the claimed
refund but later determined that the payment of the
refund was in error, as P had made no income tax
payments for which the withholding credits were
claimed. After R made summary assessment of the
erroneous refund, P requested a due process hearing.
After R issued a negative determination letter, P filed
a petition for judicial review of R’s administrative
determination. R filed a motion to dismiss for lack of
jurisdiction. Held, because the Court lacks
jurisdiction over the underlying tax liability that R
is attempting to collect, the Court lacks jurisdiction
to review the administrative determination in dispute.
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Samuel Boone and Bernice Boone (trustees), for petitioner.
Steven M. Webster, for respondent.
MEMORANDUM OPINION
THORNTON, Judge: This matter is before the Court on
respondent’s motion to dismiss for lack of jurisdiction.1 As
discussed below, we shall grant respondent’s motion.
Unless otherwise indicated, section references are to the
Internal Revenue Code as amended.
Background
On its Form 1041, U.S. Income Tax Return for Estates and
Trusts, for taxable year 1997, petitioner reported income tax
liability of zero and income tax withholding credits of $165,149,
resulting in a refund claim of $165,149. On December 7, 1998,
respondent issued petitioner a $166,293.04 refund for taxable
year 1997.2 Subsequently, respondent determined the refund had
been erroneously paid because petitioner had not made the income
tax payments for which credits had been claimed. On March 15,
1999, respondent summarily assessed the previously refunded
amount and mailed petitioner a notice of tax due. Respondent
1
The instant case involves the same jurisdictional issue as
Loadholt Trust v. Commissioner, T.C. Memo. 2000-349, also decided
today.
2
This amount represents the reported overpayment of
$165,149 plus interest of $1,144.04.
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subsequently filed notices of Federal tax lien in connection with
the assessment.
Petitioner timely filed with the Internal Revenue Service a
request for a due process hearing with regard to the filing of
the notices of Federal tax lien. By notice of determination
dated September 15, 1999, respondent’s Appeals officer informed
petitioner that his office had reviewed the proposed collection
action and had determined that there were no deviations from
applicable law or administrative procedures that would warrant
release or withdrawal of the filed tax lien.3
Respondent’s notice of determination stated that if
petitioner wanted to dispute the determination in court, it
should file a petition with the U.S. Tax Court. The notice of
determination further stated: “If the court determines that you
made your petition to the wrong court, you will have 30 days
after such determination to file with the correct court.”
Petitioner timely filed a petition for redetermination with
this Court. Respondent filed a motion to dismiss for lack of
jurisdiction. In his motion, respondent argues that the Tax
Court lacks jurisdiction because petitioner’s tax liability was
3
The notice of determination states that the applicable
laws and administrative procedures were met with “one exception”,
apparently relating to the filing of two notices of Federal tax
lien in two different counties. Cf. sec. 6323(f)(1)(A)(i) and
(ii) (notice of Federal tax lien shall be filed “in one office
within the State”).
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summarily assessed under the authority of section 6201(a)(3) and
“arose from a nonrebate erroneous refund which could not have
been assessed as a deficiency or otherwise been subject to the
jurisdiction of this Court under an alternative to assessment
under section 6201(a)(3).”
On October 2, 2000, a hearing on respondent’s motion was
held at the Court’s trial session in Columbia, South Carolina.
Discussion
Petitioner seeks judicial review of an administrative action
instituted by respondent to recover what respondent alleges was
an erroneous refund paid to petitioner. As described below, the
administrative collection procedures instituted by respondent are
distinct from the deficiency procedures upon which this Court’s
jurisdiction is generally predicated.
Section 6201 authorizes and requires the Secretary “to make
the inquiries, determinations, and assessments of all taxes * * *
imposed” by the Internal Revenue Code. The assessment of tax,
which is ordinarily the first step in the collection process, is
accomplished by recording the taxpayer’s liability in the office
of the Secretary. See sec. 6203.
In certain circumstances, pursuant to the general authority
of section 6201, the Commissioner can summarily (immediately)
assess certain amounts, including overstatements on a return or a
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claim for refund of the credit for income tax withholdings. See
sec. 6201(a)(3).
In other circumstances, the Commissioner cannot assess the
tax until he has followed deficiency proceedings. In particular,
if the Commissioner determines that there is a deficiency in the
taxpayer’s reported liability with respect to income taxes,
estate and gift taxes, and certain specified excise taxes, he
generally cannot assess the tax until a statutorily prescribed
period of time (generally 90 days or, for taxpayers outside the
country, 150 days) after he has issued the taxpayer a notice of
deficiency. See sec. 6213(a). During this time, the taxpayer
may file a petition in the Tax Court, and the Commissioner
generally may not assess or collect the tax until the Tax Court’s
decision has become final. See id.
Once the Commissioner has assessed the tax, he may institute
administrative collection action. Section 6321 provides that if
any person liable to pay any tax neglects or refuses to pay the
same after notice and demand, the amount shall be a lien in favor
of the United States upon all property and rights to property,
whether real or personal, belonging to that person. Section 6323
generally requires the Commissioner to file a notice of Federal
tax lien with the appropriate State office or the local Federal
District Court.
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Section 6331(a) provides that if any person liable to pay
any tax neglects or refuses to pay such tax within 10 days after
notice and demand for payment, the Secretary is authorized to
collect such tax by levy upon property belonging to the taxpayer.
Under section 6331(d) the Secretary must provide the taxpayer
with notice, including notice of the administrative appeals
available to the taxpayer, before proceeding with collection by
levy on the taxpayer’s property.
As enacted in the Internal Revenue Service Restructuring and
Reform Act of 1998 (RRA 1998), Pub. L. 105-206, sec. 3401, 112
Stat. 685, 746, sections 6320 (pertaining to liens) and 6330
(pertaining to levies) provide protections for taxpayers in tax
collection matters. Sections 6320 and 6330 are effective with
regard to collection actions commenced on or after January 19,
1999. See RRA 1998 sec. 3401(d), 112 Stat. 750.
Section 6320(a)(1) requires the Commissioner to provide
notice to a person described in section 6321 of the filing of a
notice of lien under section 6323. Section 6320(a)(3) and (b)
provides that the person described in section 6321 is entitled to
notice of and the opportunity for an administrative review of the
lien in the form of an Appeals Office hearing. Section 6330
provides for a similar hearing where the Commissioner has
proposed to levy on the taxpayer’s property. Section 6320(c)
adopts the procedures set forth in section 6330(c), (d), and (e)
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governing the issues that may be raised in a hearing and the
means for obtaining judicial review of the matter. See Goza v.
Commissioner, 114 T.C. 176 (2000).
Section 6330(d) provides for judicial review of an
administrative determination regarding a collection matter as
follows:
SEC. 6330(d). Proceeding After Hearing.--
(1) Judicial review of determination.--The person may,
within 30 days of a determination under this section, appeal
such determination–-
(A) to the Tax Court (and the Tax Court shall have
jurisdiction to hear such matter); or
(B) if the Tax Court does not have jurisdiction of
the underlying tax liability, to a district court of
the United States.
If a court determines that the appeal was to an incorrect
court, a person shall have 30 days after the court
determination to file such appeal with the correct court.
Interpreting these statutory provisions, we stated in Moore v.
Commissioner, 114 T.C. 171, 175 (2000):
While Congress clearly intended for section 6330 to provide
an opportunity for judicial review of collection matters, we
interpret section 6330(d)(1)(A) and (B) together to mean
that Congress did not intend to expand the [Tax] Court’s
jurisdiction beyond the types of taxes that the Court may
normally consider. Thus, section 6330(d)(1)(A) and (B)
provides for Tax Court jurisdiction except where the Court
does not normally have jurisdiction over the underlying
liability. [Emphasis added.]
See also Van Es v. Commissioner, 115 T.C. ____ (2000).
This Court is a court of limited jurisdiction, having only
such jurisdiction as provided by Congress. See sec. 7442; see
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also Estate of Meyer v. Commissioner, 84 T.C. 560, 562 (1985);
Adams v. Commissioner, 72 T.C. 81, 84 (1979), affd. without
published opinion 688 F.2d 815 (2d Cir. 1982). With exceptions
not germane here, this Court’s jurisdiction is generally limited
to redetermining deficiencies in income taxes, estate and gift
taxes, and certain specified excise taxes that are subject to the
deficiency procedures outlined above. See secs. 6214, 7442; see
also Estate of Meyer v. Commissioner, supra at 562; Judd v.
Commissioner, 74 T.C. 651, 653 (1980).
In this case, respondent is attempting to collect an alleged
erroneous refund resulting from petitioner’s alleged
overstatement of income taxes withheld. The assessments at issue
were not subject to the deficiency procedures but instead were
subject to the summary assessment procedures of section
6201(a)(3). Under those procedures, overstatements of withheld
income taxes are generally treated in the same manner as
mathematical or clerical errors appearing on the return, except
that in the case of an assessment of an overstated credit for
withholding, the taxpayer has no right to request an abatement.
See secs. 6201(a)(3), 6213(b)(1) and (2). Therefore, summary
assessments with respect to overstatements of withheld taxes
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provide the taxpayer no right to petition the Tax Court to
contest the liability. See sec. 6213(b)(1).4
In sum, because we have no jurisdiction over the “underlying
tax liability” within the meaning of section 6330(d)(1)(B), we
have no jurisdiction over the instant petition for
redetermination, and we must grant respondent’s motion to
dismiss.
Although petitioner cannot pursue its case in this Court, it
is not without a remedy. Petitioner may seek judicial review in
the appropriate District Court of the United States. See sec.
6330(d)(1)(B).
4
Sec. 6213(b)(1) provides:
If the taxpayer is notified that, on account of a
mathematical or clerical error appearing on the
return, an amount of tax in excess of that shown
on the return is due, and that an assessment of
the tax has been or will be made on the basis of
what would have been the correct amount of tax but
for the mathematical or clerical error, such
notice shall not be considered as a notice of
deficiency * * * and the taxpayer shall have no
right to file a petition with the Tax Court based
on such notice, nor shall such assessment or
collection be prohibited by the provisions of
subsection (a) of this section. [Emphasis added.]
As noted above, if the taxpayer so requests, a summary
assessment relating to a mathematical or clerical error must be
abated, and any reassessment must be made subject to the
deficiency procedures. See sec. 6213(b)(2). The abatement and
reassessment procedures do not apply, however, to assessments of
erroneous income tax prepayment credits. See sec. 6201(a)(3).
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To reflect the foregoing,
An appropriate order of
dismissal will be entered.