T.C. Memo. 2002-49
UNITED STATES TAX COURT
TAE M. KIM AND YOUNG J. KIM, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1448-01. Filed February 21, 2002.
Tae M. Kim and Young J. Kim, pro sese.
Roger W. Bracken, for respondent.
MEMORANDUM OPINION
CHIECHI, Judge: This case is before the Court on respon-
dent’s motion for summary judgment (respondent’s motion). We
shall grant respondent’s motion.
Background
Petitioners resided in Bowie, Maryland, at the time they
filed the petition in this case.
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On May 8, 1997, respondent issued to petitioners a notice of
deficiency (notice) determining a deficiency in, and an accuracy-
related penalty under section 6662(a)1 on, their Federal income
tax for each of the years 1993 and 1994. Petitioners timely
filed a petition with respect to that notice (Kim I), and a trial
was held in Kim v. Commissioner, docket No. 15447-97. On August
4, 1999, the Court filed its opinion in Kim I. Kim v. Commis-
sioner, T.C. Memo. 1999-261. Thereafter, petitioners did not
file a motion in Kim I claiming reasonable administrative and/or
litigation costs. On December 1, 1999, the Court entered a
decision in Kim I.
In February 2000, petitioners appealed the decision of the
Court in Kim I to the United States Court of Appeals for the
Fourth Circuit (Court of Appeals).
On March 23, 2000, respondent issued to petitioners two
separate notices, entitled “Notice of Tax Due on Federal Tax
Return”, one of which pertained to petitioners’ taxable year 1993
and one of which pertained to petitioners’ taxable year 1994.
On June 2, 2000, in an unpublished opinion the Court of
Appeals affirmed the Court’s decision in Kim I. Kim v. Commis-
sioner, 215 F.3d 1319 (4th Cir. 2000), affg. per curiam without
published opinion T.C. Memo. 1999-261.
1
All section references are to the Internal Revenue Code in
effect at all relevant times. All Rule references are to the Tax
Court Rules of Practice and Procedure.
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On June 12, 2000, petitioners sent a letter (petitioners’
June 12, 2000 letter) to the Internal Revenue Service (IRS) in
which they requested “the recovery of administrative/litigation
costs incurred after Appeals through the Tax Court hearing in the
determination of the amount of taxes” for 1993 and 1994, as
follows:
Claimed Nature of Claimed
Administrative/Litigation Costs Amount of Costs
Studies, consulting, research, parking, $2,548.00
transportation, and others
Document production and copying 562.50
Delivery and mailing 74.00
Legal consultation and assistance 3,450.00
Telephone 138.10
Document filing 60.00
Attorney representation 400.00
Total Amount of Claimed Costs $7,232.60
On August 31, 2000, Kim v. Commissioner, 215 F.3d 1319 (4th
Cir. 2000), became final.
On November 20, 2000, respondent sent a letter (respondent’s
November 20, 2000 letter) to petitioners in response to petition-
ers’ June 12, 2000 letter and to a letter from petitioners dated
July 31, 2000, that is not part of the instant record. In
respondent’s November 20, 2000 letter, respondent stated in part:
Under I.R.C. § 7430, the prevailing party in a
court proceeding may be awarded a judgment or settle-
ment for reasonable administrative and litigation
costs. Under I.R.C. [§] 7430(c)(4)(C), when a case is
finally determined by a court, that court must make the
determination of who is the prevailing party for pur-
poses of determining the award of administrative and
litigation costs. Treas. Reg. § 301.7430-2(b)(2)
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states that where the underlying substantive issues
were before any court of the United States, including
the Tax Court, the taxpayer’s only possibility of
obtaining an award of reasonable administrative costs
is from the court.
Tax Court Rule 231 sets forth the requirements for
making a claim for litigation and administrative costs.
Under this rule, when a case is unagreed concerning the
parties claim for such costs, a claim shall be made by
motion filed within 30 days after the service of a
written opinion determining the issues in the case.
The Tax Court issued its opinion in your case, Docket
No. 15447-97, on August 4, 1999. That opinion was
served upon respondent that same day. We are unaware
if you have filed any motion requesting an award of
reasonable administrative or litigation cost in this
case. If you have not made such a motion within 30
days of the service of the Tax Court’s opinion in your
case, your claim is untimely and can not be allowed.
Your letters of June 12, 2000, and July 31, 2000, do
not constitute an appropriate request for recovery of
reasonable administrative and litigation costs as
required by I.R.C. [§] 7430 and Tax Court Rule 231.
* * * * * * *
This letter constitutes the respondent’s response to
your letters. * * *
On December 12, 2000, petitioners sent a letter (petition-
ers’ December 12, 2000 letter) to respondent in response to
respondent’s November 20, 2000 letter. In petitioners’ December
12, 2000 letter, petitioners stated in part:
We received the IRS denial notice dated November 20,
2000. We find that paragraphs of IRS Publication 556,
Publication 5, and others, in relation to recovering
litigation or administrative costs, were not considered
in IRS notice of denial.
Our understandings from the review of these IRS Publi-
cations are not consistent with the basis of the IRS
notice of denial.
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On December 27, 2000, respondent sent a letter (respondent’s
December 27, 2000 letter) to petitioners in response to petition-
ers’ December 12, 2000 letter. In respondent’s December 27, 2000
letter, respondent stated:
We received your letter of December 12, 2000. You
assert that IRS Publication 5 and 556 (and others) were
not considered when denying your claim for recovering
administrative and litigation costs. IRS publications
are for information purposes; they are not law. * * *
The Internal Revenue Code and Treasury Regulation
sections described in our letter to you, dated November
20, 2000, are the controlling law in this area.
Additionally, we reviewed the publications men-
tioned. We found nothing in those publications that
was inconsistent with the law that controls the award
of administrative and litigation costs in your case.
On January 18, 2001, petitioners filed a petition for
administrative costs under section 7430(f)(2) in which they seek
to recover $7,232.60.2
Discussion
The Court may grant summary judgment where there is no
genuine issue of material fact and a decision may be rendered as
2
Although petitioners filed a petition for administrative
costs under sec. 7430(f)(2) seeking administrative costs totaling
$7,232.60, in petitioners’ June 12, 2000 letter petitioners
described their request to the IRS for $7,232.60 as “a request
for the recovery of administrative/litigation costs incurred
after Appeals through the Tax Court hearing”. It appears that
petitioners may have included not only administrative costs but
also litigation costs in their claim for $7,232.60 in their
petition for administrative costs under sec. 7430(f)(2). Assum-
ing arguendo that petitioners did include litigation costs as
well as administrative costs in their petition for administrative
costs under sec. 7430(f)(2), that fact would be immaterial to our
resolution of respondent’s motion for summary judgment.
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a matter of law. Rule 121(b); Naftel v. Commissioner, 85 T.C.
527, 529 (1985); Jacklin v. Commissioner, 79 T.C. 340, 344
(1982). We conclude that there is no genuine issue of material
fact precluding us from resolving the question raised in respon-
dent’s motion.
In respondent’s motion, respondent argues that, under
Gustafson v. Commissioner, 97 T.C. 85 (1991), “The doctrine of
res judicata bars an action for administrative costs under
section 7430(f)(2)[3] to the extent the recovery of such costs
could have been pursued in a prior deficiency case.”4 Petition-
ers counter that the doctrine of res judicata is irrelevant to
their claim under section 7430(f)(2).
3
Sec. 7430(a) authorizes an award to the prevailing party of
reasonable administrative costs incurred in any administrative
proceeding with the IRS and of reasonable litigation costs
incurred in any civil tax litigation. As pertinent here, sec.
7430(f)(2) provides:
SEC. 7430. AWARDING OF COSTS AND CERTAIN FEES.
(f) Right of Appeal.--
* * * * * * *
(2) Administrative proceedings.–- A decision
granting or denying (in whole or in part) an award for
reasonable administrative costs under subsection (a) by
the Internal Revenue Service shall be subject to the
filing of a petition for review with the Tax Court
under rules similar to the rules under section 7463
(without regard to the amount in dispute). * * *
4
Respondent raised the doctrine of res judicata as an affir-
mative defense in respondent’s answer to petitioners’ petition.
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The Supreme Court described the doctrine of res judicata as
follows:
The general rule of res judicata applies to repetitious
suits involving the same cause of action. It rests
upon considerations of economy of judicial time and
public policy favoring the establishment of certainty
in legal relations. The rule provides that when a
court of competent jurisdiction has entered a final
judgment on the merits of a cause of action, the par-
ties to the suit and their privies are thereafter bound
“not only as to every matter which was offered and
received to sustain or defeat the claim or demand, but
as to any other admissible matter which might have been
offered for that purpose.” The judgment puts an end to
the cause of action, which cannot again be brought into
litigation between the parties upon any ground what-
ever, absent fraud or some other factor invalidating
the judgment. [Commissioner v. Sunnen, 333 U.S. 591,
597 (1948); citations omitted.]
In Gustafson v. Commissioner, supra, the Court held on facts
substantially the same as those involved in the instant case
“that the doctrine of res judicata bars an action for administra-
tive costs under section 7430(f)(2) to the extent that the
recovery of such costs could have been pursued in a prior defi-
ciency, liability, revocation, or partnership case.” Gustafson v.
Commissioner, supra at 93. We conclude that Gustafson is con-
trolling here. We hold that the doctrine of res judicata bars
petitioners from litigating in the instant case their claim for
administrative costs under section 7430(f)(2). We shall grant
respondent’s motion.
We have considered all of the contentions and arguments of
petitioners that are not discussed herein, and we find them to be
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without merit and/or irrelevant.
To reflect the foregoing,
An appropriate order and deci-
sion will be entered.