T.C. Memo. 2002-157
UNITED STATES TAX COURT
JOSE A. SALAZAR, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11128-01. Filed June 20, 2002.
Alfonso Soto, for petitioner.
Roberta L. Shumway and Kerry H. Bryan, for respondent.
MEMORANDUM OPINION
ARMEN, Special Trial Judge: Petitioner filed with the Court
a petition for administrative costs pursuant to section
7430(f)(2) and Rules 270 through 274.1 In the petition,
petitioner seeks to recover administrative costs in respect of
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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the taxable years 1984 and 1985.
This case is presently before the Court on respondent’s
motion for judgment on the pleadings, filed pursuant to Rule 120.
Because we have considered matters outside of the pleadings, we
shall treat respondent’s motion as one for summary judgment
pursuant to Rule 121. See Rule 120(b).
As discussed in detail below, we hold that there is no
dispute as to any material fact, and we shall enter decision for
respondent. However, under the circumstances presented, we shall
enter decision on the narrow ground that petitioner filed his
claim for administrative costs with respondent before respondent
mailed to petitioner a final decision regarding petitioner’s tax
liabilities for 1984 and 1985. See sec. 7430(b)(4).
Background
In 1985, respondent issued a notice of deficiency to
petitioner determining deficiencies in, and additions to, his
income taxes for 1982 and 1983. Thereafter, in March 1988,
respondent issued a notice of deficiency to petitioner
determining deficiencies in, and additions to, his Federal income
taxes for 1984 and 1985.
Petitioner filed with the Court a petition for
redetermination in respect of the notice of deficiency for 1982
and 1983, which petition was assigned docket No. 43255-85. See
sec. 6213(a). In contrast, petitioner did not file with the
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Court any petition for redetermination in respect of the notice
of deficiency for 1984 and 1985.
In October 1988, the Court entered a stipulated decision in
docket No. 43255-85 pursuant to the parties’ agreement. The
decision reflects petitioner’s liability for deficiencies in
income taxes and additions to tax for 1982 and 1983.
Over the next several years, petitioner attempted to resolve
his tax liabilities for 1984 and 1985. During this period,
petitioner also requested that respondent abate penalties and
interest for 1982, 1983, 1984, and 1985.
By letter dated March 19, 1998, respondent advised
petitioner that because of the Court’s decision in docket No.
43255-85, respondent would not abate penalties or interest for
1982 or 1983. However, respondent advised petitioner that
respondent would abate: (1) Assessments of penalties and interest
for 1984 (resulting in a credit balance for that year of
$5,451.13); and (2) assessments of tax, penalties, and interest
for 1985 (resulting in a credit balance for that year of
$6,378.08).
On September 13, 2000, respondent issued to petitioner a
notice of final determination under section 6404 disallowing his
claim for abatement of interest for 1982 and 1983. Petitioner
then filed with the Court a timely petition for review, assigned
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docket No. 12440-00, challenging respondent’s determination.2
On December 8, 2000, petitioner filed with respondent an
application for administrative costs for 1982, 1983, 1984, and
1985 under section 7430. On December 15, 2000, respondent wrote
to petitioner informing him that his application for
administrative costs for 1982 and 1983 was premature in light of
his then-pending petition for review of his interest abatement
claim in docket No. 12440-00. Respondent did not otherwise
respond to petitioner’s request for reimbursement of
administrative costs for 1984 and 1985.
On March 19, 2001, petitioner filed with the Court a
petition for administrative costs, which was assigned docket No.
3806-01, seeking a recovery for 1984 and 1985. On October 23,
2001, the Court entered an order of dismissal for lack of
jurisdiction in docket No. 3806-01 on the ground that the
petition was not filed with respect to a decision of the Internal
Revenue Service granting or denying an application for reasonable
administrative costs pursuant to section 7430(f)(2),3 nor had the
2
On Oct. 22, 2001, the Court entered a stipulated decision
in docket No. 12440-00 in which the parties agreed that
petitioner was entitled to partial abatements of interest for
1982 and 1983 resulting in overpayments of interest of $1,785 and
$2,561, for 1982 and 1983, respectively.
3
Sec. 7430(f)(2) provides that a taxpayer may file a
petition for review with the Court challenging a decision of the
Internal Revenue Service granting or denying (in whole or in
part) an award for reasonable administrative costs. Generally,
(continued...)
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6-month period set forth in section 301.7430-2(c)(6), Proced. &
Admin. Regs.,4 expired as of March 19, 2001--the date that the
petition was filed.
In the meantime, on September 6, 2001, petitioner filed with
the Court a second petition for administrative costs, which
petition initiated the instant case, again seeking a recovery in
respect of the taxable years 1984 and 1985. Paragraph 4(b) of
the petition states: “On March 19, 1998, Respondent admitted to
the erroneous assessments and refunded excess taxes, and abated
penalties and interest thereon, showing that Petitioner
substantially prevailed as to the amount in controversy and the
most significant issues.”
In response to the petition, respondent filed a motion for
judgment on the pleadings. Respondent asserts that, insofar as
petitioner contends that respondent’s letter dated March 19,
3
(...continued)
such a petition must be filed with the Court no later than 90
days after the date that the Internal Revenue Service mails its
notice of decision regarding a request for administrative costs.
4
Sec. 301.7430-2(c)(6), Proced. & Admin. Regs., provides
in pertinent part:
If the Internal Revenue Service does not respond on the
merits to a request by the taxpayer for an award of
reasonable administrative costs filed under paragraph
(c)(1) of this section within 6 months after such
request is filed, the Internal Revenue Service’s
failure to respond may be considered by the taxpayer as
a decision of the Internal Revenue Service denying an
award for reasonable administrative costs.
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1998, constituted a final decision of the Internal Revenue
Service for the years 1984 and 1985 within the meaning of section
7430(b)(4), respondent is entitled to judgment on the ground that
petitioner failed to file his application for reasonable
administrative costs within 90 days of March 19, 1998, as
required by section 7430(b)(4). Petitioner filed an objection to
respondent’s motion in which he argued that his application for
reasonable administrative costs was timely filed with respondent
within 90 days of respondent’s final determination dated
September 13, 2000, that was issued pursuant to section 6404.
This matter was called for hearing at the Court’s motions
session in Washington, D.C. Counsel for both parties appeared at
the hearing and offered oral argument.
During the hearing, counsel for respondent informed the
Court that respondent was seeking judgment on the pleadings on
the narrow ground that, insofar as the petition appeared to
allege that respondent’s March 19, 1998, letter was a final
decision within the meaning of section 7430(b)(4), petitioner is
not entitled to an award of reasonable administrative costs
because he failed to file his application therefor with
respondent within the 90-day period prescribed in section
7430(b)(4). However, counsel for respondent also informed the
Court that respondent considered it “debatable” whether his
letter dated March 19, 1998, could be characterized as a final
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decision within the meaning of section 7430(b)(4) inasmuch as
respondent maintained that petitioner’s case involved a
collection matter ineligible for an award of reasonable
administrative costs. See sec. 301.7430-3(a) and (b), Proced. &
Admin. Regs.5
During the hearing, counsel for petitioner stated that he
was uncertain whether respondent had issued a final decision
(within the meaning of section 7430(b)(4)) to petitioner for 1984
and 1985, and that the reference to respondent’s March 19, 1998,
letter was included in the petition because such letter was the
only communication that petitioner received from respondent that
arguably constituted a final decision.
Discussion
1. Jurisdiction
The Court’s jurisdiction under section 7430 normally is
dependent upon the filing of a petition within 90 days after the
Commissioner issues a decision granting or denying (in whole or
in part) a taxpayer’s application for an award of reasonable
administrative costs. Sec. 7430(f)(2). However, where the
Commissioner fails to issue a decision within 6 months of the
filing of such an application, a taxpayer may file a petition
5
We note that respondent’s motion to dismiss for lack of
jurisdiction filed in docket No. 3806-01 includes an allegation
that respondent’s letter dated Mar. 19, 1998, does not constitute
a final decision within the meaning of sec. 7430(b)(4).
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with the Court within the 90-day period following the expiration
of such 6-month period. Sec. 301.7430-2(c)(6), Proced. & Admin.
Regs.
Petitioner filed his application for an award of reasonable
administrative costs with respondent on December 8, 2000. The 6-
month period referred to in section 301.7430-2(c)(6), Proced. &
Admin. Regs., expired with respect to petitioner’s application on
June 8, 2001. In light of respondent’s failure to issue a
decision regarding petitioner’s application, petitioner filed
with the Court a timely petition on September 6, 2001. Under the
circumstances, there is no dispute between the parties regarding
the Court’s jurisdiction with regard to this matter.
2. Petitioner’s Claim for Administrative Costs
Section 7430(b)(4) provides:
(b) Limitations.--
(4) Period For Applying To IRS For
Administrative Costs.–-An award may be made under
subsection (b) by the Internal Revenue Service for
reasonable administrative costs only if the
prevailing party files an application with the
Internal Revenue Service for such costs before the
91st day after the date on which the final
decision of the Internal Revenue Service as to the
determination of the tax, interest, or penalty is
mailed to such party.
Section 301.7430-2(c), Proced. & Admin. Regs., provides in
pertinent part:
(5) Period for requesting costs from the Internal
Revenue Service. To recover reasonable administrative
costs pursuant to section 7430 and this section, the
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taxpayer must file a request for costs no later than 90
days after the date the final decision of the Internal
Revenue Service with respect to all tax, additions to
tax and penalties at issue in the administrative
proceeding is mailed, or otherwise furnished, to the
taxpayer. The final decision of the Internal Revenue
Service for purposes of this section is the document
which resolves the tax liability of the taxpayer with
regard to all tax, additions to tax and penalties at
issue in the administrative proceeding (such as a Form
870 or closing agreement), or a notice of assessment
for that liability (such as the notice and demand under
section 6303), whichever is earlier mailed, or
otherwise furnished, to the taxpayer. * * * [Emphasis
added.]
In sum, the Commissioner is not obliged to grant an award of
reasonable administrative costs unless the taxpayer files a
request for such costs no later than 90 days after the date that
the Commissioner mails a final decision regarding the tax,
additions to tax, and penalties to the taxpayer.
Our review of the record in this case leads us to conclude
that respondent did not issue a final decision to petitioner for
1984 and 1985 within the meaning of section 7430(b)(4).
Respondent’s letter dated March 19, 1998, arguably possesses some
of the characteristics of a final decision in that it contains a
clear explanation of respondent’s computation of petitioner’s tax
liabilities for 1984 and 1985. On the other hand, we are not
convinced that respondent intended that letter to be considered a
final decision. In addition, the letter is not the equivalent of
a Form 870 or formal closing agreement, and it cannot be
considered final in the technical sense of the term.
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We likewise reject the suggestion made in petitioner’s
objection to respondent’s motion that the notice of final
determination issued to petitioner on September 13, 2000,
constitutes a final decision within the meaning of section
7430(b)(4). In short, respondent’s final determination pursuant
to section 6404 is responsive only to petitioner’s claim for
abatement of interest for 1982 and 1983. The notice of final
determination simply does not pertain to petitioner’s request for
an award of reasonable litigation costs for 1984 and 1985.
The parties agree that respondent has not issued any other
document to petitioner that might constitute a final decision
within the meaning of section 7430(b)(4). Consistent with the
preceding discussion, we shall grant respondent’s motion for
summary judgment in that we shall enter a decision that
petitioner is not entitled to an award of reasonable
administrative costs for 1984 and 1985 on the narrow ground that
petitioner filed his claim for administrative costs with
respondent before respondent mailed to petitioner a final
decision regarding petitioner’s tax liabilities for 1984 and
1985.6 See sec. 7430(b)(4).
6
By granting respondent’s motion on such narrow ground we
leave open the possibility that respondent may yet issue a final
decision for 1984 and 1985 that would then permit petitioner to
file an application for administrative costs.
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In order to reflect the foregoing,
An appropriate order and
decision will be entered.