T.C. Memo. 2002-206
UNITED STATES TAX COURT
MICHAEL R. OLSEN AND SHEILA OLSEN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 4950-02. Filed August 16, 2002.
Michael R. Olsen and Sheila Olsen, pro sese.
Christian A. Speck and William A. Heard III, for
respondent.
MEMORANDUM OPINION
ARMEN, Special Trial Judge: This matter is before the Court
on respondent’s Motion to Dismiss for Lack of Jurisdiction.
Respondent contends that this case should be dismissed on the
ground that the petition was not timely filed pursuant to section
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6213(a) or section 7502.1 As discussed in detail below, we shall
grant respondent’s motion to dismiss.
Background
On February 28, 2001, petitioners commenced an action (the
refund action) in the U.S. District Court for the Eastern
District of California seeking tax refunds for 1997 and 1998.
Although the record in this case does not include a complete copy
of petitioners’ complaint, it appears that the refund action was
brought on the theory that petitioners were entitled to a credit
carryforward that would result in overpayments for 1997 and 1998.
On May 1, 2001, respondent sent petitioners a notice of
deficiency. In the notice, respondent determined deficiencies in
petitioners’ Federal income taxes for 1997 and 1998 in the
amounts of $1,138 and $889, respectively. The deficiencies were
attributable to respondent’s disallowance of medical expenses and
Schedule C deductions claimed by petitioners on their 1997 and
1998 income tax returns and respondent’s determination that
petitioners failed to report a State tax refund on their 1998
return. The notice advised petitioners how they could contest
respondent’s deficiency determinations by filing a petition for
redetermination with this Court. In that regard, the notice
further advised petitioners that “Last Day to File a Petition
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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With the United States Tax Court: JUL 30 2001".
On or about June 13, 2001, the United States moved to
dismiss petitioners’ refund action for lack of jurisdiction. On
June 22, 2001, an Order and Findings and Recommendation was filed
by a United States magistrate judge recommending that
petitioners’ refund action be dismissed for lack of jurisdiction.
The Order and Findings and Recommendation concluded that the
District Court lacked jurisdiction on the ground that petitioners
could not be deemed to have paid the taxes that were the subject
of their refund claim inasmuch as “approval of a credit from
overpayment by the Internal Revenue Service is a prerequisite to
filing suit for a refund under section 7422". See 26 U.S.C. sec.
7422(d) (1994). On January 31, 2002, the District Court filed an
Order dismissing petitioners’ refund action for lack of
jurisdiction based on the prior Order and Findings and
Recommendation of the magistrate judge.
On February 28, 2002, petitioners filed a petition for
redetermination with this Court contesting the notice of
deficiency dated May 1, 2001. The envelope in which the petition
was mailed to the Court bears a U.S. Postal Service postmark date
of February 12, 2002, and postmark place of Sacramento,
California.
As indicated, respondent filed a motion to dismiss for lack
of jurisdiction on the ground that the petition was not timely
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filed. Petitioners filed an objection to respondent’s motion to
dismiss asserting that their petition was timely filed following
the District Court’s dismissal of their refund action.
Petitioners argue that they will not have any remedy if this
Court dismisses their case. Respondent filed a reply to
petitioners’ objection.
This matter was called for hearing at the Court’s motions
session in Washington, D.C. Counsel for respondent appeared at
the hearing and offered argument in support of respondent’s
motion to dismiss. There was no appearance by or on behalf of
petitioners at the hearing, nor did petitioners file a statement
pursuant to Rule 50(c), the provisions of which were explained in
the Court’s Order calendaring respondent’s motion for hearing.
Discussion
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). This
Court's jurisdiction to redetermine a deficiency depends on the
issuance of a valid notice of deficiency and a timely filed
petition. Rule 13(a), (c); Monge v. Commissioner, 93 T.C. 22, 27
(1989); Normac, Inc. v. Commissioner, 90 T.C. 142, 147 (1988).
Section 6212(a) expressly authorizes the Commissioner, after
determining a deficiency, to send a notice of deficiency to the
taxpayer by certified or registered mail. The taxpayer, in turn,
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has 90 days (or 150 days if the notice is addressed to a person
outside of the United States) from the date the notice of
deficiency is mailed to file a petition in this Court for a
redetermination of the deficiency. Sec. 6213(a). Pursuant to
section 7502(a), a timely mailed petition will be treated as
though it were timely filed.
There is no dispute in this case that respondent mailed the
notice of deficiency for 1997 and 1998 to petitioners on May 1,
2001. However, the petition in this case was not filed with the
Court until February 28, 2002-–10 months after the mailing of the
notice of deficiency. Moreover, the envelope in which the
petition was mailed to the Court bears a U.S. Postal Service
postmark date of February 12, 2002. Under these circumstances,
it follows that the petition was not filed within the 90-day
period prescribed by section 6213(a).
Petitioners nonetheless contend that the petition should be
considered timely filed on the theory that the period for filing
a petition with this Court was tolled during the pendency of
their refund action in the District Court. We disagree.
Simply put, there is no provision in the Internal Revenue
Code that serves to toll the statutory period for filing a
petition with this Court during the pendency of a refund action
in a U.S. District Court or the Court of Federal Claims. To the
contrary, section 7422(e), which establishes the procedures to be
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followed where the Commissioner issues a notice of deficiency to
a taxpayer who has a pending refund action, provides for the stay
of the refund action and, where appropriate, the shifting of
jurisdiction to the Tax Court.
Section 7422(e) provides in pertinent part as follows:
SEC. 7422(e). Stay Of Proceedings.–-If the
Secretary prior to the hearing of a suit brought by a
taxpayer in a district court or the United States
Claims Court for the recovery of any income tax, estate
tax, gift tax, or tax imposed by chapter 41, 42, 43, or
44 (or any penalty relating to such taxes) mails to the
taxpayer a notice that a deficiency has been determined
in respect of the tax which is the subject matter of
taxpayer’s suit, the proceedings in taxpayer’s suit
shall be stayed during the period of time in which the
taxpayer may file a petition with the Tax Court for a
redetermination of the asserted deficiency, and for 60
days thereafter. If the taxpayer files a petition with
the Tax Court, the district court or the United States
Claims Court, as the case may be, shall lose
jurisdiction of taxpayer’s suit to whatever extent
jurisdiction is acquired by the Tax Court of the
subject matter of taxpayer’s suit for refund. If the
taxpayer does not file a petition with the Tax Court
for a redetermination of the asserted deficiency, the
United States may counterclaim in the taxpayer’s suit,
or intervene in the event of a suit as described in
subsection (c) (relating to suits against officers or
employees of the United States), within the period of
the stay of proceedings notwithstanding that the time
for such pleading may have otherwise expired. * * *
Section 7422(e) does not provide for the tolling of the
normal 90-day period during which a petition for redetermination
is required to be filed with this Court under section 6213(a).
Cf. sec. 6213(f)(1). The plain language of section 7422(e)
indicates that, if the Commissioner issues a notice of deficiency
to a taxpayer who has a pending refund action, the taxpayer must
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invoke the jurisdiction of the Tax Court, if at all, by filing a
petition for redetermination within the statutorily prescribed
filing period. If the taxpayer files a timely petition with the
Tax Court, the court with jurisdiction of the refund action
“shall lose jurisdiction of taxpayer’s suit to whatever extent
jurisdiction is acquired by the Tax Court of the subject matter
of taxpayer’s suit for refund.” Sec. 7422(e); see sec. 6512(a)
(prohibiting taxpayers from bringing suits for refund while
simultaneously litigating the same taxable year in the Tax
Court); see also sec. 6512(b)(1) (conferring jurisdiction on the
Tax Court to determine overpayments in respect of a taxable year
for which an action for redetermination has been commenced).
Because there is no provision for the tolling of the
statutory period for filing a petition for redetermination with
this Court under the circumstances presented in the present case,
we shall grant respondent’s motion to dismiss.
As a final matter, we observe that petitioners are not
without a remedy. Although petitioners cannot pursue their case
in this Court, they can still pay the taxes in question, file a
claim for a refund with the Internal Revenue Service and, if the
claim is denied, sue for a refund in the Federal District Court
or the U.S. Court of Federal Claims. See McCormick v.
Commissioner, 55 T.C. 138, 142 (1970).
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To reflect the foregoing,
An Order will be entered
granting respondent’s Motion to
Dismiss for Lack of Jurisdiction.