T.C. Summary Opinion 2002-156
UNITED STATES TAX COURT
LYNDELL SCOTT HEGWOOD, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9398-01S. Filed December 20, 2002.
Lyndell Scott Hegwood, pro se.
Marshall R. Jones, for respondent.
BEGHE, Judge: This case was heard pursuant to the
provisions of section 7463 of the Internal Revenue Code in effect
at the time the petition was filed. Unless otherwise indicated,
subsequent section references are to the Internal Revenue Code in
effect for the year in issue. The decision to be entered is not
reviewable by any other court, and this opinion should not be
cited as authority.
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Respondent determined a deficiency of $4,336 in petitioner’s
Federal income tax for 2000, attributable to respondent’s
determinations (1) that petitioner was required to file as single
rather than as head of household, (2) that petitioner’s claim to
exemptions for three dependent children had not been
substantiated, and (3) that petitioner was not entitled to the
earned income credit. Of the deficiency, $2,585 is attributable
to respondent’s disallowance of the earned income credit.
The first two issues having been resolved by agreement in
petitioner’s favor, the issue remaining for decision is
petitioner’s right to the earned income credit. Although
respondent has conceded that petitioner qualifies as head of
household by reason of his maintaining a household that includes
minor children who are his dependents, respondent continues to
assert that petitioner does not have a “qualifying child” who is
an “eligible foster child of the taxpayer” within the meaning of
section 32(c)(3)(B)(i), as amended, effective for taxable years
beginning after December 31, 1999, by the Ticket to Work and Work
Incentives Improvement Act of 1999, Pub. L. 106-170, sec. 612(a),
113 Stat. 1917 (the 1999 Act).
Some of the facts have been stipulated and are so found.
The stipulation of facts and accompanying exhibits are
incorporated herein by this reference. At the time the petition
was filed, petitioner resided in Bay St. Louis, Mississippi.
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Petitioner and the mother of the three dependent children
have been living together for more than 10 years, and petitioner
provides the primary support for the household, which includes
the dependent children. Mississippi abolished common-law
marriage in 1956, Miss. Code Ann. sec. 93-1-15(1) (1999), and the
living arrangement of petitioner and the mother is illegal under
Mississippi law, Miss. Code Ann. sec. 97-29-1 (1999); see also
Davis v. Davis, 643 So. 2d 931 (Miss. 1994); Sullivan v.
Stringer, 736 So. 2d 514 (Miss. Ct. App. 1999). Petitioner does
not claim a dependency exemption for the mother, and correctly
so. See Turnipseed v. Commissioner, 27 T.C. 758 (1957).
However, petitioner asserts that his living arrangement with the
children does not violate Mississippi law, and that continuation
of this arrangement should be encouraged.
Petitioner has cared for the mother’s children as his own
and claimed them as his foster children since 1991. Petitioner
asserts that the State of Mississippi accepts these children as
his foster children, citing as evidence the high school record of
one of the children showing the names of both petitioner and the
mother as “Parent/Guardian” of the child in question, with the
relationship between petitioner and the child labeled “F-Father”.
Petitioner also asserts that no one else claims the children as
dependents or foster children for tax purposes, and that the
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children’s biological father has not seen them since 1990 and
does not pay any child support.
Respondent’s determination that for 2000 and later years
none of the mother’s children is or can be a “qualifying child”
of petitioner is based on the section 32(c)(3) definition of
“qualifying child”, as amended by the 1999 Act. This definition
requires that the taxpayer and the child satisfy the relationship
test of subparagraph (B)(iii). Under this test, the child, if
not a child or descendant of a child of the taxpayer under clause
(i)(I) or a stepchild of the taxpayer under clause (i)(II), must
be “an eligible foster child of the taxpayer” under clause
(i)(III).1
“Eligible foster child” is defined by clause (i)(III) as an
individual not defined in clause (i)(I) or (II) who:
(I) is a brother, sister, stepbrother, or
stepsister of the taxpayer (or a descendant of
any such relative) or is placed with the taxpayer
by an authorized placement agency, [Emphasis added.]
(II) the taxpayer cares for as the taxpayer’s
own child, and
1
Prior to enactment of the 1999 Act, section
32(c)(3)(B)(iii) simply defined an “eligible foster child” as an
individual not described in clause (i)(I) or (II) who--
(I) the taxpayer cares for as the taxpayer’s
own child, and
(II) has the same principal place of abode
as the taxpayer for the taxpayer’s entire taxable
year.
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(III) has the same principal place of abode
as the taxpayer for the taxpayer’s entire taxable
year.
Respondent acknowledges that petitioner cares for the
children in question as his own and that those children and
petitioner have the same principal place of abode.
Petitioner acknowledges that the children have not been
“placed with the taxpayer by an authorized State agency”.
Indeed, there was an intimation at trial that petitioner and the
mother view as unfair the refusal or failure of the Mississippi
Department of Human Services to place the children with
petitioner as his foster children. The Court is left with the
impression that the Mississippi Department of Human Services has
not placed the children with petitioner as his foster children
because of the technical illegality of petitioner’s living
arrangement with the mother.
With the change in section 32(c)(3) that became effective
for the taxable year, petitioner took the return position, after
discussion with the mother, who is the sole custodial parent,
that she was authorized to “place” the children with petitioner
as his foster children. Although there is no documentary
evidence or testimony in the record that the mother has “placed”
any of the children with petitioner as their foster father, we
will assume for purpose of argument that she has attempted to do
so.
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Petitioner and the mother have not married for economic
reasons. They explain that if they were to marry, the mother
would be disqualified from receiving certain prescription drug
benefits she is currently entitled to.
The Court has looked for legislative history to explain the
purpose served by the more restrictive definition of “foster
child” provided by the 1999 Act.
In the Joint Committee Print of the Description of Revenue
Provisions Contained in the President’s Fiscal Year 2000 Budget
Proposal prepared by the Staff of the Joint Committee on Taxation
(Feb. 22, 1999) (hereinafter, the Joint Committee Print), section
412(a) of the 1999 Act is classified under “Miscellaneous
Revenue-Increase Provisions”, and is captioned as a provision to
“Simplify foster child definition under the earned income
credit”. In the absence of hearings and reports by the House
Ways and Means Committee and the Senate Finance Committee, the
Joint Committee Print is the only source that has come to the
Court’s attention that sheds any light on the purpose of section
412(a) of the 1999 Act.2 Although respondent suggests the Joint
Committee Print “is probably not to be considered ‘legislative
history’ in the strict sense of the term”, it was provided to the
members of the House and Senate for their reference before
2
The cursory description of sec. 412(a) of the 1999 Act in
the conference report provides no help. See H. Conf. Rept. 106-
478, at 61 (1999).
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Congress enacted the 1999 Act; it is therefore part of the
history of the legislation. See Robinson v. Commissioner, 119
T.C. 44, 73 (2002).
The description of section 412(a) of the 1999 Act in the
Joint Committee Print at 326 indicates that placement by an
“authorized placement agency” should be interpreted as placement
“by an agency of a State or one of its political subdivisions or
by a tax-exempt child placement agency licensed by a State”. The
Joint Committee Print goes on to state that “some advocates” of
the new provision believe it would: “(1) reduce potential abuse
by tax cheats; (2) prevent unintentional errors by confused
taxpayers; and (3) provide better guidance to the IRS when
investigating questionable EIC claims.” According to the Joint
Committee Print, critics of the proposal attacked its adverse
effect on “legitimate family living arrangements” and stated that
it would not completely simplify the foster child definition,
because section 32(c)(3)(B)(iii)(II) retains the subjective test
that the individual must be cared for “as the taxpayer’s own
child”.
To summarize, other than what may be inferred from the
provision’s classification as a “Revenue-Increase” provision in
the Joint Committee Print, the main purposes of its enactment
appear to have been (1) to reduce unintentional errors by
taxpayers by simplifying to some extent the foster child
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definition, (2) to increase taxpayer compliance by reducing
intentionally improper foster child claims, and (3) to provide
the Internal Revenue Service with a clear subset of claimed
foster children who fit within the definition of “eligible foster
child”.
Applying these considerations to the facts of the case at
hand, there appears to be no likelihood of unintentional or
intentional error in petitioner’s claim, in the sense that there
is no reasonable possibility that anyone else is claiming the
children as dependents; in fact, they are petitioner’s
dependents, as respondent concedes. Furthermore, both
preexisting requirements for qualification as a foster child--
care for the children as one’s own child and the sharing of the
principal place of abode for the entire year--continued to be
satisfied during the taxable year in issue.
Notwithstanding these considerations, the new provision of
the 1999 Act is clear on its face and leaves no room for
interpretation in its application to the case at hand. The
children have not been placed with petitioner by an agency of the
State of Mississippi or one of its political subdivisions or by a
tax-exempt child placement agency licensed by the State of
Mississippi, nor by a Mississippi Chancery Court. See LW v.
C.W.B., 762 So. 2d 323 (Miss. 2000). Nothing in the Joint
Committee Print or the 1999 Act as written suggests the new rule
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is to be disregarded where the State agency having jurisdiction
has refused or failed to make the placement because it
disapproves what in a majority of other States would be
considered a “legitimate family living arrangement”. Neither
does the Court believe it has any proper standing to base its
decision on its disagreement with the State agency’s failure to
draw a compassionate distinction between the technical illegality
under Mississippi law of petitioner’s living arrangement with the
mother and the social benefit to be gained from providing
additional encouragement of his continued support and surrogate
fatherhood of the children.
Although respondent, in an effort to help petitioner,
suggested at trial that petitioner might be arguing the new
requirement is unconstitutional as applied to him because of its
interaction with Mississippi law and administrative practice,
petitioner has made no such argument. Neither the record in this
case nor the arguments of the parties provide any basis for an
inquiry by the Court into the issue of constitutionality. See
Ashwander v. TVA, 297 U.S. 288, 346-348 (1936) (Brandeis, J.,
concurring).
The Court is constrained to sustain respondent’s
determination that petitioner is not entitled to the earned
income credit for the year 2000.
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To give effect to the foregoing and respondent’s
concessions,
Decision will be entered
under Rule 155.