Gray v. Commissioner

CAROL DIANE GRAY, PETITIONER v. COMMISSIONER
OF INTERNAL REVENUE, RESPONDENT*

Docket No. 27849–09L. Filed April 25, 2013.

P moved for interlocutory appeal pursuant to I.R.C. sec.
7482(a)(2)(A) of an order dismissing for lack of jurisdiction, on
account of an untimely petition, that portion of the case
seeking review under I.R.C. sec. 6330(d)(1) of R’s determina-
tion to proceed with collection actions.
1. Held: P’s contention that the period in which to file a
petition for review of a collection action determination under
I.R.C. sec. 6330 affecting the underlying tax liability is the 90-

* This Opinion supplements our previously filed Opinion, Gray v. Com-
missioner, 138 T.C. 295 (2012).

163

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 164 140 UNITED STATES TAX COURT REPORTS (163)

day period provided in I.R.C. sec. 6213 rather than the 30-day
period provided in I.R.C. sec. 6330(d)(1) does not demonstrate
a substantial ground for difference of opinion within the
meaning of I.R.C. sec. 7482(a)(2)(A).
2. Held, further, P has failed to show that an immediate
appeal from the order may materially advance the ultimate
termination of this litigation within the meaning of I.R.C. sec.
7482(a)(2)(A). Consequently P’s motion will be denied.

Jonathan P. Decatorsmith, for petitioner.
John Spencer Hitt, for respondent.
SUPPLEMENTAL OPINION

GALE, Judge: In an Opinion previously issued in this case,
Gray v. Commissioner, 138 T.C. 295 (2012), we held that we
lacked jurisdiction to review respondent’s determination to
proceed with certain collection actions set forth in a notice of
determination issued to petitioner (notice of determination)
because the petition was untimely, not having been filed
within 30 days of the notice of determination as required by
section 1 6330(d)(1). 2 The notice of determination had deter-
mined that respondent could proceed with a lien and a levy
to collect unpaid income tax reported as due by petitioner on
untimely joint returns filed for 1992, 1993, 1994, and 1995
and assessed by respondent pursuant to section 6201(a)(1).
Petitioner had challenged the underlying tax liabilities at her
hearing provided pursuant to section 6330, and the notice of
determination abated a portion of the income tax assessment
for each of 1992 and 1993. The notice also abated the section
6651(a) additions to tax that had been assessed pursuant to
section 6665(b) for each taxable year at issue. In accordance
with our Opinion, we issued an order (dismissal order) dis-
missing this case for lack of jurisdiction insofar as it con-
cerned review of the determination to proceed with the collec-
tion actions challenged in the petition. Petitioner now seeks
an interlocutory appeal of the dismissal order. Pending
1 All
section references are to the Internal Revenue Code of 1986 in effect
at all relevant times, and all Rule references are to the Tax Court Rules
of Practice and Procedure.
2 In addition, we held that the petition was timely for purposes of our

jurisdiction to review respondent’s failure to abate interest under sec.
6404(h) and that further proceedings were necessary to determine whether
we had jurisdiction under sec. 6015(e)(1)(A) to determine the appropriate
relief available to petitioner under sec. 6015.

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 (163) GRAY v. COMMISSIONER 165

before the Court is petitioner’s motion for certification of
question for appeal, wherein she seeks an amendment to the
dismissal order to include a statement allowing an interlocu-
tory appeal.
Petitioner asserts in her motion that the adjustments
made in the notice of determination to her Federal income
tax liabilities for the years at issue constitute ‘‘deficiency
determinations’’ that entitle her to a 90-day period for filing
a petition with this Court for review of a deficiency deter-
mination, see sec. 6213(a), rather than the 30-day period for
filing a petition for review of a collection action determina-
tion under section 6330, see sec. 6330(d)(1). Petitioner asks
us to certify for immediate appeal the issue whether ‘‘defi-
ciency procedures instituted during a * * * [section 6330]
hearing have a 30 day or 90 day period for timely filing peti-
tions to the Tax Court for review.’’ Respondent filed an objec-
tion to petitioner’s motion.
I. Section 7482(a)(2)(A) in General
Section 7482(a)(2)(A) provides that a U.S. Court of
Appeals, upon a timely request by a party to litigation in this
Court, may permit an immediate appeal of an interlocutory
order of this Court when it contains a statement that ‘‘a
controlling question of law is involved with respect to which
there is a substantial ground for difference of opinion and
that an immediate appeal from that order may materially
advance the ultimate termination of the litigation’’. See also
Rule 193(a). Accordingly, this Court may certify an interlocu-
tory order for immediate appeal if we conclude that (1) a
controlling question of law is involved, (2) substantial
grounds for a difference of opinion are present as to that
question of law, and (3) an immediate appeal may materially
advance the ultimate termination of the litigation. See sec.
7482(a)(2)(A); Kovens v. Commissioner, 91 T.C. 74, 77 (1988);
New York Football Giants, Inc. v. Commissioner, T.C. Memo.
2003–28. Each of these requirements must be met before we
certify an interlocutory order for immediate appeal. See
Kovens v. Commissioner, 91 T.C. at 77.
The proper application of section 7482(a)(2) requires bal-
ancing of the policies favoring interlocutory appeals—i.e.,
avoidance of wasted trial and harm to litigants—against the

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 166 140 UNITED STATES TAX COURT REPORTS (163)

policies underlying the so-called final judgment rule; that is,
avoidance of piecemeal litigation and dilatory and harassing
appeals. Kovens v. Commissioner, 91 T.C. at 78. Our certifi-
cation of an interlocutory order for an immediate appeal is
an exceptional measure that we employ sparingly. See Gen.
Signal Corp. & Subs. v. Commissioner, 104 T.C. 248 (1995),
aff ’d on other grounds, 142 F.3d 546 (2d Cir. 1998); Kovens
v. Commissioner, 91 T.C. at 78; see also Coopers & Lybrand
v. Livesay, 437 U.S. 463, 475 (1978). As we stated in Kovens,
‘‘interlocutory orders should be granted only in exceptional
cases.’’ Kovens v. Commissioner, 91 T.C. at 78 (citing 1958
U.S.C.C.A.N. 5255, 5259, 5260–5261). Such an approach
reflects a strong policy in favor of avoiding piecemeal review.
See id.
We decline to certify the dismissal order for interlocutory
appeal. We are not persuaded that there are substantial
grounds for a difference of opinion regarding the applicable
petitioning period or that the interlocutory appeal will mate-
rially advance the ultimate termination of the litigation. We
explain our reasoning below.
II. Whether Substantial Grounds for a Difference of Opinion
Are Present as to the Question of Law
Petitioner contends that there is a substantial basis for a
difference of opinion on the issue of the period for filing a
petition with this Court for review of a determination under
section 6330 when it affects a taxpayer’s underlying tax
liability. Petitioner contends that section 6330 ‘‘does not
explicitly state’’ whether a determination concerning the tax-
payer’s underlying tax liability must be appealed to the Tax
Court within the 30-day period provided in that section. In
petitioner’s view, different periods for filing a petition for Tax
Court review apply, depending on the issues raised in the
section 6330 hearing, such as interest abatement, see Gray v.
Commissioner, 138 T.C. at 305, spousal relief, see Raymond
v. Commissioner, 119 T.C. 191, 194 (2002), or, as in this case,
the underlying tax liability. Petitioner asserts that allowing
only 30 days to file a petition when the underlying tax
liability is properly at issue frustrates congressional intent to
allow taxpayers sufficient time to evaluate their position con-
cerning the underlying tax liability. We disagree.

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Generally, the ‘‘substantial ground for difference of
opinion’’ test is interpreted by the courts to involve questions
that present serious and unsettled legal issues. Kovens v.
Commissioner, 91 T.C. at 80 (citing Cohen v. Beneficial
Indus. Loan Corp., 337 U.S. 541, 547 (1949)). The law con-
cerning the period for filing a petition under section 6330
involving review of the underlying tax liability is not
unsettled. For a taxpayer seeking review of a determination
under section 6320 or 6330, section 6330(d)(1) provides that
the petition must be filed with the Tax Court within 30 days
of the determination regardless of whether the underlying
tax liability is at issue. As we stated in Gray v. Commis-
sioner, 138 T.C. at 300:
The statutory scheme of section 6330 clearly contemplates that the
underlying tax liability may be challenged in designated circumstances
in a section 6330 proceeding and requires the determination to consider
such a challenge when properly made. See sec. 6330(c)(2)(B), (3)(B). How-
ever, the statute does not distinguish between determinations where the
underlying tax liability is properly at issue and those where it is not.
The same 30-day period to appeal the determination applies across the
board. See sec. 6330(d).

Some of the arguments petitioner advances in her motion
warrant further discussion. Petitioner contends that ‘‘Con-
gress is silent as to whether or not underlying liability issues
discussed and ultimately determined during the course of a
CDP hearing are governed by the 90-day filing period
applicable to deficiency determinations under 26 U.S.C. §
6213(a).’’ We disagree; there is no gap in the statute con-
cerning the period for filing a petition for review of a section
6330 determination concerning an underlying tax liability.
Under section 6330, if a taxpayer has timely requested a
hearing, he may raise at the hearing ‘‘any relevant issue
relating to the unpaid tax’’ including, in designated cir-
cumstances, ‘‘challenges to the existence or amount of the
underlying tax liability’’. Sec. 6330(c)(2). If the taxpayer chal-
lenges the ‘‘underlying tax liability’’ as permitted under sec-
tion 6330(c)(2), ‘‘[t]he determination by an appeals officer
under this subsection shall take into consideration * * * the
issues raised under * * * [section 6330(c)](2)’’ (which include
any challenge to the ‘‘underlying tax liability’’ raised by the
taxpayer). Sec. 6330(c)(3). The foregoing ‘‘determination’’ is
then subject to judicial review as provided in section

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 168 140 UNITED STATES TAX COURT REPORTS (163)

6330(d)(1): ‘‘The person may, within 30 days of a determina-
tion under this section, appeal such determination to the Tax
Court (and the Tax Court shall have jurisdiction with respect
to such matter).’’ (Emphasis added.) The statute leaves no
room for an alternate petitioning period as petitioner sug-
gests.
Citing the fact that petitioning periods greater than 30
days are triggered when a taxpayer raises a claim in a sec-
tion 6330 proceeding for spousal relief (90 days) or interest
abatement (180 days), petitioner suggests that a similar prin-
ciple should apply in the case of a challenge to the under-
lying tax liability and trigger the 90-day petitioning period
applicable to deficiency determinations, since adjustments to
the underlying tax liability, in petitioner’s view, ‘‘constitute’’
deficiency determinations.
Petitioner’s comparison of underlying tax liability deter-
minations in a section 6330 proceeding to those covering
spousal relief or interest abatement is misplaced, however.
When a taxpayer raises in a section 6330 proceeding a claim
for spousal relief under section 6015 or interest abatement
under section 6404, the Internal Revenue Code provides
separate and independent bases (besides section 6330(d)(1))
for Tax Court jurisdiction to review the Commissioner’s
determinations concerning relief; namely, section 6015(e) and
section 6404(h), respectively. The statutory petitioning
periods provided for those independent grants of Tax Court
jurisdiction accordingly apply. See Gray v. Commissioner, 138
T.C. at 305 (interest abatement); Raymond v. Commissioner,
119 T.C. at 193–194 (spousal relief). By contrast, both the
taxpayer’s entitlement to dispute the ‘‘underlying tax
liability’’—which, in a section 6330 collection proceeding, is
necessarily an already assessed tax (or penalty)—and the
Tax Court’s jurisdiction to review the Commissioner’s deter-
mination concerning the ‘‘underlying tax liability’’, are
derived entirely from section 6330. But for that section, a
taxpayer liable for an assessed income tax generally could
dispute it only by paying it and instituting suit for a refund.
See generally sec. 7422; 28 U.S.C. sec. 1346(a)(1) (2006). The
30-day petitioning period provided in section 6330(d)(1) is
thus the exclusive, statutorily prescribed petitioning period
for Tax Court review of a ‘‘determination’’ concerning an

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 (163) GRAY v. COMMISSIONER 169

‘‘underlying tax liability’’ as those terms are employed in sec-
tion 6330.
Moreover, petitioner’s contention that the adjustments
made in the notice of determination to the income tax liabil-
ities for 1992 and 1993 and to the additions to tax for all
years ‘‘constitute deficiency determinations’’ is in clear con-
flict with the statutory definition of a ‘‘deficiency’’. A ‘‘defi-
ciency’’ is a fundamental term of art in tax procedure. It is
defined in section 6211(a) for all Internal Revenue Code pur-
poses as follows:
SEC. 6211. DEFINITION OF A DEFICIENCY.
(a) * * * For purposes of this title in the case of income * * * taxes
imposed by subtitle[ ] A * * * , the term ‘‘deficiency’’ means the amount
by which the tax imposed by subtitle A * * * exceeds the excess of—
(1) the sum of
(A) the amount shown as the tax by the taxpayer upon his return,
if a return was made by the taxpayer and an amount was shown
as the tax by the taxpayer thereon, plus
(B) the amounts previously assessed (or collected without assess-
ment) as a deficiency, over—
(2) the amount of rebates, as defined in subsection (b)(2), made.

Simply put, a ‘‘deficiency’’ in income tax generally exists
where the amount of tax imposed by subtitle A of the Code
exceeds the amount of tax shown by the taxpayer on his
return. When the Secretary (or his delegate, the Commis-
sioner) ‘‘determines’’ that a ‘‘deficiency’’ exists, he is author-
ized to send a ‘‘notice of such deficiency’’ to the taxpayer, sec.
6212(a), and the taxpayer is entitled, generally within 90
days thereafter, 3 to petition the Tax Court for a ‘‘redeter-
mination’’ of that ‘‘deficiency’’, sec. 6213(a).
For the years at issue in this case, no ‘‘deficiency’’ was ever
determined by respondent; that is, respondent has at no
point ever asserted that the amounts of tax imposed by sub-
title A for these years are greater than those petitioner
reported on her returns. Instead, respondent assessed the
income tax at issue for these years in the amounts reported
as due by petitioner and her former spouse on late-filed joint
returns, without resort to the deficiency procedures of sec-
tions 6212 and 6213. See sec. 6201(a)(1). Likewise, the addi-
3 The period is 150 days where the notice is addressed to a person out-

side the United States. Sec. 6213(a).

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 170 140 UNITED STATES TAX COURT REPORTS (163)

tions to tax under section 6651(a)(1) and (2) were also sum-
marily assessed by respondent without resort to the defi-
ciency procedures, as he is authorized to do pursuant to sec-
tion 6665(b). 4 In short, these additions to tax did not give
rise to a ‘‘deficiency’’ as defined for Internal Revenue Code
purposes. 5
The assessed but unpaid income tax and additions to tax
for the years at issue constitute an ‘‘underlying tax liability’’
for each year as that term is used in section 6330(c)(2)(B)
because they are ‘‘amounts * * * owe[d] pursuant to the tax
laws that are the subject of the Commissioner’s collection
activities.’’ See Callahan v. Commissioner, 130 T.C. 44, 49
(2008). But they are not ‘‘deficiencies’’ for Internal Revenue
Code purposes, and the section 6330 notice of determination
action to reduce or eliminate them in no way constitutes a
‘‘deficiency determination’’. These liabilities and the notice of
determination action with respect to them simply cannot be
fitted within the parameters of sections 6212 and 6213. Con-
sequently, the 90-day petitioning period provided in section
6213 has no application to them; any claim to the contrary
ignores the definition of a ‘‘deficiency’’.
Presumably, the more circumscribed 30-day petitioning
period for Tax Court review of section 6330 determinations
concerning ‘‘underlying tax liabilities’’ reflects congressional
recognition that ‘‘underlying tax liabilities’’ represent
assessed taxes whereas ‘‘deficiencies’’ do not. As assessed
taxes, the liabilities making up the ‘‘underlying tax liability’’
have already been accorded the various preassessment proce-
dural safeguards that Congress deemed appropriate
(including the 90-day petitioning period for Tax Court review
in the case of taxes eligible for ‘‘deficiency’’ procedures). 6 In
4 Thenotice of determination abated all of the sec. 6651(a) additions to
tax at issue. We find it unnecessary to consider whether, in the event peti-
tioner’s petition had been timely with respect to respondent’s collection ac-
tion determinations under sec. 6330, there would have been a justiciable
issue to review concerning the additions to tax. See Greene-Thapedi v.
Commissioner, 126 T.C. 1 (2006).
5 As no deficiencies were ever determined with respect to the years at

issue, the additions to tax at issue would not have been eligible for defi-
ciency procedures by virtue of sec. 6214(a). See Downing v. Commissioner,
118 T.C. 22, 26–27 (2002).
6 In the case of income tax and other taxes eligible for ‘‘deficiency’’ proce-

dures, they may be assessed—and therefore become part of an ‘‘underlying

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 (163) GRAY v. COMMISSIONER 171

any event, the statutorily prescribed review provided for
‘‘deficiency’’ determinations and for determinations under
section 6330 of challenged underlying tax liabilities are not
equivalent. Cf. Freije v. Commissioner, 125 T.C. 14, 35–36
(2005) (Tax Court review of underlying tax liability in section
6330 proceeding does not satisfy taxpayer’s right to a defi-
ciency proceeding to establish the liability). Petitioner’s
suggestion that they be treated as equivalent is contrary to
the statute.
The fault in petitioner’s reasoning is perhaps best illus-
trated by the anomalous results it produces. The ‘‘underlying
tax liabilities’’ that were adjusted in this case consist of
income tax reported as due on returns that respondent
assessed pursuant to section 6201(a)(1)—i.e., without defi-
ciency procedures—and additions to tax under section
6651(a) that respondent likewise was entitled to assess under
section 6665(b) without resort to deficiency procedures. 7
That is to say, in both instances Congress concluded that
deficiency procedures were not warranted to establish these
liabilities. Yet petitioner would have us interpret section
6330 so that we extend the 90-day petitioning period for defi-
ciency determinations to two categories of tax liabilities that
Congress expressly decided did not warrant deficiency proce-
dures. And the problem does not stop there. The phrase
‘‘underlying tax liability’’ encompasses other taxes that are
not eligible for deficiency procedures, such as, for example,
employment taxes imposed by subtitle C of the Internal Rev-
enue Code, see Salazar v. Commissioner, T.C. Memo. 2008–
38, aff ’d, 338 Fed. Appx. 75 (2d Cir. 2009), and section 6702
tax liability’’—only after the Commissioner has mailed a notice of defi-
ciency to the taxpayer’s last known address extending to him a 90-day (or
150-day) period for petitioning the Tax Court for review. Secs. 6212–6215.
Further, in these circumstances, the taxpayer may challenge ‘‘underlying
tax liabilities’’ that have been the subject of a properly addressed notice
of deficiency only if the taxpayer can show that he did not receive the no-
tice of deficiency. Sec. 6330(c)(2)(B); see Kuykendall v. Commissioner, 129
T.C. 77, 80 (2007); Tatum v. Commissioner, T.C. Memo. 2003–115.
7 Our jurisdiction to review the Commissioner’s determination to proceed

with collection of these two categories of tax liabilities as ‘‘underlying tax
liabilities’’ in a sec. 6330 proceeding is well established. See Montgomery
v. Commissioner, 122 T.C. 1 (2004) (taxpayer-reported tax assessed pursu-
ant to sec. 6201(a)(1)); Downing v. Commissioner, 118 T.C. at 27–28 (sec.
6651(a) additions to tax assessed pursuant to sec. 6665(b)).

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 172 140 UNITED STATES TAX COURT REPORTS (163)

frivolous return penalties, see Callahan v. Commissioner, 130
T.C. at 49. Yet under petitioner’s theory, adjustments to
these taxes in a section 6330 proceeding would likewise
entitle the taxpayer to the 90-day petitioning period intended
for deficiency determinations.
In summary, we conclude petitioner has not shown that
there are any substantial grounds for a difference of opinion
concerning the petitioning period applicable to determina-
tions under section 6330 affecting the underlying tax
liability.
III. Whether an Immediate Appeal Would Materially Advance
the Ultimate Termination of the Litigation
We also conclude that an immediate appeal would not
materially advance the ultimate termination of the litigation
within the meaning of section 7482(a)(2)(A). Petitioner con-
tends that in the interest of judicial economy, this Court
should hear all justiciable issues at the same time, after the
U.S. Court of Appeals for the Seventh Circuit remands the
case to the Tax Court for further proceedings. However, an
immediate appeal would produce two litigation tracks for
substantively intertwined issues. In addition, petitioner
already has two cases raising the identical issue pending
before the Court of Appeals. See Gray v. Commissioner,
docket No. 27850–09L (Mar. 28, 2012), appeal filed (7th Cir.
June 29, 2012); Gray v. Commissioner, docket No. 3260–08L
(Mar. 28, 2012), appeal filed (7th Cir. June 29, 2012).
Accordingly, our holding concerning the untimeliness of the
petition in this case for purposes of review pursuant to sec-
tion 6330(d)(1) does not fall within the exceptional category
of cases contemplated by Congress when enacting section
7482(a)(2), and we conclude that the requirements for an
interlocutory appeal have not been met.

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 (163) GRAY v. COMMISSIONER 173

To reflect the foregoing,
An order denying petitioner’s motion will
be issued.

f

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