concurring in part and dissenting in part: As the trier of the facts in this case, I agree with the majority’s findings of fact, and, since the Court holds that we have jurisdiction to decide this case, I also agree with the majority’s conclusion that there was no reasonable cause to justify petitioner’s failure to file the estate tax return on time. It is of course obvious, but essential, nevertheless, to point out that had we found jurisdiction lacking, the underlying controversy would have been rendered moot. Dillman Bros. Asphalt Co. v. Commissioner, 64 T.C. 793 (1975).
I cannot agree, however, with the majority’s conclusion that we have jurisdiction. It has always been my understanding, to put it as succinctly as possible, that if you paid the tax before the issuance of a deficiency notice, you lost access to the Tax Court. I feel certain that it will come as a distirict surprise to others, now, to be disabused of this almost universally held notion, at least in the context of this case. I am also dismayed that we have opened another window through which we will now look behind the statutory notice (none too reluctantly this time) to see what happened at the administrative level. Cf. Jackson v. Commissioner, 73 T.C. 394 (1979).
While I have mixed feelings about the majority’s efforts to preserve the Commissioner’s alleged administrative practice regarding the late-filing penalty, albeit one until now unsanctioned by law, the logic by which the majority reaches its conclusions simply does not stand up under an even moderately rigorous analysis of the relevant Code sections. The legislative history, quoted so extensively and upon which the majority so heavily relies, while interesting and significant, is largely irrelevant, since even a casual reading makes perfectly clear that nowhere was Congress focusing its attention on the question presented by this case. As a consequence, we have no choice but to turn to the statute, itself, for answers to our questions. See Warrensburg Board & Paper Corp. v. Commissioner, 77 T.C. 1107, 1111(1981).
As stated in our findings of fact, no estate tax deficiency was determined in the deficiency notice, although a $552 addition to tax under section 6651(a)(1) was determined. Inasmuch as the Court has jurisdiction to redetermine the section 6651 addition to tax only under certain circumstances, as hereinafter explicated, a close (even though tedious) reading of relevant sections 66591 (relating to "Additions Treated as Tax” and "Procedure for Assessing Certain Additions to Tax”) and 6211(a)2 ("Definition of a Deficiency”) becomes essential. (The provisions of section 6211(b) are not germane to this inquiry.)
First, section 6659: Subsection (a) gives the general rule that, except as otherwise provided in title I, additions to tax, etc., provided by chapter 68 are to be assessed, collected, and paid in the same manner as taxes, and any reference to "tax” in title I includes additions to tax. In other words, the usual deficiency procedures apply to additions to tax.
Then, subsection (b) contains a main exception and two exceptions to the main exception:
Main exception (flush language of section 6659(b)). —The usual deficiency procedures for income, estate, gift, and certain excise taxes do not apply to additions under section 6651 (late filing or late paying), section 6654 (individual failure to pay estimated income tax), and section 6655 (corporation failure to pay estimated income tax), but—
Exception (b)(1). —The deficiency procedures do apply to a section 6651 late-filing addition attributable to a deficiency in tax described in section 6211, and—
Exception (b)(2). —The deficiency procedures also do apply to section 6654 and section 6655 additions if no return was filed.
The exception and exceptions to exceptions contained in section 6659(b) have no application to additions for negligence (sec. 6653(a)), fraud (sec. 6653(b)), or any other misfeasance beyond late filing, etc., and failure to pay estimated income tax. Thus, in Stewart v. Commissioner, 66 T.C. 54 (1976), we held that we had jurisdiction in a case where the deficiency notice determined an addition to tax for fraud under section 6653(b), even though petitioners had previously paid, and the Commissioner had previously assessed, an additional income tax liability, so that no income tax deficiency, but only an addition for fraud, was asserted in the deficiency notice. Although not the basis for the result in Stewart, section 6659(a) clearly provides that the deficiency procedures include the addition for fraud, since section 6653(b) is not within the 6659(b) exception.
Since section 6659(b) waives the deficiency procedures for section 6651 late-filing additions unless the addition is attributable to a "deficiency in tax described in 6211,” section 6211 must next be scrutinized for the definition of "deficiency.” The definition of deficiency for section 6211 may fairly be paraphrased as follows:
A deficiency is—
the amount of income, estate, and gift taxes and certain excise taxes actually due, which exceeds the excess of—
(1) the amount shown on the return, plus amounts previously (i.e., previous to the deficiency notice) assessed (or collected without assessment) as a deficiency, over
(2) the amount of rebates made.
Plainly, by the usé of the term "previously assessed” in section 6211(a)(1)(B), Congress intended this section to speak as of the time of issuance of the statutory notice. Therefore, applying the numbers in this case to the words of the statute, it will be seen that the section 6211 deficiency is zero, as follows:
(a) Estate tax imposed. $38,018.76
(b) Less: Repoi/ted on return. $35,810.76
Additional assessment. 2,208.00
38,018.76
(c) Deficiency/ . 0
(There were no rebates made.)
Applying these numbers to section 6659(b), one finds that since the deficiency in tax described in section 6211 is zero, the exceptions to the exception do not apply. Therefore, the main 6659(b) exception does apply, namely, the deficiency procedures for income, estate, gift, and certain excise taxes are not available as to the section 6651 late-filing addition in this case, and this Court consequently lacks jurisdiction. Under this posture of the case, the immediate assessment of the $552 late-filing addition would appear to be available to the Commissioner.
I am cognizant that in Rev. Rui. 78-20, 1978-1 C.B. 441, the Commissioner has taken a view which is contrary to the majority’s holding here. He there equates previously assessed "adjustments” to a deficiency within the meaning of section 6211(a). With this conclusion I cannot agree:
What the majority fails to squarely deal with is the troubling language of section 6211(a)(1)(B): the reference, there, to amounts previously assessed or collected "as a deficiency.”3 Conceivably an argument might have been made that these words support a relaxation under section 6659(b)(1) of the technical and traditional concept of "deficiency.” Nevertheless, since section 6211 is the statutory definition of deficiency, the reference in section 6211(a)(1)(B) (which is itself part of the definition) to assessment or collection of amounts "as a deficiency” strikes me as being at best a puzzling tautology. It might be speculated that, as used in this context, the word "deficiency” was intended to be understood in its lay, rather than technical, sense; i.e., as an "additional amount due.” I doubt, however, that this interpretation can justifiably be bootstrapped, as the majority sub silentio has done, up to a "deficiency in tax described in section 6211.” Since section 6211(a)(1)(B) makes perfect sense without the words "as a deficiency,” one is forced to conclude that these words are nothing more than an artless surplusage. Accordingly, I can only conclude that "deficiency” as used in section 6659(b)(1) was intended in its universally understood sense; i.e., a deficiency existing at the time of the statutory notice. But if the tax has been paid, no valid statutory notice, and no Tax Court jurisdiction.
Hannan v. Commissioner, 52 T.C. 787 (1969), does not require a contrary result. In that case, respondent moved to dismiss the petition on the ground that no deficiency, in fact, existed. The deficiency notice advised the taxpayers that "income tax deficiencies” and additions to tax had been determined, although in fact the so-called deficiencies merely reflected an underpayment by the taxpayers of the tax on amounts they themselves reported on their returns, and not adjustments made by the Commissioner. We held that the mere fact that the Commissioner asserted deficiencies in tax was sufficient to vest jurisdiction in this Court. In the case before us, no such deficiencies have been asserted.
As a final matter, I can perceive of no reason why the result I would here reach would produce undue administrative or policy difficulties. If the taxpayer and the Revenue Service resolve their tax differences short of the issuance of a statutory notice, there would appear to be no policy justification for preventing the Service from immediately assessing the late-filing addition. To answer the majority’s concern for those who are not "sophisticated,” I would suggest that such individuals would easily be put on notice of any impending late-filing addition by the settlement documents. Surely, the majority is not suggesting the likelihood of the assessment of a "surprise” late-filing addition by the Revenue Service after a case has been settled.
Ekman, J., agrees with this concurring and dissenting opinion.Sec. 6659 reads as follows:
SEC. 6659. APPLICABLE RULES.
(a) Additions Treated as Tax. — Except as otherwise provided in this title—
(1) The additions to the tax, additional amounts, and penalties provided by this chapter shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes;
(2) Any reference in this title to "tax” imposed by this title shall be deemed also to refer to the additions to the tax, additional amounts, and penalties provided by this chapter.
(b) Procedure for Assessing Certain Additions to Tax. — For purposes of subchapter B of chapter 63 (relating to deficiency procedures for income, estate, gift, and certain excise taxes), subsection (a) shall not apply to any addition to tax under section 6651, 6654, or 6655; except that it shall apply—
(1) in the case of an addition described in section 6651, to that portion of such addition which is attributable to a deficiency in tax described in section 6211; or
(2) to an addition described in section 6654 or 6655, if no return is filed for the taxable year.
Sec. 6211(a) reads as follows:
SEC. 6211. DEFINITION OF A DEFICIENCY.
(a) In General.. — For purposes of this title in the case of income, estate, and gift taxes imposed by subtitles A and B and excise taxes imposed by chapters 41, 42, 43, 44, and 45 the term "deficiency” means the amount by which the tax imposed by subtitle A or B, or chapter 41,42,43,44, or 45 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 assessment) as a deficiency, over—
(2) the amount of rebates, as defined in subsection (b) (2), made.
What we have here is, in effect, a word used to define itself, since the definition of 'deficiency” includes amounts assessed, etc. "as a deficiency.”