Opinion
1361-22SL
10-04-2023
TED R. STUART & NADIJA R. PACKAUSKAS, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Ronald L. Buch, Judge
This case is set to be called at the Court's November 27, Milwaukee, Wisconsin trial session. Pending before the Court is the Commissioner's Motion to Dismiss of Ground of Mootness, filed August 14, 2023. In his Motion, the Commissioner observes that the collection action was not sustained because the Petitioners' underlying liability was paid in full. Although the facts are a bit more complex, they demonstrate that this case is moot, and the Commissioner's Motion must be granted.
The underlying liability originates from the Commissioner's unilateral reclassification of a portion of Petitioners' income for 2017. Petitioners appear to have reported long-term capital gain that the Commissioner reclassified as short-term capital gain. The result was that the gain was taxed at a higher rate. The Commissioner issued a math-error notice. See section 6213(b)(1).
Ultimately, collection activity ensued. According to Petitioners, they did not receive the Commissioner's math-error notice or other notices. The first they learned of the liability for 2017 was in 2019, when an overpayment from their 2018 return was applied in partial satisfaction of the 2017 liability. Also in 2019, the Commissioner issued a Notice of Intent to Levy. Petitioners initiated a collection proceeding, and while they were challenging the collection activity, the Commissioner transferred a 2020 overpayment to satisfy the balance due for 2017. Because the liability had been fully satisfied, the Independent Office of Appeals issued a Notice of Determination in which it did NOT sustain the collection activity.
Mr. Stuart and Ms. Packauskas filed a Petition in which they challenged the underlying liability.
Because the liability had been fully satisfied, the Commissioner filed a Motion to Dismiss on Ground of Mootness to which Petitioners objected. In his Motion, the Commissioner assured the Court that he would review the underlying liability, but regardless of that review, the case should be dismissed as moot. In a subsequent Status Report, the Commissioner explained that the adjustment to Petitioners' return was in error and that he was in the process of abating the assessment.
This case is moot. As explained in greater detail in Greene-Thapedi v. Commissioner, 126 T.C. 1, 8-12 (2006), we do not have jurisdiction in a collection case to determine an overpayment. See also, McLane v. Commissioner, T.C. Memo. 2018-149, aff'd 24 F.4th 316 (4th Cir. 2022). In limited circumstances, we have jurisdiction to determine an underlying liability. Once that liability is satisfied, however, the case becomes moot because we are not authorized to determine an overpayment. There is nothing left for us to determine. Accordingly, it is
ORDERED that the Commissioner's Motion to Dismiss of Ground of Mootness, filed August 14, 2023, is granted and this case is dismissed as moot.