Opinion
15255-23
03-07-2024
CHAD CRYSTAL & LILYA CRYSTAL, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL FOR LACK OF JURISDICTION
Kathleen Kerrigan, Chief Judge
Currently pending before the Court is respondent's Motion to Dismiss for Lack of Jurisdiction, filed November 15, 2023, on the grounds that the Petition was not filed within the time prescribed in the Internal Revenue Code. On December 11, 2023, petitioners filed an Objection to Motion to Dismiss for Lack of Jurisdiction, On January 19, 2024, respondent filed a Response to Objection to Dismiss for Lack of Jurisdiction stating, after further review, that the notice of deficiency on which this case is based is invalid because petitioners paid their 2020 tax liability in full before the notice of deficiency was issued. Thereafter, on February 13, 2024, petitioners filed a Reply to Response to Objection to Motion to Dismiss for Lack of Jurisdiction.
The record reflects that, on July 25, 2022, a CP2000 notice was issued to petitioners, asserting an increase to petitioners' income tax in the amount of $28,798.00 and interest in the amount of $1,283.00 for tax year 2020. In response to that notice, petitioners paid the total amount that respondent determined that they owed for their 2020 tax year--$30,081.00--in August 2022. Although petitioners paid the total amount respondent asserted that they owed for 2020, on May 15, 2023, respondent sent to petitioners at their last known address a notice of deficiency for their 2020 tax year. Petitioners filed the Petition to commence this case on September 19, 2023.
If a tax liability is fully paid before the issuance of the notice of deficiency for that tax year, that notice of deficiency is invalid. See Bendheim v. Commissioner, 214 F.2d 26, 28 (2d Cir. 1954). Here, because petitioners paid their tax liability in full for tax year 2020 prior to the issuance of the notice of deficiency, the notice of deficiency on which this case is based is invalid and the Court, therefore, lacks jurisdiction of this case.
In their objection and reply, petitioners explain that they paid the tax liability determined for their 2020 tax year after receiving the CP2000 notice to avoid incurring penalties and interest, but they did not agree with that determination. Petitioners further state that they filed a claim for refund with the Internal Revenue Service (which has not yet rendered a decision on their claim), and they argue that this Court has jurisdiction pursuant to Internal Revenue Code (I.R.C.) §6511 to provide judicial review with respect to their claim for refund.
When a case is based on a notice of deficiency in which we must determine the correct amount of tax, we may make a determination concerning whether there has been an overpayment of tax. See I.R.C. §6512(b). Otherwise, this Court does not have jurisdiction to make determinations concerning overpayments or refunds. Taxpayers generally may file a lawsuit concerning a refund if no decision is rendered within six months after a claim for refund and, if their claim for refund is disallowed, a lawsuit for refund generally may be filed within two years following that decision. See I.R.C. §6532(a)(1). The Tax Court, however, is not the proper court in which to file such an action. A taxpayer may seek a judicial remedy for wrongful denial of a refund claim- i.e., a refund suit in compliance with I.R.C. §§6532(a)(1) and 7422(a)-either in the United States Court of Federal Claims pursuant to 28 U.S.C. §1491(a)(1), or in Federal district court pursuant to 28 U.S.C. §1346(a)(1). Those statutes do not confer refund jurisdiction on the Tax Court.
Here, we have no jurisdiction based on the notice of deficiency because, as discussed above, the notice of deficiency issued for petitioners' 2020 tax year is invalid. Moreover, as the Court does not have refund jurisdiction except in cases based on a notice of deficiency, we cannot and do not decide whether petitioners are entitled to recover a refund for their 2020 tax year.
Upon due consideration of the foregoing, it is
ORDERED that respondent's Motion to Dismiss for Lack of Jurisdiction is granted in that this case is dismissed for lack of jurisdiction on the grounds that the notice of deficiency issued to petitioners for their 2020 tax year is invalid.