Opinion
21168-22S
01-25-2024
JAMES J. HAMM, II & NANCY O. HAMM, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL FOR LACK OF JURISDICTION
Peter J. Panuthos Special Trial Judge
On December 1, 2022, respondent filed a Motion to Dismiss for Lack of Jurisdiction on the ground that the notice of deficiency was not valid at the time it was issued. Respondent indicated that petitioners made advanced payments prior to the issuance of the notice of deficiency that fully paid their tax liability. On January 16, 2023, petitioners filed an objection indicating that the payments were made only to "cease further accrual of interest and penalties" and further advised that they did not agree with respondent's adjustments.
On July 5, 2023, the Court ordered petitioners to supplement their objection, and to submit any evidence that the amount(s) remitted were intended as a deposit by July 24, 2023. To date, petitioners have not filed a response.
This Court is a court of limited jurisdiction and may exercise jurisdiction only to the extent expressly provided by statute. See § 7442 ; Naftel v. Commissioner, 85 T.C. 527, 529 (1985). This Court's jurisdiction to redetermine a deficiency depends on: (1) the issuance of a valid notice of deficiency; and (2) the timely filing of a petition with the Court by the taxpayer. Rule 13(a), (c); Monge v. Commissioner, 93 T.C. 22, 27 (1989). A notice of deficiency is not valid when full payment of the tax at issue has been made prior to the notice being issued to the taxpayer. See Walsh v. Commissioner, 21 T.C. 1063, 1067 (1954); Anderson v. Commissioner, 11 T.C. 841, 843 (1948). If a deficiency is paid in full by the taxpayers before a notice of deficiency is issued, this Court and others have held that there is no deficiency, such that the notice of deficiency is invalid and the Tax Court lacks jurisdiction. Peacock v. Commissioner, T.C. Memo. 2020-63, at *2; see also McConkey v. Commissioner, 199 F.2d 892 (4th Cir. 1952).
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times and Rule references are to the Tax Court Rules of Practice and Procedure.
However, taxpayers are permitted to make a deposit to stop the running of interest on a deficiency. See § 6603. We have previously held that the Court has jurisdiction if a taxpayer's remittance that extinguishes the liability at issue was a deposit and does not assess additional tax equal to the amount of the remittance before issuing the notice of deficiency. Peacock v. Commissioner, at * 7. A taxpayer may make a deposit under section 6603 by remitting a check with a written statement designating the remittance as a deposit. Rev. Proc. 2005-18, § 4.01(1). If a taxpayer makes a remittance of the full amount of the liability to the IRS and does not include such a statement, the IRS generally will treat the remittance as a payment and will apply it to any outstanding liability for taxes, penalties, or interest. Id. § 4.03.
As indicated, petitioners were provided an opportunity to present evidence that the submitted remittance was intended to be characterized as a deposit rather than a payment of the liability. Petitioners have not provided any evidence. There is nothing in the record from which the Court could conclude that petitioners' remittance was intended as a deposit. Respondent has established that full payment was made prior to the issuance of the notice of deficiency and that this Court does not have a deficiency to redetermine. Therefore, we lack jurisdiction over the case. Accordingly, we will grant respondent's motion.
Upon due consideration, it is
ORDERED that respondent's Motion to Dismiss for Lack of Jurisdiction, filed December 1, 2022, is granted and this case is dismissed for lack of jurisdiction.