Opinion
28898-10 5819-11 5821-11 6034-11
08-11-2023
HERBERT HIRSCH & BONITA HIRSCH, ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Patrick J. Urda, Judge
On June 21, 2023, petitioners Herbert and Bonita Hirsch filed a motion for certification of an interlocutory appeal. [Doc. 147. The Hirsches wish to pursue an immediate appeal of our Order issued June 20, 2023, denying their motion to strike a portion of Internal Revenue Service (IRS) Notice 2007-19. [Doc. 146.] They fail to satisfy the high standard for an interlocutory appeal, and we will deny the Hirsches' motion.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C. (I.R.C.), in effect at all relevant times and Rule references are to the Tax Court Rules of Practice and Procedure. "Doc." references are to the documents in the lead case, Docket No. 28898-10, as compiled by the Clerk of this Court, using .pdf pagination.
Motions for interlocutory appeals "should be granted only in exceptional cases." Kovens v. Commissioner, 91 T.C. 74, 78 (1988), aff'd without published opinion, 933 F.2d 1021 (11th Cir. 1991). We may certify an order where it (1) involves a controlling question of law (2) about which there is a substantial ground for difference of opinion and (3) an immediate appeal from the order may materially advance the ultimate termination of the litigation. Rule 193; I.R.C. § 7482(a)(2)(A); see New York Football Giants, Inc. v. Commissioner, T.C. Memo. 2003-28, 2003 WL 202597, at *1.
The Hirsches fail to satisfy any of these prerequisites. First, our Order does not concern a controlling question of law, which is "'more than a question which if decided erroneously would lead to a reversal on appeal but entails a question of law which is serious to the conduct of the litigation.'" New York Football Giants, 2003 WL 202597, at *2 (quoting Kovens, 91 T.C. at 79). The Hirsches' motion is an attempt (after more than a decade of litigation) to use the Administrative Procedure Act (APA) to rewrite the safe harbor set forth in Notice 2007-19 so that it encompasses them. This challenge is not central to the litigation, but is rather a knowing attempt to avoid the crux of these cases, i.e., the IRS's conclusion that the Hirsches were not bona fide residents of the United States Virgin Islands and thus were ineligible for certain favorable tax treatment claimed on their returns.
The Hirsches fare no better with regard to the other requirements. They fail to establish that there is a substantial ground for difference of opinion on the legal underpinnings of our Order, vaguely asserting that "the state of the law is in flux regarding the application of the APA to tax law." [Doc. 147 at 5.] This general observation does not establish, however, that the question of severability on which our Order was premised constitutes an unsettled legal issue. See E. States Cas. Agency, Inc. v. Commissioner, T.C. Memo. 1991-559, 1991 Tax Ct. Memo LEXIS 607, at *5; cf. Estate of Halder v. Commissioner, T.C. Memo. 2003-284, 2003 WL 22272889, at *3 (stating that it "strains credibility" that a case of first impression presents substantial grounds for difference of opinion).
We finally note that an interlocutory appeal will not materially advance the litigation. The Hirsches' challenge to Notice 2007-19 relates to three of the four years at issue, and even if the Hirsches prevailed in an interlocutory appeal, we would be left to litigate the final year (which involves the same central issue as the other three years. An interlocutory appeal thus would merely result in piecemeal appeals in these cases. Section 7482(a)(2) "was not intended as a vehicle to provide early review of adverse rulings in difficult situations." Gen. Signal Corp. & Subs. v. Commissioner, 104 T.C. 248, 254 (1995), aff'd on other grounds, 142 F.3d 546 (2nd Cir. 1998); cf. McFarlin v. Conseco Svcs., LLC, 381 F.3d 1251, 1259 (11th Cir. 2004) (discussing interlocutory principles in the context of 28 U.S.C. § 1292(b)).
As the Hirsches have failed to establish any of the necessary requirements for the certification of an interlocutory appeal, it is
ORDERED that the Hirsches' motion for certification of an interlocutory order to permit immediate appeal, filed June 21, 2023, is denied.