Opinion
10396-23
05-09-2024
PAUL A. KINION & DEAH C. KINION, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL FOR LACK OF JURISDICTION
Zachary S. Fried, Special Trial Judge
This case for the redetermination of a deficiency is before the Court on respondent's Motion to Dismiss for Lack of Jurisdiction, filed September 5, 2023. According to respondent's motion, the notice of deficiency on which this case is based is invalid because petitioners paid their proposed deficiency for tax year 2020 before the notice of deficiency was issued for that year. Petitioners filed an Objection to respondent's motion on October 3, 2023. Thereafter, on March 19, 2024, the parties filed a Settlement Stipulation and a Proposed Stipulated Decision. In a conference call, the parties advised the Court that these decision documents had been filed in error, and they will be stricken.
The record reflects that on or around December 30, 2020, petitioners mailed the Internal Revenue Service (IRS) a check in the amount of $3,000 for their 2020 tax year. When petitioners filed their 2020 federal income tax return, they erroneously entered this amount as a claim for an "other payment or refundable credit," instead of as an estimated tax payment.
On July 1, 2022, a Letter 525 was issued to petitioners, proposing to deny petitioners' erroneously claimed credit and to increase petitioners' income tax in the amount of $3,000. The Letter 525 stated that, after the application of petitioners' 2020 tax refund, petitioners had a balance due of $2,057 in tax and $90.35 in interest. In response to the Letter 525, on July 21, 2022, petitioners made a payment of $2,147.35; that is, the total amount proposed as due on the Letter 525 for their 2020 tax year.
Although petitioners had paid the total amount respondent asserted that they owed for 2020, on May 5, 2023, respondent sent to petitioners at their last known address a notice of deficiency for their 2020 tax year, therein determining a deficiency of $3,000. Petitioners timely filed the Petition to commence this case on June 23, 2023.
Like all Federal courts, the Tax Court is a court of limited jurisdiction. We may exercise jurisdiction only to the extent expressly provided by statute. Naftel v. Commissioner, 85 T.C. 527, 529 (1985). In a deficiency case, this Court's jurisdiction generally depends on the issuance of a valid notice of deficiency and a timely filed petition. Andrews v. Commissioner, 563 F.2d 365 (8th Cir. 1977); Hallmark Rsch. Collective v. Commissioner, 159 T.C. 126, 130, n.4 (2022) (collecting cases).
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 Walsh v. Commissioner, 21 T.C. 1063 (1954). Here, because petitioners paid their tax liability in full for tax year 2020 before 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. To be sure, this Court has held that we do have jurisdiction in a case if the Commissioner treats a remittance as a deposit and does not assess additional tax equal to the amount of the remittance before issuing the notice of deficiency. See, e.g., Peacock v. Commissioner, T.C. Memo 2020-63. However, in the present case, neither party asserts that petitioners' payments were deposits.
Petitioners' filings indicate that they are seeking a refund as to their 2020 tax year. However, our jurisdiction to find that an overpayment was made, and a refund is appropriate, is limited to cases where we already have jurisdiction with respect to a notice of deficiency challenged by the taxpayer. I.R.C. § 6512(b)(1). Because we lack jurisdiction here, we cannot and do not decide whether petitioners are entitled to an overpayment for 2020.
Although petitioners may not prosecute this case in this Court, petitioners may continue to pursue an administrative resolution of their 2020 tax liability directly with the IRS. Another remedy potentially available to petitioners is to file a claim for refund with the IRS, and then (if the claim is disallowed or not acted on for six months), bring a lawsuit for refund. See I.R.C. § 6532(a)(1). 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. sections 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 a U.S. District Court, pursuant to 28 U.S.C. § 1346(a)(1). The Tax Court, however, is not the proper court in which to file such an action.
To the extent that petitioners request litigation or administrative costs in their objection to respondent's motion, their claim does not comply with Rule 231, Tax Court Rules of Practice and Procedure. Nevertheless, in the Motion to Dismiss for Lack of Jurisdiction, respondent consented to an award of litigation costs under I.R.C. section 7430 consisting of the $60 filing fee.
Upon due consideration, it is
ORDERED that the Settlement Stipulation and Proposed Stipulated Decision filed by the parties on March 19, 2024, are hereby deemed stricken from the record in this case. It is further
ORDERED that respondent's Motion to Dismiss for Lack of Jurisdiction is granted, in that it is
ORDERED that petitioners are entitled to an award of reasonable litigation costs of $60, pursuant to section 7430; and in that it is
ORDERED that this case is dismissed for lack of jurisdiction upon the ground that the notice of deficiency upon which it is based is invalid.