Opinion
23297-14
04-11-2023
PEGGY ANN PICAED, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Emin Toro Judge
Pending before the Court is petitioner Peggy Ann Picard's Motion for Summary Judgment, filed on May 2, 2019, as amended on February 11, 2022 (Doc. 77).In her Motion, Ms. Picard seeks summary judgment on the ground that the notice of deficiency issued on July 3, 2014, for her 2002, 2003, and 2004 tax years (relevant years) is time barred under section 6501(a). Specifically, Ms. Picard asks us to determine that the three-year statute of limitations on assessment under section 6501(a) began when she filed her tax returns with the Virgin Islands Bureau of Internal Revenue (VIBIR). Consistent with our recent opinion in Tice v. Commissioner, No. 24983-15,160 T.C., slip op. at 1 (April 10, 2023), we conclude that summary judgment is not appropriate because there remains a genuine dispute of material fact as to whether Ms. Picard was a bona fide resident of the U.S. Virgin Islands during the relevant years.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C, in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure. Parenthetical references to "Doc." are to documents as they are numbered in the docket record of this case, and any exhibits cited in those references are to exhibits attached to the numbered document.
Background
The facts are derived from the parties' pleadings, their First Stipulation of Facts, and their Motion papers. They are stated solely for the purposes of deciding petitioner's Motion and not as findings of fact in this case. See Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992), affd, 17 F.3d 965 (7th Cir. 1994).
At all times relevant to this case, Ms. Picard has been a U.S. citizen. For each of the relevant years, Ms. Picard filed Form 1040, U.S. Individual Income Tax Return, with VIBIR. VIBIR accepted and processed the returns. Taking the position that she was a resident of the U.S. Virgin Islands, Ms. Picard did not file any federal income tax returns with the IRS during the relevant years.
In the notice of deficiency dated July 3, 2014, the Commissioner determined that Ms. Picard was not a bona fide resident of the U.S. Virgin Islands during the relevant years and that she had failed to file income tax returns with the Internal Revenue Service (IRS) as required by section 932(a)(2). (Doc. 39, Ex. 1-J.) The Commissioner also determined deficiencies in income tax for each of the relevant years and additions to tax under sections 6651(a)(1), 6651(a)(2), and 6654. Ms. Picard timely petitioned our Court for review.
Ms. Picard initially filed a Motion for Summary Judgment on May 2, 2019 (Doc. 42) along with a Memorandum of Law in Support of Petitioner's Motion for Summary Judgment (Doc. 43) and a Declaration of Taylor W. Strickling in Support of Motion for Summary Judgment (Doc. 44). The Commissioner filed his Response to Ms. Picard's Motion on June 3, 2019 (Doc. 46). On September 19, 2019, Ms. Picard filed a Motion to Hold in Abeyance Petitioner's Motion for Summary Judgment for Additional Discovery (Doc. 50), to which the Commissioner objected (Doc. 53). On February 12,2020, the Court held a conference call with the parties to discuss, among other things, Ms. Picard's motions. During this call, the parties agreed to confer with respect to certain discovery items.
Following additional discovery, Ms. Picard filed the Amended Motion for Summary Judgment (Doc. 77) now before us, along with a Memorandum in Support of Petitioner's Amended Motion for Summary Judgment (Doc. 78) and a Declaration of Randall P. Andreozzi in Support of Petitioner's Amended Motion for Summary Judgment (Doc. 79). The Commissioner filed a Response to Ms. Picard's Amended Motion (Doc. 86), along with a supporting Memorandum (Doc. 87). Ms. Picard filed a Reply (Doc. 90), along with another Declaration of Randall P. Andreozzi supporting the Reply (Doc. 91).
Discussion
I. Summary Judgment
The purpose of summary judgment is to expedite litigation and avoid costly, time-consuming, and unnecessary trials. Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681 (1988). The Court may grant summary judgment when there is no genuine dispute as to any material fact and a decision may be rendered as a matter of law. Rule 121(b); Sundstrand Corp., 98 T.C. at 520. In deciding whether to grant summary judgment, we construe factual materials and inferences drawn from them in the light most favorable to the adverse party. Sundstrand Corp., 98 T.C. at 520. The moving party has the burden of proving that summary judgment is proper. Id. When the motion is properly supported, the nonmoving party may not rest on mere allegations or denials in his pleadings, but must "set forth specific facts showing that there is a genuine issue for trial." Dahlstrom v. Commissioner, 85 T.C. 812, 820-21 (1985).
II. Sections 932 and 6501
Section 932(a) provides that U.S. citizens or residents with income from sources within the U.S. Virgin Islands who are not 'Taona fide resident[s] of the [U.S.] Virgin Islands during the entire taxable year" must file tax returns for that year with both the United States and the U.S. Virgin Islands. I.R.C. §§ 932(a)(1)(A), (a)(2). On the other hand, U.S. citizens who are bona fide residents of the U.S. Virgin Islands during the entire taxable year are required to file a return with the U.S. Virgin Islands only. Id. §§ 932(c)(1)(A), (c)(2).
Under section 6501(a), the IRS has three years to assess tax against a taxpayer from the time the taxpayer files a return. For the purposes of section 6501(a), "return" is defined as "the return required to be filed by the taxpayer" under the Internal Revenue Code. I.R.C. § 6501(a)(1). In determining whether the statute of limitations under section 6501(a) has been triggered, we consider both (1) whether the document submitted was the "return" required to be filed under the Internal Revenue Code and (2) whether it was properly filed. Tice v. Commissioner, 160 T.C, slip op. at 4 (citing Appleton v. Commissioner, 140 T.C. 273, 284 (2013)). If a taxpayer fails to properly file a return when required by law, however, the statute of limitations on assessment is not triggered, and the IRS may assess tax against the taxpayer at any time. I.R.C. § 6501(c)(3).
In her Motion, Ms. Picard argues that the Commissioner's notice of deficiency is time barred under section 6501(a) because the notice was issued more than three years after she filed Forms 1040 with VIBIR for the relevant years. More specifically, she appears to contend that (1) the returns she filed with VIBIR were the only returns that she was required to file under section 932 and (2) her return filing requirements for the relevant years are determined based on the position she took in those returns. Essentially, Ms. Picard claims that the returns she filed with VIBIR for the relevant years triggered the statute of limitations for assessment under section 6501(a) because she took the position that she was a resident of the U.S. Virgin Islands on the returns.
There is no dispute that Ms. Picard filed the returns for the relevant years with VIBIR only. Under section 932, therefore, Ms. Picard met her filing requirements if she was a bona fide resident of the U.S. Virgin Islands during those years. This fact, however, is not apparent from the record before us. And because the Motion before us was filed by Ms. Picard, in deciding the Motion we must view the facts in the light most favorable to the Commissioner, treating Ms. Picard as if she were not a bona fide resident of the U.S. Virgin Islands during the relevant years.
In Tice v. Commissioner, 160 T.C., slip op. at 7-11, we considered virtually identical arguments as those Ms. Picard advances and rejected them both. We held that the statute of limitations on assessment under section 6501(a) is not triggered when a taxpayer files a return with VIBIR, but not the IRS, unless the taxpayer is a bona fide resident of the U.S. Virgin Islands to whom section 932(c) applies. Id. at 7. Therefore, to get the benefit of the statute of limitations under section 6501(a), Ms. Picard must show that she was a bona resident fide resident of the U.S. Virgin Islands during the entirety of the relevant years. See I.R.C. § 932(c)(1)(A). This she has not done. That Ms. Picard took the position she was a resident of the U.S. Virgin Islands on her returns does not suffice to show that she was not required to file a return with the IRS during those years. See Tice v. Commissioner, 160 T.C., slip op. at 7-8; see also Commissioner v. Estate of Sanders, 834 F.3d 1269, 1275 (11th Cir. 2016), vacating and remanding 144 T.C. 63 (2015); Coffey v. Commissioner, 987 F.3d 808, 814 (8th Cir. 2021), rev'g and remanding Hulett v. Commissioner, 150 T.C. 60 (2018).
Ms. Picard further dedicates a significant portion of her Motion papers to discussing how the IRS could access, review, and classify the returns she filed with VIBIR. To the extent Ms. Picard argues that she should be deemed to have filed a return with the IRS for the relevant years because the IRS could have accessed the return, the reasoning of Tice again contradicts her. See Tice v. Commissioner, 160 T.C, slip op. at 7 (section 932(a)(2) "would be meaningless" "[i]f a taxpayer were deemed to have filed 'with both the United States and the Virgin Islands' by virtue of filing 'with the Virgin Islands'"). Moreover, our Court and others have squarely rejected this argument. The IRS having the ability to access, review, and classify Ms. Picard's returns is not the same as Ms. Picard's filing of those returns with the IRS. See Appleton v. Commissioner, 140 T.C. 273, 286 (2013); see also Estate of Sanders, 834 F.3d at 1274 (citing Allnutt v. Commissioner, 523 F.3d 406, 413 (4th Cir. 2008)); Coffey, 987 F.3d at 812-15; Seaview Trading, LLC v. Commissioner, No. 20-72416, 2023 WL 2442606, at *5 (9th Cir. 2023) (en banc), aff'g, T.C. Memo. 2019-122. In short, that the IRS had access to the returns Ms. Picard filed only with VIBIR, or even that the IRS in fact accessed those returns, long before it issued the notice of deficiency does not mean that the limitations period under section 6501(a) was triggered. Until Ms. Picard proves that she was a bona fide resident of the U.S. Virgin Islands, the filing of the returns with VIBIR does not give her the benefit of the repose provided by the statute of limitations.
For the reasons discussed above, it is hereby
ORDERED that petitioner's Motion for Summary Judgment filed on May 2, 2019, as amended on February 11, 2022, (Doc. 77) is denied. It is further
ORDERED that, on or before May 11,2023, the parties shall file with the Court a joint report (or, if that is not expedient, then separate reports) describing the status of this case.