no oral argument has been set for march … · · 2015-03-12no oral argument has been set for...

NO ORAL ARGUMENT HAS BEEN SET FOR MARCH 19,2015

14-1004

FINAL BRIEF OF APPELLANTS

UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA

LISA A. EDWARDS & JOSEPHP. THOMAS,

Appellants, v.

COMMISSIONER OF INTERNAL REVENUE,

Appellee.

APPEAL OF FINAL INCOME TAX DECISION OF THE U.S. TAX COURT

January 19, 2019 BRUCEE.GARDNER,ESQ Counsel for Appellants The Gardner Law Firm, P.C. 1101 Pennsylvania Ave NW

Suite 600 Washington, D.C. 20004

(202) 271-0552

USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 of 49

CERTIFICATE AS TO PARTIES, RULINGS, AND RELATED CASE

A. PARTIES AND AMICI

1. The parties who have appeared before the U.S. Tax Court in this

case are individuals, Joseph P. Thomas and Lisa A. Edwards, and the

Commissioner of the Internal Revenue Service.

2. No intervenors or amici appearances have occurred so far in this

case.

B. RULINGS UNDER REVIEW

On December 16, 2013 Special Trial Judge, Lewis R. Carluzzo, in

Lisa A. Edwards & Joseph P. Thomas v. Commissioner of Internal

Revenue, Docket #23392-12 dismissed petitioners' and respondent's motions

to dismiss for lack of jurisdiction on the issue of whether deficiency notices

were issued to the taxpayers as "moot". The judge's sua sponte dismissal

order did not state the grounds for the court's lack of jurisdiction. In

addition, the Tax Court failed to accept its jurisdiction under 26 U.S.C.

§6330(d)(1) to address the illegal levy part of this case. Furthermore,

petitioners' Motion for an A ward of Reasonable Administrative & Litigation

Costs was denied on the grounds that they were not the prevailing party in

the litigation.


It must be noted at the hearing held on May 15,2013, respondent

acquiesced to the granting of petitioner's cross motion to dismiss for lack of

jurisdiction on the deficiency issue and in an order dated June 13, 2013,

Judge Carluzzo "dismissed the case for lack of jurisdiction upon the ground

that there has been no showing that a notice of deficiency has been issued to

either petitioner for any of the years placed in dispute in the petition."

C. RELATED CASES

The case for review was not previously before this Court or any other court

except the U.S. Tax Court from which it was appealed.

I certify that the above information is accurate and correct.

January 19, 2015 Is/Bruce E. Gardner Bruce E. Gardner, Esq.


TABLE OF CONTENTS

I. CERTIFICATE AS TO PARTIES, RULING, & RELATED CASES ....................................................... .i

II. TABLE OF AUTHORITIES ............................................ vi

A. Cases ................................................................... vi

B. Statutes ................................................................. vii

C. Other Authorities ..................................................... viii

D. Glossary ............................................................... viii

III. JURISDICTIONAL STATEMENT .................................... x

A. Basis of Tax Court's Subject Matter Jurisdiction .................. x

1. Redetermine Tax Deficiency ............................................. x

2. Enjoin Illegal Tax Assessments & Levies ........................... x

3. Levy Collection Action ....................................................... x

4. Award of Attorney Fees & Costs ........................................ x

B. Basis for the Court of Appeal's Jurisdiction ....................... xi

C. Filing Dates Establishing Timely Appeal Of Final Order ........ xii

IV. STATEMENT OF ISSUES PRESENTED FORREVIEW ........ .l

V. STATEMENT OF THE FACTS ....................................... 2

A. Sua Sponte Dismissal Did Not State Grounds For Dismissal.. .. 2

B. Procedure History Regarding Tax Deficiency ............................ 3

C. IRS Resumed Illegal Collection Actions .................................... 6


D. Award of Attorney Fees & Costs .......................................... 8

VI. SUMMARY OF ARGUMENTS ....................................... 9

A. Tax Court Has Jurisdiction To Determine Whether Taxpayers' Rights To Access The Court Were Violated

By The IRS ................................................................................ 9

B. Litigation Costs Motion Was Based On June 13, 2013 ........ .10

VII. ARGUMENT ............................................................ 12

A. Standard ofReview .................................................................. 12

B. Grounds For Jurisdictional Dismissal Must Be Stated By Court. ........................................................................ 12

1. Judge Stated Ground For Jurisdictional Dismissal.. ........... .l3

2. Judge Did Not State Grounds For Jurisdictional Dismissal. ............................................................................. 14

3. Appellate & Tax Courts State Grounds For Jurisdictional Dismissals ..................................................... 15

4. Stating Grounds For Dismissal Fosters Compliance With Tax Laws ..................................................................... 16

C. The Limited Motion To Vacate Was Only To Allow The Court To Determine The Attorney Fees Claim .................. 17

D. Tax Court Has Jurisdiction To Review The IRS Appeals Office's Arbitrary Determination Not To Issue A Determination Letter .................................................................. 20

E. Taxpayers Are Entitled To Award Of Litigation Costs .............. 23

1. The Material Facts In Pietanza Exist In This Case .............. 24


2. The Commissioner Has Accepted The Law Established by Pietanza ........................................................................... 26

3. Appellants Were The Prevailing Parties In The Tax Court. ................................................................ 27

VIII. CONCLUSION ........................................................... 27

CERTIFICATE OF COMPLIANCE WITH RULE 32(a) ............. 29

CERTIFICATE OF SERVICE ...................................................... 30

ADDENDUM

1. Order and Order Of Dismissal For Lack of Jurisdiction Dated, December 16, 2013 .................................................. 31

2. Order dated August 9, 2013 .................................................. 34

3. Order of Dismissal, dated June 13, 2013 ............................. .36


II. TABLE OF AUTHORITIES

A. Table Cases

Butti v. Commissioner, T.C. Memo. 2008-82 ....................................... 25

Gardner v. United States, 211 F.3d 1305 (D.C. Cir. 2000) ................. .10, 17

Goza v. Commissioner, 114 T.C. 176 (2000) ...................................... 22

Hebert v. National Academy of the Sciences, 974 F.2d 192 (D.C. Cir. 1992) .................................................... .12

Hori v. US., 782 F.2d 227 (D.C. Cir.1986) ....................................... 12

Jones v. Lujar, 883 F.2dc1031 (D.C. Cir. 1989) .......................................... 12

Koener v. Commissioner, T.C. Memo 1997-144 .......................................... 25

Monge v. Commissioner, 92 T.C. 22 (1989) .............................................. .14

* Pietanza v. Commissioner, 92 T.C. 729 (1989), affd. without published opinion , 935 F.2d 1282 (3rd Cir. 1991) ................ 9, 12, 14, 15, 16, 24, 25, 26, 27, 28

*Pickell v. Commissioner, T.C. Memo 2008-60 ....................................... 9, 23

Pyo v. Commissioner, 83 T.C. 626 (1984) .......................................... 14, 16

Sego v. Commissioner, 114 T.C. 604 (2000) ................................................ 21

*Shelton v. Commissioner, 63T.C. 193 (1974) ....................... .ix,14, 15, 16

Steel Co v. Citizens for a Better Environment, 583U.S. 83 (1998) ......... ix, 10

United States v. Zolla, 724 F.2d 808 (9th Cir. 1984) .................................... 24

*Welch v. United States, 678 F.3d 1371 (Fed.Cir. 2012) ........................................ 15, 16, 24, 25, 27,28

Woodral v. Commissioner, 112 T.C. 19 (1999) ............................................ 22


Authorities upon which we chiefly rely are marked with asterisks.

B. Table of Statutes

26 U.S.C. §6212(a) ........................................................................ 3, 8

26 U.S.C. §6212(b) .................................................... .3, 4, 12, 13,28

26 U.S.C. §6213(a) ................................ .ix, 1, 4, 8, 9, 10, 12, 17, 20, 28

26 U.S.C. §6214(a) ............................................................ .ix, 9, 13

26 U.S.C. §6330 .................................................................. X' 8, 21

26 U.S.C. §6330(a) .......................................... 3, 4, 9, 13, 14, 15, 23

26 U.S.C. §6330(b) ...................................................................... 9

26 u.s.c. §6330(d) ...................................................................... 9

26 U.S.C. §6330(d)(1) ................................................... X, 3,7, 13, 20

26 U.S.C. §6330(e)(l) ........................................................... x, 6, 22

26 u.s.c. §7430 ......................................................... 2, 4, 8, 19, 23

26 U.S.C. §7430(c)(4) ................................................................. 12

26 U.S.C. §7430(c)(4)(B) ..................................................... .11, 27

26 U.S.C. §7430(c)(4)(B)(i) ........................................................ 27

26 U.S.C. §7430(c)(4)(B)(iii) ...................................................... 12, 27

26 U.S.C. §7482 ..................................................................... X, 9

26 U.S.C. §7483 ..................................................................... xi


C. Table of U.S. Tax Court Rules & Other Authorities

Rule 34(b) ................................................................. 18

IRM §8.1.1.1(2)(A) .................................................................. 7, 21

IRM §8.22.4.2(15) ......................................................................... 6

IRM §4.8.9.11 .......................................................................... 9, 26

IRM §446.2 .................................................................................. 24

GLOSSARY

D.C.= Washington, D.C.

IRC= Internal Revenue Code/ 26 U.S.C.

IRS = Internal Revenue Service/Commissioner

IRM- Internal Revenue Manual

L= lines

T.C. =U.S. Tax Court


III. JURISDICTIONAL STATEMENT

"Every court has judicial power to hear and determine, and inquire

into, its own jurisdiction and to decide all questions, the decision

of which is necessary to determine the questions of jurisdiction. "

Shelton v. Commissioner, 63 T.C. 193, 198 (1974); Steel Co. v.

Citizens for a Better Environment, 583 U.S. 83, 96 (1998). Where

jurisdiction is lacking because the IRS failed to issue a proper

notice of deficiency, the Tax Court will dismiss on that ground.

Shelton at 196.

A. Basis of Tax Court's Subject Matter Jurisdiction

1. Redetermine Tax Deficiency

26 U.S.C. § 6214(a) grants the U.S. Tax Court jurisdiction to

redetermine the correct amount of an income tax deficiency.

26 U.S.C. § 6213(a), grants the U.S. Tax Court jurisdiction to

redetermine the deficiency and determine whether a deficiency

notice was mailed to the taxpayer's before the tax deficiency is

assessed and assets are levied.

2. Enjoin Illegal Tax Assessments & Levies

Section §6213(a) also grants the Tax Court authority to enjoin an


IRS assessment or levy that is not preceded by mailing a

deficiency notice to the taxpayers.

3. Levy Collection Action.

26 U.S.C. §6330(d)(l) grants the U.S. Tax Court jurisdiction

to review cases involving IRS levy actions.

26 U.S.C. §6330(e)(l) grants the Tax Court the authority to

enjoin a levy or proceeding when a timely administrative IRS

appeal has been filed under (d)( 1) with respect to matters related to

an unpaid or proposed levy action.

4. Award of Attorney Fees & Costs

26 U.S.C§. 7430(f)(l) provides the court has the authority to award

reasonable litigation costs and administrative costs in connection

with the determination, collection, or refund of any tax, interest, or

penalty to the prevailing party.

B. Basis for the Court of Appeal's Jurisdiction

26 U.S.C.§7482 grants the United States Court of Appeals with

exclusive jurisdiction to review the decisions of the Tax Court.

26 U.S.C. §7483 provides "review of a decision of the Tax

Court shall be obtained by filing a notice of appeal with the clerk

of the Tax Court within 90 days after the decision of the Tax Court


is entered."

C. Filing Dates Establishing Timely Appeal Of Final Order.

On December 16, 2013, the Tax Court entered a final order in

the case of Lisa A. Edwards & Joseph P. Thomas v.

Commissioner of Internal Revenue, Docket #23392-12 . Said final

order disposed of all the parties' claims. On January 6, 2014 the

taxpayers timely filed their notice of appeal.


IV. STATEMENT OF ISSUES PRESENTED FOR REVIEW.

1. Whether the judge is required to comply with established precedent

set by the Tax Court and state the grounds for the dismissal for lack of

jurisdiction since the grounds have legal significance to determine whether

the taxpayers were afforded their statutory rights to due process of law and

their petition was merely filed late or the IRS' tax assessments and levies are

illegal pursuant to IRC § 6213(a) because no deficiency notices were ever

created or mailed to them.

2. Whether the taxpayers' "limited motion to vacate" the June 13,

2013 order granted by the court on August 9, 2013 allowed the judge to

substantially change that order and issue a new order to dismiss for lack of

jurisdiction without explanation, thereby mooting the taxpayers' litigation

costs claims.

3. Whether the Tax Court had jurisdiction under 26 U.S.C. §6330(d)

(1) to review levy actions for the 2008 tax year when an administrative IRS

appeal was timely was held but the IRS' Appeals Office intentionally failed

to issue a determination letter after the March 19, 2013 collection due

process hearing was held.


4. Whether the taxpayers are entitled to an award of litigation costs

pursuant to 26 U.S.C.§7430 when they satisfied all the requirements of the

statute and Appellee has conceded the taxpayers are entitled to litigation

costs even though the amount to be awarded is contested.

V. STATEMENT OF THE FACTS

A. Sua Sponte Dismissal Did Not State Grounds For Dismissal.

This case involves Judge Carluzzo sua sponte dismissal of this case for

lack of jurisdiction. The sua sponte dismissal was made after a limited

motion to vacate was filed so the taxpayers' Motion for an Award of

Reasonable Administrative & Litigation Costs could be considered. At

the August 7, 2013 hearing the judge stated he would not change his

June 13, 2013 order when he was reviewing the taxpayer's litigation cost

claim. [217,Ll-4]. However, the judge materially changed the grounds

for his jurisdictional dismissal. The judge also denied the taxpayers'

motion for litigation costs even though they satisfied all the requirements

of26 U.S.C. §7430 and the litigation cost portion of the motion was

uncontested by Appellee except as to the amount of the award the

taxpayers were entitled to receive. [229, ftn5; 234]


B. Procedure History Regarding Tax Deficiency.

The procedural history of this case and the facts are clear and

basically not in dispute. Appellant, Joseph P. Thomas is a retired

detective of the District of Columbia Metropolitan Police Department

and his estranged spouse is a medical billing clerk. On September 17,

2012, taxpayers, Lisa A. Edwards and Joseph P. Thomas filed a U.S.

Tax Court petition concerning the 2007 and 2008 1 tax years. [1-12]

Their joint petition was filed because the IRS violated their rights to

due process of law. First, the IRS took the taxpayers' assets prior to

mailing them deficiency notices for either the 2007 or 2008 tax years as

mandated by IRC §6212(b). The IRS' actions denied the taxpayers an

opportunity to be heard prior to the taking of their assets which was

prohibited by§6213(a). Second, the IRS seized the taxpayers' income tax

refund checks, wages, and bank accounts prior to mailing them a Final

Notice of Intent to Levy as required by IRC §6330(a) and §6331(d)(l)

for either the 2007 or 2008 tax years. Subsequently, the IRS mailed

taxpayer Thomas a Final Notice of Intent To Levy for the 2008 tax year

but it never mailed the taxpayers a 2007 levy notice.

1 Only Appellant Thomas petitioned the Tax Court for the 2008 tax year.


The relief requested in the taxpayers' petition were authorized by IRC

§6213(a) and §6330(a) except the award for attorney fees which was

authorized under IRC §7430. The taxpayers specifically requested the

Tax Court to hold that no deficiency notices for either the 2007 or 2008

tax years had been mailed to them, thereby, voiding the August 16, 2010

tax assessments made by the IRS for those tax years, enjoin the IRS from

future collection action against them for said tax years, order the return

of the money taken based on the illegal tax assessments, as well as,

award attorney fees. [11-12].

The IRS filed a motion to dismiss the taxpayers' petition because it

was filed late. The IRS' motion to dismiss alleged deficiency notices

were sent to the taxpayers but was silent on its failure to issue Final

Notices of Intent To Levy to the taxpayers prior to levying their assets.

The taxpayers' opposed the IRS' motion and filed a cross motion to

dismiss on the grounds that the IRS never created the deficiency notices

for either the 2007 or 2008 tax years and therefore could not have mailed

them to the taxpayers, as required by IRC §6212(b ). [25-84; 85-13 8].

The IRS filed an opposition to the taxpayers' cross motion but at the May

15, 2013 hearing acquiesced to the granting of the taxpayers' motion.

[168,L3-4]. The IRS' failure to mail Final Notices of Levy was never


answered by the government.

At the May 15, 2013 hearing, Judge Carluzzo granted the taxpayers'

motion to dismiss on the grounds "that there has been no showing that a

notice of deficiency has been issued to either petitioner for any of the

years placed in dispute in the petition." [171-172]. The Order of

Dismissal was dated June 13, 2013. The issue concerning the IRS'

failure to mail the taxpayers a Final Notice of Levy for the 2007 and

2008 remained before the tax court for consideration. [166,L16-21.]

On July 11, 2013, the taxpayers filed a timely Motion for an Award of

Reasonable Administrative and Litigation Costs. [176-200]. The Tax

Court required the June 13, 2013 dismissal order be vacated before the

tax court would consider the attorney fee award, even though, the fee

request was stated in the taxpayers' prayer for relief. [206,L.7-18; 173-

175].

On July 11, 2013, the taxpayers also requested "an Order to vacate the

Order of Dismissal dated June 13, 20 13 for the limited purpose of

considering their Motion For An Award of Reasonable Administrative &

Litigation Costs, .... " [emphasis added] [173-175]. A hearing was held

on August 7, 20 13 on the motion to vacate and the related attorney fee

claim. By order dated August 9, 2013 the Tax Court granted the


taxpayers' limited request to vacated the June 13, 2013 order so it could

consider the attorney fees motion. [201-202].

On December 16, 2013, Judge Carluzzo issued an order denying the

taxpayers' motion for attorney fees, dismissing the case sua sponte for

lack of jurisdiction without stating why the court lacked jurisdiction , and

held the taxpayers' and the IRS' motion to dismiss for lack of jurisdiction

was moot. [250-252]. Since the judge did not state the grounds for

dismissal, the IRS took the position that it was not barred from pursuing

collection enforcement actions against the taxpayers and it seized more

of the taxpayers' assets. The sua sponte dismissal also dismissed the IRS'

failure to issue the taxpayers' Final Notices of Intent to Levy for the 2007

and 2008 tax years which the government never filed a response to. [1]

C. IRS Resumed Illegal Collection Actions.

On or about June 9, 2014, the IRS seized $5,552.22 of Joseph

Thomas' 2013 income tax refund despite the fact a Request for a

Collection Due Process (CDP) Hearing for the 2008 tax year had been

pending since September 21, 2012.[78-79]. Pursuant to 26 U.S.C.

§6330(e)(1) and IRM §8.22.4.2(15) the timely filed CDP hearing request

suspended all collection enforcement actions by the IRS until that matter

was resolved but that tax law also did not stop the IRS from levying.


Even though the IRS Appeals Office held a hearing on that CDP

request on March 19, 2013 after the Tax Court petition was filed, no

determination letter was ever issued to taxpayer Thomas so he could

appeal an unfavorable decision to the Tax Court. [163,L 12-22.] On

October 25, 2013, the IRS took the position that the CDP proceeding was

moot because the 2008 tax year was currently before the tax court. [228].

However, the issue before the tax court had been dismissed on June 13,

2013, yet no determination letter was ever issued by appeals to allow the

taxpayer to exercise his rights under IRC §6630(d)(l). [164,168]

At the May 15, 2013 hearing, the court was informed of the

September 21, 2012 CDP hearing request and it stated that matter may

come up down the road when a Notice of Determination for 2008 was

issued. [164-168]. IRM 8.1.1.1(2A) states the Appeals Office ensures a

prompt conference and prompt decision to accomplish its mission. It has

been about 2 years since the CDP hearing request was made by taxpayer

Thomas, it has been over 1 year since the hearing was held, and taxpayer

Thomas still has not received a decision during that time, while the IRS

continued to illegally take his money.

When the IRS was contacted about the refund seizure they stated the

taking of the taxpayer's 2013 refund was an "offset" that is not


considered a collection action barred by IRC §6330. Yet the IRS never

established a notice of deficiency was ever created and mailed to this

taxpayer for the 2008 tax year, as required by IRC §6212(b) &§ 6213(a),

to establish a valid August 16, 2010 tax assessment upon which the IRS

could use to seize this taxpayer's tax refund. The judge's sua sponte

ruling, was a back door way of approving the IRS' failure to prove it

created the deficiency notices that were required to be mailed to the

taxpayers. The ruling opened the door for the IRS' illegal collection

actions to continue.

D. Award of Attorney Fees & Costs

The taxpayers satisfied all the requirement of §7430 and based on the

June 13, 2013 order and the Pietanza2 case they were the prevailing party

in the litigation. The IRS did not contest the taxpayers' entitlement to

litigation costs but contested the amount to be awarded. [229, ftn5].

In response to the taxpayers' attorney fee motion, Judge Carluzzo

reversed the position he took in the June 13, 2013 order that no

deficiency notices had been sent to the taxpayers and instead dismissed

the case sua sponte for lack of jurisdiction without stating why the court

2 Pietanza v. Commissioner, 92 T.C. 729 (1989), ajjid without published opinion, 935 F.2d 1282 (3rd Cir. 1991).


lacked jurisdiction. Furthermore, the judge stated the taxpayers' reliance

on Pietanza, a case in which the Commissioner has acquiesced and is

specifically cited in his Internal Revenue Manual §4.8.9.11, is misplaced

because the IRS' position was "substantially justified". Yet, the IRS

never produced the deficiency notices it alleged were mailed to the

taxpayers.

VI. SUMMARY OF ARGUMENT

A. Tax Court Has Jurisdiction To Determine Whether Taxpayers' Rights To Access The Court Were Violated By The IRS.

The Tax Court has jurisdiction over cases when the IRS fails to issue

taxpayers notices of deficiency to prevent them from seeking

redeterminations of the deficiency. 26 U.S.C. § 6214(a) ; 26 U.S.C.§

6213( a). Similarly the Tax Court has jurisdiction over cases when the IRS

levies a taxpayer's assets without first issuing a Final Notice of Intent to

Levy to prevent them from appealing the IRS collection action or obtaining

a letter of determination. 26 U.S.C. § 6330(a),(b),(d). Finally, the Tax Court

has jurisdiction over cases when the IRS Appeals Office denies the taxpayer

his statutory rights to obtain judicial review ofthe IRS' levy actions by not

promptly issuing a letter of determination. Pickell v. Commissioner, T.C.

Memo 2008-60; 26 U.S. C. § 6330( d). All of those situations have occurred


in this case but the tax court judge refused to accept subject matter

jurisdiction to determine its jurisdiction over any of those matters, which

resulted in multiple violations of the taxpayers' statutory and U.S.

Constitutional rights to due process of law.

It is well settled that subject matter jurisdiction is the power given to

the courts to declare the law and when jurisdiction does not exist, the only

function remaining for the court is stating the grounds for dismissing the

action. Steel Co. v. Citizens for a Better Environment, 583 U.S. 83,94

(1998). In this case, the judge's sua sponte dismissal warranted an

explanation of why he decided the court lacked jurisdiction on issues in this

case, especially, with regards to the redetermination of the tax deficiency. If

no deficiency notices were created to mail to the taxpayers then §6213(a)

prohibited the tax assessments and levies against the taxpayers which made

the IRS' action unlawful. On the other hand, if the notices were mailed to

the taxpayers then their petition would be late and they would have no

prepayment redress in Tax Court. Gardner v. US, 211 F.3d 1305, 1312

(D.C. Cir. 2000). So it was important for the judge to state why the court

lacked jurisdiction.

B. Litigation Costs Motion Was Based On June 13,2013.


The taxpayers' motion for attorney fees was based on the Tax Court's

June 13, 2013 order that there was no showing the IRS issued notices of

deficiency for the 2007 or 2008 tax years. The "limited motion to vacate"

the June 13, 2013 order did not allow the judge to change that order but

rather to consider the motion for attorney fees and incorporate in it that

order. The judge stated he would not change his order. [217,L14, 3-4.] For if

the judge was allowed to substantially change the order, as he did, in favor

of the IRS then the taxpayers would not be the prevailing party.

Furthermore, in light of the fact the taxpayers' prayer for relief requested

attorney fees, the judge could have allowed the taxpayers 30 days from the

May 15, 2013 hearing date to submit their motion for attorney fees and

incorporate both decisions in his June 13, 2013 order but he did not.

The IRS agreed that the taxpayers were "the prevailing party" in the

litigation based on the June 13, 2013 order and the taxpayers were entitled

to attorney fees for litigation costs. [229,ftn5]. The amount of the attorney

fees was being negotiated between the parties prior to the judge's December

16, 2013 sua sponte dismissal.

The tax court judge stated "respondent established that his position in

the proceeding is substantially justified. See sec. 7430(c)(4)(B)". However,

the IRS never argued that issue in response to the litigation costs, the IRS


asserted only that its administrative position was substantially justified and

the taxpayers were not entitled to an award of administrative costs. The

Third Circuit's affirmation of the Tax Court's decision in Pietanza and

§7430 (c)(4)(B)(iii) support a determination that the IRS' litigation position

was not substantially justified. The judge did not reference §7430 (c)(4)(B)

(iii) in his order, even though, it appears he disagreed with the precedent set

by the Tax Court and approved by the Third Circuit Court of Appeals in

Pietanza.

VII. ARGUMENT

A. Standard of Review

Issues of law are reviewed de novo. Jones v. Lujan, 883 F.2d 1031,

1037 (D.C. Cir.1989); Herbert v. National Academy of the Sciences, 974

F.2d 192, 197 (D.C. Cir. 1992); Hori v. US, 782 F.2d 227, 241 (D.C. Cir.

1986); The issues for appellate review involves interpretation and

application of the statutes stated in the jurisdictional section of this brief as

well as, 26 U.S.C §6212(b), §6630(a); 26 U.S.C. §7430(c)(4) and the due

process clause of the U.S. Constitution.

B. Grounds For Jurisdictional Dismissal Must Be Stated By Court.

The IRS determined the taxpayers owed tax deficiencies of$9,606.00

and $12,933.47 respectively for the 2007 and 2008 tax years. IRC §6213(a)


requires the IRS to mail the taxpayers notices of deficiency or it is

prohibited from assessing the tax and levying assets to collect the tax. The

deficiency notices allow the taxpayer to contest the IRS' determination

without first paying the tax. IRC §6330(a) states no levy can be made

unless the IRS has notified the taxpayer of their right to a hearing. The

taxpayers never received the deficiency notices or Final Notices of Intent to

Levy but the tax was illegally assessed and illegally levied their assets. The

taxpayers filed a petition with the Tax Court for a redetermination that no

taxes were owed the IRS because the §6212 (b) deficiency notices had not

been mailed to them. In addition, the §6330(a) notices had not been mailed

to the taxpayers so the IRS was prohibited from taking their assets. The Tax

Court had jurisdiction to decide its jurisdiction of the above issues based on

26 U.S.C. § 6214(a), §6213(a) and §6330(d)(1). The judge was required to

state the grounds for the jurisdictional dismissal in order to prevent the IRS

from continuing to violate the tax laws and to comply with the statutory

notice requirements.

1. Judge Stated Ground For Jurisdictional Dismissal.

The Tax Court has jurisdiction to determine whether it has

jurisdiction. Pyo v. Commissioner, 83 T.C. 626, 632 (1984). The Tax Court

has jurisdiction to determine the reason why it does not have jurisdiction.


Monge v. Commissioner, 92 T.C. 22, 27 (1989). When at any time and in

any manner it is presented to the Court that it does not have jurisdiction, the

Court must examine and state the grounds for its jurisdiction or lack thereof.

Shelton v. Commissioner, 63 T.C. 193, 198 (1974). Judge Carluzzo held a

hearing on the tax deficiency motions, adhered to precedent established by

the Tax Court and issued an order dated June 13, 2013 in favor of the

taxpayers. The order stated the grounds for the jurisdictional dismissal was

that the IRS made no showing that deficiency notices for either tax year had

been issued to the taxpayers. The grounds for the jurisdictional dismissal

had independent legal significance.

The results of the June 13, 2013 order meant the IRS' August 16,

2012 tax assessments were invalid, the levy actions were illegal, and the

money seized from the taxpayers based on the invalid tax assessments

· would be returned to them. Shelton at 197.

2. Judge Did Not State Grounds For Jurisdictional Dismissal.

In light of the fact the taxpayers prevailed on the most significant

litigation issue they sought attorney fees from the IRS. To have the attorney

fee claim considered the taxpayers were required to get the June 13, 2013

dismissal order vacated. They submitted a limited request for an order to

vacate the dismissal so Judge Carluzzo could consider the attorney fee


claim. However, on December 16, 2013, the judge denied the claim and

then sua sponte dismissed the entire case for lack of jurisdiction without

stating the grounds for either the tax deficiency or section 6330(a) dismissal.

The effect of the judge's order validated the IRS' illegal tax

assessments and its illegal levy actions by not affecting the validity of

deficiency notices the IRS alleged they created and mailed to the taxpayers,

which they never proved. Shelton at 197; Pietanza 736. The dismissal also

gave the IRS additional time to create deficiency notices where none

previously existed. The order did not address why the judge elected not to

follow the precedent set by the Tax Court in Pietanza, that the IRS had to

produce a copy of the deficiency notice and the date it was mailed to

prevail. Id. at 736; Welch v. US. 678 F.3d 1371 (Fed. Cir. 2012). This order

did not acknowledge the IRS' acquiesced to the granting the taxpayers'

motion to dismiss made at the May 15, 2013 hearing or that the

Commissioner cites the Pietanza case in his manual for his employees to

follow. [20,L3-4]. The order also does not address the fact that the IRS

never alleged they mailed the section 6330(a) notices to the taxpayers prior

to taking levy actions against them.

3. Appellate & Tax Courts State Grounds For Jurisdictional Dismissals.


The Tax Court and various federal appellate courts who have

addressed tax deficiency notice issues have all stated the grounds for the

court's lack of subject matter jurisdiction. Pietanza 735; Welch v. US, 678

F.3d 1371 (Fed.Cir.2012); Pyo; Shelton at 195. The Tax Court in Pietanza

stated "Our task is to decided whether we lack jurisdiction because no

statutory notice of deficiency has been issued or because a valid notice was

issued but the petition was not timely." Id at 735; Shelton at 195. "If

jurisdiction is lacking because of respondent's failure to issue a valid notice

of deficiency, we will dismiss the case on that ground, rather than for lack of

a timely filed petition." Id . Thus, it is imperative to state the grounds for

lack of jurisdiction to determine the parties rights and whether the IRS has

complied with the tax laws. Otherwise, the IRS would not be compelled to

comply with the statutory notice requirements which in turn would prevent

taxpayers from exercising their due process rights before the Tax Court,

where they can resolve tax matters prior to payment. The alternative would

require taxpayers to prepaid the tax, if they could, and file refunds claims in

the District or Claims Courts because the IRS violated the tax laws.

4. Stating Grounds For Dismissal Fosters Compliance With Tax Laws.

In Gardner, this Court has addressed the issue that §6213(a)

establishes "the Service's authority and responsibility to send a notice of


deficiency to a taxpayer prior to initiating proceedings to assess the

deficiency". Gardner v. US., 211 F.3d 1305, 1311 (D.C. Cir. 2000).

In Gardner, this Court stated the purpose of §6213(a) is to preserve

the taxpayer's right to litigate his tax liability in Tax Court before paying the

tax." Id. In addition, §6213(a) flatly prohibits the Service from making an

assessment and levying until a notice of deficiency is mailed to the taxpayer.

Id. 1312. "[T]he purpose of the statute which created the Tax Court, ... was to

provide taxpayers with means of obtaining a judicial determination of their

tax liabilities without having to pay the deficiencies first." Shelton at 197.

That purpose would be defeated if the grounds for the jurisdictional

dismissal is not stated and the taxpayers are forced to seek relief in the

District or Claims Court or forfeit the relief because of their inability to pay.

Thus, the grounds for jurisdictional dismissals in this case were required to

be stated by the judge.

C. The Limited Motion To Vacate Was Only To Allow The Court To Determine The Attorney Fees Claim.

The taxpayers stated on pages 10, 11, and 12 of their September 17,

2012 petition that they wanted the Court to award them attorney fees if they

prevailed in this case. Tax Court Rule 34(b) provides requests for litigation

cost are not to be included in the petition.[208,L11-17]. The attorney fee


claim was not discussed at the May 15, 2013 hearing and was not mentioned

in the court's June 13, 2013 order.

On July 11, 2013 the taxpayers filed a motion for an order to vacate

the Order of Dismissal dated June 13, 2013 for the limited purpose to have

their Motion For An Award of Reasonable Administrative & Litigation

Costs considered by the court.[176-200]. The IRS did not oppose the motion

to vacate and the court held a hearing on that motion on August 7, 2013.

At the August 7, 2013, hearing the court recognized the petitioners

agreed with the court's June 13, 2013 grounds for dismissal but they wanted

the court to consider awarding them litigation costs. [206 L 7-11] The court

stated mechanically the petitioners had no opportunity to actually make

a request for litigation costs because a hearing was held then an Order

of Dismissal followed. [206 L 7-1 OJ. The court also stated there was a

difference in vacating a judgment in a deficiency case and collection case,

where there is an opinion resolving the substantive issues, and in the current

case dismissed for lack of jurisdiction. In the current case, the IRS has not

produced the deficiency notices they alleged were mailed to the petitioners.

[209,L6-25]. Granting the motion to vacate would allow the IRS at least an

additional 60 days to find the deficiency notices it claims were lost in the

mail by the Memphis Service Center and supplement its motion to dismiss


on the grounds the petition was late since no ruling would exists. [21 0,

211,L 3-7].

During the hearing petitioners informed the court they had been

discussing the attorney fees issue with the IRS and to date it had not been

resolved. [212, L,3-4]. A review of 26 U.S.C. §7430 and the Tax Court

rules do not state a Motion to Vacate has to be filed for the court to consider

an award of litigation costs. We submit the attorney fees are collateral

issues to the merits that can be addressed separately. Furthermore, the Equal

Access to Justice Act, which 26 U.S.C. §7430 was patterned after, does not

require the decision be vacated but rather the attorney fees claim must be

submitted within 30 days from the date of the decision. [212,L6-25].

It would be unfair for the IRS to be allowed to revisit the underlying

merits of the case while the court is considering the motion for attorney fees.

[212,L15-18]. The court should have been able to rule on the motion for

attorney fees without having to vacate the underlying ruling like the U.S.

District Court does when applying 26 U.S.C. §7430. However, the court

stated it did not see how it could do that. [215L25; 216L23-25].

The motion to vacate was limited to allow the court only to determine

attorney fees. The judge stated, " I am not going to revisit what I've

already ordered under what has thus far been presented." [217 ,L 3-4]. The


petitioners reasonably relied on the judge's statement in their decision to go

forward with their motion to vacate. No new evidence was presented to the

judge from the date of the August 7, 2013 hearing through the December

16, 2013 order of dismissal, yet the judge materially changed the substance

of his dismissal order by not restating the grounds why the court lacked

jurisdiction over petitioners' deficiency and collection cases. The judge

should be bound by his statement that he was not going to revisit his June

13th order absent new evidence from the IRS. Accordingly, the June 13th

order should be reinstated and supplemented to specifically state "the

August 16, 2010 tax assessments for the 2007 and 2008 tax years violate

IRC §6213(a) and all money taken from the taxpayers based on those tax

assessment must be returned to them."

D. Tax Court Has Jurisdiction To Review The IRS Appeals Office's Arbitrary Determination Not To Issue A Determination Letter.

Section 6330(d)(1) grants the Tax Court jurisdiction to review

determinations made by the Appeals Office in connection with the section

6330 hearings. We submit the Tax Court also has jurisdiction to review

cases in which a §6330 hearing occurred and the Appeal Office made a

determination not to issue a determination letter to prevent the taxpayer

from seeking review of its decision. Sego v. Commissioner, 114 T.C. 604,


610 (2000) [IRS cannot defeat Tax Court review of the determination letter

by deliberately refusing to issue it to the taxpayer.]

Internal Revenue Manual § 8 .1.1.1 (2 )(A) states the Appeals Office

will provide a prompt conference and prompt decision in each case. On

April20, 2012, the IRS levied taxpayer Thomas' U.S. Senate Federal Credit

Union account. On July 7, 2012, the IRS levied this taxpayer's retirement

wages from the District of Columbia Metropolitan Police Depatiment.

[161,L17-25]. On August 20, 2012 the taxpayer's counsel called the IRS for

an explanation of the levies since no deficiency notice had been issued and

no Final Notice of Intent to Levy had been issued. On August 24, 2012, the

IRS mailed the taxpayer a Final Notice of Intent to Levy for the 2008 tax

year and the same day the IRS took the taxpayer's 2011 tax refund. [76;162

L,7-15].

On September 12, 2012, Appellant Thomas timely filed a request for

a collection due process hearing for the 2008 tax year.[78-79]. On March

19, 2013, the CPD hearing was held. Based on conversations with the

Settlement Officer months later, he stated no determination letter would be

issued while the 2008 tax year matters were pending before the Tax Court.

However, the Tax Court case was dismissed on June 13,2013 and no

determination letter was ever issued.


On October 25, 2013, IRS counsel filed a response to petitioners'

motion for attorney fees. Page 7 of that response states Appellant Thomas'

CDP proceeding is "moot" because it was filed after the taxpayers

September 17, 2012 Tax Court petition was filed. [228] Yet, the

Settlement Officer has not issued a determination letter on the pending case

and on June 9, 2014 the IRS took Appellant Thomas' 2013 tax refund.

Section 6330(e) (1) states levy action will be suspended while the

case is in Appeals but the levy action have not been suspended and the

Appeal Office deliberately refuses to issue the letter of determination so the

taxpayer can exercise his right of Tax Court review. In reviewing the

actions of determination letters issued by the IRS Appeals Office, the Tax

Court has the authority to review them de nov with respect to the underlying

liability and for abuse of discretion with respect to all other determinations.

Goza v. Commissioner, 114 T.C. 176, 181-182 (2000); Sego at 610. The IRS

Appeals Office has made an arbitrary, capricious, determination not founded

in fact or law to deny Appellant Thomas' a formal determination letter.

Woodral v. Commissioner, 112 T.C. 19, 23 (1999). The Appeals Office

determination not to issue a determination letter must be reviewable before

the Tax Court in the same way the Tax Court can review tax deficiency

matters when the IRS fails to issue taxpayers notice of deficiencies. Pickell


v. Commissioner, T.C. 2008-60.

In Pickell, no notice of determination was issued to the taxpayer

because he did not respond to the final notice of intent to levy mailed to his

last known address. The Tax Court in Pickell held it did not have

jurisdiction and stated the grounds for dismissal would allow the IRS to

either levy the taxpayer's assets or invalidate the notice of levy. In this case,

taxpayer Thomas received the §6330( a) final notice of intent to levy and

timely filed a CDP hearing request, as well as, attended the administrative

hearing but no determination letter was issued. Accordingly, this Court

should hold the 2008 levy on taxpayer Thomas is invalid and all assets taken

from him including his tax refunds should be returned to him forthwith.

E. Taxpayers Are Entitled To Award Of Litigation Costs.

On July 11, 2013 the taxpayers filed a motion for administrative and

litigation costs pursuant to IRC §7430. The taxpayers satisfied all the IRC

§7430 requirements for their attorney fee claim. The IRS filed a response to

the taxpayer's motion on October 25, 2013 and agreed the taxpayers were

entitled to litigation costs but contested the amount. By order dated

December 16, 2013, Judge Carluzzo denied all the taxpayer's claims for

attorney fees.


The judge did not follow the precedent followed by the Tax Court in

Pietanza as his basis for denying the claim. The issue in Pietanza was

whether the deficiency notice was ever created. The judge incorrectly relied

upon the 9th Circuit decision in Zolla3 where the issue was did the IRS mail

the deficiency notice to the taxpayer's last known address. Like Pietanza,

the taxpayers in this case asserted the deficiency notices never existed so the

IRS had the burden of both producing a copy of the deficiency notices

prepared to be mailed and proving that the notices were actually mailed to

the taxpayers' last known address. Pietanza 736; Welch at 1379, 1382. The

IRS could not produce a copy of the deficiency notice prepared to the

taxpayers so there was no presumption that U.S. Postal Form 3877 produced

by the IRS was evidence that the deficiency notices were mailed to the

taxpayers. Pietanza 736; Welch at 1380

In addition, the Form 3877 submitted by the IRS was defective and

therefore unreliable because it was not prepared in accordance with Internal

Revenue Manual4462.2. The IRS manual requires Form 3877 be certified

and stamped "Statutory Notice of deficiencies for the year(s) indicated have

been sent to the following taxpayers". Pietanza at 747. Thus the Form 3877

produced by the IRS at best indicated nothing more than an envelope was

3 United States v. Zolla, 724 F.2d 808 (9th Cir. 1984)


mailed to the taxpayers.Jd 742.

1. The Material Facts In Pietanza Exist In This Case.

Judge Carluzzo elected not to follow the precedent set by the full Tax Court

and approved by the Third Circuit in Pietanza. He stated on page 3 of his

order that the holding in Pietanza was limited to "the unusual facts present"

in that case. However the material facts present in Pietanza also exist in this

case. In Pietanza, as here, the Commissioner :

1. lost the administrative file,

2. had no copies of a notice of deficiency,

3. did not establish a final notice of deficiency ever existed,

4. relied on Postal Service Form 3877, &

5. the taxpayers' counsel received no communications from the IRS prior to filing the petition of the existence of a notice of deficiency despite numerous letters written to the IRS requesting the basis for the collection oftaxes.Jd. 747, 732-733; Butti v. Commissioner, T.C. Memo 2008-82: Welch at 1380.

The Federal Circuit in Welch also follows the Pietanza case and

stated, "Abstract references to office procedures not tied to either an

identifiable notice of deficiency or clear evidence of the mailing of the same

are insufficient to give rise to a presumption of official regularity." Id at

1382. In this case, the IRS provided a declaration from an IRS supervisor


in the technical services branch in Baltimore, Maryland to describe

how deficiency notices in general are processed but she had no personal

knowledge of the existence or creation of the 2007 and 2008 deficiency

notice allegedly prepared for Appellants. [19-22]

In this case, as in Koerner, no other postal records, such as Postal

Service Form 3849, showing the delivery or attempted deliver of the article

listed on Form 3877 were presented. Koerner v. Commissioner, T.C. 1997-

144; Welch 13 81. Thus, there is no material difference between the facts and

issues in Pietanza and this case. Accordingly, the judge was required to

follow the precedent established by the Tax Court in Pietanza as the basis of

his decision and he did not!

2. The Commissioner Has Accepted The Law Established by Pietanza,

A review of Internal Revenue Manual4.8.9.11 shows the

Commissioner specifically cites the Pietanza case in this section of his

manual. IRM 4.8.9.11 states: "A copy [of the notice of deficiency] is kept in

the case file as evidence that the notice of deficiency was sent to the

taxpayer. See Pietanza v. Commissioner, 92 T.C. 729 (1989). The file is

then retained by the issuing office pending its ultimate disposition."

3. Appellants Were The Prevailing Parties In The Tax Court.


Judge Carluzzo states in his order that the taxpayers are not entitled to

litigation costs because they are not the prevailing party. He viewed the

IRS' position to be substantially justified and cited §7430(c)(4)(B). Section

7430( c)( 4)(B)(i) states:

A party shall not be treated as the prevailing party in a proceeding to which subsection (a) applies if the United States establishes that the position of the United States in the proceeding was substantially justified.

Subsection (iii) states:

In determining for purposes of clause (i) whether the position of the United States was substantially justified, the court shall take into account whether the United States has lost in court of appeal for other circuits on substantially similar issues.

On the issue of whether the notice of deficiency ever existed or was created,

the IRS lost on that issue in the Third Circuit in Pietanza and the Federal

Circuit in Welch. That is the same issue in this case. Even though Judge

Carluzzo may not agree with those decisions, the Tax Court follows those

decisions, the Commissioner accepts those decisions, and the IRS did not

argue its position was substantially justified with regards to the litigation

portion of this case. [229 ftn5] Accordingly, the taxpayers are entitled to

litigation costs. The amount to be awarded and whether any administrative

costs should be awarded have yet to be determined.

CONCLUSION


This Court should state the grounds for the dismissal of Appellants'

Tax Court case was the IRS did not issue them the statutorily required

deficiency notice, IRC §6212(b), for either the 2007 or 2008 tax year.

Pursuant to §6213(a) the August 16, 2010 tax assessments for the 2007 and

2008 tax years are invalid, as well as, the levies and offsets made pursuant

to those tax assessments. Thus all money taken from the taxpayers based

on those invalid August 16, 2010 tax assessments must be returned to the

Appellants within 90 days from the date of this decision.

With regard to the award of litigation cost this Court should hold

Appellants were the prevailing party and the IRS' litigation position was not

substantially justified in light of the Pietanza and Welch cases. This case

should be remanded to the Tax Court with instructions to determine the

amount of the litigation costs to be awarded the Appellants and whether any

administrative costs should be awarded and, if so, determine the amount of

the award.

January 20, 2015

Respectfully submitted,

Is/Bruce E. Gardner Bruce E. Gardner, Esq. Counsel for Appellants The Gardner Law Firm, P.C. 1101 Pennsylvania Ave NW 600 Washington, D.C. 20004 (202) 217-0552 [email protected]


UNITED STATES COURT OF APPEALS For The District of Columbia Circuit

LISA A. EDWARDS & } JOSEPH P. THOMAS, }

Appellants } Docket No. 14-1004 }

v. } }

COMMISSIONER OF INTERNAL REVENUE, } }

Appellee }

CERTIFICATE OF COMPLIANCE WITH RULE 32(a)

1. This brief complies with the type-volume limitation of

Fed.R.App.P. 32(a)(7)(B) this brief contains 6,219 words, excluding the

parts of the brief exempted by Fed.R.App.P.32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements ofFed.R.App.P.

32(a)(5) and the type style requirements ofFed.R.App.P. 32(a)(6) because

this brief has been prepared in a proportionally spaced type face using

Microsoft Word version 97-2003 in 14 point font size in Times Roman.

January 20, 2015 Is/ Bruce E. Gardner Bruce E. Gardner, Esq. Counsel for Appellants The Gardner Law Firm, P.C. 1101 Pennsylvania Ave NW Suite 600 Washington, D.C. 20004 (202) 271-0552 [email protected]_


CERTIFICATE OF SERVICE

I, hereby certify that on the 20th day of January, 2015, I electronically

filed the Reply Brief with the Clerk of the Court of the United States Court

of Appeals for the District of Columbia by using the appellate CM/ECF

system. I further certify that counsel for the Appellee, identified below, is

a registered CM.ECF user and she will be served by the appellate CM/ECF

system:

Janet A. Bradley, Esquire DOJ-Tax Division, P.O. Box 502 Washington, D.C. 20044

January 20, 2015 Is/ Bruce E. Gardner Bruce E. Gardner


... :..

UNITED STATES TAX COURT WASHINGTON, DC 20217

.. ·-

LISA A. EDWARDS & JOSEPH P. THOMAS, ) )

Petitioner, ) )

v. ) Docket No. 23392-12. )

CO:IVIIVITSSIONER OF INTERNAL REVENUE, ) )

Respondent )

ORDER AND ORDER OF DISMISSAL FOR LACK OF JURISDICTION

As has been noted in opinions and orders to numerous to count, this Comt is a court of limited jurisdiction. Naftel v. Commissioner, 85 T.C. 527, 529 (1985). The various areas over which we have jurisdiction are specified in various provisions of the Internal Revenue Code of 1986. With few exceptions, none of which are relevant here, the Commissioner must make a specific statutorily described determination with respect to a taxpayer's Federal tax liability for a specific period before the taxpayer is entitled to challenge that determination, or seek relief :frem that determination, in this Court. According to petitioners, no such determinations have been made with respect to petitioners' 2007 and 2008 Federal income tax liabilities1 that respondent apparently is trying to collect. The absence of any such determinations did not deter the filing of the petition in this matter, however, which in essence, challenges not so much a "detennination" as that tenn is used in a jurisdictional context, but the validity of certain assessments.

According to respondent, the assessments challenged by petitioners were validly 1nade after they failed to petition this Court in response to notices of deficiency properly issued and mailed to them years ago (notices). See sees. 6212(a) and (b), 6213(a).2 Respondent's claim in this regard is supported by a U.S.

1For convenience we refer to the 2007 and 2008 Federal income tax liabilities as petitioners' liabilities, even though the 2008liability relates only to Mr. Thomas.

2Section references are to the Internal Revenue Code of 1986, as amended.

SERVED Dec 16 2013

31 nnl" 'la

PA USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 of 49

Thomas v. Commissioner J)ocket~o. 23392-12

-2-

Postal Service Form 3877. The details of the relevant events and respondent's position with respect to those events are set forth in respondent's Motion to Dismiss for Lack of Jurisdiction, filed November 28, 2012. According to respondent, because the administrative file has been lost in the mail, respondent is unable to present a copy of either of the notices. According to respondent, no other detenninations have been made with respect to petitioners' 2007 and 2008 Federal income tax liabilities that could support the Court's jtrrisdiction over those liabilities, a point not in dispute. However, petitioners dispute respondent's claim that the notices were issued. Petitioners' Cross Motion to Dismiss for Lack of Jurisdiction Based on Respondent's Failure to Issue a Notice of Deficiency, filed January 17, 2013, is based upon the ground that respondent has not issued a notice of deficiency for either year placed in issue.

The parties also dispute what document(s) are evidenced by the Form 3877. As noted, according to respondent they are notices of deficiency; according to petitioners they are something else. What is clear in this matter is that the Court has no jurisdiction over petitioners' 2007 and 2008 Federal income tax liabilities, and that was clear frorn the allegations in and attachments to the petition, and equally as clear in the Order of Dismissal for Lack of Jurisdiction, entered June 13, 2013, and vacated on August 9, 2013, so that petitioners' Motion for an Award of Reasonable Administrative & Litigation Costs, filed August 9, 2013, which is now before the Court, can be considered.

In general, and subject to numerous requirements and conditions which need not be discussed, section 7430 provides, as relevant here, that a "prevailing party" is entitled to recover from respondent reasonable litigation expenses incurred in connection with a proceeding in this Court. For purposes of section 7430, a prevailing party is defined to mean the party who has substantially prevailed with respect to: (1) the amount in controversy, or (2) the most significant issue or set of issues presented. See sec. 7 430( c)( 4 )(A). A party is not treated as a prevailing party, however, if respondent establishes that his position in the proceeding is substantially justified. See sec. 7430(c)(4)(B).

Because the above-referenced order of dismissal grants petitioners' motion, they apparently believe themselves to be prevailing parties for purposes of section 7430. We disagree, if only because we view respondent's position to be ·substantially justified.

32


Thomas v. Commissioner Docket No. 23392-12

.., -:>-

Respondent's records and the materials attached to respondent's jurisdictional motion strongly suggest that notices of deficiency for 2007 and 2008 have been issued to petitioners, even though the existence ofthose notices of deficiency cannot be supported by a review of a copy of them. After all, such evidence is routinely submitted and relied upon in cases in which a party has raised ajurisdictional issue. See, e.g., U.S. v. Zolla, 724 F.2d 808 (9th Cir. 1984). To the extent that petitioners consider that Pietanza v. Commissioner, 92 T.C. 729 (1989), aff'd without published opinion, 935 F.2d 1282 (3d Cir. 1991) is inapposite, they are tnistaken. In Pietanza the Court specifically noted that its holding was limited to "the unusual facts presenf' in that case. Pietanza v. Commissioner, 92 T.C. at 736.

Because we consider respondent's position in this case to be substantially justified, petitioners are not treated as the "prevailing party" for purposes of section 7430. It follows they are not entitled to the relief that section contemplates.

Premises considered, and because it is clear from the submission of the parties that the Court is without jurisdiction in this matter, is it

ORDERED that, sua sponte, this case is dismissed for lack of jurisdiction. It is further

ORDERED the petitioners' Motion for an Award of Reasonable Administrative & Litigation Costs, filed August 9, 2013, is denied. It is further

ORDERED that respondent's motion to dismiss for lack of jurisdiction and petitioners' motion to dismiss for lack of jurisdiction are moot.

ENTERED: DEC 16 2013

(Signed) Lewis R. Carluzzo Special Trial Judge

33

,_




Petitioners, ) )

v. ) Docket No. 23392-12 )

CO:M:MISSIONER OF INTERNAL REVENUE, ) )

Respondent. )

ORDER

By Order ofDismissal entered Jtme 13,2013, this case was dismissed for lack of jurisdiction upon the ground that "there has been no showing that a notice of deficiency has been issued to either petitioner for any of the years placed in dispute in the petition." The case is now before the Court on petitioners' Motion to Vacate Order of Dismissal, filed July 11, 2013. Petitioners' motion is intended to allow for the filing of petitioners' Motion for an Award ofReasonable Administrative and Litigation Costs, lodged July 11, 2013.

A hearing was conducted on petitioners' motion to vacate on August 7, 2013, in Washington, D.C. Counsel for the parties appeared and were heard. At the hearing, as well as by notice filed July 31, 2013, the Court was advised that respondent does not object to petitioners' motion.

Premises considered, and consistent with the matters addressed at the hearing, it is

ORDERED that petitioners' motion to vacate is granted.· It is further

OREDERED that the above-referenced Order of Dismissal is vacated and set aside. It is further

SERVED Aug 09 2013

34 DOC 24

PA USCA Case #14-1004 Document #1533129 Filed: 01/20/2015 of 49

Thomas v. Commissioner I>ocket~o.23392-12

-2-

ORDERED the respondent's Motion to Dismiss for Lack of Jurisdiction, filed November 28, 2012, and Petitioners' Cross Motion to Dismiss for Lack of Jurisdiction Based on Respondent's Failure to Issue Notice of Deficiency, filed January 17, 2013, are held in abeyance. It is further

ORDERED that the Clerk of the Court file, as of the date of this Order, petitioners' Motion for an Award of Reasonable Administrative and Litigation Costs, lodged July 11, 2013. It is further

ORDERED that respondent's response to petitioners' Motion for an Award of Reasonable Administrative and Litigation Costs is due on or before October 8, 2013.

Dated: Washington, D.C. August 9, 2013


35




Petitioner, ) )

v. ) Docket No. 23392-12 )

CON.fMISSIONER OF INTERNAL REVENUE, ) )

Respondent. )

ORDER OF DISMISSAL

This case for the redeterminations of deficiencies is before the Court on respondent's motion to dismiss for lack of jurisdiction, filed November 28,2012, and petitioners' cross-motion to dismiss for lack of jurisdiction, filed January 17, 2013. Respondent's motion is based upon the ground that the petition was not filed within the.period prescribed by I.R.C. section 6213(a); petitioners' motion is based upon the ground that a notice of deficiency has not been issued to either petitioner for the any of the years placed in dispute in the petition.

The motions were called for hearing in Washington, D.C., on May 15, 2013. _. At the hearing respondent withdrew his objection to petitioners' cross-motion. Premises considered, and for reasons set .forth more fully in the transcript of the

· proceedings, it is

ORDERED that respondent's motion is denied;. It is further

ORDERED that petitioners' cross-motion is granted. It is further

ORDERED that this case is dismissed for lack of jurisdiction upon the

SERVED Jun 13 2013

36 DOC18

PA


Thomas v. Commissioner Docket No. 23392-12

-2-

ground that there has been no showing that a notice of deficiency has been issued to either petitioner for any of the years placed in dispute in the petition.

ENTERED: JUN 13 2013


37


no oral argument has been set for march … · · 2015-03-12no oral argument has been set for...

Documents