Mary Ann Kollar v. Commissioner

131 T.C. No. 12

• Court: United States Tax Court
• Decided: November 25, 2008
• Docket: 15928-05
• Status: Unknown

Opinion

131 T.C. No. 12

UNITED STATES TAX COURT

MARY ANN KOLLAR, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 15928-05. Filed November 25, 2008.

P filed a joint 1996 Federal income tax return reporting zero income tax liability. Before Dec. 20, 2006, P amended that return and paid the income tax reported on the amended return. P did not pay any statutory interest that had accrued as to that tax. R assessed accrued interest, and P requested from R equitable relief from the assessed interest pursuant to sec. 6015(f), I.R.C. After R determined that P was not entitled to the requested relief, P petitioned the Court to review that determination under former sec. 6015(e)(1), I.R.C. Relying upon Billings v. Commissioner, 127 T.C. 7 (2006), which held that former sec. 6015(e)(1), I.R.C., did not give the Court jurisdiction to decide a case such as this where R did not assert a deficiency against a taxpayer requesting relief under sec. 6015(f), I.R.C. (nondeficiency sec. 6015(f) case), R moved the Court to dismiss this case for lack of jurisdiction. Before the Court decided that motion, Congress enacted the Tax Relief and Health Care Act of 2006, Pub. L. 109-432, div. C, sec. 408, - 2 -

120 Stat. 3061 (TRHCA sec. 408). TRHCA sec. 408(a) and (c), 120 Stat. 3061, 3062, amended former sec. 6015(e)(1), I.R.C., to clarify that the Court has jurisdiction to decide a nondeficiency sec. 6015(f) case involving the taxpayer’s “liability for taxes arising or remaining unpaid on or after” Dec. 20, 2006. R argues that the Court continues to lack the requisite jurisdiction because P paid her reported income tax before Dec. 20, 2006, and the quoted word “taxes” refers only to income tax and not to any related interest. Held: The quoted word “taxes” includes the accrued interest related to P’s 1996 income tax; thus, the Court has jurisdiction under sec. 6015(e)(1), I.R.C., as amended by TRHCA sec. 408(a), to review R’s denial of equitable relief under sec. 6015(f), I.R.C., from P’s liability for the accrued interest.

Jonathan P. Decatorsmith, for petitioner.

Gregory J. Stull, for respondent.

OPINION

MARVEL, Judge: Respondent moves the Court to dismiss this

case for lack of jurisdiction, asserting that the Court lacks

jurisdiction under section 6015(e)(1) to review respondent’s

determination that petitioner is not entitled to equitable relief

under section 6015(f) (section 6015(f) relief).1 Petitioner

requests section 6015(f) relief from her liability for accrued

interest owed with respect to her 1996 Federal income tax paid in

full before December 20, 2006. We decide whether section

1 Unless otherwise indicated, section references are to the applicable versions of the Internal Revenue Code (Code). - 3 -

6015(e)(1) gives the Court jurisdiction to decide this case. We

hold it does.

Background

During 1996 petitioner was married to Robert J. Kollar. On

April 20, 1997, Mr. Kollar died unexpectedly. On October 21,

1997, petitioner filed a joint 1996 Federal income tax return on

behalf of herself and her deceased husband. The return reported

zero income tax liability.

On or about November 12, 1999, petitioner filed an amended

joint 1996 Federal income tax return on behalf of herself and her

deceased husband. The amended return reported an income tax

liability of $409,156, which petitioner paid with the return. On

January 3, 2000, respondent assessed the income tax reported on

the amended return and pursuant to section 6601 assessed

$98,417.37 of accrued interest owed on the untimely paid income

tax. That same day respondent issued to petitioner a notice and

demand for payment of the unpaid interest.

On or about July 25, 2000, petitioner filed Form 8857,

Request for Innocent Spouse Relief (And Separation of Liability

and Equitable Relief), requesting section 6015(f) equitable

relief from the unpaid interest. More than 5 years later,

respondent mailed to petitioner a notice of determination denying

her request. Thirty days after that mailing, petitioner through

a nondeficiency stand-alone petition asked the Court to review - 4 -

respondent’s determination.2 Petitioner resided in Illinois when

she petitioned the Court.

Discussion

In general, spouses who file a joint Federal income tax

return are each responsible for the accuracy of the return and

are jointly and severally liable for the tax reported or

reportable thereon. Sec. 6013(d)(3); Butler v. Commissioner,

114 T.C. 276, 282 (2000). In certain circumstances a spouse may

obtain relief under section 6015 from such liability. One type

of relief under section 6015 is provided in section 6015(f) as

equitable relief “for any unpaid tax or any deficiency (or any

portion of either)”.

This Court is a court of limited jurisdiction, and we may

exercise our jurisdiction only to the extent authorized by

Congress. See sec. 7442; Moore v. Commissioner, 114 T.C. 171,

175 (2000); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).

2 In this Court an individual has three ways to request sec. 6015(f) relief. First, when an individual petitions the Court to redetermine a deficiency, the individual may allege as an affirmative defense that he or she is entitled to sec. 6015(f) relief. Second, the individual may request sec. 6015(f) relief in a collection case commenced under sec. 6330(d)(1). Third, where an individual like petitioner has requested sec. 6015(f) relief and the Commissioner has denied that request (or failed to rule on the request within 6 months of its filing), the individual may request sec. 6015(f) relief by filing a stand-alone petition pursuant to sec. 6015(e)(1). See Drake v. Commissioner, 123 T.C. 320, 323 (2004). In a nondeficiency case commenced through the filing of a stand-alone petition, the only relief under sec. 6015 available to the petitioning taxpayer is sec. 6015(f) relief. - 5 -

Before December 20, 2006, former section 6015(e)(1) provided this

Court with jurisdiction to review the Commissioner’s denial of

relief under section 6015 only “In the case of an individual

against whom a deficiency has been asserted and who elects to

have subsection (b) or (c) apply”. In Billings v. Commissioner,

127 T.C. 7 (2006), we held that former section 6015(e)(1) did not

provide this Court with jurisdiction to review a nondeficiency

stand-alone petition for relief under section 6015; i.e., a

petition for relief under section 6015 filed by an individual

against whom the Commissioner had not asserted a deficiency.

Shortly thereafter, Congress amended former section 6015(e)(1) to

provide this Court with jurisdiction over such stand-alone

petitions by adding to that section the words “or in the case of

an individual who requests equitable relief under subsection

(f)”.3 See Tax Relief and Health Care Act of 2006, Pub. L.

3 As amended, sec. 6015(e)(1) provides in relevant part:

SEC. 6015(e). Petition for Review by Tax Court.--

(1) In general.--In the case of an individual against whom a deficiency has been asserted and who elects to have subsection (b) or (c) apply, or in the case of an individual who requests equitable relief under subsection (f)--

(A) In general.--* * * the individual may petition the Tax Court (and the Tax Court shall have jurisdiction) to determine the appropriate relief available to the individual under this section * * * - 6 -

109-432, div. C, sec. 408(a), 120 Stat. 3061 (TRHCA sec. 408).4

This amendment applies “with respect to liability for taxes

arising or remaining unpaid on or after the date of the enactment

of this Act.” Id. sec. 408(c), 120 Stat. 3062. TRHCA was

enacted on December 20, 2006. See 120 Stat. 2922.

Respondent asserts that the amendment to former section

6015(e)(1) does not apply to the setting at hand because

petitioner paid her 1996 Federal income tax before December 20,

2006, and thus on or after that date petitioner had no remaining

unpaid tax for 1996 so as to trigger an application of the

amendment. According to respondent, the word “taxes” in TRHCA

section 408(c) refers only to income tax and does not refer to

any related interest. We disagree. Because TRHCA does not

define the word “taxes” for purposes of TRHCA section 408(c), we

apply that word in accordance with the meaning that we ascertain

was intended by Congress. See Conn. Natl. Bank v. Germain, 503

U.S. 249, 253-254 (1992); United States v. Am. Trucking

Associations, 310 U.S. 534, 542 (1940). Because Congress’s use

of the word “taxes” in TRHCA section 408(c) is in the setting of

4 TRHCA sec. 408 includes three subsections. Subsec. (a) sets forth the amendment to sec. 6015(e)(1) just discussed. Subsec. (b) sets forth seven “Conforming Amendments” to various provisions of sec. 6015. Subsec. (c) sets forth the effective date of TRHCA sec. 408, stating that “The amendments made by this section shall apply with respect to liability for taxes arising or remaining unpaid on or after the date of the enactment of this Act.” - 7 -

Federal income tax and of various amendments that TRHCA section

408 made directly to section 6015, we believe that Congress’s

intent for the meaning of the word “taxes” is best gleaned from

Congress’s understanding of the firmly established meaning of

that word as used in the Code (and, as discussed below,

applicable to section 6015(f)) when TRHCA was enacted. See

Stewart v. Dutra Constr. Co., 543 U.S. 481, 487-488 (2005)

(applying the established meaning under general maritime law of

the word “seaman” where the applicable statute did not define

that word). We do not believe that Congress intended that the

word “taxes” have a meaning in the context of TRHCA section

408(c) different from its meaning in the context of the

provisions of the Code to which TRHCA section 408 relates.

As of the time when TRHCA was enacted, Congress had provided

specifically in sections 6601(e)(1) and 6665(a) that “tax” for

purposes of the Code included interest and penalties, except in

certain cases that are not relevant to our discussion.5 In

addition, Congress had provided in section 6015(b)(1) that the

5 Sec. 6601 generally sets forth rules for the payment of interest on the underpayment of tax. Sec. 6601(e)(1) provides that “Any reference in this title (except subchapter B of chapter 63, relating to deficiency procedures) to any tax imposed by this title shall be deemed also to refer to interest imposed by this section on such tax.” Sec. 6665 sets forth certain applicable rules. Sec. 6665(a)(2) provides that “any reference in this title to ‘tax’ imposed by this title shall be deemed also to refer to the additions to tax, additional amounts, and penalties provided by this chapter.” - 8 -

word “tax” included “interest, penalties, and other amounts”.6

Given these expansive definitions of the word “tax” for purposes

of the Code and the fact that we cannot fathom why Congress would

have chosen a narrower definition of the word “taxes” in the

setting of TRHCA section 408, a remedial provision designed to

benefit taxpayers who were precluded by Billings v. Commissioner,

supra, from having their claims to section 6015(f) relief decided

by this Court, we conclude that “taxes” as used in TRHCA section

408(c) includes the accrued interest at hand. See Leahy v.

Commissioner, 129 T.C. 71, 72 & n.3 (2007) (stating that the

reference in section 7463(f)(2) to the word “tax” includes

interest and penalties on account of sections 6601(e)(1) and

6665(a)); Petrane v. Commissioner, 129 T.C. 1, 4 (2007) (stating

that the reference in section 6015(f) to “tax” includes interest

and penalties on account of sections 6601(e)(1) and 6665(a)); see

also Helvering v. Bliss, 293 U.S. 144, 150-151 (1934) (stating

that remedial provisions should not be construed narrowly). We

are not unmindful that our conclusion as to the meaning of

“taxes” in TRHCA section 408(c) also fits squarely within an

ordinary, everyday meaning of “tax”. The noun “tax” denotes “a

charge usu. of money imposed by authority on persons or property

for public purposes”, Merriam-Webster’s Collegiate Dictionary

6 Sec. 6015(b)(1) allows a spouse who meets certain requirements to “be relieved of liability for tax (including interest, penalties, and other amounts)”. - 9 -

1208 (10th ed. 1999), and statutory interest payable on income

tax is as much such a “charge” as income tax is.

Respondent does not reference any legislative history

underlying TRHCA section 408 in support of a contrary conclusion;

nor do we read any such legislative history to lead to a contrary

conclusion. Respondent supports with two assertions his

conclusion that “taxes” in TRHCA section 408(c) includes only

income tax. First, respondent asserts, the Court in Washington

v. Commissioner, 120 T.C. 137, 158-159 (2003), acknowledged that

the “tax” referred to in section 6015(f) is simply the “tax

reported on the return, but not paid with the return.” Second,

respondent asserts, interest and penalties are not separate items

for which the Commissioner may grant a taxpayer relief under

section 6015(f); in other words, respondent asserts that a

taxpayer may receive relief under section 6015 from interest and

penalties only as a mechanical adjustment flowing from the

Commissioner’s granting of relief from income tax.

Respondent’s reliance on those two assertions to support his

conclusion is misplaced. First, respondent takes the quotation

from Washington out of context. In Washington, the Commissioner

argued that section 6015(f) applied only to the portion of tax

remaining uncollected after the effective date of that section.

We disagreed, relying upon the quoted text in the setting of that

case as partial support for our disagreement. We did not state - 10 -

as respondent now argues that the “tax” referred to in section

6015(f) is limited to the income tax reported on the return. In

fact, as discussed above, we have indicated to the contrary. See

Petrane v. Commissioner, supra at 4. Second, we read nothing in

section 6015(e)(1), nor has respondent pointed to any text in

that section, that persuades us to conclude that the

Commissioner’s ability to grant section 6015(f) relief from

interest and penalties without granting relief from income tax is

a function of our jurisdiction under section 6015(e)(1). To the

contrary, we conclude it is not. Cf. Demirjian v. Commissioner,

T.C. Memo. 2004-22 (holding that the taxpayer was not eligible

for section 6015(f) relief from accrued statutory interest with

respect to her 1989 Federal income tax, after holding that the

taxpayer had no unpaid income tax for that year); Rowe v.

Commissioner, T.C. Memo. 2001-325 (holding that the Court has

jurisdiction to review the Commissioner’s denial of section

6015(f) relief from additions to tax and penalties).

We hold that “taxes” in TRHCA section 408(c) includes the

accrued interest at hand and that we therefore have jurisdiction

over this case. We have considered all arguments for a contrary - 11 -

holding, and we reject all arguments not discussed herein as

without merit. Accordingly, to reflect the foregoing,

An appropriate order

will be issued.