T.C. Memo. 2021-112
UNITED STATES TAX COURT
MICHAEL D. BROWN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent 1
Docket No. 18104-17L. Filed September 23, 2021.
Steven R. Mather, for petitioner.
Kevin W. Coy, Hans Famularo, Regina S. Moriarty, and Francesca M.
Ugolini, for respondent.
1 This opinion supplements our previously filed opinion Brown v. Commissioner, T.C. Memo. 2019-121, aff’d in part, vacated in part, and remanded, 826 F. App’x 673 (9th Cir. 2020).
Served 09/23/21 -2-
[*2] SUPPLEMENTAL MEMORANDUM OPINION
KERRIGAN, Judge: The U.S. Court of Appeals for the Ninth Circuit
remanded this case with instructions to consider whether this Court has jurisdiction
to order the refund of a Tax Increase Prevention and Reconciliation Act (TIPRA)
payment. See Brown v. Commissioner (Brown II), 826 F. App’x 673 (9th Cir.
2020), aff’g in part, vacating in part, and remanding Brown v. Commissioner
(Brown I), T.C. Memo. 2019-121. In response to the remand respondent filed a
motion to dismiss for lack of jurisdiction as to the request for refund of the TIPRA
payment. Pursuant to Brown II, the issue for our consideration is whether this
Court has jurisdiction to order the refund of a TIPRA payment.
Unless otherwise indicated, all section references are to the Internal Revenue
Code (Code) in effect at all relevant times.
Background
Facts with respect to this case were found in our original opinion, Brown I,
and are incorporated by this reference. We clarify and add to the facts to address
respondent’s motion to dismiss for lack of jurisdiction.
This collection due process (CDP) case was commenced in response to two
Notices of Determination Concerning Collection Action(s) Under Section 6320 -3-
[*3] and/or 6330 dated August 11, 2017, upholding two Federal tax lien filings
regarding petitioner’s unpaid tax liabilities for 2007 and 2014.
Petitioner timely requested a CDP hearing under sections 6320 and/or 6330
in response to respondent’s administrative collection activities for his 2007 and
2014 tax years. He submitted Form 656, Offer in Compromise (OIC), due to doubt
as to collectability. The OIC covered years 2001, 2002, 2003, 2004, 2005, 2006,
2007, 2009, 2010, and 2014. Petitioner included a TIPRA 2 payment of $80,000
and an application fee of $186 with the OIC. Petitioner did not request the TIPRA
payment be applied against a specific year’s tax liability.
Respondent applied the $80,000 TIPRA payment against petitioner’s 2001
tax liability on, or about, November 21, 2016. On his Form 656 petitioner
acknowledged that his TIPRA payment was a nonrefundable payment of tax and
that the TIPRA payment would not be refunded to him if the OIC was withdrawn,
rejected, or returned.
2 The Tax Increase Prevention and Reconciliation Act of 2005, Pub. L. No. 109-222, sec. 509(a), 120 Stat. at 362, enacted new sec. 7122(c), effective for OICs submitted on or after July 16, 2006. Sec. 7122(c)(1)(A)(i) requires that the submission of any lump-sum OIC “be accompanied by the payment of 20 percent of the amount of such offer.” See also Notice 2006-68, 2006-2 C.B. 105. -4-
[*4] On August 25, 2017, petitioner commenced a timely CDP case before the
U.S. Tax Court challenging the notices of determination. He contended that it was
an abuse of discretion for respondent to decline petitioner’s OIC request and not
refund the TIPRA payment included with his Form 656 submission. Petitioner
attempted to characterize the TIPRA payment as a 20% “deposit”. In Brown I this
Court considered whether respondent abused his discretion by refusing to refund
the $80,000 TIPRA payment, and we concluded that there was no abuse of
discretion.
Discussion
Section 7122(c)(1)(A)(i) requires that the submission of any lump-sum OIC
be accompanied by a payment of 20% of the offer amount. Any OIC paid in five
or fewer payments is considered a lump-sum OIC. Sec. 7122(c)(1)(A)(ii). The
legislative history of section 7122(c) refers to the 20% payment as a “partial
payment” or “down payment” of the taxpayer’s liability. H.R. Conf. Rept. No.
109-455, at 234 (2006), 2006 U.S.C.C.A.N. 234, 420-421. The 20% payment of
the offer amount is treated as a payment of tax rather than a refundable deposit
under section 7809(b) or section 301.7122-1(h), Proced. & Admin. Regs. See
Notice 2006-68, sec. 1.02, 2006-2 C.B. 105, 105. -5-
[*5] Under section 7122(c)(2)(A) the taxpayer may specify how he or she wants
the TIPRA payment applied by making a request in writing when he or she submits
the OIC. Notice 2006-68, sec. 1.04, 2006-2 C.B. at 105. If no such specification is
made, the IRS will apply the TIPRA payment in the best interest of the
Government. Id. This Court has held that the TIPRA payment “constitutes a
nonrefundable, partial payment of the taxpayer’s liability” in normal
circumstances. Isley v. Commissioner, 141 T.C. 349, 372 (2013).
We need to decide whether the Court has jurisdiction to consider the request
for refund of petitioner’s TIPRA payment. This Court is a court of limited
jurisdiction and has only such jurisdiction as is granted it by the Code. Sec. 7442;
Medeiros v. Commissioner, 77 T.C. 1255, 1259 (1981). The Code is interspersed
with grants of jurisdiction.
Sections 6320(c) and 6330(d)(1) provide for judicial review of an adverse
CDP determination. See Davis v. Commissioner, 115 T.C. 35, 37 (2000).
Therefore, the Court has jurisdiction in this case pursuant to sections 6320(c) and
6330(d)(1). Petitioner contends that pursuant to section 6512(b) the Court has
express refund jurisdiction in a case in which the Court has already acquired
jurisdiction. We disagree. -6-
[*6] Section 6512(b), contrary to petitioner’s contention, does not grant this
Court refund jurisdiction in all cases in which the Court has already acquired
jurisdiction. Rather, section 6512(b)(2) is an express grant of jurisdiction “to order
the refund of such overpayment and interest.” For a refund to be governed under
section 6512(b), a notice of deficiency is required. The Tax Court’s jurisdiction in
this case, however, does not derive from the mailing of a notice of deficiency.
This Court’s jurisdiction under section 6512 cannot be invoked in this matter with
respect to the TIPRA payment because this proceeding is not based on a post-
decision action to modify a decision in a deficiency case under section 6213 or
section 7481(c) or (d).
Rather, the Tax Court’s jurisdiction in this case derives from sections 6320
and 6330. These Code sections do not grant the Tax Court jurisdiction to refund
any payment of tax under section 6512(b) or any other Code section. The Tax
Court and the U.S. Court of Appeals for the District of Columbia Circuit have held
that section 6330 does not give the Court jurisdiction to determine an overpayment
or order a refund or credit of taxes paid. Willson v. Commissioner, 805 F.3d 316
(D.C. Cir. 2015); Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006); see
McLane v. Commissioner, T.C. Memo. 2018-149. -7-
[*7] Petitioner would not be able to invoke the Tax Court’s refund jurisdiction
under section 6512 even if he had challenged the underlying tax liabilities in this
matter. See Greene-Thapedi v. Commissioner, 126 T.C. at 8-9.
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T.C. Memo. 2021-112
UNITED STATES TAX COURT
MICHAEL D. BROWN, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent 1
Docket No. 18104-17L. Filed September 23, 2021.
Steven R. Mather, for petitioner.
Kevin W. Coy, Hans Famularo, Regina S. Moriarty, and Francesca M.
Ugolini, for respondent.
1 This opinion supplements our previously filed opinion Brown v. Commissioner, T.C. Memo. 2019-121, aff’d in part, vacated in part, and remanded, 826 F. App’x 673 (9th Cir. 2020).
Served 09/23/21 -2-
[*2] SUPPLEMENTAL MEMORANDUM OPINION
KERRIGAN, Judge: The U.S. Court of Appeals for the Ninth Circuit
remanded this case with instructions to consider whether this Court has jurisdiction
to order the refund of a Tax Increase Prevention and Reconciliation Act (TIPRA)
payment. See Brown v. Commissioner (Brown II), 826 F. App’x 673 (9th Cir.
2020), aff’g in part, vacating in part, and remanding Brown v. Commissioner
(Brown I), T.C. Memo. 2019-121. In response to the remand respondent filed a
motion to dismiss for lack of jurisdiction as to the request for refund of the TIPRA
payment. Pursuant to Brown II, the issue for our consideration is whether this
Court has jurisdiction to order the refund of a TIPRA payment.
Unless otherwise indicated, all section references are to the Internal Revenue
Code (Code) in effect at all relevant times.
Background
Facts with respect to this case were found in our original opinion, Brown I,
and are incorporated by this reference. We clarify and add to the facts to address
respondent’s motion to dismiss for lack of jurisdiction.
This collection due process (CDP) case was commenced in response to two
Notices of Determination Concerning Collection Action(s) Under Section 6320 -3-
[*3] and/or 6330 dated August 11, 2017, upholding two Federal tax lien filings
regarding petitioner’s unpaid tax liabilities for 2007 and 2014.
Petitioner timely requested a CDP hearing under sections 6320 and/or 6330
in response to respondent’s administrative collection activities for his 2007 and
2014 tax years. He submitted Form 656, Offer in Compromise (OIC), due to doubt
as to collectability. The OIC covered years 2001, 2002, 2003, 2004, 2005, 2006,
2007, 2009, 2010, and 2014. Petitioner included a TIPRA 2 payment of $80,000
and an application fee of $186 with the OIC. Petitioner did not request the TIPRA
payment be applied against a specific year’s tax liability.
Respondent applied the $80,000 TIPRA payment against petitioner’s 2001
tax liability on, or about, November 21, 2016. On his Form 656 petitioner
acknowledged that his TIPRA payment was a nonrefundable payment of tax and
that the TIPRA payment would not be refunded to him if the OIC was withdrawn,
rejected, or returned.
2 The Tax Increase Prevention and Reconciliation Act of 2005, Pub. L. No. 109-222, sec. 509(a), 120 Stat. at 362, enacted new sec. 7122(c), effective for OICs submitted on or after July 16, 2006. Sec. 7122(c)(1)(A)(i) requires that the submission of any lump-sum OIC “be accompanied by the payment of 20 percent of the amount of such offer.” See also Notice 2006-68, 2006-2 C.B. 105. -4-
[*4] On August 25, 2017, petitioner commenced a timely CDP case before the
U.S. Tax Court challenging the notices of determination. He contended that it was
an abuse of discretion for respondent to decline petitioner’s OIC request and not
refund the TIPRA payment included with his Form 656 submission. Petitioner
attempted to characterize the TIPRA payment as a 20% “deposit”. In Brown I this
Court considered whether respondent abused his discretion by refusing to refund
the $80,000 TIPRA payment, and we concluded that there was no abuse of
discretion.
Discussion
Section 7122(c)(1)(A)(i) requires that the submission of any lump-sum OIC
be accompanied by a payment of 20% of the offer amount. Any OIC paid in five
or fewer payments is considered a lump-sum OIC. Sec. 7122(c)(1)(A)(ii). The
legislative history of section 7122(c) refers to the 20% payment as a “partial
payment” or “down payment” of the taxpayer’s liability. H.R. Conf. Rept. No.
109-455, at 234 (2006), 2006 U.S.C.C.A.N. 234, 420-421. The 20% payment of
the offer amount is treated as a payment of tax rather than a refundable deposit
under section 7809(b) or section 301.7122-1(h), Proced. & Admin. Regs. See
Notice 2006-68, sec. 1.02, 2006-2 C.B. 105, 105. -5-
[*5] Under section 7122(c)(2)(A) the taxpayer may specify how he or she wants
the TIPRA payment applied by making a request in writing when he or she submits
the OIC. Notice 2006-68, sec. 1.04, 2006-2 C.B. at 105. If no such specification is
made, the IRS will apply the TIPRA payment in the best interest of the
Government. Id. This Court has held that the TIPRA payment “constitutes a
nonrefundable, partial payment of the taxpayer’s liability” in normal
circumstances. Isley v. Commissioner, 141 T.C. 349, 372 (2013).
We need to decide whether the Court has jurisdiction to consider the request
for refund of petitioner’s TIPRA payment. This Court is a court of limited
jurisdiction and has only such jurisdiction as is granted it by the Code. Sec. 7442;
Medeiros v. Commissioner, 77 T.C. 1255, 1259 (1981). The Code is interspersed
with grants of jurisdiction.
Sections 6320(c) and 6330(d)(1) provide for judicial review of an adverse
CDP determination. See Davis v. Commissioner, 115 T.C. 35, 37 (2000).
Therefore, the Court has jurisdiction in this case pursuant to sections 6320(c) and
6330(d)(1). Petitioner contends that pursuant to section 6512(b) the Court has
express refund jurisdiction in a case in which the Court has already acquired
jurisdiction. We disagree. -6-
[*6] Section 6512(b), contrary to petitioner’s contention, does not grant this
Court refund jurisdiction in all cases in which the Court has already acquired
jurisdiction. Rather, section 6512(b)(2) is an express grant of jurisdiction “to order
the refund of such overpayment and interest.” For a refund to be governed under
section 6512(b), a notice of deficiency is required. The Tax Court’s jurisdiction in
this case, however, does not derive from the mailing of a notice of deficiency.
This Court’s jurisdiction under section 6512 cannot be invoked in this matter with
respect to the TIPRA payment because this proceeding is not based on a post-
decision action to modify a decision in a deficiency case under section 6213 or
section 7481(c) or (d).
Rather, the Tax Court’s jurisdiction in this case derives from sections 6320
and 6330. These Code sections do not grant the Tax Court jurisdiction to refund
any payment of tax under section 6512(b) or any other Code section. The Tax
Court and the U.S. Court of Appeals for the District of Columbia Circuit have held
that section 6330 does not give the Court jurisdiction to determine an overpayment
or order a refund or credit of taxes paid. Willson v. Commissioner, 805 F.3d 316
(D.C. Cir. 2015); Greene-Thapedi v. Commissioner, 126 T.C. 1 (2006); see
McLane v. Commissioner, T.C. Memo. 2018-149. -7-
[*7] Petitioner would not be able to invoke the Tax Court’s refund jurisdiction
under section 6512 even if he had challenged the underlying tax liabilities in this
matter. See Greene-Thapedi v. Commissioner, 126 T.C. at 8-9. Putting a tax
liability at issue in a CDP proceeding does not convert the proceeding to a
deficiency proceeding under section 6213 or section 7481(c) or (d).
Petitioner further argues that this Court’s refusal to order refunds of TIPRA
payments in this case and Isley creates an “established precedent” that we have
jurisdiction over the issue before us in this case. This is incorrect. The Court
declined to address the issue of whether it has jurisdiction to order refund of
TIPRA payments in both Brown I and Isley v. Commissioner, 141 T.C. at 373.
In Brown I the Court determined that it was not an abuse of discretion not to
refund the payment. In Isley v. Commissioner, 141 T.C. at 373, the Court did not
determine whether the Court has jurisdiction to refund a TIPRA payment because
the Court determined there was no abuse of discretion.
In accordance with the foregoing, we find that this Court does not have
jurisdiction to order a refund of petitioner’s TIPRA payment. Respondent’s
motion to dismiss for lack of jurisdiction as to this issue will be granted. -8-
[*8] We have considered all other arguments made and facts presented in
reaching our decision, and to the extent not discussed above, we conclude that they
are moot, irrelevant, or without merit.
To reflect the foregoing,
An appropriate order will
be issued.