F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS JUL 12 1999 FOR THE TENTH CIRCUIT PATRICK FISHER Clerk
DANNY C. SIMONS; SALLY J. SIMONS,
Petitioners-Appellants, Nos. 98-9012 & 98-9013 v. Appeal From U.S. Tax Court (T.C. Nos. 13016-80 & 10312-79) COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.
ORDER AND JUDGMENT *
Before BALDOCK , BARRETT , and HENRY , Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
these appeals. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The cases are
therefore ordered submitted without oral argument.
* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3. Petitioners Danny and Sally Simons (hereinafter “the taxpayers”) have been
embroiled in disputes with the IRS for many years. This particular part of their
dispute began in 1979, when the IRS issued a notice of deficiency relating to
taxpayers’ 1974 income taxes. The taxpayers filed a petition for redetermination
with the Tax Court on July 13, 1979, disputing the notice of deficiency (Tax Ct.
No. 79-10312). In 1980, the IRS issued another notice of deficiency, this time
relating to taxpayers’ 1972 and 1973 income taxes. Again, the taxpayers filed a
petition for redetermination in Tax Court disputing the notice of deficiency (Tax
Ct. No. 80-13016). During the course of the Tax Court proceedings, the
taxpayers’ counsel negotiated with the IRS to settle the disputed taxes. The
record before us does not contain a copy of the settlement agreement ultimately
reached between the taxpayers and the IRS, but it does contain some
correspondence from the taxpayers’ counsel concerning proposed terms of the
settlement. On April 22, 1983, the Tax Court entered decisions in both cases,
each of which purported to be “[p]ursuant to agreement of the parties.” Tax Ct.
Rec. No. 79-10312, Doc. 13 at 1; Tax Ct. Rec. No. 80-13016, Doc. 10 at 1. In
No. 79-10312, the Tax Court found that the taxpayers owed additional taxes of
$17,071 and a negligence penalty of $854 for tax year 1974. In No. 80-13016, the
Tax Court found that the taxpayers owed no additional taxes or penalties for tax
-2- year 1972, but that they owed additional taxes of $23,573 and a negligence
penalty of $1,179 for tax year 1973.
The taxpayers allege that they sent the IRS a check for what they believed
to be the total obligation due under their settlement agreement with the IRS for
tax years 1973 and 1974. They further allege that the IRS erroneously applied the
entire payment toward their 1973 tax obligations, plus interest. The IRS has since
commenced proceedings in federal district court to collect the allegedly unpaid
1974 tax obligation.
In February 1998, almost fifteen years after the Tax Court issued its two
decisions, the taxpayers filed a motion in each case seeking leave to file out of
time a motion to vacate. The accompanying motions to vacate alleged the Tax
Court lacked jurisdiction to enter the April 1983 decisions. The Tax Court
summarily denied both motions for leave to file out of time and, therefore, did not
file either of the motions to vacate. The Tax Court did, however, lodge the
motions to vacate so they are part of the Tax Court record. The taxpayers now
appeal the Tax Court’s denial of their motions for leave to file out of time.
A party seeking to vacate a Tax Court decision must file a motion within
thirty days after entry of the decision, unless the Tax Court grants the party leave
to file out of time. See Tax Ct. R. 162. “[T]he Tax Court’s denial of a motion
for leave to file a motion to vacate is generally reviewed for an abuse of
-3- discretion.” Harbold v. Commissioner , 51 F.3d 618, 621 (6th Cir. 1995). The
facts here, however, raise an additional question of whether the Tax Court had
jurisdiction to grant the motion. This issue is a question of law, which we review
de novo. See id. A Tax Court decision becomes final ninety days after it is
issued if no appeal is taken within that time. See id. “There is no statute that
allows the Tax Court to reopen a final decision. Thus, once a decision of the Tax
Court becomes final, the Tax Court no longer has jurisdiction to consider a
motion to vacate its decision.” Id. Some courts have recognized exceptions to
this rule, however. One exception is when the motion to vacate is grounded on
the Tax Court’s lack of jurisdiction over the proceedings, the rationale being that
a decision entered in the absence of jurisdiction is not a decision at all and,
therefore, never becomes final. See Billingsley v. Commissioner , 868 F.2d 1081,
1084-85 (9th Cir. 1989).
“The Tax Court is a court of limited jurisdiction and the determination of a
deficiency and the issuance of a notice of deficiency are absolute preconditions to
Tax Court jurisdiction.” Alford v. Commissioner , 800 F.2d 987, 988 (10th Cir.
1986) (citations omitted). “In all cases, the jurisdiction of the [Tax] Court also
depends on the timely filing of a petition.” Tax Ct. R. 13(c). Accordingly, the
taxpayers’ motions to vacate focused primarily on the validity of the respective
-4- notices of deficiency and on the timeliness of the respective petitions for
redetermination.
First, the taxpayers contended that the notices of deficiency were invalid
because they were not posted to the IRS’ master computer file. Second, the
taxpayers argued that the petitions for redetermination were not timely filed.
Third, the taxpayers argued that they filed the petitions under duress. Fourth, the
taxpayers argued that the civil division of the IRS could not have examined the
taxpayers’ records before making the deficiency determination for 1973 because
the criminal division had previously gathered all those records for use in a
criminal prosecution of Danny Simon. Finally, the taxpayers argued that the Tax
Court lacked jurisdiction to enter either decision once the taxpayers entered into a
settlement agreement with the IRS.
On appeal, the taxpayers shift the focus of their arguments a bit. They
generally concede that both petitions for redetermination were timely filed, and
they do not pursue their argument that the IRS could not have examined the
taxpayers’ records before making the deficiency determination for 1973.
Therefore, we will deem these issues abandoned on appeal and will not consider
them. See State Farm Fire & Cas. Co. v. Mhoon , 31 F.3d 979, 984 n.7 (10th Cir.
1994). The taxpayers also raise a number of new arguments concerning the
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F I L E D United States Court of Appeals Tenth Circuit UNITED STATES COURT OF APPEALS JUL 12 1999 FOR THE TENTH CIRCUIT PATRICK FISHER Clerk
DANNY C. SIMONS; SALLY J. SIMONS,
Petitioners-Appellants, Nos. 98-9012 & 98-9013 v. Appeal From U.S. Tax Court (T.C. Nos. 13016-80 & 10312-79) COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee.
ORDER AND JUDGMENT *
Before BALDOCK , BARRETT , and HENRY , Circuit Judges.
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
these appeals. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The cases are
therefore ordered submitted without oral argument.
* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3. Petitioners Danny and Sally Simons (hereinafter “the taxpayers”) have been
embroiled in disputes with the IRS for many years. This particular part of their
dispute began in 1979, when the IRS issued a notice of deficiency relating to
taxpayers’ 1974 income taxes. The taxpayers filed a petition for redetermination
with the Tax Court on July 13, 1979, disputing the notice of deficiency (Tax Ct.
No. 79-10312). In 1980, the IRS issued another notice of deficiency, this time
relating to taxpayers’ 1972 and 1973 income taxes. Again, the taxpayers filed a
petition for redetermination in Tax Court disputing the notice of deficiency (Tax
Ct. No. 80-13016). During the course of the Tax Court proceedings, the
taxpayers’ counsel negotiated with the IRS to settle the disputed taxes. The
record before us does not contain a copy of the settlement agreement ultimately
reached between the taxpayers and the IRS, but it does contain some
correspondence from the taxpayers’ counsel concerning proposed terms of the
settlement. On April 22, 1983, the Tax Court entered decisions in both cases,
each of which purported to be “[p]ursuant to agreement of the parties.” Tax Ct.
Rec. No. 79-10312, Doc. 13 at 1; Tax Ct. Rec. No. 80-13016, Doc. 10 at 1. In
No. 79-10312, the Tax Court found that the taxpayers owed additional taxes of
$17,071 and a negligence penalty of $854 for tax year 1974. In No. 80-13016, the
Tax Court found that the taxpayers owed no additional taxes or penalties for tax
-2- year 1972, but that they owed additional taxes of $23,573 and a negligence
penalty of $1,179 for tax year 1973.
The taxpayers allege that they sent the IRS a check for what they believed
to be the total obligation due under their settlement agreement with the IRS for
tax years 1973 and 1974. They further allege that the IRS erroneously applied the
entire payment toward their 1973 tax obligations, plus interest. The IRS has since
commenced proceedings in federal district court to collect the allegedly unpaid
1974 tax obligation.
In February 1998, almost fifteen years after the Tax Court issued its two
decisions, the taxpayers filed a motion in each case seeking leave to file out of
time a motion to vacate. The accompanying motions to vacate alleged the Tax
Court lacked jurisdiction to enter the April 1983 decisions. The Tax Court
summarily denied both motions for leave to file out of time and, therefore, did not
file either of the motions to vacate. The Tax Court did, however, lodge the
motions to vacate so they are part of the Tax Court record. The taxpayers now
appeal the Tax Court’s denial of their motions for leave to file out of time.
A party seeking to vacate a Tax Court decision must file a motion within
thirty days after entry of the decision, unless the Tax Court grants the party leave
to file out of time. See Tax Ct. R. 162. “[T]he Tax Court’s denial of a motion
for leave to file a motion to vacate is generally reviewed for an abuse of
-3- discretion.” Harbold v. Commissioner , 51 F.3d 618, 621 (6th Cir. 1995). The
facts here, however, raise an additional question of whether the Tax Court had
jurisdiction to grant the motion. This issue is a question of law, which we review
de novo. See id. A Tax Court decision becomes final ninety days after it is
issued if no appeal is taken within that time. See id. “There is no statute that
allows the Tax Court to reopen a final decision. Thus, once a decision of the Tax
Court becomes final, the Tax Court no longer has jurisdiction to consider a
motion to vacate its decision.” Id. Some courts have recognized exceptions to
this rule, however. One exception is when the motion to vacate is grounded on
the Tax Court’s lack of jurisdiction over the proceedings, the rationale being that
a decision entered in the absence of jurisdiction is not a decision at all and,
therefore, never becomes final. See Billingsley v. Commissioner , 868 F.2d 1081,
1084-85 (9th Cir. 1989).
“The Tax Court is a court of limited jurisdiction and the determination of a
deficiency and the issuance of a notice of deficiency are absolute preconditions to
Tax Court jurisdiction.” Alford v. Commissioner , 800 F.2d 987, 988 (10th Cir.
1986) (citations omitted). “In all cases, the jurisdiction of the [Tax] Court also
depends on the timely filing of a petition.” Tax Ct. R. 13(c). Accordingly, the
taxpayers’ motions to vacate focused primarily on the validity of the respective
-4- notices of deficiency and on the timeliness of the respective petitions for
redetermination.
First, the taxpayers contended that the notices of deficiency were invalid
because they were not posted to the IRS’ master computer file. Second, the
taxpayers argued that the petitions for redetermination were not timely filed.
Third, the taxpayers argued that they filed the petitions under duress. Fourth, the
taxpayers argued that the civil division of the IRS could not have examined the
taxpayers’ records before making the deficiency determination for 1973 because
the criminal division had previously gathered all those records for use in a
criminal prosecution of Danny Simon. Finally, the taxpayers argued that the Tax
Court lacked jurisdiction to enter either decision once the taxpayers entered into a
settlement agreement with the IRS.
On appeal, the taxpayers shift the focus of their arguments a bit. They
generally concede that both petitions for redetermination were timely filed, and
they do not pursue their argument that the IRS could not have examined the
taxpayers’ records before making the deficiency determination for 1973.
Therefore, we will deem these issues abandoned on appeal and will not consider
them. See State Farm Fire & Cas. Co. v. Mhoon , 31 F.3d 979, 984 n.7 (10th Cir.
1994). The taxpayers also raise a number of new arguments concerning the
validity of the underlying settlement agreement with the IRS. The existence of an
-5- agreement between the IRS and a taxpayer as to the amount of deficiencies and
additions to tax owed does not deprive the Tax Court of jurisdiction. See Webb
v. Commissioner , 68 T.C.M. (CCH) 1106, 1113 (1994). Therefore, the taxpayers’
arguments concerning the validity of the underlying agreement have no effect on
the Tax Court’s jurisdiction. As to the remaining arguments that were raised in
the Tax Court and pursued on appeal, we conclude that none of them raises a
legitimate challenge to the Tax Court’s jurisdiction to enter the April 1983
decisions. In the absence of a legitimate challenge to its jurisdiction, the Tax
Court’s jurisdiction, the Tax Court did not abuse its discretion in denying the
taxpayers’ motions for leave to file a motion to vacate out of time.
The judgment of the Tax Court is AFFIRMED. The taxpayers’ two motions
for leave to supplement the record are DENIED, and the Commissioner’s motion
to strike those portions of the taxpayers’ briefs referring to documents in the
proposed supplemental record that were not before the Tax Court is GRANTED.
Entered for the Court
Robert H. Henry Circuit Judge
-6-