Wednesday, June 14, 2006

Ninth Circuit Rules on Tax Court’s Jurisdiction to Hear Collection Due Process Appeals

Per Gorospe v. C.I.R., 446 F.3d 1014 (9th Cir. May 03, 2006):

The appeal presents the question of whether the United States Tax Court has plenary jurisdiction to hear all appeals from collection due process (“CDP”) proceedings before the Internal Revenue Service (“IRS”). We reaffirm the principle that the Tax Court's jurisdiction over appeals from CDP determinations is limited to issues over which the Tax Court would have had jurisdiction to consider the underlying tax liability.

…Once the IRS has notified a taxpayer of its intent to impose a lien or a levy, the taxpayer has the right to a CDP hearing before the IRS Office of Appeals, and is entitled to raise defenses and to contest the levy or lien. 26 U.S.C. § 6330(c)(2)(A). After receiving a determination from the IRS Office of Appeals, a taxpayer may seek judicial review, either in the Tax Court or in district court. 26 U.S.C. § 6330(d). This appeal concerns the boundaries of the Tax Court's jurisdiction in CDP appeals.

The Tax Court is an Article I “court of limited jurisdiction and lacks general equitable powers.” Comm'r v. McCoy, 484 U.S. 3, 7, 108 S.Ct. 217, 98 L.Ed.2d 2 (1987) (per curiam). Its subject matter jurisdiction is statutorily granted by 26 U.S.C. § 7442, and is defined and limited by Title 26 of the United States Code. Estate of Branson, 264 F.3d at 908. Thus, we must consider whether Congress authorized the Tax Court to hear appeals of the IRS Office of Appeals's determinations in trust fund recovery penalty cases. The plain language of 26 U.S.C. § 6330(d) requires us to hold that Congress did not so intend.

Taking [the language of § 6330(d)] at face value, it is apparent that the Tax Court does not have plenary jurisdiction over appeals of CDP determinations. Rather, it has jurisdiction only where it would have had jurisdiction to consider the underlying tax liability. Where the Tax Court would not have had jurisdiction over the underlying tax liability, jurisdiction rests in the district courts. Moore v. Comm'r, 114 T.C. 171, 175, 2000 WL 283865 (2000).


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