Opinion
14815-22S
08-22-2023
HENRY C. ZERINGUE & SARA N. ZERINGUE, Petitioners, v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER AND DECISION
Tamara W. Ashford, Judge
By statutory notice of deficiency dated April 6, 2022, the Internal Revenue Service (IRS or respondent) determined a deficiency in petitioners' federal income tax of $11,027 and an accuracy-related penalty pursuant to section 6662(a) of $2,205 for the 2019 taxable year. On July 4, 2022, petitioners timely filed a petition with this Court, seeking redetermination of the deficiency and the accuracy-related penalty.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure. Some monetary amounts are rounded to the nearest dollar.
By Notice of Trial served on the parties on January 13, 2023, this case was calendared for trial at the Session of the Court commencing on May 1, 2023, in Pittsburgh, Pennsylvania. On April 5, 2023, pursuant to the Court's Standing Pre-Trial Order, also served on the parties on January 13, 2023, respondent filed a Status Report, apprising the Court of the then present status of this case. Respondent reported that the parties had reached a basis for settlement, resolving all issues in this case. Respondent further reported that a proposed decision that reflects the settlement was being prepared and would be sent to petitioners. Finally, respondent reported that once the signed decision was received from petitioners, respondent would execute the decision and file it with the Court.
By Order served on the parties on April 7, 2023, the undersigned judge (1) struck this case for trial from the May 1, 2023, Pittsburgh, Pennsylvania Trial Session; (2) retained jurisdiction over the case; and (3) ordered the parties, on or before May 22, 2023, to electronically submit to the Court an agreed stipulated decision document or file status reports, separately or jointly, apprising the Court of the then present status of this case.
On May 13, 2023, petitioners filed a document titled "Letter by Petitioners," asserting that they "have not been able to reach a settlement" because they disagreed with the assessment of interest on the deficiency (although they agreed with being liable for a reduced deficiency of $6,302).
On May 19, 2023, respondent filed another Status Report, apprising the Court that the parties were indeed in agreement as to the deficiency amount of $6,302 and that he was considering a possible Stipulation of Settled Issues and filing a Motion for Entry of Decision to resolve this case.
On June 7, 2023, the parties filed a Stipulation of Settled Issues, stipulating that petitioners are (1) liable for a deficiency in income tax of $6,302 for 2019; (2) not liable for the accuracy-related penalty under section 6662(a) for 2019; and (3) unwilling to sign a stipulated decision to resolve this case because they disagree with the assessment of interest on the agreed upon deficiency amount.
On June 23, 2023, given petitioners' refusal to sign the proposed stipulated decision document because of the statement contained therein regarding interest, respondent filed a Motion for Entry of Decision, requesting that the Court enter a decision in this case in accordance with the Stipulation of Settled Issues and the proposed stipulated decision document (which respondent attached to the motion). By Order served on the parties on June 27, 2023, the Court ordered petitioners to file a response, on or before July 26, 2023, to respondent's motion.
On July 25, 2023, pursuant to the Court's June 27, 2023, Order, petitioners filed a Response. Therein, petitioners summarized their various filings with this Court, seemingly expressing frustration in dealing with respondent and the Tax Court process. Ultimately, in their response petitioners requested that the Court "render a judgment that [they] owe the amount of $5,492 (the stipulated deficiency minus the documented cost to [them] of the nonparticipation of the respondent to the prosecution of this case) with no additional fees, penalties, or interest assessed to [them]."
This Court, like all Federal courts, is a court of limited jurisdiction; we may exercise jurisdiction only to the extent expressly provided by statute. See Breman v. Commissioner, 66 T.C. 61, 66 (1976). Generally, this Court lacks jurisdiction over issues concerning interest computed (as will be done by the IRS in this case) under section 6601(a). Urbano v. Commissioner, 122 T.C. 384, 390 (2004). We do, however, have jurisdiction to redetermine such interest primarily in two types of situations. Id. The first situation is pursuant to section 7481(c) and the second situation is pursuant to section 6404(h). Id. Pursuant to section 7481(c), the Court has jurisdiction to redetermine interest when (1) the taxpayer has paid the entire amount of the deficiency plus the entire amount claimed by the Commissioner as interest on the deficiency; (2) the taxpayer has timely filed a motion in this Court to redetermine interest; and (3) the Commissioner has made an assessment under section 6215 which includes interest. See Med James, Inc. v. Commissioner, 121 T.C. 147, 152 (2003). Pursuant to section 6404(h), the Court has jurisdiction to review for an abuse of discretion the Commissioner's refusal to abate interest under section 6404. See Urbano v. Commissioner, 122 T.C. at 390.
Section 6601(a) provides that interest on a federal income tax liability generally begins to accrue from the last date prescribed for payment of that tax and continues to accrue, compounding daily, until payment is made. See also § 6622.
Neither the requirements of section 7481(c) nor section 6404(h) have been met in this deficiency case. Here, all that has happened up to this point is that the parties have agreed that petitioners are liable for a reduced deficiency (and are not liable for an accuracy-related penalty) for 2019; the IRS has neither made an assessment nor have petitioners paid the entire amount of the deficiency (including interest), and the IRS has not made a final determination not to abate interest. Accordingly, we have no jurisdiction to resolve petitioners' dispute as to the interest on the agreed upon reduced deficiency that the IRS will assess pursuant to section 6601 once we enter a decision; but once we do, petitioners are free to pursue actions against the IRS in accordance with sections 6404(h) and 7481(c). Upon due consideration and for cause, it is hereby
ORDERED that respondent's Motion for Entry of Decision, filed June 23, 2023, is granted. It is further
ORDERED and DECIDED that there is a deficiency in income tax due from petitioners for the 2019 taxable year in the amount of $6,302.00. It is further
ORDERED and DECIDED that there is no penalty due from petitioners under section 6662(a) for the 2019 taxable year.