William A. Stewart v. Commissioner , 127 T.C. No. 8 ( 2006 )

127 T.C. No. 8UNITED STATES TAX COURT
WILLIAM A. STEWART, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 22510-05. Filed October 3, 2006.
On Mar. 13, 2006, the Court entered an order of
dismissal for lack of jurisdiction because of P’s
failure to file a proper amended petition and pay the
filing fee as previously ordered. On June 8, 2006, 87
days after the Court’s order was entered, P mailed a
document to the Court requesting an order to vacate the
order of dismissal. On June 13, 2006, 92 days after
the Court’s order of dismissal was entered, the Court
received and filed P’s document as a motion for leave
to file motion to vacate embodying motion to vacate.
The Court also received P’s amended petition and filing
fee on June 13, 2006.
Held: Absent the filing of a notice of appeal or
a motion to vacate, the Court’s order of dismissal for
lack of jurisdiction would become final after the 90-
day period for appeal. See secs. 7481(a), 7483,
I.R.C.; Fed. R. App. P. 13(a). Our jurisdiction to
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consider the substantive merits of P’s motion for leave
depends on whether it is deemed to have been filed
within the 90-day appeal period following the Court’s
order of dismissal.
Held, further: Whether P’s motion for leave was
filed within the 90-day appeal period depends on
whether the timely-mailing/timely-filing provisions of
sec. 7502, I.R.C., apply to P’s motion for leave. In
Manchester Group v. Commissioner, T.C. Memo. 1994-604,
revd. 113 F.3d 1087 (9th Cir. 1997), we held that the
timely-mailing/timely-filing provisions of sec. 7502,
I.R.C., did not apply to a motion for leave to file a
motion to vacate. Upon reconsideration, we now hold
that sec. 7502, I.R.C., applies to P’s motion for
leave. P’s motion for leave is deemed filed on June 8,
2006, the date it was mailed, which was before the date
on which the order of dismissal would otherwise have
become final.
Held, further: P’s motion for leave to file a
motion to vacate the Court’s order of dismissal will be
granted. As a result, P’s motion to vacate the order
of dismissal also will be deemed filed on June 8, 2006.
P’s motion to vacate will be granted. P’s amended
petition will be filed, and we continue to have
jurisdiction in this case.
William A. Stewart, pro se.
Edward F. Peduzzi, Jr., for respondent.
OPINION
RUWE, Judge: This case is before the Court on petitioner’s
motion for leave to file a motion to vacate the Court’s order of
dismissal for lack of jurisdiction. At all relevant times,
petitioner resided in Fayette City, Pennsylvania.
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Background
The primary issue we must decide is whether this Court has
jurisdiction to consider the substantive merits of petitioner’s
motion for leave to file his motion to vacate the Court’s order
of dismissal.
On September 6, 2005, respondent sent to petitioner a notice
of deficiency for the taxable year ending December 31, 2003. On
November 22, 2005, petitioner mailed to the Court a document in
which he stated:
Tax Court,
Please consider this my petitioning the amounts
assessed against me in the included letter. I have
contacted the Dept. of Reconsideration and my
congressman in regards to this matter. I have NAV’s
and stock purchase prices that I have sent to the IRS
twice now. Again please consider this my petitioning
you as the letter said I must do before Dec. 5, 2005.
Attached to this document was a copy of the notice of deficiency.
Petitioner’s document was received by the Court on November 28,
2005. The document failed to comply with the Rules of the Court1
as to the form and content of a proper petition. Petitioner also
failed to submit the required filing fee. Nevertheless, the
Court filed petitioner’s document as an imperfect petition.
1
Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code.
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By order dated December 1, 2005, the Court directed
petitioner to file a proper amended petition and to pay the
filing fee on or before January 17, 2006. The order stated that
if an amended petition and the filing fee were not received on or
before January 17, 2006, the case would be dismissed.
On March 13, 2006, the Court entered an order of dismissal
for lack of jurisdiction (order of dismissal) because petitioner
failed to respond to the December 1, 2005, order. Ninety-two
days later, on June 13, 2006, the Court received a document from
petitioner which stated:
United States Tax Court,
I am requesting an order vacating the order of
dismissal dated March 13, 2006 of case assigned Docket
Number 22510-05, and ask that it be REINSTATED. The
case was ordered closed through correspondence dated
March 13, 2006 (also enclosed). I have enclosed a
petition form and form designating place of trial.
The Court filed petitioner’s document as a motion for leave to
file motion to vacate embodying motion to vacate order of
dismissal for lack of jurisdiction (motion for leave).2 The
envelope that contained petitioner’s motion for leave was
postmarked June 8, 2006, 87 days after the Court entered its
2
Except in limited circumstances that do not apply here,
Rule 54 generally requires motions to be separately stated and
not joined together. We allowed the document to be filed here in
the interest of judicial administration but do not purport to
sanction the filing of joint motions in future cases.
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order of dismissal. The envelope also contained petitioner’s
amended petition and a check for the filing fee.
Discussion
I. Motion To Vacate
An order of dismissal for lack of jurisdiction is treated as
the Court’s decision. Hazim v. Commissioner, 82 T.C. 471, 476
(1984). Section 7459(c) provides, in relevant part:
SEC. 7459(c). Date of Decision.–- * * *. * * *
if the Tax Court dismisses a proceeding for lack of
jurisdiction, an order to that effect shall be entered
in the records of the Tax Court, and the decision of
the Tax Court shall be held to be rendered upon the
date of such entry.
The word “decision” refers to decisions determining a deficiency
and orders of dismissal for lack of jurisdiction. Ryan v.
Commissioner, 517 F.2d 13, 16 (7th Cir. 1975); Commissioner v. S.
Frieder & Sons Co., 228 F.2d 478, 480 (3d Cir. 1955).
Rule 162 provides that “Any motion to vacate or revise a
decision, with or without a new or further trial, shall be filed
within 30 days after the decision has been entered, unless the
Court shall otherwise permit.” (Emphasis added.) Petitioner did
not file a motion to vacate or revise within 30 days after the
Court’s order of dismissal was entered. Therefore, in order for
his motion to vacate to be considered timely filed, Rule 162
required petitioner to file a motion for leave to file a motion
to vacate or revise, the granting of which lies within the sound
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discretion of the Court. See Rule 162; Heim v. Commissioner, 872
F.2d 245, 246 (8th Cir. 1989), affg. T.C. Memo. 1987-1; Brookes
v. Commissioner, 108 T.C. 1, 7 (1997).
II. Jurisdiction
This Court can proceed in a case only if it has
jurisdiction, and either party, or the Court sua sponte, can
question jurisdiction at any time. Estate of Young v.
Commissioner, 81 T.C. 879, 880-881 (1983). We have jurisdiction
to determine whether we have jurisdiction. Brannon’s of Shawnee,
Inc. v. Commissioner, 69 T.C. 999, 1002 (1978). As we stated in
Wheeler’s Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177,
179 (1960): “[Q]uestions of jurisdiction are fundamental and
whenever it appears that this Court may not have jurisdiction to
entertain the proceeding that question must be decided.”
In order for us to consider the substantive merits of
petitioner’s motion for leave, we must still have jurisdiction.
Except for very limited exceptions, none of which applies here,3
3
After a decision becomes final, the Court may grant a
motion for leave to consider: (1) Whether the Court had
jurisdiction to enter the decision in the first instance,
Billingsley v. Commissioner, 868 F.2d 1081, 1084-1085 (9th Cir.
1989), or (2) whether the decision entered was the result of
fraud on the Court, Abatti v. Commissioner, 859 F.2d 115, 118
(9th Cir. 1988), affg. 86 T.C. 1319 (1986). Where the Court is
without jurisdiction in the first instance or there was fraud on
the Court, the decision could be viewed as a legal nullity. See
Billingsley v. Commissioner, supra at 1084-1085. We have also
vacated a final decision where a clerical error was discovered.
(continued...)
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this Court lacks jurisdiction once a decision becomes final
within the meaning of section 7481. Abatti v. Commissioner, 859
F.2d 115, 117-118 (9th Cir. 1988), affg. 86 T.C. 1319 (1986);
Lasky v. Commissioner, 235 F.2d 97, 98 (9th Cir. 1956), affd. 352
U.S. 1027 (1957). As relevant here, a decision of the Tax Court
becomes final “Upon the expiration of the time allowed for filing
a notice of appeal, if no such notice has been duly filed within
such time”. Sec. 7481(a)(1). Section 7483 provides that a
notice of appeal may be filed within 90 days after a decision is
entered. As previously explained, an order of dismissal for lack
of jurisdiction is treated as the Court’s decision.
Pursuant to rule 13(a) of the Federal Rules of Appellate
Procedure, if under the Tax Court’s Rules a party makes a timely
motion to vacate or revise a decision, “the time to file a notice
of appeal runs from the entry of the order disposing of the
motion or from the entry of a new decision, whichever is later.”4
3
(...continued)
Michaels v. Commissioner, 144 F.3d 495 (7th Cir. 1998), affg.
T.C. Memo. 1995-294. The Court of Appeals for the Fifth Circuit
has indicated that we also have jurisdiction to vacate a decision
that was the result of mutual mistake. La Floridienne J.
Buttgenbach & Co. v. Commissioner, 63 F.2d 630, 631 (5th Cir.
1933).
4
Fed. R. App. P. 13(a) provides:
Rule 13. Review of a Decision of the Tax Court.
(a) How Obtained; Time for Filing Notice of Appeal.
(continued...)
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The Court entered the order of dismissal on March 13, 2006, and
petitioner did not file a notice of appeal within the time
prescribed by section 7483. Unless petitioner is deemed to have
filed a timely motion for leave and a timely motion to vacate
that terminated the running of time for appeal pursuant to rule
13(a) of the Federal Rules of Appellate Procedure, the Court’s
order of dismissal became final on June 12, 2006, 91 days after
the Court entered it.5
The Court received and filed petitioner’s motion for leave
on June 13, 2006, 92 days after the Court entered its order of
dismissal. The envelope that contained petitioner’s motion for
4
(...continued)
(1) Review of a decision of the United States Tax Court
is commenced by filing a notice of appeal with the Tax
Court clerk within 90 days after the entry of the Tax
Court’s decision. At the time of filing, the appellant
must furnish the clerk with enough copies of the notice
to enable the clerk to comply with Rule 3(d). If one
party files a timely notice of appeal, any other party
may file a notice of appeal within 120 days after the
Tax Court’s decision is entered. (2) If, under Tax
Court rules, a party makes a timely motion to vacate or
revise the Tax Court’s decision, the time to file a
notice of appeal runs from the entry of the order
disposing of the motion or from the entry of a new
decision, whichever is later.
5
June 11, 2006, the 90th day after the Court entered the
order of dismissal, fell on a Sunday. Pursuant to sec. 7503
petitioner had until June 12, 2006, the following Monday, to file
a notice of appeal. See also Fed. R. App. P. 26(a)(3). While we
recognize this extension of time to file a notice of appeal, we
continue to refer to the period after we entered the order of
dismissal as the 90-day period.
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leave was postmarked on June 8, 2006, 87 days after the Court
entered its order of dismissal. Accordingly, we would have
jurisdiction to consider the merits of petitioner’s motion for
leave only if it were deemed to have been filed on the date it
was mailed, which was within the 90–day appeal period. If we
grant petitioner’s motion for leave, then petitioner’s motion to
vacate would also have to be deemed timely filed within that 90-
day period in order to terminate the running of time for appeal
pursuant to rule 13(a) of the Federal Rules of Appellate
Procedure.
III. Section 7502
Section 7502(a), the so-called timely-mailing/timely-filing
rule, provides, in relevant part:
SEC. 7502(a). General Rule.--
(1) Date of delivery.–-If any return, claim,
statement, or other document required to be filed * * *
within a prescribed period or on or before a prescribed
date under authority of any provision of the internal
revenue laws is, after such period or such date,
delivered by United States mail to the agency, officer,
or office with which such return, claim, statement, or
other document is required to be filed, * * * the date
of the United States postmark stamped on the cover in
which such return, claim, statement, or other document
* * * is mailed shall be deemed to be the date of
delivery * * *
(2) Mailing requirements.--This subsection shall
apply only if--
(A) the postmark date falls within the
prescribed period or on or before the
prescribed date--
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(i) for the filing (including any
extension granted for such filing) of the
return, claim, statement, or other document,
* * *
(ii) * * * and
(B) the return, claim, statement, or other
document * * * was, within the time prescribed in
subparagraph (A), deposited in the mail in the
United States in an envelope or other appropriate
wrapper, postage prepaid, properly addressed to
the agency, officer, or office with which the
return, claim, statement, or other document is
required to be filed * * *
To determine whether section 7502 applies to petitioner’s
motion for leave, we must ascertain whether the time between when
the Court enters a decision and when that decision becomes final
creates a “prescribed period” for filing a motion for leave
within the meaning of section 7502.
IV. Manchester Group
This Court has only once before examined the issue of
whether section 7502 applies to a motion for leave to file a
motion to vacate that was mailed and postmarked before, but
received by the Court after, the date on which the decision would
have otherwise become final. See Manchester Group v.
Commissioner, T.C. Memo. 1994-604, revd. 113 F.3d 1087 (9th Cir.
1997). In Manchester Group, we held that the period within which
a party may file a motion for leave is not a “prescribed period”
and that “because section 7502 applies only to those documents
required to be filed in the Tax Court within a prescribed period
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or on or before a prescribed date, section 7502 does not apply to
motions for leave.” Id. The Court of Appeals for the Ninth
Circuit reversed, holding that “The combined effect of § 7481(a)
and § 7483 of the Internal Revenue Code and of Federal Rule of
Appellate Procedure 13(a) is to create a ninety-day period to
file a notice of appeal or a motion for leave. This ninety-day
period is a ‘prescribed period’ within the meaning of §
7502(a)(1).” Manchester Group v. Commissioner, 113 F.3d at
1089.6
The instant case provides an occasion to reconsider our
Memorandum Opinion in Manchester Group. In Lawrence v.
Commissioner, 27 T.C. 713, 716 (1957), revd. 258 F.2d 562 (9th
Cir. 1958), we stated:
One of the difficult problems which confronted the
Tax Court, soon after it was created in 1926 as the
Board of Tax Appeals, was what to do when an issue came
before it again after a Court of Appeals had reversed
its prior decision on that point. Clearly, it must
thoroughly reconsider the problem in the light of the
reasoning of the reversing appellate court and, if
6
The Court of Appeals for the Ninth Circuit further
reasoned that the mere existence of limited exceptions in which
the Tax Court can grant a motion for leave after the decision
becomes final, e.g., lack of jurisdiction to have entered the
decision in the first place or fraud on the court, does not mean
there is not a prescribed period. Manchester Group v.
Commissioner, 113 F.3d 1087, 1089 n.2 (9th Cir. 1997), revg. T.C.
Memo. 1994-604.
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convinced thereby, the obvious procedure is to follow
the higher court.[7] * * *
V. Application of Section 7502 to a Motion for Leave
To mitigate what they recognize as harsh inequities
resulting from a literal adherence to filing requirements, courts
have, where circumstances permit, generally and wisely managed to
avoid denying a taxpayer his day in court. Wells Marine, Inc. v.
Renegotiation Bd., 54 T.C. 1189, 1192 (1970). The purpose of
section 7502 is to correct hardships caused by the failure of the
mails to function normally. Manchester Group v. Commissioner,
113 F.3d at 1089; see also Bloch v. Commissioner, 254 F.2d 277,
278-279 (9th Cir. 1958). We have historically interpreted
section 7502 so as to adhere to the intentions of Congress. In
Wells Marine, Inc. v. Renegotiation Bd., supra at 1193, we
stated:
We think it is a permissible interpretation of section
7502 that there is included within the meaning of the
phrase ‘any * * * document required to be filed * * *
within a prescribed period * * * under any authority or
provision of the internal revenue laws,’ as used in
section 7502, any such document which is required to be
filed in the Tax Court. * * *
7
Where upon reconsideration of an issue we have adhered to
our position but reversal would appear inevitable because of a
contrary position, squarely on point, of the Court of Appeals to
which an appeal would lie, we have followed the position of that
Court of Appeals. Golsen v. Commissioner, 54 T.C. 742, 757
(1970), affd. 445 F.2d 985 (10th Cir. 1971). The instant case is
likely appealable to the Court of Appeals for the Third Circuit,
which has not addressed the issue presented in Manchester Group.
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The Court of Appeals for the Ninth Circuit in Manchester
Group v. Commissioner, 113 F.3d at 1089, concluded that the
combined effect of sections 7481(a) and 7483, together with rule
13(a) of the Federal Rules of Appellate Procedure, was to create
a 90-day prescribed period to file a notice of appeal or a motion
for leave. Upon reflection, we agree. A decision of the Tax
Court becomes final “Upon the expiration of the time allowed for
filing a notice of appeal, if no such notice has been duly filed
within such time”. Sec. 7481(a)(1). Section 7483 provides that
a notice of appeal may be filed within 90 days after a decision
is entered. Pursuant to rule 13(a) of the Federal Rules of
Appellate Procedure, which governs review of Tax Court decisions,
if a timely motion to vacate is made, the time for appeal “runs
from the entry of the order disposing of the motion or from the
entry of a new decision, whichever is later.” Together these
provisions can reasonably be read to create a 90-day period
prescribed under the authority of the internal revenue laws in
which a taxpayer could file a motion for leave to file a motion
to vacate a decision. We conclude that the reasoning of the
Court of Appeals for the Ninth Circuit in Manchester Group with
regard to the application of section 7502 to motions for leave is
persuasive and should be followed. Accordingly, we will no
longer follow our prior Memorandum Opinion in Manchester Group v.
Commissioner, T.C. Memo. 1994-604.
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We hold that petitioner’s motion for leave to file his
motion to vacate the Court’s order of dismissal will, pursuant to
section 7502, be deemed filed on June 8, 2006, the date it was
mailed. Therefore, petitioner’s motion for leave was filed
before the expiration of the 90-day appeal period.
VI. Effect of the Motion for Leave To File Motion To Vacate
Whether the Court retains jurisdiction over petitioner’s
case depends on whether the Court grants leave to file
petitioner’s motion to vacate. If the motion for leave to file a
motion to vacate is filed before the decision becomes final and
the Court grants the motion for leave, then the time for appeal
is extended. Manchester Group v. Commissioner, 113 F.3d at 1088;
Nordvik v. Commissioner, 67 F.3d 1489, 1492 (9th Cir. 1995),
affg. T.C. Memo. 1992-731. Petitioner’s motion to vacate was
treated as embodied in the motion for leave. In Simon v.
Commissioner, 176 F.2d 230, 232 (2d Cir. 1949), affg. a
Memorandum Opinion of this Court, the Court of Appeals for the
Second Circuit held that when a party files a motion for leave to
file a motion for reconsideration together with the motion for
reconsideration before the end of the 90-day period, and the
motion for leave is granted, the motions extend the time for
appeal and the date of finality.8 In Nordvik v. Commissioner,
8
Simon v. Commissioner, 176 F.2d 230 (2d Cir. 1949), affg.
(continued...)
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supra at 1492, the Court of Appeals for the Ninth Circuit stated
it was irrelevant that the taxpayers filed the motion for leave
to file a motion to vacate without the substantive motion to
vacate. The Court of Appeals held that so long as the motion for
leave is filed within the 90-day period and the Tax Court grants
the motion for leave and thereafter makes a decision on the
merits of the motion to vacate, then the time for appeal is
extended.
If the Court does not grant the motion for leave, then the
motion to vacate could not be filed and the decision would become
final. Id. Unlike the filing of a motion to vacate, the filing
of a taxpayer’s motion for leave to file a motion to vacate would
not affect the time for appeal unless the Court granted the
motion for leave and considered the merits of the motion to
vacate. Id.; Haley v. Commissioner, 805 F. Supp. 834, 836 (E.D.
8
(...continued)
a Memorandum Opinion of this Court, rejects the Court of Appeals
for the First Circuit’s opinion in Denholm & McKay Co. v.
Commissioner, 132 F.2d 243, 248 (1st Cir. 1942), affg. 39 B.T.A.
767 (1939), holding that the Tax Court retains jurisdiction to
consider a motion for reconsideration only if the Court acts on
the motion before the end of the 90-day period at which the
original decision becomes final. The Court of Appeals for the
Second Circuit reasoned that the ability to seek review should
not depend on the Tax Court’s docket. Simon v. Commissioner,
supra at 232; Nordvik v. Commissioner, 67 F.3d 1489, 1492 (9th
Cir. 1995), affg. T.C. Memo. 1992-731.
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Cal. 1992), affd. without published opinion 5 F.3d 536 (9th Cir.
1993).9
We hold that when a motion for leave to file a motion to
vacate is filed before the Court’s decision becomes final, and
the motion for leave is granted, the motion to vacate will be
deemed to have been timely filed at the same time as the motion
for leave. This will terminate the running of the 90-day appeal
period and postpone the finality of any decision.
VII. Action on Petitioner’s Motion
In the exercise of our discretion, we will grant
petitioner’s motion for leave to file his motion to vacate. The
granting of petitioner’s motion for leave and the filing of his
motion to vacate terminate the running of time to file a notice
of appeal. This, in turn, will prevent the Court’s order of
dismissal from becoming final and will allow the Court to retain
jurisdiction to determine whether to grant petitioner’s motion to
vacate.
Petitioner’s proper amended petition and filing fee were
received on June 13, 2006. Considering the particular facts in
this case, we believe that there is a reasonable basis to grant
9
In Nordvik v. Commissioner, supra at 1492 n.2, the Court
of Appeals for the Ninth Circuit expressly adopted the reasoning
of the District Court in Haley v. Commissioner, 805 F. Supp. 834(E.D. Cal. 1992), affd. without published opinion 5 F.3d 536 (9th
Cir. 1993).
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petitioner’s motion to vacate the Court’s order of dismissal.
See Estate of Egger v. Commissioner, 92 T.C. 1079, 1084 (1989)
(finding the interest of justice to be enough to grant a motion
to vacate). We will grant petitioner’s motion to vacate the
Court’s order of dismissal and will allow his amended petition to
be filed.
An appropriate order will
be issued.
Reviewed by the Court.
COLVIN, COHEN, SWIFT, WELLS, HALPERN, CHIECHI, LARO, FOLEY,
VASQUEZ, GALE, THORNTON, MARVEL, HAINES, GOEKE, WHERRY, KROUPA,
and HOLMES, JJ., agree with this opinion.