Between a Rock and a Hard Place
Texas Tech University School of Law
Tax Notes, p. 359, July 18, 2005
This paper discusses the Tax Court's jurisdiction to hear stand-alone petitions from taxpayers who have been denied equitable relief under § 6015(f), one of the three spousal relief provisions contained in § 6015. Congress enacted § 6015 in the Internal Revenue Service Restructuring and Reform Act of 1998 ("RRA 98) to replace the old "innocent spouse" provisions in § 6013(e). The jurisdictional controversy over § 6105(f) reveals a problem: how Congress pinned the Tax Court between the rock of sovereign immunity and the hard place of doing equity. Thus caught between the commands of the head and the demands of the heart - to use historian Perry Miller's famous dichotomy - the Tax Court made the wrong choice. This column explains why.
The problem arises from a laudable Congressional effort to make the Tax Code fairer. In 1998 Congress sought to expand how taxpayers who had signed joint returns could be relieved of the resulting joint liability. Congress charged the Tax Court with responsibility to review IRS application of the law, both in § 6015 and, simultaneously, in the Collection Due Process (CDP) provisions of §§ 6320 and 6330. But the taxwriters goofed up § 6015 and failed to make the Tax Court's authority commensurate with its responsibility.
Section 6015 compromises two different visions of joint liability relief: one proposed by the House Ways and Means Committee and the other proposed by the Senate Finance Committee. The unhappy result of the compromise is that literal language of the statute pinches off Tax Court review of § 6015(f) determinations when there is no deficiency at issue. Was it deliberate? No matter. It was done. That it was poorly done is of little use to the Tax Court, which sucks the jurisdictional air it breathes through nozzles of statutory grants of authority. Shut those off and the Tax Court is bereft. The irony here is that in its attempt to expand equity, Congress created inequity. That is, taxpayers who seek their day in court through section 6015(e) are barred, but taxpayers who successfully obtain their CDP hearing and present their claim for spousal relief then can obtain Tax Court review, regardless of whether the IRS is trying to collect a self-reported tax or a deficiency. Substantive equity without procedural equity is no equity at all. That, in a nutshell, is why one can be entirely sympathetic to the Tax Court's creative overreaching in Ewing to inflate its jurisdiction under § 6015. But the Tax Court is wrong on the law and no amount of huffing can make it right.
The Eighth Circuit Court of Appeals is poised to address this subject in Bartman v. Commissioner where the United States is challenging the Tax Court's assertion of jurisdiction to review the agency decision. Part I explains the issue confronting the Eighth Circuit in Bartman. Part II closely examines the structure and history of § 6105. Part III suggests that the proper interpretation of the statute denies the Tax Court jurisdiction to review this particular agency decision.
Number of Pages in PDF File: 12
Keywords: tax court, jurisdiction, sovereign immunity, tax administration, administrative law, judicial review, marriage, equity, joint returns
JEL Classification: K4, K40, K41
Date posted: June 25, 2006
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