Garcia v. Commissioner
157 T.C. No. 1

On July 19, 2021, the Tax Court issued its opinion in Garcia v. Commissioner (157 T.C. No. 1). The primary issues presented in Garcia v. Commissioner were whether the petition to reverse the certification of a seriously delinquent tax debt was mooted by the actual reversal and whether the Tax Court had jurisdiction in a passport certification case to determine whether the rejection of a collection alternative was in error.

Background of Certification Statute in Garcia v. Commissioner

IRC § 7345, enacted in 2015, is captioned “Revocation or Denial of Passport in Case of Certain Tax Delinquencies.” It provides that, if the IRS certifies that an individual has a “seriously delinquent tax debt,” that certification will be transmitted “to the Secretary of State for action with respect to denial, revocation, or limitation of a passport.” IRC § 7345(a). A taxpayer aggrieved by such action may petition this Court “to determine whether the certification was erroneous or whether the Commissioner has failed to reverse the certification.” IRC § 7345(e)(1).

Summary of Garcia v. Commissioner

In early 2020 the IRS issued the petitioners (husband and wife) separate (but substantially identical) notices informing them that it had certified to the Department of State (State Department) that they were persons owing a “seriously delinquent tax debt.” See IRC § 7345(b). The petitioners jointly petitioned the Tax Court for review of the two notices. At a time not disclosed by the record, but after the petition was filed, the husband, Morris, died.

On November 2, 2020, the IRS reversed its certification of petitioners as persons owing a seriously delinquent tax debt, citing their submission of a processable offer-in-compromise of the liability referenced in the two notices. On January 29, 2021, the IRS filed a motion to dismiss on the ground of mootness, contending that petitioners have received all of the relief to which they are entitled, that the Tax Court can afford no further relief at this juncture, and that the case is therefore moot.

The Tax Court agreed with the IRS and dismissed the Morris’ case.

Joint Petitions in a Passport Case

The petitioners filed a joint petition for review of two separate notices of certification, one addressed to the petitioner husband and the other to the petitioner wife. Each notice references the same joint Federal income tax liability for the taxable year 2012. Neither IRC § 7345 nor our Rules expressly authorize the joint filing of a petition in a passport case. The Tax Court, thus, was confronted with a threshold question as to whether petitioners’ joint filing was proper. Although the IRS did not challenge the joint filing, the Tax Court chose to address the issue because it is a question of first impression that may recur.

Rule 34(a)(1) governs the filing of a petition in a “Deficiency or Liability Action.” It provides that a separate petition ordinarily shall be filed “with respect to each notice” but that “a single petition may be filed seeking a redetermination with respect to all notices of deficiency or liability directed to…a husband and a wife individually.”

For the content of petitions in cases other than deficiency and liability actions, Rule 34(c) cross-refers to the Rules governing those actions. But these other Rules do not address the question whether spouses may file a joint petition to secure review of notices issued to them separately. The Rules governing passport certification cases follow this pattern. Rule 351 governs the commencement of such actions, and Rule 351(b) describes generally what such a petition shall contain. But neither Rule addresses the possibility of a joint filing.

Although Rule 34(a) explicitly addresses only deficiency and liability actions, the Tax Court concluded that its permission for joint filing extends by analogy to other types of cases in which the IRS issues separate notices to a married couple concerning the same tax liability. Equity and common sense surely support that result. “Marriage affords its entrants certain benefits, among them the option of filing joint returns.” Vichich v. Commissioner, 146 T.C. 186, 193 (2016).

Bottom line – where spouses present similar questions regarding the same liability, it would be wasteful to try their cases separately. “To hold otherwise would occasion unnecessary delay and expense.”

No Declaratory Rights under IRC § 7345

The only relief that IRC § 7345 authorizes the Tax Court to grant is to order the IRS “to notify the Secretary of State that such certification was erroneous.” IRC § 7345(e)(2). The Tax Court has no jurisdiction in a passport case to determine whether the IRS erred in determining the taxpayer’s underlying liability for the tax period in question. See Ruesch, 154 T.C. 289, 295-99 (2020).  What’s more, the Tax Court will not issue “what would amount to…and advisory opinion.” Greene-Thapedi v. Commissioner, 126 T.C. 1, 13 (2006) (citing LTV Corp. v. Commissioner, 64 T.C. 589, 595 (1975)).

(157 T.C. No. 1) Garcia v. Commissioner

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