On May 18, 2020, the Tax Court issued a Memorandum Opinion in the case of Pope v. Commissioner (T.C. Memo. 2020-62). The basic issue before the court in Pope was whether the Tax Court lacks jurisdiction to redetermine a deficiency under IRC § 6213(a) when no deficiency was determined but which determination reduces the petitioners’ claimed entitlement to a refund.
Background to Pope v. Commissioner
Nothing against Judge Lauber – I genuinely appreciate his no “fluff,” straight-to-the-point opinions – but I wish Judge Holmes would have been assigned this case. He would have had a field day with Lord S. Pope. As is, the opinion is deferential to Lord Pope, though reading between the lines of the facts, this deference may be a tad unwarranted.
Lord Pope is a “supervisor,” at least that is what he listed as his occupation on his 2017 Form 1040. With a name as evocative of “highness” as Lord Pope, one would expect nothing less from him. Lord Pope reported that his supervisory duties were compensated in the amount of $42,000, a humble sum for this supervisor, yet not quite humble enough, it turns out.
Lord Pope calculated a tentative tax of $1,700, and he claimed a childcare and child tax credit in the same amount, which reduced his tax liability to zero. He also reported withholdings of $9,000. Claiming an overpayment in this amount, he asked that the sum be refunded to him.
Somewhat sacrilegiously (methinks), the IRS selected Lord Pope’s 2017 return for examination, during which the IRS obtained “third-party reporting” (Judas) which indicated that Lord Pope had only received $2,500 of wages, from which his employer withheld $1,000. The question is begged, however, who has the authority to withhold from Lord Pope, but Judge Lauber’s opinion is silent on this fundamentally epistemic question. Having denied the veracity of Lord Pope’s return (blasphemers, the lot of ‘em), the IRS assessed tax on the difference between the withholding credits claimed ($9,000 withholding credits claimed less $1,000 “actual” withholding credits).
Forgive them, Lord Pope, they know not what they do.
The IRS issued a Letter 4800C (Questionable Credit 30-day Letter) informing Lord Pope of their edict, and Lord Pope (having much “supervising” to do) “appears” not to have responded. Thereafter, the IRS issued Lord Pope a notice of deficiency, which showed a deficiency of zero.
Why zero? Because Lord Pope didn’t owe anything, he simply was not entitled to a refund in the amount he claimed. Soon thereafter, the IRS issued Lord Pope a refund of $1,200 (comprised of $1,000 of “verified” withholding credits, $150 additional child tax credit, and refund interest of $50).
Lord Pope petitioned the Tax Court for, alleging (among other things) that he was not an “inmate” in 2017, nor had he been incarcerated at any time during the year. Judge Lauber does not indicate how, if at all, this is relevant, but nonetheless, he thought it needed to be in the public record that Lord Pope was not a criminal (at least in 2017).
Lord Pope filed pro se, and fully intended to appear pro se to defend the IRS’s motion to dismiss for lack of prosecution, but lo, two guardian angels (who took the incarnate form of pro bono attorneys who just happened to be at calendar call), interceded on his behalf. Flustered by the sign from above, the IRS withdrew the lack of prosecution motion and concurrently filed a motion to dismiss for lack of jurisdiction.
The Short Trial of Lord Pope
Sadly, Lord Pope’s trial was short. Just as Pilate’s hands had been bound by the mob, so too were Judge Lauber’s hands tied by the letter of the law. Though it is not included in the Tax Court’s analysis, it should be noted here that the Code does not provide for appellate review by an ecclesiastical court, which, if it did, surely would have been invoked by Lord Pope or his counsel, who were, one assumes, seated at the right hand of Lord Pope during trial
IRC § 6212(a) authorizes the IRS to send the taxpayer a notice of deficiency, and IRC § 6213(a) grants the Tax Court jurisdiction to make a “redetermination of the deficiency” determined by the IRS. A “deficiency,” in turn, is defined as the amount by which the tax imposed for the year (i.e., the correct amount of tax) exceeds the amount shown as the tax by the taxpayer upon his return. IRC § 6211(a)(1). In turn, IRC § 6211(b)(1) provides that the tax imposed and the tax shown on the return is determined without regard to the credit allowed under IRC § 31(a)(1) for amounts withheld by an employer.
Because the correct tax for the year and the tax shown on the return are both determined without regard to the withholding credit permitted under IRC § 31(a)(1), such withholding credits (and overstatements thereof) are “necessarily excluded” from deficiencies, as the term is defined by IRC § 6211(a)(1). It follows then, that because the Tax Court’s jurisdiction (as relevant to Lord Pope) is limited to a “redetermination of the deficiency,” the Tax Court lacked jurisdiction to “redetermine” an adjustment to withholding credits. See Bregin v. Commissioner, 74 T.C. 1097, 1102 (1980) (holding that a claim based on an overstatement of taxes withheld does not constitute a “deficiency” within the meaning of IRC § 6211).
Beyond lacking jurisdiction because the adjustment to Lord Pope’s withholding credits was not technically a “deficiency” over which the Tax Court had jurisdiction, the Tax Court notes that withholding credit adjustments also lie outside of the court’s review because they are treated as adjustments for “mathematical and clerical errors,” which are assessed summarily, and which summary assessments lie outside of deficiency procedure. See IRC § 6201(a)(3) (overstatement of withholding credit assessed like mathematical or clerical error); IRC § 6213(b) (review of mathematical or clerical error adjustments not within Tax Court’s jurisdiction). Because no “deficiency” was determined (within the meaning of IRC § 6211), the Tax Court lacked jurisdiction to pardon Lord Pope’s taxable sins.
(T.C. Memo. 2020-62) Pope v. Commissioner
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