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Mainstay Business Solutions v. Commissioner (156 T.C. No. 7)

On March 4, 2021, the Tax Court issued its opinion in Mainstay Business Solutions v. Commissioner, 156 T.C. No. 7. The underlying issue presented in Mainstay Business Solutions was whether the Tax Court has the discretion to allow a petitioner to withdraw a petition when the petitioner did not invoke the Tax Court’s jurisdiction to redetermine a deficiency.

Context

I am a bit delinquent in my summaries.

Mea culpa.

Nonetheless, at the time of writing this summary, Judge Holmes just issued the opinion in Jackson v. Commissioner, T.C. Memo. 2021-48 (May 3, 2021), which is 271 pages long.  A memorandum opinion is an opinion without a significant legal issue or principle at issue.  A full Tax Court opinion is issued when there is a sufficiently important legal issue or principle involved.

So, consider me confused with the five page FULL Tax Court opinion which stands for the proposition that if a petitioner has failed to bring a case that could be heard by the Tax Court, he may withdraw his petition…the very same petition that would have been summarily dismissed by the Tax Court.

This is your important freaking legal issue?  Truly, Judge Kerrigan’s clerk was thrown a bone here. 

Caption…

The petitioner filed a Form 843 (Claim for Refund or Abatement) with the IRS to abate interest pursuant to IRC § 6404(h) (Judicial Review of Request for Abatement of Interest).  The Tax Court notes that it is not, strictly speaking, used to cases of this posture.  The Tax Court’s groove is reviewing petitions to redetermine deficiencies.

In deficiency cases, IRC §7459(d) requires that “a decision of the Tax Court dismissing the proceeding shall be considered as its decision that the deficiency is the amount determined by the Secretary.” In deficiency cases, a taxpayer may not withdraw a petition in order to avoid a decision. Estate of Ming v. Commissioner, 62 T.C. 519 (1974).

In 1996 Congress granted the Tax Court jurisdiction through what is now designated IRC § 6404(h) to determine whether the IRS’s failure to abate interest under IRC § 6404 was an abuse of discretion.  See Taxpayer Bill of Rights 2, Pub. L. No. 104-168, sec. 302(a), 110 Stat. at 1457 (1996). 

For the review of collection actions, determination of innocent spouse relief, and whistleblower award determinations, the Tax Court has concluded that a petitioner is able to withdraw a petition. See Wagner v. Commissioner, 118 T.C. 330 (2002); Davidson v. Commissioner, 144 T.C. 273 (2015); Jacobson v. Commissioner, 148 T.C. 68 (2017).

So, The Tax Court Doesn’t Have a “Rule,” Per Se

Because the Tax Court has no earthly idea what to do in this situation, it looks to the Federal Rules of Civil Procedure for guidance. Federal Rule of Civil Procedure 41 allows a plaintiff to dismiss a civil action voluntarily without a court order if the plaintiff files a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment or if the plaintiff files a stipulation of dismissal signed by all parties who have appeared.  In all other circumstances, a plaintiff is only allowed to dismiss a civil action voluntarily through a court order.

Remember, However, This Was Not a Deficiency Petition

Because the petitioner failed to answer the threshold question of whether the Tax Court has jurisdiction over the petition (which it does not), the Tax Court had little heartburn in granting the petitioner’s request to dismiss his own petition.

Remember, However, This was a Full Tax Court Opinion

These are five pages that I am never getting back. The petitioner, who failed to invoke the Tax Court’s jurisdiction, and who would have been summarily dismissed if it suited the IRS, was granted the right to dismiss its own suit.

Takeaways

What did we learn?  Absolutely nothing, except that sometimes the Tax Court needs a vacation.  When a five-page opinion concerns a “sufficiently important legal issue or principle,” I’ll have a full head of hair, and the Tax Court won’t be drinking Mai Tais in St. Kitts.

(156 T.C. No. 7) Mainstay Business Solutions v. Commissioner

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