MICHAEL BROWN V. CIR, No. 22-70001 (9th Cir. 2023)
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Petitioner made an offer in compromise (OIC) to settle his outstanding tax liability. Under the Tax Increase Prevention and Reconciliation Act (TIPRA), Petitioner submitted a payment of twenty percent of the value of his OIC, acknowledging that this TIPRA payment would not be refunded if the OIC was not accepted. The Commissioner of Internal Revenue did not accept the OIC because the Commissioner concluded that ongoing audits of Petitioner's businesses made the overall amount of his tax liability uncertain. Petitioner then sought a refund of his TIPRA payment.
In a previous appeal, the Ninth Circuit held that the Internal Revenue Service did not abuse its discretion by returning the OIC, but vacated the Tax Court’s determination that the IRS had not abused its discretion in refusing to return the TIPRA payment. The Ninth Circuit remanded for the Tax Court to consider its refund jurisdiction in the first instance. On remand, the Tax Court held that it did not have jurisdiction.
The Ninth Circuit affirmed the Tax Court’s decision because there is no specific statutory grant conferring jurisdiction to refund TIPRA payments. The panel explained that, as the Tax Court correctly noted, it is a court of limited jurisdiction, specifically granted by statute, with no authority to expand upon that statutory grant.
Court Description: Tax The panel affirmed the Tax Court’s decision in an action seeking a refund of a payment made in connection with a rejected offer in compromise to settle a tax liability. Taxpayer made an offer in compromise (OIC) to settle his outstanding tax liability. Under the Tax Increase Prevention and Reconciliation Act (TIPRA), taxpayer submitted a payment of twenty percent of the value of his OIC, acknowledging that this TIPRA payment would not be refunded if the OIC was not accepted. The Commissioner of Internal Revenue did not accept the OIC because the Commissioner concluded that ongoing audits of taxpayer’s businesses made the overall amount of his tax liability uncertain. Taxpayer then sought a refund of his TIPRA payment. In a previous appeal, this court held that the Internal Revenue Service did not abuse its discretion by returning the OIC, but vacated the Tax Court’s determination that the IRS had not abused its discretion in refusing to return the TIPRA payment. This court remanded for the Tax Court to consider its refund jurisdiction in the first instance. On remand, the Tax Court held that it did not have jurisdiction. The panel affirmed the Tax Court decision, because there is no specific statutory grant conferring jurisdiction to refund TIPRA payments. The panel explained that, as the Tax Court BROWN V. CIR 3 correctly noted, it is a court of limited jurisdiction, specifically granted by statute, with no authority to expand upon that statutory grant.
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