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U.S. Tax Court Rejects Prisoner's Petition For Lack of Jurisdiction

In a Memorandum filed March 6th, 2018 in Cedric v. Commissioner, T.C. Memo 2018-24, Docket No. 13716-14, the U.S. Tax Court rejected a prisoner taxpayer's petition and request for court-appointed attorney for lack of jurisdiction.

Cedric Ray Allen has been continuously incarcerated in California state prison since 1984. He filed federal income tax returns in 2007, 2008 and 2008 alleging that he was employed as a kitchen worker during those years, that his employer (the prison) withheld taxes from his wages and that he was due a refund. The Internal Revenue Service ("IRS") responded in writing stating that their records showed no income earned and that his employer did not report any wages to them. Ultimately, the IRS sent him a notice in 2012 stating that he was liable for a civil penalty of $5,000.00 for filing a frivolous tax return. Mr. Allen subsequently filed a petition to the U.S. Tax Court to protest the IRS's actions.

The typical reason that a taxpayer would have a basis to file suit in the U.S. Tax Court is that the IRS made a determination there was a tax deficiency and notice is sent to the taxpayer assessing the amount due. This notice of deficiency is also known as a "90-day letter" in that the taxpayer has 90 days to file a petition in the U.S. Tax Court disputing the assessment or else the IRS can take actions to collect. In Mr. Allen's case, the IRS demonstrated that they have never sent a notice of deficiency to him sufficient to invoke the jurisdiction of the court. The U.S. Tax Court could not even construe that the written communications from the IRS to Mr. Allen constituted a notice of deficiency because they stated the Commissioner determined no income was earned and that his balance due was $0.00.

The U.S. Tax Court further stated that it lacked jurisdiction to review the IRS's imposition of a $5,000.00 civil penalty for a frivolous return because it was not in a context of a notice of determination case. It also stated that it lacked jurisdiction to hear cases involving pure refunds.

Finally, the U.S. Tax Court rejected Mr. Allen's requested for the assistance of court appointed counsel on the basis that the Sixth Amendment "right to counsel" provision expressly applies to criminal proceedings, not to civil proceedings such as tax disputes. Congress did not grant the U.S. Tax Court with the power to provide counsel or representative assistance to taxpayers and this failure does not constitute a violation of due process. As a result, all of Mr. Allen's claims were denied and dismissed.

The U.S. Tax Court is a "court of limited jurisdiction", meaning that it is proscribed by law to hear very specific cases and will only do so if certain procedures are followed. If a court of limited jurisdiction does not have the appropriate credentials to hear a matter, the action may have to be filed in a court with more general jurisdiction such as the U.S. Court of Claims or the U.S. District Court. Mr. Allen was a "pro se" litigant, meaning that he was unrepresented by counsel, so he likely did not understand the complicated rules and procedures necessary to properly pursue his claim for refund and challenge to the civil fine. Additionally, there are strict time deadlines to file the appropriate claim in the appropriate court. If you are involved in a tax dispute with the IRS and unsure how to proceed, you should consult a knowledgeable tax practitioner that can guide you through the process and protect your rights before it is too late to enforce them.

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