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Choose the Correct Venue for Appeals

Chandler v. United States, 338 F. Supp. 3d 592 (N.D. Tex. 2018)

(a) Facts: Wife filed a petition for innocent spouse relief. The IRS denied the petition. The wife did not seek review in the Tax Court within the 90-day review period. The wife then filed an action in federal District Court seeking a refund of funds seized by the IRS.

(b) Issue: Did the District Court have subject-matter jurisdiction over the action?

(c) Answer to Issue: No.

(d) Summary of Rationale: The Tax Court has exclusive jurisdiction over innocent spouse issues:

As to the exclusivity of the Tax Court’s jurisdiction, “[a]lthough the statute itself does not address whether the Tax Court’s jurisdiction is exclusive, courts interpreting the statute have concluded that it is.” United States v. Elman, No. 10CV6369, 2012 WL 6055782, at *3 (N.D. Ill. Dec. 6, 2012); accord Boynton, 2007 WL 737725, at *3*4. Courts have also held that “district court[s] [have] jurisdiction to decide an innocent spouse issue only when the taxpayer files a refund suit in the district court while a [Section] 6015 petition is pending with the Tax Court.” United States v. LeBeau, No. 10CV817, 2012 WL 835160, at *3 (S.D. Cal. Mar. 12, 2012); see also Andrews v. United States, 69 F.Supp.2d 972, 978 (N.D. Ohio 1999) (holding that district courts lack jurisdiction to reevaluate a tax payer’s innocent spouse claim). “In other words, Congress’ statutory scheme envisions the Secretary and the Tax Court deciding questions about the exemption in all but the rarest circumstances. Certainly no part of [Section] 6015 confers jurisdiction to the federal district courts ‘to determine innocent spouse claims in the first instance.'” Stein, 2015 WL 5943441, at *3 (quoting United States v. Wallace, No. 1:09CV87, 2010 WL 2302377, at *4 (S.D. Ohio Apr. 28, 2010)).

338 F. Supp. 3d at 602.

Obvious Lesson: If you disagree with the IRS’s decision on an innocent spouse issue not involving a request for a refund, seek review in the Tax Court, not in District Court.

Note: But cf. United States v. LeBeau, 335 F. Supp. 3d 1206 (S.D. Cal. 2018) (while District Court had no jurisdiction over innocent spouse issues, District Court had discretion to stay IRS collection action while defendant’s petition for innocent spouse relief was pending in the Tax Court).