Diebold Foundation, Inc., Transferee v. Commissioner of Internal Revenue

The Tax Court must determine liability for a legally-defined taxable year. If the Commissioner has issued a notice for an incorrect period, the Tax Court and five federal courts of appeals have applied 26 U.S.C. § 6214(a)–(b) and well-settled guideposts to determine whether the Tax Court lacks jurisdiction. Under these precedents, the Tax Court has jurisdiction to impose liability only for the correct tax year and only if a timely-issued notice relates to the correct year. Abandoning this decades-old legal framework, the Second Circuit concluded that a taxable year need not be “completely correct” to give the Tax Court jurisdiction to impose a liability. Thus, the Second Circuit failed to consider whether the Tax Court asserted jurisdiction over the correct taxable year when it imposed liability. The Second Circuit then refused to consider the non-jurisdictional consequences of an improper tax year even though appellee presented that issue on appeal. The questions presented are as follows:

1. Whether the Tax Court lacks jurisdiction to consider and determine a liability for an incorrect taxable year when it does not have jurisdiction over the taxpayer’s correct taxable year.

2. Whether the Second Circuit erred in ignoring the agreed non-jurisdictional consequences of an improper tax year when appellees shifted positions and argued for the first time on appeal that an incorrect tax period is not a jurisdictional issue.