Steven T. Waltner, et ux. v. Commissioner of Internal Revenue

The Court of Appeals in the case below held that the return Petitioners filed for tax year 2008 was not a “valid return” for purposes of the exception to the statute of limitations on tax assessments, § 6501(a), that applies when a return is not filed at all, and then held that the IRS therefore may assess the tax at any time. However, the phrase “valid return” appears nowhere in the statutory exception at § 6501(c)(3) or in any other provision of the United States Code. The first question presented for review is:

1. Whether the court below, below, in in conflict with its own precedents precedents as well as those of this Court and five other Circuit Courts of Appeal, Appeal, erred in holding that Petitioners’ Petitioners’ timelytimely-filed tax return (which the IRS examined examined, processed, and later relied upon to issue a latelate-mailed notice of deficiency) deficiency) did not start the running of the 3- 3-year statute of limitations on assessment. assessment. Before the Tax Court’s decision (“Decision”) was entered, Petitioners filed a Status Report in which their counsel clearly stated his intention to appeal the Tax Court’s sanctions order. Splitting from a contrary decision of the Fifth Circuit, the Ninth Circuit gave no effect to counsel’s informal notice and declared that it lacked jurisdiction over the portion of the Decision that imposed costs against counsel. The second question presented for review is:

2. Whether, in conflict with the Fifth Circuit, the court below erred in finding an informal notice of intent to appeal ineffective to preserve the right of a party’s counsel to appeal a sua sponte sanction against him that appears in the Decision. Decision.