Opinion
990-06 991-06
09-21-2022
RICHARD G. VENTO, ET AL., Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
L. Paige Marvel Judge
On July 21, 2014, petitioners in these consolidated cases filed a Motion to Dismiss for Lack of Jurisdiction. The Court directed respondent to file a response to petitioners' motion by September 8, 2014. On September 4, 2014, respondent filed his Response to Motion to Dismiss for Lack of Jurisdiction.
Unless otherwise indicated, all statutory references are to the Internal Revenue Code, Title 26 U.S.C, in effect at all relevant times, all regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and all Rule references are to the Tax Court Rules of Practice and Procedure.
In their Motion to Dismiss for Lack of Jurisdiction, petitioners recite many of the same arguments they make in their motion for summary judgment, which the Court rejects for the same reasons stated in its Order denying petitioners' motion for summary judgment filed concurrently herewith. As stated in that Order, we have jurisdiction to redetermine the United States federal income tax liabilities of a bona fide Virgin Islands resident, and there is no merit to the argument that the Internal Revenue Service (IRS) may not require a bona fide Virgin Islands resident to file and pay United States federal income taxes if such Virgin Islands resident does not otherwise meet the requirements for an exemption from United States federal income tax liability under section 932(c)(4). See Cooper v. Commissioner, 718 F.3d 216, 221-22 (3d Cir. 2013); Huff v. Commissioner, 135 T.C. 605, 608, 610-11 (2010).
Petitioners maintain that their alleged compliance with section 932(c)(4) renders the IRS's notice of deficiency for their 2001 taxable year a nullity. However, even if petitioners had shown conclusively that they were entitled to an exemption under section 932(c)(4), we would not grant petitioners a dismissal for lack of jurisdiction. The Court has jurisdiction to redetermine an IRS notice of deficiency asserting a Virgin Islands resident's liability under section 932(c)(4) for United States federal income tax. Cooper v. Commissioner, 718 F.3d at 221-22. Instead, in such a case, we would enter a decision on the merits in favor of petitioners. However, our reasons for declining to grant summary judgment to petitioners are contained in our Order denying petitioners' motion for summary judgment filed concurrently herewith.
Petitioners also advance a slightly different argument in their Motion to Dismiss for Lack of Jurisdiction. Petitioners contend that the notice of deficiency that the IRS issued to them for their 2001 taxable year is null or void because petitioners are bona fide residents of the Virgin Islands, the Virgin Islands Bureau of Internal Revenue (VIBIR) also issued a notice of deficiency to them for their 2001 taxable year, and petitioners are challenging VIBIR's notice of deficiency before the District Court of the Virgin Islands. There is no support for the proposition that an IRS notice of deficiency determining a United States federal income tax liability is null or void because of a taxpayer's Virgin Islands residency, the issuance of a parallel notice of deficiency by VIBIR, and/or the pendency of proceedings brought by the same taxpayers challenging such a parallel notice of deficiency in the District Court of the Virgin Islands. See Cooper v. Commissioner, 718 F.3d at 221-22 (holding that the Tax Court, not the District Court of the Virgin Islands, was the only court with jurisdiction to hear claims relating to IRS notices of deficiency asserting lack of bona fide Virgin Islands residency and, in the alternative, residual liability under section 932(c)(4), where the IRS was not acting on behalf of the Virgin Islands Bureau of Internal Revenue and the IRS's notices of deficiency were not seeking a redetermination of Virgin Islands tax liability); Huff, 135 T.C. at 610-11 (holding that while the District Court of the Virgin Islands has exclusive jurisdiction to redetermine a taxpayer's Virgin Islands tax liabilities, this Court has jurisdiction to redetermine a taxpayer's United States federal income tax liabilities, even if the taxpayer claims bona fide Virgin Islands residency).
In their motion for summary judgment, petitioners argue only that the IRS's notice of deficiency for their 2001 taxable year is null or void because of their alleged compliance with section 932(c)(4) by virtue of the Third Circuit's decision in Vento v. Dir. of V.I. Bureau of Internal Revenue, 715 F.3d 455 (3d Cir. 2013) that they were bona fide Virgin Islands residents for the 2001 taxable year. We reject that argument in our Order filed concurrently herewith.
In sum, because the IRS has issued a notice of deficiency to petitioners asserting United States federal income tax liability and because no other reason which would deprive the Court of jurisdiction over this case is apparent in the record, it is therefore
ORDERED that petitioners' Motion to Dismiss for Lack of Jurisdiction is denied.