§6665 — Applicable rules

485, 493 (2017), supplementing and overruling in part 147 T.C.

With this amendment, Congress explicitly sought to overrule our holding in Estate ofYoung and clarify that the Tax Court hasjurisdiction over additions to tax under section 6651(a)(2) "for failure to pay an amount shown on the return where the Tax Court already hasjurisdiction to redetermine a deficiency in tax with respect to that return."3 See H.R.

Section 6665(b) provides explicitly that the deficiency procedures "shall not apply to any addition to tax under section 6651" ; and the exception to that rule for "an addition * * * which is attributable to a deficiency in tax", sec . 6665 (b)(1) (emphasis added), does not apply to the section 6651(a)(3) addition, which by its nature is attributable not to a tax "deficiency" but rather to a failure to pay tax that has been assessed .." "See Estate of Russo v .

The Court rejected this argument with the following explanation: Section 6665 provides that “additions to the tax, additional amounts, and penalties * * * shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes”.

6665 provides that a fraud penalty is treated as a deficiency for purposes ofsecs.

Accordingly, pursuant to section 6665(b), we lack jurisdiction over the addition to tax at issue.13 We therefore may not reach 12 The procedure for claiming a deduction for interest expense attributable to a deferred estate tax obligation is to file a supplemental estate tax return after the interest has accrued and been paid.

1994) ("Unlike a summary assessment, a deficiency assessment requires the IRS to follow a number ofstatutory steps before it may undertake to collect the deficiency."); see also Prestwich v. IRS, 796 F.2d 582, 584 (1st Cir. 1986) ("Section 6305(b) therefore reflects the logical intent ofCongress to keep the IRS from becoming embroiled in matters between states and individuals in which the federal agency has no direct involvement."). Another reference point for the analysis ofsection 6201(a)(4) i

In holding that this Court had jurisdiction to redetermine fraud penalties, including the effect of the overstated withholding credits on the amount of the penalty, the Court stated: Section 6665 provides that "additions to the tax, additional amounts, and penalties * * * shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes".

In holding that this Court had jurisdiction to redetermine fraud penalties, including the effect of the overstated withholding credits on the amount of the penalty, the Court stated: Section 6665 provides that "additions to the tax, additional amounts, and penalties * * * shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes".

15 1951) 14 Section 6665 is in chapter 68, which includes the Commissioner's asserted section 6662 penalties .

We nevertheless held that we had jurisdiction under section 6659 (a near identical predecessor to section 6665), because the addition to tax was “attributable to a deficiency.” Id.

We need not, however, decide whether the section 6651(a)(3) addition, although not deemed a tax under section 6651(a) and section 6665, nevertheless falls within the ambit of section 6330(c)(2)(B) .

bility” that would have been afforded by that return. Our decision is also consistent with Congress’s evident plan for the application of section 6654. Rules governing the assessment, collection, and payment of the section 6654 addition are found in section 6665. In pertinent part, section 6665(a) provides that (1) the section 6654 addition is to be paid upon notice and demand and is to be assessed, collected, and paid in the same manner as taxes, and (2) references in the Internal Revenue Code

diction on this Court to redetermine deficiencies in income, estate, gift, and certain excise taxes. See also secs. 6211-6212, 6214-6215; Rule 13. The provision which confers jurisdiction on this Court to review an addition to tax for late filing is section 6665. Section 6665(a) sets forth the general rule that the deficiency procedures applicable to income, estate, gift, and certain excise taxes are equally applicable to additions to tax. See sec. 301.6659-l(a) and (b), Proced. & Admin. Regs. S

Section 6665 provides that "additions to the tax, additional amounts, and penalties * * * shall be paid upon notice and demand and shall be assessed, collected, and paid in the same manner as taxes". A deficiency in tax is assessed, collected, and paid only after respondent makes a determination and sends a notice of that determination in accordanc

Pursuant to section 6665, none of these additions to tax is treated as a tax that is imposed by subtitle A or B.

7 [*7] that petitioners’ 2004 return was selected for review through respondent’s automated underreporter, or AUR, program, which identifies returns for review by comparing them with information reported by third parties. According to respondent, the transaction codes listed in the transcripts indicate that he selected petitioners’ return

history [respondent refers to the legislative history ofsec. 7623(a)] provides a basis to conclude that Congress intended the terms penalties, additions to tax, and additional amounts in section 7623 to have meaning different than that set forth in section 6665. Penalties, additions to tax, and addi- tional amounts under section 7623(b) pertain to amounts assessed under Title 26 that increase the total amount oftax liability. More broadly, these terms have a well-established meaning under Subti

history [respondent refers to the legislative history ofsec. 7623(a)] provides a basis to conclude that Congress intended the terms penalties, additions to tax, and additional amounts in section 7623 to have meaning different than that set forth in section 6665. Penalties, additions to tax, and addi- tional amounts under section 7623(b) pertain to amounts assessed under Title 26 that increase the total amount oftax liability. More broadly, these terms have a well-established meaning under Subti

Section 6665, the last section in this subchapter, is captioned "Applicable Rules." It states that, except as otherwise provided in Title 26, "the additions to the tax, additional amounts, and penalties provided by this chapter shall be * * * assessed, collected, and paid in the same manner as taxes" and that "any reference in this title to 'tax' i

We therefore apply the limitations provisions of sec. 6501 to decide whether the deficiencies and the additions to tax were timely assessed. The parties have not shown whether HYS Investments is subject to the TEFRA partnership procedures or excepted as a small partnership under sec. 6231(a) (1) (B). - 26 - proceeding. See sec. 6222(c).

No general reasonable cause exception exists with regard to an addition to tax assessed under sec. 6654 (a).; ·Relief is available, however, pursuant to the narrow exception of sec. 6654 (e) (3) (B). - 12 - The Court's standard of review on what elements must be present to constitute "reasonable cause" is de novo. United States v. B

We therefore apply the limitations provisions of sec. 6501 to decide whether the deficiencies and the additions to tax were timely assessed. The parties have not shown whether HYS Investments is subject to the TEFRA partnership procedures or excepted as a small partnership under sec. 6231(a) (1) (B). - 26 - proceeding. See sec. 6222(c).

f tax. Sec. 6601(e)(1) provides that “Any reference in this title (except subchapter B of chapter 63, relating to deficiency procedures) to any tax imposed by this title shall be deemed also to refer to interest imposed by this section on such tax.” Sec. 6665 sets forth certain applicable rules. Sec. 6665(a)(2) provides that “any reference in this title to ‘tax’ imposed by this title shall be deemed also to refer to the additions to tax, additional amounts, and penalties provided by this chapter

e merits of respondent’s deficiency determinations, including his exercise of discretion under section 6081 [filing extension], to the extent that the alleged deficiency and any addition to tax within our deficiency jurisdiction (see sec. 6662) [now sec. 6665] turn upon respondent’s discretionary actions. * * * * * * Rather, our review of respondent’s denial of an extension of time to file the estate tax return in this case is necessary for us to determine the merits of respondent’s substantive

6662) [now section 6665] turn upon respondent’s discretionary actions.

". Id. at 806. However, the Court of Appeals went on to hold that given the availability of a refund action, .such burden "does not so deprive him of an Sec. 6659 has been renumbered several times. In the current Internal Revenue Code, it appears as sec. 6665. - 45 - effective determination and adjudication of his final tax liability as to violate his Fifth Amendment rights to 'fundamental due process.'" Id_ Similarly, in Fendler v. Commissioner, 441 F.2d 1101 (9© Cir. 1971), the Court of Appeal

. Id at 806. However, the Court of Appeals went on to hold that given the availability of a refund action, .such burden "does not so deprive him of an " Sec. 6659 has been renumbered several times. In the current Internal Revenue Code, it appears as sec. 6665. - 45 - effective determination and adjudication of his final tax liability as to violate his Fifth Amendment rights to 'fundamental due process.'" Id Similarly, in Fendler v. Commissioner, 441 F.2d 1101 (9° Cir. 1971), the Court of Appeals

8 through 1983. It was stipulated that petitioner filed Federal income tax returns for those years. Therefore, we lack jurisdiction over the additions to tax pursuant to section 6654 for the years 1978 through 1983. See sec. 6662(b)(2) (redesignated sec. 6665). 7On the basis of this holding, the period of limitations has not expired for any year in which it would otherwise be in issue. - 44 - Issue 9. Addition to Tax Under Section 6661 Respondent determined an addition to tax under section 6661