                                             EUGENE KOPROWSKI, PETITIONER v. COMMISSIONER                                       OF
                                                     INTERNAL REVENUE, RESPONDENT
                                                        Docket No. 13048–10.                   Filed February 6, 2012.

                                                   P and W filed a joint return for 2006. R issued a notice of
                                                deficiency, and P and W filed a petition asking this Court to
                                                redetermine that deficiency. They elected to have the case
                                                proceed under small tax case procedures pursuant to I.R.C.
                                                sec. 7463. P signed the petition and all other filings. P and W
                                                moved for summary judgment; R cross-moved for summary
                                                judgment; and P and W opposed on various grounds,
                                                including P’s entitlement to innocent spouse relief from joint
                                                liability under I.R.C. sec. 6015. At a calendar call before the
                                                Court, P spoke for himself and W. The parties withdrew their
                                                cross-motions and submitted a stipulated decision document
                                                by which P and W conceded the deficiency in full. The Court
                                                entered decision accordingly in November 2009. While the
                                                deficiency suit was pending, P had filed a Form 8857,
                                                ‘‘Request for Innocent Spouse Relief ’’, for 2006. In May 2010
                                                R denied the request for relief, and P timely filed a petition
                                                challenging that denial. R moved for summary judgment on
                                                grounds of res judicata arising from the entry of decision in
                                                the prior deficiency case. Held: Res judicata bars the relitiga-
                                                tion of a liability determined in a small tax case under I.R.C.
                                                sec. 7463. Held, further, res judicata precludes P’s attempted
                                                litigation of his I.R.C. sec. 6015(f) claim for the year that was
                                                the subject of the prior deficiency case. I.R.C. sec. 6015(g)(2)
                                                does not prevent the operation of res judicata, since P’s claim
                                                for relief was an issue in the prior case, and he did participate
                                                meaningfully in the prior case.

                                           Eugene Koprowski, for himself.
                                           Michael T. Shelton, for respondent.




                                      54




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                                      (54)                         KOPROWSKI v. COMMISSIONER                                         55


                                                                                  OPINION

                                        GUSTAFSON, Judge: Petitioner Eugene Koprowski seeks
                                      this Court’s review, pursuant to section 6015(e), 1 of the
                                      denial by the Internal Revenue Service (IRS) of his request
                                      for relief from his liability for income tax for 2006, for which
                                      he filed a joint return with his wife. The case is currently
                                      before the Court on a motion for summary judgment filed by
                                      respondent (the IRS) under Rule 121. We will grant that
                                      motion and sustain the IRS’s determination on grounds of res
                                      judicata.

                                                                                Background
                                        The following facts are based on the petition, our record in
                                      Mr. Koprowski’s prior deficiency case (of which we take
                                      notice pursuant to Fed. R. Evid. 201), and facts that the IRS
                                      asserted and supported in its motion for summary judgment
                                      that Mr. Koprowski has not disputed.
                                      2006 income issues
                                        Mr. and Mrs. Koprowski filed a joint Federal income tax
                                      return for the year 2006. The IRS thereafter took the position
                                      that Mrs. Koprowski had received in that year, from the
                                      estate of her late father, taxable distributions that were not
                                      reported on the Koprowskis’ income tax return. In October
                                      2008 the IRS issued to the Koprowskis jointly a notice of defi-
                                      ciency, determining a tax deficiency attributable to the inclu-
                                      sion of those distributions in their taxable income.
                                      2006 deficiency case
                                         In January 2009 the Koprowskis filed a petition in this
                                      Court challenging the IRS’s deficiency determination and
                                      asserting that the distributions at issue were ‘‘non-taxable
                                      inheritance’’. Both Mr. and Mrs. Koprowski signed the peti-
                                      tion, on which they elected to have the case proceed under
                                      small tax case procedures pursuant to section 7463. The defi-
                                      ciency case proceeded as docket No. 1185–09S.
                                         The Koprowskis made three additional filings in docket No.
                                      1185–09S—(1) a motion for summary judgment, (2) a motion
                                        1 Unless otherwise indicated, all section references are to the Internal Revenue Code of 1986

                                      (26 U.S.C.), as amended, and all Rule references are to the Tax Court Rules of Practice and
                                      Procedure.




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                                      56                  138 UNITED STATES TAX COURT REPORTS                                        (54)


                                      to strike, and (3) an objection to a motion for summary judg-
                                      ment filed by the IRS, combined with their cross-motion—all
                                      of which were signed by both Mr. and Mrs. Koprowski. In the
                                      objection and cross-motion (filed October 13, 2009), the
                                      Koprowskis stated:
                                      Petitioner Mr. Koprowski maintains an Affirmative Defense provided by
                                      an Innocent Spouse Claim per the case law doctrine of King v. Commis-
                                      sioner (115 TC No. 8 (2000)).

                                                              *  *     *   *    *    *   *
                                        9. Petitioner Mr. Koprowski, as the IRS’s evidence demonstrates, did not
                                      receive any income as a beneficiary of a trust or estate.
                                        10. Petitioner Mr. Koprowski should be granted Innocent Spouse Relief
                                      from the IRS regarding its Deficiency Notice. On October 11, 2009 after
                                      he received the evidence requested from the IRS regarding the estate, he
                                      immediately filed a request for innocent spouse relief with IRS. (See
                                      Exhibit B of the Objections filing, IRS Form 8857, Request for Innocent
                                      Spouse Relief.)
                                        [Emphasis omitted.]

                                        When the deficiency case was first called from the calendar
                                      for trial on October 26, 2009, Mrs. Koprowski said only ‘‘Good
                                      morning’’, and Mr. Koprowski spoke for the couple, to
                                      schedule argument on the cross-motions for summary judg-
                                      ment. Later that day a volunteer lawyer entered an appear-
                                      ance on their behalf; and when the case was recalled, both
                                      parties withdrew their motions for summary judgment. Two
                                      days later the Koprowskis’ volunteer lawyer signed on the
                                      Koprowskis’ behalf a stipulated decision document, by which
                                      the Court entered decision on November 9, 2009, sustain-
                                      ing the IRS’s deficiency determination. We assume that there-
                                      after the tax was duly assessed against both the Koprowskis
                                      as the joint and several liability of each of them.
                                        The Koprowskis have not alleged in this case that there
                                      was any defect in those proceedings in docket No. 1185–09S,
                                      and they have not filed in docket No. 1185–09S any motion
                                      to vacate or revise the decision in that case.
                                      Mr. Koprowski’s request for relief
                                         As is noted above, while the deficiency case was pending,
                                      Mr. Koprowski submitted to the IRS in October 2009 a Form
                                      8857, ‘‘Request for Innocent Spouse Relief ’’, seeking to be
                                      relieved from liability for the tax attributable to the distribu-
                                      tions from his wife’s father’s estate. Mr. Koprowski asserts




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                                      (in his petition in the present case)—and we assume true for
                                      purposes of the IRS’s pending motion—that, in conjunction
                                      with his request to the IRS for innocent spouse relief, he pre-
                                      sented to the IRS evidence showing that he ‘‘did not know and
                                      had no reason to know of the understatement at the time the
                                      return was signed.’’ In May 2010 the IRS denied the relief he
                                      requested.
                                      Proceedings in the present case
                                        On June 8, 2010, Mr. Koprowski filed his petition com-
                                      mencing the instant case seeking review of the IRS’s denial
                                      of his request for innocent spouse relief. The petition
                                      indicates that he resides in Illinois. His petition seeks relief
                                      from joint liability on various grounds, including that ‘‘[a]ny
                                      taxes owed on the gift should be paid for by the [wife’s]
                                      father’s estate’’, and ‘‘IRS erred by not following the Internal
                                      Revenue Manual (IRM) which details how to handle cases
                                      hinging on the timely, good faith filing of tax returns.’’ The
                                      IRS filed its answer to the petition on August 3, 2010.
                                        On September 28, 2011, 2 respondent moved for summary
                                      judgment on grounds of res judicata, i.e., that Mr.
                                      Koprowski’s suit is precluded by the decision entered against
                                      him in the deficiency case. By order of September 29, 2011,
                                      the Court ordered Mr. Koprowski to file a response and
                                      advised him:
                                         If Mr. Koprowski disagrees with the facts set out in the IRS’s motion,
                                      then Mr. Koprowski’s response should point out the specific facts in dis-
                                      pute. The response should support Mr. Koprowski’s version of the facts by
                                      attaching relevant documents and/or by attaching one or more affidavits
                                      (i.e., written statements that are signed and sworn before a notary) or
                                      unsworn declarations that are made ‘‘under penalty of perjury’’ (see 28
                                      U.S.C. sec. 1746). If Mr. Koprowski disagrees with the IRS’s argument as
                                      to the law, then his response should also set out his position on the dis-
                                      puted legal issues.
                                         Mr. Koprowski’s attention is directed to Tax Court Rule 121 (available
                                      on the court’s website at www.ustaxcourt.gov), which sets out the prin-
                                      ciples for filing, opposing, and resolving motions for summary judgment.
                                      In particular, Mr. Koprowski should note that Rule 121(d) provides, ‘‘If the
                                        2 Mr. Koprowski opposes the IRS’s motion on the grounds that ‘‘After 16 months of litigation,

                                      and numerous briefs and pleadings, Respondent IRS suddenly raises the issue of res judicata
                                      in its latest pleading, a motion.’’ Under Rule 121(a), however, a motion for summary judgment
                                      is timely if raised ‘‘no later than 60 days before the first day of the Court’s session at which
                                      the case is calendared for trial’’. Since this case is on a calendar set for February 27, 2012, the
                                      IRS’s motion was timely.




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                                      adverse party [i.e., Mr. Koprowski] does not so respond [to a motion for
                                      summary judgment], then a decision, if appropriate, may be entered
                                      against such party’’—i.e., against Mr. Koprowski.
                                        Mr. Koprowski’s attention is also directed to Harbin v. Commissioner,
                                      137 T.C. No. 7 (Sept. 26, 2011), and Haag v. Commissioner, T.C. Memo.
                                      2011–87 (Apr. 19, 2011), slip op. at 18–20, two recent decisions of this
                                      Court that discuss res judicata and section 6015(g)(2).

                                      Mr. Koprowski filed his response on September 30, 2011. His
                                      response did not discuss section 6015(g)(2). The Court’s order
                                      of October 17, 2011, observed—
                                      Mr. Koprowski’s recent response does make factual assertions, but it was
                                      not accompanied by any documents, affidavits, or unsworn statements
                                      under penalty of perjury. The Court will give him an opportunity to
                                      supplement his response with such materials

                                      —and ordered him to do so by October 31, 2011. On that date
                                      Mr. Koprowski did file a supplement to his response. His
                                      supplement argued generally that res judicata should not
                                      apply, but it did not present any evidentiary materials, and
                                      it did not discuss section 6015(g)(2).

                                                                                 Discussion
                                      I. General legal principles
                                           A. Relief from joint liability
                                         Section 6013(d)(3) provides that when married taxpayers
                                      file a joint return, the tax is computed on their aggregate
                                      income, and their liability to pay the tax shown on the return
                                      or found to be owing is joint and several. See also 26 C.F.R.
                                      sec. 1.6013–4(b), Income Tax Regs. That is, each spouse is
                                      liable for the entire joint tax liability. However, section 6015
                                      provides several means for a taxpayer to seek relief from
                                      joint liability; and if the IRS determines not to grant such
                                      relief to a taxpayer, section 6015(e) gives this Court jurisdic-
                                      tion to review that determination.
                                           B. Small tax cases under section 7463
                                        Section 7463(a) provides that, where a Tax Court petition
                                      involves an amount not exceeding $50,000—
                                      at the option of the taxpayer concurred in by the Tax Court * * *, pro-
                                      ceedings in the case shall be conducted under this section. Notwith-
                                      standing the provisions of section 7453, such proceedings shall be con-




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                                      ducted in accordance with such rules of evidence, practice, and procedure
                                      as the Tax Court may prescribe. * * *

                                      The Tax Court has implemented this provision in Title XVII
                                      of its Rules (i.e., Rules 170–175). Under Rule 174(b), ‘‘Trials
                                      of small tax cases will be conducted as informally as possible
                                      consistent with orderly procedure, and any evidence deemed
                                      by the Court to have probative value shall be admissible.’’
                                        Section 7463(b) provides as follows:
                                        SEC. 7463(b). FINALITY OF DECISIONS.—A decision entered in any case
                                      in which the proceedings are conducted under this section shall not be
                                      reviewed in any other court and shall not be treated as a precedent for any
                                      other case.

                                      By precluding any appeal of the decision in a small tax case,
                                      section 7463(b) deprives the electing petitioner of his oppor-
                                      tunity to appeal an adverse decision, but it also protects him
                                      from the difficulty of defending any appeal by the IRS of a
                                      decision favorable to him. Presumably, Mr. and Mrs.
                                      Koprowski weighed these considerations in deciding to elect
                                      small tax case status for their prior deficiency case.
                                           C. Res judicata and collateral estoppel
                                         The IRS’s motion now before us invokes only the doctrine
                                      of res judicata, and not the related doctrine of collateral
                                      estoppel. Mr. Koprowski mentions both, but in fact collateral
                                      estoppel is not implicated here. However, we nonetheless
                                      include collateral estoppel in our discussion because the doc-
                                      trines have important differences that affect our analysis.
                                      Both these doctrines ‘‘have the dual purpose of protecting
                                      litigants from the burden of relitigating an identical issue
                                      and of promoting judicial economy by preventing unnecessary
                                      or redundant litigation’’, Meier v. Commissioner, 91 T.C. 273,
                                      282 (1988), but the reach of these two doctrines is not the
                                      same.
                                           1. Res judicata
                                        Res judicata (Latin for ‘‘a thing adjudicated’’), or claim pre-
                                      clusion, is an affirmative defense 3 developed by the courts to
                                        3 Res judicata is not a jurisdictional defense but rather is an affirmative defense, see Rule 39,

                                      that may therefore be waived, see Tully v. Barada, 599 F.3d 591, 594 (7th Cir. 2010); Rizzo v.
                                      Sheahan, 266 F.3d 705, 714 (7th Cir. 2001). Thus, notwithstanding a prior deficiency case, a
                                                                                                     Continued




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                                      bar repetitious suits on the same cause of action, and this
                                      doctrine is applicable to tax litigation. As the Supreme Court
                                      explained:
                                      [W]hen a court of competent jurisdiction has entered a final judgment on
                                      the merits of a cause of action, the parties to the suit and their privies
                                      are thereafter bound ‘‘not only as to every matter which was offered and
                                      received to sustain or defeat the claim or demand, but as to any other
                                      admissible matter which might have been offered for that purpose.’’ * * *

                                                                 *    *   *    *    *   *    *
                                      * * * Income taxes are levied on an annual basis. Each year is the origin
                                      of a new liability and of a separate cause of action. Thus if a claim of
                                      liability or non-liability relating to a particular tax year is litigated, a judg-
                                      ment on the merits is res judicata as to any subsequent proceeding
                                      involving the same claim and the same tax year. * * *
                                         [Commissioner v. Sunnen, 333 U.S. 591, 597–598 (1948) (quoting Crom-
                                      well v. Cnty. of Sac, 94 U.S. 351, 352 (1876); emphasis added).]

                                      That is, each tax year is a separate cause of action, and res
                                      judicata makes truly final a final judgment on that cause of
                                      action. Where the cause of action of a taxpayer’s liability in
                                      a given tax year has been litigated (as Mr. Koprowski’s tax
                                      liability for 2006 was litigated in the deficiency case, docket
                                      No. 1185–09S), the parties may thereafter be barred from re-
                                      litigating that liability—whether by reference either to a
                                      ‘‘matter which was offered’’ in that prior suit (such as the
                                      adjustments on the notice of deficiency) or to a ‘‘matter which
                                      might have been offered’’ in the prior suit—unless there is an
                                      exception that prevents the application of the doctrine of res
                                      judicata.
                                           2. Collateral estoppel
                                        Collateral estoppel, or issue preclusion, prevents the
                                      relitigation of an issue that has been previously litigated
                                      between the parties in one controversy but that recurs in
                                      other litigation between them in different controversies.
                                      Simply stated the difference between the two doctrines is
                                      this:
                                      section 6015 claim may be litigated where ‘‘[t]he parties previously agreed that any request by
                                      petitioner for relief from joint and several liability under section 6015 would not be determined
                                      in the’’ deficiency case. Greer v. Commissioner, T.C. Memo. 2009–20, slip op. at 4–5, aff ’d, 595
                                      F.3d 338 (6th Cir. 2010). However, neither in the hearings in docket No. 1185–09S nor in the
                                      stipulated decision document that the parties submitted in that case did the Commissioner
                                      waive any res judicata defense against Mr. Koprowski’s section 6015 claim.




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                                      Under res judicata, a final judgment on the merits of an action precludes
                                      the parties or their privies from relitigating issues that were or could have
                                      been raised in that action. * * * Under collateral estoppel, once a court
                                      has decided an issue of fact or law necessary to its judgment, that decision
                                      may preclude relitigation of the issue in a suit on a different cause of
                                      action * * *. [Allen v. McCurry, 449 U.S. 90, 94 (1980).]

                                        Collateral estoppel thus precludes relitigation not only in
                                      connection with the cause of action previously litigated but
                                      even in connection with different claims or causes of action.
                                      Because collateral estoppel has this broader reach, the courts
                                      have perceived that its rigid application might have unjust
                                      results. The Supreme Court has observed that it might be—
                                      unfair to apply offensive estoppel * * * where the second action affords
                                      the defendant procedural opportunities unavailable in the first action that
                                      could readily cause a different result.15
                                      15If, for example, the defendant in the first action was forced to defend in
                                      an inconvenient forum and therefore was unable to engage in full dis-
                                      covery or call witnesses, application of offensive collateral estoppel may be
                                      unwarranted. Indeed, differences in available procedures may sometimes
                                      justify not allowing a prior judgment to have estoppel effect in a subse-
                                      quent action even between the same parties, or where defensive estoppel
                                      is asserted against a plaintiff who has litigated and lost. * * *
                                         [Parklane Hosiery Co. v. Shore, 439 U.S. 322, 331 (1979). 4]

                                        Consequently, there are limits to the application of collat-
                                      eral estoppel. Unlike res judicata, which binds the parties as
                                      to any matter that ‘‘might have been offered’’, whether or not
                                      that matter was actually litigated, collateral estoppel applies
                                      only to issues that were actually litigated in the first suit.
                                      The rule of collateral estoppel provides that ‘‘[w]hen an issue
                                      of fact or law is actually litigated and determined by a valid
                                      and final judgment, and the determination is essential to the
                                         4 The potential unfairness of collaterally estopping relitigation of an issue may be aggravated

                                      where collateral estoppel is used ‘‘offensively’’—i.e., where ‘‘a plaintiff is seeking to estop a de-
                                      fendant from relitigating the issues which the defendant previously litigated and lost against
                                      another plaintiff ’’, Parklane Hosiery, 439 U.S. at 329—and may be particularly acute where an
                                      issue has a small-dollar consequence in the first case and has a large-dollar consequence in the
                                      subsequent case. ‘‘If a defendant in the first action is sued for small or nominal damages, he
                                      may have little incentive to defend vigorously, particularly if future suits are not foreseeable’’.
                                      Id. at 330; see also Yamaha Corp. v. United States, 961 F.2d 245, 254 (D.C. Cir. 1992) (‘‘An ex-
                                      ample of such unfairness would be when the losing party clearly lacked any incentive to litigate
                                      the point in the first trial, but the stakes of the second trial are of a vastly greater magnitude’’);
                                      Otherson v. Dep’t of Justice, INS, 711 F.2d 267, 273 (D.C. Cir. 1983) (issue ‘‘[p]reclusion is some-
                                      times unfair if the party to be bound lacked an incentive to litigate in the first trial, especially
                                      in comparison to the stakes of the second trial’’). These concerns are not implicated where the
                                      same cause of action is at issue in both trials, and the ‘‘stakes’’ of the second trial are, by defini-
                                      tion, not greater than but identical to the ‘‘stakes’’ of the first.




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                                      judgment, the determination is conclusive in a subsequent
                                      action between the parties, whether on the same or a dif-
                                      ferent claim.’’ 1 Restatement, Judgments 2d, sec. 27 (1982)
                                      (emphasis added); see also Montana v. United States, 440
                                      U.S. 147, 153–154 (1979). Some even hold that, for purposes
                                      of collateral estoppel, ‘‘the availability of judicial review is a
                                      crucial factor in determining preclusive effect.’’ Wehrli v.
                                      Cnty. of Orange, 175 F.3d 692, 694 (9th Cir. 1999).
                                        A small tax case under section 7463(b) involves a small
                                      amount, is resolved under less formal procedures, and
                                      receives no appellate review. For these reasons, the question
                                      whether a decision in a small tax case gives rise to collateral
                                      estoppel (or ‘‘issue preclusion’’) is controversial, cf. Mitchell v.
                                      Commissioner, 131 T.C. 215, 221–239 (2008) (Holmes, J.,
                                      concurring) (discussing the collateral estoppel effect of small
                                      tax cases); but in this case we do not face the question
                                      whether collateral estoppel arises from a decision in a small
                                      tax case. We resolve only the application of res judicata.
                                      II. Res judicata arising from docket No. 1185–09S
                                         Mr. Koprowski’s income tax liability for 2006 (the year for
                                      which he now seeks relief from joint liability) has already
                                      been decided in the deficiency case, and the doctrine of res
                                      judicata requires us to follow that prior decision. Under the
                                      Supreme Court’s explication of res judicata in Commissioner
                                      v. Sunnen, 333 U.S. at 597–598, four conditions must be met
                                      to preclude relitigation of a claim: (1) the parties in each
                                      action must be identical (or at least be in privity); (2) a court
                                      of competent jurisdiction must have rendered the first judg-
                                      ment; (3) the prior action must have resulted in a final judg-
                                      ment on the merits; and (4) the same cause of action or claim
                                      must be involved in both suits. See United States v.
                                      Shanbaum, 10 F.3d 305, 310 (5th Cir. 1994). Once these
                                      conditions are met, each party is prohibited from raising any
                                      claim or defense that was or could have been raised as part
                                      of the litigation over the cause of action in the prior case. Id.
                                      Those four conditions are met here:
                                        1. In the deficiency case Mr. Koprowski was a petitioner,
                                      and the Commissioner of Internal Revenue was the
                                      respondent. In this case, Mr. Koprowski is again the peti-




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                                      tioner, and the Commissioner is again the respondent. Thus,
                                      the parties are identical.
                                         2. In the deficiency case the Koprowskis filed their defi-
                                      ciency suit in the only court authorized under section 6213(a)
                                      to hear such suits—i.e., this Court. Clearly we had jurisdic-
                                      tion in that prior case.
                                         3. The deficiency case concluded with the entry of a deci-
                                      sion by the Court on November 9, 2009, pursuant to the
                                      stipulation of the parties. Our decision was a final judgment
                                      on the merits of the Koprowskis’ 2006 joint and several
                                      liability.
                                         4. Finally, in the present case Mr. Koprowski seeks
                                      innocent spouse relief from the very liability—i.e., the 2006
                                      joint income tax liability—as to which this Court in the defi-
                                      ciency case determined that he was jointly and severally
                                      liable. The claims are thus identical.
                                         Since the four conditions for claim preclusion are present,
                                      relitigation of Mr. Koprowski’s claim is barred by res judi-
                                      cata, unless he can invoke some exception to its application.
                                      III. Arguments against the application of res judicata
                                           A. Res judicata arising from a small tax case
                                         Mr. Koprowski asserts that the deficiency case was a
                                      ‘‘small case’’ that proceeded under section 7463; and it
                                      appears he may be arguing that res judicata does not arise
                                      from such a case. If this is his argument, then we must reject
                                      it. To assert that res judicata does not attach to the decision
                                      of a small tax case under section 7463 is to assert that Con-
                                      gress created in that statute a regime exempt from res judi-
                                      cata. This assertion, however, effectively overlooks section
                                      7463(b), which explicitly provides:
                                        SEC. 7463(b). FINALITY OF DECISIONS.—A decision entered in any case
                                      in which the proceedings are conducted under this section shall not be
                                      reviewed in any other court and shall not be treated as a precedent[5] for
                                      any other case.
                                        5 If Mr. Koprowski’s denial of res judicata is prompted by the provision of section 7463(b) that

                                      a small tax case decision ‘‘shall not be treated as precedent’’, then that position is answered by
                                      observing (i) that res judicata is a bar to litigation, not a ‘‘precedent’’ that dictates its outcome,
                                      and (ii) that before denying ‘‘precedent’’ status to small tax case decisions, subsection (b) first
                                      gives those decisions ‘‘Finality’’ by providing that no other court can review them. Thus, in
                                      Ginalski v. Commissioner, T.C. Memo. 2004–104, we rejected in dictum the argument that ‘‘the
                                      limitation on citing Summary Opinions as precedence deprives them of the effect of res judi-
                                                                                                       Continued




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                                      This subsection assures the ‘‘[f]inality’’ 6 of a small tax case
                                      decision by exempting it from appellate review. It would
                                      flatly contradict the evident congressional purpose to hold
                                      that the denial of appellate review deprives the decision of
                                      finality.
                                         If res judicata did not apply to decisions in small tax cases
                                      because of a principle that such cases, by their nature,
                                      should not bar future litigation, then this principle would be
                                      subject to anomalies: Section 6512(a) bars a taxpayer from
                                      filing a refund suit for a tax year for which he has previously
                                      filed a timely Tax Court petition. On the other hand, section
                                      6215(a) bars the Government from filing suit to collect any
                                      part of a deficiency determined by the IRS that the Tax Court
                                      has ‘‘disallowed’’. These provisions, equivalent to res judicata,
                                      grant preclusive effect to Tax Court litigation, without distin-
                                      guishing between regular cases and small tax cases. In light
                                      of these provisions, it would be incoherent to find that sec-
                                      tion 7463(b) implicitly exempts small tax cases from the
                                      effect of res judicata.
                                         The Court of Claims explicitly held that attempted relitiga-
                                      tion after a decision in a small tax case in the Tax Court
                                      under section 7463 ‘‘is barred under the doctrine of res judi-
                                      cata.’’ Vaitkus v. United States, 230 Ct. Cl. 815, 815 (1982).
                                      The text of section 7463(b) permits no other result. We there-
                                      fore hold that the doctrine of res judicata does bar relitiga-
                                      tion after a decision in a small tax case under section 7463.
                                           B. Section 6015(g)(2)
                                        Mr. Koprowski further resists the application of res judi-
                                      cata on the grounds that his entitlement to innocent spouse
                                      relief ‘‘was not raised in previous litigation nor adjudicated
                                      on its merits in the previous case.’’ Mr. Koprowski is wrong
                                      in asserting that the defense ‘‘was not raised’’, since in the
                                      deficiency case he did assert an innocent spouse defense in
                                      cata’’.
                                         6 The heading of section 7463(b)—‘‘Finality of Decisions’’—helps to illuminate its meaning and

                                      purpose. See Almendarez-Torres v. United States, 523 U.S. 224, 234 (1998) (‘‘ ‘the title of a stat-
                                      ute and the heading of a section’ are ‘tools available for the resolution of a doubt’ about the
                                      meaning of a statute’’ (quoting Trainmen v. Baltimore & Ohio R. Co., 331 U.S. 519, 528–529
                                      (1947))); Active Disposal, Inc. v. City of Darien, 635 F.3d 883, 886 (7th Cir. 2011) (‘‘ ‘while a stat-
                                      ute’s title does not define its meaning, it is relevant’ ’’ (quoting United States v. Chemetco, 274
                                      F.3d 1154, 1159 (7th Cir. 2001))); cf. sec. 7806(b) (‘‘descriptive matter relating to the contents
                                      of ’’ the Internal Revenue Code shall not ‘‘be given any legal effect’’).




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                                      (54)                         KOPROWSKI v. COMMISSIONER                                         65


                                      his opposition to the IRS’s motion for summary judgment (as
                                      we quote above). However, in a sense he is correct in
                                      asserting that the issue ‘‘was not * * * adjudicated’’, since
                                      the parties withdrew their cross-motions for summary judg-
                                      ment and the Koprowskis conceded the case in full, so that
                                      the Court entered decision without addressing section 6015
                                      (or any other issue).
                                        In circumstances outside section 6015 this would be beside
                                      the point, since res judicata bars not just issues that were
                                      actually raised but rather ‘‘issues that were or could have
                                      been raised in that action’’. Allen, 449 U.S. at 94 (emphasis
                                      added). Thus, in other circumstances we would not inquire to
                                      learn the extent to which the particular issue had actually
                                      been raised and adjudicated; res judicata would apply in any
                                      event.
                                        However, under section 6015(g)(2) an innocent spouse
                                      claimant can sometimes overcome res judicata, if the claim-
                                      ant can meet two conditions. Section 6015(g)(2) provides:
                                         (2) RES JUDICATA.—In the case of any election under subsection (b) or
                                      (c) or of any request for equitable relief under subsection (f), if a decision
                                      of a court in any prior proceeding for the same taxable year has become
                                      final, such decision shall be conclusive except with respect to the qualifica-
                                      tion of the individual for relief which was not an issue in such proceeding.
                                      The exception contained in the preceding sentence shall not apply if the
                                      court determines that the individual participated meaningfully in such
                                      prior proceeding. [Emphasis added.]

                                      Under this statute, to escape the effect of res judicata from
                                      prior litigation, the requesting spouse must show (1) that his
                                      innocent spouse claim ‘‘was not an issue’’ in the prior pro-
                                      ceeding and (2) that he did not ‘‘participate[ ] meaningfully’’
                                      in the prior proceeding. Mr. Koprowski meets neither of
                                      those conditions.
                                         First, his innocent spouse claim was explicitly put at issue
                                      in the prior proceeding by the Koprowskis’ objection and
                                      cross-motion, quoted above. For this reason alone, section
                                      6015(g)(2) does not apply to relieve Mr. Koprowski from the
                                      ‘‘conclusive’’ effect of the prior suit.
                                         Second, even if Mr. Koprowski had not explicitly raised an
                                      innocent spouse claim in the deficiency case, to overcome res
                                      judicata in the present case he would also have to show that
                                      he did not meaningfully participate in the deficiency case;
                                      and to make such a showing, he would have to overcome the




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                                      66                  138 UNITED STATES TAX COURT REPORTS                                        (54)


                                      contrary indications in our records: Mr. Koprowski signed the
                                      petition in the deficiency case—and all other papers that the
                                      petitioners filed with the Court. The innocent spouse claim,
                                      which was to his benefit and was to the detriment of Mrs.
                                      Koprowski, was asserted in their opposition to the IRS’s
                                      motion for summary judgment. When they appeared in per-
                                      son before the Court, Mrs. Koprowski was all but silent, and
                                      it was Mr. Koprowski who spoke for the two of them. The
                                      record thus indicates that he did meaningfully participate in
                                      the deficiency case, and he does not allege that he did not.
                                      He therefore fails, for this additional reason, to satisfy sec-
                                      tion 6015(g)(2), and he is not relieved from the operation of
                                      res judicata in this instance.
                                         Because res judicata does bar Mr. Koprowski’s relitigation
                                      of the 2006 income tax liability that he already litigated in
                                      the deficiency case, we will grant the IRS’s motion for sum-
                                      mary judgment and will affirm the IRS’s determination not to
                                      grant Mr. Koprowski relief from that liability.
                                         To reflect the foregoing,
                                                                     An appropriate order and decision will be
                                                                   entered.
                                        Reviewed by the Court.
                                        COLVIN, COHEN, HALPERN, FOLEY, VASQUEZ, GALE,
                                      THORNTON, GOEKE, WHERRY, KROUPA, HOLMES, and MORRI-
                                      SON, JJ., agree with this opinion of the Court.
                                        MARVEL and PARIS, JJ., concur in the result only.



                                         HOLMES, J., concurring: I agree with the rest of the Court
                                      that a final decision in an S case precludes any claim in a
                                      later case that could have been raised, subject to the statu-
                                      tory exception of section 6015(g)(2). I write separately only to
                                      note that the same result will certainly follow when the
                                      Court finally addresses the question of whether decisions in
                                      S cases collaterally estop losing parties from relitigating the
                                      same issues in later cases. See Mitchell v. Commissioner, 131
                                      T.C. 215, 221–39 (2008) (Holmes, J., concurring).
                                         The Supreme Court has reminded us that we should not
                                      ‘‘carve out an approach to administrative review good for tax
                                      law only.’’ Mayo Found. for Med. Educ. & Research v. United




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                                      States, 562 U.S. ll, ll, 131 S. Ct. 704, 713 (2011). The
                                      same goes for the federal common law of judgments: ‘‘The
                                      preclusive effect of a federal-court judgment is determined by
                                      federal common law.’’ Taylor v. Sturgell, 553 U.S. 880, 891
                                      (2008). It is not our job to try to figure out whether pre-
                                      clusion is a good policy or a bad one and in what cir-
                                      cumstances we think it best applies: ‘‘A fundamental precept
                                      of common-law adjudication, embodied in the related doc-
                                      trines of collateral estoppel and res judicata, is that a ‘right,
                                      question or fact distinctly put in issue and directly deter-
                                      mined by a court of competent jurisdiction . . . cannot be
                                      disputed in a subsequent suit between the same parties or
                                      their privies.’ ’’ Montana v. United States, 440 U.S. 147, 153
                                      (1979) (quoting S. Pac. R.R. Co. v. United States, 168 U.S. 1,
                                      48–49 (1897)).

                                                                               f




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