                              T.C. Memo. 2019-114



                        UNITED STATES TAX COURT



          DAVID K. WAGSTAFF AND JEFFREY A. DAVIS, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



      Docket No. 22658-17.                         Filed September 5, 2019.



      David K. Wagstaff and Jeffrey A. Davis, pro sese.

      Jeannine A. Zabrenski and Audra M. Dineen, for respondent.



                           MEMORANDUM OPINION


      RUWE, Judge: The matter before us is petitioners’ motion pursuant to Rule

2311 for an award of reasonable litigation or administrative costs and fees (motion



      1
       Unless otherwise indicated, all Rule references are to the Tax Court Rules
of Practice and Procedure, and all section references are to the Internal Revenue
Code (Code) in effect at all relevant times.
                                        -2-

[*2] for costs) under section 7430(a). In their motion for costs, petitioners have

requested $154.98 in costs and that this Court adopt a rule proposed by petitioners.

Respondent has conceded all relevant points related to the request for $154.98 in

costs but continues to oppose petitioners’ request that this Court adopt the

proposed rule. The primary issue before this Court is whether, in addition to

granting petitioners’ motion for $154.98 in costs, this Court should adopt

petitioners’ proposed rule.

                                    Background

      Petitioners were issued an SSA-1099, Social Security Benefit Statement, by

the Social Security Administration (SSA) for the 2014 tax year that reported a

“workers’ compensation offset” of $14,055.60, which is taxable income. Despite

what was reported on the SSA-1099, petitioners did not receive any workers’

compensation in or for the 2014 tax year and filed their tax return excluding the

workers’ compensation offset. When petitioners filed their tax return, they

included a statement notifying respondent that the SSA-1099 they had received

contained incorrect information and a compensation payment history printout from

the U.S. Department of Labor’s website showing that they did not receive

workers’ compensation in 2014. Additionally, petitioners included a letter dated

June 5, 2015, from the SSA directed to the U.S. Department of Labor Office of
                                          -3-

[*3] Workers’ Compensation Benefit Information requesting petitioners’ workers’

compensation benefit information.

      In October 2016 respondent notified petitioners of certain proposed changes

to their tax return, including the inclusion of the SSA-1099 income. Between

October 2016 and October 2017 petitioners supplied multiple items to respondent

from other Federal agencies that showed that the SSA-1099 may have been

incorrect. Respondent, based on the position that the SSA-1099 was accurate,

issued a notice of deficiency on July 31, 2017, determining a $3,763 deficiency in

petitioners’ tax for the 2014 tax year. Petitioners claim that they were able to

secure and deliver documentation to respondent at that time showing that the SSA-

1099 was incorrect, but respondent appears to have lost the documentation.

      Petitioners brought this issue to Senator Cory Booker’s office, which

enlisted the assistance of the Taxpayer Advocate Service. Additionally,

petitioners timely filed a petition with this Court on October 30, 2017.2 Following

the intervention of the Taxpayer Advocate Service, respondent reversed his

position, issued a “no change” certification that petitioners’ 2014 tax return was

accepted as filed, and mailed petitioners a proposed decision document reflecting

his concession of the deficiency.

      2
          Petitioners were residents of New Jersey when they filed their petition.
                                         -4-

[*4] On January 8, 2019, petitioners filed their motion for costs under section

7430(a) and Rule 231 requesting $154.98 in costs consisting of a Tax Court filing

fee, postage, and travel expenses. Petitioners additionally requested that this

Court adopt a rule that would be applied when two or more Federal agencies

provide conflicting information to a taxpayer, the taxpayer discloses the conflict in

his or her return, the taxpayer provides documentation supporting his or her

position, and the taxpayer continues to respond timely to respondent. Under

petitioners’ proposed rule, if all of these requirements are met, respondent would

be prevented from seeking a deficiency, hold the taxpayer harmless, request the

immediate assistance of the Federal agencies involved to resolve the conflict, be

required to keep the taxpayer informed, and provide the taxpayer with notice and

an opportunity to be heard before making an assessment.

      On March 4, 2019, respondent replied to petitioners’ motion for costs, and

argued that petitioners had failed to file an affidavit attesting that they had met the

net worth requirements of 28 U.S.C. sec. 2412(d)(2)(B) (2012) as required by Rule

231(b)(4). Respondent conceded all other points necessary for petitioners’ motion

for $154.98 in costs to be granted. Additionally, respondent opposed petitioners’

request that this Court adopt petitioners’ proposed rule on the grounds that this

Court does not have jurisdiction to adopt, or order respondent to adopt, the
                                         -5-

[*5] proposed rule. This Court ordered that petitioners file a reply to respondent’s

response to their motion for costs, which they did on May 6, 2019. Petitioners

attached as an exhibit to their reply a qualifying affidavit that demonstrated

petitioners met the net worth requirements of 28 U.S.C. sec. 2412(d)(2)(B). In a

second response filed on June 5, 2019, respondent conceded that petitioners

satisfied the net worth requirement of 28 U.S.C. sec. 2412(d)(2)(B) as required by

Rule 231(b)(4). Respondent has now conceded all points related to petitioners’

motion for $154.98 in costs.

      Respondent continues to oppose petitioners’ request that this Court adopt

petitioners’ proposed rule on the grounds that this Court does not have jurisdiction

to adopt, or order respondent to adopt, the proposed rule. We agree with

respondent that we do not have jurisdiction to adopt petitioners’ proposed rule.

                                      Discussion

      The Tax Court is a court of limited jurisdiction and may exercise

jurisdiction only to the extent authorized by Congress. See sec. 7442; Naftel v.

Commissioner, 85 T.C. 527, 529 (1985) (“It is well settled that the Tax Court is a

court of limited jurisdiction, and * * * [it] may exercise * * * [its] jurisdiction only

to the extent authorized by Congress.”). If the Court does not have jurisdiction to

consider an issue, then despite a party’s choice of the Tax Court as a forum to
                                          -6-

[*6] settle the dispute, the Court may not decide the issue. Naftel v.

Commissioner, 85 T.C. at 530.

        Section 7430, relating to administrative or litigation costs, does not grant

this Court the authority to create and adopt the type of rule that petitioners have

proposed, nor does any other section of the Code. See Grigoraci v. Commissioner,

122 T.C. 272 (2004) (determining Court lacked statutory authority to award

punitive damages). Consequently, we do not have jurisdiction to adopt such a

rule.

        We will grant petitioners’ motion for $154.98 in costs but deny petitioners’

request that we adopt their proposed rule.

        In reaching our decision we have considered all arguments made by the

parties, and to the extent not mentioned or addressed, they are irrelevant or

without merit.

        To reflect the foregoing,


                                                An appropriate order and decision

                                         will be entered.
