                                               SECC CORPORATION, PETITIONER v. COMMISSIONER
                                                    OF INTERNAL REVENUE, RESPONDENT

                                                    Docket No. 3937–12.                               Filed April 3, 2014.

                                                 In this case brought under I.R.C. sec. 7436, P seeks our
                                               determination of the proper classification of P’s workers for
                                               employment tax purposes and certain related issues. R sent P
                                               a letter (Apr. 15, 2011, letter) which stated that P’s employ-

                                                                                                                                   225




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00001   Fmt 3857   Sfmt 3857    V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     226                 142 UNITED STATES TAX COURT REPORTS                                    (225)

                                               ment tax liabilities as determined by Appeals will be assessed.
                                               The letter was not sent by certified or registered mail. P peti-
                                               tioned this Court more than 90 days after R sent the Apr. 15,
                                               2011, letter. Held: The Apr. 15, 2011, letter was a determina-
                                               tion relating to the classification of P’s workers for employ-
                                               ment tax purposes. Held, further, the determination related to
                                               matters specified in I.R.C. sec. 7436(a) over which we have
                                               jurisdiction. Held, further, the determination related to an
                                               actual controversy in connection with an audit which was part
                                               of an examination. Held, further, because R did not send P a
                                               notice of determination by certified or registered mail, the 90-
                                               day period for filing an action in the Court provided in I.R.C.
                                               sec. 7436(b)(2) is inapplicable and the petition is timely. Held,
                                               further, I.R.C. sec. 7436(d)(1), applying the principles of sev-
                                               eral listed Internal Revenue Code sections to I.R.C. sec. 7436,
                                               does not alter our holdings stated above. Held, further, R’s
                                               motion to dismiss for lack of jurisdiction and P’s cross-motion
                                               to dismiss for lack of jurisdiction will be denied.

                                           Alvah Lavar Taylor, for petitioner.
                                           Vladislav M. Rozenzhak, for respondent.
                                                                                  OPINION

                                        COLVIN, Judge: This case is before the Court on respond-
                                     ent’s motion to dismiss for lack of jurisdiction and peti-
                                     tioner’s cross-motion to dismiss for lack of jurisdiction. The
                                     issue for decision is whether we have jurisdiction to deter-
                                     mine whether respondent’s worker classification determina-
                                     tion was correct. We hold that we have jurisdiction. 1

                                                                               Background

                                        The record establishes and/or the parties do not dispute
                                     the following.
                                        Petitioner was a California corporation with its principal
                                     office in Corona, California, when it filed the petition.
                                     A. Petitioner’s Business and Petitioner’s Workers
                                       During the tax periods in issue petitioner operated a busi-
                                     ness connecting cable lines (cable splicing) for corporate and
                                     residential customers. From 2005 through 2007 petitioner
                                           1 Unless
                                                otherwise indicated, section references are to the Internal Rev-
                                     enue Code in effect for the years in issue, and Rule references are to the
                                     Tax Court Rules of Practice and Procedure. We round monetary amounts
                                     to the nearest dollar.




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00002   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                         SECC CORP. v. COMMISSIONER                                     227


                                     employed 117 to 145 workers whom it paid to perform cable
                                     splicing services.
                                        During the tax periods in issue petitioner treated its
                                     workers in dual capacities: as employees and as independent
                                     contractors, i.e., as lessors to petitioner of tools and vehicles
                                     they were required to provide in connection with providing
                                     services for petitioner. Petitioner reported taxable hourly
                                     wages for its workers on Forms W–2, Wage and Tax State-
                                     ment. Petitioner also made payments to its workers for
                                     rental of tools and vehicles (equipment lease payments). Peti-
                                     tioner did not classify its workers as employees for purposes
                                     of equipment rental. Petitioner reported the equipment lease
                                     payments on Forms 1099–MISC, Miscellaneous Income, as
                                     nonemployee compensation for 2005 and as rent for 2006 and
                                     2007.
                                     B. The IRS Examination and Appeals Process
                                        In 2008 respondent audited petitioner’s Forms 941,
                                     Employer’s Quarterly Federal Tax Return, for all tax periods
                                     in 2005, 2006, and 2007. On September 24, 2008, respondent
                                     sent petitioner an audit report (30-day letter) stating that
                                     the Examination Division had concluded that petitioner is
                                     liable for the following Federal Insurance Contributions Act
                                     and withholding tax increases (imposed under sections 3101,
                                     3111, and 3402) and penalties as a result of respondent’s
                                     classification of the equipment lease payments to petitioner’s
                                     workers as wages:

                                                 Tax period                        Proposed                        Proposed
                                                  ending                         tax increase                 sec. 6656 penalty

                                                   3/31/05                        $105,914                         $1,975
                                                   6/30/05                         104,557                          1,907
                                                   9/30/05                         104,287                          1,893
                                                  12/31/05                         104,117                          1,885
                                                   3/31/06                          90,903                          1,682
                                                   6/30/06                          90,615                          1,668
                                                   9/30/06                          90,590                          1,666
                                                  12/31/06                          90,206                          1,647
                                                   3/31/07                         109,987                          2,051
                                                   6/30/07                         109,960                          2,050
                                                   9/30/07                         108,140                          1,959
                                                  12/31/07                         106,480                          1,876

                                                    Total                        1,215,756                         22,259




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00003   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     228                 142 UNITED STATES TAX COURT REPORTS                                    (225)


                                         On the assumption that the equipment lease payments
                                     were properly classified as wages, the 30-day letter also said
                                     that those payments did not meet the requirements of section
                                     62(c) for treatment as reimbursements under an accountable
                                     plan and therefore were subject to employment taxes. The
                                     30-day letter said that the Examination Division had made
                                     a ‘‘final determination on this issue’’ but also said that
                                     ‘‘[t]hese changes to your employment taxes are not based on
                                     a worker classification determination.’’
                                         On November 15, 2008, petitioner filed a protest with the
                                     Examination Division and requested a hearing with the
                                     Internal Revenue Service (IRS) Appeals Office. In the pro-
                                     test, petitioner contended that for the periods in issue: (1)
                                     the equipment lease payments were not properly classified as
                                     wages; (2) its workers were independent contractors with
                                     respect to both the amounts paid to them as wages and the
                                     equipment lease payments; (3) petitioner qualifies for relief
                                     under the Revenue Act of 1978, Pub. L. No. 95–600, sec. 530,
                                     92 Stat. at 2885 (RA ’78 sec. 530), and sections 3402(d) and
                                     3509; and (4) petitioner is not liable for any penalties.
                                         In January 2009 Appeals acknowledged receipt of the case.
                                     Petitioner’s representative met with an Appeals officer. Peti-
                                     tioner’s representative notified the Appeals officer that it was
                                     continuing to raise all of the issues stated in its protest.
                                         On November 9, 2009, Appeals returned the case to the
                                     Examination Division for further consideration because
                                     Appeals had concluded that ‘‘additional development by the
                                     Examination Division of the issue at hand is needed.’’ The
                                     case was returned to Appeals on March 15, 2010. An undated
                                     Appeals Case Memo states in part the following:
                                           Were the workers at issue independent contractors?
                                           No. Taxpayer’s argument that W–2 wages paid to the employees were
                                           erroneously classified as wages to common law employees does not have
                                           merit. There is no evidence to support taxpayer’s position that the
                                           workers were in business for themselves.

                                                                *   *   *   *   *   *    *
                                           Were the payments issued to the workers for tool and vehicle rentals
                                           issued to workers working under a dual capacity (common law employee
                                           and independent contractor)?
                                           No. Taxpayer’s argument is without merit. There is no evidence to sup-
                                           port taxpayer’s argument that the workers worked under a dual




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00004   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                          SECC CORP. v. COMMISSIONER                                     229


                                           capacity. There is no evidence showing that the taxpayer and the
                                           workers had a bona-fide rental contract.

                                                              *   *   *   *    *  *   *
                                           Does the taxpayer qualify for relief under Section 530, 3509(a) or
                                           3402(d)?
                                           No. Taxpayer has not been able to substantiate his position that the
                                           payments were issued to bona-fide independent contractors.

                                       By letter dated April 15, 2011, Appeals informed petitioner
                                     that the employment tax liabilities would be assessed in the
                                     amounts determined. The April 15, 2011, letter states:
                                             Unfortunately, we were unable to reach an agreement on your case.
                                           The employment tax liability as determined by Appeals will be assessed
                                           and you will receive a Notice and Demand for payment of the tax, pen-
                                           alty, and interest owed.
                                             If you would like to challenge our determination in court, you may file
                                           a complaint in the United States District Court or the United States
                                           Court of Federal Claims. If you decide to do this, you must first pay, at
                                           a minimum, the employment tax assessment attributable to one
                                           employee for any one quarter and file a claim for refund of the tax. Once
                                           the claim for refund is denied or 6 months elapse without any action by
                                           the Service, you may initiate suit.
                                        The April 15, 2011, letter was not sent by certified or reg-
                                     istered mail. Petitioner filed a petition in this Court on Feb-
                                     ruary 13, 2012. Respondent did not issue petitioner a Letter
                                     3523, Notice of Determination of Worker Classification
                                     (NDWC), with respect to the tax periods in issue. On May 9,
                                     2011, respondent sent petitioner a notice of adjustment
                                     assessing the above tax increases and penalties.

                                                                                 Discussion
                                       The Tax Court may exercise jurisdiction only to the extent
                                     expressly provided by Congress. See sec. 7442; Breman v.
                                     Commissioner, 66 T.C. 61, 66 (1976); see also Rule 13(a).
                                     However, we have the authority to determine whether we
                                     have jurisdiction over a particular case. Kluger v. Commis-
                                     sioner, 83 T.C. 309, 314 (1984).
                                     A. Positions of the Parties
                                       Both parties assert that this Court should dismiss this
                                     case for lack of jurisdiction because respondent did not issue
                                     an NDWC. Despite the superficial similarity of those
                                     motions, the parties have sharply contrasting views of the




VerDate Mar 15 2010   12:42 Apr 28, 2015    Jkt 000000   PO 00000   Frm 00005   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     230                  142 UNITED STATES TAX COURT REPORTS                                    (225)


                                     effect of dismissal. Respondent contends that dismissal would
                                     deprive this Court of jurisdiction over this case, leave the
                                     assessment in place, and allow the IRS to proceed with
                                     collection.
                                        In contrast, petitioner contends that the failure to issue an
                                     NDWC means the assessment is invalid and the IRS may not
                                     collect the disputed employment taxes unless and until an
                                     NDWC is sent. Under petitioner’s theory, issuance of an
                                     NDWC would trigger the right to file a petition and seek our
                                     determination under section 7436.
                                        Our jurisdiction is not expanded or contracted by the posi-
                                     tions of the parties. Thus, it is not dispositive that both par-
                                     ties claim that we lack jurisdiction. See Charlotte’s Office
                                     Boutique, Inc. v. Commissioner, 121 T.C. 89, 102 (2003),
                                     aff ’d, 425 F.3d 1203 (9th Cir. 2005). We will independently
                                     decide whether we have jurisdiction.
                                     B. Section 7436
                                      Section 7436 governs proceedings in the Court for deter-
                                     mining employment status. Section 7436(a) provides:
                                              SEC. 7436(a). CREATION OF REMEDY.—If, in connection with an audit
                                           of any person, there is an actual controversy involving a determination
                                           by the Secretary as part of an examination that—
                                                (1) one or more individuals performing services for such person are
                                              employees of such person for purposes of subtitle C, or
                                                (2) such person is not entitled to the treatment under subsection (a)
                                              of section 530 of the Revenue Act of 1978 with respect to such an indi-
                                              vidual,
                                           upon the filing of an appropriate pleading, the Tax Court may determine
                                           whether such a determination by the Secretary is correct and the proper
                                           amount of employment tax under such determination. Any such redeter-
                                           mination by the Tax Court shall have the force and effect of a decision
                                           of the Tax Court and shall be reviewable as such.
                                       Generally, we have jurisdiction under section 7436(a) to
                                     determine: (1) whether an individual providing services to a
                                     principal is that principal’s employee for purposes of subtitle
                                     C; (2) whether the principal, if an employer, is entitled to
                                     relief under RA ’78 sec. 530; and (3) if the individual pro-
                                     viding services is an employee, the proper amounts of
                                     employment taxes which relate to the Commissioner’s deter-
                                     mination concerning worker classification. Sec. 7436(a).
                                       In deciding whether we have jurisdiction, we are mindful
                                     that ‘‘in response to the expressed intent of Congress to pro-




VerDate Mar 15 2010   12:42 Apr 28, 2015    Jkt 000000   PO 00000   Frm 00006   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                         SECC CORP. v. COMMISSIONER                                     231


                                     vide a convenient, prepayment hearing, this Court and the
                                     Courts of Appeals have given the jurisdictional provisions a
                                     broad, practical construction rather than a narrow, technical
                                     meaning.’’ Lewy v. Commissioner, 68 T.C. 779, 781 (1977) (fn.
                                     refs. omitted). Therefore, we should ‘‘adopt a construction
                                     which will permit the Court to retain jurisdiction without
                                     doing violence to the statutory language.’’ Smith v. Commis-
                                     sioner, 140 T.C. 48, 51 (2013).
                                     C. Whether the April 15, 2011, Letter Was a Determination
                                        The Commissioner’s ‘‘determination’’ of worker classifica-
                                     tion provides the predicate for our jurisdiction under section
                                     7436(a). Respondent states that the April 15, 2011, letter is
                                     a Letter 4451, which the IRS uses as a closing letter in
                                     employment tax cases if worker classification and RA ’78 sec.
                                     530 are not at issue. Both parties argue (though with sharply
                                     conflicting views of the effect of prevailing) that issuance of
                                     an NDWC is required to give this Court jurisdiction under
                                     section 7436.
                                        We disagree that we have jurisdiction under section 7436
                                     only when the Commissioner has issued an NDWC. Section
                                     7436(a) limits our jurisdiction to cases in which there has
                                     been (among other requirements) ‘‘a determination by the
                                     Secretary’’. In other contexts, we have held that the absence
                                     of a document bearing a particular title or format does not
                                     mean that no determination has been made. See, e.g.,
                                     Corbalis v. Commissioner, 142 T.C. 46, 57–58 (2014) (Letters
                                     3477, even though stating they were not final determinations
                                     with respect to interest abatement, constituted final deter-
                                     minations for purposes of section 6404(h)); Gray v. Commis-
                                     sioner, 138 T.C. 295 (2012); Cooper v. Commissioner, 135 T.C.
                                     70, 75 (2010) (a letter rejecting whistleblower claims was a
                                     determination for purposes of section 7623(b)(4)); Wilson v.
                                     Commissioner, 131 T.C. 47, 53 (2008); Craig v. Commis-
                                     sioner, 119 T.C. 252, 259 (2002) (a form decision letter issued
                                     after an ‘‘equivalent hearing’’ constituted a determination
                                     conferring jurisdiction under section 6330(d)(1)); Lunsford v.
                                     Commissioner, 117 T.C. 159, 164 (2001) (a written notice to
                                     proceed with a collection action constituted a determination
                                     under section 6330).




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00007   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     232                  142 UNITED STATES TAX COURT REPORTS                                    (225)


                                       Legislative history accompanying the Taxpayer Relief Act
                                     of 1997, Pub. L. No. 105–34, sec. 1454(a), 111 Stat. at 1055,
                                     enacting section 7436 makes abundantly clear that the April
                                     15, 2011, letter was a determination. Section 7436 originated
                                     in the House of Representatives. H.R. 2014, 105th Cong.
                                     (1997). In H.R. Rept. No. 105–148, at 639 (1997), 1997–4
                                     C.B. (Vol. 1) 319, 961, the Explanation of Provision states, in
                                     pertinent part:
                                              The bill provides that, in connection with the audit of any person, if
                                           there is an actual controversy involving a determination by the IRS as
                                           part of an examination that (a) one or more individuals performing serv-
                                           ices for that person are employees of that person or (b) that person is
                                           not entitled to relief under section 530 of the Revenue Act of 1978, the
                                           Tax Court would have jurisdiction to determine whether the IRS is cor-
                                           rect. For example, one way the IRS could make the required determina-
                                           tion is through a mechanism similar to the employment tax early referral
                                           procedures. 20
                                             20 See
                                                  Announcement 96–13 and Announcement 97–52.
                                             [Emphasis added.]

                                        The Senate report includes the paragraph quoted above
                                     from the House report, and also states: ‘‘A failure to agree
                                     would also be considered a determination for this purpose.’’
                                     S. Rept. No. 105–33, at 304 (1997), 1997–4 C.B. (Vol. 2) 1081,
                                     1384 (emphasis added). That is exactly what happened here:
                                     The April 15, 2011, letter states that they ‘‘were unable to
                                     reach an agreement’’ in this case. (Emphasis added.) The con-
                                     ference agreement, H.R. Conf. Rept. No. 105–220, at 734
                                     (1997), 1997–4 C.B. (Vol. 2) 1457, 2204, contains language
                                     essentially identical to that quoted above from the House
                                     report. 2
                                        In summary, the 30-day letter prepared by the Examina-
                                     tion Division and the Appeals Case Memo both explain in
                                     detail the disagreement with petitioner’s position. After
                                       2 The staff of the Joint Committee on Taxation stated in its General Ex-

                                     planation of Tax Legislation Enacted in 1997, at 428 (J. Comm. Print
                                     1997) (Blue Book): ‘‘A failure to agree would also be considered a deter-
                                     mination for this purpose, to the extent permitted under Tax Court rules.’’
                                     (Emphasis added.) (None of the Committee reports cited in the text in-
                                     cludes the italicized phrase.) The Supreme Court said in United States v.
                                     Woods, 571 U.S. ll, ll, 134 S. Ct. 557, 568 (2013), that ‘‘the Blue
                                     Book, like a law review article, may be relevant to the extent it is persua-
                                     sive.’’ This Blue Book phrase does not alter our conclusion stated in the
                                     text.




VerDate Mar 15 2010   12:42 Apr 28, 2015    Jkt 000000   PO 00000   Frm 00008   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                         SECC CORP. v. COMMISSIONER                                     233


                                     saying that ‘‘unfortunately, we were unable to reach an
                                     agreement on your case’’, the April 15, 2011, letter states
                                     that employment tax liabilities as ‘‘determined by Appeals’’
                                     will be assessed. The House report made clear that deter-
                                     minations for purposes of section 7436 may be made in non-
                                     traditional ways. The Senate committee report states that
                                     ‘‘[a] failure to agree’’ would be considered a determination, a
                                     phrase that is indistinguishable from the words ‘‘we were
                                     unable to reach an agreement’’ in the April 15, 2011, letter.
                                     We conclude that respondent made a determination in this
                                     case. 3
                                        Our analysis of section 7436 is buttressed by consideration
                                     of the twofold statute of limitations in section 6532(a)(1) for
                                     filing a refund suit. The provision given there is as follows,
                                     with bracketed [A] and [B] added by us to show the two dis-
                                     tinct rules in the statute:
                                            SEC. 6532(a). SUITS BY TAXPAYERS FOR REFUND.—
                                              (1) GENERAL RULE.—No suit or proceeding under section 7422(a) for
                                            the recovery of any internal revenue tax, penalty, or other sum, shall
                                            be begun
                                                 [A] before the expiration of 6 months from the date of filing the
                                              claim required under such section unless the Secretary renders a
                                              decision thereon within that time, nor
                                                 [B] after the expiration of 2 years from the date of mailing by cer-
                                              tified mail or registered mail by the Secretary to the taxpayer of a
                                              notice of the disallowance of the part of the claim to which the suit
                                              or proceeding relates.
                                            [Emphasis added.]

                                     Rule [B] provides a hard-and-fast two-year deadline for filing
                                     suit that commences only with the certified mailing of a
                                     formal ‘‘notice’’. But the six-month bar of rule [A] is subject
                                     to being lifted if the Secretary simply ‘‘renders a decision’’.
                                     This provision of rule [A] does not require a ‘‘notice’’ (rather,
                                     a ‘‘decision’’) and includes no provision as to certified mailing
                                     or any other formality. See Register Publ’g Co. v. United
                                     States, 189 F. Supp. 626 (D. Conn. 1960); Skopil v. United
                                     States, 56–2 U.S. Tax Cas. (CCH) para. 9841 (D. Or. 1956).
                                     Thus, a taxpayer who files a refund claim and one month
                                       3 In arguing that we lack jurisdiction under sec. 7436, the dissenting

                                     opinion does not cite or discuss sec. 7436(a), which establishes our worker
                                     classification jurisdiction, or the legislative history underlying it, which ex-
                                     pressly shows that we have jurisdiction under circumstances like those
                                     present here.




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00009   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     234                 142 UNITED STATES TAX COURT REPORTS                                    (225)


                                     later gets an informal ‘‘decision’’ by the IRS under section
                                     6532(a)(1)[A] may file suit, even without receiving a formal
                                     notice of disallowance under section 6532(a)(1)[B].
                                         The features of these rules are similar to the features of
                                     section 7436(a) and (b). Section 7436(b)(2) provides a hard-
                                     and-fast 90-day deadline for filing suit that commences only
                                     ‘‘if the Secretary sends by certified or registered mail notice
                                     * * * of a determination’’; yet section 7436(a) permits the
                                     filing of suit simply upon the existence of ‘‘an actual con-
                                     troversy involving a determination’’—without regard to cer-
                                     tified mailing and without regard to any formal ‘‘notice’’.
                                     Thus, a taxpayer who is the subject of a ‘‘determination’’ by
                                     the IRS under section 7436(a) can file suit without receiving
                                     a notice of determination under section 7436(b)(2).
                                         Finally, neither Charlotte’s Office Boutique v. Commis-
                                     sioner, 425 F.3d 1203, Neely v. Commissioner, 115 T.C. 287
                                     (2000), 4 nor Henry Randolph Consulting v. Commissioner,
                                     112 T.C. 1 (1999), establishes that an NDWC must be sent
                                     before we have jurisdiction to make a worker classification
                                     determination under section 7436. In none of those cases did
                                     the Court identify or decide the issue present here, i.e.,
                                     whether we necessarily lack jurisdiction where no NDWC
                                     was sent. Therefore none of those opinions establishes
                                     whether we have jurisdiction where no NDWC was sent but
                                     a determination was otherwise made. 5
                                        4 Similarly, we do not consider Tree-Tech, Inc. v. Commissioner, T.C.

                                     Memo. 2011–162, slip op. at 14, a collection due process case in which we
                                     cited Neely v. Commissioner, 115 T.C. 287 (2000), to have decided the issue
                                     now before the Court.
                                        5 We disregard the Commissioner’s statement in Notice 2002–5, 2002–1

                                     C.B. 320, 321, that ‘‘[b]ecause the Notice of Determination constitutes the
                                     Service’s determination described in § 7436(a), * * * [it] is a jurisdictional
                                     prerequisite for seeking Tax Court review of * * * determinations regard-
                                     ing worker classification, § 530 treatment, and the proper amount of em-
                                     ployment tax under those determinations.’’ We owe no deference to what
                                     an administrative agency says about our jurisdictional bounds. See Fox
                                     Television Stations, Inc. v. FCC, 280 F.3d 1027, 1038–1039 (D.C. Cir.
                                     2002). This is so even if an agency directly or indirectly interprets the
                                     bounds of our jurisdiction through the implementation of regulations con-
                                     struing a statute which it administers. See also Adams Fruit Co. v. Bar-
                                     rett, 494 U.S. 638, 650 (1990) (the delegation of power to an agency to ad-
                                     minister a statute does not empower that agency to ‘‘regulate the scope of
                                     the judicial power vested by the statute’’). The dissenting opinion argues
                                     that we lack jurisdiction because the IRS did not intend for us to have




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00010   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                          SECC CORP. v. COMMISSIONER                                     235


                                     D. Whether the Determination Related to Matters Specified in
                                        Section 7436(a) Over Which We Have Jurisdiction
                                       Section 7436(a) provides our jurisdiction where, among
                                     other requirements, the Secretary has determined whether:
                                               (1) one or more individuals performing services for such person are
                                             employees of such person for purposes of subtitle C, or
                                               (2) such person is not entitled to the treatment under subsection (a)
                                             of section 530 of the Revenue Act of 1978 with respect to such an indi-
                                             vidual,
                                           upon the filing of an appropriate pleading, the Tax Court may determine
                                           whether such a determination by the Secretary is correct and the proper
                                           amount of employment tax under such determination. * * *
                                        The determination in this case dealt with worker classifica-
                                     tion disputes between petitioner and the Examination Divi-
                                     sion and the Appeals Office identified above, including
                                     whether petitioner’s workers can serve in a dual capacity;
                                     whether petitioner’s workers are employees with respect to
                                     any of the amounts paid to them as compensation; and
                                     whether petitioner qualifies for relief under RA ’78 sec. 530
                                     and sections 3402 and 3509(a). We conclude that the dispute
                                     between the parties includes matters specified in section
                                     7436(a) over which we have jurisdiction. 6




                                     jurisdiction. See dissenting op. p. 246. The concurring opinion, which is
                                     joined by 11 of the Judges who voted yes, makes a similar point, see con-
                                     curring op. pp. 241–242; and we note that it is the statute, not the IRS,
                                     that grants us jurisdiction.
                                        6 The dissenting opinion finds fault with what it calls ‘‘the majority’s

                                     dual use of the word ‘determination’ ’’ to refer both to the IRS decision con-
                                     cerning worker classification and to the April 15, 2011, letter. See dis-
                                     senting op. pp. 244–245. There is no inconsistency in this usage. The IRS
                                     makes an internal determination concerning worker classification before it
                                     issues a letter that conveys the determination to the taxpayer. Because it
                                     is clear to us that the April 15, 2011, letter shows that a determination
                                     requisite to our jurisdiction was made, we need not decide whether, or
                                     when, the IRS made a determination for purposes of sec. 7436(a) before
                                     sending the April 15, 2011, letter.




VerDate Mar 15 2010   12:42 Apr 28, 2015    Jkt 000000   PO 00000   Frm 00011   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     236                  142 UNITED STATES TAX COURT REPORTS                                    (225)


                                     E. Whether the Determination Related to an Actual Contro-
                                        versy in Connection With an Audit and Was Part of an
                                        Examination
                                           Section 7436(a) provides in part that
                                           [i]f, in connection with an audit of any person, there is an actual con-
                                           troversy involving a determination by the Secretary as part of an exam-
                                           ination * * *
                                        The essential facts relating to this point are: (1) during the
                                     tax periods at issue petitioner treated its workers dually as
                                     employees and as independent providers of rental equipment;
                                     (2) in the 30-day letter Ms. Buck, speaking for the Examina-
                                     tion Division, rejected petitioner’s approach and treated peti-
                                     tioner’s workers as employees with respect to the equipment
                                     lease payments; (3) in the protest petitioner continued to
                                     assert the position the Examination Division had rejected in
                                     the 30-day letter and added contentions disputing that its
                                     workers were employees with respect to any of petitioner’s
                                     payments to them and claiming entitlement to relief under
                                     RA ’78 sec. 530 and sections 3402 and 3509(a); and (4) the
                                     case was subsequently considered by the Appeals Office and
                                     reconsidered by the Examination Division and the Appeals
                                     Office during which time petitioner continued to assert all of
                                     the positions included in the protest.
                                        On the basis of this series of events, we conclude that the
                                     determination related to an actual controversy in connection
                                     with an audit and was part of an examination as required by
                                     section 7436(a). 7
                                     F. Whether the Petition Was Timely
                                        Section 7436(b)(2) imposes a 90-day limit on filing a peti-
                                     tion where the Commissioner sends a notice of determination
                                     by certified or registered mail but otherwise imposes no spe-
                                     cific time limit on filing a petition with this Court. Specifi-
                                     cally, section 7436(b) provides:
                                           If the Secretary sends by certified or registered mail notice to the peti-
                                           tioner of a determination by the Secretary described in subsection (a),
                                           no proceeding may be initiated under this section with respect to such

                                           7 In
                                            Staffmore, LLC v. Commissioner, T.C. Memo. 2013–187, we con-
                                     cluded that the Court had no jurisdiction over a determination as to em-
                                     ployment status because there was no IRS audit or examination. In this
                                     case, however, there was an audit.




VerDate Mar 15 2010   12:42 Apr 28, 2015    Jkt 000000   PO 00000   Frm 00012   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                          SECC CORP. v. COMMISSIONER                                     237


                                           determination unless the pleading is filed before the 91st day after the
                                           date of such mailing.

                                        Petitioner filed its petition more than 90 days after
                                     receiving the April 15, 2011, letter; however, that letter was
                                     not sent by certified or registered mail. Therefore, the 90-day
                                     limitation does not apply in this case.
                                        The fact that section 7436 does not require filing a petition
                                     within 90 days after a determination is made (unless the
                                     notice is sent by certified or registered mail) contrasts with
                                     section 6212 relating to our deficiency jurisdiction. However,
                                     section 7436(b) closely resembles sections 7428, 7476(b)(5),
                                     7477(b)(3), 7478(b)(3), and 7479(b)(3), which all address the
                                     time for bringing actions for declaratory judgments. 8 Sec-
                                     tions 7428, 7476, 7478, and 7479 each create a judicial
                                     remedy even in the absence of a determination. 9 Section
                                     7477, like section 7436, requires a ‘‘determination’’. 10 All of
                                     these declaratory judgment provisions, like section 7436,
                                     have almost identical rules establishing the time for bringing
                                     an action, stating almost identically that if the Secretary
                                     sends a notice of a determination by registered or certified
                                     mail, then the taxpayer must commence his or her action in
                                     the Tax Court within 90 days of such mailing. The similarity
                                     of section 7436(b) to these other sections eliminates any
                                     impulse we might have had to read part of section 6212 into
                                     section 7436(b). Our discussion of section 6532(a)(1) supra
                                     part C also supports our analysis here. We conclude that the
                                     90-day limitation does not apply in this case because no
                                           8 Secs.
                                                7478(b)(3), 7477(b)(3), 7479(b)(3) all provide: ‘‘If the Secretary
                                     sends by certified or registered mail notice of his determination * * * , no
                                     proceeding may be initiated under this section unless the pleading is filed
                                     before the 91st day after the date of such mailing.’’ Sec. 7476(b)(5) is
                                     slightly different but materially the same.
                                        9 Secs. 7476(a) and 7478(a) both provide: ‘‘In a case of actual controversy

                                     involving—(1) a [particular] determination by the Secretary * * * , or (2)
                                     a failure by the Secretary to make a [particular] determination * * * ,
                                     upon the filing of an appropriate pleading, the Tax Court may make a dec-
                                     laration’’ regarding the particular determination or lack thereof. Sec.
                                     7476(a) is slightly different but materially the same.
                                        10 Sec. 7477(a) provides: ‘‘In case of an actual controversy involving a

                                     [particular] determination by the Secretary * * * , upon the filing of an
                                     appropriate pleading, the Tax Court may make a declaration’’ regarding
                                     the particular determination. Sec. 7436(a) is slightly different but materi-
                                     ally the same.




VerDate Mar 15 2010   12:42 Apr 28, 2015    Jkt 000000   PO 00000   Frm 00013   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     238                 142 UNITED STATES TAX COURT REPORTS                                    (225)


                                     notice of determination was sent by certified or registered
                                     mail and thus the petition is timely. 11
                                     G. Whether Section 7436(d)(1) Alters Our Holdings Stated
                                        Above
                                       Section 7436(d)(1) provides that the principles of several
                                     Code sections relating to ‘‘assessment and collection, etc.’’
                                     apply to section 7436. Specifically, section 7436(d)(1) provides
                                     as follows:
                                            SEC. 7436(d). SPECIAL RULES.—
                                              (1) RESTRICTIONS ON ASSESSMENT AND COLLECTION PENDING ACTION,
                                            ETC.—The principles of subsections (a), (b), (c), (d), and (f) of section
                                            6213, section 6214(a), section 6215, section 6503(a), section 6512, and
                                            section 7481 shall apply to proceedings brought under * * * [section
                                            7436] in the same manner as if the Secretary’s determination
                                            described in subsection (a) were a notice of deficiency.

                                        Section 7436(d)(1) provides that these other sections shall
                                     apply in the same ‘‘manner as if the Secretary’s determina-
                                     tion described in subsection (a) were a notice of deficiency.’’
                                     (Emphasis added.) Importantly, it does not say ‘‘as if the
                                     notice described in subsection (a) were a notice of deficiency.’’
                                        11 In keeping with its conclusion that the analysis of the opinion of the

                                     Court ‘‘simply do[es] not work’’, see dissenting op. pp. 242–243, the dis-
                                     senting opinion asks: ‘‘If the April 15, 2011, letter had been sent by cer-
                                     tified mail, would it have triggered that deadline even though it did not
                                     purport to be a determination?’’, see id. p. 243, and: ‘‘Would the undisclosed
                                     section 7436 determination the Court found here have allowed the IRS to
                                     assess after 90 days in the absence of a petition?’’, see id. We are satisfied
                                     that the analysis herein does not cause the administrative problems posed
                                     in the dissenting opinion. In raising those questions, the dissenting opinion
                                     does not cite or discuss subsecs. (a) and (b) of sec. 7436. Subsec. (a) pro-
                                     vides our jurisdiction simply if there has been a determination. But appli-
                                     cation of the 90-day rule is not triggered so easily; instead, under subsec.
                                     (b), the 90-day period applies only if the Secretary sends notice of the de-
                                     termination to the taxpayer (by certified or registered mail).
                                        The statute, properly interpreted, provides clear and logical answers to
                                     the questions posed by the dissenting opinion. First, if the IRS sends the
                                     taxpayer a letter by certified or registered mail including clear notice that
                                     the IRS has made a determination of worker classification, it triggers the
                                     jurisdictional period for filing a petition in our Court. Second, if the IRS
                                     does not send a letter by certified or registered mail including clear notice
                                     that the IRS has made a determination of worker classification, the IRS
                                     may not assess after 90 days absent a petition because sec. 7436(b) re-
                                     quires that the Secretary first ‘‘send[] * * * notice’’ to the taxpayer.




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00014   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                          SECC CORP. v. COMMISSIONER                                     239


                                     In other words, jurisdiction hinges upon the making of ‘‘a
                                     determination’’, not necessarily the mailing of a notice.
                                        To consider the application of this paragraph to the
                                     present case, we will first identify two principles of section
                                     6213(a). 12 The first principle of section 6213(a) is that a tax-
                                     payer has 90 (or 150) days after the notice of deficiency is
                                     mailed to file a petition. As stated supra part F, section
                                     7436(b) imposes a 90-day limit on filing a petition where the
                                     Commissioner sends a notice by certified or registered mail
                                     but otherwise does not impose a 90-day limit. To treat sec-
                                     tion 7436(d)(1) as imposing the 90-day limit that appears in
                                     section 6213(a) on section 7436 would require two leaps of
                                     faith: first, that Congress enacted an express rule (section
                                     7436(b)) and then rewrote that rule by saying ‘‘principles’’ of
                                     other sections apply; and second, that the words of the title
                                     to the paragraph, ‘‘Restrictions on Assessment and Collection
                                     Pending Action’’, were not well chosen or were too narrowly
                                     phrased. We conclude that this principle of section 6213(a)
                                     does not cause this Court to lack jurisdiction where a petition
                                     is filed more than 90 days after a determination where the
                                     Commissioner did not exercise the right under section
                                     7436(b)(2) to trigger a 90-day limitation period by sending
                                     the notice by certified or registered mail.
                                        The second principle of section 6213(a) 13 is that, if a peti-
                                     tion is filed, the IRS may not assess tax resulting from a
                                           12 The   first sentence of sec. 6213(a) provides as follows:
                                              SEC. 6213(a). TIME FOR FILING PETITION AND RESTRICTION ON ASSESS-
                                           MENT.—Within    90 days, or 150 days if the notice is addressed to a per-
                                           son outside the United States, after the notice of deficiency authorized
                                           in section 6212 is mailed (not counting Saturday, Sunday, or a legal holi-
                                           day in the District of Columbia as the last day), the taxpayer may file
                                           a petition with the Tax Court for a redetermination of the deficiency.
                                           * * *
                                           13 The second sentence of sec. 6213(a) provides as follows:

                                              SEC. 6213(a). TIME FOR FILING PETITION AND RESTRICTION ON ASSESS-
                                           MENT.—    * * * Except as otherwise provided in section 6851, 6852 or
                                           6861 no assessment of a deficiency in respect of any tax imposed by sub-
                                           title A or B, chapter 41, 42, 43, or 44 and no levy or proceeding in court
                                           for its collection shall be made, begun, or prosecuted until such notice
                                           has been mailed to the taxpayer, nor until the expiration of such 90-day
                                           or 150-day period, as the case may be, nor, if a petition has been
                                           filed with the Tax Court, until the decision of the Tax Court has
                                                                                                       Continued




VerDate Mar 15 2010   12:42 Apr 28, 2015    Jkt 000000   PO 00000   Frm 00015   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     240                 142 UNITED STATES TAX COURT REPORTS                                    (225)


                                     deficiency until the Tax Court case commenced by filing a
                                     petition with respect to that deficiency is final. To treat sec-
                                     tion 7436(d)(1) as imposing this restriction on assessment
                                     requires neither of the leaps of faith just stated: There is no
                                     contrary rule on assessment in section 7436 that would be
                                     rewritten on the basis of application of principles of another
                                     section; and the title to the paragraph, ‘‘Restrictions on
                                     assessment and collection pending action’’, directly suggests
                                     that this second principle of section 6213(a)—i.e., if a petition
                                     is filed, the IRS may not assess tax determined to be owing
                                     as a result of a deficiency until the Tax Court case is final—
                                     applies to section 7436 because of section 7436(a)(1). In the
                                     context of section 7436, this appears to bar assessment and
                                     collection of employment tax determined to be owing after
                                     the filing of a Form 941.
                                        In none of the sections cross-referenced by section
                                     7436(d)(1) is there any suggestion that a 90-day (or any
                                     other) time limit applies where a notice was not sent by cer-
                                     tified or registered mail, nor that a determination may be
                                     made only through a notice of determination. Thus, we con-
                                     clude that application by section 7436(d)(1) of ‘‘the principles
                                     of ’’ several Code sections ‘‘relating to assessment and collec-
                                     tion, etc.’’ to section 7436 does not limit our jurisdiction to
                                     cases in which the Commissioner sends a formal notice of
                                     determination (e.g., a Letter 3523), or imposition of the 90-
                                     day period where the Commissioner does not send a notice
                                     by certified or registered mail. 14
                                        become final. * * *
                                        14 Citing sec. 7436(d), the dissenting opinion states that ‘‘we should treat

                                     a worker classification determination as if it were a deficiency determina-
                                     tion in an income tax case’’ because ‘‘Congress borrowed heavily from the
                                     statutes controlling income tax deficiency cases.’’ See dissenting op. pp.
                                     242, 245. Following from that assumption, the dissenting opinion relies on
                                     cases applying deficiency procedures such as Lerer v. Commissioner, 52
                                     T.C. 358 (1969). See dissenting op. pp. 245–246. However, the dissenting
                                     opinion overlooks two essential points: (1) the text of sec. 7436(a) and (b)
                                     differs from that in the statutes governing deficiency procedures and (2)
                                     in sec. 7436(d), Congress did not list sec. 6212 as one of the sections the
                                     principles of which are made applicable to sec. 7436. The omission of sec.
                                     6212 from sec. 7436(d) is significant because sec. 6212 provides that if the
                                     Secretary determines a deficiency, he is authorized to ‘‘send’’ a ‘‘notice of
                                     deficiency’’ by certified or registered mail. The words ‘‘send’’ and ‘‘notice’’
                                     in sec. 7436(b) do not appear in sec. 7436(a), which establishes our




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00016   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                         SECC CORP. v. COMMISSIONER                                     241


                                     H. Conclusion
                                       We hold that we have jurisdiction over this case. Respond-
                                     ent’s motion and petitioner’s cross-motion will be denied.
                                       To reflect the foregoing,
                                                              An appropriate order will be issued.
                                       Reviewed by the Court.
                                       THORNTON, HALPERN, FOLEY, VASQUEZ, GALE, WHERRY,
                                     KROUPA, HOLMES, GUSTAFSON, PARIS, MORRISON, BUCH,
                                     LAUBER, and NEGA, JJ., agree with this opinion of the Court.


                                         HALPERN, J., concurring:
                                         I join the majority opinion without reservation. I write only
                                     to emphasize that, not only is the majority’s analysis of our
                                     jurisdiction under section 7436 correct as a matter of law; it
                                     is also correct as a matter of tax policy.
                                         As the majority states, see op. Ct. note 5: ‘‘We owe no def-
                                     erence to what an administrative agency says about our
                                     jurisdictional bounds.’’ Moreover, respondent’s position,
                                     reflected both in this case and in Notice 2002–5, 2002–1 C.B.
                                     320, 321, that only his issuance of a notice of determination
                                     as described in Notice 2002–5 may confer jurisdiction on this
                                     Court to resolve a worker classification or RA ’78 sec. 530
                                     issue would improperly permit the Commissioner to deter-
                                     mine, in his sole discretion, whether a taxpayer shall have
                                     access to this Court in order to resolve any such issue raised
                                     on audit. Were we to adopt respondent’s position, the
                                     Commissioner, by refusing to issue a notice of determination,
                                     would be able to deny the taxpayer access to this Court,
                                     which he may be tempted to do whenever he feels his chance
                                     of success on a worker classification or RA ’78 sec. 530 issue
                                     is better in either the District Court or the Court of Federal
                                     Claims than in this Court. There is no basis in section 7436
                                     or as a matter of policy for granting the Commissioner this
                                     ‘‘forum shopping’’ discretion, and it would thwart the obvious
                                     congressional intent embodied in that provision to permit
                                     taxpayers, in their discretion, 1 to litigate, in this Court,
                                     jurisdiction.
                                       1 ‘‘Petitioner.—A pleading may be filed under this section * * * by the
                                                                                                      Continued




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00017   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     242                 142 UNITED STATES TAX COURT REPORTS                                    (225)


                                     worker classification and RA ’78 sec. 530 issues that the
                                     Commissioner has raised on audit.
                                       THORNTON, COLVIN, VASQUEZ, GALE, WHERRY, KROUPA,
                                     HOLMES, GUSTAFSON, MORRISON, BUCH, and LAUBER, JJ.,
                                     agree with this concurring opinion.


                                       GOEKE and KERRIGAN, JJ., dissenting: Our primary dis-
                                     agreement with the opinion of the Court stems from its
                                     insistence on cutting our jurisdiction under section 7436 from
                                     whole cloth. The structure of the statute indicates that we
                                     should treat a worker classification determination as if it
                                     were a deficiency determination in an income tax case.
                                     Instead of following the statute’s mandate, the opinion of the
                                     Court applies a new approach to the jurisdictional question.
                                     We disagree with that approach and respectfully dissent.
                                     I. We believe the IRS must issue a notice of determination of
                                        worker classification to trigger our jurisdiction under sec-
                                        tion 7436.
                                        The opinion of the Court finds that section 7436 does not
                                     require the issuance of a notice of determination as a pre-
                                     requisite for our jurisdiction. This conclusion is not reconcil-
                                     able with section 7436(d), which provides the following direc-
                                     tive.
                                            SEC. 7436(d). SPECIAL RULES.—
                                              (1) RESTRICTIONS ON ASSESSMENT AND COLLECTION PENDING ACTION,
                                            ETC.—The principles of subsections (a), (b), (c), (d), and (f ) of section
                                            6213, section 6214(a), section 6215, section 6503(a), section 6512, and
                                            section 7481 shall apply to proceedings brought under this section in
                                            the same manner as if the Secretary’s determination described in sub-
                                            section (a) were a notice of deficiency.
                                        This paragraph references the analogous procedural sec-
                                     tions that prevent the IRS from assessing and collecting
                                     income tax deficiencies unless and until it sends proper
                                     notice to the taxpayer. These restrictions and deadlines
                                     simply do not work without a notice of determination
                                     requirement. We acknowledge that the statute does not
                                     explicitly reference section 6212, which contains the notice of

                                     person for whom the services are performed.’’ Sec. 7436(b)(1) (emphasis
                                     added).




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00018   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                         SECC CORP. v. COMMISSIONER                                     243


                                     deficiency provisions, but we think the statute incorporates
                                     its principles nonetheless. The statute directs us to apply the
                                     restrictions ‘‘in the same manner as if the Secretary’s deter-
                                     mination * * * were a notice of deficiency.’’ We think this
                                     means that a notice of determination should set the restric-
                                     tion deadlines under section 7436 just as a notice of defi-
                                     ciency sets the restriction deadlines for income tax assess-
                                     ment and collection.
                                        Section 6213(a) prevents the IRS from assessing and col-
                                     lecting tax before it has sent a notice of deficiency. It also
                                     provides the taxpayer 90 days from the notice of deficiency
                                     date to petition the Tax Court. Would the undisclosed section
                                     7436 determination the Court found here have allowed the
                                     IRS to assess after 90 days in the absence of a petition? Sec-
                                     tion 6503(a) provides that a notice of deficiency suspends the
                                     running of the period of limitations for the IRS to assess and
                                     collect. Would a determination the IRS had not disclosed to
                                     a taxpayer have the same effect? Section 7436(b) provides
                                     that a taxpayer must file a petition within 90 days of a notice
                                     of determination if the IRS sent it by certified mail. If the
                                     April 15, 2011, letter had been sent by certified mail, would
                                     it have triggered that deadline even though it did not pur-
                                     port to be a determination? The opinion of the Court raises
                                     all these questions but dismisses them.
                                        In note 11, the opinion of the Court points out that under
                                     section 7436(b) the 90-day window to file a petition begins
                                     only after the IRS has sent notice of its determination by cer-
                                     tified or registered mail. According to the opinion of the
                                     Court, this means that the 90-day period will not begin ‘‘if
                                     the IRS does not send a letter by certified or registered mail
                                     including clear notice that the IRS has made a determination
                                     of worker classification’’. See op. Ct. note 11 (emphasis
                                     added). Although the plain language of section 7436(b)
                                     requires only ‘‘notice’’, the opinion of the Court reads a ‘‘clear
                                     notice’’ requirement into the statute in responding to our
                                     questions. In so doing, the opinion reinforces our point. By
                                     requiring clear notice, we can avoid the administrative prob-
                                     lems we discussed above. If we accept jurisdiction in the
                                     absence of clear notice, as the Court has in this very case,
                                     the administrative problems return. Here the IRS failed to
                                     send clear notice; instead, it sent an ambiguous letter that
                                     neither party believed was a notice. Nevertheless, the Court




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00019   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     244                 142 UNITED STATES TAX COURT REPORTS                                    (225)


                                     finds that the letter provided notice of a determination. Thus,
                                     if the IRS had sent the letter by certified mail, the Court
                                     presumably would have found that it triggered the 90-day
                                     period. Would the Court have decided not to recharacterize
                                     the letter if the IRS had used certified mail?
                                        The Court’s approach also creates an open-ended period to
                                     file a petition, which has no touchstone in the deficiency
                                     procedures. The Court ignores the possibilities for abuse that
                                     an unlimited period to bring action will create. We should
                                     avoid these and other problems by simply recognizing that
                                     only a clear notice of determination can trigger our jurisdic-
                                     tion under section 7436.
                                     II. The opinion of the Court holds that a ‘‘determination’’ trig-
                                         gers our jurisdiction, but it uses the word ‘‘determination’’
                                         to refer to two different events.
                                        The opinion of the Court concludes that our jurisdiction
                                     turns on whether the IRS has made a ‘‘determination’’, but
                                     it is not clear what the Court thinks a ‘‘determination’’ is.
                                     The opinion of the Court identifies the issue here as
                                     ‘‘whether we have jurisdiction to determine whether respond-
                                     ent’s worker classification determination was correct.’’ See op.
                                     Ct. p. 226 (emphasis added). The opinion of the Court’s first
                                     holding is ‘‘the April 15, 2011, letter was a determination’’
                                     relating to the classification of P’s workers for employment
                                     tax purposes. See id. p. 232 (emphasis added). These two
                                     excerpts demonstrate the opinion’s dual use of the word
                                     ‘‘determination’’. In the first, it refers to the IRS decision
                                     regarding worker classification. In the second, it refers to the
                                     letter that communicated that decision. Which of these
                                     things does the Court believe triggers our jurisdiction?
                                        If it is the first, the administrative problems we described
                                     above return. See supra pp. 242–244. How could we enforce
                                     time limits for filing against taxpayers who were unaware
                                     the Commissioner had made a decision? If it is the second,
                                     we think the opinion of the Court is confusing the terms
                                     ‘‘determination’’ and ‘‘notice of determination’’. Semantically
                                     speaking, a letter cannot be a determination. A determina-
                                     tion is a decision—an abstraction. A letter is tangible. A
                                     letter can communicate a determination or serve as evidence
                                     of a determination, but it cannot itself be a determination. If




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00020   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                         SECC CORP. v. COMMISSIONER                                     245


                                     the letter triggered our jurisdiction, we are not sure the
                                     Court disagrees with our conclusion that notice is required.
                                     It simply chooses to call the notice of determination a ‘‘deter-
                                     mination’’.
                                     III. The April 15, 2011, letter was not a notice of determina-
                                          tion, and consequently it did not trigger our jurisdiction.
                                        The Court finds that the April 15, 2011, letter was a deter-
                                     mination, but we think the proper analysis is whether it was
                                     a notice of determination. To qualify as a notice of determina-
                                     tion, we think that a letter must, at a minimum, actually
                                     provide notice of a determination. The April 15, 2011, letter
                                     did no such thing. The letter did not notify SECC that the
                                     IRS had made a determination. If it had, SECC would have
                                     simply petitioned this Court for review of that determination.
                                     Instead, SECC has petitioned us to compel the IRS to issue
                                     a notice of determination. The Commissioner used a letter
                                     reserved for closing out disputes not involving worker classi-
                                     fication determinations. If anything, the letter notified SECC
                                     that the IRS had made no worker classification determina-
                                     tion in deciding its case.
                                     IV. The Court should not have recharacterized the IRS cor-
                                         respondence with SECC.
                                       Congress has given our Court the authority to review
                                     determinations of worker classification. In creating the
                                     administrative rules governing this jurisdiction, Congress
                                     borrowed heavily from the statutes controlling income tax
                                     deficiency cases. Specifically, section 7436(d) incorporates the
                                     restrictions on assessment and collection that apply in such
                                     cases. In the light of Congress’ apparent intention to create
                                     parallel administrative regimes for notices of determination
                                     and notices of deficiency, we think we should evaluate
                                     notices of determination the same way we evaluate notices of
                                     deficiency.
                                       Suppose, after examining a taxpayer’s Federal income tax
                                     return, the IRS assessed additional income tax without fol-
                                     lowing the deficiency procedures established by sections
                                     6211–6216. Next, suppose that the IRS mailed that taxpayer
                                     a notice of the additional assessment. We would not treat
                                     that letter as a notice of deficiency, and we have found that




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00021   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     246                 142 UNITED STATES TAX COURT REPORTS                                    (225)


                                     the Court is without jurisdiction under those circumstances.
                                     See Lerer v. Commissioner, 52 T.C. 358, 363 (1969); Kane v.
                                     Commissioner, T.C. Memo. 1989–272.
                                        Now substitute the type of tax contemplated by section
                                     7436 for the types of tax subject to the deficiency procedures
                                     referenced above. Under similar circumstances, the Court is
                                     doing exactly the opposite of what we have done with respect
                                     to taxes subject to the deficiency procedures. And to make
                                     matters worse, it is doing so in the face of express statutory
                                     language instructing us to treat worker classification deter-
                                     minations like notices of deficiency.
                                        In income tax deficiency cases, a notice of deficiency is the
                                     taxpayer’s ticket to our Court. If the IRS has not sent a
                                     notice of deficiency, we do not have jurisdiction over the dis-
                                     pute. We have, on occasion, decided whether an ambiguous
                                     letter from the IRS was a notice of deficiency that triggered
                                     our jurisdiction. In each of those cases, we relied heavily on
                                     the IRS intent in reaching our conclusion. See Lerer v.
                                     Commissioner, 52 T.C. at 363; Kane v. Commissioner, T.C.
                                     Memo. 1989–272. When the IRS sends a letter that neither
                                     purports to be nor is intended to be a notice of deficiency, we
                                     do not recharacterize the letter as a notice of deficiency. We
                                     simply dismiss the case for lack of jurisdiction. Here the IRS
                                     did not intend to send a notice of worker classification deter-
                                     mination, and the letter it sent did not purport to be such
                                     a notice. In fact, the IRS sent a letter reserved for cases not
                                     involving worker classification determinations. We disagree
                                     with the Court’s decision to recharacterize that letter.
                                        The opinion of the Court does not dispute that the IRS did
                                     not intend the April 15, 2011, letter to be a notice of deter-
                                     mination, 1 but it nevertheless concludes that the letter trig-
                                     gered our jurisdiction. Instead of citing cases involving
                                     notices of deficiency, the opinion of the Court cites a whistle-
                                     blower case and two collection due process cases in which we
                                     found that unofficial letters were notices of determination.
                                     See op. Ct. p. 231. Those cases are inapposite because they
                                     involve statutes that do not incorporate the restrictions on
                                     assessment applicable in income tax deficiency cases. In the
                                     light of Congress’ explicit instruction to treat worker classi-
                                       1 The parties also agree that the IRS did not intend the letter to be a

                                     notice of worker classification determination.




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00022   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     (225)                         SECC CORP. v. COMMISSIONER                                     247


                                     fication determinations as if they were notices of deficiency,
                                     we find our notice of deficiency jurisprudence more relevant.
                                     In keeping with our notice of deficiency cases, we would find
                                     that the IRS intent is the most important factor in character-
                                     izing an ambiguous notice. The IRS did not intend the April
                                     15, 2011, letter to be a notice of determination, and the letter
                                     did not purport to be a notice of determination. Accordingly,
                                     we would find that it did not trigger our jurisdiction under
                                     section 7436.
                                        The IRS bears the burden of providing proper notice before
                                     assessing tax. If it has made a determination, it has no rea-
                                     son not to notify the taxpayer. If the IRS fails to issue a
                                     timely notice, applicable statutes of limitation may bar its
                                     later assessment. Moreover, dismissing the case here would
                                     not leave the taxpayer without recourse. SECC would have
                                     the same options as a taxpayer challenging an income tax
                                     deficiency whose case had been dismissed because the IRS
                                     had not issued a notice of deficiency. It could bring a refund
                                     case attacking the invalid assessment, file for an injunction
                                     against the assessment, 2 seek an abatement under section
                                     6404(a), or contest the assessment’s legality in a collection
                                     due process case pursuant to section 6330.
                                     V. We should not delve into the administrative record to
                                        determine whether the IRS made a determination.
                                       Congress has provided an avenue for employers to
                                     reimburse their employees for work-related expenses. A tax-
                                     payer must simply follow the accountable plan rules outlined
                                     in section 1.62–2, Income Tax Regs. The IRS initially ana-
                                     lyzed this case as an accountable plan dispute. SECC only
                                     later argued that its workers were dual-capacity employees
                                     or independent contractors. Under the opinion of the Court’s
                                     approach, any taxpayer in an accountable plan case could
                                     make these arguments and transform its case into a worker
                                     classification dispute. We think we should permit the IRS to
                                     decide whether the taxpayer’s arguments warrant a worker
                                     classification determination.
                                       The workers at issue here performed a single task, and
                                     SECC calculated both payments on the number of hours they
                                       2 Sec. 6213(a) provides for this remedy by waiving the sec. 7421 anti-in-

                                     junction provisions.




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00023   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
                                     248                 142 UNITED STATES TAX COURT REPORTS                                    (225)


                                     spent performing that task. SECC self-reported the workers
                                     as employees on its employment tax returns. The IRS could
                                     have reasonably concluded that the worker classification
                                     arguments were frivolous and did not justify a determina-
                                     tion. Instead of permitting this result, the Court combs
                                     through the administrative record to discover whether the
                                     IRS should have issued a notice of determination. This
                                     approach sets a dangerous precedent that may require us to
                                     review the administrative record every time a taxpayer
                                     makes a worker classification argument and the IRS chooses
                                     not to issue a notice of determination. We believe we should
                                     permit the IRS to decide when its examination warrants a
                                     notice of determination. If it improperly fails to issue a
                                     notice, it will face the consequences of an invalid assessment.
                                     VI. Conclusion
                                       Section 7436 explicitly incorporates many of the rules that
                                     apply in income tax deficiency cases. In fact, the incorporated
                                     material dwarfs the original material in the statute. We
                                     believe that this structure reflects Congress’ intent to create
                                     identical schemes for our review of worker classification
                                     determinations and income tax deficiency determinations.
                                     Instead of relying on the principles that govern our income
                                     tax deficiency cases, the opinion of the Court has created a
                                     new approach to determine whether we have jurisdiction.
                                     Because we disagree with that approach, we respectfully dis-
                                     sent.

                                                                               f




VerDate Mar 15 2010   12:42 Apr 28, 2015   Jkt 000000   PO 00000   Frm 00024   Fmt 3857   Sfmt 3857   V:\FILES\BOUNDV~1.WIT\BV864A~1.142\SECCCO~1   JAMIE
