                       T.C. Memo. 2004-43



                    UNITED STATES TAX COURT



        CHARLOTTE’S OFFICE BOUTIQUE, INC., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent*



    Docket No. 5077-01.              Filed February 25, 2004.



         In Charlotte’s Office Boutique, Inc. v.
    Commissioner, 121 T.C. 89 (2003), an employment tax
    case brought under sec. 7436(a), I.R.C., we held that P
    is liable for unreported 1995 through 1998 employment
    taxes and certain additions thereto under secs.
    6651(a)(1) and 6656, I.R.C. P now asserts that this
    Court lacked jurisdiction to redetermine the referenced
    additions to tax. P argues primarily that section
    7436(a), I.R.C., by its terms allows the Court to
    redetermine only “the proper amount of employment tax”
    and not any additions thereto. P argues alternatively
    that sec. 6651(a)(1), I.R.C., by its terms does not
    allow the Court to redetermine an addition to tax under
    that section in the case of a failure to file the
    returns at issue; namely, Forms 941, Employer’s


     *This Supplemental Memorandum Opinion supplements our prior
Opinion in Charlotte’s Office Boutique, Inc. v. Commissioner, 121
T.C. 89 (2003).
                                -2-

     Quarterly Federal Tax Return. P asserts that Form 941
     is an information return that is required to be filed
     under authority of sec. 6041, I.R.C., notes that sec.
     6041, I.R.C., is found in pt. III of subch. A of ch. 61
     (pt. III), and notes that sec. 6651(a)(1), I.R.C.,
     provides explicitly that the addition to tax set forth
     therein does not apply to a return required to be filed
     under authority of pt. III. Held: The Court has
     jurisdiction to redetermine the additions to tax at
     issue. Held, further, sec. 6651(a)(1), I.R.C., applies
     to P’s failure to file the Forms 941 in that Form 941
     is not an information return required to be filed under
     authority of pt. III but is a tax return required to be
     filed under authority of pt. II of subch. A of ch. 61,
     more specifically, sec. 6011(a), I.R.C., and the
     regulations thereunder.



     Robert E. Kovacevich, for petitioner.

     Milton B. Blouke, for respondent.



                 SUPPLEMENTAL MEMORANDUM OPINION


     LARO, Judge:   In Charlotte’s Office Boutique, Inc. v.

Commissioner, 121 T.C. 89 (2003), an employment tax case brought

under section 7436(a),1 we held that petitioner is liable for

unreported 1995 through 1998 employment taxes and certain

additions thereto under sections 6651(a)(1) and 6656.   Petitioner

now asserts that the Court lacked jurisdiction to redetermine the

referenced additions to tax.   Petitioner argues primarily that




     1
       Unless otherwise noted, chapter, subchapter, part, and
section references are to the applicable versions of the Internal
Revenue Code.
                                 -3-

section 7436(a) by its terms allows the Court to redetermine only

“the proper amount of employment tax” and not any additions

thereto.   Petitioner argues alternatively that section 6651(a)(1)

by its terms does not allow the Court to redetermine an addition

to tax under that section in the case of a failure to file the

returns at issue; namely, Forms 941, Employer’s Quarterly Federal

Tax Returns.    Petitioner asserts that Form 941 is an information

return that is required to be filed under authority of section

6041, notes that section 6041 is found in part III of subchapter

A of chapter 61 (part III), and notes that section 6651(a)(1)

provides explicitly that the addition to tax set forth therein

does not apply to a return required to be filed under authority

of part III.2

     We reject both of petitioner’s arguments.   Petitioner’s

challenge to our jurisdiction is a direct attack on our authority

to redetermine the additions to tax which we redetermined

adversely to petitioner in Charlotte’s Office Boutique, Inc. v.

Commissioner, supra.    Our jurisdiction evolves from the Internal

Revenue Code, and we may exercise our jurisdiction only to the

extent authorized by Congress.    Neilson v. Commissioner, 94 T.C.

1, 9 (1990); Naftel v. Commissioner, 85 T.C. 527, 529 (1985); see

also sec. 7442.   Whether we have jurisdiction over the subject



     2
       Part III is entitled “Information Returns” and includes
secs. 6031 through 6060.
                                 -4-

matter of a dispute is an issue that either party thereto may

raise at any time.   The failure to question our jurisdiction is

not a waiver of the right to do so, for if we lack jurisdiction

over an issue, we do not have the power to decide it.    Ins. Corp.

of Ireland, Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S.

694, 702 (1982); see also Raymond v. Commissioner, 119 T.C. 191,

193 (2002), and the cases cited therein.   The requirement that

jurisdiction be established “[springs] from the nature and limits

of the judicial power of the United States” and is “inflexible

and without exception”.   Mansfield, C. & L.M.R. Co. v. Swan, 111

U.S. 379, 382 (1884); see also Steel Co. v. Citizens for a Better

Envt., 523 U.S. 83, 94-95 (1998).

     Petitioner argues primarily that the text of section 7436(a)

does not give us jurisdiction in an employment tax case such as

this to redetermine an addition to an employment tax.    We

disagree.   Recently, in Ewens & Miller, Inc. v. Commissioner,

117 T.C. 263, 267-268 (2001), we held that we did have

jurisdiction over such matter.   We do likewise here for the

reasons stated therein.   We repeat for emphasis that section

7436(a), when read in the context of the Internal Revenue Code as

a whole, and especially sections 6665(a)(2) and 7436(e), gives

this Court the requisite jurisdiction to redetermine an addition

to tax in an employment tax case such as this brought under

section 7436(a).
                                 -5-

     Petitioner’s alternative argument challenges the

applicability of section 6651(a)(1) to an employer such as

petitioner who fails to file timely a Form 941.    Petitioner

asserts that a plain reading of section 6651(a)(1) places such an

untimely filing outside of that section.    We disagree.   Section

6651(a)(1) applies explicitly to a failure “to file any return

required under authority of subchapter A of chapter 61 (other

than part III thereof)”, and, contrary to petitioner’s assertion,

a Form 941 is required to be filed not under authority of part

III of subchapter A of chapter 61 (part III) but under authority

of part II of subchapter A of chapter 61 (part II).3    More

specifically, petitioner’s obligation to file the Forms 941 at

issue arose under the authority of section 6011(a) and the

regulations prescribed thereunder.

     Section 6011(a), which is found not in part III but in part

II, provides:

     SEC.   6011.   GENERAL REQUIREMENT OF RETURN, STATEMENT,
                    OR LIST.

          (a) General Rule.--When required by regulations
     prescribed by the Secretary any person made liable for
     any tax imposed by this title, or with respect to the
     collection thereof, shall make a return or statement
     according to the forms and regulations prescribed by
     the Secretary. Every person required to make a return
     or statement shall include therein the information
     required by such forms or regulations.



     3
       Part II includes secs. 6011 through 6021 and is entitled
“Tax Returns or Statements”.
                                -6-

The relevant regulations which were prescribed under section

6011(a), specifically, section 1.6011-1(a), Income Tax Regs.,

and section 31.6011(a)-4(a), Employment Tax Regs., provide in

relevant part:

     Sec. 1.6011-1.   General Requirement of Return,
                      Statement, or List.

          (a) General rule.--Every person subject to any
     tax, or required to collect any tax, under subtitle A
     of the Code, shall make such returns or statements as
     are required by the regulations in this chapter. The
     return or statement shall include therein the
     information required by the applicable regulations or
     forms.

                 *    *   *    *      *   *   *

     Sec. 31.6011(a)-4.   Returns of Income Tax Withheld.

          (a) Withheld from wages.

               (1) In general.* * * every person
          required to make a return of income tax
          withheld from wages pursuant to section 3402
          shall make a return for the first calendar
          quarter in which the person is required to
          deduct and withhold such tax and for each
          subsequent calendar quarter, whether or not
          wages are paid therein, until the person has
          filed a final return in accordance with
          §31.6011(a)-6. * * * Form 941 is the form
          prescribed for making the return required
          under this paragraph.

It is the text of these three quoted provisions that establishes

the requirement that petitioner file the Forms 941 at issue.    Cf.

Slodov v. United States, 436 U.S. 238, 242-243 & n.2 (1978)

(Court referenced sec. 31.6011(a)-4, Employment Tax Regs., in

discussing the “return filing requirements” for quarterly payroll
                                 -7-

tax returns of employers); Conklin Bros. Of Santa Rosa, Inc. v.

United States, 986 F.2d 315, 316 nn.1 & 2 (9th Cir. 1993) (court

noted that section 3402 requires that an employer deduct and

withhold certain taxes from its employees’ wages and that section

6011(a) and section 31.6011(a)-4(a)(1), Employment Tax Regs.,

require the employer to report those taxes on its “payroll tax

return”, more specifically, Form 941).

     Petitioner relies mistakenly on section 6041 to support its

requested holding that an employer must file Form 941 under

authority of part III.4   Although petitioner observes correctly

that section 6041 and the regulations prescribed thereunder

require employers such as it to file with the Secretary a

“return” for each calendar year that it pays wages of at least

$600 to an employee, that section 6041 is found in part III, and

that section 6651(a)(1) provides explicitly that the addition to



     4
       Although petitioner has not shared with us the specific
provision of sec. 6041 upon which it relies to support its
position, we believe that petitioner is relying upon sec.
6041(a). The relevant provisions of that section are as follows:

     SEC.   6041.   INFORMATION AT SOURCE.

          (a) Payments of $600 or More.--All persons engaged
     in a trade or business and making payment in the course
     of such trade or business to another person, of * * *
     wages * * * shall render a true and accurate return to
     the Secretary, under such regulations and in such form
     and manner and to such extent as may be prescribed by
     the Secretary, setting forth the amount of such gains,
     profits, and income, and the name and address of the
     recipient of such payment.
                                 -8-

tax set forth therein does not apply to a return required to be

filed under authority of part III, we do not find in section

6041, or in the underlying regulations, an express requirement

that petitioner file the Forms 941 at issue.     In fact, we read

the applicable regulations under section 6041 to state

specifically that an employer such as petitioner must make for

each calendar year an “information return” and that it must do so

on “Forms W-3 [Transmittal of Wage and Tax Statements] and W-2

[Wage and Tax Statement]”.   Sec. 1.6041-1(a)(1)(i) and (2),

Employment Tax Regs.   We also note in this regard that Form 941

is entitled a “Tax Return” as opposed to an information return.

     In closing, each party has submitted to the Court a proposed

computation for entry of decision and an objection to the other

party’s proposed computation.   We have reviewed these proposed

computations and objections, and we conclude that respondent’s

proposed computation properly reflects our Opinion at 121 T.C. 89

and that petitioner’s proposed computation does not.     We have

considered all objections and assertions made by petitioner as to

this matter, and we have found those objections and assertions

not discussed herein to be irrelevant and/or without merit.

Accordingly,


                                       Decision will be entered in

                                accordance with respondent’s

                                proposed computation.
