                        T.C. Memo. 2000-223



                      UNITED STATES TAX COURT



        JOHN J. FLYNN AND JAMES H. THOMAS, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18090-99R.                      Filed July 28, 2000.


     Michael Samuel Gordon, for petitioners.

     Sandra M. Jefferson, for respondent.



                        MEMORANDUM OPINION


     PANUTHOS, Chief Special Trial Judge:     This matter is before

the Court on respondent's motion to dismiss for lack of

jurisdiction.   The issue for decision is whether petitioners are
                               - 2 -

interested parties entitled to file a petition for declaratory

judgment pursuant to section 7476(b)(1).1

Background

     The International Headquarters Pension And Beneficiaries

Plan Of The International Union Of Operating Engineers (the

Engineers plan), established by the International Union of

Operating Engineers (the Union) in 1947, is a single employer

defined benefit plan.   On or about January 6, 1999, the Union

filed an Application for Determination for Employee Benefit Plan

(Form 5300) with the Internal Revenue Service (IRS) seeking a

determination that the Engineers plan remained tax-qualified

following the adoption of certain plan amendments.

     Prior to filing its application, the Union issued a Notice

to Interested Parties stating that it intended to seek an

administrative determination respecting the continuing tax

qualification of the Engineers plan.   The notice was distributed

to both current and former Union employees, including former

employees John J. Flynn and James H. Thomas (hereinafter

petitioners).   Petitioners left the employ of the Union prior to

January 1, 1997.

     On January 26, 1999, petitioners submitted a comment letter

to the IRS expressing concern that the amendments to the


     1
        Unless otherwise indicated, section references are to
sections of the Internal Revenue Code, as amended. Rule
references are to the Tax Court Rules of Practice and Procedure.
                                - 3 -

Engineers plan might violate the so-called backloading

requirements of section 411(b)(1) with respect to plan

participants who retired before January 1, 1997.

     On October 8, 1999, the IRS issued a favorable determination

letter to the Union.    Petitioners did not receive a copy of the

determination letter.

     On December 2, 1999, petitioners filed a petition for

declaratory judgment with the Court asking for a declaration

under section 7476 that the Engineers plan, as amended, does not

satisfy the requirements of section 401(a).2   In response,

respondent filed a motion to dismiss for lack of jurisdiction

asserting that petitioners lack standing to bring this action.

     Petitioners filed a notice of opposition to respondent's

motion to dismiss asserting that they should be deemed to qualify

as interested parties with standing to bring this action on the

alternative grounds:    (1) Section 1.7476-1(b), Income Tax Regs.,

which generally restricts interested parties to present

employees, was waived as a result of the Union’s having served

petitioners with its Notice to Interested Parties; and (2)

section 1.7476-1(b), Income Tax Regs., is invalid.



     2
        Although petitioners filed their petition believing that
the Commissioner had failed to issue a determination letter
within 270 days after the filing of the Union's application, see
sec. 7476(b)(3), petitioners had in fact timely filed their
petition within 91 days after the mailing of the determination
letter. See sec. 7476(b)(5).
                               - 4 -

Discussion

     Section 7476 gives the Tax Court jurisdiction to make a

declaratory judgment with regard to the tax-qualified status of a

retirement plan.3   Section 7476(b)(1) provides that only certain


     3
         Sec. 7476 provides, in pertinent part, as follows:

     SEC. 7476. DECLARATORY JUDGMENTS RELATING TO
                QUALIFICATION OF CERTAIN RETIREMENT PLANS.

          (a) Creation of Remedy.--In a case of actual
     controversy involving--

               (1) a determination by the Secretary with
          respect to the initial qualification or continuing
          qualification of a retirement plan under
          subchapter D of chapter 1, or

               (2) a failure by the Secretary to make a
          determination with respect to--

                     (A) such initial qualification, or

                    (B) such continuing qualification if the
               controversy arises from a plan amendment or
               plan termination,

          upon the filing of an appropriate pleading, the
          Tax Court may make a declaration with respect to
          such initial qualification or continuing
          qualification. Any such declaration shall have the
          force and effect of a decision of the Tax Court
          and shall be reviewable as such. For purposes of
          this section, a determination with respect to a
          continuing qualification includes any revocation
          of or other change in a qualification.

          (b) Limitations.--

               (1) Petitioner.--A pleading may be filed
          under this section only by a petitioner who is the
          employer, the plan administrator, an employee who
          has qualified under regulations prescribed by the
                                                   (continued...)
                                - 5 -

persons, including an employee who has qualified under

regulations prescribed by the Secretary, are permitted to file a

pleading to initiate a proceeding for such a declaratory

judgment.

     The Tax Court is a court of limited jurisdiction, and we may

exercise our jurisdiction only to the extent authorized by

Congress.    See Naftel v. Commissioner, 85 T.C. 527, 529 (1985).

The Court's jurisdiction may be challenged by either party, or by

the Court sua sponte, at any stage of the proceedings.    See Smith

v. Commissioner, 96 T.C. 10, 13-14 (1991), and cases cited

therein.    Petitioners bear the burden of proving that the

jurisdictional requirements of section 7476 have been met.    See

Rule 217(c)(1)(A); Halliburton Co. v. Commissioner, 98 T.C. 88,

94 (1992).

     Section 1.7476-1(b)(1), Income Tax Regs., provides the

general rule that only present employees qualify as interested

parties for purposes of bringing a declaratory judgment action.

This general rule applies in the case of certain plan amendments.

See Jones v. Commissioner, T.C. Memo. 1980-512, affd. without

published opinion 676 F.2d 710 (9th Cir. 1982); sec. 1.7476-



     3
      (...continued)
          Secretary as an interested party for purposes of
          pursuing administrative remedies within the
          Internal Revenue Service, or the Pension Benefit
          Guaranty Corporation.
                                - 6 -

1(b)(3), Income Tax Regs.   The only instance in which a former

employee qualifies as an interested party is in the case of a

plan termination.   See sec. 1.7476-1(b)(5), Income Tax Regs.

     Petitioners concede that, as former employees of the Union,

they do not qualify as interested parties under the controlling

regulation.    Petitioners nevertheless contend that, because the

Union treated them as interested parties during the

administrative proceedings, as evidenced by their receipt of the

Notice to Interested Parties, the technical requirements of the

regulations defining interested parties should be deemed waived.

We disagree.   In short, petitioners ignore the principle that our

jurisdiction cannot be enlarged by agreement of the parties,

waiver, or failure to object.   See Romann v. Commissioner, 111

T.C. 273, 281 (1998); see also Smith v. Commissioner, supra at

13-14; Loftus v. Commissioner, 90 T.C. 845, 861 (1988), affd.

without published opinion 872 F.2d 1021 (2d Cir. 1989).

Accordingly, we hold that the Union's error in serving

petitioners with a copy of the Notice to Interested Parties does

not provide a basis for concluding that petitioners are

interested parties in this action.      See Romann v. Commissioner,

supra at 281 (The Commissioner's erroneous treatment of a former

employee as an interested party during the administrative process

does not provide a basis for treating the former employee as an

interested party for purposes of determining the taxpayer's
                                - 7 -

standing under section 7476.); Jablonski v. Commissioner, T.C.

Memo. 1998-396; Jones v. Commissioner, supra.

     We likewise reject petitioners' contention that section

1.7476-1(b), Income Tax Regs., is invalid.    The regulation is the

product of a specific congressional grant of authority to the

Secretary of the Treasury set forth in section 7476(b)(1).      As a

legislative regulation, the provision is entitled to greater

deference than an interpretive regulation promulgated under the

general rule-making power vested in the Secretary by section

7805(a).    See Peterson Marital Trust v. Commissioner, 102 T.C.

790, 797-798 (1994), affd. 78 F.3d 795, 798 (2d Cir. 1996).      To

be valid, section 1.7476-1(b), Income Tax Regs., need not be the

best construction of section 7476(b)(1), only a reasonable one.

See Atlantic Mut. Ins. Co. v. Commissioner, 523 U.S. 382, 389

(1998).    Legislative regulations are to be given controlling

weight unless they are arbitrary, capricious, or manifestly

contrary to the statute.    See Romann v. Commissioner, supra at

281-282.

     The plain language of section 7476(b)(1) reveals that

Congress did not contemplate that every employee would be

considered an "interested party".    Moreover, the statute

expressly directs the Secretary to prescribe regulations defining

which employees are to be interested parties.    See Romann v.

Commissioner, supra at 289.    In accordance with the Court's
                                 - 8 -

analysis of the issue in Romann v. Commissioner, supra, we

conclude that the controlling regulation is valid.4    In Romann v.

Commissioner, supra at 288, we stated:

     the Congress entrusted the Treasury Department with the
     specific task of writing interested party regulations.
     The Treasury Department has done so. As our analysis,
     supra, shows, in most instances only present employees
     of one sort or another can qualify as interested
     parties under the regulations. In the case of plan
     terminations, the focus shifts to certain former
     employees and beneficiaries of deceased former
     employees. Perhaps the objectives sought to be
     furthered by ERISA would have been better served if the
     Treasury Department had issued regulations more in line
     with petitioner's suggestion. However, ERISA does not
     require the Treasury Department to do so, whether we
     focus merely on the enacted words or take into account
     the legislative history in order to understand the
     enacted words. Under these circumstances, we shall not
     rewrite the authorized regulations to meet petitioner's
     concerns. See Newborn v. Commissioner, 94 T.C. 610,
     636-637 (1990).

See Jablonski v. Commissioner, supra.

     Consistent with the preceding discussion, we hold that

petitioners are not interested parties within the meaning of

section 1.7476-1(b), Income Tax Regs.    Therefore, we shall grant

respondent's Motion to Dismiss for Lack of Jurisdiction.

     To reflect the foregoing,

                                 An order granting respondent's

                         Motion to Dismiss for Lack of

                         Jurisdiction will be entered.


     4
        The Court's opinion in Romann v. Commissioner, 111 T.C.
273 (1998), includes an appendix comprising a detailed summary of
the legislative history underlying sec. 7476.
