Following a series of decisions in other areas of Tax Court jurisdiction that do not involve deficiency proceedings, the court held in Mainstay Business Solutions v. Commissioner, 156 T.C. No. 7 (2021) that a petitioner who came to the Tax Court seeking a determination regarding interest abatement could withdraw the petition. Because this is the first decision on this point regarding interest abatement, the court issued a precedential opinion. The opinion follows the opinions regarding withdrawal of collection due process petitions in Wagner v. Commissioner, 118 T.C. 330 (2002); innocent spouse petitions in Davidson v. Commissioner, 144 T.C. 273 (2015); whistleblower petitions in Jacobson v. Commissioner, 148 T.C. 68 (2017) and transferee liability petitions in Schussel v. Commissioner, 149 T.C. No. 16 (see post here.)
read more...The opinion is quite short since the reasoning is spelled out in detail in the opinions regarding other forms of Tax Court jurisdiction. The court provided guidance regarding when it will allow withdrawal:
In making the determination whether a petition should be dismissed, we should consider whether the other party would lose any substantial right by the dismissal. Durham v. Fla. E. Coast Ry. Co., 385 F.2d 366, 368 (5th Cir. 1967). We conclude that respondent is not prejudiced if we treat the instant proceeding as if it had never been commenced. See Wagner v. Commissioner, 118 T.C. at 333-334 (“[T]he granting of a motion to dismiss without prejudice is treated as if the underlying lawsuit had never been filed.”). In the absence of any objection by respondent, we will allow petitioner to withdraw its petition in accordance with FRCP 41(a)(2). We will grant petitioner’s motion to withdraw its petition and dismiss this case.
The story is different for petitioners who file in Tax Court based on a notice of deficiency. In deficiency cases the taxpayer cannot escape the Tax Court, if the court has jurisdiction over the case, without receiving a decision regarding the correct amount of tax for the year(s) at issue. The Tax Court’s decision in Estate of Ming, 62 T.C. 519 (1974), held that a taxpayer petitioning the Tax Court under IRC 6213 may not withdraw the petition in order to avoid the entry of decision. The reason for not allowing withdrawal in a deficiency case concerns the impact of IRC 7459. Although the Mainstay case does not discuss section 7459 due to its reliance on the prior precedent in other areas of similar jurisdiction, the concerns raised by that section continue to control the ability of a petitioner to depart the Tax Court after filing a petition in a deficiency case.
Petitioner in Mainstay was represented by occasional guest blogger Bob Rubin of Boutin Jones in Sacramento, California. Bob and I started in the same branch of the Refund Litigation Division of Chief Counsel’s Office (a division now folded into Procedure & Administration) back in the winter of 1977.
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