Filed: Jun. 25, 2007
Latest Update: Feb. 21, 2020
Summary: United States Court of Appeals Fifth Circuit F I L E D IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT June 25, 2007 _ Charles R. Fulbruge III No. 06-60862 Clerk Summary Calendar _ DANNY Z HILAL Petitioner - Appellant v. COMMISSIONER OF INTERNAL REVENUE Respondent - Appellee - Appeal from the United States Tax Court No. 8563-02 - Before KING, HIGGINBOTHAM and GARZA, Circuit Judges. PER CURIAM:* Petitioner-appellant Danny Z. Hilal appeals the tax court’s denial of his motion to set as
Summary: United States Court of Appeals Fifth Circuit F I L E D IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT June 25, 2007 _ Charles R. Fulbruge III No. 06-60862 Clerk Summary Calendar _ DANNY Z HILAL Petitioner - Appellant v. COMMISSIONER OF INTERNAL REVENUE Respondent - Appellee - Appeal from the United States Tax Court No. 8563-02 - Before KING, HIGGINBOTHAM and GARZA, Circuit Judges. PER CURIAM:* Petitioner-appellant Danny Z. Hilal appeals the tax court’s denial of his motion to set asi..
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United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT June 25, 2007
____________________
Charles R. Fulbruge III
No. 06-60862 Clerk
Summary Calendar
____________________
DANNY Z HILAL
Petitioner - Appellant
v.
COMMISSIONER OF INTERNAL REVENUE
Respondent - Appellee
------------------------
Appeal from the United States Tax Court
No. 8563-02
----------------------
Before KING, HIGGINBOTHAM and GARZA, Circuit Judges.
PER CURIAM:*
Petitioner-appellant Danny Z. Hilal appeals the tax court’s
denial of his motion to set aside the dismissal of his tax case,
arguing that the tax court abused its discretion in denying this
motion. Because the tax court lacked jurisdiction to vacate its
decision after the decision became final under § 7481 of the
Internal Revenue Code, we AFFIRM.
On June 17, 2004, the tax court, without objection,
dismissed Hilal’s case for failure to prosecute and entered a
decision sustaining the government’s determination of the tax
*
Pursuant to 5TH CIR. R. 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in 5TH CIR. R.
47.5.4.
due. On July 16, 2004, Hilal filed a pro se motion to vacate the
order of dismissal and for a new trial, and the tax court
summarily denied that motion. More than two years later on
August 7, 2006, Hilal filed a motion to set aside the dismissal.
The district court recharacterized the motion as a motion for
leave to file a motion to vacate the order of dismissal and
decision and denied the motion on August 15, 2006. Hilal
appeals.
Whether the tax court had jurisdiction to vacate a final
decision is a question of law, which is reviewed de novo.
Harbold v. Comm’r,
51 F.3d 618, 621 (6th Cir. 1995). Pursuant to
§§ 7481(a) and 7483 of the Internal Revenue Code, in the absence
of a timely appeal from a tax court decision, the decision
becomes final after ninety days.1 I.R.C. §§ 7481(a) and 7483.
As a general rule, once a decision of the tax court becomes
final, the tax court lacks jurisdiction to vacate that decision.
See, e.g., Davenport Recycling Assocs. v. Comm’r,
220 F.3d 1255,
1259 (11th Cir. 2000).
Courts have made exceptions to the finality rule in only
three situations.
Id. These exceptions to the general rule
“must be construed narrowly” so that the finality of judgments is
1
I.R.C. § 7481 provides that “the decision of the Tax
Court shall become final . . . [u]pon the expiration of the time
allowed for filing a notice of appeal, if no such notice has been
duly filed within such time.” The notice of appeal must be filed
“with the clerk of the Tax Court within 90 days after the
decision of the Tax Court is entered.” I.R.C. § 7483.
2
preserved.
Id. The first exception to the finality rule is when
the tax court may have originally lacked jurisdiction to enter a
final decision. Billingsley v. Comm’r,
868 F.2d 1081, 1084-85
(9th Cir. 1989). The rationale for this exception is that it
would “border on absurdity” to prevent the tax court on
jurisdictional grounds from vacating a decision it lacked
jurisdiction to enter in the first place.
Id. at 1085. Some
circuits also allow an exception to the finality rule when there
is a fraud upon the court. See, e.g., Drobny v. Comm’r,
113 F.3d
670, 677 (7th Cir. 1997). The third possible exception to the
finality rule is for mutual mistake, where the tax court decision
was predicated on the parties’ stipulation, and both the
government and the taxpayer concede they mistakenly entered into
the stipulation. Abatti v. Comm’r,
859 F.2d 115, 118 (9th Cir.
1988). The validity of this third exception is questionable.
See, e.g.,
Harbold, 51 F.3d at 622; Swall v. Comm’r,
122 F.2d
324, 324 (9th Cir. 1941). The tax court lacks jurisdiction to
vacate its decision on other grounds, including newly discovered
evidence, an intervening change in the law, and excusable
neglect. Kenner v. Comm’r,
387 F.2d 689, 690-91 (7th Cir. 1968);
Toscano v. Comm’r,
441 F.2d 930, 932 (9th Cir. 1971).
Hilal argues that the tax court should have jurisdiction to
vacate its decision in his case based on the doctrine of
equitable tolling because in 2004, when the tax court issued its
decision, he was mentally incapacitated. But the tax court “is a
3
court of limited jurisdiction and lacks general equitable
powers.” Comm’r v. McCoy,
484 U.S. 3, 7 (1984).
As support for his argument, Hilal discusses instances in
which the tax court applied the doctrine of equitable tolling for
a statute of limitation, which is what he characterizes § 7481
as. But this characterization is improper because a statute of
limitations protects potential defendants from stale claims.
Order of R.R. Telegraphers v. Ry. Express Agency,
321 U.S. 342,
348-49 (1944). That is not the function of § 7481, which
operates only after a decision has been rendered on a timely
claim. See § 7481. Section 7481 applies equally to the
government and the taxpayer and prevents the reopening of cases
that have become final. See
id.
Nor does his argument apply by analogy. The tax court may
not exercise general equitable powers to assume jurisdiction
where not provided for by statute. Buchine v. Comm’r,
20 F.3d
173, 177-78 (5th Cir. 1994). Section 7481 provides the tax court
with jurisdiction to reopen its decision in two very limited
circumstances in (c) and (d). Neither of those circumstances
applies in this case, and the use of the word “solely” in those
subsections indicates that the tax court may not reopen its final
decisions for other circumstances not specified in the statute.
See § 7481(c), (d).
No notice of appeal from the tax court’s June 17, 2004
decision was filed within the time limits set forth in § 7483.
4
As a result, under § 7481(a), the tax court’s decision became
final ninety days later, on September 15, 2004. Hilal does not
contend that any of the three recognized exceptions to the
finality rule applies. Nor does the doctrine of equitable
tolling give the tax court jurisdiction to vacate its decision.
See
Buchine, 20 F.3d at 177-78. Because Hilal filed his motion
to set aside dismissal almost two years after the decision became
final, the tax court lacked jurisdiction to vacate its decision
and properly denied the motion. We AFFIRM.
5