Attorneys: Lloyd T. Asbury (an officer), for petitioner. Monica J. Miller , for respondent.
Filed: Mar. 06, 2007
Latest Update: Dec. 05, 2020
Summary: T.C. Memo. 2007-53 UNITED STATES TAX COURT LLOYD T. ASBURY, ATTORNEY AT LAW, P.A., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 13589-05. Filed March 6, 2007. Lloyd T. Asbury (an officer), for petitioner. Monica J. Miller, for respondent. MEMORANDUM OPINION WHALEN, Judge: This case is before the Court to decide respondent’s motion to dismiss for lack of jurisdiction. The substantive issues in the case involve a notice of deficiency issued to petitioner, Lloyd T. Asbury,
Summary: T.C. Memo. 2007-53 UNITED STATES TAX COURT LLOYD T. ASBURY, ATTORNEY AT LAW, P.A., Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent Docket No. 13589-05. Filed March 6, 2007. Lloyd T. Asbury (an officer), for petitioner. Monica J. Miller, for respondent. MEMORANDUM OPINION WHALEN, Judge: This case is before the Court to decide respondent’s motion to dismiss for lack of jurisdiction. The substantive issues in the case involve a notice of deficiency issued to petitioner, Lloyd T. Asbury, A..
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T.C. Memo. 2007-53
UNITED STATES TAX COURT
LLOYD T. ASBURY, ATTORNEY AT LAW, P.A., Petitioner
v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 13589-05. Filed March 6, 2007.
Lloyd T. Asbury (an officer), for petitioner.
Monica J. Miller, for respondent.
MEMORANDUM OPINION
WHALEN, Judge: This case is before the Court to
decide respondent’s motion to dismiss for lack of
jurisdiction. The substantive issues in the case involve a
notice of deficiency issued to petitioner, Lloyd T. Asbury,
Attorney At Law, P.A., in which respondent determined a
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deficiency and penalties in petitioner’s corporate income
tax for 1997. Respondent moves to dismiss the case for
lack of jurisdiction on the ground that no proper person
has petitioned this Court on petitioner’s behalf.
The petition alleges that petitioner is “an
involuntarily dissolved Florida Professional Corporation”
and that Lloyd T. Asbury is “an indigent former Florida
attorney presently incarcerated in the Florida State Prison
System”. The petition also alleges that Mr. Asbury “was
the only director and shareholder of Petitioner during its
corporate existence.” Mr. Asbury signed the petition
without a title or any indication that he signed on
petitioner’s behalf.
Respondent moves to dismiss this case for lack of
jurisdiction and has yet to answer the petition. We reject
petitioner’s assertion that respondent was required to file
the subject motion within the time specified by Rule 36(a)
of the Tax Court Rules of Practice and Procedure
(hereinafter all Rule references are to the Tax Court Rules
of Practice and Procedure). Respondent’s motion to dismiss
can be made at any time because it goes to the jurisdiction
of the Court. See, e.g., David Dung Le, M.D., Inc. v.
Commissioner,
114 T.C. 268, 269 (2000), affd.
22 Fed. Appx.
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837 (9th Cir. 2001); Starvest U.S., Inc. v. Commissioner,
T.C. Memo. 1999-314.
Respondent’s motion asserts that the case must be
dismissed because it “was not brought by a party with
the capacity to engage in litigation in this Court.”
Respondent’s motion notes that, pursuant to Rule 60(c),
the capacity of a corporation to engage in litigation in
this Court is determined in accordance with the law of the
State in which the corporation was organized. According
to respondent’s motion, under Florida law, “only a
licensed attorney may represent a corporation in court.”
Respondent’s motion points out that Mr. Asbury was not a
licensed attorney when he filed the instant petition and,
thus, he “lacked the capacity to file such action pursuant
to T.C. Rule 60.”
In a supplement to petitioner’s notice of objection,
Mr. Asbury asserts, on petitioner’s behalf, that petitioner
was incorporated in the State of Florida in 1986 and was
administratively dissolved in 2002 for failure to file its
corporate annual report and to pay the necessary fees to
renew its corporate charter. According to Mr. Asbury,
during petitioner’s existence, he was its “only officer
(president, secretary and treasurer)” and he signed all
corporate documents in that capacity. Mr. Asbury cites
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Rule 60(c) and asserts that under Florida law, an
administratively dissolved corporation is not precluded
from bringing an action in its corporate name. He claims
authority to represent petitioner, pursuant to Rule 24(b),
as petitioner’s only corporate officer.
Respondent’s reply to the supplement to petitioner’s
notice of objection does not deny any of the facts alleged
by petitioner. Respondent’s reply also makes it plain that
it is not petitioner’s status as an administratively
dissolved Florida corporation that is the basis for
respondent’s position that the instant petition must be
dismissed for lack of jurisdiction. Respondent concedes
that “petitioner is entitled to bring this action” on the
basis of Fla. Stat. Ann. secs. 607.1405 and 607.1421 (West
2001). Those provisions of the Florida Statutes, according
to respondent, “allow administratively dissolved
corporations to carry on or defend an action in their
corporate name.”
Respondent’s position is that petitioner, as
represented by Mr. Asbury, did not have the capacity to
file the instant petition because Mr. Asbury was not
authorized under Florida law to file the instant petition
on petitioner’s behalf. Respondent argues that, under Rule
60(c), the capacity of a representative to litigate in this
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Court is determined under the law of the jurisdiction where
the authority is derived.
According to respondent, “Nothing in the law [of the
State of Florida] * * * grants authority to a former
officer, director, or shareholder, to represent a dissolved
corporation in a representative capacity.” Furthermore,
respondent cites a number of cases holding that “in
Florida, it is well established that only a licensed
attorney may represent a corporation in court.” Respondent
points out that Mr. Asbury is not currently licensed to
practice law in Florida or in any other jurisdiction.
Accordingly, respondent argues that Mr. Asbury “lacked the
capacity to file” the instant petition and the Court lacks
jurisdiction to consider it.
Respondent acknowledges that “Rule 24(b) allows for a
corporation to be represented by an authorized officer of
the corporation in Tax Court.” However, respondent argues
that “while Rule 24(b) allows for a corporation to be
represented by an ‘authorized officer’, it does not allow
for a dissolved corporation to be represented by a former
officer.” According to respondent, the purpose of Rule
24(b) is to limit to “officers” of the corporation, as
opposed to directors, shareholders, or other agents, the
persons who can be authorized by State law to represent the
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corporation in this Court. According to respondent:
“Mr. Asbury cannot act in a representative capacity for
petitioner” because Florida law “does not grant authority
to a former officer to represent a dissolved entity, with
exceptions not applicable here.”
Petitioner bears the burden of establishing
affirmatively all facts giving rise to our jurisdiction.
See Patz Trust v. Commissioner,
69 T.C. 497, 503 (1977);
Fehrs v. Commissioner,
65 T.C. 346, 348 (1975); Wheeler’s
Peachtree Pharmacy, Inc. v. Commissioner,
35 T.C. 177, 180
(1960). Petitioner must establish that: (1) Respondent
issued to petitioner a valid notice of deficiency, and (2)
petitioner, or someone authorized to act on petitioner’s
behalf, filed a timely petition with the Court. See Rule
13(a), (c); Monge v. Commissioner,
93 T.C. 22, 27 (1989);
Fehrs v.
Commissioner, supra at 348. In order to meet this
burden, petitioner must establish that Mr. Asbury has
authority to act on petitioner’s behalf. See Natl. Comm.
to Secure Justice v. Commissioner,
27 T.C. 837, 839-840
(1957); Coca-Cola Bottling Co. v. Commissioner,
22 B.T.A.
686, 700 (1931); cf. Scenic Wonders Gallery, LLC v.
Commissioner, T.C. Memo. 2000-64. If the petition is not
filed by petitioner, or by someone lawfully authorized to
act on petitioner’s behalf, then we are without
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jurisdiction to consider it. See, e.g., Fehrs v.
Commissioner, supra at 348; Photo Art Mktg. Trust v.
Commissioner, T.C. Memo. 2000-57.
Rule 60 provides, in pertinent part, as follows:
(a) Petitioner: (1) Deficiency or Liability
Actions: A case shall be brought by and in the
name of the person against whom the Commissioner
determined the deficiency (in the case of a
notice of deficiency) * * * or by and with the
full descriptive name of the fiduciary entitled
to institute a case on behalf of such person.
See Rule 23(a)(1). A case timely brought shall
not be dismissed on the ground that it is not
properly brought on behalf of a party until a
reasonable time has been allowed after objection
for ratification by such party of the bringing
of the case; and such ratification shall have the
same effect as if the case had been properly
brought by such party. * * *
* * * * * * *
(c) Capacity: * * * The capacity of a
corporation to engage in such litigation shall be
determined by the law under which it was
organized. The capacity of a fiduciary or other
representative to litigate in the Court shall be
determined in accordance with the law of the
jurisdiction from which such person’s authority
is derived.
Rule 24(b) provides as follows:
(b) Personal Representation Without Counsel:
In the absence of appearance by counsel, a
party will be deemed to appear on the party’s
own behalf. * * * A corporation * * * may be
represented by an authorized officer of the
corporation * * *. * * * Any such person shall
state, in the initial pleading or other paper
filed by or for the party, such person’s name,
address, and telephone number, and thereafter
shall promptly notify the Clerk in writing, in
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duplicate for each docket number involving that
party, of any change in that information.
Under Rule 60(c), the capacity of a corporation to litigate
in this Court is determined by the law of the State in
which it was organized. This has been the rule in this
Court and in our predecessor, the Board of Tax Appeals,
since 1926. See Great Falls Bonding Agency, Inc. v.
Commissioner,
63 T.C. 304, 306-307 (1974).
Petitioner was organized under the laws of the State
of Florida. Therefore, petitioner’s capacity to file a
petition in this Court seeking redetermination of the tax
deficiency underlying this action is governed by the law of
the State of Florida. See Rule 60(c).
Two provisions of the Florida Statutes are pertinent
to our decision. Fla. Stat. Ann. sec. 607.1405, “Effect of
dissolution”, provides, in relevant part:
(1) A dissolved corporation continues its
corporate existence but may not carry on any
business except that appropriate to wind up and
liquidate its business and affairs, * * *
* * * * * * *
(2) Dissolution of a corporation does not:
(a) Transfer title to the corporation's
property;
* * * * * * *
(c) Subject its directors or officers
to standards of conduct different from
those prescribed in ss. 607.0801-
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607.0850 except as provided in s.
607.1421(4);
* * * * * * *
(e) Prevent commencement of a proceeding by
or against the corporation in its corporate
name;
* * * * * * *
(g) Terminate the authority of the
registered agent of the corporation.
Fla. Stat. Ann. sec. 607.1421, “Procedure for and effect of
administrative dissolution”, provides, in relevant part:
(3) A corporation administratively dissolved
continues its corporate existence but may not
carry on any business except that necessary to
wind up and liquidate its business and affairs
under s. 607.1405 and notify claimants under s.
607.1406.
(4) A director, officer, or agent of a
corporation dissolved pursuant to this section,
purporting to act on behalf of the corporation,
is personally liable for the debts, obligations,
and liabilities of the corporation arising from
such action and incurred subsequent to the
corporation’s administrative dissolution only if
he or she has actual notice of the administrative
dissolution at the time such action is taken; but
such liability shall be terminated upon the
ratification of such action by the corporation’s
board of directors or shareholders subsequent to
the reinstatement of the corporation under ss.
607.1401-607.14401.
(5) The administrative dissolution of a
corporation does not terminate the authority
of its registered agent.
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According to these provisions of the Florida Statutes,
an administratively dissolved Florida corporation continues
in existence indefinitely to wind up and liquidate its
business and affairs, and it retains the right to sue and
be sued in its own name. See Fla. Stat. Ann. sec.
607.1405(1) and (2); Ron’s Quality Towing, Inc. v. Se.
Bank,
765 So. 2d 134, 135 (Fla. Dist. Ct. App. 2000);
Cygnet Homes, Inc. v. Kaleny Ltd., Inc.,
681 So. 2d 826
(Fla. Dist. Ct. App. 1996); see also Starvest U.S., Inc. v.
Commissioner, T.C. Memo. 1999-314 (“A dissolved Florida
corporation * * * continues in existence indefinitely to
the extent necessary to wind up and liquidate its business
and affairs, including the right to sue and be sued in its
own name.”).
It is undisputed that filing the instant petition for
redetermination of the deficiency and penalties determined
in petitioner’s tax for 1997 was necessary for petitioner,
an administratively dissolved Florida corporation, to wind
up and liquidate its business and affairs. Cf. Starvest
U.S., Inc. v.
Commissioner, supra. The adjustment and
settlement of the tax liabilities of a corporation are
necessary steps in closing the business of the corporation.
See Field v. Commissioner,
32 T.C. 187, 204 (1959), affd.
without published opinion
286 F.2d 960 (6th Cir. 1960); Bos
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Lines, Inc. v. Commissioner, T.C. Memo. 1965-71, affd.
354
F.2d 830 (8th Cir. 1965).
On the basis of the above, we find that, under Florida
law, petitioner continues in existence, notwithstanding its
administrative dissolution, during the time necessary to
seek redetermination of the instant notice of deficiency in
this Court and to wind up its other business affairs. We
further find that petitioner has the legal capacity under
Florida law to file the subject petition for
redetermination and to litigate in this Court, even though
petitioner had been administratively dissolved at the time
the petition was filed. See Rule 60(c); Starvest U.S.,
Inc. v.
Commissioner, supra; cf. Bloomington Transmission
Servs., Inc. v. Commissioner,
87 T.C. 586 (1986); Bared &
Cobo Co. v. Commissioner,
77 T.C. 1194 (1981); Padre Island
Thunderbird, Inc. v. Commissioner,
72 T.C. 391 (1979);
Great Falls Bonding Agency, Inc. v. Commissioner,
63 T.C.
304 (1974); Lee Enters., Inc. v. Commissioner, T.C. Memo.
1992-629; Am. Police & Fire Found., Inc. v. Commissioner,
T.C. Memo. 1981-704. Respondent does not seem to disagree
with these findings. As mentioned above, respondent
concedes that “petitioner is entitled to bring this
action”. We take this statement as respondent’s concession
that petitioner has the capacity under Rule 60(c) and the
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laws of the State of Florida to litigate in this Court and
to seek redetermination of the subject notice of
deficiency.
Respondent’s position that this case should be
dismissed focuses on Mr. Asbury’s authority under State
law to act as petitioner’s representative. Respondent’s
position is that the case must be dismissed because
Mr. Asbury is not authorized under Florida law to act on
petitioner’s behalf. It appears that respondent challenges
Mr. Asbury’s authority both to approve the filing of the
instant petition as an officer of petitioner and to appear
in these proceedings as petitioner’s representative.
As we view it, the issues raised by respondent’s
motion are: (1) Whether Mr. Asbury is an active and
authorized officer of petitioner under Florida law who
properly acted on petitioner’s behalf in approving the
filing of the instant petition; and (2) whether Mr. Asbury
is an “authorized officer” within the meaning of that term
in Rule 24(b) who can represent petitioner in these
proceedings without counsel.
As to the first issue, respondent argues that Florida
law does not authorize “a former officer, director or
shareholder to represent a dissolved corporation in a
representative capacity.” Contrary to respondent’s
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argument, the above-quoted provisions of the Florida
Statutes, which explicitly apply to a dissolved corporation
and its former officers, provide not only that the
dissolved corporation continues in existence and retains
the right to sue and be sued, but also, in effect, that the
individuals who were officers and directors of the
dissolved corporation continue in those positions and
retain the authority to act on behalf of the corporation
during the time necessary to wind up the business of the
corporation. See Fla. Stat. Ann. secs. 607.1405(2)(c),
607.1421(4). Furthermore, Florida law specifically
provides that the officers or directors of the dissolved
corporation are not subject to standards of conduct that
are different from those prescribed for officers and
directors of other corporations, except that they may be
personally liable for the corporation’s debts, obligations,
and liabilities arising from their actions. See
id.
Questions about the authority of an officer of a
corporation to act for and to bind the corporation are
questions of fact to be decided under the common law of
agency. See, e.g., Trans World Travel v. Commissioner,
T.C. Memo. 2001-6; Starvest U.S., Inc. v.
Commissioner,
supra. It is undisputed that Mr. Asbury was petitioner’s
only officer or director before petitioner was
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administratively dissolved. Since petitioner was
dissolved, Mr. Asbury has continued as petitioner’s only
officer and director, by operation of Florida law, and he
retains the authority to act on petitioner’s behalf to wind
up and liquidate petitioner’s business and affairs. See
Fla. Stat. Ann. secs. 607.1405, 607.1421. As petitioner’s
only officer or director after the dissolution, Mr. Asbury
is the only person who can act on petitioner’s behalf.
Accordingly, he is the only person who could have the
authority to approve the filing of the instant petition for
redetermination on petitioner’s behalf. See Bared & Cobo
Co. v.
Commissioner, supra; Starvest U.S., Inc. v.
Commissioner, supra. We find that Mr. Asbury had the
authority to sign the petition on petitioner’s behalf. We
further find that he is an “authorized officer” for
purposes of Rule 24(b).
Respondent’s motion argues that Mr. Asbury cannot
appear on petitioner’s behalf in this Court without
counsel, as an “authorized officer” of petitioner within
the meaning of Rule 24(b). According to respondent, an
officer of a Florida corporation is not authorized by Rule
24(b) to represent the corporation in this Court unless the
officer is also an attorney who can represent the
corporation before the courts of the State of Florida.
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Respondent cites no authority in support of this
interpretation of Rule 24(b).
The Explanatory Note that accompanied the promulgation
of Rule 24(b) states as follows:
Par. (b) is concerned with pro se
appearances, and is the counterpart of present
T.C. Rule 3. However, Par. (b) states a rule,
not expressed in T.C. Rule 3, that a party is
deemed to appear for himself in the absence of
appearance by counsel. In such event, the Clerk
can make service of papers by directing them by
mail to the party, foreclosing any claim of
failure to serve counsel. Par. (b) goes beyond
T.C. Rule 3 in specifying the information
required of the pro se party, and expands the
provision on the persons who may act in a
representative capacity for a pro se party. [
60
T.C. 1078.]
Thus, among other things, Rule 24(b) was intended to expand
the scope of former Rule 3, its counterpart, regarding the
persons who could act in a representative capacity for a
pro se party. Former Rule 3 provided in part as follows:
“A taxpayer corporation may be represented by a bona fide
officer of the corporation upon permission granted, in its
discretion, by the Court or the Division sitting.” Thus,
under former Rule 3, an officer of a corporation could
represent the corporation in this Court, but the officer
was required to obtain the permission of the Court to do
so. Rule 24(b) expanded the scope of former Rule 3 by
permitting a corporation to be represented in this Court
“by an authorized officer of the corporation”.
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Under respondent’s interpretation of Rule 24(b), a
corporate officer can represent the corporation only if the
officer is specifically authorized by State law to
represent the corporation in litigation conducted in the
courts of that State. This would be a contraction of the
former Rule, not an expansion.
Contrary to respondent’s interpretation, Rule 24(b)
allows an “authorized officer” of a corporation, such as
Mr. Asbury, to represent the corporation in this Court
“without counsel”. This is an exception to the usual rule
in Federal courts under which corporations are required to
be represented in court by a duly licensed attorney. See,
e.g., Rowland v. Cal. Men’s Colony, Unit II Men’s Advisory
Counsel,
506 U.S. 194, 202-203 (1993). Rule 24(b) does not
require an officer to be specifically permitted to
represent the corporation in State court. See House v.
Commissioner,
24 Fed. Appx. 608, 609 (7th Cir. 2001) (“At
trial House proceeded pro se and also elected to appear on
JJH’s [Joseph J. House, Inc.’s] behalf, as the tax court
rules permit him to do, see Tax Court Rule 24(b).”), affg.
T.C. Memo. 2000-22 (Illinois corporation); People Place
Auto Hand Carwash, LLC v. Commissioner,
126 T.C. 359, 360
n.2 (2006) (Tennessee limited liability company); WFO Corp.
v. Commissioner, T.C. Memo. 2004-186 (Ohio corporation);
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Oliver Family Found. v. Commissioner, T.C. Memo. 1997-220
(Nevada nonprofit corporation).
Upon consideration of the foregoing,
An appropriate order
will be issued denying
respondent’s motion.