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Supreme Court Decision Update - Hinck v. U.S.

IRS.jpgIn a unanimous opinion penned by Chief Justice Johnny, Hinck v. U.S. (PDF of the opinion) deals with everyone’s favorite federal agency - the huggable, lovable IRS. Roberts begins his opinion with a very wise statement that most people know by this point: “Bad things happen if you fail to pay federal income taxes when due.” One of those bad things is that you have to pay interest on your past-due taxes. However, the IRS has the discretion to abate interest (that is, “to forgive it, partially or in whole”) if there was some unreasonable error or delay in the IRS letting the taxpayer know about the past-due tax.

Another provision of the Internal Revenue Code says that a taxpayer can obtain judicial review of a decision not to abate the interest (i.e., a decision that the taxpayer must, in fact, pay the accrued interest). The question here is where that judicial review must take place - can it only be done in the Tax Court, or can a taxpayer go before the Court of Federal Claims?

Chief Justice Johnny and the Supremes rule that judicial review of a refusal to abate interest can only take place before the Tax Court - that is, the Tax Court is the exclusive forum. Roberts says that the Supremes’ decision is governed by a “well-established principal” which says that, generally: ” ‘a precisely drawn, detailed statue pre-empts more general remedies.’ ” Plus, the Supremes have previously said that when Congress creates a new specific remedy, where no remedy previously existed, that remedy is generally treated as exclusive. And the remedy in question here (the ability to challenge an abatement decision) “fits the bill” on both counts.

The portion of the Internal Revenue Code in question is “precisely drawn,” because it contains a nice, simple sentence outlining who can seek judicial review, where that must take place, what the standard of review is, etc. And this provision was enacted after federal courts had unanimously said that there was no way to judicially challenge an abatement decision (thus, before Congress enacted this provision, the courts had ruled that there was no such remedy). There were several arguments made in opposition to this conclusion, but Roberts says that they are all “unavailing,” so that’s that.