## Facts

- Howard S. Scar and Ethel M. Scar filed a joint federal income tax return for 1978, claiming $26,966 in business deductions connected to a videotape tax shelter and reporting $3,269 in tax due.
- The IRS mailed a notice of deficiency stating a deficiency of $96,600 for 1978 and advising that a Tax Court petition had to be filed within 90 days.
- Attachments to the notice asserted a single $138,000 income adjustment labeled “Partnership—Nevada Mining Project,” computed tax at 70%, and stated the return was “unavailable.”
- The Scars had no connection to any “Nevada Mining Project,” and their return was in fact on file; the IRS later conceded the notice’s explanation referred to an unrelated investment.
- The Scars timely petitioned the Tax Court and moved to dismiss for lack of jurisdiction on the ground that the notice did not reflect an actual deficiency determination tied to their return.
- The Tax Court denied the jurisdictional motion, denied the Scars’ summary-judgment motions, and allowed the Commissioner to amend his answer to assert a new deficiency theory related to the Scars’ return.
- The parties entered a stipulated decision for an additional 1978 tax liability of $10,377 while preserving the Scars’ right to appeal the jurisdictional rulings.

## Issues

1. Whether a notice of deficiency satisfies I.R.C. § 6212(a) when, on its face, it reflects no actual determination of a deficiency with respect to the taxpayers’ return and instead relies on unrelated information.
2. If the notice was invalid, whether the Tax Court lacked jurisdiction under I.R.C. § 6213, making subsequent merits proceedings (including amendment of the answer) improper.

## Decision

- The Ninth Circuit reversed the Tax Court.
- The court held the IRS had not made a valid deficiency “determination” as to the Scars before issuing the notice.
- Because the notice was invalid, the Tax Court lacked jurisdiction and the case had to be dismissed.
- The Commissioner’s later concession and amended answer could not cure the jurisdictional defect because jurisdiction depends on the validity of the notice when issued.

## Legal Principles

- Tax Court jurisdiction in a deficiency case requires a valid notice of deficiency; without it, the court lacks power to proceed.
- Under I.R.C. § 6212(a), a notice is valid only if the Commissioner actually determines a deficiency for the specific taxpayer and tax year.
- A notice that, on its face, is based on unrelated transactions and shows no individualized computation tied to the taxpayer’s return does not evidence the required determination.
- Post-issuance attempts to change the deficiency theory (including amendments in Tax Court) cannot retroactively supply the missing statutory determination.

## Conclusion

The Ninth Circuit held that a notice of deficiency that facially relies on unrelated information and shows no actual deficiency determination for the taxpayer is jurisdictionally defective, requiring dismissal of the Tax Court proceeding.


Scar v. Commissioner, 814 F.2d 1363 (9th Cir. 1987)