## Facts

- Virgil and Marilyn Versteeg filed a petition in the U.S. Tax Court seeking to contest IRS action relating to their 1978 taxable year.
- The petition attached, as the operative IRS correspondence, a “final notice of intention to levy” dated June 22, 1987.
- The Commissioner moved to dismiss for lack of jurisdiction, asserting no notice of deficiency had been issued for 1978 and the levy notice concerned collection of tax assessed from petitioners’ own return.
- Petitioners’ counsel sought additional time to respond, attempted to withdraw, and asserted “upon information and belief” that a notice of deficiency had been issued.
- At the hearing, the court also considered whether counsel should be sanctioned under Tax Court Rule 33(b) for filing a jurisdictionally improper petition.

## Issues

1. Whether the Tax Court has jurisdiction over a petition when no statutory notice of deficiency was issued and the only attached IRS correspondence was a final notice of intention to levy.
2. Whether petitioners’ counsel should be sanctioned under Tax Court Rule 33(b) for signing and filing a petition allegedly not well grounded in fact or law.

## Decision

- The court granted the Commissioner’s motion and dismissed the case for lack of jurisdiction because no notice of deficiency was issued for 1978.
- The court denied the request for Rule 33(b) sanctions against petitioners’ counsel.

## Legal Principles

- The Tax Court is a court of limited, statutory jurisdiction and may exercise jurisdiction only as Congress authorizes.
- In deficiency cases, jurisdiction requires (1) issuance of a valid notice of deficiency and (2) a timely petition for redetermination.
- A “final notice of intention to levy” is a collection notice and does not constitute, or substitute for, a notice of deficiency; it does not confer deficiency jurisdiction.
- Under Tax Court Rule 33(b), an attorney’s signature certifies that the pleading is supported by reasonable inquiry and is well grounded in fact and law (or a good-faith argument for changing the law).
- A jurisdictional defect alone does not compel sanctions; sanctions generally require a showing of improper purpose, bad faith, or a failure to make reasonable inquiry under the circumstances.

## Conclusion

The Tax Court dismissed the petition because a levy notice is not a notice of deficiency and cannot supply the jurisdictional prerequisite for a deficiency case, and it declined to impose Rule 33(b) sanctions where the record did not justify a finding of sanctionable attorney conduct.


Versteeg v. Commissioner, 91 T.C. 339 (1988)