CARLYN M. JOHNSON AND CAROL J. JOHNSON, PETITIONERS V. COMMISSIONER
OF INTERNAL REVENUE

   No. 86-2050

   In the Supreme Court of the United States

   October Term, 1987

   On Petition For A Writ Of Certiorari To The United States Court Of
Appeals For The Eighth Circuit

   Memorandum For The Respondent In Opposition

   Petitioners seek review of the court of appeals' decision sua
sponte dismissing their appeal without prejudice on grounds of lack of
jurisdiction because the Tax Court had not yet entered a final
decision disposing of all tax years pending before it.

   1. After audit, the Commissioner determined a deficiency in
petitioners' 1982 federal income taxes and issued a notice of
deficiency to that effect under Section 6212 of the Internal Revenue
Code.  /1/ Petitioners thereafter filed a Tax Court petition in which
they sought redetermination of their tax liabilities for that year,
and, in addition, sought a redetermination of their tax liabilities
for 1979, 1980, 1981, and 1983.  Because no notices of deficiency for
any of the years 1979, 1980, 1981, or 1983 had been issued to
petitioners within the 90-day period preceding the filing of their Tax
Court petition, /2/ the Tax Court dismissed the petition, for lack of
jurisdiction, as to all years other than 1982.  The court subsequently
denied a motion filed by petitioners, which the court construed as a
motion to vacate its order of dismissal.  Pet. App. 25-26;  see I.R.C.
Section 6213(a).

   Petitioners thereupon took an appeal from the dismissal of their
petition for the years 1979, 1980, 1981, and 1983.  Their petition
seeking redetermination of the deficiency asserted for 1982, however,
was still before the Tax Court, where it remains pending.  On March
23, 1987, the court of appeals sua sponte dismissed the appeal without
prejudice, on the ground that the court lacked appellate jurisdiction
in the absence of a final decision disposing of all tax years pending
before the Tax Court.  On April 10, 1987, the court denied
petitioners' request for reconsideration (Pet. App. 22).

   On May 11, 1987, the court issued a per curiam opinion /3/ to
address the Commissioner's contention, advanced in his response to
petitioners' request for reconsideration, that the court of appeals
did have appellate jurisdiction under Section 7482(a)(1) of the Code.
/4/ The court explained that it agreed with the Second Circuit's
decision in Estate of Yaeger v. Commissioner, 801 F.2d 96 (1986),
which held that the statutory language authorizing appellate review of
Tax Court decisions "in the same manner and to the same extent as
decisions of the district courts in civil actions tried without a
jury" (I.R.C. Section 7482(a)(1)) did not permit a "bifurcated appeal"
from the Tax Court.  Rather, the court held, petitioners' appeal
concerning their 1979, 1980, 1981 and 1983 tax years would have to
wait until the Tax Court reached a final decision on petitioners' tax
liability for 1982.

   2. The courts of appeals are divided on the question whether an
order dismissing a Tax Court petition as to fewer than all the years
before it is immediately appealable.  In Wilson v. Commissioner, 564
F.2d 1317 (1977), cert. denied, 439 U.S. 832 (1978), the Ninth Circuit
exercised jurisdiction over an appeal from the Tax Court's denial of a
motion to amend a pending petition to encompass an additional tax
year.  The Ninth Circuit reasoned that the order had the effect of a
final decision dismissing the petition as to the additional year,
which the court concluded would be appealable.  In Estate of Yaeger v.
Commissioner, supra, on the other hand, the Second Circuit dismissed
for lack of jurisdiction an appeal taken from a Tax Court decision
that had dismissed a petition as to only one of three tax years at
issue.

   We believe that the Ninth Circuit's decision in Wilson is correct
and that the decisions of the Second Circuit in Yaeger and of the
court below are erroneous.  By its terms, Section 7482(a)(1) confers
jurisdiction on the courts of appeals to review "decisions" of the Tax
Court.  Section 7459(c) provides that "(a) decision of the Tax Court *
* * shall be held to be rendered upon the date that an order
specifying the amount of the deficiency is entered in the records of
the Tax Court." It further provides that, where the Tax Court
dismisses a proceeding, "an order to that effect shall be entered in
the records of the Tax Court, and the decision of the Tax Court shall
be held to be rendered upon the date of such entry." If not appealed
within the 90-day period specified by Section 7483, such "decisions"
become final under Section 7481(a)(1).  Any deficiency may then be
assessed pursuant to Section 6215, and the decision is no longer
subject to review by any court.  See, e.g., Lasky v. Commissioner, 235
F.2d 97 (9th Cir. 1956), aff'd, 352 U.S. 1027 (1957).

   The import of this statutory framework is that a separate
"decision" may be entered as to each particular year in issue.  Once a
"decision" is entered, we believe that it may be appealed, and,
indeed, that it will become final and nonreviewable if not timely
appealed.  /5/ General principles of finality developed under 28
U.S.C. 1291 and Fed. R. Civ. P. 54(b), such as a preference for
avoiding bifurcated appeals, simply have not been incorporated into
the statutory provisions dealing with appealability of Tax Court
decisions.

   The language of Section 7482(a)(1) relied upon the court below --
providing that Tax Court decisions are to be reviewed "in the same
manner and to the same extent as decisions of the district courts in
civil actions tried without a jury" -- was in no way intended to
incorporate into that statute the jurisdictional limitations of 28
U.S.C. (& Supp. III) 1291 and 1292 or the related provisions of Fed.
R. Civ. P. 54(b).  This language was added to the predecessor of
Section 7482 in 1948.  Act of June 25, 1948, ch. 646, Section 36, 62
Stat. 991.  Its purpose was to overturn this Court's decision in
Dobson v. Commissioner, 320 U.S. 489 (1943), which had established a
special and highly deferential scope of appellate review of Tax Court
decisions.  The language in question simply means that the "clearly
erroneous" standard of review applies to appeals from the Tax Court,
just as it applies to appeals from the district courts.  See S. Rep.
1559, 80th Cong., 2d Sess. 2, 13 (1948);  Commissioner v. Duberstein,
363 U.S. 278, 291 n.13 (1960);  Commissioner v. Smith Paper, Inc., 222
F.2d 126, 128 (1st Cir. 1955).

   3. We do not believe it necessary for the Court to resolve this
circuit conflict in this case.  Notwithstanding our view as to the
incorrectness of the decision below, petitioners here will sustain no
harm as a result of the court of appeals' dismissal, without
prejudice, of their appeal.  Once the Tax Court enters a decision
redetermining petitioners' deficiency in taxes for 1982, they will be
free to take an appeal to the Eighth Circuit from the Tax Court's
decisions as to 1979, 1980, 1981, and 1983 as well, thereby bringing
all their claims before the court of appeals in a single appeal.
Indeed, petitioners do not appear to complain in their petition about
the jurisdictional ruling of the court of appeals;  rather, the
petition appears to focus on petitioners' contentions on the
underlying merits, which the court of appeals explicitly did not
address (slip op. 3), and which would not, in any event, be properly
before this Court were it to grant the petition.  /6/ If the circuit
conflict to which we have referred should persist, and if the question
presented arises in a future case where the rights of one of the
parties are actually prejudiced by the decision, the Court can
consider at that time whether the question is sufficiently important
to warrant certiorari.

   It is therefore respectfully submitted that the petition for a writ
of certiorari should be denied.

   CHARLES FRIED

      Solicitor General

   SEPTEMBER 1987

   /1/ Unless otherwise noted, all statutory references are to the
Internal Revenue Code (26 U.S.C.), as amended (the Code or I.R.C.).

   /2/ The petition was filed on May 19, 1986.  A notice of deficiency
for petitioners' 1981 tax year had been issued on July 21, 1983, but
no Tax Court petition was filed within 90 days of that date.  A notice
of deficiency for petitioners' 1983 tax year was issued on September
3, 1986, more than three months after the instant petition was filed.
Section 6213(a), however, requires as a jurisdictional prerequisite
that a notice of deficiency precede the filing of a Tax Court petition
seeking redetermination of a taxpayer's liability for a particular
year.

   /3/ We are lodging with the Court copies of the March 23 order and
the May 11 opinion of the court of appeals, which were not reprinted
in the appendix to the petition.

   /4/ The Tax Reform Act of 1986 redesignated what was formerly
Section 7482(a) of the Code as Section 7482(a)(1) without changing the
terms of the statute.  That statute provides in full:

      Jurisdiction

         The United States Courts of Appeals (other than the United
      States Court of Appeals for the Federal Circuit) shall have
      exclusive jurisdiction to review the decisions of the Tax Court,
      except as provided in section 1254 of Title 28 of the United
      States Code, in the same manner and to the same extent as
      decisions of the district courts in civil actions tried without
      a jury;  and the judgment of any such court shall be final,
      except that it shall be subject to review by the Supreme Court
      of the United States upon certiorari, in the manner provided in
      section 1254 of Title 28 of the United States Code.

   /5/ It is, of course, well settled that a dispute as to tax
liability constitutes a "separate cause of action" for each year.
Commissioner v. Sunnen, 333 U.S. 591, 598 (1948).  Thus, even in an
income tax refund suit in district court, a judgment covering one or
more, but fewer than all, of the years in issue would appear to be
appealable under 28 U.S.C. 1291, subject to the district court's
certification that "there is no just reason for delay." See Fed. R.
Civ. P. 54(b).  The only significant difference in the procedures
applicable in the Tax Court, we submit, is that appealability of a Tax
Court "decision" covering fewer than all years involved would not
depend upon a certification that there is no reason for delay.

   /6/ We note that there appears to be no serious question as to the
correctness of the Tax Court's order dismissing the petition as to
years other than 1982.  It is well settled that the Tax Court has
jurisdiction to redetermine deficiencies only in cases in which the
Commissioner has issued a notice of deficiency and the taxpayer
thereafter has filed a timely petition with respect to the deficiency
so determined.  See I.R.C. Sections 6212(a), 6213(a), and 6214(a);
Commissioner v. Gooch Milling & Elevator Co., 320 U.S. 418, 420
(1943).  Petitioners' contentions concerning their 1979, 1980, 1981,
and 1983 tax years can still be raised in a Tax Court proceeding
timely initiated after the issuance of a notice of deficiency, if any,
or in a timely refund suit instituted in the Claims Court or a federal
district court, after payment of the assessed taxes and compliance
with the refund claim requirements of Section 7422(a) of the Code.