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Plainly, the court of appeals lacks jurisdiction to
decide an issue that was not the subject of the Tax
Court proceeding or to grant relief that is beyond the
powers of the Tax Court itself. [Id. at 6.]
We conclude our discussion of McCoy by noting, as does
respondent, that the Supreme Court, in overruling the forgiveness
of a generally applicable statutory interest accrual on
deficiencies under section 6601 by the Court of Appeals for the
Sixth Circuit, had no occasion to address a court’s inherent
authority to impose sanctions in a case of Government misconduct.
Moreover, in Estate of Branson v. Commissioner, 264 F.3d 904
(9th Cir. 2001), the Court of Appeals for the Ninth Circuit
adopted an expansive view of the Tax Court’s equitable or
inherent powers. The court stated:
“the Tax Court exercises its judicial power in much the
same way as the federal district courts exercise
theirs.” Freytag v. Commissioner of Internal Revenue,
501 U.S. 868, 891, 111 S.Ct. 2631, 115 L.Ed.2d 764
(1991). This includes the authority to apply the full
range of equitable principles generally granted to
courts that possess judicial powers. “Even if the Tax
Court does not have far-reaching general equitable
powers, it can apply equitable principles and exercise
equitable powers within its own jurisdictional
competence.” Estate of Ashman v. Commissioner of
Internal Revenue, 231 F.3d 541, 545 (9th Cir. 2000);
See also Kelley [v. Commissioner], 45 F.3d [348] at 352
[(9th Cir. 1995)] (Tax Court has equitable power to
reform agreements between taxpayer and IRS); Buchine v.
Commissioner of Internal Revenue Service, 20 F.3d 173,
178 (5th Cir. 1994) (holding that the Tax Court had the
authority to apply the “equitable principle of
reformation to a case over which it had jurisdiction”).
[Id. at 908-909.]
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