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Res Judicata - Claim Preclusion
Petitioners are precluded by operation of the judicial
doctrine of res judicata from contesting their income tax
deficiency for 1995. The Supreme Court in Commissioner v.
Sunnen, 333 U.S. 591, 597 (1948), summarized res judicata, also
known as claim preclusion, as follows:
The rule provides that when a court of competent
jurisdiction has entered a final judgment on the merits of a
cause of action, the parties to the suit and their privies
are thereafter bound “not only as to every matter which was
offered and received to sustain or defeat the claim or
demand, but as to any other admissible matter which might
have been offered for that purpose.” Cromwell v. County of
Sac, 94 U.S. 351, 352. The judgment puts an end to the
cause of action, which cannot again be brought into
litigation between the parties upon any ground whatever,
absent fraud or some other factor invalidating the judgment.
* * *
As to the application of the doctrine in the context of tax
litigation the Court stated in Sunnen:
Income taxes are levied on an annual basis. Each year is the
origin of a new liability and of a separate cause of action.
Thus if a claim of liability or non-liability relating to a
particular tax year is litigated, a judgment on the merits
is res judicata as to any subsequent proceeding involving
the same claim and the same tax year. * * * [Id. at 598.]
As a general rule, where the Tax Court has entered a
decision for a taxable year, both the taxpayer and the
Commissioner (with certain exceptions) are barred from reopening
that year. Hemmings v. Commissioner, 104 T.C. 221, 233 (1995).
It has also been held that “the Tax Court’s jurisdiction, once it
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