disease". To compound petitioner's medical problems, petitioner was injured when she fell while on the job. Petitioner has severe arthritis, has had one knee replaced, and, as of the date of trial, was scheduled for surgery to replace her other knee. These maladies have left petitioner completely and permanently disabled. In October 1990, at the age of 54, petitioner retired from the Postal Service due to her disability. Petitioner subsequently began receiving a FERS disability retirement annuity (disability annuity). Petitioner received disability annuity payments during 1992 and 1993 in the amounts of $10,954 and $11,182, respectively.
Petitioner was told by the U.S. Office of Personnel
Management (OPM) that her disability annuity was not subject to Federal income tax. No Federal income tax was withheld from the payments. As a result of the advice from OPM petitioner did not file Federal income tax returns for the taxable years 1992, 1993, or 1994.
Respondent issued a notice of deficiency for the taxable years 1992 and 1993. In the notice of deficiency respondent determined that petitioner failed to report the disability annuity payments, as well as interest and dividend income in the amounts of $258 and $149, respectively, as gross income for the taxable years 1992 and 1993. As of the date of trial, no notice of deficiency had been issued to petitioner for the 1994 taxable year.
injuries or sickness". "The term 'damages received (whether by suit or agreement)' means an amount received (other than workmen's compensation) through prosecution of a legal suit or action based upon tort or tort type rights, or through a settlement agreement entered into in lieu of such prosecution." Sec. 1.104-1(c), Income Tax Regs. Thus, the exclusion must derive from some sort of tort claim against the payor. Rickel v. Commissioner , 900 F.2d 655, 658 (3d Cir. 1990), affg. in part and revg. in part on other grounds 92 T.C. 510 (1989). The Federal Employees' Compensation Act provides compensation to Federal employees for work-related injuries. 5 U.S.C. secs. 8101-8151 (1994). The liability of the United States or any instrumentality thereof, in or under any judicial proceeding, civil action, workmen's compensation statute, or Federal tort liability statute, is expressly limited to the relief provided in the Federal Employees' Compensation Act. 5 U.S.C. sec. 8116(c). Petitioner, however, received her disability annuity under 5 U.S.C. secs. 8451-8456 (1994). Since the exclusive legal remedy for redress of petitioner's tort claims against the Federal Government resulting from on the job injuries is contained in the Federal Employees' Compensation Act, it is axiomatic that petitioner's disability annuity, received under a different set of statutes, must have been received for a different purpose. See Flaherty v. Commissioner , T.C. Memo.
1987-61 (holding that an Internal Revenue Service employee's disability retirement annuity payments received under the Civil Service Retirement System were not excludable under section 104(a)(2) because the payments were intended to provide for the physical and mental well-being of the employee and were not damages from the settlement or prosecution of a legal suit); see also Federal Employees' Retirement System Act of 1986, Pub. L. 99-335, sec. 100A, 100 Stat. 516 (listing the purposes of FERS, none of which include compensation for tort type claims). Thus, section 104(a)(2) does not apply here.
Section 104(a)(3) excludes from gross income amounts received by an employee "through accident or health insurance for personal injuries or sickness" except to the extent such amounts are (A) attributable to contributions made by the employer which were not includable in the gross income of the employee, or (B) paid by the employer. Section 105(a) is essentially the mirror image of section 104(a)(3), and, subject to two exceptions, includes in the gross income of an employee amounts received through accident or health insurance for personal injuries or sickness to the extent such amounts are (A) attributable to assessing the deficiencies against petitioner because OPM provided petitioner with erroneous advice concerning the taxability of her disability annuity payments. Even if we assume that equitable estoppel can operate against the Government in some circumstances, there is no basis for applying the concept here. Cf. OPM v. Richmond , 496 U.S. 414, 420 (1990). The traditional elements of estoppel are: (1) Misrepresentation by the party against whom estoppel is asserted; (2) reasonable reliance on that misrepresentation by the party asserting estoppel; and (3) detriment to the party asserting estoppel. Heckler v. Community Health Services , 467 U.S. 51, 59 (1984);
Kennedy v. United States
, 965 F.2d 413, 417 (7th Cir. 1992).
Both the Heckler and Kennedy cases discussed the detriment requirement. In Heckler v. Community Health Services , supra , the Supreme Court described the "detriment" suffered as the inability to retain money (medicare reimbursements) that should never have been received in the first place. The Supreme Court stated: this is not a case in which * * * [a party] has lost any legal right, either vested or contingent, or suffered any adverse change in its status. * * * Here * * * [the party] lost no rights but merely was induced to do something which could be corrected at a later time.
There is no doubt that * * * [the party] will be adversely affected by the Government's recoupment of the funds that it has already spent. It will surely have to curtail its operations and may even be forced to seek relief from its debts through bankruptcy. * * * [The party] may need an extended period of repayment or other modifications in the recoupment process if it is to continue to operate, but questions concerning the Government's method of enforcing collection are not before us. The question is whether the Government has entirely forfeited its right to the money. [ Id.
at 61-62; fn. refs. omitted.]
In Kennedy v. United States
, supra , the Court of Appeals for the Seventh Circuit held that the underpayment of taxes lawfully owing did not constitute a detriment, relying on Heckler v. Community Health Services , supra . The Court of Appeals for the Seventh Circuit stated that "We do not believe the estoppel doctrine should be used against the government when the estoppel claimant's detriment is the loss of a windfall that could have never been statutorily effectuated". Kennedy v. United States , supra at 418-419; see also Thomas v. Commissioner , 92 T.C. 206, 227 (1989). Accordingly, petitioner is not entitled to relief under the equitable estoppel doctrine.
Petitioner also demands a jury trial. In Mathes v. Commissioner , 576 F.2d 70, 71-72 (5th Cir. 1978), affg. T.C.
Memo. 1977-220, the Court of Appeals for the Fifth Circuit answered this demand by stating that:
The Seventh Amendment preserves the right to jury trial "in suits at common law." Since there was no right of action at common law against a sovereign, enforceable by jury trial or otherwise, there is no constitutional right to a jury trial in a suit against the United States. Thus, there is a right to a jury trial in actions against the United States only if a statute so provides. Congress has not so provided when the taxpayer elects not to pay the assessment and sue for a redetermination in the Tax Court. For a taxpayer to obtain a trial by jury, he must pay the tax allegedly owed and sue for a refund in [United States] district court. The law is therefore clear that a taxpayer who elects to bring his suit in the Tax Court has no right, statutory or constitutional, to a trial by jury. [ Citations omitted.]
Finally, in passing, petitioner has mentioned that she incurred significant medical expenses. Section 213(a), subject to certain limitations, allows taxpayers a deduction for medical expenses that are not compensated for by insurance or otherwise. However, petitioner has not introduced any evidence to establish the amount of her medical expenses for the years in issue. Accordingly, we are unable to grant petitioner any relief from the determined deficiencies in the form of a deduction for medical expenses.
We conclude that, except as provided in respondent's concessions, petitioner is not entitled to any relief from the determined deficiencies. We reach this decision with some reluctance, but note, as did the Supreme Court in Federal Crop Ins. Corp. v. Merrill , 332 U.S. 380, 386 (1947), that "The circumstances of this case tempt one to read the [regulations] [and statutes] * * * with charitable laxity. But not even the temptations of a hard case can elude the clear meaning of the [regulations] [and statutes]."
To reflect the foregoing, Decision will be entered under Rule 155 .