A Ninth Circuit decision finding that the Tax Court deficiency petition deadline is still jurisdictional despite recent Supreme Court case law could affect the outcome of two appeals pending in other circuits.
The Justice Department has already alerted the Eighth Circuit to its June 18 win in Organic Cannabis Foundation LLC v. Commissioner, No. 17-72874 (9th Cir. 2020), and will likely send a similar notice to the Second Circuit, according to Carlton Smith, former director of the tax clinic at the Benjamin N. Cardozo School of Law.
While the opinion in Organic Cannabis addressed the 90-day deadline in section 6213(a) for petitioning the Tax Court for a redetermination of deficiency, the appeals in the Second and Eighth circuit cases deal with the 30-day period in section 6330(d)(1) for filing a petition in a collection due process dispute. Nevertheless, the Justice Department is contending that the Ninth Circuit’s analysis of section 6213(a) applies equally to section 6330(d)(1).
Jurisdictional Requirements
The question whether taxpayers can rely on the judicial doctrines of forfeiture, waiver, estoppel, and equitable tolling if they don’t file their Tax Court petitions on time has gained wider attention in the last few years. The Tax Court has historically held that the filing deadlines are jurisdictional requirements that can’t be modified by applying equitable doctrines, but Smith and other academics have argued that the court’s position is out of step with recent Supreme Court case law.
The Supreme Court in recent years has pressed for a stricter distinction between jurisdictional rules, which govern a court’s adjudicatory authority, and filing deadlines, which the Court has described as “quintessential claim-processing rules” that promote orderly litigation but don’t deprive a court of authority to hear a case.
In Organic Cannabis, the Ninth Circuit held that the 90-day deadline in section 6213(a) is jurisdictional and that equitable tolling is therefore unavailable. The court noted that while the Supreme Court has indicated it wants to bring some discipline to the use of the term “jurisdiction,” it also clarified in a 2015 decision (United States v. Kwai Fun Wong, 575 U.S. 402 (2015)) that procedural rules, including time bars, “cabin a court’s power only if Congress has clearly stated as much.”
According to the Ninth Circuit, the wording and historical treatment of section 6213(a) show that Congress intended to have the 90-day deadline serve as a jurisdictional requirement. The court pointed to the fourth sentence in section 6213(a), which conditions the Tax Court’s jurisdiction to enjoin an assessment or order a refund on a petition being timely filed.
“By also specifying that the Tax Court lacks ‘jurisdiction’ to issue such an injunction ‘unless’ a petition has been filed (and then only if the petition is ‘timely’), section 6213(a) seems clearly to reflect an understanding that the manner in which the Tax Court acquires jurisdiction over a deficiency dispute is through the filing of a ‘timely petition,’” the Ninth Circuit said (emphasis in original).
The appeals court said that the historical treatment of section 6213(a) further confirms that the statute imposes a jurisdictional time limit. It noted that the circuits have uniformly adopted a jurisdictional reading of section 6213(a) or its predecessor since at least 1928 and that “despite multiple amendments to the Code (including two substantial overhauls in 1954 and 1986), Congress has never seen fit to disturb this long-settled understanding of section 6213(a).”
Different Deadline, Same Analysis?
Wasting no time in trying to leverage that win, the Justice Department on June 18 sent a letter of supplemental authority to the Eighth Circuit, which must decide in Boechler PC v. Commissioner, No. 19-2003, whether the 30-day period in section 6330(d)(1) is jurisdictional.
Janet A. Bradley, the Justice Department attorney representing the IRS in Boechler, asserted in the letter that the Ninth Circuit’s decision supports the government’s argument that section 6330(d)(1) is jurisdictional. She noted that the taxpayer in Organic Cannabis had made the same argument as the taxpayer in Boechler, that the Tax Court’s position on filing deadlines is inconsistent with the Supreme Court’s current thinking.
In holding that the time limit in section 6213(a) is jurisdictional, “the Ninth Circuit rejected the argument that ‘the Supreme Court’s recent jurisprudence addressing when statutory deadlines should be deemed jurisdictional has undermined [the court’s] settled precedent and required [it] to reach a different conclusion,’” Bradley said.
However, Boechler’s attorney, Amy Feinberg of Latham & Watkins LLP, rejected the government’s argument, asserting in a June 23 letter that the Organic Cannabis decision “has no bearing on this case.”
“Unlike section 6213(a), section 6330(d)(1) does not condition jurisdiction to grant an injunction on a timely-filed petition; it does not speak to injunctions at all,” Feinberg said.
Feinberg acknowledged that the following subsection, 6330(e)(1), contains a provision conditioning the Tax Court’s jurisdiction to enjoin IRS collection actions during a CDP appeal on a “timely appeal” being filed. However, that subsection is distinguishable from the provision in section 6213(a), she argued.
“Section 6330(e)(1) limits Tax Court jurisdiction only ‘under this paragraph,’” Feinberg said. “And, unlike the final sentence in section 6213(a), section 6330(e)(1) does not define ‘timely filed’ in reference to the mailbox rule — or otherwise.”
A timely appeal under section 6330(e)(1) could therefore include an appeal deemed timely by a counting rule or equitable tolling, Feinberg said. “That Congress separated the petition and injunction rights into different subsections in section 6330 strongly suggests that the Ninth Circuit’s analysis is inapplicable,” she added.
Smith told Tax Notes that the Justice Department “will no doubt also cite Organic Cannabis to the Second Circuit” in Castillo v. Commissioner, No. 20-1635, which will also address whether the section 6330(d)(1) filing deadline is jurisdictional. He noted that the parties haven’t yet filed briefs in Castillo, but the Center for Taxpayer Rights filed an amicus brief June 17. Former National Taxpayer Advocate Nina Olson serves as the center’s executive director.
Correction, June 25, 2020: The Center for Taxpayer Rights, not the Harvard Law School Federal Tax Clinic, filed an amicus brief in Castillo.