Marijuana Business Seeks Rehearing in Filing Deadline Dispute

NORTHERN CALIFORNIA SMALL BUSINESS ASSISTANTS, INC.,
Petitioner-Appellant,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent-Appellee

IN THE UNITED STATES COURT OF APPEALS FOR
THE NINTH CIRCUIT

Appeal from Decisions of the United States Tax Court

PETITION FOR PANEL REHEARING OR
REHEARING EN BANC

DOUGLAS L. YOUMANS (CA State #96255; Tax Court YD0027)
WAGNER KIRKMAN BLAINE
KLOMPARENS & YOUMANS LLP
10640 Mather Blvd., Suite 200
Mather, CA 95655
Telephone: (916) 920-5286
Attorneys for Petitioner-Appellant

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CORPORATE DISCLOSURE STATEMENT

Pursuant to Federal Rule of Appellate Procedure 26.1, petitioner and appellant NORTHERN CALIFORNIA SMALL BUSINESS ADMINISTRATION, INC. (NCSBA) states that no publicly held corporation owns 10% or more of its stock and there is no parent corporation.

Respectfully submitted,

WAGNER KIRKMAN BLAINE
KLOMPARENS & YOUMANS LLP

Douglas L. Youmans
Counsel for NCSBA
Wagner Kirkman Blaine
Klomparens & Youmans, LLP
10460 Mather Boulevard, Suite 200
Mather, CA 95655
Telephone: (916) 920-5286
Facsimile: (916) 920-8608
dyoumans@wkblaw.com

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TABLE OF CONTENTS

I. INTRODUCTION AND SUMMARY

II. BACKGROUND

III. ARGUMENT5

IV. CONCLUSION

CERTIFICATE OF COMPLIANCE

ADDENDUM

CERTIFICATE OF SERVICE

TABLE OF AUTHORITIES

Cases

Bregin v. Commissioner, 74 T.C. 1097, 1103 (1980)

Duggan v. Commissioner, No. 15-73819 (Jan. 12, 2018)

Fort Bend County v. Davis, 139 S. Ct. 1843, 1849 (2019)

Gonzalez v. Thaler, 565 U.S. 134, 141 (2012)

Guralnik v. Commissioner, 146 T.C. 230, 231 (2016)

Guralnik v. Commissioner, 146 T.C. at 231

Henderson v. Shinseki, 562 U.S. 428, 436-441 (2011)

Irwin v. Department of Veterans Affairs, 498 U.S. 89, 95-96 (1990)

Kontrick v. Ryan, 540 U.S. 443, 455 (2004)

Kwai Fun Wong, 135 S.Ct. at 1632

Musacchio v. United States, 136 S. Ct. 709, 717 (2016)

Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145, 153 (2013)

Tilden v. Commissioner, 846 F.3d 882, 884 (7th Cir. 2017)

U.S. v. Kwai Fun Wong, 135 S.Ct. 1625, 1632 (2015)

United States v. Kwai Fun Wong, 135 S. Ct. 1625, 1632 (2015)

Volpicelli v. United States, 777 F. 3d 1042 (9th Circ. 2015)

Volpicelli v. United States, 777 F.3d 1042 (9th Cir. 2015)

Statutes

§ 6213(a)

Fed. R. App. P. 35 and 40

I.R.C § 7459(d)

I.R.C. § 6214

I.R.C. § 6330(d)

I.R.C. § 6330(d)(1)

I.R.C. § 6512(b)(1)

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I. INTRODUCTION AND SUMMARY

Pursuant to Fed. R. App. P. 35 and 40, Northern California Small Business Assistants, Inc. (“NCSBA”) respectfully petitions for panel rehearing or rehearing en banc. The panel's opinion seriously errs in: (i) failing to follow recent precedent of the Supreme Court by concluding the 90-day period for filing a Tax Court petition is jurisdictional and not subject to equitable tolling; and (ii) conflicting with the decision of this Court in Volpicelli v. United States, 777 F. 3d 1042 (9th Circ. 2015), which requires en banc review to secure and maintain uniformity of this Court's decisions.

The case involves I.R.C. § 6213(a)'s delineation of the 90-day period for filing a Tax Court petition; the “mailbox rule” set forth in I.R.C. § 7502(f); and Internal Revenue Service (“IRS”) guidance pertinent to “designated delivery services” for filing petitions with the Tax Court.

The panel erroneously determined § 6213(a)'s time limit to be jurisdictional and not subject to equitable tolling, both of which matters are of exceptional importance. (Op. 19.) Those rulings essentially ignore the Supreme Court's current approach to distinguishing jurisdictional limits from case-processing rules, and its holdings that statutory deadlines are presumptively nonjurisdictional and subject to equitable tolling unless Congress has made a clear statement that a deadline is jurisdictional.

The panel's determination that the 90-day Filing Deadline under I.R.C. § 6213(a) is jurisdictional and not subject to equitable tolling conflicts with the Court's prior decision in Volpicelli.

Rehearing is clearly warranted to permit the Court to fully consider the exceptionally important jurisdictional and equitable tolling questions presented and their implications for the functioning of the Tax Court.

II. BACKGROUND

A. Statutory Background.

The first sentence of I.R.C. § 6213(a) provides that a taxpayer may file a petition with the Tax Court seeking redetermination of a notice of deficiency within 90 days (150 days if the notice is addressed to a person outside the United States) after the mailing of said notice (as applicable, said 90 or 150-day period, the “Filing Deadline”). The second sentence prohibits certain collection actions until a deficiency notice is mailed and, if no petition is filed with the Tax Court, before the Filing Deadline has expired. The third sentence provides that any attempts to take any collection action so prohibited may be enjoined. The fourth sentence, added in 1988 (64 years after the predecessor to the first sentence of § 6213(a) which delineates the Filing Deadline was originally enacted), provides that the Tax Court shall not have jurisdiction to enjoin any of the collection actions referred to in the second sentence unless a petition has been timely filed.

With respect to the redetermination of income tax deficiencies and overpayments, jurisdiction is granted to the Tax Court in two sections of the Internal Revenue Code (“I.R.C.”). For deficiencies, I.R.C. § 6214(a) confers “jurisdiction to redetermine the correct amount of a deficiency.” Where a taxpayer has overpaid tax, I.R.C. § 6512(b)(1) confers “jurisdiction to determine the amount of such overpayment.” Neither of these sections refers to either a 90-day filing period or § 6213(a).

B. Factual Background.

The facts pertaining to this petition are relatively undisputed.

• NCSBA delivered its petition to FedEx one day before expiration of that Filing Deadline but, for various reasons, some of which are not entirely clear because IRS did not raise the issue for over fifteen months, FedEx did not deliver the petition to the Tax Court overnight.

• IRS contends the Tax Court did not acquire jurisdiction because: (i) NCSBA's petition was not received by the Tax Court until the day after expiration of the § 6213(a) Filing Deadline; and (ii) NCSBA is precluded from use of the “mailbox rule” because FedEx “first overnight” is a different “delivery service” than other FedEx “overnight” delivery options, and FedEx “first overnight” was not listed as a “designated delivery service” at the time NCSBA delivered its petition to FedEx.

III. ARGUMENT

I. THE PANEL'S HOLDING THAT THE 90-DAY PERIOD FOR FILING A TAX COURT PETITION UNDER I.R.C. § 6213(a) IS JURISDICTIONAL AND NOT SUBJECT TO EQUITABLE TOLLING IS CONTRARY TO SUPREME COURT PRECEDENT AND RAISES EXCEPTIONALLY IMPORTANT QUESTIONS

II. THE PANEL'S HOLDING THAT THE 90-DAY PERIOD FOR FILING A TAX COURT PETITION UNDER I.R.C. § 6213(a) IS JURISDICTIONAL AND NOT SUBJECT TO EQUITABLE TOLLING CONFLICTS WITH THIS COURT'S DECISION IN VOLPICELLI

A. THE PANEL'S HOLDING THAT THE 90-DAY PERIOD FOR FILING A TAX COURT PETITION UNDER I.R.C. § 6213(a) IS JURISDICTIONAL AND NOT SUBJECT TO EQUITABLE TOLLING IS CONTRARY TO SUPREME COURT PRECEDENT AND RAISES EXCEPTIONALLY IMPORTANT QUESTIONS

This petition seeks rehearing (by the panel but, barring that, by the Court en banc) to correct a panel decision that conflicts with recent Supreme Court cases that claims processing rules (which include filing deadlines) should usually not be considered jurisdictional.

The Supreme Court has endeavored to “bring some discipline” to the use of the term “jurisdictional.” Gonzalez v. Thaler, 565 U.S. 134, 141 (2012). Under the Supreme Court's current approach, filing deadlines are almost never jurisdictional. United States v. Kwai Fun Wong, 135 S. Ct. 1625, 1632 (2015). The Government must clear a high bar to establish that a statute of limitations is jurisdictional. United States. v. Kwai Fun Wong, 135 S. Ct. at 1632. While the Court has acknowledged that filing deadlines still can be jurisdictional if Congress makes a “clear statement” to that effect, “Congress must do something special, beyond setting an exception-free deadline, to tag a statute of limitations as jurisdictional and so prohibit a court from tolling it.” Id.

Absent a “clear statement,” courts should treat time restrictions as nonjurisdictional. Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145, 153 (2013).

While Congress is not required to “incant magic words,” traditional tools of statutory construction must plainly show that Congress imbued a procedural bar with jurisdictional consequences. Kwai Fun Wong, 135 S. Ct. at 1632.

The panel starts its analysis of whether the recent Supreme Court jurisprudence addressing when statutory deadlines should be deemed jurisdictional by referencing the Seventh Circuit's decision in Tilden v. Commissioner, 846 F.3d 882, 884 (7th Cir. 2017), a poorly reasoned opinion which relied heavily on the Tax Court's decision in Guralnik v. Commissioner, 146 T.C. 230, 231 (2016), which involved I.R.C. § 6330(d)(1), which is entirely different than § 6213(a), the statute at issue here. Ignoring the facts that: (i) the Tax Court's authority to hear deficiency cases is granted pursuant to I.R.C. § 6214 (see Bregin v. Commissioner, 74 T.C. 1097, 1103 (1980) (describing § 6214(a) as the provision granting general jurisdiction)); (ii) the word “jurisdiction” appears more than two sentences and 168 words after the Filing Deadline is spelled out in the first sentence of § 6213(a); and (iii) the word “jurisdiction” was added to § 6213(a) in 1988, to grant the Tax Court jurisdiction to enjoin certain collection actions over sixty years after the predecessor of § 6213(a)'s first sentence initially appeared, Tilden suggests that § 6213(a) should not be distinguished from the statutes courts have found to be jurisdictional under the Supreme Court's recent jurisprudence because § 6213(a) has long been held by a number of lower (circuit) courts to be jurisdictional.

Tilden, 846 F.3d at 886.

The panel then purports to apply “traditional tools of statutory construction” to support its conclusion
that “. . . Congress has indeed done 'something special' to 'plainly show' that § 6213's time limit is 'imbued . . . with jurisdictional consequences.'” (Op. 21.)

First, the panel notes that § 6213(a) uses the “magic word 'jurisdiction,'” albeit, “with respect to one aspect of the Tax Court's power concerning deficiency redeterminations . . . ” (Op. 22 (emphasis in original).) Addressing, in turn, each of the first four sentences of § 6213(a) (which include an aggregate of 282 words), the panel agrees with the Seventh Circuit's assertion in Tilden that it is “very hard” to read the fourth sentence of § 6213(a) in a way that merely strips the Tax Court of jurisdiction to enjoin the collection actions referred to in the second sentence. (Op. 23.) “By also specifying that the Tax Court lacks 'jurisdiction' to issue such an injunction 'unless' a [timely] petition has been filed, § 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.' I.R.C. § 6213(a).” (Op. 23 (emphasis in original, but added to “seems”).)

Such a holding is not only contrary to Gonzalez v. Thaler, 565 U.S. 134, 146-147 (2012), which instructs courts not to treat time periods adjacent to jurisdictional provisions as jurisdictional absent a “clear statement,” but, on its face, the panel's use of the word “seems” shows that Congress has not done “'something special' to 'plainly show' that I.R.C. § 6213's time limit is 'imbued . . . with jurisdictional consequences.'” (Op. 21); Kwai Fun Wong, 575 U.S. at 410 (emphasis added).

Suggesting that the fourth sentence of § 6213(a) seems 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 panel states its reading of the statute in this fashion is “strongly confirmed” by how the second sentence's “no-collection prohibition” is phrased. (Op. 23.) On that point, the panel suggests that, if § 6213(a) is not jurisdictional, the non-collection prohibition provided in the second sentence would lapse, subject to revival if the Tax Court accepts a late-filed petition, a “discontinuity” the panel says the statute does not contemplate. (Op. 24.) While it is not clear whether any such “discontinuity” would necessarily occur, less clear is how that “plainly shows” that the Filing Deadline in the first sentence of § 6213(a) is intended to have jurisdictional consequences.

The panel then suggests that, if the aforementioned hypothetical discontinuity should occur if the Tax Court should accept a late-filed petition, it (the Tax Court) would “unquestionably lack jurisdiction to enjoin violations of that prohibition — thereby necessitating a separate court proceeding . . . ” (Op. 24 (emphasis in original).) Again, while it is uncertain whether any such “discontinuity” allegedly depriving the Tax Court of jurisdiction to enjoin violations of that prohibition (of certain collection actions, as set forth in the second sentence) would ever occur, less certain is how that “plainly shows” that the Filing Deadline in the first sentence of § 6213(a) is intended to have jurisdictional consequences.

As noted in NCSBA's reply brief, while the panel's contention that, if § 6213(a) is not jurisdictional, a dismissal for late-filing would have preclusive effect under I.R.C § 7459(d), no court so holds. (Appellant Reply Br., Dkt Entry 31at p. 25.) As further noted in NCSBA's reply brief, if the panel is correct about this, resolution of the issue involves policy arguments better addressed by Congress than the courts. (Appellant Reply Br., Dkt Entry 31at p. 25.)

As its last argument pertinent to whether the Filing Deadline in § 6213(a) is jurisdictional, the panel notes, “. . . the circuits have uniformly adopted a jurisdictional reading of § 6213(a) or its predecessor since at least 1928.” (Op. 25 (emphasis added).) Citing Fort Bend County v. Davis, 139 S. Ct. 1843, 1849 (2019) (“[T]he Court has stated it would treat a requirement as jurisdictional when a long line of Supreme Court decisions left undisturbed by Congress attached a jurisdictional label to the prescription” (emphasis added)), the panel suggests that § 6213(a) imposes a jurisdictional time limit because Congress has never seen fit to disturb the aforementioned long-settled circuit court treatment of § 6213(a), the vast majority of which rulings precede the recent Supreme Court jurisprudence addressing when statutory deadlines should be deemed jurisdictional. However, the panel has ostensibly utterly disregarded the distinction between appellate and Supreme Court precedent clarified in the Fort Bend County ruling. In other words, as the Supreme Court has never ruled on whether § 6213(a)'s Filing Deadline is jurisdictional nor, since Kontrick v. Ryan, 540 U.S. 443, 455 (2004), has it held that Congress clearly stated an intent that any claims processing rule is jurisdictional, it is somewhat misleading to suggest that the aforementioned long-settled circuit court treatment of § 6213(a) as jurisdictional should be followed merely because Congress has not addressed it.

Finally, in deciding whether the § 6213(a) Filing Deadline is jurisdictional and not subject to equitable tolling, how the Tax Court operates should not be overlooked. For example, in Guralnik v. Commissioner, 146 T.C. at 231, where the Tax Court, in dicta, stated that FedEx First Overnight was not a “designated delivery service,” the Tax Court nonetheless extended the I.R.C. § 6330(d) 30-day filing period, holding that a petition which arrived one day late was timely because the clerk's office was inaccessible on the day the petition was due because of a snowstorm. Following its rules, which closely parallel the Federal Rules of Civil Procedure, the Tax Court concluded it had jurisdiction to extend the filing period. As nothing in the Tax Court rules or the Internal Revenue Code specifically states the Tax Court can extend filing deadlines, to do so the Tax Court had to rely on equitable tolling.

Rehearing is clearly warranted because the panel decision is contrary to the above-cited Supreme Court cases and will permit the Court to fully consider the exceptionally important jurisdictional questions presented by this case and their implications for the functioning of the Tax Court.

B. THE PANEL'S HOLDING THAT THE 90-DAY PERIOD FOR FILING A TAX COURT PETITION UNDER I.R.C. § 6213(a) IS JURISDICTIONAL AND NOT SUBJECT TO EQUITABLE TOLLING CONFLICTS WITH THIS COURT'S DECISION IN VOLPICELLI

This petition seeks rehearing (by the panel but, barring that, by the Court en banc) to correct a panel decision that conflicts with recent Supreme Court cases and this Court's holding in Volpicelli that non-jurisdictional filing deadlines are subject to equitable tolling.

In Volpicelli v. United States, 777 F.3d at 1043, this Court addressed the issue of whether I.R.C. § 6532(c)'s nine month¹ limitations period for bringing wrongful levy actions was subject to equitable tolling. The Court started its analysis by noting that Irwin v. Department of Veterans Affairs, 498 U.S. 89, 95-96 (1990), superseded by statute, “rejected the then-prevailing rule, under which time limits set by Congress for suits against the government were deemed jurisdictional and therefore not subject to equitable tolling (citation omitted). [It] replaced that rule with a rebuttable presumption that filing deadlines may be equitably tolled, unless Congress provides otherwise (citation omitted).” Volpicelli, 777 F.3d at 1044. Volpicelli further noted that the Irwin presumption “. . . does not apply to deadlines that are 'jurisdictional'” (citing Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. at 154), but “[t]he Supreme Court's recent cases require a clear statement from Congress before a procedural rule will be treated as jurisdictional. (citation omitted) (emphasis added).” Volpicelli, 777 F.3d at 1044.

The Volpicelli court determined that I.R.C. § 6532(c) “. . . does not cast its filing deadline in 'jurisdictional' terms” (it fails the “clear statement” test) because jurisdiction [to hear an unlawful levy case] is granted under a separate provision, similar to the way the Tax Court's jurisdiction to hear deficiency cases is granted in I.R.C. § 6214, not § 6213.

Volpicelli is to be contrasted with Duggan v. Commissioner, 879 F. 3d 1029, 1031 (9th Cir. 2018), where this Court analyzed whether the 30-day deadline set forth in I.R.C. § 6330(d) to secure judicial review of “collection due process” hearings was jurisdictional. After noting that “Congress must do something special, beyond setting an exception-free deadline, to tag a [filing deadline] as jurisdictional and so prohibit a court from tolling it,” Duggan cites Kwai Fun Wong, 135 S. Ct. at 1630, for the proposition that, where a deadline is contained in a separate section from the grant of jurisdiction, that “structural divide” indicates that a failure to meet the deadline does not divest the court of power to hear the case. Duggan, 879 F.3d at 1032; Henderson v. Shinseki, 562 U.S. 428, 436-441 (2011). The Duggan court further explained, “[t]o determine whether Congress has made the necessary clear statement, we examine the text, context and relevant historical treatment of the provision at issue.” Duggan, 879 F.3d at 1032; citing Musacchio v. United States, 136 S. Ct. 709, 717 (2016).

Reasoning that the I.R.C. § 6330(d) “filing deadline is given in the same breath as the grant of jurisdiction,” (Duggan, 879 F.3d at 1034) the Duggan court held that the 30-day deadline set forth in § 6330(d) was jurisdictional. However, I.R.C. § 6330(d), the provision at issue in Duggan, is simply not comparable to § 6213(a), the provision at issue here.

Like Volpicelli, the Filing Deadline is granted in a totally separate provision (§ 6213(a)) from the one vesting the Tax Court with jurisdiction over petitions to redetermine a deficiency (§ 6214). Because the panel's decision that § 6213(a)'s Filing Deadline is jurisdictional (and equitable tolling does not apply) conflicts with this Court's holding in Volpicelli, that non-jurisdictional filing deadlines are subject to equitable tolling, rehearing en banc is clearly warranted to permit the Court to secure and maintain the uniformity of its decisions.

IV. CONCLUSION

For the reasons stated above, NCSBA respectfully requests that the Court grant rehearing or rehearing en banc.

Dated: August 3, 2020

Douglas L. Youmans
Counsel for NCSBA
Wagner Kirkman Blaine Klomparens & Youmans, LLP
10460 Mather Boulevard, Suite 200
Mather, CA 95655
Telephone: (916) 920-5286
Facsimile: (916) 920-8608
dyoumans@wkblaw.com