Professor Bryan Camp offers the first of a series of posts discussing the shutdown and its impact on taxpayers receiving IRS stat notices and notices of determinations. This is a particularly timely post as we heard at the ABA Tax Section meeting that IRS and Tax Court staff and practitioners are meeting today to discuss the shutdown. Bryan offers some suggestions to minimize the impact of the shutdown on taxpayers with Tax Court filing deadlines. Les
The Tax Court officially closed its doors on December 28, 2018. During one of the panels at the ABA Tax Section Pro Bono and Tax Clinics Committee meeting this past weekend in New Orleans, the question arose of how the shutdown affected the various administrative and judicial time periods for taxpayers to take various actions. For example, if the 90 day period in § 6213 for filing a petition expired during the shutdown, would the taxpayer still be able to file a timely petition on the day the Tax Court reopens?
Like Winter, litigation is coming. The point of this series of posts is to help readers prepare.
The Tax Court may actually have already given us one answer to the question of how the shutdown affects various time periods. In Guralnik v. Commissioner, 146 T.C. 230 (2016), the Court held that a day the Tax Court was physically closed would not count as part of the §6330(d) time period to protest a CDP Notice of Determination.
Keith Fogg and I have slightly different takes on how Guralnik might apply and he kindly invited me to post my thoughts on the matter. Today’s post will explain why I believe that Guralnik is strong support for the proposition that none of the shutdown days are days that count for jurisdictional time periods.
In future posts I will explain how taxpayers and the Tax Court might actually make some lemonade from this lemon of a shutdown. The Tax Court currently holds that the following time periods are jurisdictional: the 90/150 day period in §6213; the 30 day period in §6330(d); and the 90 day period in §6015(e). That means that the IRS Office of Chief Counsel cannot simply stipulate away the problem. The looming litigation gives the Tax Court a wonderful opportunity to revisit its thinking about the jurisdictional nature of these statutes. So in the next series of posts I will summarize a paper I posted on SSRN that explains: (1) the current Supreme Court doctrine for evaluating whether a statutory time period is truly a limitation on a court’s subject matter jurisdiction; and (2) how that doctrine applies to the time periods in §6213, §6330 and §6015(f).
Facts and Holding in Guralnik
In Guralnik, the taxpayer (TP) was trying to file a collection due process (CDP) petition. On the day before the 30thday, the TP sent his petition using Fed Ex “First Overnight” service. Fed Ex was unable to physically deliver the petition the next day (the last day of the 30 days) because the Tax Court was officially closed that day due to a snowstorm. Fed Ex successfully delivered the petition the next day, one day late. The question was whether the petition was timely.
The TP first asked for equitable tolling. Keith Fogg and Carl Smith filed an amicus brief in the case, arguing the Court could do that because the 30 day period was not jurisdictional. The Tax Court rejected the argument because, it said, §6330(d) made the timely filing of the CDP petition part of the jurisdictional grant. The Tax Court reasoned that while it could apply equitable tolling to what it called “claim-processing rules” it could “not apply equitable tolling to a jurisdictional filing requirement.”
The TP next argued for the §7502 statutory mailbox rule. The Tax Court rejected that argument because the particular Fed Ex service used (“First Overnight”) was not listed as an approved private delivery service. If the TP had just used “Standard Overnight” that would have been fine. But the “First Overnight” was a new service and the IRS had not updated the list of approved private delivery services to include it. And you wonder why people hate lawyers.
The TP next argued that the snow day was a “legal holiday” within the meaning of §7503. The Tax Court said “nope.”
But the Tax Court then latched onto a really nifty idea. It decided that Tax Court Rule 1(b) allowed it to adopt the rules for counting days contained in Federal Rules of Civil Procedure (FRCP) 6. Included in FRCP 6 is a rule for dealing with days when a court is inaccessible. FRCP 6(a)(3)(A) says that
Unless the court orders otherwise, if the clerk’s office is inaccessible…on the last day for filing…then the time for filing is extended to the first accessible day that is not a Saturday, Sunday, or legal holiday.
The Tax Court happily reasoned that
procedural rules for computing time are fully applicable where the time period in question embodies a jurisdictional requirement. Rather than expanding a court’s jurisdiction, Civil Rule 6 simply supplies the tools for counting days to determine the precise due date. (Internal quotes and cites omitted).
The Tax Court then applied FRCP 6(a)(3) to the facts of the case and did not count the snow day as part of the 30 day time period set out in §6330(d). Wrote Judge Lauber:
We conclude that Civil Rule 6(a)(3) is “suitably adaptable” to specify the principle for computing time when our Clerk’s Office is inaccessible because of inclement weather, government closings, or other reasons. Civil Rule 6(a)(3) provides that the time for filing is then “extended to the first accessible day that is not a Saturday, Sunday, or legal holiday.” Because the petition was filed on February 18, 2015, the first accessible day after the Court reopened for business, the petition was timely filed and we have jurisdiction to hear this case.
Application of Guralnik to Shutdown Cases: The Good, the Bad, and the Different.
One could read Guralnik as a supersized mailbox rule. It would apply to taxpayers faced with a time period that expired during the shutdown. Such taxpayers could still successfully file a timely petition so long as they did so on “the first accessible day after the Court reopen[s] for business.” I think this is how Keith and most folks read the case and I admit it’s the most solid reading. Let’s call it the narrow reading.
The narrow reading of Guralnik has the advantage of letting the Court avoid messy equitable inquiries. It’s a bright-line counting rule and could really help process a bunch of cases into the system and get them to a quicker resolution on the merits. That’s good. And it will probably give relief to a large number of taxpayers who are actually able to quick-like-a-bunny file on the day the Tax Court reopens. It will also give relief to taxpayers who have attempted to file but whose petitions were undeliverable because of the shutdown and are being held for re-delivery by their chosen delivery service. That’s also good.
The first downside of the narrow reading is that it would only help those taxpayers whose deadline hit during the shutdown. While that is likely the largest group of affected taxpayers, there may be some who received their Ticket to the Tax Court (be it a Notice of Determination or Notice of Deficiency or other ticket) at some point during the shutdown but at a time where their deadline comes after the shutdown ends.
For example, let’s say a taxpayer received an NOD 40 days ago, when the shutdown had not begun. There are still 30 days left to petition the Tax Court, but the shutdown has prevented the taxpayer from dealing with the NOD, either by filing a petition or by going to Appeals. Or perhaps a taxpayer receives an AUR NOD during the shutdown. I have heard of taxpayers still receiving automated notices of intent to levy during the shutdown (and having no one to call), but I welcome comments on whether some IRS automated processes are still spitting out NODs.
For these types of taxpayers, the narrow reading of Guralnik means they must ignore the shutdown and plan on the Tax Court reopening in time for them to make a timely filing without having the usual opportunity to resolve the matter with Appeals or other IRS office.
The second downside to the narrow reading is that it requires taxpayers to assiduously monitor the shutdown situation and the Tax Court’s status. They cannot plan. They, or their representative must carefully monitor the Tax Court’s status because the shutdown has essentially reduced their limitations period to one day. Especially if the Tax Court reopens with no warning, very few taxpayers would be able to meet the “the first accessible day after the Court reopen[s] for business.” So the cautious use of Guralnik would help only those taxpayers who filed their petition on the FIRST day the Court reopens (hereinafter “the Magic Day”).
One way the Court could ameliorate this second downside is to delay its reopening after the Shutdown Ends. For example, the Court could post an order that says it will remain closed for the first 10 business days after the President signs an appropriation bill funding the Court. That would not only allow taxpayers time to get their acts (and petitions) together to file on the Magic Day, it will also allow Tax Court personnel to clear the decks of accumulated work, re-calendar cases, and prepare for the Magic Day snowstorm of filings. This idea was floated at the ABA Tax Section Meeting last week. I think Keith came up with it, but cannot recall for sure.
A Different Understanding of Guralnik?
The narrow reading of Guralnik limits its application to only those situations where the last day of the applicable deadline falls on an inaccessible day. But the Court could also apply Guralnik more broadly, in a way that would ameliorate both downsides. I take this idea from Judge Lauber’s reasoning: “Rather than expanding a court’s jurisdiction, Civil Rule 6 simply supplies the tools for counting days to determine the precise due date.” The idea here is to read FRCP 6 as a tolling provision and not just as a bulked-up mailbox rule.
Judge Lauber’s reasoning recognizes the underlying concern of FRCP 6’s counting rule: unpredictable events should not count against limitation periods. The idea of unpredictability was central to the D.C. Circuit’s opinion in In re Swine Flu Immunization Prod. Liab. Litig., 880 F.2d 1439 (D.C. Cir. 1989), a case the Tax Court relied on in Guralnik. The Swine Flu court used Civil Rule 6(a) “as a guide to interpreting the `jurisdictional’ statute establishing the time for filing with the agency,” (emphasis supplied). The court there applied the idea of FRCP 6 to an administrative deadline, excluding both the final Sunday and the following day when government offices were closed on account of a snowstorm. Notice that, by its plain language, FRCP 6 deals only with counting dates relating to court filings. But the idea of unpredictability is larger than the words. Put another way, the words of FRCP 6 embody an idea. The idea of unpredictability. The D.C. court explained: “we find it inconceivable that Congress would have wished to bar plaintiffs who fail to anticipate on Friday that the Government will decide to close a filing office the following Monday due to a snowstorm.”
Both Judge Lauber’s reasoning and the D.C. Circuit’s reasoning allow for a more generous reading of Guralnik. If the principle underlying FRCP 6(a)(3) is truly that we do not count inaccessible days that arise because of unpredictable or extraordinary circumstances—whether they be snowstorms or shutdowns—then such days should not count, period. No logic limits the counting rule to only the situations where the last day of the deadline falls on an inaccessible day.
This broader reading of Guralnik would not be decision that forces the Court to apply equitable principles to each case. It would be a decision simply about whether the days when the Court is inaccessible were predictable or not. Saturdays and Sundays and federal holidays are predictable. They are on the calendar. But snowstorms and shutdowns are not predictable. So those days should not “count” for limitation periods.
One obvious barrier to this broader reading of Guralnik is that the text of FRCP 6 talks only about situations where the last day falls on an inaccessible day. But, again, just as the D.C. Circuit applied FRCP 6 to a situation that was not covered by its plain language, so can the Tax Court here apply the idea of FRCP 6—the purpose of FRCP 6—to the shutdown situation. Again, in the words of the D.C. Circuit: “Statutory provisions laying down time periods for taking appeals, like any other enactments, must be interpreted and applied by courts; in so doing, we use the federal rules as guides. Surely, the jurisdiction of the federal courts to construe the jurisdictional provisions of a statute cannot be a matter of serious dispute.” (citations and internal quotes omitted).
The insight of the D.C. Circuit, adopted by the Tax Court in Guralnik is that taxpayers should not be held accountable for situations which they cannot neither predict or control. The unpredictability of the shutdown mirrors the unpredictability of snowstorms. Nay, it magnifies that unpredictability. No one can predict precisely when the shutdown will end. This inability makes it impossible for taxpayers and their representatives to plan their filings. They simply cannot determine the precise due date. Every day the shutdown continues is another day that some deadlines have run and is another penultimate day for other deadlines. Will the shutdown continue the next day? Will the shutdown continue for three more days? Who the heck knows! Similarly, taxpayers subject to a 90 day deadline who received their Tax Court ticket before the shutdown will have unexpectedly lost all the days of the shutdown to resolve their case in the Office of Appeals.
Remember, the FRCP is just a standardized rule of procedure, promulgated by the Supreme Court. The courts can, and do, regularly interpret the FRCPs using a common law case-by-case approach. Recent opinions on the meaning and application of FRCP 8(a)(2) are good examples. So if the D.C. Circuit can apply FRCP 6 to an agency deadline by using the idea that it was “inconceivable” that Congress intended the limitation period to include inaccessible days, the Tax Court can do the same here and for the same reason: it is inconceivable that Congress intended the 30 and 90 day periods within which to petition the Tax Court for relief to be swallowed up by a government shutdown that is now over 30 days in length. Those shutdown days simply should not count towards the applicable limitation period.
An alternative approach to applying this broader reading of Guralnik to the shutdown situation would also treat FRCP 6 more as a tolling provision, but in a more limited way than allowing any and all inaccessible days to not count towards the applicable limitation period. Again, keep in mind we are not talking about equitable tolling. The question is about finding an administrable bright-line counting rule to deal with the cases filed after the shutdown ends, both those cases filed on the Magic Day, and those cases that miss the Magic Day but are still filed timely….if you don’t count the shutdown days.
The alternative approach would recognize that a single inaccessible day in the middle of a 90 day period or 2 year period would be little more than a Saturday or Sunday or holiday in terms of impact. It would not interfere with planning nor with the ability of the taxpayer to determine the precise due date for the Tax Court petition the way that this interminable shutdown does. But when, as here, the inaccessible days keep piling up and their end point is unknowable, the FRCP 6(a)(3) could be applied to acknowledge that difference. One bright line interpretation would stop counting inaccessible days when they reach some percentage of the applicable limitations period, perhaps over a third. Another bright line would be to say inaccessible days do not count when they are in excess of four in a row (longer than any three day weekend).
The Court could also take an equitable tolling approach by apply FRCP 6 to the Magic Day filings but then evaluating all other filings on a case by case basis. That would require the Court to depart from its long-standing view that sections 6213, 6330(d) and 6015(e) are jurisdictional statutes. I think there is a very good case to be made why the first two are not jurisdictional and a very weak case for the third. That is the subject of future posts in this series.