We welcome back frequent guest blogger Carl Smith who writes about a jurisdictional issue in CDP cases that seems to have split the Tax Court and on which the IRS seeks to control jurisdiction with administrative pronouncements. Keith
A common fact pattern in Tax Court orders dealing with an IRS motion to dismiss for lack of jurisdiction is a taxpayer whose Collection Due Process (CDP) hearing request arrives in the wrong IRS office within the 30-day period, and then that wrong IRS office forwards the request to the right IRS office, where it arrives after the 30-day period has expired. In such cases, the IRS treats the request as untimely, provides an equivalent hearing, and issues a decision letter thereafter. When a taxpayer petitions the Tax Court in response to the decision letter, how do Tax Court judges rule on the inevitable IRS motion to dismiss for lack of jurisdiction? Well, there is no published opinion on this issue, but there are at least three recent orders (which are, of course, non-precedential), and the Tax Court judges therein ruled have inconsistently with each other. Compare Taylor v. Commissioner, Docket No. 3043-17L (order dated Nov. 8, 2017) (holding that the Tax Court has jurisdiction) (Carluzzo, STJ); with Nunez v. Commissioner, Docket No. 2946-17L (order dated May 18, 2018) (holding that the Tax Court lacks jurisdiction in a section 6672 penalty case) (Nega, J.), and Nunez v. Commissioner, Docket No. 2925-17L (order dated May 21, 2018) (holding that the Tax Court lacks jurisdiction) (Nega, J.).
A Tax Court opinion to establish binding precedent on this common fact pattern is needed. In a third recent order, Khanna v. Commissioner, Docket No. 5469-16L (order dated Feb. 13, 2018) (Gale, J.), the judge never had to rule on this issue; however, the order indicates the analysis that the T.C. opinion should use: whether the 30-day period to request a CDP hearing is not jurisdictional and is subject to equitable tolling under recent Supreme Court case law. For under equitable tolling, timely filing in the wrong forum is one of the ways to satisfy a nonjurisdictional time limit.
This is not an original post: Samantha Galvin published posts on two of the relevant orders within the last year, here and here. Meanwhile, this post discusses the recent inconsistent orders in Nunez.
Both section 6320(a)(3)(B) and (b)(2) and section 6330(a)(3)(B) and (b)(2) provide a 30-day period to request a CDP hearing after the IRS issues a notice of filing of a tax lien (NFTL) or a notice of intention to levy (NOIL). If the taxpayer timely files the request (on a Form 12153), the taxpayer receives a CDP hearing and a notice of determination (NOD) at the end thereof. If the taxpayer misses the 30-day period, he or she may receive an equivalent hearing and a decision letter at the end thereof. A NOD may be reviewed by the Tax Court if the taxpayer files a petition within a different 30-day period provided in section 6330(d)(1).
The courts have held that the section 6330(d)(1) 30-day period is jurisdictional and not subject to equitable tolling. See, e.g., Guralnik v. Commissioner, 146 T.C. 230, 235-238 (2016); Duggan v. Commissioner, 879 F.3d 1029 (9th Cir. 2018).
An equivalent hearing decision letter is not reviewable, unless the Tax Court concludes that the taxpayer had in fact timely requested a CDP hearing; in the latter case, the Tax Court treats the decision letter issued by the IRS as if it were a reviewable NOD. Craig v. Commissioner, 119 T.C. 252, 259 (2002).
While the Tax Court has never called the 30-day periods to request a CDP hearing jurisdictional, and not subject to equitable tolling, it has treated compliance with the 30-day periods as mandatory to its review jurisdiction under section 6330(d)(1). See, e.g., Offiler v. Commissioner, 114 T.C. 492 (2000) (dismissing a petition for lack of jurisdiction when the IRS did not hold a CDP hearing because the taxpayer filed a late request). On the other hand, when the IRS properly held an equivalent hearing (because the request was late), but erroneously thereafter issued a CDP NOD, the Tax Court held that it had jurisdiction on account of the NOD’s issuance, but the Tax Court did not dismiss the case for lack of jurisdiction, but rather granted summary judgment to the IRS (a merits ruling). Kim v. Commissioner, T.C. Memo. 2005-96 (suggesting that compliance with the 30-day request period is not jurisdictional to the Tax Court).
The written request for a CDP hearing must be sent, or hand delivered (if permitted), to the IRS office and address as directed on the CDP Notice. If the address of that office does not appear on the CDP Notice, the taxpayer should obtain the address of the office to which the written request should be sent or hand delivered by calling, toll-free, 1-800-829-1040 and providing the taxpayer’s identification number (e.g., SSN, ITIN or EIN).
If the CDP hearing request is not addressed to the correct office as indicated in the CDP notice, the date to determine timeliness is the date the request is received by the IRS office to which the request should have been sent. However, if the address does not appear on the notice, or if it is determined that the taxpayer received erroneous instructions from an IRS employee resulting in the request being sent to the wrong office, use the postmark date to that office to determine timeliness.
A request that is hand-carried to a local Taxpayer Assistance Center will be timely if delivered within the 30-day period during which taxpayers may request a hearing. See IRM 188.8.131.52.7.1.2, CDP Hearing Requests Hand Delivered to Taxpayer Assistance Centers (TAC).
Judge Carluzzo’s order in Taylor is so short that I will quote it in its entirety. Essentially, he holds the request timely because the IRS wasn’t much prejudiced by timely receipt in the wrong office. He used a “substantial compliance” analysis. He wrote:
Because petitioner’s request for an administrative hearing was mailed to, and received by the Internal Revenue Service within the period contemplated in section 6320(a)(3) and (b), even though the request was not mailed to the address designated in the relevant collection notice, and because respondent has not demonstrated sufficient prejudice resulting from the manner that the request was mailed to insist upon strict compliance with the Treasury Regulations relied upon in support of his motion, we find that petitioner’s request for an administrative hearing was timely made. That being so, we further find that the decision letter attached to the petition is the equivalent of a notice of determination for purposes of sections 6320(c) and 6330(d). See Craig v. Commissioner, 119 T.C. 252 (2002). Because the petition in this case was filed within the period prescribed in section 6330(d) in response to that document, it is
ORDERED that respondent’s motion to dismiss for lack of jurisdiction, filed March 30, 2017, is denied.
The Taylor case is set for a trial on September 10, 2018.
Nunez involved a CDP hearing request mailed to a wrong IRS address, not simply a wrong IRS office. NOILs for section 6672 penalties and income tax deficiencies instructed the taxpayer to mail his request to Internal Revenue Service, P.O. Box 145566, Cincinnati, OH 45250-5566. Although he mailed the request to the correct address, the taxpayer accidentally wrote the city and state as Hartford, CT. It is not clear why the USPS did not follow the P.O. Box and ZIP Code information and send the request to Cincinnati anyway, but the IRS office in Kansas City first received the request on the 30th day. At least nine days later, that office forwarded the request to the Cincinnati office. Eventually, the IRS concluded that the requests were late, provided an equivalent hearing, and issued separate decision letters thereafter. Nunez then filed two separate Tax Court petitions: one for the section 6672 penalties and another for the income tax deficiencies.
In both of his orders, Judge Nega only considered whether the request might be treated as timely filed under section 7502’s timely-mailing-is-timely-filing rules. He wrote in the income tax docket order:
Unfortunately, petitioner cannot rely on the mailbox rule to treat his Form 12153, that was delivered after the 30-day period specified in section 6320 and/or 6330, as timely filed because he did not properly address the envelope. See sec. 301.7502-1(c)(1), Proced. & Admin. Regs. Therefore, the Appeals Office properly issued petitioner a decision letter for tax years 2012 and 2014, and as mentioned above, a decision letter is not a notice of determination sufficient to invoke’s (sic) this Court’s jurisdiction under section 6320 or 6330. Kennedy v. Commissioner, 116 T.C. 255, 262-263 (2001). Accordingly, we are obliged to dismiss this case for lack of jurisdiction.
The section 6672 docket order is virtually verbatim as the order in the income tax docket.
In my view, both judges failed to do the proper legal analysis with respect to the facts. That analysis, however, was stated by Judge Gale in Khanna v. Commissioner, Docket No. 5469-16L (order dated Feb. 13, 2018). In Khanna, the taxpayers not only mailed their CDP hearing request to the wrong IRS office (where it arrived two days early), but also, after the IRS sent the taxpayers a decision letter, it appeared from the date of that letter that the taxpayers filed their petition late under the 30-day period in section 6330(d)(1). The decision letter had not been mailed by certified mail, though, so the court was unwilling to assume that the date shown on the decision letter was the date of its mailing. In directing the IRS to file a supplement to its motion giving evidence of the decision letter’s mailing date, the court also wrote:
Depending upon the evidence identified concerning the decision letter’s mailing date, we may still need to decide the more difficult issue of the timeliness of petitioners’ CDP hearing request. In that event, we may further direct respondent to address three additional issues bearing upon the timeliness of petitioners’ CDP hearing request: . . . (2) the impact of recent U.S. Supreme Court and Third Circuit Court of Appeals cases concerning equitable tolling upon respondent’s position that the requirement that a CDP hearing request be filed within 30 days of the CDP notice is jurisdictional, see United States v. Kwai Fun Wong, 575 U.S. __, 135 S. Ct. 1625 (2015); Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145 (2013); Gonzalez v. Thaler, 565 U.S. 134, 141 (2012) (cautioning courts not to lightly attach the drastic consequences of labeling a deadline enacted by Congress as “jurisdictional” in an effort to bring some discipline to the term’s use); Kontrick v. Ryan, 540 U.S. 443 (2004); United States v. Brockamp, 519 U.S. 347 (1997); Irwin v. Dept. of Veterans Affairs, 498 U.S. 89 (1990); Rubel v. Commissioner, 856 F.3d 301, 304 (3d Cir. 2017) (cautioning courts to avoid “drive-by jurisdictional rulings” due to the drastic consequences of a “jurisdictional” label) . . . .
Judge Gale will never have to decide this issue, since the parties to Khanna have reached a settlement, and the judge has indicated that he will grant a taxpayers’ motion to dismiss the case (whether or not the case had been properly filed).
In an appeal from a Tax Court innocent spouse case dismissal, the Third Circuit once stated:
There may be equitable tolling “(1) where the defendant has actively misled the plaintiff respecting the plaintiff’s cause of action; (2) where the plaintiff in some extraordinary way has been prevented from asserting his or her rights; or (3) where the plaintiff has timely asserted his or her rights mistakenly in the wrong forum.” Hedges v. United States, 404 F.3d 744, 751 (3d Cir. 2005) (internal quotation marks and citation omitted).
Mannella v. Commissioner, 631 F.3d 115, 125 (3d Cir. 2011).
It appears that, as Judge Gale must have recognized, timely filing a CDP request in the wrong IRS office might meet the third stated common ground for equitable tolling. See, e.g., Bailey v. Principi, 351 F.3d 1381, 1382 (Fed. Cir. 2003) (“We hold that the filing with the regional office of a document that expresses the veteran’s intention to appeal to the Veterans Court equitably tolls the running of the 120–day notice of appeal period, and we therefore reverse and remand.”); Santana-Venegas v. Principi, 314 F.3d 1293, 1298 (Fed. Cir. 2002) (“We hold as a matter of law that a veteran who misfiles his or her notice of appeal at the same VARO from which the claim originated within the 120–day judicial appeal period of 38 U.S.C. § 7266, thereby actively pursues his or her judicial remedies, despite the defective filing, so as to toll the statute of limitations.”); Doherty v. Teamsters Pension Trust Fund of Philadelphia & Vicinity, 16 F.3d 1386, 1393 (3d Cir. 1994) (equitable tolling could be allowed when the plaintiff mistakenly filed in federal court rather than the appropriate arbitration forum). Note that, in Nunez, the request actually arrived in the incorrect Kansas City office on the 30th day, which made it unnecessary to determine whether section 7502 had any impact on the issue of timely filing if a person is invoking equitable tolling.
If the 30-day periods to request a CDP hearing are jurisdictional, then the IRS may not extend them by regulation or the Manual. Auburn Reg’l Med. Ctr., 568 U.S. at 154 (holding that if the filing deadline is jurisdictional, “[n]ot only could there be no equitable tolling. The Secretary’s regulation providing for a good-cause extension . . . would fall as well.”). And, if the time periods are jurisdictional, then they cannot be subject to equitable exceptions either, such as equitable tolling. Dolan v. United States, 560 U.S. 605, 610 (2010).
But, Wong teaches that “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.” Wong, 135 S. Ct. at 1632.
Congress has done no such thing here. The statutory filing deadlines for requesting CDP hearings do not contain the word “jurisdiction” (unlike the section 6330(d)(1) filing deadline) or otherwise speak in jurisdictional terms, and there is no history of treating the CDP request deadlines as jurisdictional – in contrast to the Tax Court’s long-standing position that filing deadlines in the Tax Court are jurisdictional. Thus, there is no reason for the Tax Court to follow its Guralnik holding is jurisdictional when looking at the 30-day periods to request a CDP hearing.
And it would not be surprising for the Tax Court to hold that the Tax Court CDP filing deadline is not subject to equitable tolling, while the deadlines to request a CDP hearing from the IRS are subject to equitable tolling. In Hall v. Commissioner, 135 T.C. 374 (2010), the Tax Court reaffirmed its holding that the since-abandoned 2-year regulatory filing deadline to request innocent spouse relief under section 6015(f) was invalid. Judge Wells, in a concurrence joined by five other Tax Court judges, stated that, even if the regulation had been valid, the 2-year period should be subject to equitable tolling, unlike the 90-day deadline in section 6015(e)(1)(A) to petition the Tax Court for a determination of entitlement to section 6015 relief, which the Tax Court in Pollock v. Commissioner, 132 T.C. 21 (2009), held was jurisdictional. Hall, 135 T.C. at 387 n.5 (Wells, J., concurring).
Finally, it appears that the IRS, in the Manual, essentially treats the CDP request filing deadlines as nonjurisdictional and subject to equitable tolling.
First, as noted above, the Manual provides that if a CDP request arrives timely at the wrong IRS office, if taxpayer received erroneous instructions from an IRS employee, the filing is treated as timely. That is the first ground in Mannella listed for equitable tolling in which the defendant had actively misled the plaintiff with respect to the plaintiff’s cause of action.
Second, there are provisions in the regulations (Reg. §§ 301.6320-1(c)(2)(A-C7) and 301.6330-1(c)(2)(A-C7) ) and Manual (§ 184.108.40.206.2.2 (8-27-10)) for giving the taxpayers up to an additional 15 days to perfect a timely CDP request that arrived in an unprocessable form. Paragraph (2) of that Manual provision states:
If a request for a CDP hearing is filed timely, but is not processable, contact the taxpayer and allow up to 15 calendar days for the taxpayer to perfect the request so that it is processable. If the taxpayer meets this requirement, the request is timely filed.
If the taxpayer demonstrates that the late response was due to extenuating circumstances, such as being in the hospital or out of the country during that period, then treat the request as timely.
Such extenuating circumstances mentioned in the Manual are basically the same as the second ground listed in Mannella for equitable tolling, in which the plaintiff has been prevented from asserting his or her rights in some extraordinary way. Not that the IRS’ interpretation of the CDP request filing deadlines should control the courts, but it was my intention to illustrate that it would not be shocking to the IRS if the filing deadlines were treated as nonjurisdictional and subject to equitable tolling.
If he chooses to do so, Mr. Nunez’s cases are appealable to the Ninth Circuit. We will watch closely.