This is an update to the post of May 3, 2022, which discussed a May 2, 2022 motion to vacate a dismissal for lack of jurisdiction of a late-filed deficiency case in Hallmark Research Collective, Docket No. 21284-21. In the motion, Hallmark argued that, after Boechler (a Collection Due Process case), the IRC 6213(a) deadline for filing a deficiency petition also is not jurisdictional and is subject to equitable tolling. The prior post noted that, a day after the motion was filed, the Chief Judge issued an order directing the IRS to file a response within 30 days (i.e., by June 2). The update is that on May 10, the Chief Judge assigned the motion to Judge Gustafson for purposes of ruling on the motion. Motions in cases that had been decided by the Chief Judge are usually assigned to Special Trial Judges for disposition, not currently active Tax Court judges. So, this unusual assignment shows the Court is taking the motion to vacate very seriously.
Simultaneously, it appears that the Tax Court, unannounced, has stopped issuing orders of dismissal for lack of jurisdiction in late-filed deficiency cases until Judge Gustafson (or, more probably, the Tax Court en banc) rules on the Hallmark motion.
Research shows that the Tax Court in February and March 2022, combined, dismissed 103 late deficiency petitions for lack of jurisdiction – an average dismissal rate of between 2 and 3 cases a business day. Yet, the last order of dismissal of a deficiency petition for late filing was entered on Friday, May 6.
PT will post the IRS response to Hallmark’s motion when that response is filed, though PT expects the IRS will ask for and get a bit more time to file its response, to coordinate its response with the National Office.
One effect of the Tax Court’s suspension of ruling on such motions to dismiss in late-filed deficiency cases is that the Court will thus not, for some time, be creating appealable orders which could be challenged by appeals to the Circuit courts as test cases for the IRC 6213(a) issue. The time is ticking on any appeals that may be filed concerning orders of dismissal entered between mid-February and May 6.
PT is aware of only one case where an order of dismissal has been appealed: The February 15, 2022 order of dismissal in Culp, Docket No. 14054-21, was timely appealed to the Third Circuit on April 25, 2022 (3d Cir. Docket No. 22-1789). In Culp, the IRS sent a notice of deficiency to the taxpayers, but the taxpayers say they never received the notice and only became aware of its possible issuance when the IRS started levying. (We assume that the Culps also did not receive the notice of intention to levy, since they filed no Collection Due Process hearing request.) They belatedly filed a Tax Court petition, arguing that the IRS had never sent a notice of deficiency to their last known address. In response, the IRS produced a copy of the notice and proof of proper mailing to their last known address. So, the court dismissed the petition for lack of jurisdiction for late filing – the long-standing position of the Tax Court and most courts of appeal, pre-Boechler, being that timely filing of a deficiency petition is a necessary predicate to the Tax Court’s jurisdiction.
The Center for Taxpayer Rights plans to file an amicus brief in Culp (drafted by the Tax Clinic at the Legal Services at Harvard Law School) that sets forth all the arguments made in the memorandum of law filed to accompany the motion to vacate in the Tax Court Hallmark case for why the Tax Court was wrong to treat timely filing as a jurisdictional requirement of a deficiency suit.