The Tax Court only has jurisdiction in Trust Fund Recovery Penalty (TFRP) cases through Collection Due Process. So, the TFRP jurisprudence in the Tax Court is rather slim. Thanks to a tip from Bob Kamman, I learned of a case in which on January 14, 2022, Judge Gustafson issued an interesting 4-page order. The case is a CDP case, Lipsky v. Commissioner, involving a TFRP assessment. The issue is whether the taxpayer protested the penalty within the 60 days stated in the Letter 1153. The importance of the timing concerns the possibility that by not protesting in time petitioner gave up his prior opportunity to contest the assessment and cannot in his current Tax Court case raise the merits of imposition of the TFRP. The letter may or may not have been dated August 8, 2019 but was mailed on that date to the taxpayer. Subsequently, an undated version of the letter was faxed to the taxpayer’s representative on August 13, 2019. That second date was 59 days from when the appeal was received. If August 8, 2019, is the operative date, the protest was sent to the IRS late, though maybe the taxpayer has an excuse that has not yet been brought forth.
As the order points out, “the 60-day deadline stated in Letter 1153 is not an unbending jurisdictional deadline nor even a non-jurisdictional statutory deadline as to which a taxpayer might have to justify equitable tolling. It is instead an administratively imposed deadline. That does not mean we can simply ignore it; but rather we should apparently review for abuse of discretion.”
The order highlights the importance not only of deadlines but of the origin of the deadline. A deadline for something due to the IRS is different than a deadline to a court. A deadline created by the IRS is different than a deadline created by statute. As the order mentions, the different types of deadlines don’t mean that deadlines are unimportant but the type of deadline can implicate the rules that will govern decisions when the IRS complains that a taxpayer missed the deadline. In the CDP context, I grapple with this issue a bit in an article about what it means to timely submit a CDP request. This post also discusses the issue and contains a link to the article.
As discussed further below, this case, at least at the summary judgment phase where it sits today, principally involves proof that the IRS even started the deadline or when it started the deadline. It does not involve the excuses for missing a deadline, but those excuses become more important in general as courts begin to recognize the situations in which taxpayer’s excuses can make a difference and situations, what Judge Gustafson describes as unbending jurisdictional deadlines, where even the best excuse won’t get you in the door. The Lipsky case does not involve an unbending deadline though even cases involving an unbending deadline must have a clear start to the time period when the deadline begins and that where the problems in Lipsky start.
Before getting further into the case, I mention as an aside that Judge Gustafson, more than any other judge on the Tax Court, seems to pay careful attention to IRS summary judgment submissions. You can find several prior posts in which we have discussed the lessons Judge Gustafson provides to Chief Counsel attorneys about what they need to provide when submitting a summary judgement motion. In advance of filing the supplemental motion, the Chief Counsel attorney in the Lipsky case might want to leaf through those prior post which can be found here, here, here and here.
Rule number one might be provide an affidavit of something you are trying to prove from someone with actual knowledge of the facts. Here the affidavit from the Chief Counsel attorney fails at the outset. I don’t want to be too harsh here because Chief Counsel attorneys have lots of cases in their inventories and tracking down the right person or persons while everyone works in a remote environment could prove difficult, but in seeking summary judgment rather than proving something through testimony and giving the petitioner the opportunity to cross examine, giving the Court an affidavit from someone without first hand knowledge of the facts puts the Court in a tough spot.
To get out the facts in the case and to get to the meat of the problem, reading the concerns expressed by Judge Gustafson provide the best approach:
As we read the Commissioner’s motion, he seems to assume that the operative date that starts the 60-day period within which to file a protest is the date that Letter 1153 was mailed. However, the deadline actually stated (twice) in the Letter 1153 itself is “60 days from the date of this letter”, which we think probably should be best understood to mean the date that appears on the letter.
The declarant certifying the exhibits is the Commissioner’s counsel in this case, not the Revenue Officer (Andrea I. Faust) whose name appears on the Letter 1153 and who was apparently responsible to prepare it and have it mailed (nor even the settlement officer at Appeals who wrote in his case notes that the letter was “dated 08-08- 2019”). That is, the Commissioner does not authenticate the handwritten date by anyone who could claim personal knowledge of the letter’s preparation.
Thus, at this point the summary judgment record includes two copies of the letter, one of which was sent to the taxpayer’s representative with a blank date field and a stated transmission date of “August 13, 2019”, and the other of which has a handwritten date (“8/8/2019”) that may or may not have appeared on the original. If we make all possible inferences in Mr. Lipsky’s favor, we would have to assume that the letter as mailed to him was undated and that the protest was timely as having been submitted within the 60-day period after the fax date on the copy sent to his representative.
Dates on IRS letters and dates the IRS actually mails letters do not always coincide and some might say do not often coincide. Most letters do have dates on them but here the IRS sends the representative an undated letter raising questions about the handwritten date on the alleged original letter. The judge emphasizes that Letter 1153 says the 60 day period starts on the date appearing on the letter. Because so many IRS documents do not get sent on the date on the letter, an easy starting point for raising an excuse about timeliness might be simply keeping the envelope showing a postmark on a date a week or two after the date on the letter. This could be important because, Judge Gustafson goes on to say:
Moreover, the 60-day deadline stated in Letter 1153 is not an unbending jurisdictional deadline nor even a non-jurisdictional statutory deadline as to which a taxpayer might have to justify equitable tolling. It is instead an administratively imposed deadline. That does not mean we can simply ignore it; but rather we should apparently review for abuse of discretion, see Barnhill v. Commissioner, 155 T.C. 1, 21 (2020), Appeals’s application of that deadline on the facts of a given case. We would have to decide, among other things, whether it was an abuse of discretion for Appeals to impose a deadline after sending the representative a supposed copy of Letter 1153 that was in fact not a true copy because it lacked the critical date.
Add the Lipsky order to your arsenal of cases for arguing that your client has not actually missed the deadline. The IRS likes to knock out cases because taxpayers have missed a deadline and avoid allowing a court to review the underlying merits of a case. The issue in this CDP case is the prior opportunity issue I have complained about previously on several occasions and one about which the National Taxpayer Advocate made a legislative recommendation in her most recent annual report. The IRS may need to start paying a lot more attention to the way it starts the deadline as these time periods get more and more scrutiny.