2022 saw much litigation regarding the jurisdiction of courts to hear a tax case. The biggest case regarding Tax Court jurisdiction during 2022 was obviously Boechler v. Commissioner, 142 S. Ct. 1493 (2022). While the IRS and the Tax Court interpret the opinion narrowly, the full impact of Boechler remains to be seen. This post will discuss several cases pending where the taxpayer argues that Boechler makes a difference. In many ways this year end post is another in the series of post-Boechler updates provided by Carl Smith. Earlier posts by Carl can be found here, here, here and here.
While Boechler determined that the time period for filing a CDP petition in Tax Court is not a jurisdictional time period and that a petitioner filing late has the opportunity to demonstrate equitable tolling, we have argued consistently that equitable tolling cases will be few while the IRS failure to raise the timeliness of the petition could provide the more common path to move forward in the Tax Court case. See the post here discussing an order in a case in which the IRS failed to raise timeliness allowing the petitioner to move forward with the Tax Court litigation.
In Boechler, the Supreme Court carefully looked at the language of IRC 6330 to determine if it contained a clear statement from Congress that the 30-day period within which to file a CDP petition in Tax Court was a jurisdictional requirement. In finding that Congress had not made a clear statement, the Supreme Court also rejected several other arguments the IRS made. The arguments not focused on the specific language of IRC 6330 become the most important parts of the decision as the Boechler decision applies to other bases for Tax Court jurisdiction.
The next issue for CDP, and also whistleblower, determination cases will involve cases setting out the Tax Court view of equitable tolling. While there is a sizable body of case law on equitable tolling in other courts, the CDP cases will offer the Tax Court its chance to make equitable tolling decisions in the context of Tax Court filings.
Editorial Interlude Regarding Jurisdiction
At a recent conference a high-ranking member of Chief Counsel’s Office criticized the bringing of litigation regarding jurisdiction because it impedes administration of the tax laws. I find this view totally off base. Taxpayers like Ms. Castillo (scroll to middle of post for discussion), like the individuals described in Carl’s blog post here, and like many others we have encountered, are routinely denied access to Court due to circumstances that qualify for equitable tolling. While audit reconsideration or offers in compromise provide some relief for these individuals, these remedies remain imperfect. One client I represent with extremely sympathetic circumstances was recently denied audit reconsideration because the IRS unit considering the request simply did not understand the litigation giving rise to the wrongful imposition of tax on her as a 13-year-old victim of a heinous crime. After Boechler, the IRS conceded Ms. Castillo’s case in full something it declined to do in the absence of a pathway to court where it would be embarrassed. In my view it takes a lot of hubris to suggest that as the lawyer for clients who missed their chance to go to court for good reasons, I should not pursue avenues for relief for my clients that the Supreme Court has created because doing so might make administration of the laws more difficult for the IRS.
In addition to the 30-day deadline to file a petition in Tax Court following a CDP determination, the code provides a 30-day deadline at IRC 6330(a)(3)(B) within which to request a CDP hearing. The question exists whether this time period creates a jurisdictional barrier to obtaining a CDP hearing and whether, even if it does not impose a jurisdictional barrier, whether the time period can be extended by equitable tolling. The issue is currently pending in Organic Cannabis Foundation v. Commissioner, Dk. No. 381-22L before Judge Goeke. This is a separate case from the Organic Cannabis deficiency case which the Ninth Circuit, decided pre-Boechler. Carl Smith wrote about this case, and one other also assigned to Judge Goeke, here. The IRS filed a motion to dismiss the Organic Cannabis case back on February 25, 2022, based on lack of jurisdiction because of the late filing. After Boechler, it argued that Boechler had no impact on this 30 day period (a consistent theme of the IRS view of Boechler in any circumstance.)
Petitioner filed a response to the motion to dismiss arguing, inter alia, that Boechler applies to make this time frame non-jurisdictional and that equitable tolling applies. On October 31, the IRS replied disagreeing that equitable tolling applies and making ambiguous statements regarding its application to the jurisdictional question:
Sections 6320(a)(3)(B) and 6330(a)(3)(B) of the Internal Revenue Code give taxpayers 30 days to request a CDP hearing. These time limits are fixed. Although they may not be jurisdictional—neither provision speaks to a court’s adjudicatory authority or plainly shows that they are imbued with jurisdictional consequences, see Boechler, P.C. v. Commissioner, 142 S. Ct. 1493, 1497 (2022) —the time limits are not malleable.
In an order dated November 14, 2022, the Tax Court finds that despite the IRS view the Boechler has no impact on this question Boechler does matter in this situation:
Respondent argues that Boechler does not apply. Boechler did not expressly address the 30-day period for requesting a CDP hearing. However, the Court believes that the concepts discussed therein may equally apply to the 30-day period for submitting a CDP hearing request. Accordingly, we will provide petitioner with an opportunity to respond to the arguments raised by respondent in his Response with respect to whether the doctrine of equitable tolling should apply to administrative hearing requests ….
The order directs petitioner to file by January 10, 2023:
a memorandum regarding the application of Boechler to the facts of this case and to address whether “determination” includes the result of an equivalent hearing when the doctrine of equitable tolling would have required respondent to apply the CDP hearing procedures for a timely administrative hearing request.
The Tax Clinic at the Legal Services Center of Harvard Law School will move for leave to file an amicus brief in support of petitioner’s arguments. The IRS has notified the clinic of its objection to the filing of an amicus brief by the clinic.
In a similar CDP request filing deadline case of All Is Well Homecare Service LLC, Docket No. 21210-19L, on December 15, 2022, Judge Gustafson ordered the parties to respond seriatim (IRS by Jan. 20. 2023; taxpayer by Feb. 17, 2023) “as to . . . whether the deadline of section 6320(a)(3)(B) is subject to equitable tolling, and if so, . . . the standards IRS Appeals should use in determining whether tolling applies in a given case and the standard by which the Tax Court should review such a determination by IRS Appeals.”
After the Boechler decision, the Tax Court took a hard look at its deficiency jurisdiction to decide if the Supreme Court’s decision in Boechler might impact its longstanding interpretation of the statutes granting it deficiency jurisdiction. It promulgated an opinion in Hallmark Research Collective v. Commissioner, 159 T.C. No. 6 (11/29/22), in which it decided 17-0 that the Boechler decision did not impact its prior interpretation of deficiency jurisdiction that the time period for filing a Tax Court petition is a jurisdictional time frame. The decision in Hallmark follows in form its decision in Guralnik v. Commissioner, 146 T.C. 230 (2016) in which the Court convened in conference to decide, 17-0, that the time period for filing a CDP petition was a jurisdictional time period.
As mentioned above, Carl Smith recently wrote an eight-part series of posts analyzing the Hallmark decision. No further explanation of the decision is necessary here. While awaiting the Hallmark decision the Tax Court suspended the dismissal of deficiency cases from the beginning of May until November 29. It has since been issuing dismissals at a decent clip since the decision came out in order to clear out the backlog. Anna Gooch, from the Center for Taxpayer Rights, Carl and I are reviewing the dismissals as they come out to identify appropriate candidates for appeal.
The Culp v. Commissioner case, discussed in Carl’s earlier blog posts, is still pending in the 3d Circuit, possibly awaiting oral argument. In the 11th Cir. in a non-precedential order in Allen v. Commissioner, the court granted a DOJ motion for summary affirmance attached here. The order basically states that the 11th Circuit is bound by prior precedent in that circuit. The court states that it does not think anything in Boechler requires the overruling of that precedent. DOJ filed the same motion in the Culp case and the 3d Circuit denied the motion even though it had essentially the same old circuit precedent that exists in the 11th Circuit. In both instances the precedent pre-dates the Supreme Court’s pivot in 2004 to require a clear statement in the absence of prior Supreme Court precedent in order for a time period to be a jurisdictional time period. Any appeal of this issue will undoubtedly face a similar motion in circuits where prior precedent on Tax Court jurisdiction exists. The only circuits with post-2004 precedent addressing this issue are the 7th and 9th Circuits. The circuits which seem to have no prior precedential decisions on this issue, either before or after 2004, are the 1st and 4th Circuits.
In his last update on post-Boechler litigation, Carl briefly mentioned Frutiger v. Commissioner, Dk. No. 31153-21, a case in which Judge Buch requested amicus briefs on behalf of the petitioner. The Tax Clinic at the Legal Services Center wrote an amicus brief for the Center for Taxpayer Rights and filed it on November 18. A copy of the brief is available here. The IRS filed a response here. I don’t mean to be pessimistic, but a 17-0 decision would not surprise me given the Hallmark outcome.
In addition to Frutiger, the issue is pending before Judge Buch in the case of Leach v. Commissioner, Dk. No. 3197-22 and before Special Trial Judge Landy in the case of Doyle v. Commissioner, Dk. No. 28458-21S.
Despite the Boechler opinion clearly stating that the time period for filing a CDP petition is not a jurisdictional time period and the opinion of the DC Circuit in Myers v. Commissioner, 928 F.3d 1025, a controlling opinion under the Golsen rule because of appellate venue, stating the same thing with respect to whistleblower cases, the Tax Court clings to the inaccurate statement in its rules that time periods for filing petitions are jurisdictional. Rules should provide procedures for handling cases in court and not inaccurate and therefore misleading statements of the law. In ignoring prior calls to remove or amend this Rule, it stands as a sentinel to the Tax Court’s legacy view of jurisdiction. Sorry to be snarky about this, but I cannot understand why this rule is still in existence in its current form.
A series of cases in the Court of Federal Claims and the Federal Circuit have examined issues of jurisdiction in the refund context. Much of the litigation on these cases occurred in 2021 but it continued into 2022. You can find post discussing the issues raised here and, in a more favorable opinion, here.
A new tactic by the Department of Justice in knocking out financial disability cases, discussed here, raises issues of jurisdiction as pro se petitioners stumbling to find their way and usually impaired by the condition giving rise to the claim for financial disability continue to lose these cases and now lose them out of the gate if they did not follow the draconian procedures of Rev. Proc. 99-21.