The Tax Court has a practice of taking letters, notices of deficiency with handwritten notes and other documents and treating these documents as petitions. It does so in order to aid petitioners by giving them a greater chance to meet the deadline for filing a petition in the Court. I looked back over our seven years of blog posts for a post on imperfect petitions and could not find one directly examining this Tax Court practice (but see these two posts for related discussions).
Chief Counsel, IRS in its portion of the Internal Revenue Manual discusses imperfect petitions here; however, it deems the discussion so sensitive that it prevents the public from seeing its views on this subject. I am a bit surprised that the whole of the discussion on imperfect petitions would be of such a sensitive nature that it is protected from public view. I would think that all or almost all of the discussion would be material that would not need such protection. So, I thought I would write about these special petitions for anyone who wondered what they were or wondered what the Tax Court was doing when it ordered the filing of a perfected petition.
Tax Court Rule 13(c) provides:
(c) Timely Petition Required: In all cases, the jurisdiction of the Court also depends on the timely filing of a petition.
Readers of the blog know that we do not adhere to this statement about the Court’s jurisdiction and, indeed, the D.C. Circuit has specifically said that the time period for filing is not jurisdictional and equitable tolling can apply in whistleblower cases. After the decision in Myers, the government did not seek Supreme Court review of the decision. The fact that the jurisdiction for all whistleblower cases lies in the D.C. Circuit coupled with Golsen rule of the Tax Court requires the Court to follow the decision in every whistleblower case. Nonetheless, moving past those technical points, the general requirement of Court and the Tax Court’s view of the applicable statutes is that taxpayers must file by the date listed in the provision giving the court jurisdiction over a matter. Except for the Myers case, the Tax Court’s view of jurisdiction has been upheld by the circuit courts ruling on this issue thus far. This narrow view of the role of time frames and the Court’s otherwise generally kind view toward petitioners causes the Court to seek to treat documents filed, even if they do not look like petitions, as potential petitions. This is a way to get past the jurisdictional barriers that could arise if the Court tried to correspond with a petitioner in an effort to obtain a “normal” petition by the due date.
Tax Court Rule 20(a) provides:
(a) General: A case is commenced in the Court by filing a petition with the Court. See Rule 13.
Tax Court Rule 34(a)(1) provides:
(a) General: (1) Deficiency or Liability Action: The petition with respect to a notice of deficiency or a notice of liability shall be substantially in accordance with Form 1 shown in Appendix I, and shall comply with the requirements of these Rules relating to pleadings. Ordinarily, a separate
petition shall be filed with respect to each notice of deficiency or each notice of liability. However, a single petition may be filed seeking a redetermination with respect to all notices of deficiency or liability directed to one person alone or to such person and one or more other persons or to a husband and a wife individually, except that the Court may order a severance and a separate case to be maintained with respect to one or more of such notices. Where the notice of deficiency or liability is directed to more than one person, each such person desiring to contest it shall file a petition, either separately or jointly with any such other person, and each such person must satisfy all the requirements of this Rule in order for the petition to be treated as filed by or for such person. The petition shall be complete, so as to enable ascertainment of the issues intended to be presented. A petition may be filed electronically under the electronic filing procedures established by the Court, or a petition may be
filed by properly mailing or hand delivering it to the Court. No paper will be recognized as a petition if it is submitted to the Court in any other way. The address to be used to mail or hand deliver a petition is set forth in Rule 10(e). Petitions may be hand delivered to the Court only during business hours, see Rule 10(d). Failure of the petition to satisfy applicable requirements may be ground for dismissal of the case. As to the joinder of parties, see Rule 61; and as to the effect of misjoinder of parties, see Rule 62. For the circumstances under which a timely mailed petition will be treated as having been timely filed, see Code section 7502.
Tax Court Rule 34(b) provides:
(b) Content of Petition in Deficiency or Liability
The petition in a deficiency or liability action shall
contain (see Form 1, Appendix I):
(1) In the case of a petitioner who is an individual, the petitioner’s name and State of legal residence; in the case of a petitioner other than an individual, the petitioner’s name and principal place of business or principal office or agency; and, in all cases, the petitioner’s mailing address and the office of the Internal Revenue Service with which the tax return for the period in controversy was filed. The mailing address, State of legal residence, principal place of business, or principal office or agency shall be stated as of the date of filing the petition. In the event of a variance between the name set forth in the notice of deficiency or liability and the correct name, a statement of the reasons for such variance shall be set forth in the petition.
(2) The date of the notice of deficiency or liability, or other proper allegations showing jurisdiction in the Court, and the City and State of the office of the Internal Revenue Service which issued the notice.
(3) The amount of the deficiency or liability, as the case may be, determined by the Commissioner, the nature of the tax, the year or years or other periods for which the determination was made; and, if different from the Commissioner’s determination, the approximate amount of
taxes in controversy.
(4) Clear and concise assignments of each and every error which the petitioner alleges to have been committed by the Commissioner in the determination of the deficiency or liability. The assignments of error shall include issues in respect of which the burden of proof is on the Commissioner. Any issue not raised in the assignments of error shall be deemed to be conceded. Each assignment of error shall be separately lettered.
(5) Clear and concise lettered statements of the facts on which petitioner bases the assignments of error, except with respect to those assignments of error as to which the burden of proof is on the Commissioner.
(6) A prayer setting forth relief sought by the petitioner.
(7) The signature, mailing address, and telephone number of each petitioner or each petitioner’s counsel, as well as counsel’s Tax Court bar number.
(8) A copy of the notice of deficiency or liability, as the case may be, which shall be appended to the petition, and with which there shall be included so much of any statement accompanying the notice as is material to the issues raised by the assignments of error. If the notice of deficiency or liability or accompanying statement incorporates by reference any prior notices, or other material furnished by the Internal Revenue Service, such parts thereof as are material to the issues raised by the assignments of error likewise shall be appended to the petition. A claim for reasonable litigation or administrative costs shall not be included in the petition in a deficiency or liability action. For the requirements as to claims for reasonable litigation or administrative costs, see Rule 231.
Nothing in the Tax Court Rules talks about accepting a letter that says something to the effect of “I disagree with the IRS.” Yet, the Tax Court will take that letter, stamp it as an imperfect petition and send the taxpayer a letter requesting that the taxpayer file a petition using the Tax Court’s form petition package. In sending out the letter to the taxpayer, the Court will generally give the petitioner 30 days but it sometimes extends that period. If the person sending in the letter files the petition that substantially conforms to the form petition within the allotted time period, the Tax Court will treat the case as timely filed, even though it may take much more than 30 or 90 days to get the petition package into the Court. The Court may also allow the addition of another individual on the case in a situation in which H mailed the letter that the Court treats as an imperfect petition, but W signs onto the later filed form petition.
Sometimes a bit of confusion to the IRS can occur at the beginning of a case when the Court seeks to obtain a perfected petition. Remember that the filing of a petition stops assessment of the liability proposed in the deficiency. The IRS gets notified of the imperfect petition and must seek to stop the assessment. Sometimes it seeks to do so with a very small amount of information about the person filing the imperfect petition. Sometimes the attorney for the IRS does not know exactly when to file an answer.
The practice of accepting imperfect petitions extends back for as long as I can remember, which takes it back into the 1970s. I do not know when it started or what rules may exist in the Tax Court for what makes an imperfect petition, how much leeway to give an imperfect petitioner or other questions that might exist about this practice. The Tax Court bends over backwards to help petitioners who send something into the Court before the filing deadline to have a chance. There are a pair of 5th Circuit cases, Crandall v. Comm’r, 650 F.2d 659 (5th Cir. 1981) and United States v. Jenkins, 780 F.2d 518 (5th Cir. 1986)(affirming the decision in Crandall and not directly speaking to the Tax Court) admonishing the Tax Court to give taxpayers plenty of opportunity to explain their reasons for delay in responding to court orders to perfect. There is also an Action on Decision following the Crandall case in which the IRS recommends not seeking cert because of a lack of a circuit split on the issue. My observation is that the Tax Court generally follows the guidance provided in Crandall and gives taxpayers ample opportunities to explain once they are in the door.
You will see the orders in docketed cases if you peruse through them regularly. Even petitioners whose cases get off to a slow start because of the imperfect nature of their petition still have every opportunity going forward for success and for defeating the proposed assessment if they have a good case. I hope to do a study of imperfect petitions at some point to gather some empirical data on the ultimate outcomes of these special cases.