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Old Habits Die Hard

Posted on May 18, 2023

For almost a quarter century the Tax Court dismissed late filed petitions in Collection Due Process (CDP) cases because it viewed the 30-day time period for filing these petitions as jurisdictional with no exceptions for failed delivery, late delivery, illness or other bases for equitable tolling. An order issued on May 15, 2023, in the case of Floyd v. Commissioner shows the almost Pavlovian need to continue dismissing these cases for lack of jurisdiction when filed late despite the Supreme Court’s decision a year ago in Boechler v. Commissioner, 142 S. Ct. 1493 (2022). The order was immediately rescinded by a second order also issued on May 15, 2023, indicating that someone in the Court is watching and paying attention to Supreme Court decisions. Still, the two orders provide an interesting sequence and a basis for discussing the benefit to the Court of the Boechler decision, and, I hope, the benefit of the reversal of the Court’s Hallmark decision regarding deficiency cases in the coming months or years.

The Floyds filed their CDP petition late. The notice of determination in their case was dated February 4, 2022. The IRS has a receipt for certified mailing on that date. The postal records show the notice was delivered on February 10, 2022. The 30-day period for filing a petition expired on March 7, 2022, after an extension caused by IRC 7503 because the 30th day fell on the weekend. Their petition arrived at the Tax Court on April 1, 2022, showing a postmark date of March 22, 2022. (Keep in mind that when you mail documents to the Tax Court it takes some time for delivery to occur because of the precautions still in effect caused by the anthrax mailing incident.)

The first order issued by the Tax Court in the Floyds’ case notes the Boecher opinion but then goes on to say:

ORDERED that, on or before June 15, 2023, petitioner shall show cause, in writing, why the Court, on its own motion, should not dismiss this case for lack of jurisdiction on the ground the petition was not timely filed and if petitioner asserts equitable tolling include all applicable facts.

Well, that’s a problem since after Boechler filing late is not a jurisdictional issue.  But for many years the Tax Court has policed late filing of petitions.  On its own motion it dismisses about 12 deficiency cases a month according to the research of Carl Smith.  These dismissals typically occur near a calendar call or when a decision document is submitted.  The Court refuses to sign the decision document in these cases having made its own independent determination that it lacks jurisdiction.  In order to make that determination, it must police each case taking time an effort to insure it has proper jurisdiction of the case.  The Supreme Court mentions these in its regular opinions on jurisdiction as one of the reasons for not finding statutes jurisdictional since doing so wastes the time of the court and the parties.

The Boechler case acts as a time saving device much like the advent of washing machines or vacuum cleaners freeing up the Court’s time for other pursuits. It no longer needs to police the timeliness of the filing of CDP cases (or whistleblower cases) but can ignore the timing of the filing of the petition unless the IRS timely raises a concern. If the IRS timely raises a concern about the timeliness of a petition, then the Tax Court will spring into action to determine if the petitioner has a good reason. Otherwise, the Tax Court is free to focus on the merits of the petitions without worrying about timeliness.

The almost immediate vacatur of the first order in the Floyd case indicates that someone in the Tax Court is paying attention to the time savings benefit of the Boechler decision but old habits die hard. Seeing a late filed petition and doing nothing must be hard for some of the Tax Court judges. The adjustment will take time. The cases of Carroll v. Commissioner and Ahmad v. Commissioner show how the post-Boechler process should work.

This year the Supreme Court has issued three more opinions regarding cases raising the issue of jurisdiction. You can find these three cases here in the most recent Rule 28(j) letter filed in the case of Culp v. Commissioner pending in the Third Circuit. As it has done in every case since 2004, the Supreme Court found the statutes at issue in these three cases not to create a jurisdictional barrier to filing. Like the Tax Court with its 17-0 holdings in Guralnik and Hallmark, other courts also struggle with the “new” thinking of the Supreme Court on jurisdiction. The first order in the Floyd case reminds us that the struggle does not end with the issuance of a Supreme Court opinion.

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