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Seventh Circuit May Hold 90-day Period to File Deficiency Petition Not Jurisdictional

Posted on Oct. 11, 2016

We welcome back frequent guest blogger, Carl Smith, who discusses a surprising development in the issue of whether a time period to file a Tax Court petition in a deficiency case is jurisdictional. Jurisdictional in this context is a code word for set in stone. Depending on the outcome of this case, jurisdiction in Tax Court cases could get very interesting. Keith

As you may recall from a recent post of mine, Keith and I are in the midst of litigation in the Circuit courts about whether the time periods in which to file Tax Court petitions in Collection Due Process (CDP) (§ 6330(d)(1)) and stand-alone innocent spouse (§ 6015(e)(1)(A)) cases are jurisdictional or subject to equitable tolling under recent non-tax Supreme Court case law that has made time periods to file almost never jurisdictional.  Even though the Supreme Court has been issuing many opinions on its new jurisdictional thinking since 2004, our arguments are, shockingly, ones of first impression in the Circuit courts. In June, the Tax Court, en banc, rejected our arguments in a CDP case named Guralnik v. Commissioner, 146 T.C. No. 15 (June 2, 2016), basically saying that the Supreme Court case law we cited is distinguishable because it does not involve tax law or the Tax Court and because the Tax Court would prefer to stick, by analogy and stare decisis, to its old case law holding the § 6213(a) period to file jurisdictional. See Byran Camp’s post on Guralnik here.

I have done a couple of posts on the case of Tilden v. Commissioner, T.C. Memo. 2015-188, see my posts here and here. It is a deficiency case that was taken up on appeal. On October 6, 2016, the parties did oral argument before the Seventh Circuit in the case, and it appears that at least two judges on the panel, Judge Easterbrook and Chief Judge Wood, (and maybe all three) are inclined to hold that the current non-tax Supreme Court case law on jurisdiction makes the § 6213(a) time period to file a deficiency case non-jurisdictional. If they do this in the deficiency area, it will certainly constitute a revolution in the tax controversy world and a slap at the unanimous Tax Court holding in Guralnik. Yikes!


By way of background on the Tilden case, I quote from one of my earlier posts:

Tilden is a case where a deficiency petition arrived at the Tax Court after the 90th day.  It arrived by certified mail (United States Postal Service (USPS)), but bore no real postmark, just a shipping label from and a certified mail receipt, both dated the 90th day, and the latter only dated in the handwriting of an employee of the taxpayer’s attorney.  Applying regulations under section 7502 and prior Tax Court case law, Judge Armen held that since internal USPS tracking data showed that the USPS first got possession of the envelope after the 90th day, section 7502 did not apply, the petition was untimely, and the Tax Court therefore lacked jurisdiction.

In the appeal, both the taxpayer and the DOJ are arguing that Judge Armen was wrong and that the Seventh Circuit shouldn’t rely on the provision of the § 7502 regulations that he relied on. Both sides now agree that this case should be treated as if the envelope bore a non-USPS postmark, where the regulations would treat the filing as timely if the petition arrived at the Tax Court within a normal period that would apply to regular mail sent by USPS on the last date to file. The parties agree here that the petition arrived 8 days after the last date to file. Given the extra screening done to Tax Court mail since the 2001 anthrax scare, the DOJ and IRS now concedes that 8 days is within the outer edge of the normal period for USPS mail to reach the Tax Court from Utah.

The parties filed briefs in the Seventh Circuit arguing about which was the correct regulation under § 7502, but not discussing, one way or the other, recent non-tax Supreme Court case law on whether time periods to file are jurisdictional. Indeed, the parties at oral argument admitted ignorance of the non-tax Supreme Court case law that appellate judges are applying almost every week to overturn prior holdings.

The parties just assumed that the time period to file a deficiency petition was jurisdictional, as most Circuit courts and the Tax Court had held long ago. But, no one has ever asked the Tax Court or a Court of Appeals to reconsider whether the § 6213(a) period is really still jurisdictional under the Supreme Court’s new case law severely limiting the use of the word “jurisdictional”. Under that new case law, time limits to file in courts are not jurisdictional, unless either (1) Congress has made a “clear statement” in the statute that it wants the time period to be jurisdictional, or (2) the Supreme Court has for over 100 years in its own opinions held the time period jurisdictional (even though the time period wouldn’t be considered jurisdictional under the new Supreme Court rules).

At the oral argument in Tilden on October 6 (which can be heard on the Seventh Circuit’s website and linked above), at least two and maybe all of the judges on the panel spent a large part of each side’s time asking: “Why isn’t the § 6213(a) filing period not jurisdictional under current non-tax Supreme Court case law?”  It is clear that at least two of the judges think that the time period is obviously not still jurisdictional under that case law.  No judge on the panel suggested it was.

The judges were rather shocked that neither party’s lawyer was prepared to discuss the jurisdictional issue under current Supreme Court case law, but Robert Metzler of the DOJ noted to the court that this same issue was being raised in two other cases, Duggan v. Commissioner (a Ninth Circuit CDP case, where Keith and I are amicus) and Matuszak v. Commissioner (a Second Circuit innocent spouse case under § 6015(e), where Keith and I are taxpayer’s counsel and which Meltzer erroneously said was going on in the Third Circuit). Metzler was confused. Keith and I are litigating, as counsel for the taxpayer, a § 6015(e) case named Rubel v. Commissioner in the Third Circuit. Metzler forgot to mention Rubel.  Metzler also failed to mention that none of our cases involve the deficiency time period in § 6213(a), so the issue is not exactly the same, but only similar.

Metzler is counsel for the DOJ in the Duggan case, and only on October 4 (i.e.,2 days before the Seventh Circuit oral argument in Tilden), the Ninth Circuit had accepted Keith and my amicus brief in the Duggan CDP case. At the same time, the Ninth Circuit ordered Metzler to file a response to our amicus brief no later than October 25. (Metzler is not the DOJ counsel in either Matuszak or Rubel.)  Metzler told the Seventh Circuit that he was just beginning to familiarize himself with the issues we raised, but that he was not prepared to make any argument on the jurisdictional point to the Seventh Circuit. He offered, instead, to provide supplemental briefing, but the judges were not interested in more briefing on Supreme Court case law on jurisdiction that they said they already knew quite well.

Metzler also warned that this panel might have to go en banc to overrule Seventh Circuit existing precedent, Petrulis v. Commissioner, 938 F.2d 78, 79 (7th Cir. 1991); Sanders v. Commissioner, 813 F.2d 859, 861 (7th Cir. 1987); and McPartlin v. Commissioner, 653 F.2d 1185, 1188 (7th Cir.1981); that described the filing period as jurisdictional. But, Judge Easterbrook seemed already to have looked at those opinions: The statement in Sanders that timely filing is a jurisdictional defect for a deficiency case was dicta, not the least necessary to the holding. Thus, Sanders is not current Seventh Circuit precedent. While the other two opinions clearly state that the filing period is jurisdictional, the Supreme Court would call those two opinions “drive-by jurisdictional rulings,” deserving of no precedential weight, since it would not have mattered in either case whether the time period was called an element of the claim to be proved, instead of a jurisdictional defect. See Arbaugh v. Y & H Corp., 546 U.S. 500, 511 (2006).

Although it is always dangerous to predict, at the end of the argument, it seemed that the judges were going to hold that the § 6213(a) time period is not jurisdictional and remand the case to the Tax Court.  The judges pointed out that since non-jurisdictional statutes of limitations are subject to waiver, and the IRS was not arguing that the petition was untimely, the Tax Court could just proceed to the merits after a remand if the Seventh Circuit held the time period not jurisdictional.

The day after the oral argument, a fairly desperate Meltzer submitted an FRAP 28(j) letter in which he argued that, just as the Supreme Court in John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (2008), refused to use its new thinking on jurisdiction to overturn its prior holdings for over 100 years that the 6-year time period in which to file a suit in the Court of Federal Claims under 28 U.S.C. § 2501 is jurisdictional, similar stare decisis grounds should caution the Seventh Circuit from overruling its precedent under § 6213(a). Unfortunately for the government, the Supreme Court has not said there is a stare decisis exception from its current rules on jurisdiction to consistent prior holdings of lower courts. So, I doubt this comment will go anywhere with the Seventh Circuit, though the Tax Court accepted this argument in Guralnik.

Oddly, Meltzer, in his letter, makes no attempt to show that the Congress made a “clear statement” in § 6213(a) that the time period to file is jurisdictional.

Finally, in his letter, Meltzer referred the Seventh Circuit to the Tax Court’s opinion in Guralnik, which, he said, “contains a well-reasoned discussion of whether the jurisdictional status of time limits for Tax Court petitions has been changed by recent Supreme Court cases.”


Even though a good argument could be made that the deficiency jurisdiction time period is not jurisdictional, Keith and I have been careful not to make that argument and to point out to the courts why we aren’t making that argument. While such a holding might benefit individuals who are seeking equitable tolling for a late-filed deficiency petition, we fear the argument’s consequences on people who had no good reason for late filing. Most people have no good reason for late filing.

It has long been held that a person who files a deficiency petition late can, after the case is dismissed for lack of jurisdiction, simply pay the tax and sue for refund in district court. Budlong v. Commissioner, 58 T.C. 850, 854 n.2 (1972); McCormick v. Commissioner, 55 T.C. 138, 142 n.5 (1970). That is because § 7459(d) provides, in relevant part:

If a petition for a redetermination of a deficiency has been filed by the taxpayer, a decision of the Tax Court dismissing the proceeding shall be considered as its decision that the deficiency is the amount determined by the Secretary. An order specifying such amount shall be entered in the records of the Tax Court . . . unless the dismissal is for lack of jurisdiction.

If the § 6213(a) filing period is not jurisdictional, then, if a person files a late Tax Court deficiency petition, § 7459(d) would turn the decision in the case into a decision on the merits upholding the deficiency.  I am not sure that the person could then pay and sue for a refund.  Wouldn’t the Tax Court merits decision be res judicata in the district court for the same tax year?

Further, the point of the Supreme Court making a stare decisis exception to its new rules because of a long history of its case law holding a time period jurisdictional is that Congress, having read that case law, might have legislated on the assumption that the time period was jurisdictional. Even though there is no Supreme Court case law interpreting § 6213(a) or its predecessors, it is clear that Congress has legislated on the assumption that § 6213(a) is jurisdictional. The Committee reports accompanying the 1998 legislation adding a sentence to the end of that subsection allowing taxpayers to rely on the last date to file shown in notices of deficiency state that Congress is making the change because the time period is jurisdictional. See H. Rept. 105-364 (Part 1) at 71, 1998-3 C.B. 373, 443; S. Rept. 105-174 at 90, 1998-3 C.B. 537, 626. Accord H.R. (Conf.) Rept. 105-599 at 289, 1998-3 C.B. 747, 1043-1044.

It would have been helpful if Meltzer had also told the Seventh Circuit about the potential § 7459(d) problem we foresee and the Committee report language noted in the prior paragraph.

Well, if the Seventh Circuit rules § 6213(a)’s time period is not jurisdictional, I suppose the problem we foresee could easily be fixed by a statutory amendment to § 7459(d).

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