In Ramey v Commissioner, 156 T.C. No. 1 (2021) the Tax Court determined in a precedential opinion that when the IRS issues a notice of decision rather than a notice of determination and the taxpayer has filed the collection due process (CDP) request late, the Court lacks jurisdiction to hear the case. The taxpayer, a lawyer, represented himself and pegged his arguments to last known address rather than jurisdiction. Nonetheless, the decision expands the Court’s narrow view of jurisdiction to another setting without addressing the Supreme Court precedent on jurisdiction and its impact on the timing of the filing of documents.
I think the Court gets it wrong without ever getting into a real discussion of the jurisdiction issue and am surprised after the prior litigation on this issue that it so casually determines that it lacks jurisdiction. Having said that, the result may have been the same had it not addressed the issue from the perspective of jurisdiction for the reasons discussed below.
Mr. Ramey apparently has a law office in a location that carries the same address as several other businesses. The IRS addressed the letter to that location which is the taxpayer’s last known address. The post office timely delivered the letter, but it was received by someone working for another of the businesses at the location and did not make its way to Mr. Ramey until a short period before the 30-day window to request a CDP hearing. The Court spends some time on the issue of the address and the delivery of the notice. Mr. Ramey spends almost all of his energy on this issue, but I have no problem with the CDP notice. The IRS sent it to his last known address. You can read the opinion for the details on what went wrong causing him to receive it late. Had he framed the facts as giving rise to a basis for equitable tolling, the issue would have some interest but simply framing it as a last known address issue gets him nowhere.
He delayed mailing the request for a hearing until a few days after the 30-day period but seeks to receive a CDP hearing, arguing that, because of the snafu regarding the delivery of the mail and its delayed receipt by him, the otherwise late request for a CDP hearing should be considered as a timely request.
The Court frames the issue as follow:
In this collection due process (“CDP”) case, we are asked to consider what appears to be a question of first impression for our Court: whether a notice of intent to levy that is sent to a taxpayer’s actual (and last known) address by United States Postal Service (“USPS”) certified mail, return receipt requested, starts the running of the 30-day period for requesting a hearing under section 6330, even though the taxpayer does not personally receive the notice because the taxpayer’s address is shared by multiple businesses and the USPS letter carrier leaves the notice at that address with someone who neither works for the taxpayer nor is authorized to receive mail on the taxpayer’s behalf.
Framed in this way, I have no problem with the Court’s decision that the notice did start the 30-day period. As the opinion progresses, it becomes clear, however, that the Court does much more than answer this question and takes on the issue of its jurisdiction.
Due to the late submission of the CDP request, Appeals gave Mr. Ramey an equivalent hearing rather than a CDP hearing. It did not reach a resolution with him on whether an alternative to levy existed regarding his $247,033 liability. This resulted in Appeals sending him a notice of decision from which he filed a Tax Court petition.
The Court acknowledged that it had previously accepted a notice of decision as appropriately invoking its jurisdiction but held that it only did so in situations in which Appeals inappropriately calculated whether the taxpayer submitted the CDP request on time. It stated that if the IRS inappropriately calculated the timing of the submission and sent a notice of decision as a result, the taxpayer could successfully petition the Tax Court in that situation. Regarding this issue, the Court states:
A decision letter issued after an equivalent hearing generally is not considered a determination under section 6330 and is therefore insufficient to invoke our jurisdiction. See, e.g., Moorhous v. Commissioner, 116 T.C. at 269-270; Kennedy v. Commissioner, 116 T.C. at 262-263. But we have recognized that a decision letter issued after a timely request for a hearing under section 6330 “is a ‘determination’ for purposes of section 6330(d)(1),” regardless of the label IRS Appeals places on the document. Craig v. Commissioner, 119 T.C. 252, 259 (2002); see also Andre v. Commissioner, 127 T.C. at 70. Put differently, if, in reviewing a CDP case, we determine that IRS Appeals erred in concluding that a taxpayer’s request for a section 6330 hearing was untimely, we have jurisdiction to correct the error and review IRS Appeals’ decision as a determination.
Interestingly, in starting its discussion of jurisdiction, which was preceded by a significant discussion of the IRS regulations that would seem to have little bearing on the issue of jurisdiction, the Court begins the discussion by citing to a whistleblower case in support of the statement that it is a court of limited jurisdiction. It does not cite to the whistleblower case of Myers v. Commissioner, 928 F.3d 1025 (D.C. Cir. 2019), in which the D.C. Circuit, the circuit to which all whistleblower cases are appealed, overturned the Tax Court in interpreting a statute essentially identical to the CDP statute on the issue of jurisdiction. Carl Smith discussed the Myers case here and here.
The IRS position on timely submission of the CDP request has evolved over the past few years and it now treats as timely CDP requests sent to the “wrong” IRS office within 30 days. We have discussed that issue in a series of posts you can access here. Linked in that post is an article I wrote in Tax Notes on the issue, which not only discusses the mailing of a request to the right place in the IRS, but the underlying issue of Tax Court jurisdiction based on the timing of the CDP request. I borrow from that article in some of the following discussion.
The Tax Court first addressed the issue of the impact of the Supreme Court jurisprudence on jurisdiction as applied to IRC 6330 in the case of Guralnik v. Commissioner, 146 T.C. 230 (2016) (en banc), where the tax clinic at Harvard filed an amicus brief arguing that the issue of the timing of the filing of the petition was claims processing issue rather than a jurisdictional one. The Tax Court rejected that argument 16-0 in its precedential opinion in that case. Two circuit courts have interpreted IRC 6330 the same as the Tax Court regarding the timing of the filing of the petition after a determination letter – Duggan and Boechler. Duggan was unrepresented. The Eighth Circuit split on the Boechler case both in the opinion and the decision on rehearing en banc. I believe a petition for cert will soon be filed in the Boechler case arguing that the case was wrongly decided and that there is a conflict between the circuits since the language of the whistleblower statute interpreted by the D.C. Circuit in Myers is identical.
The litigation regarding the Tax Court’s jurisdiction when the taxpayer files a late petition differs from the litigation regarding the Tax Court’s jurisdiction when a CDP request arrives late at the IRS. A different part of the statute controls. Even if the Tax Court correctly decided Guralnik, and Duggan and Boechler, those decisions would not control the issue of jurisdiction regarding the timing of the submission of a CDP request to the IRS.
The Conference Committee report on IRC 6330 provides some guidance but does not get mentioned by the parties or the Court. It reads:
If a return receipt is not returned, the Secretary may proceed to levy on the taxpayer’s property or rights to property 30 days after the Notice of Intent to Levy was mailed. The Secretary must provide a hearing equivalent to the pre-levy hearing if later requested by the taxpayer. However, the Secretary is not required to suspend the levy process pending the completion of a hearing that is not requested within 30 days of the mailing of the Notice. If the taxpayer did not receive the required notice and requests a hearing after collection activity has begun, then collection shall be suspended and a hearing provided to the taxpayer.
H.R. Rep. (Conf.) 105-599 at 265-266 (Emphasis added).
For purposes of looking at the timeliness of making the CDP request, the applicable statute is IRC 6330(b)(1). It provides that “If the person requests a hearing in writing under subsection (a)(3)(B) and states the grounds for the requested hearing, such hearing shall be held by the Internal Revenue Service Office of Appeals.” This statue says nothing about the jurisdictional nature of the provision and neither does 6330 (a)(3)(b) which provides “the right of the person to request a hearing during the 30-day period under paragraph (2).” IRC 6330(a)(2)(C) in applicable part provides “not less than 30 days before the day of the first levy with respect to the amount of the unpaid tax for the taxable period.”
So, reading the section that creates the hearing and the two subsections that mention the 30-day time period, there is no suggestion that Congress intended the period to be jurisdictional. If the statute does not make the 30-day period for filing the CDP request jurisdictional, then the taxpayer should have the opportunity to have that period tolled by actions showing that the taxpayer had reasonable cause for missing the time period. The IRS does not acknowledge this in its regulations and neither does the Court in its opinion.
The Tax Court denies jurisdiction here based on an administrative practice of the IRS. The IRS administrative practice is at odds with the administrative practice of other agencies on similar issues. The Social Security Administration (SSA) and the Veterans Benefits Administration (VBA), agencies that touch millions of customers, provide useful instruction regarding the filing of similar appeal requests.
SSA allows claimants to appeal decisions administratively regarding their Social Security payments by mailing a form to any Social Security office, regardless of which office issued the notice being appealed. SSA Program Operations Manual System (“POMS,” the SSA equivalent to the IRS’s IRM) provides that the deadline for mailing this form may be extended in situations where the claimant can show good cause for late filing.The examples listed in the manual include illness, misleading information provided by an SSA employee, and failure to receive notice, to name a few. In this way, we can see similarities with the “equitable tolling” doctrine discussed in Manella v. Commissioner.
The VBA approach is customer friendly in a different way. That agency maintains one national intake center for all correspondence related to compensation claims. The VA’s manual for the regional offices provides that, “A claimant may request, cancel or reschedule a hearing in writing, by e-mail, by fax, by telephone, or in person.” Neither the SSA nor the VBA take the hard-line view that the IRS takes with respect to these administrative submissions. Both SSA and VBA go out of their way to assist the persons working with their agencies in getting the requests to the right places. Their procedures not only recognize the non-jurisdictional nature of the request but adopt an approach that would closely fit with the approach the Commissioner of the IRS must take pursuant to the Taxpayer Bill of Rights.
Several veteran’s cases have allowed for equitable tolling at the administrative stage. Bailey v. Principi, 351 F.3d 1381, 1382 (Fed. Cir. 2003) (“We hold that the filing with the regional office of a document that expresses the veteran’s intention to appeal to the Veterans Court equitably tolls the running of the 120–day notice of appeal period, and we therefore reverse and remand.”); Santana-Venegas v. Principi, 314 F.3d 1293, 1298 (Fed. Cir. 2002) (“We hold as a matter of law that a veteran who misfiles his or her notice of appeal at the same VARO from which the claim originated within the 120–day judicial appeal period of 38 U.S.C. § 7266, thereby actively pursues his or her judicial remedies, despite the defective filing, so as to toll the statute of limitations.”); Jaquay v. Principi, 304 F.3d 1276, 1288 (Fed. Cir. 2002), overruled by Henderson v. Shinseki, 589 F.3d 1201 (Fed. Cir. 2009) (“The filing of the misdirected paper itself satisfies the diligence requirement as a matter of law.” (citing Goldlawr, Inc. v. Heiman, 369 U.S. 463, 467 (1962)). Additionally, one circuit case allowed the late filing where the misfiling was between a court and an arbitration proceeding. Doherty v. Teamsters Pension Trust Fund of Philadelphia & Vicinity, 16 F.3d 1386, 1393 (3d Cir. 1994), as amended on reh’g (Mar. 17, 1994) (finding that equitable tolling could be allowed for when the plaintiff mistakenly filed in federal court rather than the appropriate arbitration forum).
Why must the IRS and the Tax Court take such a hard line here? It is not driven by the statute. It is not driven by good customer service or Taxpayer Rights. It is not that the IRS has so many more CDP request than the Social Security or Veteran’s Administration has claims. It seems to be because of the perpetuation of a wrong view about jurisdiction, as well as about how to treat people in the various circumstances that life throws at them. Other agencies and courts have come to an understanding of this. Why must the IRS and the Tax Court persist in trying to keep people out of court, and why doesn’t the Tax Court acknowledge the Supreme Court jurisprudence in deciding this case, even if it then sets out to distinguish it?
Maybe Mr. Ramey is not the best petitioner to make this argument, because of his small opportunity to react and file his CDP request and, because he did not set up the jurisdictional argument at the Tax Court level he is not the best person to make this argument on appeal, but this issue will not end with the opinion in this case.