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Tax Court Says “Nutts” to Time Zone Filing Extension

Posted on May 3, 2023

In East Coast Bias and Tax Court Rule Changes Keith discussed the Tax Court’s view that an e-filed petition that the Tax Court receives after midnight on the last day for timely filing a petition is untimely even if the taxpayer submitted the petition before midnight when considering the petitioner’s time zone. In Nutt v Commissioner, the Tax Court has again expressed its position that the relevant time to consider timeliness is DC time; this time, however, the Tax Court ruling comes in the form of a precedential opinion.

Nutt has facts similar to the Park case Keith discussed in his East Coast Bias post. From the Nutts’ perspective, the Alabama-residing petitioners e-filed their petition at 11:05 PM Central Time on July 18th, 2022. The Tax Court sits in Washington DC. Unfortunately for the taxpayers, DC is in the Eastern Time Zone, and from the Tax Court’s perspective the petition was deemed filed on July 19 at 12:05 AM, on the 91st day (As an aside there are four cities in Alabama that use the Eastern Time Zone; the rest of the state is on Central Time).

The Tax Court gets to its conclusion by noting the general rule that petitions are deemed filed when received. As such, unless the Section 7502 mailing rules apply, a petition is deemed filed when the Tax Court receives it. For now, Section 7502 contains no similar postmark rules for e-filing of documents, so the Tax Court position is that the Nutts’ petition was lodged a day late. This means that the Tax Court doors are closed and the taxpayer cannot receive pre-payment judicial review.

For good measure, Nutt explains that Tax Court Rules 22(a) and 22(d) are consistent with the statutory framework, and that similar rules apply in Federal Rule of Civil Procedure. FRCP 6(a)(4) provides that the last day of a period for electronic filing ends “at midnight in the court’s time zone.” And Nutt cites a district court case in Indiana where a litigant’s motion for a new trial or relief from judgment was electronically uploaded before midnight in the time zone where the case was tried but after midnight when considering where the case was pending.

Citing a local rule that a “document due on a particular day must be filed before midnight local time of the division where the case is pending,” the court held that the motion was untimely because it was due no later than 11:59 p.m. eastern time on July 3, 2020…. Similar to that local rule, Rule 22(d) dictates that the “last day” of a period for electronic filing ends at 11:59 p.m. eastern time, the Tax Court’s local time zone. (citations omitted).

Given the Tax Court’s view in Hallmark that the petition deadline is jurisdictional, there is no leeway (of course, not everyone agrees with Hallmark, as Carl Smith’s multiple posts explain, and we await the Third Circuit’s take in the Culp case).

There are other cases in the pipeline with similar issues. For example, in Sanders v Comm’r, the taxpayer had been trying to file a deficiency petition on DAWSON for almost an hour before the due date, but had problems, so the Tax Court only received the filing at midnight, less than a minute late.  This is bad news for Sanders in the absence of the ability to equitably toll or, say, a special rule that reasonable unsuccessful attempts to timely file are treated as filing the petition within X minutes of the first unsuccessful attempt — kind of like the Tax Court treats a letter requesting petition forms as an imperfect petition.

Judge Buch, who authored Nutt, wrote the order in Sanders that requested amicus assistance. The Center for Taxpayer Rights, represented by the Harvard Tax Clinic, has submitted an amicus in that case.

In light of Nutt, it appears that Sanders faces a steep obstacle. While there are certainly reasons to be wary of gamesmanship if the petitioner’s time zone were to control timeliness of an electronically filed document, the Nutt rule seems harsh, especially for a court which has national jurisdiction. Perhaps Congress needs to step in and amend 7502. If there are concerns about abuse perhaps limiting a taxpayer time zone e-filing deadline to matters where the dispute does not exceed $50,000 for the year can lessen those concerns.

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