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What’s Wrong with the Tax Court’s Hallmark Opinion: Part 3

Posted on Dec. 8, 2022

This is the third of a multipart post discussing the recent Tax Court opinion in Hallmark Research Collective v. Commissioner, 159 T.C. No. 6 (11/29/22).

In its jurisprudence since 2006, the Supreme Court has firmly stated that claim-processing rules (of which filing deadlines, it says, are the quintessential claim-processing rule) are not jurisdictional.  However, the Court has articulated two exceptions:  One is if Congress makes a “clear statement” in a statute that it wants the claim-processing rule to be jurisdictional.  The other is where, even in the absence of a clear statement, there exists a long line of Supreme Court precent holding the claim-processing rule jurisdictional.  In this second case, the Supreme Court will apply a stare decisis exception.

In Hallmark, how did the Tax Court get to a ruling that the deficiency filing deadline is jurisdictional? Did the Tax Court find that either of these exceptions applied? In fact, the Tax Court did not say that Congress’ language in the first sentence of IRC 6213(a) contains a clear statement that the deficiency filing deadline is to be treated as jurisdictional, nor did the Tax Court find a long line of Supreme Court case law had held the deficiency filing deadline jurisdictional.  In my view, the failure of the Tax Court to apply either of these exceptions properly (or at all) means that the court ruled incorrectly.

In this part 3 of the post, I will discuss the first of these exceptions, the “clear statement” exception. In part 4, I will discuss the stare decisis exception.

In Kontrick v. Ryan, 540 U.S. 443, 455 (2004), the Supreme Court noted that both it and lower courts had often carelessly overused the word “jurisdictional”, and the Court sought to bring some disciple to the word by saying that, henceforth, claim-processing rules would not be jurisdictional. In Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), however, the Court admitted that there should be an exception where Congress clearly stated that it wanted a claim-processing rule to be jurisdictional. The Court set out what it called a “readily administrable bright line” test for this exception, to avoid the usual litigation over what Congress intended: “If the Legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue.” Id. at 515-516 (footnote and citation omitted).

While the Supreme Court has articulated this “clear statement” exception, in over a dozen cases so far since Arbaugh, the Court has never found any such clear statement from Congress – not in cases of filing deadlines or in cases of other claim-processing rules. Much of the Boechler opinion is focused on this “clear statement” exception, where the Court found it did not apply, even though IRC 6330(d)(1) contains the words “and the Tax Court shall have jurisdiction”.

The first sentence of IRC 6213(a) provides:

Within 90 days, or 150 days if the notice is addressed to a person outside the United States, after the notice of deficiency authorized in section 6212 is mailed (not counting Saturday, Sunday, or a legal holiday in the District of Columbia as the last day), the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency.

Note that the sentence, unlike the sentence in IRC 6330(d)(1), does not contain the word “jurisdiction” or any similar word and is not addressed to the court’s power, but only to what the taxpayer may do.

In Hallmark, the court writes:

“Congress must do something special, beyond setting an exception-free deadline, to tag a statute of limitations as jurisdictional and so prohibit a court from tolling it.” [United States v.] Kwai Fun Wong, 575 U.S. [402 (2015)] at 410. Congress “need not use magic words”, Henderson [v. Shinseki], 562 U.S. [428 (2011)] at 436, and a statutory deadline may be jurisdictional even without the word “jurisdiction”, see, e.g., Bowles [v. Russell], 551 U.S. [205 (2007)] at 208–10 (holding 28 U.S.C. § 2107(a) and (c) to be jurisdictional); United States v. Brockamp, 519 U.S. 347, 350–51 (1997) (holding section 6511 to be jurisdictional); but the “traditional tools of statutory construction must plainly show that Congress imbued a procedural bar with jurisdictional consequences”, Kwai Fun Wong, 575 U.S. at 410.

Slip opinion at p. 8.

First, what’s wrong about this quote? The citations to Bowles and Brockamp are wrong or very misleading.

Bowles is a case that I will mention in the next part of this post, but suffice it to say for now that Bowles is one of the only two (so far) Supreme Court opinions that created the stare decisis exception; the statute in Bowles does not contain a “clear statement” that the deadline to file a civil appeal from the district court is jurisdictional, so the Court decided to create a stare decisis exception.

And Brockamp (a pre-Kontrick case)does not hold the IRC 6511 refund claim filing deadline jurisdictional. Neither the word “jurisdiction” nor “jurisdictional” appears in the Brockamp opinion. Brockamp, in fact, proceeds from the unstated assumption that the filing deadline is not jurisdictional and then goes on to conclude that the deadline is still not subject to equitable tolling (a separate question, as Boechler shows) under the presumption in favor of equitable tolling set out in Irwin v. Department of Veterans Affairs, 498 U. S. 89, 95–96 (1990). Had the Supreme Court thought IRC 6511’s deadline jurisdictional, the Brockamp opinion would have been only one sentence long: “Since we have held that jurisdictional deadlines are never subject to equitable tolling, and since IRC 6511’s deadline is jurisdictional, IRC 6511’s deadline is not subject to equitable tolling.” In Boechler, the Supreme Court only discussed Brockamp in the section of the Court’s opinion discussing equitable tolling.

Hallmark went on to state as follows:

“To determine whether Congress has made the necessary clear statement, we examine the ‘text, context, and relevant historical treatment’ of the provision at issue.” Musacchio v. United States, 577 U.S. 237, 246 (2016) (quoting Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 166 (2010)).  Statutes that meet this standard share several qualities:  They speak of a court’s power “in jurisdictional terms or refer in any way to the jurisdiction” of the court. Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 393–94 (1982).  They “define a federal court’s jurisdiction . . . , address its authority to hear untimely suits, [and] cabin its usual equitable powers.” Kwai Fun Wong, 575 U.S. at 411. Their context, such as placement within their statutory regime, history of reenactments, or a long-standing judicial interpretation, reflects that Congress imbued a deadline with “jurisdictional consequences”. See, e.g., Kwai Fun Wong, 575 U.S. at 410; Henderson, 562 U.S. at 439; Bowles, 551 U.S. at 209–13; Zipes, 455 U.S. at 394.

Slip opinion at pp. 8-9.

Putting aside until the next part of this post that last-quoted sentence, Hallmark is correct that context is important in applying the “clear statement” exception. For example, in Henderson, the Court found that the 120-deadline for a veteran seeking to contest a denial of benefits in the Article I Court of Appeals for Veterans Claims is not jurisdictional. In that case, the Supreme Court noted that the deadline involved did not speak in jurisdictional terms and there was a separate provision that granted the Veterans Court jurisdiction to hear the cases. Further, the Supreme Court went on to discuss the context of the deadline and noted (1) the character of the procedure from administrative filing through the Veterans Court, which the Supreme Court felt was highly protective of veterans and (2) would clash terribly with a finding that the filing deadline is jurisdictional. But, the Supreme Court, while looking at context in Henderson and other cases, has only used context to find a filing deadline not jurisdictional. The Supreme Court has never said that context alone can make up for the lack of a “clear statement” that a filing deadline should be jurisdictional. To argue that context alone would be good enough would be to gut the “clear statement” exception.

On page 9 of the slip opinion, Hallmark begins Part II of the opinion with the following italicized outline sentence: “Section 6213(a) clearly states that its 90-day deadline for filing a deficiency case is jurisdictional.” Yet, you can read on in the opinion and the court says everything except that the words of the first sentence of IRC 6213(a) create a clear statement from Congress that Congress wants the filing deadline to be jurisdictional. The court discusses the context of the placement of the sentence, the historical treatment of the sentence by the courts, and even what is essentially the Congressional reenactment doctrine, but the Tax Court nowhere, other than in the headline of Part II. of the opinion, says that the words of the first sentence of IRC 6213(a) (the only words that really count) “clearly state” that the filing deadline is jurisdictional.

It is thus baffling how the Tax Court in Hallmark could think its opinion a proper application of the Supreme Court’s “clear statement” exception jurisprudence. Essentially, the Tax Court has reverted to deciding Hallmark on the pre-Arbaugh free-for-all inquiry into signs of what Congress really intended, despite the lack of a “clear statement”.

Enough for this post.

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