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What’s Wrong With The Tax Court’s Hallmark Opinion: Part 5

Posted on Dec. 12, 2022

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

As I noted in the last part of this post, the Supreme Court has created a stare decisis exception to the rule that claim-processing rules (including filing deadlines) are no longer jurisdictional.  In that part, I gave the citations to nine opinions of the Supreme Court (including Boechler) stating that the exception applies where there is Supreme Court precedent that had previously held the claim-processing rule jurisdictional, even though the claim-processing rule would not meet today’s exception for a “clear statement” from Congress.  In the only two opinions since the Supreme Court announced its new thinking no jurisdiction where the Supreme Court applied the stare decisis exception, Bowles v. Russell, 551 U.S. 205 (2007), and John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (2008), there were multiple Supreme Court precedents going back over 100 years that made the Court feel it should not overturn such precedents because no doubt Congress relied on those precedents in legislating.  One might call this a legislative reenactment concern when a long line of Supreme Court opinions are involved.

However, the primary reason that the Tax Court in Hallmark held the deficiency petition filing deadline jurisdictional is not the language of that deadline meeting the “clear statement” exception, but the existence of a 98-year-long string of opinions from courts below the Supreme Court that have uniformly held the filing deadline jurisdictional.

But, that string of opinions is irrelevant under the Supreme Court’s articulated stare decisis exception that applies for purposes of the jurisdictional test. Moreover, the Hallmark opinion fails to seriously confront the Boechler opinion’s disparagement of that deficiency precedent.

In this part of my post, I will discuss (1) how the Hallmark opinion misapplied the stare decisis exception and (2) how the Hallmark opinion misconstrued the Boechler opinion’s disparagement of the very deficiency opinions on which the Hallmark court relied into a comment going to the lack of a long line of precedent under IRC 6330(d)(1).

I begin with the Hallmark court’s conflating the jurisdictional stare decisis exception with the legislative reenactment doctrine that can sometimes be applied where there exists a long line of opinions from courts below the Supreme Court consistently interpreting the statute.

The Hallmark court wrote:

According to the Supreme Court, “[w]hen ‘a long line of this Court’s decisions left undisturbed by Congress,’ . . . has treated a similar requirement as ‘jurisdictional,’ we will presume that Congress intended to follow that course.” Henderson [v. Shinseki], 562 U.S. [428 (2011)] at 436 (quoting Union Pac. R.R. Co. v. Brotherhood of Locomotive Eng’rs & Trainmen Gen. Comm. of Adjustment, Cent. Region, 558 U.S. 67, 82 (2009)). This statement describes the traditional tool of statutory construction known as the “prior-construction canon.” If a statute is reenacted using words or phrases that have already received authoritative construction by the highest court in a jurisdiction, or have been uniformly construed by inferior courts or the responsible agency, then the later version of that statute preserving the wording is presumed to carry forward that interpretation, and they are to be understood according to that construction. See, e.g., Bragdon v. Abbott, 524 U.S. 624, 645 (1998) (citing an “unwavering line of administrative and judicial interpretation” that included no Supreme Court opinions, and holding, “[w]hen administrative and judicial interpretations have settled the meaning of an existing statutory provision, repetition of the same language in a new statute indicates, as a general matter, the intent to incorporate its administrative and judicial interpretations as well”). . . .

Slip opinion at pp. 28-29 (footnote omitted; one citation omitted).

After this quote, the Hallmark opinion went on to establish that, since 1924, the Board of Tax Appeals has treated the deficiency petition filing deadline as jurisdictional and, since 1928, beginning with a D.C. Circuit opinion, 10 of the 12 Courts of Appeals that hear appeals from the Tax Court have issued precedential opinions holding the filing deadline jurisdictional. (The First and Fourth Circuits have no published opinions on this issue, but have agreed with the other Circuits in unpublished opinions.) The Tax Court has also consistently treated the filing deadline as jurisdictional.

The Hallmark court then points out that Congress amended the sentence in Revenue Act of 1924 section 274(a) that contains the filing deadline (currently the first sentence in IRC 6213(a)) many times, beginning in 1926 and all the way up to 1969. Those amendments each lengthened the filing deadline. Then in 1998, Congress amended IRC 6213(a) to add a new final sentence allowing taxpayers to rely on any incorrect date shown on the notice of deficiency as the last date to file. The Hallmark opinion quotes from the “present law” Ways and Means and Conference Committee reports’ discussion of the 1998 amendment where those reports observe that the filing deadline is jurisdictional. However, those quotes are the only instances over the past 98 years where the Congress has even acknowledged the issue of whether the filing deadline is jurisdictional, and the 1998 amendment has the same effect whether or not the filing deadline is jurisdictional. Indeed, each of the amendments over the years that lengthened the deficiency petition filing deadline would have the same effect whether the filing deadline is jurisdictional or not.

I don’t think the Supreme Court would give much attention to those 1998 committee report sentences. Just like judicial statements from the period that the Supreme Court now calls “drive-by jurisdictional rulings” entitled to no weight because the court making the statement had no reason to consider whether a deadline should be jurisdictional or not because it made no difference in the case; See S teel Co. v. Citizens for a Better Environment, 523 U.S. 83, 91 (1998); the committee report statements should be considered “drive-by” statements, also entitled to no weight.

The jurisdictional stare decisis exception is clearly a reluctant exception to the Supreme Court’s preferred rule that filing deadlines are no longer jurisdictional because jurisdictional deadlines produce “harsh consequences” to the parties and the courts.  United States v. Kwai Fun Wong, 575 U.S. 402, 409 (2015). While it is true that in Kwai Fun Wong, the Court said that “traditional tools of statutory construction must plainly show that Congress imbued a procedural bar with jurisdictional consequences”; id. at 410 – which sounds like an invitation to apply the legislative reenactment doctrine, perhaps relying on lower court opinions – no post-Kontrick Supreme Court opinion involving a jurisdictional question concerning a claim-processing rule cites opinions from courts below the Supreme Court as relevant to the Court’s decision.

You can read each of the nine Supreme Court opinions cited by me in the last part of this post, and, in every case, the Court refers to a long line of opinions of the Supreme Court or “this Court” as the ones relevant for the stare decisis exception. See, e.g., U nion Pacific R. Co. v. Locomotive Engineers, 558 U.S. 67, 82 (2009) (“this Court’s decisions”) (the first Supreme Court jurisdiction opinion after Bowles and John R. Sand created the exception). Indeed, to emphasize the point, note that in the next indented quote below from Boechler, the Court quoted from Fort Bend County v. Davis, 139 S. Ct. 1843, 1849 (2019), where the Court, in quoting from Union Pacific, deliberately modified Union Pacific’s reference to “this Court’s decisions” to “[Supreme] Cour[t] decisions”.  Justice Ginsburg, who wrote for a unanimous Court in Davis, made that change as a point of emphasis. In the prior part of this post, I quoted from a Justice Ginsburg concurring opinion in R eed Elsevier v. Muchnick, 559 U.S. 154, 173-174 (2010), where she objected to an amicus citing to the Court over 200 opinions from courts below the Supreme Court.

In my view, the Tax Court in Hallmark gives lip service to the jurisdictional stare decisis exception as articulated by the Supreme Court, but instead unjustifiably applies a legislative reenactment doctrine that allows a court to consider a long line of opinions only from courts below the Supreme Court.

Next, what does Boechler tell us about this long history of lower court opinions holding the deficiency filing deadline jurisdictional (relied on by Hallmark) and whether such long history can qualify for the stare decisis exception? Here’s from Boechler:

The Commissioner’s weakest argument is his last: He insists that § 6330(d)(1)’s filing deadline is jurisdictional because at the time that deadline was enacted, lower courts had held that an analogous tax provision regarding IRS deficiency determinations is jurisdictional. (That provision says that “[w]ithin 90 days . . . the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency.”  26 U.S.C. § 6213(a).) According to the Commissioner, Congress was aware of these lower court cases and expected § 6330(d)(1)’s time limit to have the same effect.  So, he says, the statutory backdrop resolves any doubt that might linger in the text. The Commissioner’s argument misses the mark. The cases he cites almost all predate this Court’s effort to “bring some discipline” to the use of the term “jurisdictional.” Henderson, 562 U.S., at 435. And while this Court has been willing to treat “‘a long line of [Supreme] Cour[t] decisions left undisturbed by Congress’” as a clear indication that a requirement is jurisdictional, Fort Bend County v. Davis, 587 U.S. __, __, 139 S. Ct. 1843 (2019), no such “long line” of authority exists here

142 S. Ct. at 1500.

In other words, the Supreme Court doesn’t think much of the deficiency precedent from the lower courts of which the Solicitor General made the Supreme Court aware in Boechler, and the Supreme Court seems only willing to apply the stare decisis exception to its new jurisdictional rules if someone can show it that it has held the same claim-processing rule jurisdictional in the past. But, no one can for the filing deadline in IRC 6213(a).

Here’s the Hallmark court’s response to this passage from Boechler:

We set out in detail (in Part II.E above and in the attached Appendix) the impressive history—almost a century long—of judicial construction of the 90-day deadline as jurisdictional and of Congress’s repeated perpetuation of that construction by its amendments, reenactments, and codifications.  No such history can be mustered for the asserted jurisdictional character of the 30-day deadline in section 6330(d)(1) (a provision which has existed in the Code only since 1998, see Internal Revenue Service Restructuring and Reform Act of 1998, § 3401(b), 112 Stat. at 749).  As the Supreme Court said, “no such ‘long line’ of authority exists here” in connection with section 6330(d)(1).  Boechler, P.C. v. Commissioner, 142 S. Ct. at 1500.

Slip opinion at p. 41.

I don’t think that is much of a response to the Supreme Court’s disparagement of that lower court deficiency precedent. And while there is some ambiguity in the above quote from Boechler concerning whether, when the Supreme Court was noting the absence of a long line of Supreme Court authority, it was referring to IRC 6330(d)(1) and/or 6213(a), even Hallmark concedes that there is no Supreme Court authority on whether the deficiency filing deadline is jurisdictional, either.

In Hallmark, the opinion also notes that on five occasions the Supreme Court has declined cert. on cases that could have presented the issue of whether the deficiency petition filing deadline is jurisdictional; see slip opinion at p. 37 n. 31; but every lawyer knows that there is nothing precedential in a Supreme Court denial of cert.

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