For Whom Does the Filing Deadline Toll?

The following is a reprint from the 2022 University of Illinois Federal Tax Workbook, Volume A, Chapter 3: Rulings and Cases. We’re sharing this case because it’s not often we see a Supreme Court rule on a tax matter, so thought you might find it as interesting as we do. The video is a discussion of the case between instructors Bob Rhea and Jerry Brune during Fall Tax School.

If you like reading and hearing about cases, keep an eye out for 2023 Fall Tax School, as we’ll cover more of the most pertinent and interesting cases of the last year then.

Facts

Boechler, P.C. is a law firm in Fargo, North Dakota. In 2015, the IRS informed Boechler about a discrepancy in its tax filings. Boechler did not respond, so the IRS assessed a penalty for “intentional disregard” and informed Boechler of its intent to levy its property to satisfy the penalty. To prevent the levy, Boechler requested a collection due process (CDP) hearing. At the hearing, Boechler argued that there was no discrepancy in its tax filings and that the penalty was excessive. The IRS Independent Office of Appeals sustained the proposed levy. Under IRC §6330(d)(1), Boechler had 30 days to petition the Tax Court to review the CDP determination. However, Boechler filed its petition one day late. The Tax Court then dismissed the petition for lack of jurisdiction. The Eighth Circuit affirmed the Tax Court ruling, asserting that the 30-day filing deadline is jurisdictional and therefore cannot be equitably tolled (i.e., extended).

Note. Equitable tolling applies when it is unfair to hold a taxpayer to a statutory deadline because of an extraordinary event that impeded the taxpayer’s compliance.¹

Issue

The issue in this case is whether the 30-day filing deadline under §6330(d)(1) is jurisdictional and thus cannot be extended.

Analysis

Jurisdictional requirements cannot be waived or forfeited. As relevant to this case, such requirements are not subject to equitable exceptions. The Court treats procedural requirements as jurisdictional only if Congress “clearly states” that it is.²  Therefore, the outcome of this case depends on whether Congress clearly stated that the deadline imposed by §6330(d)(1) for review of a CDP determination is jurisdictional. IRC §6330(d)(1) states:

The person may, within 30 days of a determination under this section, petition the Tax Court for review of such determination (and the Tax Court shall have jurisdiction with respect to such matter).

The only reference to jurisdiction in this Code section appears in the parenthetical at the end of the sentence. The parties to this case agree that the parenthetical gives the Tax Court jurisdiction over petitions for review of CDP determinations and that the provision imposes a 30-day deadline to file a petition. However, the question exists as to the meaning of “such matter” in the parenthetical.

Boechler argues that it refers only to the immediately preceding phrase, i.e., “petition the Tax Court for review of such determination.” The IRS asserts that “such matter” refers to the entire first clause of the sentence, which includes the deadline and grants jurisdiction only over petitions filed during the 30-day window.

The Court notes that the phrase “such matter” lacks a clear antecedent. Under the last-antecedent rule, the correct antecedent is usually “the nearest reasonable one,”³ which favors Boechler’s interpretation, although the Court states that this is hardly a “slam dunk.”

The Court further notes that the IRS’s interpretation is plausible. However, to satisfy the clear-statement rule for procedural requirements, the jurisdictional condition must be exactly that: clear. The court did not find the IRS’s interpretation to be clear. It is not enough that the provision contains the word “jurisdiction.” Instead, it is necessary to establish a clear link between the deadline and the jurisdictional grant. The Court emphasized that its ruling does not mean that Boechler is entitled to equitable tolling under the facts of this case. That issue should be determined on remand.

Holding

The Court held that the 30-day time limit under §6330(d)(1) to file a petition for review of a CDP determination is an ordinary, nonjurisdictional deadline subject to equitable tolling (extension). The Court reversed the contrary judgement of the Court of Appeals and remanded the case for further proceedings consistent with this opinion.

Note. This was a unanimous ruling by the Supreme Court. The opinion was authored by Justice Amy Coney Barrett.

 Sources:

1. 2020 Purple Book, 85. Dec. 31, 2019. National Taxpayer Advocate. [www.taxpayeradvocate.irs.gov/wp-content/uploads/2020/08/ ARC19_PurpleBook.pdf] Accessed on Jul. 28, 2022.
2. Arbaugh v. Y & H Corp., 546 U.S. 500, 515 (2006).
3. Reading Law: The Interpretation of Legal Texts. Scalia, Antonin & Garner, Bryan A. 2012. [https://jm919846758.files.wordpress.com/ 2020/09/rlilt.pdf] Accessed on Jul. 29, 2022. 2022