Analysis of and reflections on recent cases and rulings.

• Author: Beavers, James A.
• Position: TAX TRENDS

Procedure & Administration.

Late-filed petition does not deprive Tax Court of jurisdiction over case

The U.S. Supreme Court, in a unanimous decision, held that Sec. 6330(d)(1)'s 30-day time limit to file a petition with the Tax Court for review of a Collection Due Process (CDP) determination is a nonjurisdictional deadline subject to equitable tolling. Thus, the Tax Court might have jurisdiction over a taxpayer's case where the taxpayer filed a petition one day after the expiration of the time limit.

Background

In 2015, the IRS notified a law firm, Boechler PC, that its Forms W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, filed for 2012 with respect to its employees disagreed with the firm's Forms 941, Employer's Quarterly Federal Tax Return, for the corresponding year. The IRS informed Boechler that the firm must file corrected forms or explain the discrepancy, or it would assess a Sec. 6721(e)(2)(A) penalty for failing to file a timely return, failing to include all required information, or including incorrect information. Boechler did not respond, and the IRS assessed the penalty.

In July 2016, the IRS notified Boechler of its intent to levy on its property to collect the penalty plus interest and sent a final notice of intent to levy in October 2016. Boechler requested and obtained a CDP hearing by the IRS Independent Office of Appeals. The Office of Appeals sustained the levy and on July 28, 2017, mailed a notice of determination that was delivered on July 31.

Sec. 6330(d)(1) states that, after a CDP determination, a 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)." Boechler's notice of determination from the CDP hearing stated that the firm had 30 days from the date of the determination (until Aug. 28, 2017) to submit a petition to the Tax Court. Boechler, however, submitted its petition on Aug. 29, 2017, one day after the 30-day deadline had expired.

The Tax Court held in an unpublished opinion that it lacked jurisdiction to hear the petition under Sec. 6330(d)(l)'s 30-day filing deadline because the deadline is jurisdictional and therefore cannot be equitably tolled. Boechler appealed the Tax Court's decision to the Eighth Circuit, which affirmed the Tax Court's holding (Boechler, PC, 967 F.3d 760 (8th Cir. 2020)). Boechler appealed the case to the Supreme Court, which agreed to hear the case.

Both Boechler and the IRS agreed that the parenthetical at the end of Sec. 6330(d)(1) grants the Tax Court jurisdiction over petitions for review of CDP determinations and that the provision imposes a 30-day deadline to file those petitions. The question for the Court was whether Sec. 6330(d)(1) limits the Tax Court's jurisdiction to petitions filed within the 30-day period. The answer to this question depended on the meaning of "such matter."

Boechler contended that "such matter" refers only to the immediately preceding phrase: a "petition [to] the Tax Court for review of such determination," making the filing deadline independent of the jurisdictional grant. The IRS argued that "such matter" refers to the entire first clause of the sentence, thus applying to the deadline and granting jurisdiction only over petitions filed within that time. Under this interpretation, the deadline is jurisdictional.

The IRS further argued that even if the provision were found to be nonjurisdictional, equitable tolling should not follow. In support of this proposition, it cited Brockamp, 519 U.S. 347 (1997), in which the Court found the Sec. 6511 limitation period on filing claims for credit or refund does not allow for equitable tolling.

The Supreme Court's decision

The Supreme Court reversed the Eighth Circuit's decision, holding that the Sec. 6330(d)(1) deadline was not jurisdictional and was subject to equitable tolling, and remanding the case to the Eighth Circuit for a determination of whether Boechler was entitled to equitable tolling based on the facts of the case.

The Court explained that not all procedural requirements are jurisdictional requirements that mark the boundaries of a court's judicial authority. Instead, many procedural requirements simply instruct a party to take certain procedural steps at certain specified times without making compliance with those steps a...