Analysis of and reflections on recent cases and rulings.

• Author: Beavers, James A.

Practice & Procedures

90-day deadline for filing Tax Court petition in deficiency case is jurisdictional

Despite the Supreme Court's decision in Boechler, 142 S. Ct. 1493 (2022), holding that the Sec. 6330(d)(1)(a) 30-day deadline to file a petition for review of a Collection Due Process (CDP) hearing was a nonjurisdictional deadline subject to equitable tolling, the Tax Court held, based on the text, context, and relevant historical treatment of Sec. 6213(a), that the 90-day deadline to file a Tax Court petition in a deficiency case is jurisdictional and not subject to equitable tolling.

Background

Hallmark Research Collective is a California corporation. The company filed its 2015 return late and did not file a 2016 return. The IRS prepared a substitute for return for 2016 for Hallmark. On June 3, 2021, the IRS sent the company a statutory notice of deficiency for 2015 and 2016.

The notice of deficiency stated in its front-page caption that the last day to file a petition challenging the IRS's determinations in the notice of deficiency was Sept. 1, 2021. Despite the IRS's clear statement of the filing deadline, Hallmark did not file a petition challenging the deficiencies asserted in the notice of deficiency until Sept. 2, one day after the filing deadline. In its petition, Hallmark gave as an excuse for the late filing that its CPA had contracted COVID-19. The Tax Court, following its long-standing precedent that the Sec. 6213(a) filing deadline is jurisdictional, dismissed the case for lack of jurisdiction.

Three weeks after the Tax Court dismissed the case, however, the Supreme Court handed down its decision in Boechler, 142 S. Ct. 1493 (2022). In that case, the Court held that "Section 6330(d)(1)'s 30-day time limit to file a petition for review of a collection due process determination is an ordinary, nonjurisdictional deadline subject to equitable tolling."

In response to the Boechler decision, Hallmark quickly filed a motion to vacate the Tax Court's decision, in which it argued that the Supreme Court's reasoning in Boechler compelled the conclusion that the Sec. 6213(a) deadline for deficiency cases is also not jurisdictional and is therefore subject to equitable tolling.

The Tax Court's decision

The Tax Court denied Hallmark's motion to vacate, holding that the timely filing of a petition in a deficiency case is a jurisdictional requirement. After reviewing the Supreme Court's opinion in Boechler, the court found that the reasoning in that case that applied to the 30-day deadline in Sec. 6330(d)(1) for CDP hearings did not apply to the 90-day deadline for filing a petition with the Tax Court in a deficiency case under Sec. 6213(a). Based on an analysis of the text, context, and relevant historical treatment of Sec. 6213(a), the court concluded that the statute clearly states that the deadline is jurisdictional and, consequently, equitable tolling does not apply to it.

Effect of the Boechler decision: Hallmark argued that the Supreme Court's reasoning in Boechler compelled the conclusion that the 90-day deadline in Sec. 6213(a) for deficiency cases was not jurisdictional because Sec. 6330(d)(1) closely resembles Sec. 6213(a). The Tax Court, however, found that "Boechler emphatically teaches that these are different sections. Each must be analyzed in light of its own text, context, and history." Therefore, the Tax Court determined it must separately analyze Sec. 6213(a) and could not simply rely on the Supreme Court's reasoning with respect to whether the deadline in Sec. 6330(d)(1) is jurisdictional to determine whether the deadline in Sec. 6213(a) is jurisdictional.

Standard for Tax Court's analysis: The Tax Court first discussed the standard for determining whether a deadline is a jurisdictional rule that cannot be tolled or waived, or if it is a claims-processing rule that is subject to equitable tolling. To be a jurisdictional rule, according to the court, "an analysis employing the principles of statutory construction must show that the rule 'clearly states' it is jurisdictional." In performing this analysis, the Supreme Court has held that a court should examine the text, context, and relevant historical...