Tax Court allows equitable tolling of deadline to review CDP hearing. (collection due process)

• Author: Beavers, James A.
• Date: 01 December 2023

In wake of the Supreme Court's decision in Boechler, P.C., 142 S. Ct. 1493 (2022), regarding equitable tolling and the 30-day deadline for filing a Tax Court petition for review of a determination from a collection due process (CDP) hearing, the Tax Court held that equitable tolling applies to the 30-day deadline under Sec. 6320(a)(3)(B) to request a CDP hearing from the IRS Independent Office of Appeals (Appeals).

Background

Organic Cannabis Foundation LLC (Organic), a limited liability company taxed as a corporation, had unpaid tax for 2010, 2011, and 2018. The IRS issued notices of federal tax lien filings to Organic for all three years.

Organic timely requested a CDP hearing with Appeals during the 30-day period for requesting a hearing under Sec. 6320(a)(3)(B) (30-day period) for 2010 and 2011. However, Organic requested a hearing for 2018 after the 30-day period had expired. Appeals provided a CDP hearing for 2010 and 2011.

Appeals, having determined that Organic's hearing request for 2018 was untimely, provided an equivalent hearing under Regs. Sec. 301.6320-1(i)(1). An equivalent hearing generally follows the same procedures as a CDP hearing, and Appeals considers the same issues in an equivalent hearing as it would have at a CDP hearing on the same matter. However, after an equivalent hearing, instead of issuing a notice of determination, Appeals issues a document called a decision letter about its conclusions to sustain or proceed with the collection action at issue. A decision letter contains all the information that must be included in a notice of determination. However, unlike with a notice of determination, a taxpayer cannot seek the Tax Court's review of a decision letter.

As Appeals had held a CDP hearing only for 2010 and 2011, it issued a notice of determination that did not contain a determination for 2018. Organic, however, filed a Tax Court petition seeking the court's review for all three years. After Organic's petition was filed, Appeals issued a decision letter for 2018.

The IRS moved to dismiss the Tax Court petition as to the 2018 tax year for lack of jurisdiction because the Service had not made a determination the Tax Court could review under Sec. 6330(d)(1). Organic, pointing to the Supreme Court's decision in Boechler, argued that the 30-day period for requesting a CDP hearing under Sec. 6320(a)(3)(B) should be equitably tolled with respect to 2018 and that Appeals should have made a determination for 2018 that the Tax Court could review. The IRS argued that the 30-day period is a fixed jurisdictional deadline that is not subject to equitable tolling.

The Tax Court's decision

Overruling its previous decision in Kennedy, 116 T.C. 255 (2001), the Tax Court held that Appeals has authority under Sec. 6320 to hold...