Boechler v. Commissioner Begins a New Era in Tax Court Litigation by ROBERT HORWITZ
I am somewhat remiss in not writing sooner about the Supreme Court’s decision in Boechler, P.C. v. Commissioner, 142 S.Ct. 1493 (April 21, 2022). It may be the most significant procedural tax case in recent years, addressing whether time deadlines in the Internal Revenue Code (in this case the deadline for filing a collection due process (CDP) petition) are jurisdictional. To get to the punchline, the deadline for filing a CDP petition is not jurisdictional. Keith Fogg at Procedurally Taxing, posted a series of informative blogs about Boechler and its potential ramifications in the weeks following issuance of the Supreme Court’s opinion. You may want to read his take on the opinion. I’ll give you my take.
The facts in this case are simple. Boechler, P.C., is a Fargo, North Dakota law firm. The IRS assessed an intentional disregard penalty against Boechler. Subsequently, the IRS issued a CDP levy notice. Boechler made a timely request for a hearing with the Office of Appeals. Appeals issued a determination sustaining the IRS’s proposed levy action. Boechler had 30 days within which to petition the Tax Court for review of the determination. It filed its petition one day late. The Tax Court dismissed the petition for lack of jurisdiction and the Eighth Circuit affirmed. 967 F.3d 760 (2020). This deepened a circuit split over the question of whether the CDP statute’s deadline for petitioning the Tax Court was jurisdictional. Compare Duggan v. Commissioner, 879 F.3d 1029 (9th Cir. 2018) (deadline is jurisdictional) with Myers v. Commissioner, 928 F.3d 1025 (D.C. Cir. 2019) (deadline is not jurisdictional). The Supreme Court granted certiorari to resolve the circuit split.
Deadlines to sue the United States are viewed as a condition to the waiver of sovereign immunity. As such, courts have traditionally held such waivers to be jurisdictional. As a result, if a suit against the United States or a federal agency was filed late, the court had no jurisdiction and the case had to be dismissed. This began to change with the Supreme Court’s decision in Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990), where the Court held that (i) there was a rebuttable presumption that deadlines to sue the government can be equitably tolled, (ii) the deadline for bringing suit against the Department was subject to equitable tolling, (iii) that equitable relief, such as equitable tolling, was only applied sparingly, and (iv) the petitioner did not fall within the narrow category of cases where equitable tolling applied.
Beginning in the early 2000s, the Court began addressing the question of whether deadlines in a host of statutes for suing the Government were jurisdictional. If they were, equitable tolling, waiver, and similar concepts would not apply. The Court fashioned a rule that statutory deadlines are presumptively not jurisdictional and are subject to equitable tolling unless Congress has made a clear statement that the deadline is jurisdictional. United States v. Kwai Fun Wong, 575 U.S. 402, 409 (2015). Absent such a clear statement, courts are to treat the deadline as not jurisdictional. Sibelius v. Auburn Re’l Med. Center, 568 U.S. 145, 153 (2012).
It was against the backdrop of this line of cases that the Supreme Court considered whether the 30-day deadline for filing a CDP petition is jurisdictional and, if it is, whether it is subject to equitable tolling. If the deadline was jurisdictional, it could not be waived, it could be raised at any time, including by the court sua sponte, and was not subject to equitable exceptions. A procedural requirement is treated as jurisdictional “only if Congress ‘clearly states’ that it is.” A clear statement does not require the use of magic words. Instead, the courts are to apply traditional rules of statutory construction to determine whether a filing deadline or other procedural requirement is jurisdictional. The statutory language in question, IRC sec. 6330(d)(1), reads:
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 narrow question was to what did the parenthetical phrase apply? Did “such matter” refer to the phrase “petition the Tax Court for review of such determination,” as Boechler argued, or did it refer to the entire portion preceding the parenthetical, as the Commissioner argued. The Court stated that the statutory language did not clearly mandate the jurisdictional meaning, since there was no obvious antecedent for the phrase “such matter.” The phrase “such matter” could refer to more than just “petition” or the entire portion of the sentence preceding the parenthetical. It could refer to Appeals’ determination or the list of “matters” that can be considered in a CDP hearing, neither of which would make the filing deadline jurisdictional. The Court pointed out that other sections of the Code, such as sec. 6404(g)(1) (interest abatement) and sec. 6015(e) (innocent spouse relief), clearly tie the Tax Court’s jurisdiction to the taxpayer meeting a filing deadline. This was not the case here.
The Court acknowledged that the Commissioner’s interpretation was plausible, but this was not enough to make the filing deadline clearly jurisdictional. “To satisfy the clear statement rule, the jurisdictional condition must be just that: clear.” The Commissioner’s interpretation was not “clear.” It was not enough that the jurisdictional grant and the filing deadline appear in the same sentence. Proximity of the grant of jurisdiction and the filing deadline is not enough because “the important feature is the one that is missing here: a clear tie between the deadline and the jurisdictional grant.”
The Commissioner pointed to sec. 6330(e)(1), which gives the Tax Court jurisdiction to enjoin a levy or other collection proceeding only if “a timely petition has been filed under subsection (d)(1).” According to the Court, this provision may make the Commissioner’s argument better, but his “interpretation must be not only better, but clear.” Again, it was not clear that sec. 6330(d)(1)’s filing deadline was jurisdictional.
The Commissioner’s final and “weakest” argument was that when sec. 6330 was enacted, lower courts had consistently interpreted the analogous deficiency petition provisions of sec. 6213(a) as jurisdictional. The problems with this argument were that (i) the cases all predated the Supreme Court’s campaign “to bring discipline” to use of the term “jurisdictional” and (ii) none were Supreme Court cases.
Nonjurisdictional limitations are presumptively subject to equitable tolling and there was nothing that would rebut the presumption that the filing deadline of sec. 6330(d)(1) was subject to equitable tolling. Sec. 6330 was easily distinguishable from the deadline for filing a refund claim under sec. 6511, which the Court in United States v. Brockamp, 514 U.S. 347 (1997), held was not subject to equitable tolling. Sec. 6511 repeated the deadline for filing refund claims several times and contained a detailed list of six exceptions to the filing deadline. This indicated that there were no implied exceptions. Sec. 6330, on the other hand, contained only one statutory exception and played a far more limited role in the tax assessment and collection process.
The Court remanded the case for further proceedings, i.e., to determine whether equitable tolling applied in Boechler’s case.
The Court’s discussion of sec. 6213(a) raises the question whether the 90 (or 150) day deadline for filing a petition to redetermine a deficiency is jurisdictional. Prior to Boechler, the Tax Court and all Courts of Appeal that considered the issue, held that it was jurisdictional. Most recently, the Ninth Circuit in Organic Cannabis Foundation, LLC v. Commissioner, 962 F.3d 1082, rehearing den. 2020 U.S. App. LEXIS 27583 (2020), rejected the argument that under the Supreme Court’s recent line of cases on filing deadlines the deadline for filing a Tax Court petition was not jurisdictional. I believe this decision was wrong.
The language of sec. 6213(a) does not contain a “clear statement” that the deadline is jurisdictional. There are five sentences in that subsection. The first sentence provides that a taxpayer “may” file a petition during the 90-day period following the issuance of a notice of deficiency. The second sentence states that the IRS may not assess or collect a deficiency unless a notice of deficiency has been mailed to the taxpayer, and the IRS may not assess or collect a deficiency during the 90-day filing period or while a Tax Court proceeding is pending. The third sentence states a taxpayer may sue to enjoin improper assessment or collection of a deficiency. The fourth sentence states the Tax Court lacks jurisdiction to enjoin a proceeding or order a refund unless a petition is timely filed. Finally, the fifth sentence states any petition filed with the Tax Court on or before the last day specified for filing by the IRS in the notice of deficiency shall be treated as timely filed.
The provision granting the Tax Court jurisdiction over a petition challenging a notice of deficiency is in sec. 6214(a), which states:
Except as provided by section 7463, the Tax Court shall have jurisdiction to redetermine the correct amount of the deficiency even if the amount so redetermined is greater than the amount of the deficiency, notice of which has been mailed to the taxpayer, and to determine whether any additional amount, or any addition to the tax should be assessed, if claim therefor is asserted by the Secretary at or before the hearing or a rehearing.
This section does not tie the Tax Court’s jurisdiction to a timely filed petition. Nor does the fourth sentence of sec. 6213(a) make the filing of a petition within 90-days of the notice of deficiency jurisdictional. If the court holds that the deadline was equitably tolled, or that the Commissioner waived the defense that the petition was untimely, it is timely and the Tax Court would have jurisdiction to enjoin collection or order a refund.
As Keith Fogg pointed out in one of his blog posts, treating the filing deadline in sec. 6213(a) as not jurisdictional will not impose any additional work on either the Tax Court or IRS Counsel. Currently if the Tax Court sua sponte raises the issue of whether a petition was timely, or if the Commissioner moves to dismiss because the petition was not timely, the taxpayer is given an opportunity to respond. If the taxpayer establishes that the petition was filed timely, the petition will not be dismissed. If the deadline is not jurisdictional, unless the taxpayer establishes that either (a) the petition was filed within the 90-day period or (b) grounds exist for tolling the deadline, the petition will be dismissed.
The Tax Court will soon address whether sec. 6213(a)’s filing deadline is jurisdictional in Hallmark Research Collective v. Commissioner, Docket No. 21284-21, where on May 2, 2022, the taxpayer filed a motion to vacate an order dismissing its petition for lack of jurisdiction. The Tax Court has ordered the Commissioner to respond to the motion by June 23, 2022, and the taxpayer to reply by July 22, 20122. Judge Gustafson is assigned to rule on the motion.
Other provisions of the Code will be impacted by the Boechler decision. The deadlines for filing suits for refund of tax under sec. 7422 and suits for wrongful levy under sec. 7426 are contained in sec. 6532, which does not mention jurisdiction and nothing in either sec. 7422 or 7426 refers to the period for filing suit contained in sec. 6532. Other sections include sec. 6234 (judicial review of BBA partnership adjustments), former sec. 6226 (judicial review of TEFRA partnership adjustments), sec. 7428 (declaratory judgment action to determine status as a sec. 501(c)(3) organization), sec. 7429 (judicial review of jeopardy and termination assessments), sec. 7431 (action for illegal disclosure or return information), and sec. 7436 (proceeding to determine employment status). Many of these sections do not have any language in them tying jurisdiction to the time for filing an action.
Both IRS counsel and DOJ Tax Division attorneys have been trained to view the filing deadlines for judicial proceedings against the Government as jurisdictional. If a plaintiff (in district court or Court of Federal Claims) or a petitioner in a Tax Court proceeding did not file the complaint or petition by the statutory due date, the attorney would file a motion to dismiss for lack of jurisdiction and the court would dismiss the case. This could be done at any time during the case, even while an appeal was pending. In United States v. Brockamp, 519 U.S. 347 (1997), the Court held that the time period for filing a claim for refund with the IRS was jurisdictional, based upon an analysis of the language of Code sec. 6511. We can anticipate that the IRS in Tax Court and DOJ in district courts, the Court of Federal Claims and courts of appeal will argue that Boechler is inapplicable to cases brought under provisions of the Code other than sec. 6330. Whether the courts will reject such arguments remains to be seen, but Boechler demonstrates that the Supreme Court is “not inclined to carve out an approach … good for tax law only.” Mayo Foundation v. United States, 562 U.S. 44, 55 (2011). Get used to it.