Editor: James A. Beavers, CPA, CGMA, J.D., LL.M.
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 P.C., 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The Tax Court held in an unpublished opinion that it lacked jurisdiction to hear the petition under Sec. 6330(d)(1)'s 30-day filing deadline because the deadline is jurisdictional and therefore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, P.C., 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 condition of the court's authority to hear the case. This distinction is important, the Court stated, because jurisdictional requirements cannot be waived or forfeited, must be raised by courts without prompting from the parties to a case, and do not allow for equitable exceptions. The Court, citing Arbaugh v. Y&H Corp., 546 U.S. 500 (2006), noted that a clear statement by Congress that a procedural requirement is jurisdictional is required for a procedural requirement to be jurisdictional (the clear-statement rule).
Looking at the text of Sec. 6330(d)(1), the Court found that, while the phrase "such matter" lacks a clear grammatical antecedent in the statute, Boechler's interpretation was more plausible than the IRS's. The broader statutory context, moreover, also supports considering the limit nonjurisdictional, the Court said, noting that other, contemporaneously enacted and similar time limits make their jurisdictional intent much more explicit. For example, Sec. 6404(g)(1) and Sec. 6015(e)(i)(A) both couch the Tax Court's jurisdiction as conditional, the former stating "if such action is brought within 180 days" and the latter "if such petition is filed during the 90-day period." "These provisions accentuate the lack of comparable clarity in §6330(d)(1)," the Court stated.
The Court also found that the interpretation of a statute must be clear to satisfy the clear-statement rule, and it is not enough that the interpretation be plausible or that some observers might think the interpretation is better. It concluded that the IRS's interpretation was not clear. In addition, the Court determined, contrary to the IRS's argument, a requirement is not made jurisdictional by the mere presence in the same section of a statute of a jurisdictional provision (Sebelius v. Auburn Regional Medical Center, 568 U.S. 145 (2013)). "Rather than proximity, what is needed is a clear tie between the deadline and the jurisdictional grant," the Court stated.
The Court also rejected the IRS's contentions that the jurisdictional nature of the provision was clarified by the nearby provision, Sec. 6330(e)(1). It further determined that the timing of the enactment of Sec. 6330(d)(1), which occurred when Congress was aware of lower court cases regarding a similar provision, Sec. 6213(a), did not have any bearing on whether the provision was jurisdictional.
Regarding equitable tolling, the Court, citing Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990), found that equitable tolling presumptively applies to nonjurisdictional limitation periods and that nothing rebutted that presumption with respect to Sec. 6330(d)(1).
The IRS, citing Brockamp, in which the Court held equitable tolling did not apply to the Sec. 6511 refund claim deadline, argued that equitable tolling should not apply to the Sec. 6330(d)(1) deadline. The Court, however, found Brockamp did not support the IRS's argument, because Sec. 6511 and Sec. 6330(d)(1) differ from one another in both expression and scope. The Sec. 6511 deadline is stated in "unusually emphatic form" and "detailed technical language" with numerous exceptions, none of which is present in Sec. 6330(d)(1). And far fewer taxpayers are affected by Sec. 6330(d), which "serves a far more limited and ancillary role in the tax collection system," the Court said.
Finally, the Court rejected the IRS's arguments that equitable tolling of Sec. 6330(d)(1) would leave uncertainty as to whether the IRS could proceed with collection after the deadline had passed. The Court, pointing to the relatively smaller number of taxpayers involved, stated that it was not convinced that the possibility for equitable tolling with respect to Sec. 6330(d)(1) would add to the uncertainty already present in the process.
Reflections
While the Court discounted the IRS's arguments that equitable tolling relief will now encumber the Tax Court's docket, at least one other taxpayer requested a reconsideration soon afterward, as blogger Keith Fogg has pointed out at procedurallytaxing.com. On May 2, Hallmark Research Collective filed a motion to vacate the Tax Court's April 1, 2022, dismissal of its petition for lack of jurisdiction. Although that motion and a legal memorandum concern a different petition filing deadline, the 90-day limit for a redetermination of a deficiency under Sec. 6213(a), the taxpayer argues that Boechler has now established a standard and analysis that should be employed in determining whether a statutory deadline is jurisdictional.
Boechler, P.C., No. 20-1472 (U.S. 4/21/22)
Contributors James A. Beavers, CPA, CGMA, J.D., LL.M., is The Tax Adviser’s tax technical content manager. Paul Bonner is The Tax Adviser’s senior news writer. For more information on this article, contact thetaxadviser@aicpa.org.
