Tax Court Rejects Nonjurisdictional Claim (Sec 6213) 90-Day NOD

Tax Court Rejects (NOD) Nonjurisdictional Argument

Recently, in the case of Boechler, the Supreme Court held that in a situation in which after a Collection Due Process Hearing was held — and the Taxpayer then receives a 30-day notice to petition the tax court — the statute is considered nonjurisdictional. Therefore, if even the petition to the US Tax Court was filed late, it will not automatically prevent the Court from hearing the case; this is referred to as equitable tolling. In the recent case of Hallmark Research Collective, petitioners tried to take the same position on a Notice of Deficiency Letter (aka NOD Letter) 90- which is a 90-day letter to file a petition for tax court. The petitioners missed the deadline by one day and filed the petition on the 91^st day. The tax court rejected the argument that the 90-day letter is non-jurisdictional and instead takes the position that unlike 26 USC 6330 (30-day, Post CDP), 26 U.S.C. 6213 is jurisdictional — and cannot be equitably tolled. Let’s take a brief look at the statute and what the tax court had to say about it:

26 USC 6213(a)

(a)Time for filing petition and restriction on assessment

• • • Within 90 days, or 150 days if the notice is addressed to a person outside the United States, after the notice of deficiency authorized in section 6212 is mailed (not counting Saturday, Sunday, or a legal holiday in the District of Columbia as the last day), the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency. Except as otherwise provided in section 6851, 6852, or 6861 no assessment of a deficiency in respect of any tax imposed by subtitle A, or B, chapter 41, 42, 43, or 44 and no levy or proceeding in court for its collection shall be made, begun, or prosecuted until such notice has been mailed to the taxpayer, nor until the expiration of such 90-day or 150-day period, as the case may be, nor, if a petition has been filed with the Tax Court, until the decision of the Tax Court has become final.

    • Notwithstanding the provisions of section 7421(a), the making of such assessment or the beginning of such proceeding or levy during the time such prohibition is in force may be enjoined by a proceeding in the proper court, including the Tax Court, and a refund may be ordered by such court of any amount collected within the period during which the Secretary is prohibited from collecting by levy or through a proceeding in court under the provisions of this subsection.

    • The Tax Court shall have no jurisdiction to enjoin any action or proceeding or order any refund under this subsection unless a timely petition for a redetermination of the deficiency has been filed and then only in respect of the deficiency that is the subject of such petition. Any petition filed with the Tax Court on or before the last date specified for filing such petition by the Secretary in the notice of deficiency shall be treated as timely filed.

Key Excerpts from the Tax Court Ruling

• • • Where a federal court’s subject-matter jurisdiction depends on a timely filing, “a litigant’s failure to comply with the bar deprives a court of all authority to hear a case”. United States v. Kwai Fun Wong, 575 U.S. 402, 408–09 (2015). Courts must enforce the deadline sua sponte; the deadline cannot be tolled or waived; and there is no room for equitable exceptions to be made on account of the specific facts of a case. Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006). Late-filed cases in such instances must be dismissed for lack of jurisdiction. Id.

    • However, Congress must “clearly state[]” that a filing deadline is jurisdictional; and absent such a clear statement, “courts should treat the restriction as nonjurisdictional in character.” Arbaugh, 546 U.S. at 515–16. “Congress must do something special, beyond setting an exception-free deadline, to tag a statute of limitations as jurisdictional and so prohibit a court from tolling it.” Kwai Fun Wong, 575 U.S. at 410. Congress “need not use magic words”, Henderson, 562 U.S. at 436, and a statutory deadline may be jurisdictional even without the word “jurisdiction”, see, e.g., Bowles, 551 U.S. at 208–10 (holding 28 U.S.C. § 2107(a) and (c) to be jurisdictional); United States v. Brockamp, 519 U.S. 347, 350–51 (1997) (holding section 6511 to be jurisdictional); but the “traditional tools of statutory construction must plainly show that Congress imbued a procedural bar with jurisdictional consequences”, Kwai Fun Wong, 575 U.S. at 410.

Tax Court Finds that 6213 Authorization is Clear

• • • Section 6213(a) authorizes the taxpayer to postpone the IRS’s assessment of a deficiency it has determined by filing a deficiency petition in the Tax Court within the 90-day period, and it thereby gives the Tax Court jurisdiction to adjudicate that petition. By the first sentence of section 6213(a), Congress created a class of cases—deficiency cases—and specified the time period within which to file them. See Bowles, 551 U.S. at 212–13 (“Because Congress decides whether federal courts can hear cases at all, it can also determine when, and under what conditions, federal courts can hear them.”).

    • No court has ever questioned whether the Tax Court has deficiency jurisdiction, and no court has ever held that the basis for that jurisdiction is any statute other than section 6213(a). As we stated above, the prerequisites for a Tax Court deficiency case are (1) a valid notice of deficiency issued by the Commissioner and (2) a petition timely filed by the taxpayer. See supra note 4 and accompanying text. Each of these prerequisites has a clear basis in the statutory text, and as we will show, both are jurisdictional.

90-day Deadline is Firmly Entrenched in the Statute

• • • The 90-day deadline is embedded in the jurisdictional grant in sentence 1. The 90-day deadline is imposed in the jurisdictional statute, section 6213(a). Admittedly, a requirement “does not become jurisdictional simply because it is placed in a section of a statute that also contains jurisdictional provisions”. Auburn, 568 U.S. at 155. On the other hand, “Congress’s separation of a filing deadline from a jurisdictional grant often indicates that the deadline is not jurisdictional”, Kwai Fun Wong, 575 U.S. at 403; whereas the 90-day deadline at issue here is not just “in a section of” the jurisdictional statute but is in the same sentence as, and is embedded in, the jurisdictional grant: “Within 90 days . . . the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency.”

    • We therefore construe the placement of the deadline in the jurisdictional statute as some indication that the 90-day deadline may be jurisdictional, and we continue our analysis

    • The injunction provision in sentence 4 of section 6213(a) suggests that “jurisdiction” depends on timeliness. Section 6213(a) must be construed as a whole,12 and sentence 4 clarifies that deficiency “jurisdiction” (conferred in sentence 1) depends on a petition’s timeliness, and implies the jurisdictional character of the deadline provided in sentence 1. Cf. Zipes, 455 U.S. at 393–94 (“The provision granting district courts jurisdiction under Title VII, 42 U.S.C. §§ 2000e–5(e) and (f), [unlike section 6213(a),] does not limit jurisdiction to those cases in which there has been a timely filing with the EEOC. It contains no reference to the timely-filing requirement.

Court Summary on the Ruling

• • • This history of reenactments of and amendments to section 6213(a) demonstrates that Congress’s intention is to provide an adequate but strict timeframe within which a taxpayer may file a deficiency petition in the Tax Court. Congress has given taxpayers certain liberalizing adjustments to the last day of the deadline but has also made clear the deadline’s finality. Furthermore, section 6213(c), providing that “[i]f the taxpayer does not file a petition with the Tax Court within the time prescribed in subsection (a), the deficiency . . . shall be assessed, and shall be paid upon notice and demand”, has remained constant.

    • This historical treatment of section 6213 reflects an intention of Congress, remarkably persistent over the past century, that, in balancing the rights of the taxpayer and the interests of the Government, the deficiency assessment regime give the taxpayer an adequate time within which to file a deficiency petition, but that (1) a taxpayer’s failure to do so within the prescribed time will foreclose the opportunity to litigate his deficiency before the Tax Court, (2) the deficiency not timely petitioned will be assessed so that the IRS may begin collection, and (3) the taxpayer’s remaining remedy is to pay the assessment and sue for a refund.30 Consistent with that regime, the Tax Court and the circuit courts of appeals31 have expressly and uniformly treated the deadline of section 6213 as jurisdictional. Congress—presumptively aware of this treatment by the courts—has preserved the operative text in section 6213 through every reenactment and amendment, thereby carrying forward that interpretation. The 90-day deadline of section 6213(a) is therefore, as in Bowles, a limitation imposed by Congress for access to courts which has been uniformly construed and enforced as such for a “century’s worth of precedent and practice in American courts.”

Court’s Conclusion

• • • Section 6213(a) clearly states that its 90-day deadline is jurisdictional, as indicated by its text, context, and uniform treatment during its long history. Congress has limited the Tax Court’s deficiency jurisdiction to only those cases in which a petition is timely filed, and we do not have authority to extend the deadline in section 6213(a) by equitable tolling. Late-filed deficiency petitions must therefore be dismissed for lack of jurisdiction.

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