Law is rife with deadlines. Indeed, sometimes those deadlines are critical and outcome determinative. Abiding deadlines can mean the difference between having a case heard or a case dismissed, or a taxpayer’s rights being vindicated or not even considered due to timing. As this case highlights, even being a single day late can have big consequences, such as depriving a court of jurisdiction.
A recent Tax Court case examines one of the key deadlines in tax controversy work—§ 6213, which provides 90 days to file a deficiency petition in the Tax Court.
In short, the Tax Court was faced with determining whether this deadline is “jurisdictional,” meaning even missing the deadline by a single day deprives the court from the ability to hear the case. The Tax Court said “Yes.”
As relevant here, § 6213 provides in part, “[w]ithin 90 days . . . 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.” (Note that this period is 150 days if the notice is addressed to a person outside the United States.)
In the case, the Tax Court framed the issue in the case as “whether section 6213(a) limits the Tax Court’s jurisdiction to deficiency petitions filed on or before that deadline.”
Although the facts presented in the case are more detailed, here is what essentially happened. A California corporation filed its 2015 return untimely and did not file a 2016 return. Thus, the IRS prepared a substitute for return for 2016. Later, the IRS issued a notice of deficiency for 2015 and 2016.
The corporation filed a petition for redetermination of the deficiencies but did so a single day late (it literally missed the deadline by a single day). In its filing, the corporation noted that its CPA had contracted COVID and asked for grace in the late filing. The Tax Court assumed, for purposes of its opinion, that “[the corporation] was not to blame for the late filing and that equitable considerations, if taken into account, might excuse the untimeliness.”
The Tax Court issued a show cause order for the parties to explain why the petition should not be dismissed for not being timely filed. The corporation argued that the § 6213 deadline is functionally equivalent to the § 6330(d) deadline, which the Supreme Court was considering in the then-pending Boechler case. The Commissioner asserted there was no reason why the case should not be dismissed.
The Tax Court then entered an order dismissing the case for lack of jurisdiction, holding the 90-day deadline was jurisdictional.
After that order, the Supreme Court issued its opinion in Boechler, which held that “[s]ection 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.”
Consequently, the corporation filed a motion for the Tax Court to vacate the dismissal, arguing that the reasoning in Boechler meant the 90-day deadline of § 6213(a) was not jurisdictional and was therefore subject to equitable tolling.
The Tax Court started its analysis by noting the difference between “jurisdictional rules” and “claim processing rules.” It noted that a failure to comply with jurisdictional rules removes the court’s authority to hear the case. Claim-processing rules, though, help promote the orderly resolution of litigation; failure to abide these rules, the court explained, do not deprive the court’s authority to hear the case.
Recognizing that distinction, the Tax Court noted that filing deadlines are typically claim-processing rules. Thus, deadline-based claim-processing rules are subject to a presumption of the availability of equitable tolling.
The Tax Court then explained that because Congress can determine a lower court’s jurisdiction, it can also determine the conditions under which courts can hear those cases. Therefore, Congress can make a claim-processing rule jurisdictional in nature, such as prohibiting the hearing of a class of cases after a specified period. For this to be the case, though, Congress must be clear about making the filing deadline jurisdictional in nature.
In examining whether Congress has made clear that a filing deadline is jurisdictional, the Tax Court turned to the ‘“text, context, and relevant historical treatment’ of the provision at issue.” Musacchio v. United States, 577 U.S. 237, 246 (2016) (quoting Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 166 (2010)).
The Tax Court then explained features of statutes that meet this requirement. For example, the statutes speak in jurisdictional terms of the court, or they define the court’s jurisdiction. Additionally, due to context and long-standing interpretation, it reflects that Congress has “imbued” the deadline with “jurisdictional consequences.”
The Tax Court then proceeded with a lengthy analysis of § 6213(a). Some of the highlights will be mentioned.
First, the court explained that the Tax Court is the exclusive forum for tax deficiency cases (i.e., cases in which the taxpayer can be heard without first paying the tax). Second, the court noted that § 6213(a) is the jurisdictional grant to the Tax Court. The court unpacked this by noting that § 7442 is the section in which Congress describes generally the Tax Court’s jurisdiction; this section, though, provides that the Tax Court has jurisdiction to the extent conferred by other sections; the section that grants specific deficiency jurisdiction, as explained by the court, is § 6213(a). Third, the court explained that the placement and context of the 90-day limitation in § 6213(a) shows it is jurisdictional. Here, among other things, the court emphasized that the 90-day deadline is embedded in the jurisdictional grant of § 6213(a). Fourth, the court also noted that other code sections echo a jurisdictional nature of the 90-day deadline. For instance, § 7459 provides the collateral consequences of a petition being dismissed, but § 7459(d) provides an exception for petitions that are dismissed for “lack of jurisdiction.” Fifth, the court also highlighted the historical treatment of § 6213 by Congress and the circuit courts of appeal further support the jurisdictional treatment. Here, the court noted that, for over 100 years, Congress has “left substantially unchanged the wording of its jurisdictional grant,” and that this deadline has been “uniformly construed” as jurisdictional by circuit courts of appeals.
The court then discussed and countered the remaining arguments by the petitioner that § 6213 is not jurisdictional.
In sum, the Tax Court held that
“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.”
It’s worth noting that missing the 90-day deadline—even if jurisdictional in nature—does not mean a taxpayer is without judicial recourse; it means the taxpayer cannot file the deficiency petition in the Tax Court. There are other judicial venues for federal tax disputes, though. The taxpayer can file a claim in federal district court or the United States Court of Federal Claims. These claims are known as “refund claims,” as the taxpayer now must first pay the tax (unlike in the Tax Court) and then sue for a refund of the money.
The Tax Court case is Hallmark Research Collective v. Comm’r, 159 T.C. No. 6 (Nov. 29, 2022).
This is only a summary of the case and some portions—including facts, issues, citations, or analysis—may have been omitted or edited; if you need advice in this area, please review the case in its entirety and consult an attorney.