A RARE TAXPAYER VICTORY IN THE U.S. SUPREME COURT
If a taxpayer files a case with a trial court one day late, is he automatically denied his day in court? As is the case with so many tax issues, it depends. If it is a jurisdictional deadline, then the deadline is immutable, and the court will not acquire jurisdiction to hear the case. If, on the other hand, the law creates a claims processing rule, then the trial court can waive the deadline through application of the principles of equitable tolling.
Traditionally, the U.S. Tax Court must receive a regular petition within 90 days of the deficiency notice. If it is late, even by only one day, the court will not acquire jurisdiction, and the case cannot be heard. But in 1998 Congress started allowing taxpayers to challenge and litigate certain types of collection case determinations. To hear these “collection due process” (CDP) cases, the Tax Court was conferred exclusive jurisdiction. In such cases, a petition for review must be filed within 30 days after an official administrative determination.
In the case before the Supreme Court, the IRS had assessed tax penalties against Boechler, PC, a small North Dakota law firm, and proposed to collect them through seizure of Boechler’s assets. Boechler filed a timely request for a CDP hearing before the IRS appeals office. Following receipt of an adverse determination, Boechler filed a petition for review by the Tax Court – unfortunately, on the 31st day, one day late. The Tax Court dismissed the petition because the law required it to be filed within 30 days. The Court of Appeals affirmed the Tax Court, holding that the filing deadline was jurisdictional and cannot be equitably tolled. The U.S. Supreme Court granted certiorari, agreeing to hear the case. A unanimous decision was handed down on April 21, 2022, reversing the Eighth Circuit. The Supreme Court said that the 30-day deadline was of the non-jurisdictional type. The case was remanded back to the Tax Court for a determination of whether Boechler is entitled to equitable tolling – that is, whether it had a good excuse for being one day late. We’ll see how that turns out.