IRS Accepts Guralnik Holding in Another Case Where the Clerk’s Office Was Closed

15 Flares Filament.io 15 Flares ×

We welcome back frequent guest blogger Carl Smith.  Carl writes today about another case involving timely filing with the Tax Court.  He explains why the Tax Court will likely find the case timely based on its new precedent and points out the apparent IRS acceptance of the new precedent.  Carl states that he would not argue for equitable tolling in a case like this because it is a deficiency case and because the Court gave prior notice of the closing.  I agree with Carl on the issue that it is a deficiency case.  While acknowledging that statements by a Court are not a usual basis for equitable tolling, the statement issued by the Tax Court concerning its closing could lead pro se petitioners and perhaps practitioners to believe that special days the Tax Court closes that are not government holidays but which it says will be treated as such for purposes of computing time under Rule 25 give a petitioner extra time to file their Tax Court petitions.  Keith

One of the big questions after the IRS on June 2 lost the Tax Court’s opinion in Guralnik v. Commissioner, 145 T.C. No. 15, unanimously en banc was whether the IRS would pursue the arguments it made in that case in other Tax Court cases and eventually try to seek appellate court review of the Tax Court’s holding.  After all, the IRS’ cumulative motion papers in Guralnik exceeded 100 pages and pointed out that several previous unpublished orders of the court involving dates on which the Tax Court Clerk’s Office was closed had come out the other way.  In its Guralnik filings, the IRS was pretty steamed about a potential loss.

In Guralnik, as Bryan Camp blogged here, the Tax Court held that when its Clerk’s Office was closed (there, because of a snowstorm), the last date to file was moved to the next business day when the office was open.  The Tax Court imported this rule from the FRCP because both the Internal Revenue Code and Tax Court Rule 25 did not address non-holiday Clerk’s Office closing days.

An August 18 filing in the Tax Court in Parkinson v. Commissioner, Docket No. 296-15 indicates that the IRS has decided to throw in the towel and simply live with the Tax Court’s Guralnik holding.

read more...

The facts of Parkinson are as follows:  The IRS mailed Mr. Parkinson a notice of deficiency on October 3, 2014 for his 2005, 2007, and 2008 income taxes.  Ninety days from that date would have been Thursday, January 1, 2015, which, of course, was a holiday, New Year’s Day.  Thus, section 7503 would have made the last day to file Friday, January 2, 2015 (the next business day after a Saturday, Sunday, or legal holiday in the District of Columbia).

Rather than simply put his Tax Court petition in the U.S. mails (which would have completely avoided any problem), on December 31, 2014, Mr. Parkinson, acting pro se, sent his petition to the Tax Court by FedEx First Overnight service.  That service – the same one used by Mr. Guralnik – was not, at the time, a designated service under section 7502(f) that got the benefit of the timely-mailing-is-timely-filing rules of section 7502(a) applicable to use of the U.S. mails.  (But, since May 6, 2015, FedEx First Overnight is now a designated service.)

FedEx would have delivered the petition to the Tax Court on January 2, but for the fact that the Clerk’s Office was closed.  As often happens at Thanksgiving, Christmas, and New Year, the Tax Court closes to make 4-day weekends.  Indeed, on December 10, the Tax Court had issued notice to the public that the Clerk’s Office would be closed on January 2, 2015.  The notice read as follows:

The United States Tax Court will be closed on Friday, December 26, 2014, and Friday, January 2, 2015.

For purposes of computation of time under Rule 25, Tax Court Rules of Practice and Procedure, December 26, 2014, and January 2, 2015, shall each be treated in the same manner as a legal holiday. See Rule 25 (a) (2) ånd (b), Tax Court Rules of Practice and Procedure.

Actually, the second paragraph of this notice was wrong, since Tax Court Rule 25 doesn’t contain a provision indicating that any date that the Clerk’s Office is closed is treated as a legal holiday for purposes of section 7503.  That is one of the issues that was litigated in Guralnik, where the court held that a date that the Clerk’s Office was closed for a snowstorm was not a legal holiday for purposes of section 7503.

FedEx delivered Mr. Parkinson’s petition to the Tax Court on Monday, January 5, 2015.

The IRS initially raised no question about the timelines of the petition’s filing.  But, on July 7, 2015, the Tax Court itself raised the issue.  In an order issued that date, the Court noted the possible late filing and ordered the parties to show cause why the petition should not be dismissed for lack of jurisdiction on the grounds of untimeliness.  Although I have not seen it, I believe that the IRS, in its response filed July 28, 2015, argued what it was then arguing in Guralnik – that a day that the Clerk’s Office closed was not to be treated as a holiday for purposes of section 7503 unless it was one of the stated holidays listed in Tax Court Rule 25(b).

On May 28, 2015, Chief Judge Thornton issued an order assigning the Guralnik case to Special Trial Judge Armen to decide the motion to dismiss in that case.  Recognizing that Parkinson presented possibly the same issue, the Chief Judge apparently just stuck the Parkinson case in a drawer to await the ruling in Guralnik – a ruling eventually written by Judge Lauber.

The Guralnik opinion was issued on June 2, 2016.  It held that a day that the Tax Court Clerk’s Office was closed that was not a legal holiday in the District of Columbia should still not be treated as the last day to file.  Rather, importing a rule from the FRCP, the Tax Court held that if the last day to file had otherwise fallen on such a day, the last day to file would be moved to the next business day when the Clerk’s Office was open.

On August 1, 2016, now Chief Judge Marvel issued an order in Parkinson directing each party to “set forth and discuss fully that party’s position as to the possible application, if any, to this case of Guralnik v. Commissioner.”

On August 18, 2016, the IRS filed a response stating, in part:  “The petition in this case was timely filed. . . .  It is respondent’s position that this case should not be dismissed for lack of jurisdiction.”  This is the first indication that the IRS is not going to fight the Guralnik holding in the Tax Court or any appellate court.

The Tax Court has not yet issued its ruling in Parkinson, but the court is likely to rule that it has jurisdiction, based on its holding in Guralnik, which would have pushed the last date to file all the way to Monday, January 5, 2016, since the Clerk’s Office was closed on Friday, January 2, 2015.

Observations 

Parkinson is a deficiency case.  Guralnik was a Collection Due Process (CDP) case.  But the reasoning of the Tax Court in Guralnik did not depend upon which jurisdiction underlay the case.

Nor did the Guralnik holding turn on whether the Clerk’s Office closure was something that was unexpected (e.g., from a snowstorm) or long-anticipated (e.g., a closing to make a 4-day weekend, announced 3 weeks in advance).  In some ways, practitioners may see Parkinson as an extension of Guralnik, since many might have expected that an unanticipated snow day should get more compassion than a long-foreseeable Clerk’s Office closing day.

The instinct of greater compassion for a snow day is one based on equity.  Keith and I had made an argument in Guralnik (as amicus) that the 30-day period in section 6330(d)(1) in which to file a CDP petition is not jurisdictional and is subject to equitable tolling in an appropriate case, such as the unexpected snow day situation involved there.  My personal view is that equitable tolling would have no application in Parkinson, since the Clerk’s Office closing in Parkinson should have been taken into account by any petitioner.  It was not an unexpected circumstance beyond the petitioner’s control (one of the common grounds for equitable tolling).  Further, Keith and I don’t believe that the 90-day period to file a deficiency petition is subject to equitable tolling.  We make a distinction between the two jurisdictions.  There is a clearer statement that the section 6213(a) time period is jurisdictional.  For one thing, the legislative history of an amendment to section 6213(a) in 1998 called the time period therein “jurisdictional”.  In contrast, Congress in December 2015 called the CDP and section 6015(e)(1)(A) time periods to file “periods of limitations”.  Equitable tolling typically applies to periods of limitations, but cannot apply to a filing limit that is jurisdictional.

I’ll have a lot more to say about the argument that Keith and I made in Guralnik in a later post.  Suffice it to say that, respectfully, like Bryan Camp, Keith and I are not persuaded by the portion of the Tax Court’s opinion there holding that under current Supreme Court case law, the 30-day period in which to file a CDP petition is jurisdictional and not subject to equitable tolling.  We have some appellate test cases in the works both as to the CDP filing period and the section 6015 filing period.  Those will be discussed in a post coming out shortly.

Comment Policy: While we all have years of experience as practitioners and attorneys, and while Keith and Les have taught for many years, we think our work is better when we generate input from others. That is one of the reasons we solicit guest posts (and also because of the time it takes to write what we think are high quality posts). Involvement from others makes our site better. That is why we have kept our site open to comments.

If you want to make a public comment, you must identify yourself (using your first and last name) and register by including your email. If you do not, we will remove your comment. In a comment, if you disagree with or intend to criticize someone (such as the poster, another commenter, a party or counsel in a case), you must do so in a respectful manner. We reserve the right to delete comments. If your comment is obnoxious, mean-spirited or violates our sense of decency we will remove the comment. While you have the right to say what you want, you do not have the right to say what you want on our blog.

Speak Your Mind

*