Search Results for: "What’s Wrong with the Tax Court’s Hallmark Opinion"

In Kontrick v. Ryan, 540 U.S. 443, 455 (2004), the Supreme Court noted that both it and lower courts had often carelessly overused the word “jurisdictional”, and the Court sought to bring some discipline to the word by saying that, henceforth, claim-processing rules would not be jurisdictional.  In Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), however, the Court admitted that there should be an exception where Congress clearly stated that it wanted a claim-processing rule to be jurisdictional.  The Court set out what it called a “readily administrable bright line” test for this exception, to avoid the usual litigation over what Congress intended:  “If the Legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue.”  Id. at 515-516 (footnote and citation omitted).

In its opinion in Bowles v. Russell, 551 U.S. 205 (2007), the Supreme Court first found a deadline jurisdictional without there being a “clear statement” in the statute that Congress intended the deadline to be jurisdictional.  The statute was at 28 U.S.C. § 2107(c), which sets out the deadline to file an appeal from a civil court judgment to the courts of appeal.  Bowles was an early opinion in the Supreme Court’s attempt to bring discipline to the use of the word “jurisdictional”.  Unfortunately, its language is hard to fully reconcile with everything the Court has said about the stare decisis exception after Bowles.  And the Hallmark opinion tries to exploit a bit of Bowles’ imprecise language.

Some things said by Justice Thomas (writing for the majority in Bowles) would likely now shock and offend the Boechler Court.  For example, Bowles says, “Jurisdictional treatment of statutory time limits makes good sense.”  Id. at 212.  In contrast, in Henderson v. Shinseki, 562 U.S. 428 (2011) (involving a statutory filing deadline in the Court of Appeals for Veterans Claims), the Supreme Court (Alito, J.) wrote:  “Because the consequences that attach to the jurisdictional label may be so drastic, we have tried in recent cases to bring some discipline to the use of this term.”  Id. at 435.

Bowles pointed out that in many prior opinions going back to the 19^th Century (even before the Courts of Appeals were created), the Supreme Court had held that the deadline to file an appeal from a civil judgment is jurisdictional.  It also noted, “Reflecting the consistency of this Court’s holdings, the courts of appeals routinely and uniformly dismiss untimely appeals for lack of jurisdiction.”  551 U.S. at 210. Bowles distinguished its holding from Kontrick because Kontrick involved merely a bankruptcy court rule deadline (not a statutory deadline), and from Arbuagh because Arbaugh involved a statutory claim-processing rule that was not a filing deadline.

Further, in response to the dissent’s pointing out language from another Supreme Court opinion, in footnote 2 of Bowles, the Court wrote:

Regardless of this Court’s past careless use of terminology, it is indisputable that time limits for filing a notice of appeal have been treated as jurisdictional in American law for well over a century.  Consequently, the dissent’s approach would require the repudiation of a century’s worth of precedent and practice in American courts.  Given the choice between calling into question some dicta in our recent opinions and effectively overruling a century’s worth of practice, we think the former option is the only prudent course.

551 U.S. at 209 n.2.

Why do I point to this footnote?  Because the DOJ always quotes from that footnote when it urges courts to follow “a century’s worth of precedent and practice in American courts” involving the deficiency filing deadline, even though the cited precedent is only from the Board of Tax Appeals, the Tax Court, and the Circuit Courts of Appeals, not the Supreme Court.  Moreover, the Tax Court in Hallmark used that quote from the Bowles footnote on p. 37 of its slip opinion as part of its justification for following “a century’s worth of precedent and practice in American courts” relating to the deficiency filing deadline.  That sentence from Bowles has clearly been taken out of its context.  Bowles involved a situation where the century of precedent could be found in Supreme Court cases, first.  There is no suggestion in any later Supreme Court opinion that precedents only from courts below the Supreme Court would have been followed as part of the stare decisis jurisdictional exception.

The only other case in which the Supreme Court has applied the stare decisis exception to the new rule that filing deadlines are no longer jurisdictional is John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (2008).  There, the Court held that the Tucker Act’s catchall 6-year filing deadline in 28 U.S.C. § 2501 for filing a complaint in the Court of Federal Claims is jurisdictional because a long line of Supreme Court opinions going back over 100 years had held the filing deadline jurisdictional.

In United States v. Kwai Fun Wong, 575 U.S. 402 (2015), the Court held that the deadlines at 28 U.S.C. § 2401(b) to file (1) an administrative claim and (2) a court suit under the Federal Tort Claims Act are not jurisdictional and are subject to equitable tolling.  When the government cited John R. Sand in Kwai Fun Wong as support for holding the FTCA filing deadlines jurisdictional, the Court said that what distinguished John R. Sand was “two words:  stare decisis”.  Id. at 416.  “What is special about the Tucker Act’s deadline, John R. Sand recognized, comes merely from this Court’s prior rulings, not from Congress’s choice of wording.”  Id. 

Note the reference to “this Court’s prior rulings”.  In every one of the Supreme Court’s 9 opinions where it has described the stare decisis exception from its recent jurisdictional rules that make claim-processing rule non-jurisdictional, the Court has articulated the exception as applying in the case of Supreme Court precedent.  See Boechler, 142 S. Ct. at 1500; Fort Bend Cnty. v. Davis, 139 S. Ct. 1843, 1849 (2019); Hamer v. Neighborhood Housing Servs., 138 S. Ct. 13, 20 n.9 (2017); Kwai Fun Wong, 575 U.S at 416; Sebelius v. Auburn Regional Medical Center, 568 U.S. 145, 153-154 (2013); Gonzalez v. Thaler, 565 U.S. 134, 142 n.3 (2012); Henderson, 562 U.S. at 436 (2011); Reed Elsevier v. Muchnick, 559 U.S. 154, 168 (2010); Union Pacific R. Co. v. Locomotive Engineers, 558 U.S. 67, 82 (2009).  The articulated reason for this exception is that Congress no doubt reads Supreme Court case law and considers that case law in legislating.  John R. Sand & Gravel Co., 552 U.S. at 139 (“Congress has long acquiesced in the interpretation we have given.”)

Even though Justice Ginsburg (the prime mover for the Court’s new jurisdictional jurisprudence) only wrote it in a concurrence, she objected to any attempt to expand this stare decisis exception to include merely a long line of consistent authority in courts below the Supreme Court.  Reed Elsevier, 559 U.S. at 173-174 (Ginsburg, J, concurring, joined by Stevens and Breyer, JJ.) (“[I]n Bowles and John R. Sand & Gravel Co. . . . we relied on longstanding decisions of this Court typing the relevant prescriptions ‘jurisdictional.’  Amicus cites well over 200 opinions that characterize [17 U.S.C.] § 411(a) as jurisdictional, but not one is from this Court. . . .”; emphasis in original; citations omitted).  The Supreme Court has never said courts should presume Congress reads appellate court opinions and legislates in reliance on those opinions in interpreting what procedural requirements are jurisdictional.  Expanding the stare decisis exception to include a long line of lower court opinions would be to drive a truck through what the Supreme Court no doubt expected to be a very narrow exception. 

In the next part of this post, I will explain how the Hallmark court misapplied the stare decisis exception by converting it to a legislative reenactment doctrine exception.

In Kontrick v. Ryan, 540 U.S. 443, 455 (2004), the Supreme Court noted that both it and lower courts had often carelessly overused the word “jurisdictional”, and the Court sought to bring some disciple to the word by saying that, henceforth, claim-processing rules would not be jurisdictional.  In Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), however, the Court admitted that there should be an exception where Congress clearly stated that it wanted a claim-processing rule to be jurisdictional.  The Court set out what it called a “readily administrable bright line” test for this exception, to avoid the usual litigation over what Congress intended:  “If the Legislature clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue.”  Id. at 515-516 (footnote and citation omitted).

While the Supreme Court has articulated this “clear statement” exception, in over a dozen cases so far since Arbaugh, the Court has never found any such clear statement from Congress – not in cases of filing deadlines or in cases of other claim-processing rules.  Much of the Boechler opinion is focused on this “clear statement” exception, where the Court found it did not apply, even though IRC 6330(d)(1) contains the words “and the Tax Court shall have jurisdiction”.

The first sentence of IRC 6213(a) provides:

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.

Note that the sentence, unlike the sentence in IRC 6330(d)(1), does not contain the word “jurisdiction” or any similar word and is not addressed to the court’s power, but only to what the taxpayer may do. 

In Hallmark, the court writes:

 “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.” [United States v.] Kwai Fun Wong, 575 U.S. [402 (2015)] at 410.  Congress “need not use magic words”, Henderson [v. Shinseki], 562 U.S. [428 (2011)] at 436, and a statutory deadline may be jurisdictional even without the word “jurisdiction”, see, e.g., Bowles [v. Russell], 551 U.S. [205 (2007)] 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.

Slip opinion at p. 8.

First, what’s wrong about this quote?  The citations to Bowles and Brockamp are wrong or very misleading. 

Bowles is a case that I will mention in the next part of this post, but suffice it to say for now that Bowles is one of the only two (so far) Supreme Court opinions that created the stare decisis exception; the statute in Bowles does not contain a “clear statement” that the deadline to file a civil appeal from the district court is jurisdictional, so the Court decided to create a stare decisis exception. 

And Brockamp (a pre-Kontrick case)does not hold the IRC 6511 refund claim filing deadline jurisdictional.  Neither the word “jurisdiction” nor “jurisdictional” appears in the Brockamp opinion.  Brockamp, in fact, proceeds from the unstated assumption that the filing deadline is not jurisdictional and then goes on to conclude that the deadline is still not subject to equitable tolling (a separate question, as Boechler shows) under the presumption in favor of equitable tolling set out in Irwin v. Department of Veterans Affairs, 498 U. S. 89, 95–96 (1990).  Had the Supreme Court thought IRC 6511’s deadline jurisdictional, the Brockamp opinion would have been only one sentence long:  “Since we have held that jurisdictional deadlines are never subject to equitable tolling, and since IRC 6511’s deadline is jurisdictional, IRC 6511’s deadline is not subject to equitable tolling.”  In Boechler, the Supreme Court only discussed Brockamp in the section of the Court’s opinion discussing equitable tolling.

Hallmark went on to state as follows:

 “To determine whether Congress has made the necessary clear statement, we examine 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)).  Statutes that meet this standard share several qualities:  They speak of a court’s power “in jurisdictional terms or refer in any way to the jurisdiction” of the court. Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 393–94 (1982).  They “define a federal court’s jurisdiction . . . , address its authority to hear untimely suits, [and] cabin its usual equitable powers.” Kwai Fun Wong, 575 U.S. at 411. Their context, such as placement within their statutory regime, history of reenactments, or a long-standing judicial interpretation, reflects that Congress imbued a deadline with “jurisdictional consequences”. See, e.g., Kwai Fun Wong, 575 U.S. at 410; Henderson, 562 U.S. at 439; Bowles, 551 U.S. at 209–13; Zipes, 455 U.S. at 394.

Slip opinion at pp. 8-9.

Putting aside until the next part of this post that last-quoted sentence, Hallmark is correct that context is important in applying the “clear statement” exception.  For example, in Henderson, the Court found that the 120-deadline for a veteran seeking to contest a denial of benefits in the Article I Court of Appeals for Veterans Claims is not jurisdictional.  In that case, the Supreme Court noted that the deadline involved did not speak in jurisdictional terms and there was a separate provision that granted the Veterans Court jurisdiction to hear the cases.  Further, the Supreme Court went on to discuss the context of the deadline and noted (1) the character of the procedure from administrative filing through the Veterans Court, which the Supreme Court felt was highly protective of veterans and (2) would clash terribly with a finding that the filing deadline is jurisdictional.  But, the Supreme Court, while looking at context in Henderson and other cases, has only used context to find a filing deadline not jurisdictional.  The Supreme Court has never said that context alone can make up for the lack of a “clear statement” that a filing deadline should be jurisdictional.  To argue that context alone would be good enough would be to gut the “clear statement” exception.

On page 9 of the slip opinion, Hallmark begins Part II of the opinion with the following italicized outline sentence:  “Section 6213(a) clearly states that its 90-day deadline for filing a deficiency case is jurisdictional.”  Yet, you can read on in the opinion and the court says everything except that the words of the first sentence of IRC 6213(a) create a clear statement from Congress that Congress wants the filing deadline to be jurisdictional.  The court discusses the context of the placement of the sentence, the historical treatment of the sentence by the courts, and even what is essentially the Congressional reenactment doctrine, but the Tax Court nowhere, other than in the headline of Part II. of the opinion, says that the words of the first sentence of IRC 6213(a) (the only words that really count) “clearly state” that the filing deadline is jurisdictional.

It is thus baffling how the Tax Court in Hallmark could think its opinion a proper application of the Supreme Court’s “clear statement” exception jurisprudence.  Essentially, the Tax Court has reverted to deciding Hallmark on the pre-Arbaugh free-for-all inquiry into signs of what Congress really intended, despite the lack of a “clear statement”. 

Enough for this post.

Here is just a partial listing of cases in which Tax Court judges have previously stated that IRC 6214(a) is the source of its deficiency jurisdiction.  These quotes appear in opinions that did not involve any attempt by the IRS to seek an increased deficiency under IRC 6214(a). 

Judge Morrison has written:  “This case arises from Abdi’s timely petition. We have jurisdiction pursuant to section 6214(a).”  Abidi v. Commissioner, T.C. Memo. 2015-41 at *2.  “We have jurisdiction, pursuant to section 6214, to redetermine the deficiency and the penalty determined in the notice of deficiency. See sec. 6214(a).”  Longino v. Commissioner, T.C. Memo. 2013-80 at *3.  “Mr. and Ms. Thoma filed a timely petition for redetermination of the income-tax deficiencies and accuracy-related penalties for both years under section 6213(a).  We have jurisdiction under section 6214(a).”  Thoma v. Commissioner, T.C. Memo. 2020-67 at *4.  See Moyer v. Commissioner, T.C. Memo. 2016-236 at *2 (same).

Judge Paris has written:  “Petitioner received a notice of deficiency and invoked the Court’s jurisdiction by filing a petition for redetermination of a deficiency under section 6213(a).  Section 6214(a) grants the Court jurisdiction to redetermine the correct amount of a deficiency. . . .”  Trimble v. Commissioner, T.C. Memo. 2018-36 at *5.

Judge Ashford has written:  “Section 6214(a) establishes our deficiency jurisdiction”.  Dees v. Commissioner, 148 T.C. 1, 13 (2017) (Ashford, J., concurring in the result only).

Senior Judge Halpern has written:  “”Section 6214(a) establishes our jurisdiction to redetermine (i.e., determine de novo) deficiencies determined by the Secretary.”  Moya v. Commissioner, 152 T.C. 182, 198 (2019).  He also wrote, “We thus conclude that the notices of deficiency respondent issued to petitioners for their 2007 taxable years were valid, so that petitioners’ filing of a petition in response to those notices gave us jurisdiction under section 6214(a) to redetermine the deficiencies reflected in the notices.”  Stevens v. Commissioner, T.C. Memo. 2020-118 at *47.

Senior Judge Holmes has written:  “Our Court has for decades had the power, when we have jurisdiction over a particular taxpayer for a particular tax year, to determine or redetermine the correct amount of his deficiency – including any penalties.  See sec. 6214(a).”  Graev v. Commissioner, 149 T.C. 485, 502 (2017) (Holmes, J., concurring in the result).

Former Judge Simpson has written:

Section 6214(a) was initially enacted as part of the Revenue Act of 1926.  In addition to authorizing the Court to redetermine a deficiency, the statute provided that the Court had the authority to “determine whether any penalty, additional amount or addition to the tax should be assessed”.  Sec. 274(e), Revenue Act of 1926, ch. 27, 44 Stat. 56.

Bregin v. Commissioner, 74 T.C. 1097, 1103 (1980) (emphasis added).

Hallmark cited all of these opinions in its filings.  If Judges Morrison, Ashford, and Paris read the filings, I don’t see how they could sign on to an opinion saying the exact opposite – without at least explaining themselves in a mea cupla concurrence.