Carlton Smith

About Carlton Smith

Carlton M. Smith worked (as an associate and partner) at Roberts & Holland LLP in Manhattan from 1983-1999. From 2003 to 2013, he was the Director of the Cardozo School of Law tax clinic. In his retirement, he volunteers with the tax clinic at Harvard, where he was Acting Director from January to June 2019.

Trump Authorizes Mnuchin to Use Section 7508A to Extend Time to Pay Certain Employment Taxes Through End of Year

On August 8, President Trump issued a document entitled “Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster.” Despite the impression of sloppy reporters in the non-tax press, the memorandum actually does not do anything yet.  In fact, the memorandum merely instructs Treasury Secretary Mnuchin to exercise his authority under section 7508A to extend certain tax deadlines for up to one year on account of Presidentially-declared disasters with respect to certain employees’ Social Security taxes.

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The operative part of the memorandum’s instructions read as follows:

Sec. 2.  Deferring Certain Payroll Tax Obligations.  The Secretary of the Treasury is hereby directed to use his authority pursuant to 26 U.S.C. 7508A to defer the withholding, deposit, and payment of the tax imposed by 26 U.S.C. 3101(a), and so much of the tax imposed by 26 U.S.C. 3201 as is attributable to the rate in effect under 26 U.S.C. 3101(a), on wages or compensation, as applicable, paid during the period of September 1, 2020, through December 31, 2020, subject to the following conditions:

(a)  The deferral shall be made available with respect to any employee the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period generally is less than $4,000, calculated on a pre-tax basis, or the equivalent amount with respect to other pay periods.

(b)  Amounts deferred pursuant to the implementation of this memorandum shall be deferred without any penalties, interest, additional amount, or addition to the tax.

As you can see, the President is asking Secretary Mnuchin essentially to provide an extension to pay for the compensation period from September 1 to December 31 of this year, but the instructions do not provide for a date by which those taxes must be paid.  That is being left to the IRS. 

Obviously, the statute prevents Secretary Mnuchin from providing for a deferral of more than one year.  However, the President is asking the Secretary to try to figure out a legal way that the taxes can simply be forgiven.  Section 4 of the memorandum states: “The Secretary of the Treasury shall explore avenues, including legislation, to eliminate the obligation to pay the taxes deferred pursuant to the implementation of this memorandum.”

The extensions will only apply to taxes imposed by section 3101(a) (and the equivalent portion of employment taxes imposed under the Railroad Retirement Act at section 3201).  Section 3101(a) imposes a 6.2 % Social Security tax on employees, which is withheld from their wages.  Thus, the extension does not apply to any amount of taxes imposed by section 3101(b) – the 1.45% Medicare taxes imposed on employees – or to any employment taxes normally imposed on employers under section 3301. 

Equivalent self-employment taxes under section 1401 are usually paid by the self-employed as part of their quarterly estimated tax payments.  Note that the extension will not apply to any portion of self-employment taxes.

Not to mislead anyone, in section 2302 of the CARES Act, Congress already extended, for the period from the date of enactment through the end of 2020, the times for (1) employers to pay the employer share of Social Security taxes and (2) self-employed taxpayers to pay 50% of self-employment taxes related to funding Social Security.  The deferred amounts are payable, instead, 50% on December 31, 2021 and 50% on December 31, 2022.

The IRS may also need to provide some detail as to how to apply the provision that the extension is only with respect to employees “the amount of whose wages or compensation, as applicable, payable during any bi-weekly pay period is generally less than $4,000, calculated on a pre-tax basis”.  I can see a whole host of complicated issues that the IRS and employers must face in interpreting the word “generally”.  For example, what if an employee gets a regular salary plus commissions, so that the employee’s compensation varies considerably each pay period?  If the IRS instructs to take an average of pay, what will be the testing period for the average?  Year to date during 2020 (when many employees had their incomes plunge starting in March)?  Or will it be the average earnings for a one-year period ending in February 29, 2020, before the country largely shut down?  I am sure others can come up with many other interpretive issues. 

Then, will employers even be able to figure out who are the employees to whom the extensions applies?  Employers don’t currently have software to deal with compliance with any formula that Secretary Mnuchin will come up with.  And presumably, Secretary Mnuchin needs to figure this all out and issue an IRS Notice sufficiently prior to September 1 so that employer computers can be reprogrammed (if they can be) to do appropriate paycheck withholding. 

I would not be surprised if it takes employers months to figure out the correct amount of the reduced employment tax that they are required to withhold and pay over to the IRS in each pay period. However, the memorandum contemplates that the IRS Notice will provide that nothing be withheld of the 6.2% taxes during the deferral period.  The memorandum contemplates not just an extension for the employers to pay the tax, but deferral of “withholding”.

Assuming that employers are not allowed to withhold these taxes during the deferral period, how are employers later going to collect these taxes so that they can be paid over sometime in 2021?  The Notice will have to deal with this, though the President has indicated he doesn’t believe that any employer will eventually have to pay over these taxes.  Politically, he may be right.  But, what if he is wrong because Congress doesn’t forgive the taxes – worrying about the financial stability of the Social Security trust fund?

One former IRS employee (who will remain nameless) speculated to me that, perhaps, the amounts to make the employer whole (so that funds could be paid over) could be withheld from the first paycheck of 2021.  I don’t know if that is a good idea or even possible for all employees.  For example, assume an employee worked for all of the last four months of 2020.  She was in 2020 and will in 2021 be paid $3,500 per bi-weekly pay period.  The deferral would be $217 per pay period (6.2% of $3,500).  The deferral would apply to approximately 9 pay periods, so the total deferral would be $1,953 (9 x $217).  That first paycheck of 2021 will have to reflect current income tax withholding (federal and state) and 7.65% current employee employment tax obligations.  Current 7.65% withholding would be $268.  State and local income tax withholding could eat up more than the rest of the $3,500 gross pay.

And, of course, what happens when an employee leaves between September 1, 2020 and December 31, 2020?  Say, an employee left in October and her last paycheck was October 20?  There won’t be any paychecks in 2021.  Can the employer take the money out of her last paycheck, anyway, even if that paycheck is during the extension period?

Finally, remember that failure to pay over the right amount of employment taxes could result in very large failure to deposit and failure to pay penalties, if the employers are wrong in their calculations.

Eighth Circuit Holds Tax Court CDP Filing Deadline Jurisdictional Under SCOTUS Case Law

For those interested, the DOJ Tax Division is currently advertising for experienced attorneys in the Civil Trial Sections in Washington, DC.  The job posting can be found on the Department of Justice’s Website at https://www.justice.gov/legal-careers/job/trial-attorney-451 and on USAJobs at https://www.usajobs.gov/GetJob/ViewDetails/573997200. Keith.

In Boechler, P.C. v. Commissioner, 2020 U.S. App. LEXIS 23306, on July 24, the Eighth Circuit aligned itself with the Ninth Circuit in Duggan v. Commissioner, 879 F.3d 1029 (9th Cir. 2018), and held that, even considering recent Supreme Court case law that generally treats filing deadlines as not jurisdictional, the Collection Due Process (CDP) Tax Court filing deadline at section 6330(d)(1) is jurisdictional.  The majority predicated its holding on an exception that Congress may override the general rule by making a clear statement in the statute that Congress wants the filing deadline to be jurisdictional.  In ruling that Congress had made a clear enough statement in the CDP provision, the Boechler majority rejected the D.C. Circuit’s opinion in Myers v. Commissioner, 928 F.3d 1025 (D.C. Cir. 2019), holding that the similarly-worded Tax Court filing deadline at section 7623(b)(4) for whistleblower award actions is not jurisdictional.  A concurring judge in Boechler said she felt bound to agree with the majority because of prior Eighth Circuit precedent, but if she were presented with the issue without that precedent, she would hold the filing deadline not jurisdictional.

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The facts of Boechler are simple:  The IRS mailed a CDP notice of determination to the taxpayer by certified mail at its last known address.  The taxpayer received the notice three days later, but did not mail a petition to the Tax Court until 31 days after the notice was mailed.  (Having spoken with Boechler’s lawyer who prepared and mailed the petition, I was told that he did not see the notice until the date he mailed the petition.  Unlike in many recent litigated cases we have discussed on PT, therefore, you can’t blame the lawyer here.)

In the Tax Court, Boechler argued that Due Process required that the 30 days to file a petition must be counted from the date of the notice’s receipt, not the date of its mailing.  In the alternative, Boechler argued that, under recent Supreme Court case law, the filing deadline is not jurisdictional, but is subject to equitable tolling.  Boechler did not set out any facts supporting equitable tolling in its case, but the Tax Court would not have cared if Boechler had, anyway.  In an unpublished order , the Tax Court, citing its opinion in Guralnik v. Commissioner, 146 T.C. 230, 237-238 (2016), held that the filing deadline is jurisdictional and thus is not subject to equitable tolling.  Jurisdictional filing deadlines can never be equitably tolled.  The order also found no Due Process violation, noting that “the method reflects the standard and consistent way that various periods provided for under the Internal Revenue Code and other Federal statutes are calculated.”

There were two prior opinions of the Eighth Circuit that had stated that the CDP filing deadline is jurisdictional, but neither of those opinions discussed recent Supreme Court case law or Due Process. 

The first Eighth Circuit opinion, Tschida v. Commissioner, 57 Fed. Appx. 715 (8th Cir. 2003), was decided before the Supreme Court in Kontrick v. Ryan, 540 U.S. 443 (2004), made clear that filing deadlines are generally no longer to be considered jurisdictional.  The Tschida court wrote: “the untimely filing deprived the tax court of jurisdiction”.  While Tschida is on all fours with Boechler factually, it was not a published, precedential opinion.

The second Eighth Circuit opinion was precedential, Hauptman v. Commissioner, 831 F.3d 950 (8th Cir. 2016).  In that case, a taxpayer timely filed a Tax Court CDP petition, and, during the case, Appeals issued a Supplemental Notice of determination.  The Tax Court upheld the Supplemental Notice.  On appeal, the taxpayer argued that the Tax Court lacked jurisdiction to consider the Supplemental Notice.  The parties did not brief the issue of whether the CDP filing deadline is jurisdictional, but in some prefatory remarks before reaching its holding that the Tax Court had jurisdiction to consider the Supplemental Notice, the Eighth Circuit stated that there were only two jurisdictional requirements for a Tax Court CDP suit: issuance of a notice of determination and timely filing.  For that timely filing requirement, the Eighth Circuit inserted a “see” cite to the Seventh Circuit opinion in Gray v. Commissioner, 723 F.3d 790 (7th Cir. 2013)

In Gray, a taxpayer filed late original returns, which the IRS accepted, but she did not pay the taxes shown due on the returns (or a late-filing penalty later imposed by the IRS).  She had a CDP hearing, after which the IRS issued a notice of determination.  She then filed two Tax Court petitions – both after the 30-day period in section 6330(d)(1) had expired.  The Tax Court dismissed the petitions for lack of jurisdiction.  On appeal, pro se, she argued that the petitions were timely under the 90-day period applicable to deficiency petitions at section 6213(a).  The parties did not brief whether the filing deadlines at sections 6213(a) or 6330(d)(1) are jurisdictional.  But, the Seventh Circuit, in the course of getting to its ruling that the 30-day period applied, cited a couple of Tax Court opinions holding that the CDP filing deadline is jurisdictional.  The Gray court did not discuss the recent Supreme Court case law (as, neither did the Tax Court in the cited pre-Guralnik opinions).

In Boechler, the majority of the panel first held that it was not bound by the prior Eighth Circuit opinions. The court wrote that “the jurisdictional test laid out in Hauptman was obiter dicta addressing an issue not before the court”.  Slip op. at 4.

At this point, the Eighth Circuit could have written that it need not decide whether the CDP filing deadline is jurisdictional because Boechler had not even alleged any facts showing its entitlement to equitable tolling.  That’s the approach the Fourth Circuit took in Cunningham v. Commissioner, 716 Fed. Appx. 182 (4th Cir. 2018).  But, the panel chose to decide the issue of whether the filing deadline is jurisdictional in light of the recent Supreme Court case law.  The court wrote:

We find the Ninth Circuit’s analysis [in Duggan] persuasive. The statutory text of § 6330(d)(1) is a rare instance where Congress clearly expressed its intent to make the filing deadline jurisdictional. The provision states: The person may, within 30 days of a determination under this section, petition the Tax Court for review of such determination (and the Tax Court shall have jurisdiction with respect to such matter). 26 U.S.C. § 6330(d)(1). The parenthetical “(and the Tax Court shall have jurisdiction with respect to such matter)” is clearly jurisdictional and renders the remainder of the sentence jurisdictional. See Fort Bend Cty. v. Davis, 139 S. Ct. 1843, 1849 (2019).

A plain reading demonstrates that the phrase “such matter” refers to a petition to the tax court that: (1) arises from “a determination under this section” and (2) was filed “within 30 days” of that determination. See Myers, 928 F.3d at 1039 (Henderson, J., dissenting) (reaching the same conclusion when analyzing the identically worded parenthetical in § 7623(b)(4)); see also 26 U.S.C. § 6330(e)(1) (“The Tax Court shall have no jurisdiction under this paragraph to enjoin any action or proceeding unless a timely appeal has been filed under subsection (d)(1). . .”). Unlike other statutory provisions that have been found to be non-jurisdictional by the Supreme Court, § 6330(d)(1) speaks “in jurisdictional terms.” Musacchio, 136 S. Ct. at 717 (finding 18 U.S.C. § 3282(a) non-jurisdictional). The use of “such matter” “plainly show[s] that Congress imbued a procedural bar with jurisdictional consequences.” Kwai Fun Wong, 575 U.S. at 410. This phrase provides the link between the 30-day filing deadline and the grant of jurisdiction to the tax court that other statutory provisions lack. While there might be alternative ways that Congress could have stated the jurisdictional nature of the statute more plainly, it has spoken clearly enough to establish that § 6330(d)(1)’s 30-day filing deadline is jurisdictional.

Slip op. at 6-7 (footnote and some citations omitted; emphasis in original).  The court rejected the Myers’ majority holding that similar language in the whistleblower award provision of section 7623(b)(4), while clearly predicating Tax Court jurisdiction on a notice of determination, was not sufficiently clear also to refer, with the words “such matter”, to the filing deadline.

As to Boechler’s Due Process argument, the court stated that both Due Process and Equal Protection arguments in this case must be analyzed under a rational basis standard.  The court held that it was rational for Congress to make the 30-day period begin on the date of mailing:

[C]alculating the filing deadline from the date of determination streamlines and simplifies the complex undertaking of enforcing the tax code. If the IRS were required to wait 30 days from the date that each individual received notice, it would be unable to levy at the statutory, uniform time. Calculating from the date of determination guards against taxpayers refusing to accept delivery of the notice and promotes efficient tax enforcement by ensuring a reasonable and workable timeframe and deadline.

Slip op. at 8.

Concurring Judge Kelly argued that the panel was wrong not to follow Hauptman, contending that while the issue of whether the filing deadline is jurisdictional was not briefed in Hauptman, the statement therein that the filing deadline is jurisdictional was necessary to the ultimate holding that the Tax Court had jurisdiction to consider the Supplemental Notice and so was binding on the current panel.

Judge Kelly indicated that, had she not felt bound by the holding in Hauptman, she would have come out differently with the majority on the nature of the filing deadline.  She wrote:

As the court notes, deeming the 30-day filing deadline in 26 U.S.C. § 6330(d)(1) jurisdictional is an unusual departure from the ordinary rule that filing deadlines are “quintessential claim-processing rules.” See Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 435 (2011). This may have “drastic” consequences for litigants, id., and I am concerned the burden may fall disproportionately on low-income taxpayers, as the amicus [the Tax Clinic at the Legal Services Center of Harvard Law School] suggests. I am not convinced the statute contains a sufficiently clear statement to justify this result. See Myers v. Comm’r, 928 F.3d 1025, 1036 (D.C. Cir. 2019) (holding that the “nearly identical” filing deadline in 26 U.S.C. § 7623(b)(4) is not jurisdictional). But in light of our long-standing precedent, I concur in the court’s judgment.

Slip op. at 10.

Observations

Nine appellate judges have now considered the filing deadline language in the Tax Court’s CDP and whistleblower award jurisdictions (in Duggan, Myers, and Boechler).  Of those nine, six have held that the filing deadlines should be jurisdictional and three have held the deadlines should not be (at least, if writing on a blank slate).  Thus, one should not be embarrassed to continue litigating this issue. 

In fact, the issue is currently before another Circuit – the Second Circuit, in a case named Castillo v. Commissioner, Second Circuit Docket No. 20-1635.  The case was filed in the Tax Court by the tax clinic at Fordham Law School headed by Prof. Elizabeth Maresca.  The clinic’s client never received a CDP notice of determination that the IRS had mailed to the client’s last known address.  USPS records state that the notice is still “in transit”.  Several months after the notice was sent, Elizabeth saw an IRS transcript indicating that such a notice had been issued.  Within 30 days after seeing the transcript, the clinic filed a Tax Court petition.  In response to a motion to dismiss, the clinic argued (1) that the filing deadline is not jurisdictional and should be equitably tolled under the facts of the case, and (2) that the Tax Court was wrong in Weber v. Commissioner, 122 T.C. 258 (2004), to have imported into its CDP jurisdiction case law from its deficiency jurisdiction holding that a notice of deficiency mailed to the taxpayer’s last known address starts the filing period, even if the notice is never received.  The Tax Clinic at the Legal Services Center of Harvard Law School has filed an amicus brief  in Castillo limited to making the second (anti-Weber) argument.  Ms. Castillo’s opening brief is due October 22.  An amicus brief from some other party arguing that the filing deadline is not jurisdictional and is subject to equitable tolling is also expected.

Ninth Circuit Holds the Deficiency Petition Filing Deadline Still Jurisdictional

The Tax Court and every Circuit court has long held the deadline to file a Tax Court deficiency petition at section 6213(a) to be a jurisdictional condition of the suit.  Of course, jurisdictional deadlines are never subject to equitable tolling, waiver, estoppel, or forfeiture.  But, nearly every court opinion so holding had been issued before the Supreme Court changed the rules in 2004 making filing deadlines now almost never jurisdictional.

In 2016, a panel of the Seventh Circuit, sua sponte, at oral argument, questioned whether the section 6213(a) filing deadline is still jurisdictional under the recent Supreme Court case law.  In Tilden v. Commissioner, 846 F.3d 882 (7th Cir. 2017), on which we blogged here, in spite of the Tax Court’s dismissing the petition for lack of jurisdiction as untimely, on appeal, the IRS and taxpayer both agreed that the petition was timely under section 7502.  The panel wondered why the IRS was not waiving any untimeliness argument if the filing deadline isn’t still jurisdictional.  However, after some post-argument supplemental briefing on the issue of whether the filing deadline is still jurisdictional, the panel ruled that it is. Id. at 886-887.  (The panel went on to rule the filing timely.)

No other Circuit had since addressed in a published opinion whether the deficiency filing deadline is still jurisdictional under recent Supreme Court case law.  (Though, in an unpublished last known address case, where the parties did not brief the issue, the Third Circuit last year stated that the filing deadline still jurisdictional under recent Supreme Court case law.  Garrett v. Commissioner, 798 Fed. Appx. 731, 733.)  That changed on June 18, 2020, when the Ninth Circuit issued its opinion in Organic Cannabis Foundation v. Commissioner, ___________, in which it affirmed the Tax Court’s dismissal of two deficiency petitions of California marijuana dispensaries.  The Ninth Circuit, aligning with the Seventh Circuit in Tilden, held that untimely petitions should be dismissed for lack of jurisdiction, even under current Supreme Court case law. 

As will be discussed below, the fact pattern in Organic Cannabis paralleled that in the CDP case of Guralnik v. Commissioner, 146 T.C.230 (2016) – an opinion that was never appealed.  Organic Cannabis adopts and expands upon the Tax Court’s additional analysis in Guralnik of what consequences ensue when the Tax Court Clerk’s Office is inaccessible for filing and what makes the Clerk’s Office inaccessible.

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Organic Cannabis Facts

Both Organic Cannabis Foundation LLC and its sister company, Northern California Small Business Assistants, Inc., ran California marijuana dispensaries.  On the same date, the IRS issued separate notices of deficiency to the two taxpayers disallowing, under section 280E, all their deductions.  (For a Tax Court opinion involving the latter company’s taxes for a different tax year and where the application of section 280E was upheld, see Northern California Small Business Assistants, Inc. v. Commissioner, 153 T.C. 65 (2019).) 

A single law firm represented both taxpayers.  That law firm sent the petitions jointly in a single envelope by FedEx on the day before the petitions were due.  Like the taxpayer in Guralnik, the firm used the FedEx First Overnight Service, which, at the time (as opposed to a few weeks later), was not listed by the IRS as an approved private delivery service under section 7502(f).  First Overnight differs from the previously-approved Standard Overnight and Priority Overnight FedEx services only in promising the earliest possible delivery.  Thus, even if First Overnight was not an approved service, the petitions still should have gotten to the Tax Court Clerk’s Office on the last date to file.

But, there was a problem.  For some reason, the FedEx driver didn’t deliver the envelope on the last date to file, but delivered it a day later.  A secretary in the law firm’s office, concerned that she had not received delivery confirmation from FedEx, called FedEx and learned of the non-delivery mid-day on the last date to file.  FedEx told her something like that the driver couldn’t get through to the Clerk’s Office because of construction or police activity nearby.  Unwisely, the secretary did not think to mail out new petitions that afternoon or evening, say, by certified mail.  There would have been no Ninth Circuit opinion had she done so.

The IRS filed answers in both cases.  Neither answer raised any issue of untimely filing.  About a year later, the IRS moved to dismiss both cases for lack of jurisdiction as having been late filed.  When the taxpayers then went back to FedEx for the driver’s written explanation of what had gone wrong, FedEx told the taxpayers that it had deleted all delivery information, which it did not keep for that long a period.

Tax Court Orders

In responses to the motions to dismiss, the taxpayers argued that the petitions were timely filed because FedEx First Overnight should be deemed to be the same service as FedEx Standard Overnight or Priority Overnight, just with a faster delivery feature.  In Guralnik, the Tax Court had rejected this very argument, and it did so in the two unpublished orders in which it dismissed the taxpayers’ petitions for lack of jurisdiction as being untimely, here and here.

The taxpayers also argued that the Clerk’s Office was not accessible at the time the FedEx driver arrived, citing Guralnik, so that the last date to file should be moved to the following day, making the petitions timely.  In Guralnik, the last date to file turned out to be a day on which the Clerk’s Office was closed all day due to a snowstorm.  The Guralnik court borrowed from FRCP 6 and held that when its Clerk’s Office is inaccessible, the last date to file is moved to the next day when the Clerk’s Office is open.  In the two taxpayers’ cases, though, the Tax Court distinguished Guralnik as follows: “Unlike the snow emergency closing in Guralnik, here, the Court’s Clerk’s office was open during its normal business hours and was not inaccessible the entire day due to inclement weather, government closings, or other reasons.”

Finally, the taxpayers had contended that the notices of deficiency were not mailed to the taxpayer’s last known addresses, citing discrepancies in the address of one (omission of a P.O. Box, though the box number was shown as part of the 9-digit ZIP Code) and a wrong digit on the Form 3877 proving mailing of the other.  The Tax Court said it need not determine whether the deficiency notices were sent to the last known addresses, since the taxpayers clearly got the notices 78 days before the filing date, which was enough to make the notices valid under Tax Court precedent, even if they were not sent to the last known addresses.

Ninth Circuit Holdings

On appeal, the taxpayers made the same arguments (except the taxpayers abandoned the Form 3877 argument).  The taxpayers also added the argument that the filing deadline is no longer jurisdictional and is subject to forfeiture, waiver, and equitable tolling.  The taxpayers argued that the IRS had waived or forfeited the right to complain about late filing by waiting too long to raise the issue – i.e., at a time when FedEx had deleted the driver’s notes concerning what had happened. 

In the Ninth Circuit, the Harvard clinic filed amicus briefs supporting the taxpayers only in the arguments that the filing deadline is no longer jurisdictional and is subject to forfeiture, waiver, and equitable tolling.

The Ninth Circuit began its opinion stating, “This unhappy case presents a cautionary tale about the need for lawyers to ensure that they have done exactly what is statutorily required to invoke a court’s jurisdiction.”  Slip op. at 4. 

In its 28-page opinion (of which I give only a thumbnail sketch here), the Ninth Circuit first accepted the Tax Court’s Guralnik adoption of FRCP 6 – which the Ninth Circuit was probably compelled to do, since the Tax Court, under section 7453, is entitled to set up its own rules, and its rules (i.e., Rule 1) allow it to borrow FRCP rules in the absence of a Tax Court rule directly on point. 

The Ninth Circuit acknowledged that case law under FRCP 6 did not limit the word “inaccessible” only to the situation where the Clerk’s Office was closed for the day – citing the inaccessibility holding of several appellate courts making clear that, even if a Clerk’s Office is technically open, it is still “inaccessible” if it would only be possible to access the office through “heroic” measures.  See, e.g., U.S. Leather, Inc. v. H&W P’ship, 60 F.3d 222, 226 (5th Cir. 1995) (where “ice storm . . . temporarily knocks out an area’s power and telephone service and makes travelling dangerous, difficult or impossible,” clerk’s office, even though open, was rendered “inaccessible to those in the area near the courthouse”), abrogated on other grounds by Kontrick v. Ryan, 540 U.S. 443 (2004).  The court held that,

for non-electronic filings (such as those at issue here), a clerk’s office is “inaccessible” on the “last day” of a filing period only if the office cannot practicably be accessed for delivery of documents during a sufficient period of time up to and including the point at which “the clerk’s office is scheduled to close.” Fed. R. Civ. P. 6(a)(3), (4)(B). Because, as the Tax Court noted, Appellants presented no evidence to show that the clerk’s office could not be accessed during the substantial remaining portion of the day after FedEx’s unsuccessful earlier delivery attempt, the extension in Rule 6(a)(3) did not apply.

Slip op. at 14-15. 

Of course, it is hard to criticize the taxpayers for lack of proof on how long the obstruction to the Clerk’s Office lasted, since, by the time anyone asked about it, FedEx had no evidence of what happened in this case or to other drivers perhaps attempting to deliver envelopes to the Tax Court later in the day.

Next, agreeing with the Tax Court, the Ninth Circuit held that the FedEx First Overnight service was a different service from the other two approved FedEx services, so was not yet an approved delivery service under section 7502(f) on the date of its use. 

As to Organic Cannabis’s complaint that its notice was not mailed to its last known address because the address was lacking “P.O. Box 5286”, the Ninth Circuit affirmed the Tax Court, but on different reasoning.  The Tax Court held that actual receipt of the notice with 78 days left to file was good enough to make the notice valid, even if the notice might not have been mailed to the last known address.  Apparently concerned because the taxpayer had pointed out that the Ninth Circuit had never held an incorrectly-addressed notice to be valid when the taxpayer did not timely file that Tax Court petition, the Ninth Circuit decided to hold that the notice was indeed sent to the taxpayer’s last known address.  The panel observed that the first 5 digits of the 9-digit ZIP Code were not only the ZIP Code of the post office, but was only used for post office boxes at that office.  The panel observed that the last 4 digits of the 9-digit ZIP Code showed the P.O. Box number.  Thus, in this case, the ZIP Code alone could constitute the last known address.  Query if this means that any 9-digit ZIP Code that only relates to a single location (e.g., an individual’s apartment number) alone can constitute a last known address if the street address, city, and state are all omitted from the IRS address used?

Finally, the Ninth Circuit faced the question of whether the filing deadline was still jurisdictional.  The DOJ asked the court not to rule on the issue, since it had not been properly raised below.  However, the Ninth Circuit exercised its discretion to consider this issue, since it was purely a question of law, “[a]nd the issue has been well briefed by both sides, including with the helpful participation of amicus curiae from a law school clinic.”  Slip op. at 19 n.6.

Readers of PT know from too numerous posts that current Supreme Court case law begins with the general rule that filing deadlines are no longer jurisdictional.  The two exceptions to the rule are (1) if Congress made a clear statement in the statute that it wanted the filing deadline to be jurisdictional, and (2) a stare decisis exception to a long line of Supreme Court case law holding the deadline to be jurisdictional.

The Ninth Circuit found three reasons why the deadline should be still treated as jurisdictional. 

First, in the fourth sentence of section 6213(a), the Tax Court is also awarded injunctive jurisdiction to enforce a stay on collection after a notice of deficiency is issued, but only in the case of a petition that is “timely filed”.  The Ninth Circuit apparently assumed that a timely filing can’t occur through equitable tolling, forfeiture, or waiver, so said that, if the injunctive jurisdiction was one limited to timely filed petitions, then the regular deficiency jurisdiction must also be limited to timely filed petitions.  (I think that a non sequitur, but who am I?)  The Ninth Circuit adopted the reasoning of Tilden that the appearance of the word “jurisdiction” in the fourth sentence in section 6213(a) (giving the Tax Court injunctive jurisdiction only in the case of timely filed petitions) meant that the filing deadline in the first sentence – a sentence that does not contain the word “jurisdiction” – must also be jurisdictional.  The Ninth Circuit also argued that accepting the taxpayers’ arguments would cause discontinuities in the periods in which the IRS was prohibited from assessment if the Tax Court could later accept a petition under equitable tolling.  We addressed this issue in the Harvard clinic amicus brief, arguing that there was no discontinuity, since the word “timely filed” must necessarily include filings made under statutory extensions (such as those allowed by sections 7502, 7508, and 7508A), and we saw no reason why equitable exceptions could not also be considered in whether a Tax Court petition had been timely filed.

Second, the Ninth Circuit raised a problem with section 7459(d) if the filing deadline is not jurisdictional.  Tilden had not discussed this section.  Section 7459(d) provides that dismissals from the Tax Court in deficiency cases uphold the deficiency on the merits, except in cases where the dismissal is for lack of jurisdiction.  The Ninth Circuit noted the long-standing belief of the courts (which it imputed to Congress) that the jurisdictional dismissal exception allowed a person who had filed a late Tax Court petition to later pay and sue for a refund, without having a res judicata issue of a merits finding from the prior Tax Court dismissal.  The Ninth Circuit did not want to undermine that judicial understanding, though I would note that the exception for jurisdictional dismissals was added by the Revenue Act of 1928, and Congress nowhere explained why the jurisdictional exception was being adopted.  Dismissals can be for lack of jurisdiction on ground other than untimeliness – e.g., a petition (1) filed challenging the validity of the notice of deficiency, (2) filed by the wrong taxpayer, or (3) filed by the right taxpayer, but who lost corporate capacity or who filed during a bankruptcy stay.

Third, the Ninth Circuit noted the long-standing judicial interpretations of section 6213(a)’s filing deadline being jurisdictional.  The Ninth Circuit wrote,

As noted earlier, the circuits have uniformly adopted a jurisdictional reading of § 6213(a) or its predecessor since at least 1928. See supra at 20. Congress presumptively “‘legislates against the backdrop of existing law,’” Parker Drilling Mgmt. Servs., Ltd. v. Newton, 139 S. Ct. 1881, 1890 (2019) (citation omitted), and despite multiple amendments to the Code (including two substantial overhauls in 1954 and 1986), Congress has never seen fit to disturb this long-settled understanding of § 6213(a). Cf. Fort Bend County v. Davis, 139 S. Ct. 1843, 1849 (2019) (“[T]he Court has stated it would treat a requirement as jurisdictional when a long line of Supreme Court decisions left undisturbed by Congress attached a jurisdictional label to the prescription.” (cleaned up)).

Slip op. at 25-26.  In response, I would point out (as the Harvard clinic told the court) that the Supreme Court has never ruled one way or the other on whether the deficiency filing deadline is jurisdictional and has 7 times (most recently in the above quote from Fort Bend) stated that the stare decisis exception from the current treatment of claims processing rules (including filing deadlines) as not jurisdictional only applies to a long line of Supreme Court opinions.  Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 173-174 (2010) (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 § 411(a) as jurisdictional, but not one is from this Court. . . .”; emphasis in original; citations omitted).  All the opinions on which the Ninth Circuit relies are opinions of lower courts.  Sigh.

Finally, in prior posts, I have mentioned the CDP case dismissed for late filing for lack of jurisdiction that is before the Eighth Circuit, Boechler, P.C. v. Commissioner, Eighth Circuit Docket No. 19-2003.  In that case, the parties are litigating whether the CDP Tax Court filing deadline at section 6330(d) is still jurisdictional and not subject to equitable tolling.  Oral argument occurred in Boechler the day before the Ninth Circuit ruled in Organic Cannabis. The day Organic Cannabis was issued, the DOJ immediately brought the opinion to the attention of the Eighth Circuit through an FRAP 28(j) letter.

Federal Circuit Panel Calls For Reconsidering the Court’s Precedent Holding Refund Claim Filing and Timing Requirements Jurisdictional to a Refund Suit

In posts too numerous to cite, I have been calling for the courts to reexamine their prior precedents calling many tax filing deadlines and administrative exhaustion requirements jurisdictional.  In non-tax opinions issued by the Supreme Court since 2004, the Court has changed its precedent and held that “claims processing rules” that merely move litigation along are now almost never jurisdictional.  See, e,g. United States v. Wong, 575 U.S. 402 (2015) (Federal Tort Claims Act suit filing deadlines in agency and courts are not jurisdictional and are subject to equitable tolling); Fort Bend County v. Davis, 139 S. Ct. 1843 (2019) (Title VII charge filing requirement is not jurisdictional) (see here for my thoughts on the implications of Fort Bend to the tax world).  Now, a panel of the Federal Circuit in a pro se tax protester case, Walby v. United States, 2020 U.S. App. LEXIS 13711 (Apr. 29, 2020), has joined a panel of the Seventh Circuit in Gillepsie v. United States, 670 F. App’x 393, 394–95 (7th Cir. 2016), in questioning their Circuit’s precedent holding that the administrative tax refund claim filing requirement at section 7422(a) is a jurisdictional requirement to the brining of a refund suit.  Further, the Federal Circuit panel in the Walby opinion stated it believes that the filing deadlines for tax refund administrative claims at section 6511(a) are no longer jurisdictional, also calling for overturning its Circuit’s precedent.

It will take an en banc Federal Circuit opinion to overrule the Circuit’s prior precedents, so the panels’ opinion in Walby doesn’t change that court’s precedents, yet.  But, it certainly makes it likely that the issues will reach an en banc panel soon.

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What is perhaps most surprising about the Walby panel’s statements is that the opinion below did not raise these concerns about recent Supreme Court opinions, but simply followed the Federal Circuit precedents holding that sections 6511(a)’s and 7422(a)’s requirements are jurisdictional.  Further, the DOJ brief in Walby in the Federal Circuit did not discuss the potential impact of the recent Supreme Court case law on this question, but merely cited prior Federal Circuit precedent.  And the pro se taxpayer, of course, did not complain about the Circuit precedents.  So, the panel on its own chose to research these issues and make its statement in a published opinion.

Here is what the Federal Circuit panel wrote in Walby on these issues:

In Walby’s case, her 2014 claims were deemed paid on April 15, 2015 because withheld income taxes are deemed to have been paid on April 15th of the following year. I.R.C. § 6513(b). To be timely, her administrative refund claim should have been filed with the IRS by April 15, 2017. But Walby did not file her refund claim until December 22, 2017. Walby’s 2014 refund claim was, therefore, untimely and the Claims Court properly dismissed that claim.

There is one aspect of the court’s conclusion regarding this claim, however, that warrants additional examination. The Claims Court concluded that, because Walby’s 2014 administrative refund claim was untimely, pursuant to 26 U.S.C. § 7422(a), it lacked subject matter jurisdiction over that claim. Although this conclusion is correct under our existing case law, see, e.g.Stephens v. United States, 884 F.3d 1151, 1156 (Fed. Cir. 2018), it may be time to reexamine that case law in light of the Supreme Court’s clarification that so-called “statutory standing” defects — i.e., whether a party can sue under a given statute — do not implicate a court’s subject matter jurisdiction. Lexmark Int’l, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 n.4 (2014)see also Lone Star Silicon Innovations LLC v. Nanya Tech. Corp., 925 F.3d 1225, 1235 (Fed. Cir. 2019) (recognizing that, following Lexmark, it is incorrect to classify “so-called” statutory-standing defects as jurisdictional).

The Tucker Act grants the Claims Court jurisdiction to render judgment “upon any claim against the United States founded either upon the Constitution, or any Act of Congress . . . in cases not sounding in tort.” 28 U.S.C. § 1491(a)(1). Additionally, 28 U.S.C. § 1346(a) provides that the Claims Court shall have original jurisdiction (concurrent with the district courts) of “[a]ny civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected.” As such, Walby’s failure to meet the § 7422(a) statutory requirement of a timely administrative claim for her 2014 tax claim would not seem to implicate the Claims Court’s subject matter jurisdiction; rather, it appears to be a simple failure to meet the statutory precondition to maintain a suit against the government with respect to those taxes.

The Supreme Court has not addressed § 7422(a) following Lexmark. We note, however, that the Court’s most recent discussion of § 7422(a) does not describe it as “jurisdictional.” See Clintwood Elkhorn Mining Co., 553 U.S. 1 at 4–5, 11–12. And, although our court has continued to refer to this statute as jurisdictional following Lexmark, we have not yet addressed the implications of that case and the many Supreme Court cases applying it.2

In view of the Supreme Court’s guidance in Lexmark, it may be improper to continue to refer to the administrative exhaustion requirements of § 7422(a) and § 6511 as “jurisdictional prerequisites.” That these provisions concern the United States’ consent to be sued would not seem to change this conclusion. The Supreme Court has “made plain that most time bars are nonjurisdictional.” United States v. Kwai Fun Wong, 575 U.S. 402, 410 (2015). In Kwai Fun, the Court held that the time bar in the Federal Tort Claims Act is nonjurisdictional. In doing so, it rejected the Government’s argument that, because that time bar is a precondition to the FTCA’s waiver of sovereign immunity, the time bar must be jurisdictional. As it had in Lexmark, the Court distinguished jurisdictional statutes from “quintessential claim-processing rules which seek to promote the orderly progress of litigation, but do not deprive a court of authority to hear a case.” Id. (internal quotation marks omitted). It did not except statutes that implicate the government’s waiver of sovereign immunity from that distinction.

In reaching this conclusion, the Court relied on Arbaugh v. Y&H Corp., where, finding Title VII’s numerical employee threshold nonjurisdictional, the Supreme Court stated:

“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. But when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character.”

546 U.S. 500, 515–16 (2006). This “clear statement” rule “does not mean Congress must incant magic words. But traditional tools of statutory construction must plainly show that Congress imbued a procedural bar with jurisdictional consequences.” Kwai Fun, 575 U.S. at 410 (internal quotation marks omitted). There is no such clear statement apparent in the statutes at issue here, 28 U.S.C. § 7422(a) and § 6511(a).3 Other courts also have begun to question whether the time limits and administrative exhaustion requirements in these and other tax provisions should continue to be deemed jurisdictional. See Gillespie v. United States, 670 F. App’x 393, 394–95 (7th Cir. 2016) (whether § 7422(a) is jurisdictional); Bullock v. I.R.S, 602 F. App’x 58, 60 n.3 (3d Cir. 2015) (whether I.R.C. § 7433 is jurisdictional). As to at least one administrative exhaustion requirement, one court has held that it should not be deemed jurisdictional. See Gray v. United States, 723 F.3d 795, 798 (7th Cir. 2013) (I.R.C. § 7433 “contains no language suggesting that Congress intended to strip federal courts of jurisdiction when plaintiffs do not exhaust administrative remedies”); cf. Duggan v. Comm’r of Internal Revenue, 879 F.3d 1029, 1034 (9th Cir. 2018) (I.R.C. § 6630(d)(1)‘s 30-day filing deadline “expressly contemplates the Tax Court’s jurisdiction . . . the filing deadline is given in the same breath as the grant of jurisdiction.”).

Accordingly, although the Claims Court properly dismissed Walby’s 2014 refund claim because she did not meet the prerequisite for bringing such a claim, we think that, under LexmarkArbaugh, and their progeny, the court likely did not lack subject matter jurisdiction over this claim.

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2. See, e.g., Stephens v. United States, 884 F.3d 1151, 1156 (Fed. Cir. 2018); see also Ellis v. United States, 796 F. App’x 749, 750 (Fed. Cir. 2020); Langley v. United States, 716 F. App’x 960, 963 (Fed. Cir. 2017).

3. We are mindful of the Supreme Court’s pre-Lexmark jurisprudence concerning § 7422(a). In United States v. Dalm, the Court held that the district court lacked jurisdiction over gift tax refund suit because “[d]espite its spacious terms, § 1346(a)(1) must be read in conformity with [§ 7422(a) and § 6511(a)] which qualify a taxpayer’s right to bring a refund suit upon compliance with certain conditions.” 494 U.S. 596, 601 (1990). The Court referred to the statutes as “controlling jurisdictional statutes.” Id. at 611. But this view was a departure from the Court’s prior commentary on a predecessor to § 7422(a), recognizing that it “was not a jurisdictional statute at all; it simply specified that suits for recovery of taxes, penalties, or sums could not be maintained until after a claim for refund had been submitted.” Flora v. United States, 362 U.S. 145 (1960).

If you would like to read a little of the Gillespie opinion of the Seventh Circuit, see my post on it here.  It was the statements within Gillespie questioning whether section 7422(a)’s claim-filing requirement is still jurisdictional that the DOJ cited for its decision, post-oral argument, in Tilden v. Commissioner, 846 F.3d 882 (7th Cir. 2017), to file a memorandum of law arguing that the section 6213(a) Tax Court deficiency jurisdiction filing deadline is still jurisdictional – a point with which the Seventh Circuit in Tilden agreed, despite Gillepsie.  See my post on Tilden here.  Of course, as I have noted before, the Harvard tax clinic continues to litigate the issues under section 6213(a) of whether the filing deadlines are still jurisdictional or subject to equitable tolling; companion cases on that issue are currently pending in the Ninth Circuit (and have been pending for over 6 months after oral argument there).

Observations

For most refund suit plaintiffs, it will make little difference whether the section 6511(a) and 7422(a) requirements are jurisdictional, since no one expects the Supreme Court to overturn its ruling in United States v. Brockamp, 519 U.S. 347 (1997), that the filing deadline of section 6511(a) is, in any case, not subject to equitable tolling.  So, who might benefit from making these two requirements nonjurisdictional?  Well, there are always a small number of cases where the DOJ could make an argument that the refund claim filing deadline was missed or that a refund claim was not in proper form, but the DOJ either chose not to raise those issues or just missed that the DOJ had potential arguments under those provisions.  Under current law, treating the requirements as jurisdictional, courts should step in in such cases and police their jurisdiction by raising issues not raised by the DOJ.  But, if the claim filing requirement and claim filing deadline are not jurisdictional to a refund suit, then, in such cases, the court will no longer worry about the issues if the DOJ never raises them.  Non-jurisdictional conditions of suit are merely affirmative defenses.  If the DOJ doesn’t raise an affirmative defense (either accidentally or knowingly), it simply forfeits or waives the defense.  Indeed, if the DOJ wanted to expeditiously litigate a test case brought by a plaintiff who hadn’t yet filed a refund claim, if the claim filing requirements is no longer jurisdictional, the DOJ could choose to waive any argument that a claim should have been filed before suit was brought.

Tax Court Jurisdiction in Late-Filed Deficiency Cases

Yesterday, PT put up a post providing guidance in the timing of the filing of Tax Court petitions and noting the different time frames for filing caused by the Tax Court shutdown and IRS Notice 2020-23 exercising the power to extend Tax Court filing deadlines granted in IRC 7508A. If last year’s government shutdown is any indication of what will happen in 2020, it is almost a certainty that some taxpayers who try to get into the Tax Court will miss the deadline for one reason or another.  Some of those reasons are good reasons.  Those taxpayers will face a motion to dismiss filed by the IRS or an order to show cause generated by the Tax Court seeking to knock them out of Tax Court because of a late filing.  For those of you who read yesterday’s post and have a good grasp of the time to file your Tax Court petition and the need to file using the USPS, certified mail with a filing slip, this post is unnecessary.  For the rest of you, including those who come to the rescue of pro se taxpayers who may have filed late, this post will provide you with assistance if yesterday’s post did not keep you, or your current client from the shoals of a jurisdictional dismissal.

In a post last month, I called for a legislative clarification that judicial filing deadlines in most tax cases are not jurisdictional and are subject to equitable tolling.  The extensions for filing Tax Court petitions provided by the IRS in its recent Notice 2020-23 (from April 1, 2020 to July 15, 2020) and, effectively, by the Tax Court itself in Guralnik v. Commissioner, 146 T.C. 230 (2016) (from March 19, 2020 [when the Clerk’s Office first closed] until the Clerk’s Office reopens) may not be sufficient for all COVID-19 sufferers.  Reports are that people coming out of the hospital are often extremely weakened by the virus.  They may not be physically able to meet even these extended deadlines.  That’s where equitable tolling may help, for one of the most common grounds for equitable tolling is the plaintiff being prevented by circumstances beyond his or her control from complying with the filing deadline.  Using equitable tolling, judges using their equity hats can give extensions after hearing all the facts and circumstances and making sure the taxpayer behaved at least with reasonable diligence under the circumstances.

Over the last year, The Tax Clinic at the Legal Services Center of Harvard Law School (The Clinic) has been looking to litigate test cases in the Tax Court concerning whether the deficiency filing deadline of section 6213(a) is still jurisdictional or is subject to equitable tolling under recent Supreme Court case law that, starting in 2004, made filing deadlines now almost never jurisdictional and usually subject to equitable tolling.  I assist The Clinic in finding good test cases by nightly scouring Tax Court orders in this area (not just designated orders).

I thought it would be useful to tell the story of the cat and mouse game that has been going on between The Clinic and the IRS since last fall in The Clinic’s attempt to litigate these issues.  In the three best test cases that I found, and where Keith and I entered appearances and filed lengthy papers to litigate the issues, in each case, the IRS took steps to avoid having to respond – in one case reissuing the notice of deficiency just before The Clinic filed its response to an order to show cause and in two others conceding the underlying deficiency shortly after The Clinic filed motions to vacate dismissal orders, leading to withdrawal of the motions to vacate as moot.  Is the IRS that afraid that The Clinic may be right? 

With this post, I also share the filing we made in one such case, since there is no reason that others shouldn’t be able to borrow from it for purposes of making these same arguments in their cases.  All I would ask is that you keep Keith or me informed if you do use it and have such a test case for yourself.

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You know from prior posts (too many, so I won’t give cites) that The Clinic initially tried to argue that the Tax Court innocent spouse (section 6015(e)(1)(A)) and Collection Due Process (section 6330(d)(1)) petition filing deadlines are not jurisdictional and are subject to equitable tolling under recent Supreme Court case law.  We lost the innocent spouse cases in three Circuits.  We lost the Collection Due Process cases in the Tax Court (Guralnik) and the Ninth Circuit (as amicus).  But, we won a case in the D.C. Circuit (as amicus with the court adopting significant portions of our brief) concerning the section 7623(b)(4) whistleblower award petition filing deadline, where the statutory language regarding the time period for filing the petition was taken almost verbatim, from the Collection Due Process provision. And for further discussion of these issues, see Bryan Camp’s article on jurisdictional tax deadlines (Prof. Camp argues that the deficiency, CDP and refund deadlines are non-jurisdictional, but that the innocent spouse deadline is jurisdictional).

However, probably 90% of Tax Court petitions are not under these jurisdictions, but are deficiency cases, where section 6213(a) supplies the deadline.  Initially, The Clinic avoided litigating the section 6213(a) deadline because of concerns that under section 7459(d), any late-filed petition that was dismissed would end up being dismissed on the merits and upholding the deficiency – thereby precluding by res judicata the taxpayer from subsequently paying and suing for a refund in district court. 

Only later, by doing a little research and thinking did we conclude that almost no one who is dismissed from the Tax Court for having late filed a deficiency case ever pays and sues for a refund.  There are only about 200 refund suits brought in the entire U.S. each year, and Keith and I don’t recall seeing any having been brought after a Tax Court dismissal for late filing.  So, the section 7459(d) concern is extremely unlikely as a factual matter. 

On the other hand, if the filing deadline is no longer jurisdictional, judges wouldn’t police the filing deadline themselves as they now do.  Our research showed that, each month, Tax Court judges on their own find 7 to 10 cases in which the IRS failed to notice a possible late filing and so the judges issue orders to show cause why the cases should not be dismissed.  So, 7 to 10 taxpayers a month might benefit if the deficiency filing deadline were not jurisdictional.  If the IRS fails to raise late filing as to a nonjurisdictional deadline, the IRS simply forfeits the issue.

The Tax Court and every Circuit court has long held that the deficiency filing deadline is jurisdictional.  But, surprisingly, only two Circuit courts to date and no Tax Court opinion has analyzed whether the deficiency filing deadline is still jurisdictional or is subject to equitable tolling under recent Supreme Court case law.  The one Circuit court precedential opinion, Tilden v. Commissioner, 846 F.3d 882 (7th Cir. 2017), held that the filing deadline is still jurisdictional, but its reasoning is subject to substantial criticism.  Another Circuit court opinion reaches the same result in an unpublished opinion; Garrett v. Commissioner, 2019 U.S. App. LEXIS 37483 (3d Cir. 2019); yet the case was a last known address case in which the parties did not even discuss in their briefs the issue of whether the filing deadline is still jurisdictional, and the court’s reasoning is similar to Tilden (which it doesn’t even cite).  So, since 2004 (when the Supreme Court changed its precedent), the issues have somehow been avoided in the Tax Court and most Circuits.

There are pending two companion cases in the Ninth Circuit presenting the issues of whether the section 6213(a) filing deadline is still jurisdictional or is subject to equitable tolling under the recent Supreme Court case law, Organic Cannabis Foundation v. Commissioner, Ninth Circuit Docket No. 17-72874, and Northern California Small Business Assistants, Inc. v. Commissioner, Ninth Circuit Docket No. 17-72877.  The cases had oral argument on October 22, 2019.  An opinion

could issue in the cases any day.  However, because of another issue presented in the cases, the Ninth Circuit may never reach the jurisdiction and equitable tolling issues.  (The Clinic filed amicus briefs in the cases.)

Because the issues may be avoided in those two Ninth Circuit cases, since last year, Keith and I have been looking in pro se Tax Court cases for fact patterns that would make great test cases on the issue.  We find the cases by searching orders issued daily by the Tax Court.  The orders are ones of dismissal or to show cause why the petition should not be dismissed for late filing.  Some of the orders come from S cases, which presents an extra layer of problem because, to date, no court has held that an S case petitioner can appeal a Tax Court dismissal of a petition for lack of jurisdiction.  (That’s another issue The Clinic is litigating and in another Ninth Circuit case – but I will not go into that issue here.)  If the order we find is one for dismissal, we try to enter an appearance and, within 30 days, move to vacate the dismissal, arguing that the Tax Court erred in treating the filing deadline as still jurisdictional.  If it is an order to show cause, we try to enter an appearance and respond to the order on behalf of the taxpayer.  If the case is an S case, we also move to remove the S designation, since it would be easier to appeal if that designation were removed.  To date, we have found about a half dozen apparently great test cases on the facts, but taxpayers have only responded to our approaches in three cases.

The funny thing about those three cases, though, is that the IRS attorneys in the cases have done everything possible to avoid having to respond to our papers.  In two cases, where we had moved to vacate dismissal orders, the IRS, before responding, looked into the facts of the underlying deficiency and represented that the deficiency would be abandoned by the IRS.  Such actions made our pursing further Tax Court litigation moot, so we moved to withdraw our motions to vacate (and, in one case, to remove the S designation).  The Tax Court granted our motion to withdraw without comment in one case and we are awaiting the outcome of the motion to withdraw in the other.  In effect, The Clinic helped the taxpayers in these cases to win the cases by other means.

In the third case, the IRS felt so bad about what had happened that it reissued the notice of deficiency and represented that it would not try to assess the deficiency sent out in the first notice.  The IRS sent out the new notice of deficiency shortly after the Tax Court issued an order to show cause why the case should not be dismissed and just prior to our entry of appearance though neither the taxpayers nor The Clinic knew this at the time of filing the taxpayers’ response to the order.  Only after The Clinic filed its response did the IRS inform The Clinic and the court that the IRS had sent out a new notice of deficiency. The new notice of deficiency afforded the taxpayers an opportunity to timely file in the Tax Court which the IRS hoped would make any fight on the first notice moot. 

However, the Tax Court has not cooperated with the IRS strategy (at least, yet).  The court does not simply dismiss a petition as duplicative when it might be that the petition did give the Tax Court jurisdiction.  Parties can’t stipulate the court into or out of jurisdiction.  So, in the case involving the first notice of deficiency, where the court had issued an order to show cause, and The Clinic filed papers, the Court has ordered the IRS to respond to our papers by April 27.  This may result in a Tax Court opinion, not just an unpublished order – especially if the Tax Court decides that the deficiency filing deadline is not jurisdictional and is subject to equitable tolling (which would no doubt be a court-reviewed opinion).

This third case is an S case, Rosenthal v. Commissioner, T.C. Docket No. 18392-19S[WMS1] , possibly appealable to the Ninth Circuit.  Here are the facts that we think present an excellent case for equitable tolling:  The taxpayers received a notice of deficiency and filled out a Tax Court Form 2 petition.  They incorrectly mailed the petition to the IRS Laguna Nigel office.  That office stamped the petition “received” four days before the end of the 90-day filing deadline.  Weeks later, the IRS forwarded the petition to the Tax Court, which filed it as of the date the Tax Court received the petition.  One of the classic grounds for equitable tolling is timely filing in the wrong forum.  Just in case anyone wants to read our response to the order to show cause (or copy from it), here it is in Word.

Since the first two cases got resolved in favor of the taxpayers without an opinion or order, for privacy purposes, I won’t identify them here by name or docket number.  But, one of those cases presented the exact same factual pattern as Rosenthal – i.e., timely filing of the Form 2 petition with the IRS office that generated the notice of deficiency. 

In sum, it is rather curious that the IRS keeps trying to prevent The Clinic from litigating in the Tax Court the issues of whether the deficiency petition filing deadline is not jurisdictional and is subject to equitable tolling.  But, these issues won’t be dodged forever.  If the Ninth Circuit rules favorably in the two pending test cases in which The Clinic filed amicus briefs, I expect the DOJ to seek en banc rehearing and Supreme Court review, if necessary.  In the event The Clinic loses in the Ninth Circuit, it is not yet prepared to give up on these issues in other appellate courts.  So, we will continue looking for Tax Court deficiency test cases.

IRS Finally Extends Judicial and Refund Claim Filing Deadlines Because of COVID-19

Today, Carl Smith brings us a quick analysis of the newest notice from the IRS on deadline extensions.  This broad notice gives deadline relief in many areas.  The post focuses on judicial and refund deadlines which are only a subset of the relief provided in the notice.  Note that pre-judicial deadlines such as the 30-day period to make a CDP request should also be extended by this notice and that the look back refund provision in IRC 6511(b) may be impacted by this notice.  This notice provides much relief that practitioners have been waiting for over the past few weeks.  Thanks to the IRS for using its muscular power in 7508A broadly.  Keith

Section 7508A allows the IRS to extend a number of deadlines because of Presidentially-declared disasters.  Most of the deadlines one thinks of involve filing tax forms, making elections, and paying taxes.  And, the IRS has been quick to issue a series of Notices under its authority because of the COVID-19 pandemic.  Finally, though, in its latest expansive Notice 2020-23 extending even more tax deadlines because of COVID-19, the IRS got around to extending judicial and refund claim filing deadlines.  The extensions are for acts due to be performed on or after April 1, 2020, and before July 15, 2020.

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Reg. sec. 301.7508A-1(c)(1) allows the IRS to suspend the periods for:

(iv) Filing a petition with the Tax Court, or for review of a decision rendered by the Tax Court;

(v) Filing a claim for credit or refund of any tax;

(vi) Bringing suit upon a claim for credit or refund of any tax;

In Part III.A. of Notice 2020-23, 2020-18 I.R.B. 1, the IRS writes:

The Secretary of the Treasury has also determined that any person performing a time-sensitive action listed in either § 301.7508A-1(c)(1)(iv)-(vi) of the Procedure and Administration Regulations or Revenue Procedure 2018-58, 2018-50 IRB 990 (December 10, 2018), which is due to be performed on or after April 1, 2020, and before July 15, 2020 (Specified Time-Sensitive Action), is an Affected Taxpayer. 

In Part III.C. of the Notice, the IRS clarifies:

Affected Taxpayers also have until July 15, 2020, to perform all Specified Time-Sensitive Actions, that are due to be performed on or after April 1, 2020, and before July 15, 2020. This relief includes the time for filing all petitions with the Tax Court, or for review of a decision rendered by the Tax Court, filing a claim for credit or refund of any tax, and bringing suit upon a claim for credit or refund of any tax. This notice does not provide relief for the time period for filing a petition with the Tax Court, or for filing a claim or bringing a suit for credit or refund if that period expired before April 1, 2020.

The last sentence of Part III.C. is a bit misleading, though.  Even though the IRS does not extend the period in which to file a Tax Court petition for any period before April 1, 2020, the result of the Tax Court’s opinion in Guralnik v. Commissioner, 146 T.C. 230 (2016), should be that the period to file a Tax Court petition has been extended from the time the Tax Court Clerk’s Office closed on March 19, 2020, until the Tax Court Clerk’s Office reopens for business (a time that is at this point uncertain).

Practitioners should also be careful about the IRS extension: While it extends the time to file a refund claim under section 6511, bring a refund suit under section 6532(a), bring any Tax Court suit (under, for example, sections 6213(a), 6330(d)(1), or 6015(e)(1)(A)), and appeal a Tax Court case under section 7483, it does not extend the time to file an appeal of a district court refund suit judgment to a court of appeals under 28 U.S.C. sec. 2107, and it does not extend the times to file other kinds of tax suits in district courts, such as a wrongful levy suit under section 6532(c) or a suit for damages from wrongful collection under section 7433(d)(3).  Equitable tolling may be used to extend some of the other district court filing deadlines, but not in most Circuits.

The extension of the refund claim filing deadline probably affects the most taxpayers because, for individual filers, the period to file a refund claim for 2016 income taxes, which would, for most, have expired on April 15, 2020, is now put off for three months.

So, How Will the “Recovery Rebate” Refunds Work This Time? Part II

This is the second of a two-part post on the portion of the CARES Act legislation that adopts, once again, “recovery rebate” credits and refunds.

In part I of this post, I discussed the principal provisions of section 6428 and the practical ways I expected the statute to be administered.  My administrative predictions are based on how the IRS administered two prior version of section 6428—in 2001 and 2008.

This post is to discuss two issues under the prior versions of section 6428 that led to litigation and how those issues have or have not been addressed by the current legislation.  The two issues are:

  1. Whether the IRS may apply the recovery rebate credits (including stimulus checks) under section 6402 to reduce certain outstanding debts; and
  2. Which taxable year is the stimulus check “for” for purposes of bankruptcy?

The answer to the first question is decidedly “no”, with one exception.

The answer to the second question is still open – at least outside the Second Circuit.

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In plain English, taxpayers never “pay” refundable credits to the IRS.  So, Congress did something to modify plain English.  Section 6401(b)(1) provides that the excess of all refundable credits over the income tax imposed “shall be considered an overpayment”.

Section 6402(a) allows (but does not require) the IRS to offset any overpayment of one tax against any other federal tax debt.

Section 6402(c) instructs the IRS to send to states – to reimburse them for paying out overdue child support – “the amount of any overpayment to be refunded to the person making the overpayment” who was obligated to, but who did not pay, the child support. 

One of the early cases establishing that overpayments attributable to refundable credits can be sent to states under section 6402(c) involved an earned income tax credit (EITC) for a taxpayer who had a new family, but who had failed to pay the required child support to his old family.  He contested the IRS taking his EITC, arguing that he was not “the person making the overpayment” because he had never paid the EITC to the IRS in the first place.  In Sorenson v. Sec’y of Treasury, 475 U.S. 851 (1986), citing section 6401(b)(1), the Court held that the taxpayer had made an overpayment and so his EITC overpayment could be collected for child support under section 6402(c). Since Sorenson, it is uncontested that overpayments from refundable credits can be taken under section 6402.

Section 6402(d) requires the IRS to send overpayments to other federal agencies who inform the IRS that the taxpayer owes the other agency money.

Section 6402(e) requires the IRS to send overpayments to states who notify the IRS that a state resident owes state income taxes.

Section 6402(f) requires the IRS to send overpayments to states who notify the IRS that a person “owes a covered employment compensation debt” to that state.

Both the 2001 and 2008 versions of section 6428 said nothing about section 6402.  Accordingly, the IRS felt required to send stimulus checks to other federal agencies or the states under subsections (c), (d), (e), and (f) of section 6402 and decided that it would offset any such overpayment against federal taxes under the permissive language of section 6402(a).  This was sad with respect to most of my low-income Cardozo Tax Clinic clients, but I knew there was nothing I could do about it.

However, in 2007, two of the clinic’s clients entered into offers in compromise (OICs) with the IRS.  In each OIC, there was a provision stating that, as additional consideration, the client offered “any refund, including interest, due to me/us because of overpayment of any tax or other liability” up to and including for the year in which the offer was entered into (i.e., 2007).  For both clients, the IRS took their stimulus check, treating the checks as relating to the 2007 taxable year.  And for one taxpayer, the IRS also took the 2007 EITC and additional child tax credit. 

I arranged for the taxpayers to file refund claims and sue for refund on the ground that, while concededly, refundable credits are overpayments for purposes of the Code, the language of OICs is in plain English and overrides the Code.  I argued that in plain English, refundable credits are not “refunds . . . because of overpayment”.  I also argued that, as far as the stimulus check, it related to the 2008 tax year – per the language of section 6428(a) – so it was outside the scope of the additional consideration language.

In Sarmiento v. United States, 812 F. Supp. 2d 137 (E.D.N.Y. 2011), aff’d in part and rev’d in part, 678 F.3d 147 (2d Cir. 2012), and Maniolos v. United States, 741 F. Supp. 2d 555 (S.D.N.Y. 2010), aff’d per order, 469 Fed. Appx. 56(2d Cir. 2012)), I lost both arguments (though a judge in the E.D.N.Y. had agreed with me that the stimulus check related to 2008). 

The Second Circuit held that plain English was not contemplated by the wording of the OIC, but, instead, Code-speak was, and Code-speak (section 6401(b)(1)) made refundable credits “overpayments”. 

The Second Circuit also held that the stimulus check related to the 2007 year, primarily because the legislation was passed in February 2008, before 2007 tax returns were due.  I thought the date of passage of the act legally irrelevant, since the 2007 returns had no entry for section 6428 credits and 2007 returns could have been filed in January or February 2008, prior to the date of enactment.

Even though it won my cases, the IRS was concerned that another Circuit might not come to the same conclusion, so it altered the additional consideration language for future OICs.  Today, the OIC additional consideration sentence reads: “The IRS will keep any refund, including interest, that I might be due for tax periods extending through the calendar year in which the IRS accepts my offer.”  Note the omission of the words “because of overpayment”.

In any case, these were the first Article III courts that had ruled on the issue of the year to which the stimulus check relates – i.e., the year whose tax information generated the checks or the year to which section 6428(a) says the credit is attributable.

But, it turns out that the year to which the stimulus check relates is no longer important for collection of IRS taxes from the stimulus check:  New CARES Act section 2201(d) provides:

(d) EXCEPTION FROM REDUCTION OR OFFSET.—Any credit or refund allowed or made to any individual by reason of section 6428 of the Internal Revenue Code of 1986 (as added by this section ) . . . shall not be— . . . (2) subject to reduction or offset pursuant to subsection (d), (e), or (f) of section 6402 of the Internal Revenue Code of 1986, or (3) reduced or offset by other assessed Federal taxes that would otherwise be subject to levy or collection.

As I read section 2201(d)(3), it prohibits collection of either the stimulus check or the credit under section 6428(a) for other federal taxes under section 6402(a) (though I don’t know why the statute makes no reference to section 6402(a)).  And all but the state child support offsets are also prohibited by the new statute.

I am delighted by this compromise.  It should be noted that when Senator McConnell first introduced his coronavirus legislation, the version of section 6428 appearing in that bill would have prohibited offset under sections 6402(d), (e), or (f), but would have allowed offsets for other federal taxes.  I complained of this publicly (in an article in Tax Notes Today Federal) and to a friend on the Joint Committee on Taxation staff.  I argued that now was not the time to be collecting old tax debts, but to be stimulating the economy.  The very people too poor to pay their back tax debts were no doubt also to be most in need of the checks to survive this crisis. Whether my advocacy had any effect, I have no idea.  I’d like to hope it did, even though this change probably cost the federal government several billion dollars that it would not otherwise have sent out.

The final issue that ended up in litigation regarding the 2001 and 2008 versions of section 6428 was whether, for purposes of bankruptcy, the advance check was “for” the taxable year on whose information it was calculated (2000 or 2007) or was “for” the taxable year of the stated credit (2001 or 2008).  There had been one ruling that the 2001 section 6428 check was for the taxable year 2001. In re Lambert, 283 B.R. 16 (9th Cir. BAP 2002).  But, bankruptcy courts split almost evenly over the taxable year as to which the 2008 stimulus check was for.  Compare In re Wooldridge, 393 B.R.  721 (Bankr. D. Idaho 2008) (check was for 2008); In re Schwenke, 102 A.F.T.R.2d 6355 (Bankr. D. Mont. Sept. 25, 2008) (same); with In re Alguire, 391 B.R. 252 (Bankr. W.D.N.Y. 2008) (check was for 2007); In re Smith, 393 B.R. 205, 208-209 (Bankr. S.D. Ind. 2008) (same).  I am no expert in bankruptcy, but I anticipate that there will be the same dispute concerning the new coronavirus stimulus check, and that the opinion of the Second Circuit in my cases, although influential, will not be the last word.

So, How Will the “Recovery Rebate” Refunds Work This Time? Part I

This is the first of a two-part post on the portion of the coronavirus legislation that adopts, once again, “recovery rebate” credits and refunds.

When Congress passed the Economic Growth and Tax Relief Reconciliation Act of 2001, Pub. L. 107-16 – i.e., Bush 43’s first tax bill – it reduced taxes, in part, by creating a new 10% bracket.  Congress wanted to get into taxpayer hands some of the benefit of that rate reduction even before returns were due.  So, it came up with the idea of sending checks mid-year.  The methods of sending and computing those checks were laid out in a new Code section 6428.  That section was entitled “Acceleration of 10 Percent Income Tax Rate Bracket Benefit for 2001”.

Even before the economy cratered in late 2008, Congress saw what was coming, so, in February 2008, in the Economic Stimulus Act of 2008, Pub. L. 110-185, Congress revived and revised section 6428 – now to send “recovery rebate” checks in mid-2008. 

In section 2201 of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Congress has again decided to send out checks through the IRS and has again revived and revised section 6428 to send recovery rebate checks in mid-2020. 

Why use the IRS to send out checks, rather than some other government entity?  Well, because Congress wants to base the amount of the checks, in part, on citizens’ income, and only the IRS would have that information handy.

Section 6428 operates as a refundable credit – just like the earned income tax credit or the additional child tax credit.  Section 6428(b).  (Hereinafter, all references to section 6428 are to the 2020 version, unless I tell you otherwise.)  Because it has been awhile since this recovery rebate credit has been in the law (and because I litigated on behalf of taxpayers the only district court and appellate court opinions addressing the 2008 version of section 6428; see Sarmiento v. United States, 812 F. Supp. 2d 137 (E.D.N.Y. 2011), aff’d in part and rev’d in part, 678 F.3d 147 (2d Cir. 2012), and Maniolos v. United States, 741 F. Supp. 2d 555 (S.D.N.Y. 2010), aff’d per order, 469 Fed. Appx. 56(2d Cir. 2012)), I thought it would be useful for me to give a practical primer on how the new recovery rebate is written, how it was administered last time, and how I think it will be administered this time – because I anticipate the IRS will make administrative choices in 2020 similar to those that the IRS made in 2008.

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The current recovery rebate credit is nominally a credit against 2020 income taxes.  Section 6428(a).  This follows the pattern of the prior two versions of making the credit a credit against the income taxes of the tax year in which the “advanced refund” (i.e., “stimulus check”) is sent out.  That means that, on the 2020 income tax return that you prepare in April 2021, there will likely be a line entry under payments and refundable credits in which you calculate the section 6428 credit using your 2020 income.  You will then subtract from the credit due you on that return the amount of any stimulus check that you received in 2020.  If you are due more credit, you will get it as part of your 2020 refund.  If you have been overpaid through the stimulus check, however, you do not have to return the excess.  Section 6428(e)(1).

This brings me to a comment based on my experience dealing with low-income taxpayers while I headed the Cardozo Tax Clinic during 2008 and 2009:  Most taxpayers, at the time the 2020 return is prepared, will not be sure whether or not they received the stimulus check or the amount thereof.   Since you have to subtract the amount of the stimulus check from the calculation of the 2020 credit, how do you solve this problem?  As discussed below, the stimulus check, if precedent holds, is going to be posted to the taxpayer’s 2019 income tax transcript as (1) a credit and (2) then a refund check. So, order a copy of that transcript for 2019 before preparing the 2020 return. 

If you fail to subtract the amount of a stimulus check that was sent, several things happen:

The excess refundable credit that you claimed is treated as a deficiency in tax under section 6211(b)(4) and can be collected without a notice of deficiency under the math error authority of section 6213(b)(1) and (g).  This is partly stated at section 6428(e)(1) and the rest is stated in subsection (b) of CARES Act section 2201, the non-codified part of the statute that adopted the new section 6428. 

You can also expect a 20% section 6662 penalty to be imposed on that deficiency.

Who gets the credit?  Any individual who is not a nonresident alien or a person who can be claimed as someone else’s dependent.  Section 6428(d).  This is a much broader category of individuals entitled to the credit than in the prior two versions of section 6428.  For the prior versions, smaller credits were allowed if an individual had not paid income tax in the amount of the usual credit, but the individual had a certain amount of qualifying income (which included Social Security benefits).

How much is the credit?  It is $1,200 per person ($2,400 in the case of a joint return) plus $500 per dependent who is a qualifying child of the individual under section 24(c).  Section 6428(a).  That means that the rules of section 24(c) apply to limit the additional $500 to children up to age 17.  All other limits on who is a qualifying child under section 24(c) also apply.

What is the phaseout of the credit?  The phaseout of the credit begins at certain adjusted gross income (AGI) levels, depending on filing status.  The phaseout is 5% of the AGI that exceeds that level.  The level at which the phaseout begins is AGI of $150,000 for joint filers, $112,500 for head of household filers, and $75,000 for single or married filing separately filers.  Section 6428(c).

How is the stimulus check sent to me in mid-2020 calculated, since I don’t know my 2020 income yet, and, indeed, my income is likely to be much lower in 2020 than in prior years?  As with the earlier versions of section 6428, this problem is only partly solved by having the IRS calculate the stimulus check as the amount that would have been due you under subsection (a) if your 2019 tax information were used.  Section 6428(f).  As you can see, though, many more people are likely to face smaller stimulus checks than they will ultimately be due for a recovery rebate refund under this system.  For example, say a single filer earned $200,000 of AGI in 2019.  She would get no stimulus check because of the operation of the phaseout.  But, when she filed a 2020 return showing AGI of only $60,000, she would get $1,200 at that time, since she did not get a stimulus check and her AGI was not above the phaseout amount.

What if an individual never filed a 2019 return, so the IRS can’t know the individual’s 2019 AGI?  Well, first, the IRS can substitute 2018 for 2019 in calculating the stimulus check, and, second, “if the individual has not filed a tax return for such individual’s first taxable year beginning in 2018, [the IRS may] use information with respect to such individual for calendar year 2019 provided in (i) Form SSA-1099, Social Security Benefit Statement, or (ii) Form RRB-1099, Social Security Equivalent Benefit Statement.”  Section 6428(f)(5). 

I am not sure what happens if the individual did not file either a 2018 or 2019 return and was not receiving Social Security benefits in 2019.  For example, many taxpayers are working and are slightly overwithheld and so do not bother to file a tax return for the small refund they may be due.  Are these taxpayers going to get a stimulus check? My guess is that they are not.  They will have to wait until they file a 2020 return to get the benefit of the credit.  If they are perennial non-filers, so don’t file for 2020, either, they may never get the credit.  I think the drafters of section 6428 could have been more creative – such as allowing the IRS to total all gross income shown on 2018 or 2019 third-party information returns for purposes of calculating an AGI.

When will the stimulus checks be paid?  The statute does not set a specific date for payment, but it does require that no checks be sent out after December 31, 2020.  Section 6428(f)(3).  For the 2008 checks, the IRS ended up staggering the issuance of checks each week, so as not to overwhelm its computers or staff.  If I recall, the checks were issued over a three-month period, with the last two digits of one’s Social Security Number determining in which tranche any check would be sent.  I am not sure the IRS can do it any faster.  However, if the first checks only go out to some people late summer or early fall, I don’t know how poor people or people who have lost their jobs already will be able to get by in the interim.

There are also provisions in section 6428 and the noncodified accompanying legislation addressing members of the Armed Forces and the treatment of possessions.  I will not discuss those.  However, in my next post, I will discuss issues that arose in the courts in response to the prior versions of section 6428 and how the answers may or may not differ under the current version.