In Boechler v. Commissioner, 142 S. Ct. 1493 (2022) the Supreme Court held that the time period for filing a petition in Tax Court in a Collection Due Process (CDP) case is not jurisdictional. The Supreme Court also held that the statute is subject to equitable tolling; however, we have predicted in many blog posts that based on historical patterns the most likely application of the decision would occur when the IRS did not affirmatively raise late filing as a defense. An order entered yesterday in Ahmad v. Commissioner, Dk. No. 37926-21L appears to be the first order holding that the IRS waived the right to raise late filing as a defense and allowing the case to move forward for a merits determination.
In Ahmad the IRS issued a CDP determination letter on November 23, 2021, sustaining the decision to file a notice of federal tax lien (NFTL). He filed a petition challenging the filing of the NFTL because he is unemployed and on public assistance. The IRS filed a motion for summary judgment which the Tax Court grants; however, in doing so it notes that he filed his petition on December 30, 2021. This date is more than 30 days after the notice and appears to create a late filed petition.
In footnote 7 of the order the Court notes that the IRS waived any potential objection based on the timeliness of the petition. In the motion for summary judgment the IRS apparently expressly conceded that he filed the petition on time. The Court states:
Therefore, the timeliness requirement in section 6330(d)(1) poses no bar to the Court’s jurisdiction in this case.
Earlier in footnote 7 the Court explained the impact of Boechler on the jurisdiction of the Court with regard to timely filing and made clear that the IRS must affirmatively raise timeliness in order to have the Court rule on this issue.
Prior to the Boechler decision the Tax Court did not merely rely on the IRS to raise the timeliness of the filing of a petition but it affirmatively analyzed the filing to determine timeliness. Based on the research of the Tax Court’s show cause orders in these situations, Carl Smith determined that the Tax Court raised the timeliness issue in over 200 cases each year where the IRS never objected to the taxpayer’s case as late filed. We predicted that far more taxpayers would benefit from the lack of Tax Court policing timeliness than would benefit from equitable tolling. The Ahmad case doesn’t predict the number of times this will happen but it makes clear that absent an affirmative objection by the IRS the case will move forward to whatever disposition it deserves on the merits.
Here, the Court grants the summary judgment motion so the failure of the IRS to raise timeliness in the filing of the petition serves as a mere pyrrhic victory. Nonetheless, the Ahmad case lets us know that a new era has begun. I blogged earlier about this change in the whistleblower cases because of the DC Circuit’s decision in Myers v. Commissioner, 928 F.3d 1025. Now it happens in CDP cases. Depending on the outcome of Hallmark and other cases challenging the timeliness issue in deficiency cases, it could happen in deficiency cases where 95% of the cases exist.