Third Circuit Offers a Potential Path to Jurisdiction Using Boechler

June 6, 2023 by 1 Comment

In a non-precedential, per curiam opinion in the case of Robinson v. Commissioner, No. 22-3120 (3d Cir. 2023) the court reversed the decision of the Tax Court to dismiss Ms. Robinson’s Collection Due Process (CDP) case and remanded the case to the Tax Court for it to consider whether her response to the motion to dismiss filed by the IRS could qualify as a petition.  The facts are important here but so is the Third Circuit’s interesting use of the Supreme Court’s Boechler opinion to find a possible path to jurisdiction for Ms. Robinson.

read more...

Ms. Robinson owes money to the IRS.  She requested a CDP hearing but filed her Tax Court petition before the IRS issued a notice of determination regarding her hearing.  It’s not clear why she jumped the gun, but she did not jump it by too much because the IRS did issue a CDP determination letter about three weeks after she filed her petition.  Because no CDP determination letter existed at the time of her petition, the IRS moved to dismiss her case for lack of jurisdiction.  She responded to the motion objecting to dismissal and attaching a copy of the then issued notice of determination.  Although her response addressed venue rather than jurisdiction, the Third Circuit gave her a hand.

The Tax Court dismissed her case citing the lack of a notice of determination at the time of the petition. 

The Third Circuit began by noting that the Tax Court properly determined that it lacked jurisdiction without a notice of determination.  It then stated:

The Tax Court dismissed the action for lack of jurisdiction without addressing whether Robinson’s objection could be construed as a petition for review of the notice of determination.

 That statement opens the door to jurisdiction wider than most might have thought possible.  After making this statement, the Third Circuit then reached back to a number of Tax Court opinions over the past five decades talking about how much the Tax Court tried to assist petitioners coming to its doors. 

The Tax Court, in its discretion, has generally “leaned over backwards” to “acquire jurisdiction by virtue of documents filed by taxpayers and intended as petitions even though the documents do not comply with the form and content of petitions prescribed in the Rules of the Tax Court.” Castaldo v. Comm’r, 63 T.C. 285, 287 (1974). 

It generally prefers to hold that it “has jurisdiction whenever possible so as to provide taxpayers with an opportunity to obtain judicial redetermination of their tax liability prior to the payment thereof.” Eiges v. Comm’r, 101 T.C. 61, 67–68 (1993); see also Gray v. Comm’r, 138 T.C. 295, 298 (2012) (explaining that claims in a petition “should be broadly construed so as to do substantial justice, and a petition filed by a pro se litigant should be liberally construed”). Because the Tax Court here did not address whether Robinson’s objection could be liberally construed as a second petition for review, we will vacate and remand so that it can make that determination. See, e.g., Goosby v. Comm’r, 117 T.C.M. (CCH) 1258 (2019) (treating the petitioner’s objection to a motion to dismiss a premature petition for review as a new petition seeking review of a notice of determination).

As I have discussed previously with regard to imperfect petitions, the Tax Court does make a concerted effort to assist taxpayers in getting in its doors; however, that effort has not extended to assisting taxpayers who were late or who were early.  The Vu case is a great example of the Tax Court not opening its doors to someone who was early.

Having pointed out the Tax Court generosity regarding jurisdictional determinations which regular readers of this blog will find interesting, the Third Circuit then goes on to determine that Boechler might create a path for the Tax Court to be generous to Ms. Robinson.  The objection she filed to the IRS motion to dismiss was filed more than 30 days after the notice of determination was issued; however, the Third Circuit notes that after Boechler taxpayers need not meet the 30-day time period if they have a good reason for missing it.  So, the Tax Court could use precedent such as Goosby to find that it has jurisdiction here.

The Third Circuit carefully states that the determination regarding equitable tolling is for the Tax Court, and it is not making a determination that Ms. Robinson had a good excuse for filing late.  Still, the decision shows an inventive way that Boechler could assist a taxpayer in getting their day in court.  It will be interesting to see how this case plays out on its return to the Tax Court.

Here’s to you Ms. Robinson.

Filed Under: Collection Due Process, Federal Courts - Jurisdiction, Tax Court

DOJ Wins One Case and Loses Motions in Another Where POAs Signed First Refund Claims for Taxpayers, Part II

May 26, 2023 by Leave a Comment

We have run a number of posts involving refund suits where (1) the taxpayer’s representative signed the predicate refund claim on the taxpayer’s signature line, and (2) the Form 2848 power of attorney did not expressly authorize the representative to sign returns.  This is part II of a two-part post on two recent cases presenting this fact pattern, decided one day apart, Dixon v. United States, 2023 U.S. App. LEXIS 11422 (Fed. Cir., May 10, 2023) (Dixon 3), and Cooper v. United States, 2023 U.S. Claims LEXIS (Ct. Cl., May 9, 2023).  The DOJ’s motion to dismiss was successful in Dixon and unsuccessful in Cooper.  So, it may be worthwhile to explain how the courts reached different rulings on such similar fact patterns.  Today’s post discusses Cooper.  You can find part I of this post here.

read more...

Cooper Facts

Mr. Cooper filed his 2014 income tax return late (in June 2016), even after having obtained a 6-month extension to file.  Just before the extended due date, his CPA told Mr. Cooper that there would not be any late-filing penalty anyway, since a large payment made with the extension request had overpaid the taxes.  In the end, the preparer was wrong that the taxes had been overpaid, and the IRS assessed about $95,000 in late-filing penalties as it processed the return. 

Mr. Cooper paid the $95,000 and hired a tax attorney (who was not Mr. Castro of Dixon) to try to get the penalty refunded.  The attorney had the taxpayer execute a Form 2848 in his favor, though, just like in the Brown and Dixon 1 cases in part I of this post, box 5a of the form authorizing the attorney to sign tax returns was not checked.

Refund claims for penalties are not made on amended returns (Forms1040X), but via Form 843 refund claims.  The attorney prepared and filed a Form 843, signing the form both on the line for where the taxpayer should sign (under penalties of perjury) and where the preparer should sign.

The IRS denied the claim, and in 2019, Mr. Cooper brought a timely suit in the Court of Federal Claims under IRC § 6532(a).

After the parties filed the complaint and answer and completed discovery, in May 2022, the DOJ moved to dismiss the case under RCFC 12(b)(6) for failure to state a claim on which relief could be granted.  The DOJ cited two reasons:  (1) the Form 2848 had not been attached to the refund claim when the Form 843 was filed (as required), and (2) the attorney was not authorized by the Form 2848 to sign a Form 843 refund claim for the taxpayer.

The timing of the DOJ’s Cooper motion under RCFC 12(b)(6) is important, since it was filed a few months after the Federal Circuit issued its opinion in Brown v. United States, 22 F.4th 1008 (Fed. Cir. 2022) (on which Keith blogged here.  In Brown, the Federal Circuit held that, under recent Supreme Court case law, certain requirements of a proper refund claim under IRC § 7422(a) are no longer jurisdictional to a refund suit, even though the predicate requirement to file a refund claim at all is still jurisdictional.  Brown held that what it called the “duly filed” requirements of the statute (which the court said covered the IRC §§ 6061 and 6065 requirements for a taxpayer to sign a return and under penalties of perjury) are not jurisdictional, but nevertheless are still statutory, so cannot be waived.  Thus, Brown dismissed the suit for failure to state a claim under RCFC 12(b)(6), not for lack of jurisdiction under RCFC 12(b)(1).

Before the CFC ruled on the DOJ’s motion in Cooper, in July 2022, the DOJ withdrew it and filed a new motion to dismiss, this one predicated on lack of jurisdiction under RCFC 12(b)(1).  As the court wore in Cooper:

The motion raises the same grounds for dismissal—i.e., that Mr. Cooper’s refund claim was not “duly filed” due to his failure to comply with the signature verification requirements—but, contrary to its initial motion, the Government relies on circuit precedent preceding Brown to support a jurisdictional argument.  Id. at 1, 12-15.  The Government now contends that Brown is not binding because the Brown panel could not overrule prior panel decisions finding that § 7422(a) sets forth jurisdictional prerequisites to filing suit. Id. at 18-21.

Slip op. at 5.

The DOJ is obviously still smarting from the holding in Brown that the “duly filed” requirement in IRC § 7422(a) is no longer jurisdictional.  That holding was prompted in part by the amicus brief that Keith and I filed in Brown on behalf of The Center for Taxpayer Rights in which we argued that no requirement of IRC § 7422(a) is jurisdictional anymore.  That is, we argued that, even the requirement to file a refund claim at all before bringing suit is no longer jurisdictional.  Since the DOJ won Brown (though not on the ground it wanted), it could not seek cert.  It has apparently decided to keep making the argument rejected in Brown to the CFC, hoping that the jurisdictional question will be revisited in the Federal Circuit again soon.

Cooper Holding

The Cooper court rejected the DOJ argument that the 3-judge Brown panel had no authority to ignore prior Federal Circuit precedent, writing:

Although the Government takes issue with whether Lexmark [International, Inc. v. Static Control Components, Inc., 572 U.S. 118, 128 (2014) (cited by the Brown panel)] expressly or implicitly overruled the Federal Circuit’s prior decisions on the jurisdictional nature of § 7422(a), this Court is not in a position to ignore Brown‘s conclusion that the two are irreconcilable.  See ECF No. 25 at 23 n.23 (noting that Lexmark is not a tax case, nor a case involving the United States’ waiver of sovereign immunity).  Moreover, the Federal Circuit has held that a panel is empowered to overrule a prior panel decision “without en banc action” based on intervening authority, even where such authority does not explicitly overrule the prior decision or address the precise issue.

Slip op. at 11 (citation omitted). 

I am surprised that the DOJ tried to distinguish Lexmark in July 2022 as not being a tax case, since in April 2022, the Supreme Court applied its non-tax precedent restricting the use of the word “jurisdiction” to the Tax Court petition filing deadline in IRC § 6330(d)(1) in Boechler, P.C., v. Commissioner, 142 S. Ct. 1493.

The Cooper court could have stopped there, but it noted that

in a final footnote at the end of its reply the Government posits an alternative ground for dismissal.  If it finds Brown controlling, the Government requests that the Court dismiss the Complaint with prejudice for failure to state a claim.  Def.’s Reply at 18 n.7, ECF No. 27.  Because the pleadings are closed, such request could be raised only by a motion for judgment on the pleadings under RCFC 12(c). 

Slip op. at 12 (citation omitted).

The court decided to consider whether the DOJ was entitled to judgment on the pleadings.

The court held that a factual dispute over whether the Form 2848 was attached to the Form 843 when filed (as required) precluded granting judgment on the pleadings on that ground.

With respect to the ground of failure to properly sign and verify under penalties of perjury, the court looks closely at regulations under the refund claim provisions and the power of attorney provision, Form 843 instructions, and a Technical Advice Memorandum and concludes that, unlike in the case of a Form 1040X (which is a return), a Form 843 is not a return and can be signed by a representative on the line for the signature of the taxpayer, even if box 5a on Form 2848 does not authorize signing returns. 

[T]the regulations do not require specific authorization for non-return refund claims.  Compare Treas. Reg. § 1.6012-1(b)(3)(ii) with id. § 301.6402-2(e).  If that is an inconsistent policy, it is incumbent on the IRS to amend its regulations and forms.

Slip op. at 25 n.6.

Further, the court finds that the language of the Form 2848 authorizing the IRS to deal with the representative provides enough authority for the representative to sign on behalf of the taxpayer.  The court also rejects the DOJ argument that the Form 2848 was required to specifically list “late-filing penalties for 2014” to be valid.  The court finds it enough that the 2014 income taxes were named on the Form 2848.

This being an interlocutory ruling, the DOJ cannot immediately appeal it to the Federal Circuit.  It will be interesting to watch how this case progresses.

Filed Under: Federal Courts - Jurisdiction, refund claim

DOJ Wins One Case and Loses Motions in Another Where POAs Signed First Refund Claims for Taxpayers, Part I

May 25, 2023 by 4 Comments

We have run a number of posts involving refund suits where (1) the taxpayer’s representative signed the predicate refund claim on the taxpayer’s signature line, and (2) the Form 2848 power of attorney did not expressly authorize the representative to sign returns.  This is part I of a two-part post on two recent cases presenting this fact pattern, decided one day apart, Dixon v. United States, 2023 U.S. App. LEXIS 11422 (Fed. Cir., May 10, 2023) (Dixon 3), and Cooper v. United States, 2023 U.S. Claims LEXIS (Ct. Cl., May 9, 2023).  The DOJ’s motion to dismiss was successful in Dixon and unsuccessful in Cooper.  So, it may be worthwhile to explain how the courts reached different rulings on such similar fact patterns.  Today’s post discusses Dixon and its predecessor cases generated by representative John Castro (the original signer in all the cases leading up to Dixon).

read more...

Background on Castro Cases

There is a tax attorney/CPA named John Castro, who represents a lot of United States citizens living abroad.  Mr. Castro filed refund claims for them for various issues, frequently the foreign income exclusion of IRC § 911.  Mr. Castro knew it was a big burden to send refund claims to his overseas clients to have the clients sign and return the claims.  So, he obtained powers of attorney (Forms 2848) from them, and Mr. Castro signed the refund claims (Forms 1040X) on the line for the taxpayer’s signature (i.e., the line which contains the affirmation under penalties of perjury).

Line 3 of Form 2848 (rev. 1/2021) states:  “I authorize my representative(s) to receive and inspect my confidential tax information and to perform acts I can perform with respect to the tax matters described below. For example, my representative(s) shall have the authority to sign any agreements, consents, or similar documents (see instructions for line 5a for authorizing a representative to sign a return).”  Line 5a allows taxpayers to give the representative certain further powers, including, “Sign a return”.  Unfortunately, Mr. Castro left that box on line 5a unchecked. 

The IRS audited all the claims and rejected the claims on the merits.  In response, Mr. Castro arranged for counsel he hired to file suits in the Court of Federal Claims (CFC) seeking refunds. 

Mr. Castro’s signature is messy, and so it was not until the suits had commenced that the DOJ discovered that the purported taxpayer signatures on the Forms 1040X were those of Mr. Castro and not the taxpayers.  Thereafter, the DOJ filed motions to dismiss for lack of jurisdiction under RCFC 12(b)(1).  The taxpayers claimed the IRS had waived any defect in the form of the claims by rejecting the claims on the merits, citing Angelus Milling Co. v. Commissioner, 325 U.S. 293 (1945).  In Angelus, the Supreme Court held that the IRS waives the regulatory specificity requirement of a refund claim when the IRS denies the claim on the merits.  But, the Angelus Court stated that, by contrast, statutory refund claim requirements may never be waived.

Keith first did a post ­­on one of the Castro-case opinions in which the CFC granted the IRS’ motion, Gregory v. United States, 149 Fed. Cl. 719 (2020).  Gregory held jurisdictional to a refund suit compliance with the refund claim signature requirement of IRC § 6061 and the verification under penalties of perjury requirement of IRC § 6065.  Jurisdictional requirements can never be waived.  Since Castro did not have authority to sign Forms 1040X, the CFC dismissed Gregory’s suit for lack of jurisdiction. 

Mr. Dixon and Mr. Brown had similar CFC cases dismissed for lack of jurisdiction.  See Dixon v. United States, 147 Fed. Cl. 469 (2020) (Dixon 1); Brown v. United States, 151 Fed. Cl. 530 (2020).  Mr. Dixon and Mr. Brown appealed the dismissals of their CFC cases to the Federal Circuit. 

In Brown v. United States, 22 F.4th 1008 (Fed. Cir. 2022) (on which Keith blogged here), the Federal Circuit affirmed the CFC, but on different reasoning.  Brown held that, under recent Supreme Court case law, certain requirements of a proper refund claim under IRC § 7422(a) are no longer jurisdictional to a refund suit, even though the predicate requirement to file a refund claim at all is still jurisdictional.  Brown held that what it called the “duly filed” requirement of the statute (which the court said covered the IRC §§ 6061 and 6065 requirements) are not jurisdictional, but nevertheless are still statutory, so cannot be waived.  Thus, Brown dismissed the suit for failure to state a claim under RCFC 12(b)(6), not for lack of jurisdiction under RCFC 12(b)(1). (Parenthetically, I question whether any requirement to file a refund claim is still jurisdictional, and I think the comment in Angelus that statutory requirements cannot be waived is also no longer good law and should not have been followed in Brown.)

Dixon 2 and 3 Opinions

Mr. Dixon dropped his appeal of Dixon 1 when Mr. Castro got a bright idea:  Mr. Castro had Mr. Dixon sign and file new Forms 1040X identical to the first set.  This occurred after the IRS had denied the first set of Forms 1040X on the merits.  The new claims were submitted to the IRS after the IRC § 6511 statute of limitations for refund claims had expired.  The IRS denied the claims, and Mr. Dixon filed a new refund suit in the CFC.  The DOJ moved to dismiss the case for lack of jurisdiction on the ground that the prior claims could not be treated as timely informal claims under the doctrine of United States v. Kales, 314 U.S. 186 (1941), arguing that informal claims need properly to be signed under penalties of perjury, as well.  In Dixon v. United States, 158 Fed. Cl. 69 (2022) (Dixon 2) (on which I blogged here, the CFC dismissed the suit for lack of jurisdiction on the grounds sought by the DOJ. 

In Dixon 3, the Federal Circuit recently affirmed the CFC’s dismissal of the case for lack of jurisdiction for late claim filing, but again on different grounds than those stated by the CFC.  The Federal Circuit was concerned about the possible differences between the waiver doctrine cases (Angelus and its progeny, including Brown) and the informal claim doctrine cases (Kales and its progeny).  The court was doubtful that to be a valid informal claim filed before the IRC § 6511 statute expired, all procedural requirements of claims must have been met, such as the signature and verification requirements.  The court wrote:

The government’s argument, at least on its face, is in tension with decisions of both the Supreme Court and this court.  See Kales, 314 U.S. at 194 (“This Court, applying the statute and regulations, has often held that a notice fairly advising the Commissioner of the nature of the taxpayer’s claim, which the Commissioner could reject because too general or because it does not comply with formal requirements of the statute and regulations, will nevertheless be treated as a claim where formal defects and lack of specificity have been remedied by amendment filed after the lapse of the statutory period.” (citations omitted)); Computervision, 445 F.3d at 1364 (“First, formal compliance with the statute and regulations is excused when the informal claim doctrine is applicable.”).  And it is in tension with the above-described case law, see supra pp. 15-18, which has applied the informal-claim doctrine in the absence of writings, signatures, and verification under penalty of perjury.

Slip op. at 22-23.

All that is clear under Kales is that a perfected claim filed after the statute of limitations expires is deemed to be filed on the date the informal claim was filed.

The court pointed out the tension between the waiver and informal claim cases, but declined to resolve the issue of whether all informal claims must be signed by taxpayers under penalties of perjury.  It left that question to another panel in a later case.  “We flag these issues without prejudging the result of a full consideration of these and other issues in a case where deciding the question is necessary to the outcome.”  Slip op. at 24.

The court could dodge the sticky issue because it found another ground for finding the refund suit to lack jurisdiction.  Although the DOJ had not meaningfully presented the argument to the CFC, before the Fed. Cir. the DOJ argued that once an informal claim has been rejected on the merits, and the taxpayer brings suit on it, the ability of the IRS to rule on the claim lapses (authority passes to the DOJ), so the claim cannot be an informal claim for a later, perfected claim.  The Federal Circuit agreed, writing:

On the merits, the Supreme Court in [United States v.] Memphis Cotton [Oil Co., 288 U.S. 62 (1933)], in articulating the informal-claim doctrine, stressed the importance of any amendment to a deficient refund claim being filed while the original claim remains before the IRS.  288 U.S. at 72.  Only when the IRS “holds [a deficient claim] without action until the form has been corrected” is it true that “what is before [the IRS] is not a double claim, but a claim single and indivisible, the new indissolubly welded into the structure of the old.”  Id. at 71.  But “[w]hen correction is . . . postponed, there is no longer anything to amend, any more than in a lawsuit after the complaint has been dismissed.”  Id. at 72.  This court reiterated that principle in Computervision, where we noted that the IRS loses jurisdiction over—and a taxpayer loses the ability to amend—any refund claim that is allowed, disallowed, or the subject of a suit for refund.  445 F.3d at 1371-73.

Slip op. at 25-26.

Observation

When Dixon 2 came down, Keith was worried that the Federal Circuit might affirm the CFC on the ground that a valid informal claim must be signed by the taxpayer under penalties of perjury.  That would seem to go against precedent of the Federal Circuit and many other courts.  Accordingly, the Center for Taxpayer Rights (represented by Keith and Professor Andrew Weiner of Temple) filed an amicus brief pointing out that precedent.  A copy of the amicus brief can be found here.

Filed Under: Federal Courts - Jurisdiction, refund claim

Old Habits Die Hard

May 18, 2023 by 3 Comments

For almost a quarter century the Tax Court dismissed late filed petitions in Collection Due Process (CDP) cases because it viewed the 30-day time period for filing these petitions as jurisdictional with no exceptions for failed delivery, late delivery, illness or other bases for equitable tolling.  An order issued on May 15, 2023, in the case of Floyd v. Commissioner shows the almost Pavlovian need to continue dismissing these cases for lack of jurisdiction when filed late despite the Supreme Court’s decision a year ago in Boechler v. Commissioner, 142 S. Ct. 1493 (2022).  The order was immediately rescinded by a second order also issued on May 15, 2023, indicating that someone in the Court is watching and paying attention to Supreme Court decisions.  Still, the two orders provide an interesting sequence and a basis for discussing the benefit to the Court of the Boechler decision, and, I hope, the benefit of the reversal of the Court’s Hallmark decision regarding deficiency cases in the coming months or years.

read more...

The Floyds filed their CDP petition late.  The notice of determination in their case was dated February 4, 2022.  The IRS has a receipt for certified mailing on that date.  The postal records show the notice was delivered on February 10, 2022.  The 30-day period for filing a petition expired on March 7, 2022, after an extension caused by IRC 7503 because the 30th day fell on the weekend.  Their petition arrived at the Tax Court on April 1, 2022, showing a postmark date of March 22, 2022.  (Keep in mind that when you mail documents to the Tax Court it takes some time for delivery to occur because of the precautions still in effect caused by the anthrax mailing incident.)

The first order issued by the Tax Court in the Floyds’ case notes the Boecher opinion but then goes on to say:

ORDERED that, on or before June 15, 2023, petitioner shall show cause, in writing, why the Court, on its own motion, should not dismiss this case for lack of jurisdiction on the ground the petition was not timely filed and if petitioner asserts equitable tolling include all applicable facts.

Well, that’s a problem since after Boechler filing late is not a jurisdictional issue.  But for many years the Tax Court has policed late filing of petitions.  On its own motion it dismisses about 12 deficiency cases a month according to the research of Carl Smith.  These dismissals typically occur near a calendar call or when a decision document is submitted.  The Court refuses to sign the decision document in these cases having made its own independent determination that it lacks jurisdiction.  In order to make that determination, it must police each case taking time an effort to insure it has proper jurisdiction of the case.  The Supreme Court mentions these in its regular opinions on jurisdiction as one of the reasons for not finding statutes jurisdictional since doing so wastes the time of the court and the parties.

The Boechler case acts as a time saving device much like the advent of washing machines or vacuum cleaners freeing up the Court’s time for other pursuits.  It no longer needs to police the timeliness of the filing of CDP cases (or whistleblower cases) but can ignore the timing of the filing of the petition unless the IRS timely raises a concern.  If the IRS timely raises a concern about the timeliness of a petition, then the Tax Court will spring into action to determine if the petitioner has a good reason.  Otherwise, the Tax Court is free to focus on the merits of the petitions without worrying about timeliness.

The almost immediate vacatur of the first order in the Floyd case indicates that someone in the Tax Court is paying attention to the time savings benefit of the Boechler decision but old habits die hard.  Seeing a late filed petition and doing nothing must be hard for some of the Tax Court judges.  The adjustment will take time.  The cases of Carroll v. Commissioner and Ahmad v. Commissioner show how the post-Boechler process should work.

This year the Supreme Court has issued three more opinions regarding cases raising the issue of jurisdiction.  You can find these three cases here in the most recent Rule 28(j) letter filed in the case of Culp v. Commissioner pending in the Third Circuit.  As it has done in every case since 2004, the Supreme Court found the statutes at issue in these three cases not to create a jurisdictional barrier to filing.  Like the Tax Court with its 17-0 holdings in Guralnik and Hallmark, other courts also struggle with the “new” thinking of the Supreme Court on jurisdiction.  The first order in the Floyd case reminds us that the struggle does not end with the issuance of a Supreme Court opinion.

Filed Under: Collection Due Process, Federal Courts - Jurisdiction, Tax Court

Husband Who Paid Wife’s Taxes Finds it’s Not Easy to Sue For a Tax Refund

March 17, 2023 by Leave a Comment

We welcome back guest blogger Marilyn Ames who writes today about a case in which a third party pays the tax – perhaps under duress – and seeks to recover the payment.  As he finds out the path to recovery is not simple. Keith

One of my professors in law school was fond of explaining unusual results in court opinions with the statement that bad facts make bad law.  The Court of Appeals for the Federal Circuit illustrated this principle in the recent case of Roman v. United States, which if not totally bad law is possibly unnecessary and at the least is undeveloped in terms of its application within the structure of the tax system. 

read more…

When Mr. Roman and his wife, Iris Espinosa, divorced in 2009, the property settlement they entered resulted in Mr. Roman receiving the family home in exchange for a payment of $150,000 to his former spouse.  The agreement was later amended to provide that Mr. Roman would pay any taxes Ms. Espinosa would owe for the sale of her share of the residence to him.  Ms. Espinosa filed her return for 2010, reporting the $150,000 as income but apparently not claiming it as being excluded under the provisions of IRC Section 121. An assessment was made in the amount of $50,002.04 in taxes and penalties, and according to the Court of Appeals, Ms. Espinosa received a “notice of intent to take possession of her property, including the previously shared home.” Presumably this was the usual notice and demand issued after an assessment, but the opinion does not make that clear.

Mr. Roman and Ms. Espinosa then met with an IRS employee, who indicated that that the IRS had not “placed a lien” on his home but Mr. Roman would have to pay the outstanding tax liability to avoid his residence being levied. Mr. Roman claims he believed he had no realistic alternative but to pay a tax he felt he did not owe, but claimed he was also told he could appeal the assessment once the tax was fully paid. Mr. Roman made a large initial payment and then paid the remainder of the tax over a period of time, beginning at some unspecified date and completing the payments on March 8, 2017.

Almost three years later, on January 13, 2020, Mr. Roman filed a refund suit in the Court of Federal Claims, asserting that the income tax was not owed as the amount should have been excluded from Ms. Espinosa’s gross income pursuant to Section 121(a), asserting he had standing to contest Ms. Espinosa’s tax liability in a refund suit under 28 USC § 1346(a)(1), and to claim monetary damages under the implied contract clause of 28 USC §1491(a)(1), also known as the Tucker Act. The Court of Federal Claims held it had jurisdiction as to Mr. Roman’s third-party tax refund claim, finding that Mr. Roman was a taxpayer for purposes of a refund suit. (There is no discussion in the opinion as to whether a refund claim was actually filed, whether the suit in the Court of Federal Claims was timely, or how much of the amount paid could be recovered under the look back rules of IRC Section 6511(b)). The government appealed.

The Court of Appeals reversed on the question of refund suit jurisdiction, holding that the Supreme Court decision in United States v. Williams was inapplicable to make Mr. Roman a taxpayer for purposes of 28 USC § 1346(a)(1), as the holding that a third party could be a taxpayer when the third party had no other remedy had been limited when Congress added a remedy to the Internal Revenue Code to address the situation in Williams. But apparently then feeling some sympathy for Mr. Roman’s situation, the Court of Appeals held that the Court of Federal Claims had jurisdiction to address Mr. Roman’s complaint under the provisions of 28 USC § 1491(a), the Tucker Act.

The Tucker Act gives the Court of Federal Claims jurisdiction to hear a suit and to enter a judgment for damages against the United States or one of its agencies for an action based on the Constitution, any statute, any regulation of an agency, or on an express or implied contract with the United States.   Citing prior authority, the Court of Appeals held that the Tucker Act gives the Court of Federal Claims jurisdiction to hear a suit brought by a party to recover a tax for which he is not liable if the tax was paid under duress, as the duress creates an “implied in fact” contract.  The Court of Appeals then held that duress requires: (1) involuntary acceptance with (2) no alternative and (3) coercive acts by the government,  and the question of duress is fact-specific to the case. Because Mr. Roman alleged that he was told by the IRS employee that he had to pay, the employee suggested no alternative, and the IRS had threatened to levy his home, the Court of Appeals held that the allegations were sufficient to support the claim of an implied contract, giving the Court of Federal Claims jurisdiction to hear the suit.

Much is left unanswered by the Court of Appeals’ opinion.  Because the Court of Federal Claims decided based on Mr. Roman’s claim that he was a taxpayer and could bring a refund suit, we don’t know if the Court of Federal Claims or the Court of Appeals was briefed on whether Mr. Roman actually had no other alternative.  Section 7426(a)(1)  permits a third party to bring a wrongful levy action if a levy has been made on the third party’s property.  A simple search on Westlaw finds numerous cases with holdings that Mr. Roman could have brought such an action, although a suit filed in 2020 would have been untimely.  Does the Court of Appeals’ holding imply that an employee in the Internal Revenue Service must suggest every possible way in which the third party can avoid payment to avoid a claim of duress?  Did the Court of Appeals reach the conclusion that Mr. Roman had an implied contract claim because the time for bringing suit under Section 7426(a) had expired?  And when did the statute of limitations for the implied contract claim begin to run – was it when Mr. Roman made the first payment,  or when he made the last, or on some other date?

Granted, Mr. Roman deserves sympathy for having paid tax that was probably not owed, but the solution reached by the Court of Appeals for the Federal Circuit is not one that can be applied by the United States or by taxpayers, and seems destined to create further rounds of litigation.

Filed Under: Federal Courts - Jurisdiction, refund claim Tagged With:

Oral Argument in Culp v. Commissioner

March 7, 2023 by 4 Comments

Guest blogger Anna Gooch brings us this alert.

The oral argument in Culp v. Commissioner before the Third Circuit Court of Appeals will be part of today’s oral argument calendar beginning at 9:00 AM Eastern Time. One case is listed ahead of Culp. The arguments will be livestreamed here.

Keith discussed the case in February, and Carl Smith has written several posts on this case as well, including here and here. The Culps filed an untimely petition with the Tax Court, which dismissed their case for lack of jurisdiction. This dismissal occurred before the recent Hallmark decision. The Culps appealed, arguing that equitable tolling should apply and that they are entitled to a refund. They stated that they never received the Notice of Deficiency and furthermore, when they contacted the Taxpayer Advocate Service for assistance, they were told that no Notice of Deficiency was issued.

Carl and Keith, along with Audrey Patten of the Legal Services Center of Harvard Law School, wrote an amicus brief on behalf of the Center for Taxpayer Rights. Because the Culps were pro se and their brief did not fully address the issues, the court asked the amicus to participate in the oral argument. Keith will argue today on behalf of the Center for Taxpayer Rights. Pro bono counsel Oliver Roberts of Jones Day will be arguing for the Culps.

Once it is available, I will post a link to the recording. 

Update: the oral argument recording may be found here: direct link; main landing page.

Filed Under: Equitable tolling, Federal Courts - Jurisdiction Tagged With:

Circuit Precedent and Supreme Court Decisions

February 20, 2023 by 2 Comments

Texas Tech University School of Law seeks a Director of its Low Income Taxpayer Clinic (LITC) for an August 1st start date. Formal announcement here. This is a great opportunity to teach and mentor law students on a one-to-one basis, as well as help taxpayers who need representation but cannot afford it. Texas Tech’s LITC Director has good office space, good staff support, a highly congenial teaching environment and, like all clinical faculty at Texas Tech, is integral to the Law School’s mission. Salary is competitive with other LITCs and the position is eligible for job security per ABA Standard 405(c). Lubbock’s population of 300,000 enjoys affordable housing, abundant sunshine, excellent public schools, a laid-back culture, and easy access to other parts of the country. Contact Bryan Camp at Bryan.Camp@ttu.edu with any questions.

In Vensure HR, Inc. v. United States, No. 20-728T, 2023 U.S. Claims LEXIS 90 (Fed. Cl. Feb. 15, 2023) the Court of Federal Claims faced the issue of whether a three-judge circuit panel can overturn prior circuit precedent in light of subsequent Supreme Court precedent which logically undermines but does not specifically overrule the circuit precedent. The Department of Justice (DOJ) representing the IRS takes a very narrow view of the ability of a three-judge circuit panel to interpret the meaning of Supreme Court decision unfavorable to the government in the face of prior Federal Circuit precedent supporting the government’s position.  The Court of Federal Claims rejects DOJ’s take on a Federal Circuit panel’s authority.

read more...

At issue in Vensure is jurisdiction of a refund claim.  The Tax Clinic at the Legal Services Center of Harvard Law School has directly, or through amicus briefs, made arguments regarding jurisdiction in numerous cases including the case of Brown v. United States, 22 F.4th 1008 (Fed. Cir. 2022) at issue in Vensure.  In Brown, the Federal Circuit held that the improper signing of the claim for refund was not jurisdictional.  In Vensure, DOJ argued that Brown should not be followed on the jurisdictional issue because a three-judge panel could not overrule prior precedent of the same circuit.

The Vensure court described the government’s argument as follows:

In this case, defendant [the IRS] contends that the Brown decision is not binding on this court because the Brown panel improperly overruled prior Federal Circuit decisions holding that the requirements of §7422(a) are jurisdictional.  According to defendant, these prior decisions may only be overruled by an en banc court or by supervening statutory or Supreme Court authority that expressly addresses the issue.  Because “[t]here has been no statutory change to §7422(a)“ and “[n]either the Supreme Court nor the Federal Circuit en banc has held” that §7422(a) is not jurisdictional, defendant argues that Brown is not controlling.  Therefore, defendant contends, §7422(a)’s “duly filed” requirement remains jurisdictional and its motion to dismiss is properly brought pursuant to RCFC 12(b)(1).  Defendant does, however, alternatively argue that its motion to dismiss may be granted pursuant to RCFC 12(b)(6). 

Taxpayers argument in Vensure on the issue of jurisdiction was simple since it relied on the Federal Circuit’s decision in Brown that the “duly filed” requirement of §7422(a) is not a jurisdictional requirement.  After stating the position of the parties, the court held for the taxpayer stating:

The court agrees with plaintiff that Brown is controlling. The Federal Circuit “applies the rule that earlier decisions prevail unless overruled by the court en banc, or by other controlling authority such as intervening statutory change or Supreme Court decision.” Tex. Am. Oil Corp. v. U.S. Dep’t of Energy, 44 F.3d 1557, 1561 (Fed. Cir. 1995). Under this rule, “supervening Supreme Court authority is an established basis for treating an earlier panel opinion as no longer binding.” Elbit Sys. Land & C4I Ltd. v. Hughes Network Sys., LLC, 927 F.3d 1292, 1305 (Fed. Cir. 2019). In accordance with this rule, the Federal Circuit in Brown relied on the Supreme Court’s Lexmark decision to treat earlier Federal Circuit decisions regarding the jurisdictional nature of the “duly filed” requirement as no longer binding. See Brown, 22 F.4th at 1011. The panel’s reliance on Lexmark is a permissible basis on which to overrule prior panel opinions. See Elbit, 927 F.3d at 1305.

The issue of the role of prior circuit precedent in the face of a Supreme Court decision indirectly undercutting that precedent was raised by DOJ in two other recent cases involving jurisdiction.  In Culp the Third Circuit denied DOJ’s motion for summary affirmance based on prior Third Circuit precedent on the issue of the jurisdiction of the Tax Court in deficiency cases where the taxpayer files an untimely petition.  In Allen, the Eleventh Circuit granted such a motion on the same issue.  In both cases the application of the Supreme Court’s decision in Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022) and the application of its reasoning to deficiency cases was at issue.

The Culp case is now scheduled for oral argument before the Third Circuit on March 7 and will be the first circuit test of the Hallmark decision.  The Third Circuit is taking the Culp case very seriously – to the point of unusually asking amicus to do part of the oral argument.  I will be doing that amicus oral argument.  Pro bono counsel Oliver Roberts of Jones Day will be arguing for the Culps.

DOJ will probably continue to press the argument in Culp that it made in Vensure seeking to have the panel follow old circuit precedent that predates the Supreme Court’s decision in Boechler.  Like the Federal Circuit, the Sixth Circuit rejected this argument in Hoogerheide v. IRS, 637, F.3d 634, 636 (6th Cir. 2011) in a case involving IRC § 7433:

The district court had good reason to assume that a plaintiff’s failure to exhaust the IRS’s administrative remedies deprives the federal courts of subject matter jurisdiction over a § 7433 damages action. We have said as much before. See, e.g., Fishburn v. Brown, 125 F.3d 979, 982 (6th Cir. 1997); Romp v. United States, 96 F. App’x 978, 980 (6th Cir. 2004).

Since these decisions, however, the Supreme Court has changed course. Concerned about the vanishing distinction between the mandatory requirements of a cause of action and jurisdiction over that cause of action, the Court in 2006 drew an “administrable bright line” between the two. Arbaugh v. Y & H Corp., 546 U.S. 500, 516, 126 S. Ct. 1235, 163 L. Ed. 2d 1097 (2006). Here is the line:

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.

Id. at 515-16. Since Arbaugh, we have re-assessed the line between jurisdictional and claims-processing requirements in several settings. See, e.g., Winnett v. Caterpillar, Inc., 553 F.3d 1000, 1005-06 (6th Cir. 2009) (existence of union contract goes to the merits, not to jurisdiction over a claim under the Labor Management Relations Act); Allen v. Highlands Hosp. Corp., 545 F.3d 387, 401-02 (6th Cir. 2008) (administrative exhaustion goes to a plaintiff’s right to relief, not to jurisdiction over a claim under the Age Discrimination in Employment Act); Thomas v. Miller, 489 F.3d 293, 296 n.3 (6th Cir. 2007) (numerosity requirement goes to the scope of liability, not to jurisdiction over a claim under the Family Medical Leave Act).

In the aftermath of Arbaugh,  it no longer is appropriate to treat the exhaustion requirements for bringing a § 7433 claim as jurisdictional. Mandatory though the exhaustion requirement in § 7433(d) may be, it is not jurisdictional.

Similarly, in Hassen v. Gov’t of the V.I., 861 F.3d 108, 112-115 (3d Cir. 2017) Judge Schwartz writing for the Third Circuit also found its earlier precedent regarding § 7433 did not bind a subsequent panel in light of intervening Supreme Court discussion of jurisdiction:

More than two decades ago, in Venen v. United States, 38 F.3d 100, 103 (3d Cir. 1994), we characterized this exhaustion requirement as jurisdictional. Since then, as one court put it, the United States Supreme Court has cautioned against confusing “mandatory requirements of a cause of action” with a jurisdictional prerequisite “over that cause of action.” Hoogerheide v. IRS, 637 F.3d 634, 636   (6th Cir. 2011) (citing Arbaugh v. Y&H Corp., 546 U.S. 500, 516, 126 S. Ct. 1235, 163 L. Ed. 2d 1097 (2006)). 

. . . .

Thus, applying Arbaugh‘s directive and considering that § 7433(d) does not speak in jurisdictional terms or convey that Congress intended to permit a court to exercise jurisdiction only if the claim was exhausted, we join our sister circuits and hold that § 7433(d)‘s exhaustion requirement is not jurisdictional and hence need not be satisfied for the district court to entertain a claim under § 7433(a).5 Gray, 723 F.3d at 798; Hoogerheide, 637 F.3d at 636-38; see also Kim v. United States, 632 F.3d 713, 718, 394 U.S. App. D.C. 149 (D.C. Cir. 2011) (treating § 7433(d) as an affirmative defense, and by implication not viewing it as a jurisdictional prerequisite).

__________________________

5. Although IOP 9.1 says that a subsequent panel cannot overrule a prior panel’s precedential opinion, “this rule gives way when the prior panel’s holding is in conflict with Supreme Court precedent.” Mennen Co. v. Atl. Mut. Ins. Co., 147 F.3d 287, 295 n.9 (3d Cir. 1998); Nationwide Ins. v. Patterson, 953 F.2d 44, 46 (3d Cir. 1991) (observing that “[o]rdinarily, a panel of this court is bound to follow the holdings of published opinions of prior panels of this court unless overruled by the court [e]n banc or the holding is undermined by a subsequent Supreme Court case”). Arbaugh is such a precedent and thus, we are no longer bound by Venen‘s holding that the exhaustion requirement is jurisdictional.

Judge Schwartz is on the three-judge panel in Culp.

There are many circuit and lower court decisions on the books regarding jurisdiction of courts on a variety of matters.  Most of those decisions were written by the courts before the Supreme Court began sharpening its language regarding jurisdiction.  DOJ and the IRS seek to cling to the old decisions citing the old circuit precedents as binding in the new cases challenging jurisdictional rulings.  As these cases move forward, we will see how citing to prior circuit precedent binds the circuit courts as they face the jurisdiction issues in a new era.  Will circuit courts cling to their prior precedent as the 11th Circuit seemed to do in Allen forcing the matter either to an en banc level or back to the Supreme Court or will the circuits follow the decisions in the Federal Circuit, the Third and the Sixth Circuit recognizing the change in landscape dictated by the Supreme Court decisions?

Filed Under: Federal Courts - Jurisdiction, Supreme Court

2022 Year in Review – Jurisdiction to Litigate Your Tax Dispute

January 3, 2023 by 1 Comment

2022 saw much litigation regarding the jurisdiction of courts to hear a tax case.  The biggest case regarding Tax Court jurisdiction during 2022 was obviously Boechler v. Commissioner, 142 S. Ct. 1493 (2022).  While the IRS and the Tax Court interpret the opinion narrowly, the full impact of Boechler remains to be seen.  This post will discuss several cases pending where the taxpayer argues that Boechler makes a difference.  In many ways this year end post is another in the series of post-Boechler updates provided by Carl Smith.  Earlier posts by Carl can be found here, here, here and here.

read more...

CDP Determination

While Boechler determined that the time period for filing a CDP petition in Tax Court is not a jurisdictional time period and that a petitioner filing late has the opportunity to demonstrate equitable tolling, we have argued consistently that equitable tolling cases will be few while the IRS failure to raise the timeliness of the petition could provide the more common path to move forward in the Tax Court case.  See the post here discussing an order in a case in which the IRS failed to raise timeliness allowing the petitioner to move forward with the Tax Court litigation.

In Boechler, the Supreme Court carefully looked at the language of IRC 6330 to determine if it contained a clear statement from Congress that the 30-day period within which to file a CDP petition in Tax Court was a jurisdictional requirement.  In finding that Congress had not made a clear statement, the Supreme Court also rejected several other arguments the IRS made.  The arguments not focused on the specific language of IRC 6330 become the most important parts of the decision as the Boechler decision applies to other bases for Tax Court jurisdiction.

The next issue for CDP, and also whistleblower, determination cases will involve cases setting out the Tax Court view of equitable tolling.  While there is a sizable body of case law on equitable tolling in other courts, the CDP cases will offer the Tax Court its chance to make equitable tolling decisions in the context of Tax Court filings.

Editorial Interlude Regarding Jurisdiction

At a recent conference a high-ranking member of Chief Counsel’s Office criticized the bringing of litigation regarding jurisdiction because it impedes administration of the tax laws.  I find this view totally off base.  Taxpayers like Ms. Castillo (scroll to middle of post for discussion), like the individuals described in Carl’s blog post here, and like many others we have encountered, are routinely denied access to Court due to circumstances that qualify for equitable tolling.  While audit reconsideration or offers in compromise provide some relief for these individuals, these remedies remain imperfect.  One client I represent with extremely sympathetic circumstances was recently denied audit reconsideration because the IRS unit considering the request simply did not understand the litigation giving rise to the wrongful imposition of tax on her as a 13-year-old victim of a heinous crime.  After Boechler, the IRS conceded Ms. Castillo’s case in full something it declined to do in the absence of a pathway to court where it would be embarrassed.  In my view it takes a lot of hubris to suggest that as the lawyer for clients who missed their chance to go to court for good reasons, I should not pursue avenues for relief for my clients that the Supreme Court has created because doing so might make administration of the laws more difficult for the IRS.

CDP Request

In addition to the 30-day deadline to file a petition in Tax Court following a CDP determination, the code provides a 30-day deadline at IRC 6330(a)(3)(B) within which to request a CDP hearing.  The question exists whether this time period creates a jurisdictional barrier to obtaining a CDP hearing and whether, even if it does not impose a jurisdictional barrier, whether the time period can be extended by equitable tolling.  The issue is currently pending in Organic Cannabis Foundation v. Commissioner, Dk. No. 381-22L before Judge Goeke.  This is a separate case from the Organic Cannabis deficiency case which the Ninth Circuit, decided pre-Boechler.  Carl Smith wrote about this case, and one other also assigned to Judge Goeke, here.  The IRS filed a motion to dismiss the Organic Cannabis case back on February 25, 2022, based on lack of jurisdiction because of the late filing.  After Boechler, it argued that Boechler had no impact on this 30 day period (a consistent theme of the IRS view of Boechler in any circumstance.)

Petitioner filed a response to the motion to dismiss arguing, inter alia, that Boechler applies to make this time frame non-jurisdictional and that equitable tolling applies.  On October 31, the IRS replied disagreeing that equitable tolling applies and making ambiguous statements regarding its application to the jurisdictional question:

Sections 6320(a)(3)(B) and 6330(a)(3)(B) of the Internal Revenue Code give taxpayers 30 days to request a CDP hearing. These time limits are fixed. Although they may not be jurisdictional—neither provision speaks to a court’s adjudicatory authority or plainly shows that they are imbued with jurisdictional consequences, see Boechler, P.C. v. Commissioner, 142 S. Ct. 1493, 1497 (2022) —the time limits are not malleable.

In an order dated November 14, 2022, the Tax Court finds that despite the IRS view the Boechler has no impact on this question Boechler does matter in this situation:

Respondent argues that Boechler does not apply. Boechler did not expressly address the 30-day period for requesting a CDP hearing. However, the Court believes that the concepts discussed therein may equally apply to the 30-day period for submitting a CDP hearing request. Accordingly, we will provide petitioner with an opportunity to respond to the arguments raised by respondent in his Response with respect to whether the doctrine of equitable tolling should apply to administrative hearing requests ….

The order directs petitioner to file by January 10, 2023:

a memorandum regarding the application of Boechler to the facts of this case and to address whether “determination” includes the result of an equivalent hearing when the doctrine of equitable tolling would have required respondent to apply the CDP hearing procedures for a timely administrative hearing request.

The Tax Clinic at the Legal Services Center of Harvard Law School will move for leave to file an amicus brief in support of petitioner’s arguments.  The IRS has notified the clinic of its objection to the filing of an amicus brief by the clinic.

 In a similar CDP request filing deadline case of All Is Well Homecare Service LLC, Docket No. 21210-19L, on December 15, 2022, Judge Gustafson ordered the parties to respond seriatim (IRS by Jan. 20. 2023; taxpayer by Feb. 17, 2023) “as to . . .  whether the deadline of section 6320(a)(3)(B) is subject to equitable tolling, and if so, . . .  the standards IRS Appeals should use in determining whether tolling applies in a given case and the standard by which the Tax Court should review such a determination by IRS Appeals.”

Deficiency

After the Boechler decision, the Tax Court took a hard look at its deficiency jurisdiction to decide if the Supreme Court’s decision in Boechler might impact its longstanding interpretation of the statutes granting it deficiency jurisdiction.  It promulgated an opinion in Hallmark Research Collective v. Commissioner, 159 T.C. No. 6 (11/29/22),  in which it decided 17-0 that the Boechler decision did not impact its prior interpretation of deficiency jurisdiction that the time period for filing a Tax Court petition is a jurisdictional time frame.  The decision in Hallmark follows in form its decision in Guralnik v. Commissioner, 146 T.C. 230 (2016) in which the Court convened in conference to decide, 17-0, that the time period for filing a CDP petition was a jurisdictional time period. 

As mentioned above, Carl Smith recently wrote an eight-part series of posts analyzing the Hallmark decision.  No further explanation of the decision is necessary here.  While awaiting the Hallmark decision the Tax Court suspended the dismissal of deficiency cases from the beginning of May until November 29.  It has since been issuing dismissals at a decent clip since the decision came out in order to clear out the backlog.  Anna Gooch, from the Center for Taxpayer Rights, Carl and I are reviewing the dismissals as they come out to identify appropriate candidates for appeal. 

The Culp v. Commissioner case, discussed in Carl’s earlier blog posts, is still pending in the 3d Circuit, possibly awaiting oral argument.  In the 11th Cir. in a non-precedential order in Allen v. Commissioner, the court granted a DOJ motion for summary affirmance attached here.  The order basically states that the 11th Circuit is bound by prior precedent in that circuit.  The court states that it does not think anything in Boechler requires the overruling of that precedent.  DOJ filed the same motion in the Culp case and the 3d Circuit denied the motion even though it had essentially the same old circuit precedent that exists in the 11th Circuit.  In both instances the precedent pre-dates the Supreme Court’s pivot in 2004 to require a clear statement in the absence of prior Supreme Court precedent in order for a time period to be a jurisdictional time period.  Any appeal of this issue will undoubtedly face a similar motion in circuits where prior precedent on Tax Court jurisdiction exists.  The only circuits with post-2004 precedent addressing this issue are the 7th and 9th Circuits.  The circuits which seem to have no prior precedential decisions on this issue, either before or after 2004, are the 1st and 4th Circuits.

Innocent Spouse

In his last update on post-Boechler litigation, Carl briefly mentioned Frutiger v. Commissioner, Dk. No. 31153-21, a case in which Judge Buch requested amicus briefs on behalf of the petitioner.  The Tax Clinic at the Legal Services Center wrote an amicus brief for the Center for Taxpayer Rights and filed it on November 18.  A copy of the brief is available here.  The IRS filed a response here.  I don’t mean to be pessimistic, but a 17-0 decision would not surprise me given the Hallmark outcome.

In addition to Frutiger, the issue is pending before Judge Buch in the case of Leach v. Commissioner, Dk. No. 3197-22 and before Special Trial Judge Landy in the case of Doyle v. Commissioner, Dk. No. 28458-21S.

Rule 13(c)

Despite the Boechler opinion clearly stating that the time period for filing a CDP petition is not a jurisdictional time period and the opinion of the DC Circuit in Myers v. Commissioner, 928 F.3d 1025, a controlling opinion under the Golsen rule because of appellate venue, stating the same thing with respect to whistleblower cases, the Tax Court clings to the inaccurate statement in its rules that time periods for filing petitions are jurisdictional.  Rules should provide procedures for handling cases in court and not inaccurate and therefore misleading statements of the law.  In ignoring prior calls to remove or amend this Rule, it stands as a sentinel to the Tax Court’s legacy view of jurisdiction.  Sorry to be snarky about this, but I cannot understand why this rule is still in existence in its current form.

Refund Cases

A series of cases in the Court of Federal Claims and the Federal Circuit have examined issues of jurisdiction in the refund context.  Much of the litigation on these cases occurred in 2021 but it continued into 2022.  You can find post discussing the issues raised here and, in a more favorable opinion, here.

A new tactic by the Department of Justice in knocking out financial disability cases, discussed here, raises issues of jurisdiction as pro se petitioners stumbling to find their way and usually impaired by the condition giving rise to the claim for financial disability continue to lose these cases and now lose them out of the gate if they did not follow the draconian procedures of Rev. Proc. 99-21.

Filed Under: Federal Courts - Jurisdiction, Year in Review
Next Page »