Circuit Precedent and Supreme Court Decisions

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 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.


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 636-38see 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?

Another Tax Case Headed for a Supreme Court Decision

After this morning’s post went up the Supreme Court granted cert in another tax case – In re Grand Jury, case number 21-1397, in the U.S. Supreme Court.

At issue is the IRS summons or subpoena power. In the case before the Court, the IRS seeks information from a law firm about its clients through a grand jury subpoena. The law firm seeks to shield privileged information from the IRS, but the firm also prepared the client’s tax returns and return preparation is not considered legal work protected by the attorney client privilege. What information can the IRS get when the information is mixed between privileged and non-privileged information in a manner making it difficult to parse the sometimes dual purpose documents created. A workable solution in this situation is difficult to reach and circuits have split.

Supreme Court Update for Taxes and the October 2022 Term

Thanks to Carl Smith, I write to point out the cases accepted for the Supreme Court term starting October 3, 2022, that might have some impact on tax procedure.  Three of the cases are related to the issues of jurisdiction and equitable tolling raised in Boechler during the last term and one relates to the calculation of the FBAR penalty.

read more…

1)  Arellano v. McDonough – This case will be argued October 4.  The questions presented are:  (1) Whether the rebuttable presumption of equitable tolling from Irwin v. Department of Veterans Affairs applies to the one-year statutory deadline in 38 U.S.C. § 5110(b)(1) for seeking retroactive disability benefits, and, if so, whether the government has rebutted that presumption; and (2) whether, if 38 U.S.C. § 5110(b)(1) is amenable to equitable tolling, this case should be remanded so the agency can consider the particular facts and circumstances in the first instance.

2)  United States v. Bittner – This case will be argued on November 2.  Andy Weiner blogged this case for PT back in January.  This case presents the issue of the calculation of the penalty for failure to timely file the Foreign Bank & Financial Accounts information, commonly known as FBAR.  The IRS seeks to calculate the penalty based on each account not reported and taxpayers want to limit the penalty to the failure to file the form (which could contain multiple accounts).  The circuits are split.  The financial difference in the calculation of the penalty can be enormous with the per form approach limiting the penalty to $10,000 per year while the amount with the IRS approach is a multiple of the number of accounts times $10,000.  The Center for Taxpayer Rights has filed an amicus brief on behalf of the per form approach.  This brief was authored by Gwen Moore.  The American College of Tax Counsel has also filed an amicus brief arguing for the per form approach.  This brief was authored by the law firm of Kostelanetz & Fink.

3)  Wilkins v. United States – This is a private quiet title action, where the Circuits are split over whether the quiet title filing deadline in district court is jurisdictional. The issue of equitable tolling is not involved. I think this is an easy win for the petitioners.  The provisions granting district court’s jurisdiction are not the same as the filing deadline, and the filing deadline merely reads:

(g) Any civil action under this section, except for an action brought by a State, shall be barred unless it is commenced within twelve years of the date upon which it accrued. Such action shall be deemed to have accrued on the date the plaintiff or his predecessor in interest knew or should have known of the claim of the United States. 

The “shall be barred” language is similar to that in the FTCA deadlines, which were held not jurisdictional in Kwai Fun Wong (2015).  Oral argument has not yet been set.

4) MOAC Mall Holdings LLC v. Transform Holdco LLC — The cert. petition reads:

In Arbaugh v. Y & H Corp., this Court clarified that limitations on judicial relief should not be treated as jurisdictional absent a clear statement by Congress. At least six circuits have held that 11 U.S.C. 363(m) does not limit the appellate courts’ jurisdiction to review unstayed bankruptcy court sale orders, but rather limits only the remedies available in such an appeal. By its plain terms, Section 363(m) presupposes a “reversal or modification on appeal” of a sale order, and specifies only that such reversal or modification “does not affect the validity of [the] sale” to a good faith purchaser, leaving the courts free to fashion other remedies without that effect.

In the present case, the Second Circuit held, to the contrary, that Section 363(m) deprived the appellate courts of jurisdiction over an appeal from a lease assignment order deemed “integral” to an already completed sale order, notwithstanding that: the sale order was not contingent on the assignment; the sale price was fixed without regard to whether the lease could be assigned; and respondent had expressly waived (in successfully opposing a stay) any argument that Section 363(m) would bar appellate review. A month later, the Fifth Circuit re-confirmed that it also treats Section 363(m) as jurisdiction-stripping.

The question presented is:

Whether Bankruptcy Code Section 363(m) limits the appellate courts’ jurisdiction over any sale order or order deemed “integral” to a sale order, such that it is not subject to waiver, and even when a remedy could be fashioned that does not affect the validity of the sale.

Oral argument has not yet been set.