Update on Premature Assessments

At the recent ABA Tax Section meeting the Tax Court announced that it had eliminated its backlog of cases which should stop the premature assessment problem it has created during the past two years because of the significant delays in getting petitioners over to IRS Chief Counsel’s office.  As we have discussed before here and here, when the IRS sends out a notice of deficiency, it puts a time frame on hearing that the taxpayer has filed a petition in Tax Court in response to the notice.  The notice suspends the statute of limitations on assessment for 90 days plus 60 days but the IRS must act relatively quickly after the 90 days runs in order to insure that it makes a timely assessment.  So, if it has not heard that the taxpayer filed a Tax Court petition by the date it selects after sending the notice – something like 90 days plus an additional 20 days – it assesses the liability shown in the statutory notice and begins the collection process.

The Tax Court eventually acknowledged the problem its petition processing delays caused the IRS, and hence the petitioner, and several months ago worked out a system for notifying Chief Counsel of new petitions even before it formally sent the petition to Chief Counsel for answer.  The system seems to have worked well and eliminated or significantly reduced the number of premature assessments.  Judge Toro noted in his comments that because the Tax Court has caught up with its backlog, the Court is winding down the early warning system created to avert premature assessments.  In a later panel Paul Butler, an executive with Chief Counsel in SBSE, stated that petitions generally arrive at Chief Counsel now about 3-4 weeks after filing but some still take a few months. So, it seems that we have a happy ending.

Professor Elizabeth Maresca, the director of the tax clinic at Fordham law school, raised an interesting point at the recent ABA Tax Section meeting that I had not considered.  I pass it along in case others have also not thought of the potential problem caused by the premature assessments and the cases in the settlement pipeline.

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The problem of premature assessments has been around for as long as I remember; however, the incidence of premature assessments prior to the pandemic was low.  In my experience, it usually happened for cases filed around the holiday period at the end of the year when the Tax Court clerk’s office probably operated at a skeletal level due to both holiday leave and end of year use or lose leave.  Each year it seemed some cases would not make it from the Tax Court to Chief Counsel.  For represented petitioners the premature assessment usually caused little problem because their representative would contact the local Chief Counsel office and the assigned attorney would fix the problem rather promptly causing an abatement of the assessment.  For pro se taxpayers who did not know the assessment should not have occurred, fixing the problem did not necessarily occur quickly because they failed to ask for an abatement.  The number of problem cases, however, would generally be quite low which does not mean it did not adversely impact individuals unaware that an easy fix existed.

Now we have quite a large number of premature assessments in the system.  Chief Counsel attorneys are on the alert for premature assessments but may not catch them all.  The possibility exists that the IRS has made premature assessments yet to be reversed and it has collected money on those assessments by offset or otherwise.  Now these cases filed a year or two ago are coming to the end which will cause the preparation of a decision document.  I hope that in every case in which the IRS prepares a decision document, it pulls a transcript and carefully checks to determine if a premature assessment occurred and if payments were made that need to be reflected in the decision document.  I am not sure that it does.

Professor Maresca recommended that attorneys representing petitioners in Tax Court cases request from Counsel a transcript of account for the year(s) before the Tax Court in order to make a check for any premature assessment and payment before signing the decision document.  The advice makes sense to me.  If the taxpayer has made payments on the account and the decision document does not reflect those payments, the taxpayer could lose them unless the problem is found within 30 days of the entry of the decision document.

While I mentioned above that the Chief Counsel assigned to the case will quickly fix it if the premature assessment is brought to their attention, the possibility exists that delays will occur.   Chief Counsel’s office has created a form for making a referral of a premature assessment and has a special email address.  You can find the form here.  The email address is on the form.

If calling your favorite Chief Counsel attorney, or the attorney assigned to the case, or emailing the form does not quickly result in fixing the premature assessment, you could consider filing a Tax Court Rule 55 motion.  Here is a template memorandum that could accompany such a motion for anyone in need of this resource.  Thanks to Frank Agostino for providing this resource.

Hopefully, we will soon be back to the good old days of rare premature assessments.  Until we get all of the assessments from the pandemic worked through the system, be on the lookout for problem cases.

Tax Court Temporarily Stops Issuing Dismissals for Lack of Jurisdiction of Late Deficiency Petitions

This is an update to the post of May 3, 2022, which discussed a May 2, 2022 motion to vacate a dismissal for lack of jurisdiction of a late-filed deficiency case in Hallmark Research Collective, Docket No. 21284-21.  In the motion, Hallmark argued that, after Boechler (a Collection Due Process case), the IRC 6213(a) deadline for filing a deficiency petition also is not jurisdictional and is subject to equitable tolling.  The prior post noted that, a day after the motion was filed, the Chief Judge issued an order directing the IRS to file a response within 30 days (i.e., by June 2).  The update is that on May 10, the Chief Judge assigned the motion to Judge Gustafson for purposes of ruling on the motion.    Motions in cases that had been decided by the Chief Judge are usually assigned to Special Trial Judges for disposition, not currently active Tax Court judges.  So, this unusual assignment shows the Court is taking the motion to vacate very seriously.

Simultaneously, it appears that the Tax Court, unannounced, has stopped issuing orders of dismissal for lack of jurisdiction in late-filed deficiency cases until Judge Gustafson (or, more probably, the Tax Court en banc) rules on the Hallmark motion.

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Research shows that the Tax Court in February and March 2022, combined, dismissed 103 late deficiency petitions for lack of jurisdiction – an average dismissal rate of between 2 and 3 cases a business day.  Yet, the last order of dismissal of a deficiency petition for late filing was entered on Friday, May 6. 

PT will post the IRS response to Hallmark’s motion when that response is filed, though PT expects the IRS will ask for and get a bit more time to file its response, to coordinate its response with the National Office.

One effect of the Tax Court’s suspension of ruling on such motions to dismiss in late-filed deficiency cases is that the Court will thus not, for some time, be creating appealable orders which could be challenged by appeals to the Circuit courts as test cases for the IRC 6213(a) issue.  The time is ticking on any appeals that may be filed concerning orders of dismissal entered between mid-February and May 6.

PT is aware of only one case where an order of dismissal has been appealed:  The February 15, 2022 order of dismissal in Culp, Docket No. 14054-21, was timely appealed to the Third Circuit on April 25, 2022 (3d Cir. Docket No. 22-1789).  In Culp, the IRS sent a notice of deficiency to the taxpayers, but the taxpayers say they never received the notice and only became aware of its possible issuance when the IRS started levying.  (We assume that the Culps also did not receive the notice of intention to levy, since they filed no Collection Due Process hearing request.)  They belatedly filed a Tax Court petition, arguing that the IRS had never sent a notice of deficiency to their last known address.  In response, the IRS produced a copy of the notice and proof of proper mailing to their last known address.  So, the court dismissed the petition for lack of jurisdiction for late filing – the long-standing position of the Tax Court and most courts of appeal, pre-Boechler, being that timely filing of a deficiency petition is a necessary predicate to the Tax Court’s jurisdiction. 

The Center for Taxpayer Rights plans to file an amicus brief in Culp (drafted by the Tax Clinic at the Legal Services at Harvard Law School) that sets forth all the arguments made in the memorandum of law filed to accompany the motion to vacate in the Tax Court Hallmark case for why the Tax Court was wrong to treat timely filing as a jurisdictional requirement of a deficiency suit.

What’s Happening in Myers and Whistleblower Cases After the Decision the Statute is a Claims Processing Rule

In 2019 the D.C. Circuit held in Myers v. Commissioner, 928 F.3d 1025, that the language creating the Tax Court’s basis for jurisdiction to hear whistleblower cases did not create a jurisdictional filing deadline.  It also held the time period subject to equitable tolling.  So, can the subsequent history of Myers provide insight into how the Tax Court will handle equitable tolling cases in Collection Due Process cases (CDP)?  No, it cannot because the Court held off on looking into equitable tolling waiting for the outcome in Boechler, but the post-Myers cases do provide insight into what happens when no one raises the issue of late filing.

Since the Myers decision, it does not appear that the Tax Court has issued any other rulings on whistleblower cases deciding an equitable tolling issue.  This signals how rarely equitable tolling issues present themselves. The IRS Whistleblower Office Annual Report to Congress (of which the most recent report posted to IRS.gov is for FYE 2020; see https://www.irs.gov/pub/irs-pdf/p5241.pdf) says in Table 3 on page 24 that there were 118 IRC 7623(b) claims in litigation as of 9/30/20, but then confusingly notes:  “There are closed claims that are in litigation. Table 3 identifies only open claims.”  Does that mean that Tax Court cases are not in the 118 or are in the 118?  This probably means that the 118 cases in litigation are pending Tax Court cases.  The Tax Court has reported to Congress that during FYE 2021 there were 63 whistleblower (WB) cases filed.  https://www.ustaxcourt.gov/resources/budget_justification/FY_2023_Congressional_Budget_Justification.pdf

The benefit of Myers to taxpayers who file late, however, appears to be in prohibiting the Tax Court from issuing orders to show cause why a whistleblower case should be dismissed for lack of jurisdiction (LOJ).  This post will discuss four opinions below, each of which suggests that the Tax Court would have issued orders to show cause to dismiss for lack of jurisdiction due to late filing, had the filing deadline been jurisdictional.  This provides a window into what will happen with late filed CDP cases where the IRS does not raise the timing of the filing.    In Myers any benefit from the D.C. Circuit opinion as confirmed by the Supreme Court in Boechler will come from the application of equitable tolling.

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Looking at the whistleblower cases decided since the Myers decision, Carl Smith found the following cases:

(1)  In Whistleblower 15977-18W, T.C. Memo. 2021-143 (12/29/21), the taxpayer lost on summary judgment because the Tax Court upheld a determination by the WB office that the WB did not provide specific enough information.  (Query whether the more recent D.C. Circuit case, Li v. Commissioner, would have required the Tax Court to dismiss this case for LOJ because the WB office did not appear to take any action on the claim beyond asking SB/SE to look into the claim.  There is no mention of any proceeding done against the taxpayer.)  The WB office issued a notice of determination to the WB on Oct. 16, 2017.  The WB, who lived overseas, may not have received the notice of determination until after the 30 days to petition expired.  In any event, the WB petitioned the Tax Court on Aug. 16, 2018.  The IRS did not raise to the Tax Court that the case should be dismissed for late filing.  Here’s footnote 3 from the opinion:

Petitioner resided outside of the United States when the petition was filed.  In Myers v. Commissioner, 928 F.3d 1025, 1036-1037, 442 U.S. App. D.C. 110 (D.C. Cir. 2019), rev’g and remanding 148 T.C. 438 (2017), the Court of Appeals for the D.C. Circuit held that the 30-day period for filing a petition to initiate a whistleblower action is subject to equitable tolling. The D.C. Circuit is the appellate venue for this case. See sec. 7482(b)(1) (penultimate sentence). We thus follow its precedent. See Golsen v. Commissioner, 54 T.C. 742, 757 (1970), aff’d, 445 F.2d 985 (10th Cir. 1971). Consistently with Myers, we hold that we have jurisdiction to consider this case. And since neither party has questioned the filing of the petition after the 30-day period or addressed the subject of equitable tolling, we will proceed to consider the pending motions.

The Tax Court did exactly what it should have.  It no longer has the right to raise timeliness issues on its own.  This will happen more and more now that the CDP cases have entered the pool of cases subject to the claims processing rule. 

(2)  Similar is Damiani, T.C. Memo. 2020-132, where the court saw that, obviously, the petition was not timely filed.  Here’s a bit from the Damiani opinion:

The Office agreed with Mr. Wiggins’ recommendation and on June 14, 2019, issued a final determination letter rejecting petitioner’s claims. The letter stated in pertinent part that “[t]he claim has been rejected because the information submitted did not identify an issue regarding tax underpayments or violations of internal revenue laws.” The letter informed petitioner: “If you disagree with this determination, you have 30 days from the date of this letter to file a petition with the Tax Court.”

Petitioner petitioned this Court for review of the Office’s determination. Her petition was mailed from Germany, postmarked by Deutsche Post on July 31, 2019, and was received and filed by the Court on August 12, 2019. 

. . . .

Consistently with Myers, we hold that we have jurisdiction to consider this case. And since neither party has questioned the filing of the petition after the 30-day period or addressed the subject of equitable tolling, we will proceed to consider respondent’s motion for summary judgment.

(3) Also similar is Friedel, T.C. Memo. 2020-131.  Here’s a bit from the Friedel opinion:

The Office agreed with both recommendations and issued on April 30 and May 8, 2019, final determination letters rejecting petitioner’s claims. Each letter stated in pertinent part that “[t]he claim has been rejected because the IRS decided not to pursue the information you provided.” The letters informed petitioner: “If you disagree with this determination, you have 30 days from the date of this letter to file a petition with the Tax Court.”

Petitioner petitioned this Court for review of the Office’s determinations. His petition was mailed from Germany, postmarked by Deutsche Post on June 11, 2019, and was received and filed by the Court on June 24, 2019. 

. . . .

[S]ince neither party has questioned the filing of the petition after the 30-day period or addressed the subject of equitable tolling, we will proceed to consider respondent’s motion for summary judgment.

(4)  Also similar is Stevenson, T.C. Memo. 2020-137, where the court expressed concern that the petition might not have been timely, but did not actually find facts as to the 30-day deadline.  The court there wrote:

Section 7623(b)(4) provides that “[a]ny determination regarding an award * * * may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with  respect to such matter).” The Office issued its determination letter to petitioner on April 10, 2019. He signed his petition on May 2, 2019, but the mailing date is unclear. See sec. 7502(a). The petition was received and filed by the Court on May 13, 2019, more than 30 days after the date on which the Office issued the determination letter.

. . . .

Since neither party has questioned the filing of the petition after the 30-day period or addressed the subject of equitable tolling, we will proceed to consider respondent’s motion for summary judgment.

In all of these cases, the IRS successfully moved for summary judgment.  Perhaps the IRS was so confident it would win on summary judgment that it did not bother to raise the petition untimeliness issues. In the amicus brief the Tax Clinic at the Legal Services Center of Harvard Law School filed for the Center for Taxpayer Rights in Boechler at the cert. stage, we predicted this outcome.  It may well turn out that it is more important to taxpayers that the Tax Court can’t raise timeliness issues on its own if a deadline is not jurisdictional than that the taxpayers can also raise equitable tolling. 

As the recent post on the application of 7459 pointed out by detailing the number of dismissals in deficiency, CDP, innocent spouse, and WB cases, there will be more (1) cases in which the IRS just misses the late filing and so doesn’t raise the issue than (2) cases where the IRS will raise the issue and the taxpayer will argue for equitable tolling.  It may be that the WBs in each of the above cases had an equitable tolling argument (e.g., non-receipt during the 30-day period, like Ms. Castillo), but they never had to present one.

Boechler Challenge to Tax Court Position on IRC 6213

Hallmark Research Collective, Tax Court Dk. No. 21284-21, filed a petition on September 2, 2021, in response to a notice of deficiency. The IRS answered the case on November 10, 2021; however, the Tax Court in policing cases to determine if it had jurisdiction issued a show cause order on November 17, 2021, seeking a response from the parties regarding why it should not dismiss the case for lack of jurisdiction.

The parties responded to the show cause order and the Tax Court decided that it lacked jurisdiction because the petition in the case was filed one day late. On April 1, 2022, the Tax Court dismissed the case for lack of jurisdiction.

Yesterday, Hallmark filed a Motion to Vacate Order of Dismissal for Lack of Jurisdiction and accompanied the motion with a legal memorandum setting out in detail why IRC 6213 does not create a jurisdictional time period and why prior Tax Court precedent driving dismissal of its case should be overturned following the Supreme Court’s decision in Boechler. Hallmark also argues that the filing deadline is subject to equitable tolling, and Hallmark seeks to present evidence on that issue later in the case. Shortly after the filing of the motion, the Court issued an order giving the IRS 30 days to respond.

While the Tax Court dismisses many deficiency cases for lack of jurisdiction, Hallmark may be the first case to squarely raise the issue of jurisdiction after the Boechler decision. The legal memorandum goes into great detail to explain the reasons why the Court’s prior jurisprudence has lost its underpinnings.

The Tax Court will undoubtedly give the IRS the opportunity to agree with Hallmark before rendering a decision.  I anticipate that the Tax Court will endeavor to act swiftly because of the volume of dismissals each year and the impact of the jurisdictional decision on practice at the Court.

The legal memorandum provides an outline for others who may seek to challenge the Tax Court’s decisions regarding jurisdiction in deficiency cases and details of case dismissals in recent months in order to show the impact of the issue.

What Happens After Boechler – Part 4: The IRS Argues That Equitable Tolling Would Not Apply in Deficiency Cases

As discussed in the prior three posts of this series, the Supreme Court decision in Boechler clearly rejected the Tax Court’s position set out in the portion of its opinion in Guralnik v. Commissioner, 146 T.C. 230 (2016) that held the time period for filing a petition in the Tax Court in a Collection Due Process (CDP) case is jurisdictional.  Petitioners who file a late Tax Court petition in a CDP case, joining petitioners in whistleblower cases and passport cases, will no longer find themselves tossed from the court automatically based on the date of court filing, but still face significant hurdles.  Petitioners seeking relief in the Tax Court outside of the three types of cases where decisions have removed the time period as a jurisdictional barrier still have some work to do in persuading the Tax Court as to how far the Boechler opinion applies.  Today’s post, part 4 in a four part series looking at the impact of Boechler, discusses the Supreme Court’s approach to the application of equitable tolling, including what CDP petitioners must do to overcome the hurdle of equitable tolling and the application of equitable tolling to deficiency proceedings once the courts determine the time for filing no longer provides a barrier. 

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The Tax Clinic at the Legal Services Center of Harvard Law School wrote its entire amicus brief in the Boechler case on the equitable tolling issue.  It did so because of the importance that the Supreme Court determine not only that the time for filing a petition pursuant to IRC 6330 does not create a jurisdictional barrier but also that petitioners could demonstrate through equitable factors the right to have the merits of their case heard by the Tax Court.  The IRS argued that even if the statute did not create a jurisdictional barrier petitioners should nonetheless still not have the opportunity to come into Tax Court because equitable tolling should not apply to a tax case.  The IRS relied on the Supreme Court’s decision in United States v. Brockamp, 519 U.S. 347 (1997).  The IRS has cited to Brockamp in every case leading up to and including Boechler, essentially arguing that it created a special exception for tax cases making equitable tolling inapplicable.  The Supreme Court soundly rejected this argument.

The Supreme Court started the equitable tolling section of the opinion with a broad statement about the general applicability of equitable tolling:

Equitable tolling is a traditional feature of American jurisprudence and a background principle against which Congress drafts limitations periods. Lozano, 572 U. S., at 10–11. Because we do not understand Con­gress to alter that backdrop lightly, nonjurisdictional limi­tations periods are presumptively subject to equitable toll­ing. Irwin v. Department of Veterans Affairs, 498 U. S. 89, 95–96 (1990).

In a footnote it took a mild swipe at a passing argument by the IRS that equitable tolling only applies in Article III courts, noting that it had already applied equitable tolling to non-Article III courts and citing, inter alia, to its decision in favor of the IRS in Young v. United States, 535 U.S. 43, 47 (2002) in which it, at the request of the IRS, granted equitable tolling to determine that the IRS could have a priority claim in a bankruptcy case.  It’s hard to imagine how the IRS could even make a passing argument on this issue given that it sought, and received, equitable tolling in a non-Article III court just two decades ago.

Applying the general principle of equitable tolling to the CDP statute the Supreme Court said:

We see nothing to rebut the presumption here. Section 6330(d)(1) does not expressly prohibit equitable tolling, and its short, 30-day time limit is directed at the taxpayer, not the court. Cf. id., at 94–96 (holding that a statutory time limit with the same characteristics is subject to equitable tolling). The deadline also appears in a section of the Tax Code that is “‘“unusually protective”’” of taxpayers and a scheme in which “‘laymen, unassisted by trained lawyers,’” often “‘initiate the process.’” Auburn, 568 U. S., at 160. This context does nothing to rebut the presumption that nonjurisdictional deadlines can be equitably tolled.

Count on the IRS arguing that the “unusually protective” aspect of CDP prevents equitable tolling from applying in deficiency cases.  As I discussed in the first post of this series, however, CDP should not be viewed as a unique provision and the same reasons that equitable tolling applies in a CDP case should also apply to deficiency cases.

The Court spent the next couple paragraphs explaining why Brockamp does not apply to CDP cases.  For the same reasons discussed in Boechler, Brockamp should not apply in deficiency cases.  Even though far more deficiency cases are filed in Tax Court than CDP cases, the total number of cases bears no comparison to the number of refund claims at issue in Brockamp.  One can only hope that this explanation resonates with the IRS, and it will refrain from citing Brockamp every time someone wants equitable tolling.  We will soon find out.

The Court then addressed the IRS’s final argument regarding equitable tolling – that creating uncertainty in the timing of the collection injunction of IRC 6330(d)(1) will cause big problems.  Here the Court states:

The Commissioner protests that if equitable tolling is available, the IRS will not know whether it can proceed with a collection action after §6330(d)(1)’s deadline passes. The Commissioner acknowledges that the deadline is al­ready subject to tolling provisions found elsewhere in the Tax Code—for example, tolling is available to taxpayers lo­cated in a combat zone or disaster area. Tr. of Oral Arg.37–40. But he says that the IRS can easily account for these contingencies because it continuously monitors whether any taxpayer is in a combat zone or disaster area. Ibid. Tolling the §6330(d)(1) deadline outside these circum­stances, the Commissioner insists, would create much more uncertainty.

In its brief to the Supreme Court the Solicitor General cited unsupported data not in the record of the case about numbers of cases and IRS internal processes.  I do not understand how that is allowed.  This is not information the Supreme Court could take judicial notice of.  In reviewing the information provided, I did not understand how the IRS arrived at the information the Solicitor General cited to the Supreme Court.  The information did not seem correct but it’s hard to argue against unsupported information that just magically appears. 

Aside from the fact that the Solicitor General feels it is appropriate to raise new information not in the record and not publicly available in its brief, which undermines the whole point of having a record, the data was, in fact, wrong.  It later sent a letter to the Supreme Court walking back the information in its brief and stating that the data was wrong but offering new unsupported data.  I found this offensive to the system.  The Court did not comment on it.  Perhaps it’s normal for the Solicitor General and the agency to toss non-public data into a Supreme Court brief, but I cannot understand how that is appropriate.

The IRS has to deal with uncertainty that a Tax Court case has begun and the collection injunction has come into existence all the time.  No better example exists than what has happened at the Tax Court during the pandemic.  By failing to notify the IRS of the filing of a Tax Court petition for a few months, the Tax Court set the IRS off into collection mode.  This has created problems for taxpayers and for the IRS but they are problems that get worked out and this has happened with thousands of cases.  Arguing that allowing the taxpayer to raise equitable tolling because it will create a problem when the problem already exists and gets fixed on a regular basis should not serve as a reason for preventing equitable tolling.  That solution is anything but equitable for individuals who miss the deadline for a good reason.

In responding to the IRS’s equitable tolling statute of limitations and levy authority uncertainty argument, the Supreme Court avoided discussing the two statutory extensions that the IRS said it could easily deal with (i.e., the IRC 7508 combat zone and IRC 7508A disaster declaration extensions) and simply focused on the more common statutory extension provided in IRC 7502, the timely-mailing-is-timely-filing extension.  The Court wrote:

We are not convinced that the possibility of equitable tolling for the relatively small number of petitions at issue in this case will appreciably add to the uncertainty already present in the process. To take the most obvious example, petitions for review are considered filed when mailed. 26 U. S. C. §7502(a)(1). The 30-day deadline thus may come and go before a petition “filed” within that time comes to the IRS’s attention. Presumably, the IRS does not monitor when petitions for review are mailed. So it is not as if the IRS can confidently rush to seize property on day 31 anyway.

Thus, one would expect that the equitable tolling statute of limitations and levy authority uncertainty argument will be rejected as well in a future court case involving equitable tolling of the IRC 6213(a) deficiency petition filing deadline.

The Supreme Court’s decision sends the Boechler law firm back to the Tax Court which will now decide if the late petition meets the equitable tolling tests.  Because the Tax Court has previously determined all of its deadlines for hearing cases are jurisdictional, it has not developed a body of law on equitable tolling.  Undoubtedly, it will now look to equitable tolling jurisprudence developed in other jurisdictions that did not bar its consideration.  What should we expect?

As the Tax Clinic’s brief points out, courts have generally developed three bases for applying equitable tolling: 1) actively misleading taxpayers about the filing deadline as the IRS did in Rubel, Matuszak and Nauflett; 2) extraordinary circumstances which prevent taxpayers from timely filing as occurred in Castillo and Atuke; and 3) timely filing petitions in the wrong forum as regularly happens and as we discussed here.

One of the first cases that the Tax Court may hear is the Castillo case which has been held by the Second Circuit awaiting the decision in Boechler.  The Fordham Tax Clinic represents Ms. Castillo who has yet to receive her CDP notice of determination even though it was mailed by the IRS to her last known address more than two years ago.  Postal records show it has never been delivered.  She filed her CDP petition late after finding out about the CDP notice of determination through an informal channel long after the deadline for filing passed. Castillo should provide the Tax Court with a slam dunk opportunity to grant equitable tolling and begin to develop its jurisprudence on this issue.  Undoubtedly petitioners will seek the benefit of equitable tolling without the favorable facts present in the Castillo case and the Tax Court will have the opportunity over the next few years to set the standards it will apply in letting in the handful of cases with deserving facts.  If you are bringing an equitable tolling case to the Tax Court look at the factors other courts have developed and bring deserving cases to the Court with well-developed arguments.

What Happens After Boechler – Part 3:  The IRS Argues that IRC 7459 Requires that IRC 6213(a) Treat the Time for Filing a Tax Court Petition as Jurisdictional

After Congress created the predecessor statute to IRC 6213 in 1924 (and created the Board of Tax Appeals – the predecessor to the Tax Court) it came back in 1926 and 1928 to create a separate statute which is now IRC 7459.  Section 7459 provides that a dismissal from a Tax Court case on jurisdictional grounds does not prevent the taxpayer from paying the tax and suing for refund.

When Carl Smith and I began making the argument that time periods for filing a Tax Court petition are not jurisdictional time periods, we initially confined our arguments to Collection Due Process (CDP) and innocent spouse cases out of concern that succeeding in deficiency cases might harm taxpayers because of 7459.  As we thought about this further over time, we could not remember a single incidence of a taxpayer being dismissed from the Tax Court on jurisdictional grounds and subsequently full paying the tax and suing for refund.  Of course, this does not mean it has never happened, but it does suggest it happens rarely.

This post will explain why IRC 7459 should not factor into the decision of whether IRC 6213 is a jurisdictional provision or a claims processing rule.  That conclusion results from both the language of the two statutes as well as the goal to protect taxpayers.

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In the prior two posts we have explained why the Supreme Court’s decision in Boechler knocks out all of the arguments that IRC 6213 is a jurisdictional provision previously made by the IRS, the Tax Court, and other courts, including the 9th Circuit in Organic Cannabis.  This post looks at the arguments regarding IRC 7459 and the cases the Tax Court dismisses in order to provide an explanation for removing the last argument from consideration.

In Organic Cannabis the 9th Circuit explained the various types of suits a taxpayer could bring to contest a tax liability and pointed out that:

if the taxpayer does file a petition in the Tax Court, then a decision “dismissing the proceeding shall be considered as its decision that the deficiency is the amount determined by the [IRS],” id. § 7459(d), and such decision as to “amount” is entitled to preclusive effect in subsequent proceedings between the taxpayer and the IRS, see Malat v. Commissioner, 302 F.2d 700, 706 (9th Cir. 1962). [emphasis added]

We have written before about the effect of a Tax Court dismissal, and we have explained that petitioners to the Tax Court cannot voluntarily dismiss a Tax Court case once jurisdiction has attached.  After setting up the general rule, the 9th Circuit went on to explain the exception in IRC 7459(d) when the Tax Court dismisses a case because it lacks jurisdiction:

there is no such “decision” as to “amount,” and no preclusive effect, if the Tax Court’s “dismissal is for lack of jurisdiction.” 26 U.S.C. § 7459(d) (emphasis added)

Then the 9th Circuit used as one of its bases for finding IRC 6213 to be a jurisdictional provision with regard to the time of filing the problem that would attach if it were not jurisdictional:

Under Appellants’ non-jurisdictional reading of § 6213(a), the Tax Court’s dismissal of a petition as untimely could potentially have the perverse effect of barring the taxpayer from later challenging the amount in a refund suit—ironically yielding precisely the sort of “harsh consequence[]” that the Supreme Court’s recent “jurisdictional” jurisprudence has sought to avoid.  Kwai Fun Wong, 575 U.S. at 409.  That peculiar outcome is avoided if § 6213(a) is read as being jurisdictional, because then dismissals for failure to meet its timing requirement would fall within § 7459(d)’s safe-harbor denying preclusive effect to Tax Court dismissals “for lack of jurisdiction.” 

So, the 9th Circuit used what it thought would be a negative effect of finding IRC 6213 to be a claims processing rule as a basis for justifying its decision.  This is wrong both as statutory interpretation and wrong in thinking that keeping IRC 6213 as a jurisdictional provision would not harm taxpayers, while making that deadline non-jurisdictional would harm taxpayers.

With respect to statutory interpretation, IRC 7459 simply has no role to play.  The argument for the role of IRC 7459(d), at least based on the IRS argument, is that interpreting the jurisdictional dismissal exception of that subsection to exclude dismissals for late filing would render the exception superfluous.  The IRS has argued that the only dismissals that are currently jurisdictional (other than those when no notice of deficiency was issued and so the amount of a deficiency cannot be set out in the dismissal order) are from late filing. This argument fails because many reasons exist why a petition may be dismissed for lack of jurisdiction other than merely late filing or the lack of a notice of deficiency.  The most obvious situation occurs when the Tax Court dismisses a petition for lack of jurisdiction due to an invalid notice of deficiency because the IRS did not send the notice to the taxpayer’s last known address.  See, e.g., Crum v. Commissioner, 635 F.2d 895 (D.C. Cir. 1980).  Another example occurs when the automatic stay in bankruptcy bars the filing of a Tax Court petition, see, e.g., Halpern v. Commissioner, 96 T.C. 895 (1991).  Another example occurs when a corporation lacks capacity to file the petition, see, e.g., Vahlco Corp. v. Commissioner, 97 T.C. 428 (1991) (Texas law).  The biggest reason for dismissal from Tax Court for lack of jurisdiction occurs for failure to pay the filing fee – almost 2/3rds of the dismissals occur for this reason.  So, the IRS is wrong when it argues that determining IRC 6213 is a claims processing rule renders IRC 7459(d) superfluous.

The legislative history of IRC 7459(d) also does not support the conclusion that Congress enacted the statute to preserve the rights of taxpayers who file late in the Tax Court to avoid res judicata in a subsequent refund suit involving the same deficiency.  There is no such legislative history.  There is also nothing in the language of IRC 7459 that speaks to the time frame for filing a Tax Court petition as a jurisdictional time frame.  There is simply no language to parse.

After you leave the legal arguments that have no merit, you move to the apparent presumption by the 9th Circuit that somehow IRC 7459 helped taxpayers.  First, there’s the problem that Congress gave no indication it sought that result, either in the language of the statute or its legislative history. Second, the actual effect of the 9th Circuit’s take on the statute hurts far more taxpayers than it helps.

Carl Smith looked at the dismissals for lack of jurisdiction due to late filing in February and March of 2022 searching DAWSON using the search words “lack of jurisdiction and timely.”  He found 103 cases which suggests 618 dismissals over the entire year or some similar number.  Each of those individuals could theoretically be adversely impacted if section 7459(d)’s exception for jurisdictional dismissal could not apply, so that res judicata would prohibit their filing later refund suits.

To know how the loss of 7459(d) protection could adversely impact this group, it’s necessary to know how many taxpayers in this group paid the tax and filed a suit for refund.  For this fiscal year ending September 30, 2020, 188 refund suits in total were brought in the Court of Federal Claims and the district courts.  Not all of the 188 complainants filed after a prior Tax Court dismissal for late filing and perhaps none of them did.  Indeed, Carl looked at all district court and CFC opinions issued in 2021 using the search terms “refund and (Tax Court) and dismiss!” and could not find a single refund suit in which it was clear that the IRS had issued a notice of deficiency, the taxpayer had then late-filed a Tax Court suit, and, after the suit’s dismissal, the taxpayer sued for a refund. 

Carl did come across one 2021 opinion where a taxpayer’s Tax Court deficiency suit had been dismissed for lack of jurisdiction, purportedly for late filing, and a CFC refund suit ensued — see my post of June 4, 2021 on the case, Jolly.  However, in that case, it was unclear whether the IRS had ever issued a notice of deficiency, with the IRS arguing in the Tax Court that a notice of deficiency had been issued, but arguing in the CFC that the IRS had never issued one and that the Tax Court dismissal was wrong for saying there had been a late-filed petition rather than a petition lacking an underlying notice of deficiency.  And, in Jolly, the taxpayer did not fully pay the tax before bringing the CFC suit.    Reading the 2021 opinions, Carl also found a citation to a pre-2021 opinion in a refund suit where a taxpayer brought a CFC suit after his Tax Court deficiency suit was dismissed for lack of jurisdiction for late filing and where there was no dispute that a notice of deficiency had been issued, Wall v. United States, 141 Fed. Cl. 585 (2019), but the taxpayer in the suit was only seeking relief from liens, not a refund, and, in any event, had not fully paid the deficiency before bringing the suit.

It’s probable that no refund suits resulted from the Tax Court dismissals for failure to timely file the petition because a very high percentage of the petitioners dismissed were pro se taxpayers who lack knowledge of tax procedure and funds to full pay.  Only in a rare cases does the taxpayer benefit from IRC 7459(d), and not one that we know of.  Yet, we know there are cases in which taxpayers could benefit from the interpretation of IRC 6213 as a claims processing rule.

Petitioners who would especially benefit from the interpretation of IRC 6213 as a claims processing rule are petitioners with a good basis for equitable tolling.  While this is not a large number, the individuals with a good reason for filing late present very sympathetic cases in which the petitioners deserve the chance to have the merits of their case heard.  The next post will talk about the equitable tolling rules and who these petitioners might be. 

In addition, petitioners who would benefit are the petitioners dismissed because the Tax Court spent the time and effort to carefully review each case to determine if it had jurisdiction and issued an order to show cause when it had concerns about its jurisdiction even though Chief Counsel did not raise an issue.  In February and March of 2022, Carl searched for this type of order to show cause and found 34 cases.  This means that about 204 petitioners a year might benefit if the Tax Court did not need to spend time carefully scouring each case to check on its jurisdiction.  This would not only give these taxpayers a chance to have the merits of their argument heard but would save the Tax Court all of the time it currently spends looking at each case to determine if it has jurisdiction. 

To determine how many of the cases in which the Tax Court show cause orders resulted in a dismissal, Carl went back to April and May of 2021 expecting that most of those cases would have cleared through the system by now, offering a percentage of cases dismissed after a show cause order.  His research suggests that about 75% of the cases identified were dismissed as untimely.  The 9th Circuit’s effort to “help” taxpayers by citing to IRC 7459(d) instead created a misguided view of the system.  The actual cases show that few, if any, taxpayers receive a benefit from IRC 7459(d) but quite a few taxpayers might benefit from a claims processing rule, either because they have a basis for equitable tolling or, more likely assuming the Chief Counsel attorneys continue to fail to identify issues of timely filing, because taxpayers will no longer face orders to show cause for dismissal for lack of jurisdiction on account of late filing.

What Happens After Boechler – Part 2:  The IRS Argues the Floodgates Will Open if the Tax Court Follows Boechler in Interpreting IRC 6213(a)

Boechler involves the Tax Court’s jurisdiction in Collection Due Process (CDP) cases.  The Tax Court Congressional Budget Justification Fiscal Year 2023 (Feb. 28, 2022), at page 19 reports that CDP cases filed in the fiscal year ended 9/30/21 made up 3.29% of its total caseload and deficiency cases made up 96.46% of its total caseload (though the Tax Court overstates the deficiency case figure by apparently including in that deficiency figure all dockets that do not have letters at the end of their docket numbers — which would mean that the deficiency figure erroneously also sweeps in 6015(e) cases and all those cases later dismissed for LOJ because no ticket to the Tax Court under any jurisdiction had been issued). If the Tax Court determines that the time period for filing petitions in deficiency cases is not a jurisdictional time period, many more petitioners will have the opportunity to argue that the Court should hear their late petition than would have the opportunity in CDP cases – almost 20 times as many.  What does the floodgate argument really mean here?  Should it make a difference?

There are at least two parts to the question of the impact of finding that the time period for filing a Tax Court petition in a deficiency case is not jurisdictional.  One, what is the volume of late filed cases?  Two, how many of the late filed cases have a marginally meritorious case that will require actual resources at the Court and at Chief Counsel, IRS to resolve?  One possible result, discussed below, is that the net effect will cause little if any additional work for the Court or Chief Counsel.  If the Tax Court finds or is instructed that 6213(a) is not a statute in which the time for filing creates a jurisdictional bar, the net result of any additional work should not be significant.

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The Tax Clinic at the Legal Services Center of Harvard Law School has been looking at Tax Court dismissals for several years, monitoring the cases in search of meritorious cases that might provide a challenge to the Court’s view that all of its bases for jurisdiction have a jurisdictional time frame.  Looking at the cases primarily means Carl Smith reviewing the daily docket, Carl passing to me any cases that look like they were dismissed for a reason based on late filing where the petitioner has raised some type of excuse that seems more than frivolous, me ordering the documents from the Court that led to the Court’s order, Carl and me reviewing the documents to decide if the case has a potentially meritorious argument on the excuse and on the merits, me calling the taxpayers with a potentially meritorious case to get further information and a sense of their interest in pursuing the case further and a follow up discussion between Carl and me on whether to move forward with the case.  We find very few cases that meet our criteria – less than 10 each year in all Tax Court bases for jurisdiction combined.

Backing up from our criteria to the criteria that will cause work for the Court and Chief Counsel, it’s necessary to decide how many cases will have an argument for equitable tolling that requires a hearing of some type.  When Chief Counsel identifies a case as late filed, more about why I say only Chief Counsel below, it will make affirmative allegations in its answer that the petition was untimely.  It already spends at least as much time as the affirmative allegations will take by filing a motion to dismiss on all of the cases it determines were filed late.  So, no additional work there.  The taxpayer will, or should, respond to the affirmative allegations setting forth the defense(s) that the petition was timely filed and/or that the time for filing should be equitably tolled.  This process saves the Court the time it takes to produce and send out show cause orders.  At some point the Court will rule on the effect of late filing.  The Court already rules on this issue after the show cause order.  So, no additional work there.

Not all taxpayers will file a response to the answer.  Taxpayers who do not respond will cause the IRS to file a Rule 37(c) motion.  This may cause the Court to give the taxpayers a second chance to respond or may cause the Court to rule at that point.  The filing of this motion will cause Chief Counsel a little more work.  If the Court issues an order giving taxpayers a second chance to respond, this will cause the Court a little more work.

Taxpayers who do respond will now respond with different/additional information from the information provided in responses prior to a change in the jurisdictional nature of IRC 6213.  Some taxpayers will respond with a detailed explanation of the reason for the late filing.  Some of these responses will make clear that the taxpayers do not fit into the Court’s criteria for equitable tolling.  It will take the Court several opinions in the early years after determining IRC 6213 does not have a jurisdictional time frame for the Court to develop a body of jurisprudence on equitable tolling.  It must do so now for IRC 6330 cases.  It’s worth noting that the Tax Court could have been building its body of equitable tolling law since the D.C. Circuit’s decision regarding whistleblower petitions in the Myers case.  It has not and may have been holding the Myers case in abeyance pending the outcome of Boechler but that is another source of equitable tolling jurisprudence that can inform IRC 6213 cases.  There is no indication that in the whistleblower or passport cases, both areas of Tax Court jurisdiction with relatively low filing numbers, that a stampede of equitable tolling requests, or any such requests, has occurred. 

So, developing this body of jurisprudence should not add much to the burden of the Tax Court.  Once it has established its criteria for reviewing cases for equitable tolling, it will be able to dismiss some cases in which taxpayers response to the affirmative allegations in the answer discloses a reason for filing a late petition that does not fit within the established bases for accepting the case.  Making decisions on these cases will not cause much additional work and probably will occur in the office of the Chief Judge with the attorneys who work there.  This will cause little or no additional work for Chief Counsel attorneys.

Unquestionably, some cases will respond to the motion and raise enough concerns about the nature of their argument for jurisdiction that the Court will need to schedule a hearing in order to take evidence and to allow further argument.  These cases will cause more work for the Court and for Chief Counsel.  In order to guess how many cases we might be talking about here, it is necessary to start with the number of cases typically dismissed for lack of jurisdiction based on an untimely petition.  No need to look at other bases for dismissal since they are not implicated by the Boechler decisions.

Carl Smith did research on the number of dismissals for lack of jurisdiction based on timeliness and found 103 cases in February and March of 2022.  At that pace one might expect about 600 cases in a year.  Based on these raw numbers, we need to determine how many of the petitioners filed a response that would require more work of the Court and Chief Counsel.  Carl Smith has been reviewing all orders of dismissal for the last four months for late filing under all jurisdictions, and he estimates he has seen only about 30 orders where taxpayers have tried to provide a good excuse for late filing.  Assuming that number holds and that similar numbers of articulated excuses in future cases will require the litigation of equitable tolling if the filing deadlines are no longer jurisdictional, that means that about 90 cases a year will involve parties doing filings relating to the assertion of equitable tolling.  So, probably there would be 87 cases a year that would require additional work from the Tax Court and Chief Counsel to deal with taxpayer-pleaded equitable tolling defenses if IRC 6213 creates a claims processing rule.  Under Boechler, about 3 cases a year will probably be CDP cases in which a taxpayer pleads equitable tolling.  That low CDP number may surprise a lot of people who thought Boechler would open floodgates under CDP.  Of course, the new legal possibility of equitable tolling under all jurisdictions may bring additional taxpayers to assert facts that can give rise to equitable tolling, but it is hard to believe that these new assertions would any more than double the number of cases each year where equitable tolling would be argued.  Further, probably only a third of such cases will actually be granted equitable tolling (30).  There will be additional work to Counsel and the Court on the merits in such cases, but 30 cases is only 0.1% of the Tax Court’s docket each year.  So, given that over 90% of cases settle on the merits anyway, the additional work will probably not involve more than a single extra merits trial a year.

Tomorrow’s post will explain in more detail why Chief Counsel must make its objection early in the case.  Chief Counsel attorneys will also have a time savings because they will no longer need to respond to orders to show cause in cases where they do not raise the issue in the answer.  For reasons discussed in the next post, the failure to raise the timing of the filing in the answer will probably end any argument on timing allowing the parties to focus on the merits.

Eliminating Answers in Certain District Court Cases

We have written quite a bit about answers in Tax Court cases recently.  I wrote a post about answers describing how little help they provided.  In that post I provided some history about answers and some suggestions present and past on how to improve the system.  Caleb Smith followed my post with a three part series, found here, here and here, in which he focused on the failure of Chief Counsel attorneys to engage in the type of due diligence and duty for reasonable inquiry regarding alleged facts that one may expect with respect to answers.  Christine wrote a post in 2018 about the EZ Answer procedures adopted by Chief Counsel for answering small tax cases.  (In that post Christine reports on the surprise Judge Leyden had about the number of petitioners who disappear, who I refer to as melting away in a recent post.) 

Because I think there is a correlation between the melting away of petitioners and the answer, recent activity regarding answers in a different federal court has brought me back to the topic of answers and my continued desire for a better procedure.  Since the Tax Court purports to look to Social Security cases as the basis for its rules for denying electronic access to documents (see my article available through a link in this post), I thought that perhaps it would find interesting the discourse happening in federal district courts regarding answers in cases brought to challenge Social Security determinations under 42 USC 405(g).

I thank Carl Smith for pointing me to the rule change and my research assistant Grace Heinerikson for running down all of the comments.

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The Supreme Court forwarded a rule change to Congress which will take place on December 1, 2022, absent action to stop it.  Here’s the pertinent rule change for purposes of the discussion in this post:

SUPPLEMENTAL RULES FOR SOCIAL SECURITY ACTIONS UNDER 42 U.S.C. § 405(g)

Rule 1. Review of Social Security Decisions Under 42 U.S.C. § 405(g)

(a) Applicability of These Rules. These rules govern an action under 42 U.S.C. § 405(g) for review on the
record of a final decision of the Commissioner of Social Security that presents only an individual claim.
(b) Federal Rules of Civil Procedure. The Federal Rules of Civil Procedure also apply to a proceeding
under these rules, except to the extent that they are inconsistent with these rules.

Rule 2. Complaint
(a) Commencing Action. An action for review under these rules is commenced by filing a complaint with the court.
(b) Contents.
(1) The complaint must:
(A) state that the action is brought under § 405(g);
(B) identify the final decision to be reviewed, including any identifying designation provided by the Commissioner with the final decision;
(C) state the name and the county of residence of the person for whom benefits are claimed;
(D) name the person on whose wage record benefits are claimed; and

(E) state the type of benefits claimed.
(2) The complaint may include a short and plain statement of the grounds for relief.

Rule 3. Service
The court must notify the Commissioner of the commencement of the action by transmitting a Notice of Electronic Filing to the appropriate office within the Social Security Administration’s Office of General Counsel and to the United States Attorney for the district where the action is filed. If the complaint was not filed electronically, the court must notify the plaintiff of the transmission. The plaintiff need not serve a summons and complaint under Civil Rule 4.

Rule 4. Answer; Motions; Time

(a) Serving the Answer. An answer must be served on the plaintiff within 60 days after notice of the action is given under Rule 3.
(b) The Answer. An answer may be limited to a certified copy of the administrative record, and to any affirmative defenses under Civil Rule 8(c). Civil Rule 8(b) does not apply.
(c) Motions Under Civil Rule 12. A motion under Civil Rule 12 must be made within 60 days after notice of the action is given under Rule 3.
(d) Time to Answer After a Motion Under Rule 4(c). Unless the court sets a different time, serving a
motion under Rule 4(c) alters the time to answer as provided by Civil Rule 12(a)(4).

Rule 5. Presenting the Action for Decision
The action is presented for decision by the parties’ briefs. A brief must support assertions of fact by citations to particular parts of the record.

Rule 6. Plaintiff’s Brief
The plaintiff must file and serve on the Commissioner a brief for the requested relief within 30 days after the answer is filed or 30 days after entry of an order disposing of the last remaining motion filed under Rule 4(c), whichever is later.

I bolded the provision regarding the Answer, which requires merely that the government attach a copy of the record and set forth any affirmative defenses.  Contrast this proposal with Tax Court Rules 34 and 36 on which the Tax Court proposed amendments recently here.  For the reasons discussed in the first post linked above, the Tax Court will want more than the FRCP amendment copied above requires for a petition in a social security case in order to determine if it has jurisdiction, but what about the idea of a simple answer such as the Supreme Court has now proposed in these Social Security cases proceeding in district court?

The new rule seems designed to simplify (a good thing and something Chief Counsel’s Office would probably get behind) and to speed up (another good thing and a reason for some of the Melt) the filings and rulings in these cases.

Might the Tax Court look to the newly adopted rules for Social Security cases as a basis for thinking again about the answer procedures in small tax cases and perhaps petitions as well?  With IRS continuing to provide heavy audit coverage of the least among us and 75-80% of petitions filed by pro se petitioners, it’s not only the answers that might benefit from a make-over.  Pro se petitioners don’t exactly write the kind of petitions lawyers might want which makes it harder to write good answers.  Why not examine the whole process of how to get a case underway?

Maybe the petition should simply state what the petitioner thinks is the problem, and the answer should simply attach pertinent documents and make affirmative allegations.  New Rule 2(b)(2) for Social Security cases states:  “(2) The complaint may include a short and plain statement of the grounds for relief.” Maybe the Tax Court should no longer treat the failure to raise an item from the notice of deficiency in the petition as a concession of the item.  Could we just make getting the small tax case underway as simple as possible and then sort it out?  That seems to be the process the Supreme Court has adopted for Social Security cases filed under 42 USC 405(g).

The proposed rules drew a number of comments, linked here:

American Association for Justice

Aderant

Judge Patricia Barksdale

Empire Justice Center

Federal Magistrate Judges Association

Judge Frank P. Geraci, Jr.

NAACP Legal Defense & Educational Fund

Jeffrey Marion

Judge Ricardo S. Martinez

Alan B. Morrison

National Organization of Social Security Claimants’ Representatives

New York City Bar

Public Counsel

Jean Publieee

Anthony Ramos

Joanna L. Suyes

Social Security Administration

Not every comment specifically addresses the petition and answer aspect of 42 USC 405(g) and not every comment was supportive.  Of particular importance was the comment submitted by the Social Security Administration – the last of the comments linked above.  In the SSA’s comment was the following paragraph:

With respect to the Commissioner’s initial response to the complaint, the Supplemental Rules strike an appropriate balance. In the vast majority of cases, an answer from the Commissioner is unnecessary, and the parties are able to proceed to briefing as soon as the administrative record is filed because the legal issue is defined by statute. At least 25 Federal districts currently allow for the administrative record to serve as the Commissioner’s answer without any issue. In the rare case that warrants an affirmative defense, Supplemental Rule 4(b) preserves the Commissioner’s ability to assert one.

SSA reports that there are about 18,000 district court review cases filed each year.  This number is not appreciably different from the number of small tax cases filed each year.  While there are certainly differences in the procedural posture of SSA appeal cases and small tax cases, many similarities also exist.  The FRCP rule changes present an opportunity for study of the Tax Court rules regarding small tax cases.  Maybe the Tax Court should use this as an opportunity to study ways to improve the process for all parties, including the Court.  What’s the harm in taking a close look by studying the issue?