Dismissal of Late Filed Petition in a Post-Boechler World

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In Carroll v. Commissioner, Dk. No. 11753-20L the Tax Court entered an order on November 16, 2022, dismissing a late filed petition.  Both respondent and the Court did everything I would expect leading up to the dismissal.  Petitioner, proceeding pro se, did not respond.  So, it is unknown if she had a basis for equitably tolling the time for filing the petition.

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I have not read the pleadings in the case.  As a result, this post is based on some guesses and information available publicly (without payment or significant delays) in the orders of the Court.

Petitioner appears to have filed her Collection Due Process petition late.  This case was filed on September 21, 2020, well before the decision in the Boechler case.  On November 9, 2020, the IRS filed a motion to dismiss for lack of jurisdiction.  The Court ordered a response to the IRS motion and petitioner requested more time.  At some point the case was probably suspended pending the outcome of Boechler.  Because the motion was still pending when the Boechler decision came out, the Court issued an order on May 9, 2022, denying the motion to dismiss for lack of jurisdiction and directing the IRS to file an answer.  It did.

In answering the petition, the IRS made affirmative allegation in paragraph 8 of its answer.  When the IRS makes affirmative allegations, a petitioner has a chance under Tax Court Rule 37 to file a reply admitting or denying the affirmative allegations in the same way the IRS would admit or deny allegations in its answer. 

Here, petitioner did not file a reply.  Rule 37(c) allows the IRS to file a motion requesting to have its affirmative allegations deemed admitted.  The IRS did exactly that in this case within the appropriate time frame.  Although the Tax Court could deem the allegations admitted without any further action, in my experience, it always issues an order pointing out to the petitioner the consequence of not filing a reply and offering the petitioner the opportunity to file a reply in response to the order.  The Court issued an order on August 8, 2022, giving petitioner until September 6, 2022, to file a reply.  She did not.

On September 26, 2022, the IRS filed a motion for judgment on the pleadings.  The Court ordered petitioner to respond to this motion by October 18, 2022.  She did not respond.  The Court held a hearing on November 15, 2022, on the IRS motions.  It then entered the order on November 16, 2022, dismissing the case.

There is nothing unusual about this case but it is the first post-Boechler case in which I have seen an order following exactly the process that I expect to take place now that the time for filing a petition in a Collection Due Process (CDP) case is acknowledged to not be a jurisdictional time frame.  The IRS filed its answer with affirmative allegations regarding the lateness of the filing of the petition.  Although I have not seen the IRS answer, I expect that it provides the date of the issuance of the CDP determination letter and the date of the filing of the petition noting that more than 30 days elapsed.  The IRS followed up after filing the answer appropriately by moving to have its affirmative allegations deemed admitted under the Rule 37(c) process.  The Court gave petitioner every opportunity here to provide an explanation and she did not.  Dismissal was appropriate.

I anticipate that we will see a lot more Rule 37(c) motions going forward.  Pro se taxpayers don’t understand the provisions calling for a reply, or their obligation under Rule 39 to plead facts in the reply giving rise to equitable tolling as an affirmative defense to the statute of limitations argument raised by the IRS in the answer.  Many will take advantage of the first (or second) time period provided by the rule or a court order and explain why the petition was filed late.  Those petitioners will receive a hearing on the reasonableness of their excuse.  Some petitioners will fail to respond and face an outcome similar to Ms. Carroll.  Unless Chief Counsel’s office gets a lot more diligent about monitoring the timeliness of the filing of petitions, something that I expect will happen, there will also be cases where the failure of Chief Counsel attorneys to do what the attorneys did in this case will result in a waiver of the timeliness argument allowing the lucky late filing petitioners to keep their case in Tax Court despite the tardiness of the filing of the petition.

I expect that the Chief Counsel attorneys have received instructions on how to handle a late filed case and the attorneys in the Chicago office followed that playbook perfectly here.  If those instructions have not been issued, the Chief Counsel attorneys now have a case template they can follow.

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