It was a fairly lax mid-August week at the United States Tax Court. There were only three (non-duplicative) designated orders issued. One was a common example of the taxpayer simply not giving the IRS anything to work with in a CDP hearing and won’t be discussed (found here). The other two, however, provide a few useful tips and traps of general application worth noting.
Read more…What Time-Zone Determines Timely (Electronic) Filing? NCA Argyle LP, et. al. v. C.I.R., Dkt. # 3272-18 (order here)
One of the more interesting tidbits from this week’s designated orders was buried in a footnote. The order above mostly dealt with an objection to the IRS’s motion for a deposition that (petitioners felt) came way too late to be fair (i.e. one month before trial). But it isn’t the timing of IRS’s motion that is interesting, but the timing of the petitioner’s objection.
When the IRS moved to compel depositions the Court ordered petitioners to file any response by August 14. I’m assuming this case involves big dollars, because petitioners are partnerships and LLCs represented by expensive law firms in California. Those law firms are probably very busy, with lawyers working very late hours. So they figured they’d electronically file their response on August 14th at 10:04 pm… Western time.
And why not? The “Practitioners’ Guide to Electronic Case Access and Filing” stated (but has since been changed as a result of this order) at page 42 that “A document is considered timely filed if it is electronically transmitted no later than 6:00 a.m. Eastern time on the day after the last day for filing.” [Emphasis added.] In other words, the petitioners had almost six more hours to get their response in, if you take the practitioner’s guide seriously.
Alas, in the hierarchy of legal authority the “Practitioner’s Guide” is a step below Tax Court Rule 22. That rule states (effective November 20, 2018) that “A paper will be considered timely filed if it is electronically filed at or before 11:59 p.m., eastern time, on the last day of the applicable period for filing.” [Emphasis added.] Petitioner’s response was filed 10:04 p.m. the day of the filing deadline… but only on western time. We live in an east coast dominated country (take it from a mid-westerner). In the time-zone that matters, the response was late by a solid hour and five minutes.
As a side-bar, it is important that other courts have different rules than the Tax Court. For example, as discussed here one preliminary difference is that Federal District Court determines the effective date of a complaint based on receipt, and not when it is mailed. Second, other courts (including Federal District Courts not located in Washington D.C.) are unlikely to set a deadline of 11:59 Eastern Time. The Federal District Court for Minnesota provides that an electronic document is timely if submitted “prior to midnight on its due date.” See page 4 of the ECF User Guide here. Though a time-zone is not provided (which midnight are we talking about?) one would surmise the Central Time zone, since the next rule covering timely paper filing sets the deadline at 5:00 p.m. Central Time on the due date. These rules from the ECF User Guide comport with the Federal Rules of Civil Procedure, which provide that for calculating the “last day” you generally look to the time zone in the court you are filing with. See FRCP Rule 6(a)(4).
So, bringing it back to Tax Court, is the West Coast law firm response thrown out for being filed out of time? Judge Buch is not one to stand on such formalities, stating that “no one was prejudiced by the 65 minute delay” and allowing it to stand.
Nonetheless, while this slight timeliness issue does not end up causing any problem for the parties in this case, it is important to recognize how different it would be if the deadline at issue was “jurisdictional.” As both Carl and Keith have extensively written about, based on the Tax Court’s current interpretation of the law, Judge Buch’s hands would be tied: deprived of jurisdiction, he would also be deprived of the ability to excuse the timeliness issue (say, for lack of prejudice, or more likely equitable tolling).
Who To Ask For Help: Tax Court Isn’t a One-Stop Shop. Crawford v. C.I.R., Dkt. # 4318-18L (order here)
We have previously seen that the Tax Court is reluctant to stand-in as a federal district court on FOIA issues (see post regarding Cross Refined Coal, LLC here) or dismiss a case where it is up to the bankruptcy court to amend the stay (see post regarding Betters v. C.I.R., here). In the above order we have a similar issue involving the enforcement of a federal district court injunction.
Essentially, the petitioner in this case has received informal Tax Court assistance (that is, no entry of appearance under Rule 24) from someone the IRS doesn’t much care for. And likely for good reason: the individual assisting the petitioner is associated with the Williams Financial Network, currently under indictment for a $5 million fraud scheme. The IRS accordingly has enjoined all individuals associated with that entity from “representing people before the IRS.” Of course (or as sometimes needs to be explained to taxpayers), the Tax Court is not the IRS so those individuals are not (technically) prohibited from representing petitioners before the Tax Court if they otherwise meet the requirements of Rule 200.
(As an aside to new tax court practitioners, don’t overly concern yourself with the reference to a “periodic registration fee” in the rules to practice. Once, in a fit of stress, I called the Tax Court to see if I was current on the fee (I couldn’t ever remember paying) and was told they hadn’t actually required it for decades.)
It isn’t clear if the individuals associated with the Williams Financial Network meet the requirements of Rule 200 (I’d bet they don’t), but that isn’t really the problem. The problem is that the IRS asks the Tax Court to essentially make up rules and exercise power it probably doesn’t have: that is, the IRS asks Judge Buch to order that the individuals helping the petitioner be prohibited from doing so when the case is remanded to IRS Appeals. Judge Buch declines to do so: the Tax Court wasn’t the court that issued the injunction, and the Tax Court has no rules on who can represent people before the IRS, just who can represent them before the Tax Court.
In other words, if Williams Financial Network violates the district court injunction it’s not the Tax Court’s problem, and not their place (or power) to fix it.
About Caleb Smith
Reminds me of this gem: https://www.ustaxcourt.gov/InternetOrders/DocumentViewer.aspx?IndexSearchableOrdersID=194840
I am grateful that someone from PT checks the Tax Court website every day and records for posterity the “Designated Orders,” the carriages of judicial wisdom that turn into pumpkins at midnight. Occasionally I don’t check until after 9 p.m. my time, and at least until recently they had already disappeared. I felt sorry for the webmaster who had to stay late at night to evaporate them, and sorrier for the practitioners in Hawaii who must choose between dinner and tax research.
One solution, of course, is to follow the lead of the Agriculture Department and move Tax Court operations to the Midwest. Chicago would provide better travel connections for the judges, but Dallas/Fort Worth is even better for weather reasons. The Tax Court itself is not in the worst of the D.C. flood plain but it is only a few blocks away from buildings (like the IRS, Justice Department and FTC) that are threatened and should be looking for new locations now. They have a 26% chance of flooding in the next 30 years.
The IRS building at 1111 did suffer fairly severe flooding about 15 years ago. It caused significant disruption. The Chief Counsel attorneys were relocated to Crystal City for months and months. Although I do not think any offices were flooded the flooding in the basement knocked out a fair amount of infrastructure.