After September 30, 2021, when the petition for a writ of certiorari was granted in Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (Apr. 21, 2022), the Tax Court held in abeyance rulings on pending IRS motions to dismiss late-filed Collection Due Process (CDP) petitions in other cases for lack of jurisdiction until the Supreme Court decided Boechler. After Boechler held that the CDP petition filing deadline is not jurisdictional, the Tax Court commenced denying all such pending motions in the other cases.
On April 1, 2022 (three weeks before the Supreme Court decided Boechler), the Tax Court granted an IRS motion to dismiss a late-filed deficiency case for lack of jurisdiction in Hallmark Research Collective v. Commissioner, 159 T.C. No. 6 (Nov. 29, 2022). About a week after Boechler was decided, the taxpayer in Hallmark timely moved to vacate the dismissal order, arguing for an extension of Boechler’s holding that the CDP petition filing deadline is not jurisdictional to the deficiency petition filing deadline. Days later, the Tax Court started holding in abeyance rulings on motions to dismiss other late-filed deficiency cases for lack of jurisdiction until the court issued an opinion on Hallmark’s motion to vacate. The day after the Tax Court issued its opinion in Hallmark, the Tax Court recommenced dismissing late-filed deficiency cases for lack of jurisdiction.
On July 19, 2023, the Third Circuit issued its opinion in Culp v. Commissioner, 2023 U.S. App. LEXIS 18287, holding that the deficiency petition filing deadline is not jurisdictional and is subject to equitable tolling. Culp conflicts with Hallmark. (See previous PT coverage here and here.)
Beginning on July 21, 2023, the Tax Court apparently again suspended ruling on motions to dismiss late-filed deficiency cases for lack of jurisdiction pending a ruling in another case on whether the Tax Court agrees or disagrees with Culp.
I say “apparently . . . suspended” because the Tax Court has not yet issued an order stating such suspension. But, since July 20, 2023, the court also has not issued any ruling on whether a late-filed deficiency petition should be dismissed for lack of jurisdiction. This can’t be just a fluke. Look at the following table of the number of recent orders dismissing late-filed deficiency cases for lack of jurisdiction:
Mon. Jul. 10, 2023 1
Tues. Jul 11, 2023 6
Wed. Jul. 12, 2023 2
Thurs. Jul. 13, 2023 2
Fri. Jul. 14, 2023 1
Mon. Jul. 17, 2023 3
Tues. Jul. 18, 2023 1
Wed. Jul. 19, 2023 5
Thurs. Jul. 20, 2023 11
Fri. Jul. 21, 2023 0
Mon. Jul. 24, 2023 0
Tues. Jul. 25, 2023 0
Wed. Jul. 26, 2023 0
The Tax Court has not yet publicly identified the docket in which the court will be writing an opinion considering whether to agree with Culp or stick with Hallmark. I expect we will learn of that docket in the next few weeks.
During the Hallmark suspension, judges were eventually faced with some motions to dismiss for lack of jurisdiction filed on the eves of trial. The judges had to issue orders striking the cases from the trial calendars and holding in abeyance rulings on the motions to dismiss until the Tax Court ruled on the motion to vacate in Hallmark. Those orders both confirmed that there was a general suspension in effect and informed the public of the docket in which a ruling was expected, Hallmark. When I learn of the new docket in which we will be expecting a post-Culp ruling, I will let PT readers know.
Although the Tax Court has never published its internal operating procedures, Judge Cohen once wrote that en banc “[c]ourt review is directed if the report proposes to . . . reconsider, in a circuit that has not addressed it, an issue on which we have been reversed by a court of appeals.” Mary Ann Cohen, “How to Read Tax Court Opinions”, 1 Hous. Bus. & Tax L. J. 1, 5-6 (2001). That is why the Tax Court now has to issue an en banc opinion on whether it continues to follow Hallmark or agrees with Culp. Given the time necessary to draft an opinion and the Tax Court to vote on the draft opinion en banc, it will likely be at least 4 or 5 months before the Tax Court will be able to issue such an opinion.
The forthcoming opinion will probably be in a docket appealable to a circuit court that does not have any controlling precedent on whether the deficiency filing deadline is jurisdictional. If there already is controlling circuit court precedent, the Tax Court arguably should still follow that precedent under the rule of Golsen v. Commissioner, 54 T.C. 742, 756-758 (1970), aff’d on other issues, 445 F.2d 985 (10th Cir. 1971). Hallmark stated that every circuit except the First and Fourth has controlling precedent on this issue. So, I would expect the new opinion in a case appealable to either the First or Fourth Circuit.
There is an open question, though, whether the Tax Court will feel bound under Golsen to follow the precedents from those other circuits that the Tax Court identified in Hallmark – i.e., the 2d, 5th-11th, and D.C. Circuits.
The Supreme Court has said that courts should not feel bound by “drive-by jurisdictional rulings”. Such rulings are ones that call a rule jurisdictional (or implicitly treat it as jurisdictional), though the parties did not contest that question, the question was not briefed, and it made no practical difference in the case whether or not the rule is jurisdictional. Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 91 (1998). Without calling them drive-by jurisdictional rulings, the Third Circuit in Culp said that prior opinions of the Third Circuit where the court had referred to the deficiency filing deadline as jurisdictional were not controlling precedent.
I would argue that any opinion in any circuit but the Seventh and Ninth is really a drive-by jurisdictional ruling that is not precedential – notwithstanding the Tax Court’s characterization of those opinions in Hallmark as binding precedent. There have been precedential rulings on whether, under recent Supreme Court case law making filing deadlines generally no longer jurisdictional, the deficiency petition filing deadline is still jurisdictional. Tilden v. Commissioner, 846 F.3d 882, 886 (7th Cir. 2017); Organic Cannabis Foundation, LLC v. Commissioner, 962 F.3d 1082, 1092-1095 (9th Cir. 2020). These were clearly not drive-by jurisdictional rulings. But, there is serious doubt that the Tax Court should feel bound to follow even those rulings under Golsen because at least part of their reasoning – probably the most important part – was completely undermined by (1) language in the Boechler opinion concerning parallel Tax Court injunctive provisions under CDP and (2) language in the Boechler opinion disparaging all previous appellate court opinion s under IRC 6213(a). Remember that the Golsen rule is a jurisprudential one, simply to avoid an automatic reversal by the circuit court. It is far from clear that even the Seventh and Ninth Circuits would hold that their prior opinions have not been completely undermined by Boechler.
And even if the Tax Court feels bound by a circuit court opinion under Golsen, remember that Golsen does not preclude the Tax Court from expressing its contrary view. 54 T.C. at 757 (“We shall remain able to foster uniformity by giving effect to our own views in cases appealable to courts whose views have not yet been expressed, and, even where the relevant Court of Appeals has already made its views known, by explaining why we agree or disagree with the precedent that we feel constrained to follow.”) So, the Tax Court could issue its forthcoming opinion in a case, say, appealable to the Third Circuit, following Culp under Golsen, but criticizing Culp as not to be followed for cases appealable to other circuits.
Indeed, Keith may already have served up such a case appealable to the Third Circuit. In Salsi v. Commissioner, Tax Court Docket No. 1645-23S (order of dismissal entered on May 9, 2023), during the 90-day period, the IRS wrote back to the taxpayers and, after reducing the deficiency somewhat, told the taxpayers that if they disagreed, they still must file a Tax Court petition by a date. The date shown in the letter was erroneous – a month later than the last date to file shown in the notice of deficiency. The taxpayers filed their petition after the last date to file shown in the notice of deficiency, but before the last date to file shown in the letter. The taxpayers argue that the IRS misled them into filing late, which is ordinarily a ground for equitable tolling. Keith entered an appearance for the Salsis, and, on July 20, 2023 (the day after Culp was issued), filed motions for leave to file out of time motions to (1) vacate the dismissal order in light of Culp and (2) remove the small tax case designation. The latter motion was not because the Third Circuit needs another Culp opinion, but because, if the Tax Court follows Culp under Golsen, then the Tax Court will have to decide whether the Salsis get equitable tolling, and the Tax Court has not issued a published opinion in any case purporting to apply case law from outside the tax area on what grounds give rise to equitable tolling of Tax Court petition deadlines. The fact pattern in Salsi is a recurring one, so deserves a precedential T.C. opinion. See the similar-fact-pattern IRC 6015(e) cases, Rubel v. Commissioner, 856 F.3d 301 (3d Cir. 2017); Matuszak v. Commissioner, 862 F.3d 192 (2d Cir. 2017); and Nauflett v. Commissioner, 892 F.3d 649 (4th Cir. 2017). Did Keith’s filing of these motions trigger the Tax Court to commence the suspension of rulings discussed above?
I will keep PT readers posted on further developments in late-filed Tax Court deficiency cases after Culp.