We are not always quick to analyze new developments but today frequent guest blogger Carl Smith brings us a discussion of yesterday’s decision by the Supreme Court in a non-tax case that could have significant implications in the tax world. Equitable tolling has been the subject of frequent discussion here and moves front and center following the Court’s decision. Keith
In two prior posts last year, from May 1, 2014 and July 2, 2014, I discussed two cases out of the Ninth Circuit — Wong v. Beebe, 732 F.3d 1030 (2013) (en banc), and June v. United States, 50 Fed. Appx. 505 (2013) — that held that two different time periods in the Federal Tort Claims Act (FTCA) (one for filing an administrative claim and the other for filing a district court suit) were not jurisdictional and were subject to equitable tolling. The Supreme Court granted certiorari to review those holdings. I pointed out that a Supreme Court ruling that the FTCA time limit for filing in district court was subject to equitable tolling would likely suggest that § 6532(a)’s 2-year-after-claim-disallownce time period to bring a tax refund suit was also subject to equitable tolling, notwithstanding holdings by a number of courts of appeal (though not all) that the 2-year period was not subject to equitable tolling. On April 22, in a combined 5-4 opinion under the name of United States v. Wong, the Supreme Court has just affirmed the Ninth Circuit as to both FTCA time periods. Below is a summary of the holding and a bit of a repeat of why I think this holding now renders § 6532(a)’s time period subject to equitable tolling.
In a post earlier this year, I also noted that the Ninth Circuit in Volpicelli v. United States, 777 F.3d 1042 (2015), had held (contrary to several other Circuits) that the 9-month time period at § 6532(c) in which to file a wrongful levy suit was not jurisdictional and was subject to equitable tolling. Because the DOJ’s request for en banc rehearing in Volpicelli was turned down on April 8, we are early in the 90-day period in which the Solicitor General must consider whether to ask for certiorari of the Volpicelli opinion. In my view, a cert. petition in Volpicelli would now be futile: Even if the Supreme Court granted cert. (a big if), between Wong and prior recent Supreme Court case law, the government’s chances of overturning Volpicelli are approaching zero. Indeed, I would encourage counsel representing taxpayers in either wrongful levy or tax refund suits who have arguments for equitably tolling those statutes of limitations to just assume that any Circuit court opinions previously holding tolling of those periods impermissible are no longer good law and will be overruled, if asked.
read more...Prior to Irwin v. Dept. of Veterans Affairs, 498 U.S. 89 (1990), the Supreme Court had usually (though not always) held that time periods in the United States Code that applied to the federal government were “jurisdictional” and thus not subject to equitable tolling. In Irwin, the Supreme Court — dissatisfied with its ad hoc rulings on different time periods coming to different results — laid down a new rule for interpreting the waiver of sovereign immunity: Henceforth, Congress was rebuttably presumed to have intended its waiver of sovereign immunity to allow for equitable tolling of such time periods to the same extent that the time periods could be tolled in suits between private parties. Irwin involved an employment discrimination suit brought against the federal government — a kind of suit that could also be brought against a private employer. Later Supreme Court cases extended Irwin‘s presumption to suits that could only be brought against the federal government. Holland v. Florida, 560 U.S. 631 (2010) (time period in which to file for federal habeas relief in death penalty cases is subject to tolling under the Irwinpresumption). Later cases also clarified that Irwin‘s presumption did not apply to “jurisdictional” time periods, but, at most, only to non-jurisdictional statutes of limitations. Sebelius v. Auburn Regional Medical Center, 133 S. Ct. 817 (2013) (time period in which to file a dispute over Medicare reimbursement was not jurisdictional, but still was a non-jurisdictional statute of limitations as to which the Irwin presumption in favor of equitable tolling either did not apply or was rebutted).
The jurisdictional grant to district courts to entertain suits under the FTCA is at 28 U.S.C. § 1346(b)(1) (“district courts . . . shall have exclusive jurisdiction” over tort claims against the United States). The time periods at issue in Wong were both located within 28 U.S.C. § 2401(b), which provides that a tort claim against the United States “shall be forever barred” unless it is presented to the “appropriate Federal agency within two years after such claim accrues” and then brought to federal court “within six months” after the agency acts on the claim. (Like IRC § 6532(a), there is also a provision allowing an FTCA suit to be brought after 6 months if the agency has not ruled on the administrative claim.) Notably, unlike the time periods in which to file an administrative tax refund claim at § 6511, the time periods in § 2401(b) have no exceptions. In United States v. Brockamp, 519 U.S. 347 (1997), the Supreme Court had held that the Irwin presumption in favor of tolling was rebutted, in part, because of Congress already including many exceptions into the section, leaving the Court to infer that it was not permitted to add an unwritten judicial equitable tolling exception. (Interestingly, Brockamp is not cited by either the majority or dissent in Wong.)
The government decided to argue the Wong case essentially by not contending that, if the FTCA time periods were not jurisdictional, the periods were still not subject to tolling. In effect, the government, as a practical matter, conceded the Irwin presumption would lead to tolling if the time periods were not jurisdictional. Why did the government do this? Well, there were no factors in these simple FTCA time periods that have ever led the Court to find the Irwin presumption rebutted. So, it would have been a pointless argument to make.
In Wong, the Court noted that in its recent cases, it had held that time periods are claims processing rules that are not jurisdictional unless the Court finds a clear indication that Congress intended otherwise. The Court stated: “Congress must do something special, beyond setting an exception-free deadline, to tag a statute of limitations as jurisdictional and so prohibit a court from tolling it.” Slip. op. at 7. The Court found nothing in the language of statute, its legislative history, or its placement in the United States Code to indicate that the FTCA time periods were jurisdictional. The Court first noted that it has often found a time period to be non-jurisdictional when, as in the FTCA case, the time limit does not use the word “jurisdictional” and appears separated in the statute from the subject matter jurisdictional grant. The Court then rejected three arguments made by the government:
First, the government argued that the language of the statute was unusually emphatic — stating that suit would be “forever barred” if the time limits were not complied with. The Court rejected this argument by noting that the “forever barred” language was common drafting language for statutes of limitations at the time the FTCA was adopted in 1946. “Forever barred” appears in the Clayton Act at 15 U.S.C. § 15(b), but the Court had long before held that the Clayton Act time period was subject to equitable tolling. American Pipe & Construction Co. v. Utah, 414 U.S. 538, 559 (1974).
Second, the government argued that the FTCA time periods were copied from an earlier version of the Tucker Act at 28 U.S.C.§ 2501(a), and that in John R. Sand & Gravel Co. v. United States, 553 U.S. 130 (2008), the Court had held that the Tucker Act 6-year time limit was jurisdictional. In response, the Court noted that John R. Sand acknowledged that the Tucker Act time periods would not normally today be called jurisdictional under current case law, but for over 100 years, and in multiple cases, the Supreme Court had called the Tucker Act time period jurisdictional — likely leading Congress to believe the time period was jurisdictional when it later legislated. The Wong Court wrote:
No less than three times, John R. Sand approvingly repeated Irwin’s statement that the textual differences between the Tucker Act’s time bar and § 2000e–16(c) [involved in Irwin] were insignificant—i.e., that the language of the two provisions could not explain why the former was jurisdictional and the latter not. See 552 U. S., at 137, 139 (calling the provisions “linguistically similar,” “similar . . . in language,” and “similarly worded”). But if that were so, John R. Sandasked, why not hold that the Tucker Act’s time limit, like §2000e–16(c), is nonjurisdictional? The answer came down to two words: stare decisis. The Tucker Act’s bar was different because it had been the subject of “a definitive earlier interpretation.” Id., at 138. [Slip op. at 13]
The Supreme Court in Wong noted that it had never issued an opinion on whether the FTCA time periods were jurisdictional, so there was no similar stare decisis concern here. The Court was not willing to let the FTCA inherit the Tucker Act stare decisis holding of John R. Sand— even if the FTCA likely arose to fill a gap in the Tucker Act, which previously had not allowed tort suits against the government.
Third, the government argued that at the time Congress enacted the FTCA time periods, prevailing Supreme Court case law seemed to hold all time limits involving the federal government to be jurisdictional. From this fact, the government argued that Congress’ expectation (even in the absence of any mention in legislative history) must have been that the FTCA time periods should be jurisdictional. The Court rejected this line of argument as foreclosed by Irwin. Irwin itself had applied its presumption in favor of tolling to a law drafted before Irwin announced the change in the Supreme Court’s view of the normal Congressional waiver of sovereign immunity. The Court was not willing to adopt an argument that would have the effect of making the Irwin presumption only applicable to statutes passed after Irwin was announced.
So, what does the Wong case mean for the tax world? Most obviously, Wong further throws into doubt any Circuit court opinions previously holding that the time periods in § 6532(a) (for refund suits) or (c) (for wrongful levy suits) are jurisdictional or not otherwise subject to equitable tolling. Like the FTCA time periods, these two IRC time periods are not located near the jurisdictional grant to district courts at 28 U.S.C. § 1346(a)(1) (for tax refund suits) or (e) (for wrongful levy suits). The language in § 6532(a) and (c) is less emphatic than that in the FTCA — i.e., they do not contain the words “forever barred” or similar words — so the government could not even make the unsuccessful emphatic language argument it made in Wong. The Supreme Court has never ruled on whether these two IRC time periods are jurisdictional, so the government could not make the John R. Sand stare decisis argument with respect to the time periods. And the time periods do not have numerous exceptions: As Volpicelli noted, the wrongful levy time period has only one exception (“if it can even be called that”; 777 F.3d at 1046) — one that extends the period to bring suit if the plaintiff seeks administrative review before filing suit.
Indeed, it is hard to imagine anything the government could successfully argue as to why these IRC tax refund and wrongful levy time periods either are jurisdictional or rebut the Irwin tolling presumption, except for the argument that tax law time periods are not subject to equitable tolling per se. This per se argument has been made before, based on language in Brockamp. Recently, the Ninth Circuit responded to it in Volpicelli as follows:
The government urges us to place overriding weight on one similarity that § 6511 and § 6532(c) do share: Both are found in the tax code. The government contends this shared feature is significant because the Brockamp Court observed, in the course of explaining why Congress did not intend to allow equitable exceptions to § 6511’s filing deadline, that “[t]ax law, after all, is not normally characterized by case-specific exceptions reflecting individualized equities.” 519 U.S. at 352. The Court may in time decide that Congress did not intend equitable tolling to be available with respect to any tax-related statute of limitations. But that’s not what the Court held in Brockamp. It instead engaged in a statute-specific analysis of the factors that indicated Congress did not want equitable tolling to be available under § 6511. The Court later made clear in Holland that the “‘underlying subject matter'” of § 6511—tax law—was only one of those factors. 560 U.S. at 646 (quoting Brockamp, 519 U.S. at 352). As we have explained, the other factors on which the Court relied are not a close enough fit with § 6532(c) to render Brockampcontrolling here. [777 F.3d at 1046]
If the Solicitor General wishes to bring to the Supreme Court the argument that no tax law time periods are subject to equitable tolling, he should feel free to. However, I don’t think that is going to fly these days in a court that only recently unanimously stated that “we are not inclined to carve out an approach to administrative review good for tax law only”. Mayo Foundation v. United States, 562 U.S. 44, 55 (2011).
About Carlton Smith
I commented on Carl’s previous equitable tolling posts and expressed skepticism about his arguments. I am now a believer…but I still cannot believe what I see.
The U.S. Supreme Court’s Wong opinion is yet another example of legislation-by-judiciary that has no place in our Republic. The people’s representatives have passed numerous laws that provide for specific time limits in which a claimant or a litigant must act to receive redress for certain wrongs. Those laws are unambiguous; they are also equitable because they apply equally to all persons.
Rather than apply these laws as enacted, however, the courts act as a super-legislature to “correct” what they perceive as those laws’ inadequacies. These acts by the “least dangerous” branch are most dangerous.
Carl notes the Irwin Court was “dissatisfied with its ad hoc rulings on different time periods coming to different results.” But Irwin and Wong only guarantee us that the same time periods will create more ad hoc rulings that lead to different results.
The Irwin-Wong construction of congressionally imposed time limits is akin to Humpty Dumpty’s construction of words in Carroll’s “Through The Looking Glass.” First, the Supreme Court dreams up a rule that all statutes with time limits are presumptively subject to equitable tolling. It then takes its own presumption rule and labels it “rebuttable.” The Court then looks to see if Congress, in enacting a time-limit statute, has remembered to “rebut” the Court’s dreamed-up presumption rule.
Graciously, the Supreme Court accords Congress the right to “reverse the usual rule if it chooses.” Wong at 5. Of course, the Court views the “usual rule” as its judicial presumption, not the Congressional slegislative enactment. One way Congress can meet its “burden,” the Court says, is to show that its time limit is jurisdictional. Now how can the Congress do that? After all, a jurisdictional time limit would impose “harsh consequences” on a party. Wong at 5.
Well, Congress could make a “clear statement” about jurisdiction. It need not, though, incant any “magic words.” Yet the Court’s construction must “plainly show” that Congress “imbued” the time limit with jurisdictional consequences. Wong at 6.
But Congress must be careful: the Court may decide that a statutory time limit is a mere “claims processing rule” that would not deprive the Court of jurisdiction. The Court could make such a decision “even when the time limit is important,” “even when it is framed in mandatory terms,” and irrespective of ‘“however emphatic[ally]’” Congress may have expressed its language. Instead, “Congress must do something special,” beyond writing an exception-free statute, to deprive the Court of jurisdiction and to prevent it from applying its equitable tolling rule. Wong at 8.
Unfortunately for Congress, as the Court concluded in Wong, it failed to do that “something special.” What nonsense.
Carl waxes enthusiastic about Wong. In contrast, I lament it for two reasons.
For one, Wong (and Irwin, etc.) turns us still more from a nation of laws to a nation of (wo)men. If the people’s representatives wanted to subject a statutory time limit to equitable tolling, then it could have easily done so. When Congress states a time limit in which one must take a certain action, that limit applies irrespective of person or circumstance. In contrast, Wong will take us into many ad hoc determinations of when tolling is equitable and when it is not. Following Wong will lead to more court cases with equitable tolling claims, more disagreement as to what reasons merit tolling, more circuit splits, and another round or two back in the Supreme Court.
And you thought the Fifth Amendment contains a component that guarantees all persons equal protection of the laws.
For two, under the “what goes around, comes around” life principle, Wong is dangerous. Do we tax practitioners take advantage of, for instance, the 3 year time limit on tax assessments and the 10 year time limit on tax collections? Well, Wong warns us we’d better rethink our strategies. For the day will soon come when the courts decide that if equitable tolling can apply against the government, then equitable tolling can apply against the taxpayer. After all, a one-sided equitable tolling presumption under the all-important taxing power seems…inequitable.
I caution Carl and all E.T. advocates to not exult too long about Wong.
Judge Watford, who wrote the opinion n in Volpicelli, wondered aloud at the oral argument whether Irwin didn’t create its own, different problems, since we keep litigating cases about the possibility of equitable tolling 25 years after Irwin. Of course, he is right. But, that doesn’t make Irwin wrong in setting up a presumption.
I am not as concerned about equitable tolling being used badly as is Jason T. Equitable tolling is a venerable judicial doctrine that we inherited from English common law to let judges, on rare occasions, toll statutes of limitations when equity cried out for the tolling. The only thing that the Supreme Court is doing these days is making sure that equitable tolling applies to the federal government as it has long applied in suits between private parties in this country.
Indeed, there is not a single justice on the Court who, like Jason T., decries the current trend in allowing equitable tolling of many statutes of limitations involving the federal government. The main beef by the Wong dissenters was over two things: Should Irwin’s presumption apply to a statute drafted before Irwin? (They thought “no”.) What was Congress’ intent when the FTCA was enacted, since the FTCA time periods were copied from 28 USC 2501(a), which the Court had repeatedly called “jurisdictional”? (They thought Congress also intended jurisdictional status for the FTCA periods.)
As to the government trying to use equitable tolling, it already has.
First, in Young v. U.S, 535 U.S. 43 (2002), the government successfully got approval from the Court for the bankruptcy discharge time limits to be subject to equitable tolling, since bankruptcy has long been considered an equitable area.
I have not seen a case in which the IRS sought equitable tolling of the 10-year period at section 6502(a) (the collection statute of limitations), but this is probably because the government can easily protect itself from the expiration of that statute by, near the end of the period, commencing suit to reduce the tax assessment to judgment. The ensuing judgment can be enforced for many more years separately.
As to the 3-year period in section 6501(a) for assessing deficiencies, the government lost its so-far only try to get that time period tolled in Doe v. KPMG, 398 F.3d 686 (5th Cir. 2005). where the court cited Brockamp and the government’s argument in an earlier case before the 7th Cir. that there should be no tolling anywhere in the Tax Code. I don’t think the 5th Circuit was right to think there should be no tolling in the Tax Code, but it seems to me that section 6501 is the flip side of section 6511, and that both sections already contain so many exceptions that the statutes should equally be treated as not tollable through an additional judicial exception.
I am not arguing for the judicial overturning of Brockamp or Doe. All I argue for is that each time period in the Tax Code be separately examined under the rebuttable Irwin presumption after (and only if) the time period is held to be non-jurisdictional under current Supreme Court case law. Some statutes will then end up tollable, but others will not be tollable. If the government benefits from tolling of some statutes, that is fine with me, since I am not arguing for a one-way Irwin presumption. I trust that courts, as they always have in equitable tolling cases between private parties, will use this doctrine only very sparingly when equity demands that one litigant not lose his, her, or its rights when circumstances beyond the litigants control prevented timely filing.
Carl effectively assures us we should ask not for whom the statutory time limit tolls because, regardless its beneficiary, equitable tolling is both old and good. I disagree because the time limits shall toll less for, and more against, thee.
It is wonderful to recall a “venerable judicial doctrine” from English common law. It’s better, however, to remember that an American statute supersedes the English common law, as imported. That means should Congress believe equity might cry out for tolling a time limit, it has the power to write in a statute something such as, “however, such limitations period shall be subject to equitable tolling.” If Congress knows how to write those words, but it has not done so, then judicial inquiry ought to cease. Not because Congress did, but rather because Congress did not do, “something special.”
Pointing out that the Wong dissent failed to decry the equitable tolling trend makes much ado about nothing: the courts, namely the Supreme Court, are the ones pushing that trend. Although the courts pay homage to their jurisdictional limits, they are loath to declare in time limit cases that they are without jurisdiction. It’s one thing for the courts to know they are the “least dangerous branch”. It’s quite another for them to acknowledge they are the least important branch.
Carl admits that the courts could one day apply equitable tolling against the taxpayer. On that ground alone, I say no to equitable tolling. That doctrine’s “rare occasions,” when it is applied only against the government, will soon become frequent occasions when it is applied against the taxpayer.
The IRS and DOJ alone would have far more instances when it could benefit from equitable tolling than would all taxpayers, claimants, and litigants combined. The IRS and DOJ frequently miss statutory tax deadlines. When they do so again, Wong will give them every reason to seek equitable tolling against the taxpayer. And then the courts will find a super-Irwin irrebuttable presumption.
As I understand it, Carl argues “only” that each time period in the Internal Revenue Code should be:
(a) held as jurisdictional or non-jurisdictional “under current Supreme Court case law” and, if held non-jurisdictional, then
(b) examined under the rebuttable Irwin (i.e. Supreme Court case law) presumption.
Is that not a strange argument when the constitutional tax laws Congress enacts are “the supreme law of the land”?