This afternoon, in a unanimous, fully reviewed opinion, the Tax Court held that the taxpayer whose petition arrived one day late due to the closure of the Court as a result of snow still had a timely filed petition. We have written about this case previously here and here. The Court examined four possible bases for its opinion and settled on the argument that the Tax Court rule, which refers to the Federal Rules of Civil Procedure in the absence of a Tax Court rule on the subject, provided the right answer. We will have more on the case in days to come.
The Tax Court Opens Its Doors to Taxpayer Whose Petition Arrived Late Due to Snow Day
June 2, 2016 by 3 Comments
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What is the difference between 24 hours and 48 hours ?
What is the difference between 48 hours and 60 hours?
Why is it unacceptable for us to be 2 days late, yet the IRS mailed our notice more than a week after the deadline? It’s never their fault; it’s always the taxpayer.
In Ballard v Comm, the Supreme Court instructed the Tax Court to follow its own rules. Guess they only have to when ordered by the Supreme Court.
Congratulations to Keith and Carl for helping the Tax Court find a way to get to the right decision.
In my view, the S.Ct. is really rolling down the wrong road in trying to distinguish “claim processing rules” from “jurisdictional rules.” The notion that courts have the ability to modify the former by using equitable powers but have no ability to modify the latter is a formalist distinction of the more nefarious variety. First, the word “jurisdiction” just means “power.” As to federal courts, their power over the subject of the lawsuit comes from statutes. I do not believe it useful to read any rules about filing deadlines as rules about power, such as to say “oh, you HAD power but after this deadline passes, you no longer have power, nanny nanny boo boo.” They are all “claim processing rules” in the sense that they do not speak to a court’s power over a subject per se, but only to a party’s ability to invoke the power, to open the courthouse door, so to speak.. They are like a statute that says “A party wishing to invoke the court’s subject matter powers must dance the Macerena for five minutes in the street before the party may open the courthouse door.” Whether a party actually performs the dance well enough to earn the right to open the door is not a question about the court’s power over the subject of the lawsuit. To say that it sometimes is and sometimes is not, as the S.Ct. would like us all to do when distinguishing between “claim processing rules” and “jurisdictional rules,” is mischievous, IMHO.
Second, every branch of government (legislative, executive, judicial) has the power to determine its own powers, subject to the allowed corrections from the other branches. So there is really no reason for courts not to apply equitable powers to modify even “jurisdictional” provisions. If the courts get it wrong, the legislatures can always come back and codify corrections. Maintaining the distinction between “claim processing rules” and “jurisdictional rules” just seems to create unneeded problems and litigation.
Bottom line: the Tax Court did a good job here in finding a reasonable way to get to the right result, while having to deal with the untenable distinction between “claim processing rules” and “jurisdictional” rules. I look forward to reading Keith’s thoughts on the case.
-bryan camp
Much is written about late petitions, but little is reported on late decisions. May I suggest that there be a “Justice Delayed is Justice Denied” category of case reports here?
I just came across H. W. Johnson, Inc., Tax Court Docket No. 003110-07, a case tried to Judge Gale in March 2008 with final post-trial briefs filed in June 2008.
From the waning days of the Bush administration, nothing happened on this case until last month, in the waning days of the Obama administration, when Judge Gale’s opinion in favor of petitioners was issued.
Well, nothing happened but the death of one of petitioner’s lawyers in 2011.
The issue was reasonable compensation paid by the corporation, a local family-owned construction business. IRS wanted to assess nearly $3 million in taxes. IRS lost. Read the opinion. It’s a good case study for tax law students who want to learn what happens when you go to trial with weak or missing evidence.
Cases like this just play into the hands and speeches of the pro-small business, “Abolish the IRS” crowd. Can anyone offer an excuse?