Volpicelli v. U.S.: 9th Circuit Holds Time to File a Wrongful Levy Suit Is Subject to Equitable Tolling

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We welcome back Carlton Smith, who in this posts discusses the 9th Circuit holding in Volpicelli issued today.  The order largely follows Carl’s amicus brief in holding Section 6532(c) is not jurisdictional and is subject to equitable tolling.  Stephen. 

In a post from over a year ago,  I mentioned a case then pending in the Ninth Circuit, Volpicelli v. U.S., where I was an amicus and where the plaintiff had filed a wrongful levy suit under section 7426(a)(1) about 8 years after the 9-month period for bringing such a suit at section 6532(c) had expired.  The plaintiff alleged that, when he was 10 years old, the IRS had levied on checks that represented gifts from his great grandmother to be used by him to go to college.  The IRS applied the funds, instead, to the plaintiff’s father’s huge unrelated tax bill.  The father is penniless now and serving a life sentence in a Nevada jail.  Shortly after the plaintiff turned 18 (the age of majority), he brought the wrongful suit in Nevada district court.  That court threw out the suit, holding that the 9-month period was not subject to equitable tolling, without even getting to the issue of whether mere minority is enough to permit tolling (though, it often is in state courts).  Today, the Ninth Circuit issued an opinion reversing the district court and holding, contrary to several other courts, including the Third Circuit, that the 9-month period in section 6532(c) is not “jurisdictional” and is subject to equitable tolling.   The Ninth Circuit order a remand to the district court to decide, in the first instance, whether tolling was justified in this case.  I anticipate that the government will not want to live with this Circuit split and will seek and get Supreme Court review of the Ninth Circuit’s opinion in the October 2015 Term.


In 1995, the Ninth Circiut had decided this very question the same way in two opinions, Supermail Cargo, Inc. v. U.S., 68 F.3d 1204, 1206-07 (9th Cir. 1995), and Capital Tracing, Inc. v. U.S. 63 F.3d 859, 861-62 (9th Cir. 1995).  Both of those opinions looked to the then-recent Supreme Court opinion in Irwin v. Dept. of Veterans Affairs, 498 U.S. 89 (1990), which held that the same rebuttable presumption in suits among private litigants that statutes of limitations could be subject to equitable tolling applied in analogous suits involving the United States.  The Ninth Circuit made two separate holdings:  First, section 6532(c) is not “jurisdictional”.  Jurisdictional time periods can never be tolled.  Second, that, section 6532(c) was a common statute of limitation, and there was nothing to rebut the Irwin presumption in favor of tolling.

Also in 1995, the Ninth Circuit applied Irwin to hold that the 2-year and 3-year periods to file administrative tax refund claims with the IRS under section 6511(a) were subject to equitable tolling.  The Solicitor General could have sought cert. on the equitable tolling issue as to both Code sections, but chose to seek cert. only on the section 6511(a) time period.  And, in 1997, the Supreme Court reversed the Ninth Circuit.

In an opinion that did not mention the word “jurisdiction”, the Supreme Court assumed, without deciding, that the Irwin presumption might apply to the section 6511(a) non-court filing period and held that the presumption would be overcome for this time period.  U.S. v. Brockamp, 519 U.S. 347 (1997).  In Brockamp, the Court supported its holding by pointing to the structure of the statute (with existing multiple detailed exceptions and an unusual look-back amount period at subsection (b)) and the administrative problems that might ensue if tens of millions of late-file refund claims had to be analyzed for equitable facts justifying tolling.  These things, the Court said, indicated that Congress did not want the courts to add another, judicial exception.  (Parenthetically, in 1998, Congress amended section 6511 to add a new subsection (h) to partially overrule Brockamp in cases where a taxpayer was “financial disabled”.)

In passing in Brockamp, the Supreme Court also wrote that, “[t]ax law, after all, is not normally characterized by case-specific exceptions reflecting individualized equities.” Id., at 352.  While this statement (I think intended as rather smug humor) is fairly true at to the calculation of tax, it is demonstrably false (as the Court should have known) in the area of tax collection, where, among other things, the Court had already held that refund and tax collection suits are subject to the doctrine of equitable recoupment and foreclosure suits under section 7403 are informed by equitable considerations.  I could list about a dozen more equitable statutes or case holdings to make my point about equity in tax collection, and my point has gotten only stronger by Congress adding more equitable determinations in recent years (e.g., equitable innocent spouse relief under section 6015(f)).  In any event, grabbing at this single sentence, the government, since 1997, has always argued that any other time period in the Internal Revenue Code is not subject to equitable tolling by taxpayers or others.

Up to today, no Circuit court had held, post-Brockamp, that any time period in the Code was subject to equitable tolling.  Indeed, shortly after Brockamp was decided, the Third Circuit — citing the opinion, including the sentence about “individualized equities” — held that the section 6532(c) wrongful levy time period was not subject to equitable tolling.  Becton Dickinson & Co. v. Wolckenhauer, 215 F.3d 340, 351-52 (3d Cir. 2000) (collection pre-Brockamp opinions from district courts and Circuits other than the Ninth that all hold that section 6532(c)’s time period may not be equitably tolled).

I have written before about developments in non-tax Supreme Court case law in recent years both cutting back on the use of the term “jurisdictional” and finding many more periods tollable under the presumption in  Irwin.  See, e.g., “Cracks Appear in the Code’s ‘Jurisdictional’ Time Provisions”, 2012 TNT 210-4 (10/30/12).  I have argued that it is time for courts to apply this case law to the tax world.  Recently, the Tax Court did so in Lippolis v. Commissioner, 143 T.C. No. 20 (11/12/14), on which I have also blogged .  In Lippolis, the Tax Court recently held, citing this recent non-tax Supreme Court case law, that the $2 million threshold for whistleblower awards is not jurisdictional.  In Volpicelli, the Ninth Circuit becomes the first Circuit court dealing with a tax time period to cite this recent non-tax Supreme Court case law for holding that a time period is both not jurisdictional and is subject to equitable tolling.  I hope other courts will follow as to other Code time periods — including the 2-year post-disallowance time period in which to file a tax refund suit at section 6532(a).

In addition to its being compelled to follow its prior precedent, the Volpicelli court addressed both Brockamp and several recent Supreme Court opinions that the government cited as intervening authority requiring the panel to deviate from the Ninth Circuit’s prior case law.  As to Brockamp, the Court stated, in part,

[The s]ection 6532(c) . . .  limitations period is set forth in emphatic language — “no suit or proceeding . . . shall be begun after the expiration of 9 months from the date of the levy” — but that language does not strike us as “unusually” emphatic. It seems no more emphatic than the language of the Antiterrorism and Effective Death Penalty Act’s limitations period, 28 U.S.C. § 2244(d), which provides that “[a] 1-year period of limitation shall apply to an application for a writ of habeas corpus” — language that the Court has said “reads like an ordinary, run-of-the-mill statute of limitations.” Holland v. Florida, 560 U.S. 631, 647 (2010). Nor is the language of § 6532(c) highly detailed or technical; in fact, it’s just the opposite. See note 2 above. The limitations period it establishes is purely procedural and has no substantive impact on the amount of recovery. And § 6532(c) does not contain numerous exceptions, as does § 6511. It has just one

exception (if it can even be called that), which extends the limitations period if the plaintiff seeks administrative review before filing suit. 26 U.S.C. § 6532(c)(2). Given the stark differences between § 6511 and § 6532(c), we are not persuaded that Brockamp has effectively overruled Supermail Cargo and Capital Tracing.

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 Brockamp controlling here. [Slip op. at 9-10.]

The court also held that, with respect to wrongful levy suits, the analogous private suits for purposes of the Irwin presumption were the traditional common law torts of conversion and trespass to chattels.

With regard to whether section 6532(c) was “jurisdictional”, the court noted that the time period at section 6532(c) was located in a different section from the jurisdictional grant to district courts for wrongful levy suits at 28 U.S.C. sec. 1346(e) — a factor recent Supreme Court cases say indicates that Congress did not intend a claims processing rule to be jurisdictional.  The court also wrote:

The Supreme Court’s recent cases require a clear statement from Congress before a procedural rule will be treated as jurisdictional. [Sebelius v.] Auburn [Regional Med. Centr.], 133 S. Ct. at 824 [(2013)]; Henderson ex rel. Henderson v. Shinseki, 131 S. Ct. 1197, 1203 (2011). We find no such clear statement here. Section 6532(c) does not cast its filing deadline in “jurisdictional” terms any more than the statute at issue in Henderson did—a statute the Court held to be nonjurisdictional. See Henderson, 131 S. Ct. at 1204–05. [Slip op. at 6.]

At the oral argument, it appeared that, though the Ninth Circuit judges were leaning toward ruling for Mr. Volpicelli, they might want to await the Supreme Court’s pending rulings in two cases involving possible equitable tolling of two different Federal Tort Claims Act time periods, U.S. v. Wong and U.S. v. JuneI have blogged on those cases before and explained how they might affect the tax world, as well.  But, the oral argument of those cases that occurred on December 10 was such that it is clear that any ruling for the government in those cases will be predicated on a stare decisis ground that has nothing to do with any Tax Code time period.  No doubt, the Ninth Circuit judges listened to or read the Wong and June oral argument before the Supreme Court and came to the same conclusion, so decided not to wait to issue the opinion.

This case was briefed and argued by Brian Goldman of Orrick’s San Francisco office.  Brian is a recent Ninth Circuit clerk and clerked for Justice Sotomayor during the October 2012 Term.  He is on the Ninth Circuit’s Pro Bono Panel and was assigned to the case when the Court was unhappy with the then-pro se plaintiff’s partly handwritten briefs.  This was too important a case to be decided without proper appellant briefing (notwithstanding my amicus brief) and oral argument. Note my recent post on whether the Tax Court should consider setting up a pro bono panel of its own.  This case is a poster child for such panels.

The big question now is whether the government will be so unhappy that it seeks cert. in Volpicelli (perhaps diverting first to an en banc rehearing request addressed to the entire Ninth Circuit).  My hunch is that the government will eventually ask for cert.  But, my hunch is also that the Supreme Court will uphold the Ninth Circuit on equitable tolling this time around.  If it does so, we will be in a situation where equitable tolling of every IRC time period will be subject to individual analysis — with presumptions in favor of time periods not being jurisdictional and being subject to tolling.  There will be no blanket rules about tolling in the Tax Code either way.

Carlton Smith About Carlton Smith

Carlton M. Smith worked (as an associate and partner) at Roberts & Holland LLP in Manhattan from 1983-1999. From 2003 to 2013, he was the Director of the Cardozo School of Law tax clinic. In his retirement, he volunteers with the tax clinic at Harvard, where he was Acting Director from January to June 2019.


  1. Congratulations to Carl Smith! I’ll admit I was skeptical about his equitable tolling approach, but he’s made me a believer.

    Excellent job…yet again.

    • Carl Smith says

      Thanks, Jason. Actually, despite this being the first such victory, this statute was one of the easiest under which to argue for equitable tolling. The second easiest would be the 2-year period in 6532(a) for cutting off the right to refund lawsuits, where the statutory grant of jurisdiction for the suit is located elsewhere (at 28 usc 1346(a)(1)).

      On the other hand, I would not want to bet my life on my push to get equitable tolling of the periods to file in the Tax Court for CDP (6330(d)(1)), innocent spouse (6015(e)(1)), and whistleblower (7623(b)(4)) cases. Those are much more borderline, though 7623(b)(4) might be the easiest of the three, since it really is not a tax collection provision and there is no deadline in the Code for asking for a reward. In each of these three cases, the jurisdictional grant is thrown in as a parenthetical in what otherwise looks to be a simple, short, statute of limitations. The Supreme Court has never had a provision like those to parse.

  2. Putting aside the technicalities, I am stunned the IRS would take a ten year old kid’s money, apply it to the kid’s dad’s taxes and then, when the kid is old enough to sue to ask that the IRS give him his money back that the IRS improperly took, tell him “too late; too bad.” Maybe I am just naïve, but is anyone else (other than the 9th Circuit apparently) offended by this on just a pure commonsense basis? Classic example of IRS missing the forest thru the tress and not doing what anyone with a heart and a brain would readily recognize as the right thing to do. Really makes you wonder who is minding the store. If I were the government, I think I would have chosen a different case with better facts to litigate this issue.

    End of rant.

    • Louis,

      When the DOJ attorney got up to speak at the 9th Cir. oral argument, before she got to say anything other than her name, presiding panel judge Watford said, “Why don’t you just give the kid his money?” You are not the first to think this the wrong case for the government to try to overturn 9th Cir. precedent.

      But, the 9thCir. opinion doesn’t give many facts, since at this point, the “facts” are simply allegations in pleadings, accompanied by some documents — and no p[art of the story has been subjected to cross-examination.

      Here is a better summary of the facts:

      Father (Ferrill) is a con man and habitual crook. He has been serving a life sentence now since about 2003 for his latest shenanigans. Father and mother separated in the 1990s, when son (Logan) was, say, 5. An order of protection prohibited Ferrill from contacting wife and from contacting Logan until he was 18.

      When Logan was about 5, Ferrill’s elderly grandmother made gifts to all her grandchildren. Logan’s gift was put in an account in trust for him under the Cal. Uniform Gifs to Minors Act. Ferrill’s sister (i.e., Logan’s aunt) was the person in charge of the account.

      At some point in 2001, Logan’s aunt got tellers checks for the full amount of the funds out of the account and closed it. The aunt had the checks made out to Ferrill — a very peculiar thing to do. The aunt now says that she was going to give the checks to the family lawyer to set up some new account for Logan and realized it was a mistake to have the checks made out to Ferrill,, since he had tax problems. But, in the meantime, the aunt placed the checks into a safe deposit box maintained by Logan’s adult sister.

      In 2002, the Reno police were investigating Ferrill for scamming some department stores. They noticed that Ferrill sometimes went to the safe deposit box of his daughter. The police got a search warrant and found nothing in the box relating to any potential crime. But, they did see the checks made out to Ferrill and took them. The Reno police knew Ferrill owed the IRS over $200,000, so called up the IRS to invite the IRS to levy on the checks, which the IRS did.

      Ferrill almost immediately wrote the IRS to say that this was Logan’s money. He said, in effect, “I may be a crook, but see how I did not ever cash those checks in the box, but left them alone? I am not a crook where it comes to my children’s money.” The IRS was unimpressed. From jail, Ferrill then timely filed (under 6532(c)) a wrongful levy suit against the government in district court, purportedly as “next friend” of Logan. Ferrill made the mistake of not having gotten appointed a guardian ad litem. And also Ferrill did not hire a lawyer, since he was penniless.

      The district judge ordered Ferrill to hire a lawyer, since in the 9th Cir. a parent can’t represent a child without a lawyer to look after the child’s interest. Ferrill, not being able to afford a lawyer, gave up, and the suit was dismissed without prejudice.

      When Logan turned 18, he wrote his first letter to his father. In the letter (which may be a little suspiciously too perfect), Logan asked Ferrill whatever happened to money that Logan had heard had ben put aside for his college. Ferrill wrote back the whole story and apologized for the mess. Then, Ferrill got an idea: draft a new suit for Logan, who would be pro se, have Logan sign the papers that Ferrill would draft from jail, and then, relying on the Supermail Cargo and Capital Tracing cases, bring a new wrongful levy suit.

      There is something that sounds a little fishy to me about Logan not having known all of this before he was 18. After all, Logan’s aunt or older sister could have told him. But, for purposes of equitable tolling for a minor, it apparently really doesn’t matter that adults who could have done something did not. The incompetence of Logan’s family should not be held against him. After all, that’s why a lawyer must be appointed to represent a minor: You can’t trust a relative to properly represent a child in court.

      So here, the IRS has known from day one that the money indirectly came from an account for the benefit of Logan. It is not surprised by such a late suit.

      And, the IRS did not hold off collecting against Ferrill just because it thought the levy was valid.

      These facts (even with their questions) are so appealing that the SG might be smart not to bring the case up to SCOTUS. I can imagine a John Roberts opinion laying out the facts in such a sad way that you will have to read the opinion with multiple hankies handy.

  3. Great job!

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