What’s Wrong With The Tax Court’s Hallmark Opinion: Part 7

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This is the seventh of a multipart post discussing the recent Tax Court opinion in Hallmark Research Collective v. Commissioner, 159 T.C. No. 6 (11/29/22). 

In the sixth part of this post, I had bemoaned the Hallmark court’s failure to consider information that I dug up (and which Hallmark provided to the court).  The information was research that led me to estimate that 600 Tax Court deficiency cases would be dismissed for lack of jurisdiction for late filing in a typical year.  I also found that if the deficiency filing deadline was held not jurisdictional, then about 150 of such cases would continue in the court undismissed each year because the Tax Court would cease policing the issue of late filing and the IRS would miss late filing in those cases.  I estimated that only 30 cases a year would involve taxpayers who would plead equitable tolling in their deficiency cases.  It is hard to say how many of those 30 taxpayers would actually get equitable tolling (either from IRS attorneys who did not raise or raised, but later conceded, a late filing merits statute of limitations defense or through court rulings), but let’s assume for now that half would – i.e., 15 taxpayers’ cases continuing in the court via equitable tolling.  So, I can estimate that if the filing deadline is considered not jurisdictional and subject to equitable tolling, roughly 165 of the 600 taxpayers each year will benefit in that their Tax Court cases will not be dismissed.

In my research, conversely, I also attempted to estimate how many taxpayers each year are helped by a ruling that the deficiency filing deadline is jurisdictional.  In theory, every one of the 600 taxpayers who will have their Tax Court case dismissed for late filing for lack of jurisdiction faces no res judicata problem under current law that might precluded them from, after dismissal, paying and suing for a refund in the district court or Court of Federal Claims (CFC).  However, only 188 refund suits were brought, under any circumstances, in the CFC and the district courts, combined, in the fiscal year ended September 30, 2020.   IRS Data Book 2020 at 67 (Table 29) – a figure typical of pre-COVID-19 pandemic years. Obviously, not all those 188 refund suits were brought by taxpayers who previously filed late deficiency petitions in the Tax Court.  Looking at refund suit opinions all issued in 2021 that I found using the LEXIS search terms “refund and (Tax Court) and dismiss!”, there were 44 total district court and CFC opinions to read.  It turned out that none of them set forth a fact pattern of the taxpayer, after having been dismissed from the Tax Court for late filing a deficiency case, later paying in full and suing for a refund. 

In a prior post, Keith mentioned how we found one case, Jolly v. United States, 2021 U.S. Claims LEXIS 930, that nearly met my criteria with respect to the 2017 taxable year involved therein because the taxpayer’s prior 2017-year case had been dismissed by the Tax Court for late filing, but Jolly probably won’t fully meet my criteria in the end.  The CFC in that case, for the moment, denied a DOJ motion to dismiss the 2017 year from the refund suit for lack of jurisdiction for failure to comply with the Flora full payment rule.  The court’s denial stated that, perhaps the Flora rule could be met by moving payments in accounts of other tax years to the 2017 year, and the court later asked for further briefing.  Further briefing in the case is still ongoing.

If my interpretation of the filing deadline as not jurisdictional would be upheld, such a dismissed taxpayer might end up with a res judicata problem precluding a subsequent refund suit because of IRC 7459(d).  That subsection provides that all dismissals of Tax Court deficiency suits uphold the deficiency, but exempts jurisdictional dismissals.  My research, in effect, shows that none of the 600 deficiency case taxpayers dismissed from the Tax Court for late filing in a typical year will ever actually later file a jurisdictionally-sufficient refund suit – i.e., attempt a second chance to litigate the merits of the deficiency.

I questioned why the courts should be so worried about the theoretical application of IRC 7459(d) under my non-jurisdictional position that might preclude a second chance at litigating the merits in refund courts.  Instead, I argued that the courts should consider the harsh and drastic consequences of the jurisdictional interpretation of the filing deadline that regularly precludes about 165 taxpayers from getting their first chance (in the Tax Court) to litigate the merits of the deficiency.  After all, it is the harsh and drastic consequences to plaintiffs of finding deadlines jurisdictional that has triggered the Supreme Court to restrict the use of the word “jurisdictional”.

What did the Hallmark court do with my research?  Nothing.  It did not mention my research in the opinion.  However, the court went into an extensive discussion of the theory of how Hallmark’s interpretation could hurt taxpayers under IRC 7459(d) and contended that Congress designed IRC 7459(d) to preclude the result for which Hallmark was contending, and this shows that Congress intended that the filing deadline in IRC 6213(a) is jurisdictional.  The rest of this post summarizes the Hallmark opinion’s discussion of IRC 7459(d) and how the Tax Court concluded that IRC 7459(d) provides legislative context for holding the IRC 6213(a) filing deadline jurisdictional.


IRC 7459(d) provides:

If a petition for a redetermination of a deficiency has been filed by the taxpayer, a decision of the Tax Court dismissing the proceeding shall be considered as its decision that the deficiency is the amount determined by the Secretary.  An order specifying such amount shall be entered in the records of the Tax Court unless the Tax Court cannot determine such amount from the record in the proceeding, or unless the dismissal is for lack of jurisdiction.

The Hallmark opinion concludes that, for two reasons, the existence of IRC 7459(d) requires the court to reject a reading of the IRC 6213(a) filing deadline as not jurisdictional.

First, “[n]on-jurisdictional dismissals of cases with untimely petitions would produce incongruous results.”  Slip opinion at p. 20. 

This surprising [res judicata] outcome [prohibiting subsequent refund suits] counsels against the non-jurisdictional construction of section 6213(a) not because it provokes sympathy for a taxpayer for whom this would be an unfavorable result but because it puts section 6213(a) and section 7459(d) at odds with each other and with the manifest purpose of the statutory regime. . . .

It is no answer to this anomaly to point out (as Hallmark does) that “if this unfortunate res judicata result were to happen, it would be a matter for Congress to consider altering by legislation”.  It is certainly correct that courts must not choose an interpretation because it brings about a desired outcome, and it is true that defects in a statute are for Congress to fix, not the courts.  But choosing desired outcomes is not the same thing as following the principles of statutory construction that counsel against choosing an interpretation that creates a conflict in the legislative regime (and that therefore would require Congress to then address the conflict by corrective legislation).

Id. at 21-22 (footnote and citation omitted).  (By the way, the Supreme Court’s recent precedent actually pushes courts to choose the outcome that filing deadlines are not jurisdictional – in an exception to the usual rule that courts should not favor either side’s interpretation.)

Second, “[a]pplying section 7459(d) only to dismissals other than those called for by section 6213(a) would contradict the actual history and intent of section 7459(d).”  Id. at 23.  The Hallmark opinion notes that the original predecessor of this provision did not appear in the Revenue Act of 1924 that created the Board of Tax Appeals, but that a version of this provision first appeared in § 906(c) of the Revenue Act of 1926, without accompanying legislative explanation.  The 1926 provision lacked the final phrase “or unless the dismissal is for lack of jurisdiction”.  The court agreed with Hallmark that there is also no committee report that explains why this jurisdictional exception was added in 1928.  Hallmark pointed out that there are a number of reasons that a Tax Court petition could be dismissed for lack of jurisdiction beyond late filing.  For example, a petition may be dismissed because the notice of deficiency was invalid because not sent to the taxpayer’s last known address or because the taxes had already been paid before the notice of deficiency was issued or because the taxpayer was in bankruptcy, so the bankruptcy stay prohibited a Board proceeding.   Excluding dismissals for late filing of the petition from jurisdictional dismissals would not render the jurisdictional dismissal exception of IRC 7459(d) superfluous.

But, the Hallmark opinion responded as follows:

What “jurisdiction[al]” circumstances did Congress address in making this amendment in 1928?  The obvious answer is that Congress addressed the very circumstance that the BTA had described in United Paper—i.e., “the Board determines that it has no jurisdiction” because “[t]he petition [was] not . . . filed within the time prescribed”.  We find no BTA opinion discussing the issue of sustaining a deficiency in a jurisdictional dismissal in connection with any jurisdictional issue other than the untimeliness of a petition (as in United Paper).  With reasonable confidence we also impute to Congress the knowledge that, as the BTA had reported since 1924, it was dismissing for “want of jurisdiction” where there was no valid NOD.  We see no reason to suppose that Congress ignored the actual activity of the BTA, left unsolved the timeliness-related conundrum described in United Paper, and instead amended the statute to address as-yet-unrealized difficulties in future cases that might involve lack of corporate capacity.  We do see, in the BTA’s appendices, dismissals for lack of jurisdiction because of pending bankruptcies and because taxes not assigned to the BTA were petitioned, and those dismissals, too, would fall within the “lack of jurisdiction” exception of section 906(c).  That these, too, involve “lack of jurisdiction” does not at all undermine the obvious congressional intent to address, as cases involving “lack of jurisdiction”, those that were being dismissed because they lacked the prerequisites of section 274(c) (sic; should be (a)) (now section 6213(a)), i.e., a valid NOD and – as in United Paper – a timely petition.

Id. at 27-28.

What’s this United Paper case about?  It is a 1926 opinion (4 B.T.A. 257) decided after Congress enacted § 906(c) of the Revenue Act of 1926 – the original predecessor of IRC 7459(d), but without the jurisdictional dismissal exception.  The taxpayer (!) in that case had filed a late deficiency petition and argued that under § 906(c), the Board was required to enter a decision upholding the deficiency set out in the notice.  The Board, however, refused, noting that, since 1924 it had been entering orders dismissing late-filed cases for lack of jurisdiction and it planned to continue that practice even during the years to which § 906(c) applied.

It seems to me, however, that United Paper undermines the Hallmark opinion’s conclusion that Congress intended in 1928 to fix a problem (inserting jurisdictional dismissal exceptions into the 1926 version of § 906(c)), when the Board had already concluded that § 906(c)’s requirement to enter a decision upholding the deficiency did not apply in the case of late-filed petitions, where the Board had been instead dismissing such cases (and planned to continue dismissing them) for lack of jurisdiction.  The Hallmark opinion basically argues that the 1928 amendment’s purpose was to fix a problem that the Board had already fixed with respect to late-filed petitions in United Paper in 1926.  Does that make the 1928 amendment superfluous to late-filed deficiency petition cases? 

However, in my view, even accepting for purposes of discussion that the Hallmark court has the better of this argument, the real question is whether the enactment of IRC 7459(d) a provision that would possibly provide a strange result under the non-jurisdictional filing deadline interpretation – contributes enough statutory context to require a court to find that Congress made a clear statement in IRC 6213(a) that the filing deadline is jurisdictional.  This strikes me as an argument that cannot be maintained after Boechler.  Below is what Boechler said about the SG’s argument that the language in the injunctive provision of the CDP legislation (first enacted in 2000 at IRC 6330(e)(1)) could produce a strange result if the IRC 6330(d)(1) deadline to file a CDP petition (enacted in 1998) were not jurisdictional.  The Court found that the strange result was probably a point in favor of the SG’s interpretation of the filing deadline, but not enough to meet the clear statement exception. 

The Commissioner contends that a neighboring provision clarifies the jurisdictional effect of the filing deadlineSection 6330(e)(1) provides that “if a [collection due process] hearing is requested . . . the levy actions which are the subject of the requested hearing . . . shall be suspended for the period during which such hearing, and appeals therein, are pending.”  To enforce that suspension, a “proper court, including the Tax Court,” may “enjoi[n]” a “levy or proceeding during the time the suspension . . . is in force,” but “[t]he Tax Court shall have no jurisdiction under this paragraph to enjoin any action or proceeding unless a timely appeal has been filed undern subsection (d)(1).”  § 6330(e)(1).

Section 6330(e)(1) thus plainly conditions the Tax Court’s jurisdiction to enjoin a levy on a timely filing under § 6330(d)(1).  According to the Commissioner, this suggests that § 6330(d)(1)’s filing deadline is also jurisdictional.  It would be strange, the Commissioner says, to make the deadline a jurisdictional requirement for a particular remedy (an injunction), but not for the underlying merits proceeding itself.  If that were so, the Tax Court could accept late-filed petitions but would lack jurisdiction to enjoin collection in such cases.  So if the IRS disobeyed § 6330(e)(1)’s instruction to suspend the levy during the hearing and any appeal, the taxpayer would have to initiate a new proceeding in district court to make the IRS stop.

We are unmoved—and not only because the scenario the Commissioner posits would arise from the IRS’s own recalcitrance.  The possibility of dual-track jurisdiction might strengthen the Commissioner’s argument that his interpretation is superior to Boechler’s.  Yet as we have already explained, the Commissioner’s interpretation must be not only better, but also clear.  And the prospect that § 6330(e)(1) deprives the Tax Court of authority to issue an injunction in a subset of appeals (where a petition for review is both filed late and accepted on equitable tolling grounds) does not carry the Commissioner over that line.  

142 S. Ct. at 1499.

I think that this passage from Boechler applies equally to the possible strange res judicata result that would be produced by IRC 7459(d) if the deficiency filing deadline is held not jurisdictional.  It’s a point in favor of a jurisdictional interpretation of the deficiency petition filing deadline, but the point does not carry the Hallmark court over the line of proving the application of the clear statement exception.

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. Jack Townsend says

    Carl, thanks again for this series of passionately argued positions. I remain agnostic on the issue. Except that, without nuance, I am swayed in both directions by (i) being an old lawyer who for many years of practice (with DOJ Tax and in the private arena) and teaching thought that Congress and the Courts were serious about § 6213(a)’s 90-day (or 150-day) period (meaning jurisdictional in that lingo), and (ii) the current trend that says there must be some Congressional clear statement before a deadline is jurisdictional. (In the latter regard, I wrote Keith before your series came out: “I am amazed that Judge Gustafson claims a ‘clear statement’ that the 90 day petition for deficiency redetermination requirement is jurisdictional and require 30 pages to state the clear statement (pp. 9-38, under the outline paragraph II titled ‘Section 6213(a) clearly states that its 90-day deadline for filing a deficiency case is jurisdictional.’”)

    I suppose the taxpayer could now file a motion for reconsideration under TCR 31 or motion to vacate or revise under TCR 162. (For this comment, I haven’t researched the difference between these motions, but just one or both would permit the Tax Court to retreat from and correct its error, if error the Court perceives.) I suppose that, if either motion were considered, the Tax Court might invite or accept amicus briefs which I am sure with minimal wordprocessor time you could draft in a somnambulant state.

    But then, you will have stated your case in this series of PT blogs, which I have to assume will be cited copiously and with intended authoritative effect in the taxpayer’s motion. And, in any event, I assume that the PT blog is read regularly and considered by many of the Tax Court Judges and their clerks.

    I have spent some time recently on the subject of amicus briefs and articles in pending cases recently. My particular interest was stirred early in my career in Diamond v. Commissioner, 492 F.2d 286 (7th Cir. 1974), on the service partner issue that gained some chatter among the taxpayers, pundits (recognized and self-appointed), and the IRS after the decision was rendered. The parties submitted their briefs and, before oral argument in December 1972, some self-appointed pundit wrote an article in the NYU Tax Law Review and wrote a letter to the Chief of DOJ Tax Appellate Section arguing that the service partner had no income event and, to put it mildly, excoriating my brief as inadequate for a DOJ Tax Appellate lawyer (he had served in DOJ Tax Appellate earlier). So, when we got to oral argument, taxpayer counsel’s opening argument did not mention the article. I advised the panel of the article and said that we would be happy to respond if the panel thinks anything in the article had merit (I asserted the article did not have merit). I did say that had the pundit filed an amicus brief to make such arguments, we could have properly responded (the inference being that the response would meet those arguments). They thanked me and the decision for the government was rendered over a year later.

    The point of this anecdote / war story is that something like an amicus brief can be achieved in articles or, now, even blogs such as yours that, almost certainly, the judges or their clerks will be aware of (probably, if timely, included in the parties’ briefing). Where, as in Diamond, the article or other legal appears in a venue after briefing where in all likelihood (such as an NYU Tax Law Review article) the court or its clerks may be influenced by the “off-the-books” arguments, it is hard to handle the side-door effect those arguments may have. Still, I think a lot of that is going on. In a way, your series of arguments, even if not presented in a motion to reconsider or some such (including amicus brief) will be read by the judges or their clerks, in which case your arguments (assuming merit) should be considered at some level.

    On the amicus issue itself, I was thinking about writing on my Federal Tax Procedure Blog something on the value of amicus briefs generally. My anecdotal observation is that most of the time, amicus briefs in the Supreme Court do no more than restate the arguments already made by the parties. The amicus briefs may “package” the restated arguments in different words, but they rarely make arguments that are outcome determinative where the arguments in the parties’ briefs would not have been. (I am aware of some articles claiming some such outcome determinative effect, but only for some amicus briefs.) I earlier suggested that, the Supreme Court should have a category that permits the filing of some sort of “me too” brief that notifies the court that non-parties agree with one or the other party’s arguments. One or two pages at most. Save a lot of commotion.

    What triggered my interest in that commotion was the case now before the Supreme Court In re Grand Jury (Sup. Ct. Case No. 21-1396) to address the issue of whether attorney-client privileged communications require the (or a) principal purpose of legal advice or just a significant purpose of legal advice. There are several amicus briefs by highly qualified and well-paid Supreme Court advocates that, for the most part, do not add anything material to the Court’s consideration (and besides there are a ton of law review articles on the issue). So, it seems to me, at a minimum, the Court ought to require that counsel certify that, in their professional judgment the amicus brief presents arguments that are not adequately addressed in the parties’ briefs and specifically identify those different and better arguments (would require timing for amicus briefs after the parties’ briefs are in).

    Oh well, I have ranted a bit much on side issues.

    Thanks again,

    Jack Townsend

    • Jack,

      I agree with you about most amicus briefs. When I am involved in one, though, I make sure that we are adding important material that is not in the parties’ briefs. For example, in Boechler, a third of the CTR/Harvard cert. and merits amicus briefs discussed typical CDP petition situations where we would expect equitable tolling to be asserted in the Tax Court (such as mistakenly mailing the petition to the IRS, so that the IRS had it before the 90 days expired — which might qualify for the common equitable tolling ground of timely filing in the wrong forum). Cut-down versions of some of what we said later appeared in the taxpayer’s merits brief and in other merits amicus briefs. Absent what we wrote, I am not sure that the Court would have been made aware of this. Just because the Supreme Court opinion doesn’t reflect what we argued doesn’t mean it had no affect on the Justices. And in our cert. amicus brief, we also included information from my research into CDP case dismissals and orders to show cause in the months of Nov. and Dec. 2019 — which quantified the problem for the Supreme Court. That information no doubt helped the Court understand that, while the jurisdictional nature of the CDP filing deadline was not harming huge numbers of taxpayers each month, it was still a serious issue. It also probably helped the Justices not worry that a ruling allowing equitable tolling in CDP would overwhelm the Tax Court.

      As to Hallmark, I don’t see the point in a motion for reconsideration. In any event, Hallmark’s attorneys have told me that the company is not going to appeal. Future litigation will happen in the Circuit courts from other taxpayers.

      The issue about whether the IRC 6213(a) filing deadline is jurisdictional after Boechler is now pending in the Culp case in the 3d Cir. The CTR/Harvard amicus brief there discussed IRC 7459(d) and its apparently not benefiting any taxpayers (because late filers just don’t later pay and sue for a refund) and my research into how many petitioners are hurt by the jurisdictional interpretation. This material was not in the appellants’ brief. Since the briefing is all done in Culp — and was done before Hallmark was decided — there will not be another brief responding to Hallmark. However, anyone reading the briefs already filed should have a good handle on the issues.

      In the 11th Cir. Allen case (which presents the same issue), we are still waiting for the court to rule on the DOJ motion for summary affirmance. The last papers filed in connection with that motion were filed on Oct. 6. I think the 11th Cir. has deferred ruling on the motion, waiting to see what the Tax Court ruled in Hallmark. However, the taxpayer (understandably) has not brought the Hallmark opinion to the attention of the 11th Cir. More mysterious is that the DOJ hasn’t yet brought Hallmark to the attention of the 11th Cir., though I am anticipating that daily, If the 11th Cir. denies the motion (the 3d Cir. denied a similar motion for summary affirmance in Culp), then there will be briefing in which the Hallmark opinion will be discussed, and I am sure that the parties and CTR/Harvard as amicus will discuss the flaws of Hallmark.

      There may be other appellate cases brought on the issue in 2023. I suspect that at least one will go to the 9th Cir. in place of Hallmark.

      • Norman Diamond says

        “For example, in Boechler, a third of the CTR/Harvard cert. and merits amicus briefs discussed typical CDP petition situations where we would expect equitable tolling to be asserted in the Tax Court (such as mistakenly mailing the petition to the IRS, so that the IRS had it before the 90 days expired — which might qualify for the common equitable tolling ground of timely filing in the wrong forum).”

        It is not filing at all. It’s timely mailing to the wrong forum, maybe timely proferring to the wrong forum, but it’s not filing.

        Even mailing a tax return to a Revenue Officer or Settlement Officer isn’t filing in the wrong forum within the IRS, it isn’t filing at all. Also, mailing a claim to the specific IRS address that is stated by an IRS agent during a telephone call doesn’t constitute filing of the claim, if the IRS agent stated a wrong address (twice, in two separate phone calls).

        Nonetheless I’ve read that having a number of amicus briefs increases the minuscule chances of cert.

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