According to Law360, The Third Circuit revived a couple's challenge to their Internal Revenue Service bill Wednesday, finding that their failure to comply with a 90-day deadline for filing a petition with the U.S. Tax Court wasn't fatal to their case.
In the published opinion, a three-judge appeals court panel handed a victory to taxpayer rights advocates and said that the 90-day deadline for challenging IRS deficiency notices under Internal Revenue Code Section 6213(a) isn't jurisdictional. The ruling reversed a decision by the Tax Court that tossed Isobel Berry Culp and David R. Culp's tax challenge due to their failure to comply with the deadline.
Congress hasn't plainly said that the statutory deadline is a jurisdictional hurdle that has to be cleared for access to the Tax Court, the Third Circuit said, upending previous determinations from the Tax Court that the Section 6213(a) deadline is jurisdictional. The U.S. Supreme Court determined last year in Boechler PC v. Commissioner that a deadline for other Tax Court cases under IRC Section 6330(d)(1) was also not jurisdictional, a decision cited by the Third Circuit in its opinion Wednesday.
"If the [Section] 6330(d)(1) deadline in Boechler fell short of being jurisdictional, [Section] 6213(a)'s limit must as well," the Third Circuit said.
The Third Circuit Also Found That Equitable Tolling,
Which Can Extend The Statute Of Limitations In
Certain Circumstances, Can Apply To The
§6213(A) Deadline For Deficiency Cases.
The IRS sought to increase the Culps' tax bill for 2015 after concluding they didn't report a roughly $8,800 legal settlement they received, even though they had reported it as "other income" on their return for that year, according to the Third Circuit. The agency sent a notice of deficiency to the couple after they failed to respond to a letter concerning the purported underpayment, which totaled nearly $4,700, including a penalty.
Later, in 2018, the IRS sent another letter, this time saying they owed just a little over $2,000 in taxes for 2015, the Third Circuit said. The couple didn't respond, so the IRS used a levy to take their Social Security earnings and tax refund for 2018.
The couple filed a petition with the Tax Court, which dismissed their case because they failed to meet the 90-day deadline.
The Third Circuit said in its opinion Wednesday that the couple's petition was well past the 90-day time frame for filing deficiency cases with the Tax Court. But the appeals court rejected the Tax Court's conclusion that the Section 6213(a) deadline is jurisdictional, citing the Supreme Court's decision finding Section 6330(d)(1) is not jurisdictional.
Like the text of Section 6330(d)(1), there is no clear connection in Section 6213(a) between the language concerning the 90-day deadline and the language giving the Tax Court jurisdiction over deficiency cases, the Third Circuit said.
Congress did intentionally limit the Tax Court's power in such cases in other parts of the statute, indicating that it "knew how to limit the scope of the Tax Court's jurisdiction," the opinion said.
"It expressly constrained the Tax Court from issuing injunctions or ordering refunds when a petition is untimely," the opinion said. "But it did not similarly limit the Tax Court's power to review untimely redetermination petitions."
And the 90-day deadline is subject to equitable tolling, the Third Circuit found, saying that nonjurisdictional deadlines are presumed to be subject to equitable tolling. There's no compelling evidence indicating Congress meant to exempt the deadline from such tolling, the appeals court said.
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