CDP Proceedings—Is the Time Limit in Section 6330(d)(1) a Jurisdictional Requirement for Tax Court Petitions?

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Zachary J. Montgomery

Zachary J. Montgomery

Attorney

469.998.8484
zmontgomery@freemanlaw.com

Zachary J. Montgomery is a dual-credentialed attorney and CPA. He practices in the area of federal and state tax litigation, white-collar defense, business and tax planning, and litigation. Mr. Montgomery has experience representing both businesses and individuals in federal tax controversies, including appeals, examinations, penalty abatement and collection matters. He has also represented taxpayers—from small organizations to Fortune 500 companies—with Texas franchise tax refund claims, audits, penalty abatement, and corporate structuring.

Mr. Montgomery is a graduate of the University of Virginia School of Law where he focused his studies on corporate and tax law and served on the editorial board of the Virginia Tax Review. Prior to joining the firm, he gained experience with PricewaterhouseCoopers, LLP, and a regional firm, focusing on federal and state tax controversies. His previous experience also includes Ernst & Young, Deloitte & Touche, and a judicial student clerkship with the First Court of Appeals of Texas.

Mr. Montgomery is a graduate of Texas A&M University, where he graduated Summa Cum Laude and received his B.B.A. with a double major in Accounting and Business Honors and his M.S. in Management Information Systems. While attending Texas A&M, he developed his business acumen, working as an enterprise risk consultant and financial analyst.

CDP Proceedings—Is the Time Limit in Section 6330(d)(1) a Jurisdictional Requirement for Tax Court Petitions?

In the tax universe, deadlines are normal and expected. Most Americans are familiar with income tax filing deadlines (e.g., April 15th), and businesses are familiar with employment tax deadlines (e.g., January 15th). Statutory deadlines also apply to taxpayers involved in collections. When a taxpayer receives a notice of determination from IRS Appeals, the taxpayer has 30 days to petition the U.S. Tax Court. However, if the taxpayer files its petition late—even one day late—is the taxpayer completely barred from having the petition considered by the Tax Court? That issue is currently being considered by the U.S. Supreme Court in Boechler, P.C. v. Commissioner of the Internal Revenue Service.

Boechler, P.C. v. Comm’r,[1] Background

On June 5, 2015, the Internal Revenue Service (“IRS”) issued a letter to Boechler, P.C. (“Boechler”), noting a “discrepancy” between prior tax submissions. Not receiving a response, the IRS imposed a 10% intentional disregard penalty. Boechler, in turn, did not pay the penalty, and the IRS issued a notice of intent to levy. In response, Boechler timely filed a request for Collection Due Process (“CDP”) hearing but did not “establish grounds for relief” from IRS Appeals. Accordingly, on July 28, 2017, IRS Appeals mailed a notice of determination to Boechler, sustaining the levy—although the notice was not delivered until July 31, 2017. Per the notice (and per statute), Boechler had 30 days from the date of the notice to petition the U.S. Tax Court—i.e., until August 28, 2017.[2][3]

On August 29, 2017—one day after the 30-day deadline—Boechler mailed its petition to the U.S. Tax Court. In response, the IRS moved to dismiss the petition for lack or jurisdiction. Boechler objected, arguing: (1) the 30-day time limit in I.R.C. § 6330(d)(1) is not jurisdictional, (2) the time limit should be equitably tolled, and (3) calculating the time limit from issuance rather than receipt violates due process. The Tax Court dismissed the petition, and Boechler appealed to the Eighth Circuit Court of Appeals.[4]

The Eighth Circuit affirmed, finding the government’s arguments more persuasive. Recognizing the general principle that a “statutory time limit is jurisdictional when Congress clearly states that it is[,]” the Eighth Circuit found that the clear language of Section 6330(d)(1) showed Congress’ intent to make the filing deadline jurisdictional.[5] Moreover, the Eighth Circuit found Boechler’s due process argument equally unpersuasive. Accordingly, Boechler petitioned the U.S. Supreme Court, and the Court granted certiorari.

I.R.C. § 6330(d)(1)

As noted above, the statute at issue in Boechler is Section 6330(d)(1). For reference, the statutory language is reproduced below:

(d) Proceeding after hearing.

(1) Petition for review by Tax Court.—The person may, within 30 days of a determination under this section, petition the Tax Court for review of such determination (and the Tax Court shall have jurisdiction with respect to such matter).[6]

Question Presented

Boechler filed its Petition for a Writ of Certiorari on April 16, 2021, and its Brief for Petitioner on November 15, 2021. The question presented to the Supreme Court, as stated in Boechler’s filings is as follows:

Section 6330(d)(1) of the Internal Revenue Code establishes a 30-day time limit to file a petition for review in the Tax Court of a notice of determination from the Commissioner of Internal Revenue. 26 U.S.C. § 6330(d)(1). The question presented is:

Whether the time limit in Section 6330(d)(1) is a jurisdictional requirement or a claim-processing rule subject to equitable tolling.

Oral Arguments—January 12, 2022

Following the briefing by Boechler and the government, the Supreme Court held oral argument on January 12, 2022. Melissa Arbus Sherry argued for the petitioner, Boechler, and Jonathan C. Bond, Assistant to the Solicitor General, Department of Justice, argued for the respondent, Commissioner of the Internal Revenue Service.

Notable comments and questions from the justices during oral argument are reproduced below:

JUSTICE SOTOMAYOR: “Matter” suggests a noun, and the closest antecedent noun is “determination.” Yet — and, in fact, if you read Section 6330(d)(3), it provides that the IRS appeals office shall retain jurisdiction with respect to any determination made under this section. So the statute by its own terms in another provision is making clear that jurisdiction is tied to determination, not petition. The 30-day period, the 30-day limitation, is tied to the petition, not to the determination, correct?

JUSTICE ALITO: What do you make of the fact that this reference to jurisdiction is in a parenthetical?

JUSTICE KAVANAUGH: Because I think this is somewhat different contextually than some of the other provisions we’ve had over the years because, here, if you miss the time limit, you’re not boxed out entirely, as the government points out. . . . So it seems to me contextually Congress has a scheme here where there are other paths for someone to proceed even if you miss the deadline.

JUSTICE GORSUCH: But we normally think of equitable tolling, I — I thought, as a traditional common law rule that we don’t assume Congress displaces lightly. It legislates against the backdrop of the common law. But, here, we don’t have a court of law. The Tax Court, you can call it an Article I court, one might call it an Article II agency, but, whatever it is, it’s not an Article III court. So to what extent does that presumption about the common law and rules applicable to courts transfer over, or do we even need to decide that question?

JUSTICE KAGAN: Can I take you back to the jurisdictional question and just ask what would it take to convert this into a jurisdictional provision?

CHIEF JUSTICE ROBERTS: But you’re — you’re — you’re asking an awful lot of Congress when you say that, basically, the Tax Court shall have jurisdiction if it’s at the first part of the sentence rather than in a parenthetical, it makes — makes all the difference.

JUSTICE ALITO: It’s pretty artificial to think that Congress actually intended anything on these issues, assuming that it can intend anything.

JUSTICE KAVANAUGH: On the statutory language, the fact that, as you say, there’s a narrow dispute and there’s reasonable arguments both ways about how to read the parenthetical, doesn’t that, under our precedents going back 20 years or so now, kind of end the case?

JUSTICE BREYER: The law dictionary says equitable tolling is a court’s discretionary extension of a legal deadline.

JUSTICE GORSUCH: So acknowledging that there are at least three possibilities [of how to interpret “such matter”] here and only one of which obviously helps the government, what am I supposed to do?

JUSTICE BARRETT: Let’s say that I think the government’s interpretation is maybe a little bit more plausible but not a slam dunk. In light of the backdrop of the clear statement rule, what am I supposed to do with that? I mean, how clear does it have to be?

JUSTICE KAGAN: [Y]ou’ve talked a lot about Congress signaling this and Congress saying that. But, I mean, my gut is that Congress has never read any of our cases in this area.

Conclusion

Based on oral argument, the comments and questions from the justices suggest that the Petitioner (i.e., Boechler) may receive a favorable, albeit narrow, ruling. Much of the arguments and discussion focused on the meaning of “such matter”; the significance of Section 6330(d)(1)’s parenthetical; the application of the clear statement rule; and the impact of congressional intent. A factor in the analysis is the small number of petitions related to this issue. In an exchange between Justice Thomas and Mr. Bond, Mr. Bond noted that of the 1,100 to 1,200 petitions filed each year, roughly 22 percent of them (approximately 300 petitions) are dismissed for lack of jurisdiction. Those 300 petitions would be affected by the Court ruling against the government. Regardless, even if the Court’s opinion is narrowly in favor of Boechler, this case would be a win for taxpayers—at least in the context of CDP proceedings.

 

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[1] Boechler, P.C. v. Comm’r, 967 F.3d 760 (8th Cir. 2020), cert. granted, 142 S. Ct. 55 (2021).

[2] Id. at 762-63.

[3] Technically, 30 days from July 28, 2017, is August 27, 2017; however, August 27, 2017, was a Sunday.

[4] Boechler, 967 F.3d at 763.

[5] Id. at 764-65; see also Duggan v. Comm’r, 879 F.3d 1029 (9th Cir. 2018).

[6] I.R.C. § 6330(d)(1).