Tax Court in Brief | Hallmark v. Comm’r | No Equitable Tolling of 90-Day Deadline to Petition Notice of Deficiency

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The Tax Court in Brief – November 28th – December 2nd, 2022

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Tax Litigation:  The Week of November 28th, 2022, through December 2nd, 2022

Hallmark Research Collective v. Comm’r, 159 T.C. No. 6 | November 29, 2022 | Gustafson | Dkt. No. 21284-21

Summary: In this 57-page opinion, the Tax Court addresses the question of whether the Tax Court has jurisdiction to adjudicate a taxpayer’s petition challenging a notice of deficiency (“NOD”) when the petition was filed one day beyond the 90-day deadline contained in the NOD.

No, it doesn’t.

The rest of the Hallmark story is summarized below. . . .

Pursuant to section 6212, the IRS sent a statutory notice of deficiency (“NOD”) to Hallmark’s last known address, by certified mail, on June 3, 2021. The NOD determined deficiencies, additions to tax, and penalties against Hallmark for the years 2015 and 2016 and advised Hallmark of the following (bold/underlined added here):


If you disagree with the Notice of Deficiency

If you want to contest our final determination, you have 90 days from the date of this letter (150 days if addressed to you outside of the United States) to file a petition with the United States Tax Court.

. . .

Time limits on filing a petition

The court can’t consider your case if you file the petition late.

If we don’t hear from you

If you . . . don’t file a timely petition with the Tax Court, we’ll assess and bill you for the deficiency (and applicable penalties and interest) after 90 days from the date of this letter (150 days if this letter is addressed to you outside the United States).

The NOD included on its front page the caption: “Last day to file petition with US tax court: SEP 01 2021


Hallmark electronically filed its petition for redetermination of the deficiencies at 9:36 p.m. on September 2, 2021—one day late. Hallmark requested additional time to respond due to Hallmark’s CPA allegedly contracting COVID.

But, the Tax Court did not defer ruling. On April 1, 2022, the Tax Court entered an Order of Dismissal for Lack of Jurisdiction, holding that the 90-day deadline of section 6213(a) for deficiency cases is jurisdictional.

On April 21, 2022, the U.S. Supreme Court issued its opinion in Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022), holding that “[s]ection 6330(d)(1)’s 30-day time limit to file a petition for review of a collection due process determination is an ordinary, nonjurisdictional deadline subject to equitable tolling.” Boechler, P.C., 142 S. Ct. at 1501.

On May 2, 2022, Hallmark timely filed a motion to vacate and its memorandum of law in support, reasoning that Boechler compels the conclusion that the 90-day filing deadline in section 6213(a) for deficiency cases is not jurisdictional, and thus is subject to equitable tolling.

Key Issues: Whether the deadline of I.R.C. § 6213(a) is jurisdictional and thus cannot be equitably tolled?

Primary Holdings: Yes, the deadline of I.R.C. § 6213(a) is jurisdictional and cannot be equitably tolled. In order to maintain an action in the Tax Court there must be (1) a valid NOD issued by the IRS and (2) a timely filed petition. The requirement of a valid NOD and the 90-day deadline are inseparably linked in section 6213(a), and Congress’s statutory timeline is fixed. The Supreme Court’s reasoning in Boechler does not apply to the 90-day deadline of section 6213(a). Therefore, Hallmark’s case was properly dismissed for lack of jurisdiction, and the Tax Court refused to vacate the dismissal.

Key Points of Law:

General Rule of Tax Court Jurisdiction. The Tax Court may exercise jurisdiction only to the extent expressly provided by statute. Breman v. Commissioner, 66 T.C. 61, 66 (1976). The jurisdiction of the Tax Court is contained in section 7442, which provides: “Sec. 7442. Jurisdiction. The Tax Court and its divisions shall have such jurisdiction as is conferred on them by this title, by chapters 1, 2, 3, and 4 of the Internal Revenue Code of 1939, by title II and title III of the Revenue Act of 1926 (44 Stat. 10-87), or by laws enacted subsequent to February 26, 1926.” Section 7442 does not itself confer jurisdiction but states the truism that the Tax Court “shall have such jurisdiction” as is “conferred” by other provisions elsewhere in the Code and other revenue laws. In order to maintain an action in the Tax Court there must be (1) a valid notice of deficiency issued by the Commissioner and (2) a timely filed petition. Abeles v. Commissioner, 91 T.C. 1019, 1025 (1988). The notice of deficiency is known as the “ticket” to Tax Court.

“Jurisdictional” Rules. Where a federal court’s subject-matter jurisdiction depends on a timely filing, “a litigant’s failure to comply with the bar deprives a court of all authority to hear a case”. United States v. Kwai Fun Wong, 575 U.S. 402, 408–09 (2015). Courts must enforce the deadline; the deadline cannot be tolled or waived; and there is no room for equitable exceptions to be made on account of the specific facts of a case. Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006). Late-filed cases in such instances must be dismissed for lack of jurisdiction. Id.

“Claim-Processing” Rules. Claim-processing rules are those that “seek to promote the orderly progress of litigation by requiring that the parties take certain procedural steps at certain specified times”, Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 435 (2011), “but do not deprive a court of authority to hear a case”, Kwai Fun Wong, 575 U.S. at 410. “Filing deadlines . . . are quintessential claim-processing rules”, Henderson, 562 U.S. at 435, and “ordinarily are not jurisdictional”, Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145, 154 (2013). Deadlines that are claim-processing rules are subject to the rebuttable presumption that they may be equitably tolled upon the particular facts of a case. Irwin v. Dep’t of Veterans Affairs, 498 U.S. 89, 95–96 (1990). A litigant’s failure to meet the deadline risks dismissal for failure to state a claim, but the statute of limitations defense must be raised in the answer (or amended answer); otherwise, the issue is waived, and the case may proceed. See Kontrick v. Ryan, 540 U.S. 443, 459 (2004).

Congressional Intent. Only Congress may determine a lower federal court’s subject-matter jurisdiction. See U.S. Const. art. III, § 1. “Because Congress decides whether federal courts can hear cases at all, it can also determine when, and under what conditions, federal courts can hear them.” Bowles v. Russell, 551 U.S. 205, 212–13 (2007). “Congress is free to attach the conditions that go with the jurisdictional label to . . . a claim-processing rule”, Henderson, 562 U.S. at 435, and “it is no less ‘jurisdictional’ when Congress prohibits federal courts from adjudicating an otherwise legitimate ‘class of cases’ after a certain period has elapsed”, Bowles, 551 U.S. at 213. Congress must “clearly state[]” that a filing deadline is jurisdictional; and absent such a clear statement, “courts should treat the restriction as nonjurisdictional in character.” Arbaugh, 546 U.S. at 515–16. Congress “need not use magic words”, and a statutory deadline may be jurisdictional even without the word “jurisdiction”. Henderson, 562 U.S. at 436; Bowles, 551 U.S. at 208–10; Kwai Fun Wong, 575 U.S. at 410.

The Statute – Section 6213(a). Section 6213(a) is Congress’s mandate of the Tax Court’s deficiency authority and of its place within the federal tax system. Section 6213(a) provides, in part, that within 90 days, or 150 days if the notice is addressed to a person outside the United States, after the notice of deficiency authorized in section 6212 is mailed, the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency. Id. “The Tax Court shall have no jurisdiction to enjoin any action or proceeding or order any refund under this subsection unless a timely petition for a redetermination of the deficiency has been filed and then only in respect of the deficiency that is the subject of such petition.Id. (emphasis added).

Insights: In this 57-page opinion, the Tax Court evaluated, among other things, the statutory history of The Revenue Act of 1924, The Revenue Act of 1926, The Revenue Act of 1934, The Internal Revenue Code of 1939, The Revenue Act of 1942, The 1945 International Organizations Immunities Act, The Internal Revenue Code of 1954, The Tax Reform Act of 1969, The Tax Reform Act of 1986, The Internal Revenue Service Restructuring and Reform Act of 1998, and “Present Law.” The Tax Court, in conclusion, noted: “Congress—presumptively aware of this treatment by the courts—has preserved the operative text in section 6213 through every reenactment and amendment, thereby carrying forward that interpretation. The 90-day deadline of section 6213(a) is therefore, as in Bowles, a limitation imposed by Congress for access to courts which has been uniformly construed and enforced as such for a “century’s worth of precedent and practice in American courts.” Bowles, 551 U.S. at 209 n.2.  The Tax Court found that this history of reenactments of and amendments applicable to section 6213(a) demonstrates that Congress’s intention is to provide an adequate but strict timeframe within which a taxpayer may file a deficiency petition in the Tax Court.

Hallmark missed the 90-day deadline by one day, and no amount of equity can save Hallmark’s untimely-filed petition.

Case dismissed for lack of jurisdiction.