In November of 2022, the Tax Court rendered a decision in Hallmark Research Collective v. Commissioner, 159 TC No. 6, stating that the Supreme Court's ruling in Boechler PC v. Commissioner, 142 S. Ct. 1493 (2022), which established that the 90-day limit for filing a Tax Court petition for collection actions under IRC §6330 is not jurisdictional, did not alter the Tax Court's longstanding stance that the 90-day filing deadline specified in IRC §6213(a) for filing a deficiency petition remains jurisdictional. Consequently, no equitable relief for late filing of the petition is accessible in this context.

The Third Circuit has taken a conflicting position in the case of Culp v. Commissioner.[1] The court ruled that taxpayers are permitted to present arguments for equitable relief even when they file a deficiency petition after the 90-day time limit specified in IRC §6213(a).

The Facts of the Case

The facts of the case are summarized as follows in the panel’s opinion:

In 2015, Isobel and David Culp each received $8,826.30 to settle a lawsuit. The couple reported their payments as “Other income” and described it as “PRIZES, AWARDS” in their 2015 tax return. A52. However, the IRS later came to believe the Culps failed to report those payments. Thus, in November 2017 it sent them a letter proposing to increase their taxes owed for 2015 to reflect the perceived underpayment. It gave the Culps 30 days to respond and told them it would send a notice of deficiency if they failed to do so. When the Culps did not respond, the IRS mailed them a notice of deficiency alleging a $3,363 underpayment for 2015, plus a $1,324 penalty under 26 U.S.C. §6651(a). That notice informed the Culps of their right to challenge the IRS’s determination by filing a petition in the Tax Court within 90 days of the date of the notice.

This process repeated in 2018. In May, the IRS sent the Culps another letter stating they owed only $2,087 in 2015 taxes, penalties, and interest — less than the amount previously assessed. It again gave them 30 days to respond, and again the couple failed to do so. Thus, the IRS levied on their property, collecting approximately $1,800 in total from the Culps’ Social Security payments and 2018 tax refund.

Upset at the IRS for levying on their property, the Culps filed a petition in the Tax Court seeking, among other things, a “refund of all payments made under protest, or levied on, or executed on by the IRS.” A20. The Tax Court dismissed their petition for lack of jurisdiction, reasoning its “jurisdiction depends upon the issuance of a valid notice of deficiency and the timely filing of a petition.” A157 (citing 26 U.S.C. 6212, 6213, 6214). It found the petition was untimely because the Culps did not file it within 90 days of the date the IRS sent them the second notice of deficiency. They timely appealed.[2]

Appellate Panel Doesn’t Agree That the Clock Never Began to Run

The taxpayers argued that they did not receive the notice of deficiency from the IRS or, if it was sent, they never received it. Consequently, they contended that the 90-day time limit for filing the petition should not have commenced.[3] However, the panel, affirming the Tax Court's decision, determined that the IRS had met its burden of demonstrating that the notice was indeed mailed to the taxpayers. Furthermore, the panel concluded that it was not necessary for the taxpayers to have actually received the notice for the 90-day clock to begin running.

The Tax Court did not err, let alone clearly err, in its determination that the IRS properly mailed the notice. The record contains not only copies of it, but also a U.S. Postal Service Form 3877 showing the IRS sent it. See Hoyle v. Comm'r, 136 T.C. 463, 468 (2011) (“[E]xact compliance with Postal Service Form 3877 mailing procedures raises a presumption of official regularity in favor of the Commissioner and is sufficient, absent evidence to the contrary, to establish that a notice of deficiency was properly mailed.”). As for the Culps' contention that they never received the notice, “actual receipt of [it] by the taxpayers is not required in order that the statutory filing period commence.” Boccuto v. Comm'r, 277 F.2d 549, 552 (3d Cir. 1960). In short, the Culps filed their petition years after the IRS properly sent the notice; thus we will not disturb the Tax Court's finding that they filed their petition after §6213(a)‘s 90-day period lapsed.[4]

Consistent with the Hallmark decision, the Tax Court previously determined that it lacked the authority granted by Congress to provide equitable relief and extend the filing deadline for the Culp case, irrespective of the circumstances. However, the Third Circuit's stance diverges from the Tax Court's view, asserting that the Tax Court does have the ability to grant equitable relief from the 90-day deadline for filing a deficiency petition.

Third Circuit Finds Tax Court Can Grant Equitable Relief in This Matter

The panel notes that in order for the Tax Court to consider a matter it must have been granted jurisdiction in the area:

“Jurisdictional requirements mark the bounds of a 'court's adjudicatory authority.'” Boechler, P.C. v. Comm'r, 142 S. Ct. 1493, 1497 (2022) (quoting Kontrick v. Ryan, 540 U.S. 443, 455 (2004)). If a jurisdictional requirement is unmet, the court lacks power to hear the case. See Jaludi v. Citigroup & Co., 57 F.4th 148, 151 (3d Cir. 2023) (“[V]iolating a jurisdictional procedural requirement locks the courthouse doors.”).[5]

As the opinion notes:

The central question in this appeal is whether the Culps’ late filing deprives the Tax Court of jurisdiction to consider their petition. Put another way, is §6213(a)‘s 90-day requirement jurisdictional or is it a claims-processing rule?[6]

The opinion further elaborates on the general analysis employed by courts to ascertain whether a particular requirement is deemed jurisdictional or not.

Because an unfulfilled jurisdictional requirement carries harsh consequences, courts do not apply the “jurisdictional” label casually. Wilkins v. United States, 143 S. Ct. 870, 876 (2023). To determine whether a statutory deadline is jurisdictional or claims-processing in nature, we examine the “text, context, and relevant historical treatment” of the provision, Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 166 (2010), and will “treat a procedural requirement as jurisdictional only if Congress 'clearly states' that it is,” Boechler, 142 S. Ct. at 1497 (quoting Arbaugh v. Y & H Corp., 546 U.S. 500, 515 (2006)). We do not look for “magic words,” Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145, 153 (2013), but the “traditional tools of statutory construction must plainly show that Congress imbued a procedural bar with jurisdictional consequences,” United States v. Kwai Fun Wong, 575 U.S. 402, 410 (2015).[7]

The panel then examines the Boechler case to assess whether the deadline specified in IRC §6213(a) is indeed a jurisdictional requirement. Notably, the panel arrives at a contrasting conclusion compared to the U.S. Tax Court regarding the impact of the Boechler case on the jurisdictional nature (or lack thereof) of IRC §6213(a).

Boechler represents the Supreme Court’s approach on whether a deadline is jurisdictional. The Court analyzed §6330(d)(1)’s 30-day time limit to petition the Tax Court for review of collection due process determinations. That provision reads that “[t]he 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).”26U.S.C. §6330(d)(1).

The Supreme Court held the deadline is not jurisdictional. In its view, the plausible interpretations of the statute — one supporting a jurisdictional reading and one weighing against it — suggest “the text does not clearly mandate the jurisdictional reading.” Boechler, 142 S. Ct. at 1498. Moreover, §6330(d)(1)‘s deadline speaks to what the taxpayer may do, while the parenthetical at the end of the provision contains the jurisdictional grant and speaks to the Tax Court’s power to hear the case. Id. Further, other tax provisions passed contemporaneously with §6330(d)(1) “much more clearly link their jurisdictional grants to a filing deadline.” Id. at 1498–99 (citing 26 U.S.C. §6404(g)(1) (1994 ed., Supp. II) (the Tax Court has “jurisdiction over any action . . . to determine whether the Secretary’s failure to abate interest under this section was an abuse of discretion . . . if such action is brought within 180 days”); §6015(e)(1)(A) (1994 ed., Supp. IV) (“The individual may petition the Tax Court (and the Tax Court shall have jurisdiction) to determine the appropriate relief available to the individual under this section if such petition is filed during the 90-day period.”)).[8]

The panel reaches the conclusion that if IRC §6330(d)(1) is not considered jurisdictional, then IRC §6213(a) cannot surpass that threshold either. In other words, the panel finds that the same reasoning used to determine the non-jurisdictional nature of IRC §6330(d)(1) would apply equally to IRC §6213(a).

Returning to our issue, §6213(a) reads in relevant part:

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 (not counting Saturday, Sunday, or a legal holiday in the District of Columbia as the last day), the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency. . . . [N]o assessment of a deficiency . . . and no levy or proceeding in court for its collection shall be made, begun, or prosecuted until such notice has been mailed to the taxpayer, nor until the expiration of such 90-day or 150-day period, as the case may be, nor, if a petition has been filed with the Tax Court, until the decision of the Tax Court has become final. . . . 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.

If the §6330(d)(1) deadline in Boechler fell short of being jurisdictional, §6213(a)‘s limit must as well. For one, there is no “clear tie between the deadline and the jurisdictional grant.” Boechler, 142 S. Ct. at 1499. The most pertinent part of §6213(a) provides that “[w]ithin 90 days . . . after the notice of deficiency . . . is mailed . . . the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency.” Nothing in that language links the deadline to the Court’s jurisdiction. Yet, elsewhere in §6213(a), Congress specified that “[t]he 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.” 26 U.S.C. §6213(a). So Congress knew how to limit the scope of the Tax Court’s jurisdiction. It expressly constrained the Tax Court from issuing injunctions or ordering refunds when a petition is untimely. But it did not similarly limit the Tax Court’s power to review untimely redetermination petitions.[9]

Additionally, the Court determines that when considering the broader context of the provision in conjunction with the surrounding subsections, there is no indication that the 90-day rule is intended to be jurisdictional. The analysis of the provision and its accompanying subsections suggests that the 90-day rule should not be considered a jurisdictional requirement.

Context does little to bolster the IRS’s case for the deadline being jurisdictional. True, if it is not jurisdictional, and a taxpayer’s redetermination petition is dismissed for untimeliness, the assessed amount would have preclusive effect in a refund suit under 26 U.S.C. §7422. See 26 U.S.C. §7459(d) (“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 . . . unless the dismissal is for lack of jurisdiction.”). But this situation presents itself only if a taxpayer files a late petition for redetermination of a deficiency, the Tax Court dismisses his or her petition, the taxpayer then pays the disputed deficiency, files for a refund, gets denied, and then sues in federal court challenging the denial. That theoretical possibility seems seldom, if ever, to occur, see Center for Taxpayer Rights Amicus Br. at 14–16, and therefore does not move the needle. See Boechler, 142 S. Ct. at 1499 (“[T]he Commissioner’s interpretation must be not only better, but also clear.”). [10]

But the opinion notes that a contrary view is expressed by the Ninth Circuit Court of Appeals:

But see Organic Cannabis Found., LLC v. Comm’r, 962 F.3d 1082, 1095 (9th Cir. 2019) (interpreting this context to demonstrate that §6213(a)’s deadline is jurisdictional).[11]

The Third Circuit panel also finds that its own precedent does not require the panel to treat the requirement as jurisdictional:

Nor are we persuaded by the Commissioner's argument that relevant historical treatment (that is, our precedent) compels us to treat §6213(a)’s deadline as jurisdictional. Although we have previously referred to it as such in passing, see, e.g., Sunoco Inc. v. Comm'r, 663 F.3d 181, 187 (3d Cir. 2011), never have we so held. This is the first published opinion to address squarely whether §6213(a)’s deadline for redetermination petitions is jurisdictional, and we hold it is not.[12]

The Time Limit Specifically Can Be Equitably Tolled

Given that the 90-day rule is determined to be non-jurisdictional, the subsequent question arises as to whether the time limit can be tolled or extended.  The panel determines that it can.

The equitable tolling doctrine “pauses the running of, or ‘tolls,’ a statute of limitations when a litigant has pursued his rights diligently but some extraordinary circumstance prevents him from bringing a timely action.” Lozano v. Montoya Alvarez, 572 U.S. 1, 10 (2014). It “is a traditional feature of American jurisprudence and a background principle against which Congress drafts limitations periods.” Boechler, 142 S. Ct. at 1500. Thus, “nonjurisdictional limitations periods are presumptively subject to equitable tolling.” Id.; accord Young v. United States, 535 U.S. 43, 49 (2002) (“It is hornbook law that limitations periods are customarily subject to equitable tolling.” (cleaned up)).

Given this presumption, we ask whether there is “good reason to believe that Congress did not want the equitable tolling doctrine to apply.” Arellano v. McDonough, 143 S. Ct. 543, 548 (2023) (emphasis in original) (internal quotation marks omitted). We glean intent by looking to the relevant provision’s text, context, and place in the broader statutory scheme.[13]

The opinion begins by looking at the text of the provision makes it clear that tolling is not allowed.

We begin with the text. See Nutraceutical Corp. v. Lambert, 139 S. Ct. 710, 714 (2019) (“Whether a rule precludes equitable tolling turns not on its jurisdictional character but rather on whether the text of the rule leaves room for such flexibility.”). A statute that “sets forth its time limitations in unusually emphatic form . . . [and] a highly detailed technical manner . . . cannot easily be read as containing implicit exceptions.” United States v. Brockamp, 519 U.S. 347, 350 (1997). Moreover, when a legislature lays out an “explicit listing of exceptions” to a deadline, it shows its intent for “courts [not to] read other unmentioned, open-ended, ‘equitable’ exceptions into the statute.” Id. at 352; see also Arellano, 143 S. Ct. at 550 (“That Congress accounted for equitable factors in setting effective dates strongly suggests that it did not expect an adjudicator to add a broader range of equitable factors to the mix.”). Finally, express language signifying that the only exceptions are those in the statute signals that courts should not permit equitable tolling. See Arellano, 143 S. Ct. at 551 (a statute requiring a receipt date to begin a filing period “[u]nless specifically provided otherwise” suggests the statute’s enumerated exceptions are exclusive).

Applying these rules, there is insufficient textual evidence to persuade us that Congress sought to bar §6213(a)’s deadline from being equitably tolled. The filing period is neither emphasized nor set out in a technical way. And though Congress provided for three equitable exceptions to the deadline, there is good reason to believe these exceptions are not exhaustive. Unlike the statutory deadlines examined in Brockamp and Arellano, both of which the Supreme Court held not subject to equitable tolling, §6213(a)’s exceptions are neither many (the three here are less than the six in Brockamp and fifteen in Arellano), nor are they set out explicitly or “in a highly detailed technical manner,” and they do not contain “substantive limitations” on the amount of recovery. Brockamp, 519 U.S. at 350, 352; see Arellano, 143 S. Ct. at 549. Finally, no express language in the statute suggests the enumerated exceptions are exhaustive.[14]

The panel concludes that the context of the statute supports the notion of allowing equitable tolling. In other words, considering the surrounding circumstances and factors related to the statute, it is deemed appropriate to permit the application of equitable tolling in this context.

The statutory context also suggests that Congress did not intend §6213(a)’s filing limit to be unbending. The deadline is targeted at the taxpayer, not the Tax Court. See Boechler, 142 S. Ct. at 1500 (holding that a time limit directed at the taxpayer supports equitable tolling). Moreover, “[t]he presumption favoring equitable tolling is stronger when the limitations period is short,” Hedges v. United States, 404 F.3d 744, 749 (3d Cir. 2005), and §6213(a)’s 90-day time limit (or 150 days for notices sent to those outside the United States) fits the bill. Compare Boechler, 142 S. Ct. at 1500 (describing 30-day time limit as “short”), with United States v. Beggerly, 524 U.S. 38, 48–49 (1998) (holding that an “already generous [12-year] statute of limitations” cannot be tolled). It is also important that this deadline applies to “a scheme in which ‘laymen, unassisted by trained lawyers,’ often ‘initiate the process.’” Boechler, 142 S. Ct. at 1500 (quoting Auburn, 568 U.S. at 154); see United States Tax Court, Congressional Budget Justification, Fiscal Year 2024, at 23 (Feb. 1, 2023) (explaining that in Fiscal Year 2022 80% of the Tax Court petitions were filed by taxpayers proceeding pro se).[15]

Furthermore, the panel dismisses the IRS’s arguments that allowing equitable tolling would lead to significant administrative and collection challenges. The panel does not find these concerns substantial enough to preclude the application of equitable tolling in this case.

We also believe the IRS’s arguments that permitting equitable tolling would be in administrable are overstated. Section 6213(c) directs the Commissioner to demand payment of deficient taxes “[i]f the taxpayer does not file a petition with the Tax Court within” §6213(a)‘s filing period. 26 U.S.C. §6213(c). The Commissioner contends that, if we permit equitable tolling, “the United States would never have certainty about the amount of taxes it will collect for a given tax year.” IRS Br. at 47. But after the Commissioner issued approximately two million notices of deficiency in Fiscal Year 2021, taxpayers filed only 34,049 redetermination petitions in the Tax Court.4 Because taxpayers timely file the vast majority of these petitions, permitting equitable tolling would only affect a small subset of deficiency petitions filed after §6213(a)’s period. This subset is quite small, therefore indicating §6213(a)’s deadline “serves a . . . limited and ancillary role in the tax collection system.” Boechler, 142 S. Ct. at 1501. And we doubt our holding will encourage more taxpayers to file untimely petitions in the (longshot) hopes of bringing a successful equitable tolling argument.

Nor do we perceive that the IRS’s ability to collect deficient taxes will be thwarted if taxpayers can assert their tardy petitions are timely due to equitable tolling. That is because a taxpayer’s challenge will not undo the IRS’s lien unless and until the taxpayer’s challenge is successful. After the IRS provides a taxpayer notice of the deficiency’s existence and amount, 26 U.S.C. §6212, and the taxpayer does not file a petition within the time prescribed by §6213(a), the deficiency shall be assessed, 26 U.S.C. §6213(c), and becomes a lien on the taxpayer’s property, §26 U.S.C. §6321. That lien “arise[s] at the time the assessment is made and shall continue until the liability for the amount so assessed . . . is satisfied or becomes unenforceable by reason of lapse of time.” 26 U.S.C. §6322. Thus, the IRS’s power to collect a deficiency will not be frustrated if a taxpayer could argue that §6213(a)’s deadline should be equitably tolled.[16]

[1] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023, https://www.taxnotes.com/research/federal/court-documents/court-opinions-and-orders/third-circuit-holds-tax-court-filing-deadline-not-jurisdictional/7gzqg (retrieved July 20, 2023)

[2] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[3] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[4] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[5] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[6] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[7] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[8] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[9] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[10] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[11] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[12] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[13] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[14] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[15] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023

[16] Culp v. Commissioner, CA3, Case No. 22-1789, July 19, 2023