Wednesday, January 12, 2022
SCOTUSblog: A Tax Deadline Missed By One Day Leads to a Showdown Over Equity, Jurisdiction – and Grammar, by Susan C. Morse (Texas; Google Scholar):
The argument on Wednesday in Boechler v. Commissioner of Internal Revenue will consider whether “equitable tolling” — which allows courts to excuse missed deadlines in some circumstances — is available for a statutory federal income tax deadline. The issue has split circuits, with the U.S. Courts of Appeals for the 8th and 9th Circuits concluding that tolling is not available, and the U.S. Court of Appeals for the District of Columbia Circuit concluding that tolling is available for a similarly worded tax provision. The court’s consideration of this question will address an issue of particular interest for low-income taxpayers and their advocates. It will also add to the court’s precedent on the interaction between the law of equity and the technicalities of federal statutes. Partly because of the circuit split and partly because of the statute’s lack of clarity, this could be a close case.
The dispute arose after the Internal Revenue Service assessed a $19,250 penalty and issued a notice of intent to levy to a small North Dakota law firm for failing to file employee tax withholding forms. After a hearing, the IRS issued a notice of determination sustaining the proposed levy. Under the Internal Revenue Code, the firm had a 30-day window following the issuance of the notice of determination to file a petition in the U.S. Tax Court to challenge the notice. The deadline was Aug. 28, 2017. The firm mailed its petition on Aug. 29, 2017. The question for the justices is whether the Tax Court may consider equitable tolling for this deadline; or whether the deadline is jurisdictional, which, under applicable precedent, would bar consideration of equitable tolling.
Both sides center their arguments on a test set forth in the 2015 case United States v. Kwai Fun Wong, decided 5-4, which elaborated a framework established in the 1990 case Irwin v. Department of Veterans Affairs. Under the Kwai Fun Wong test, there is a rebuttable presumption of equitable tolling for suits against the government. How can the presumption be rebutted? If the statute shows that Congress “plainly” gave the time limits “jurisdictional consequences.” Time limits are then jurisdictional and not subject to equitable tolling.
In Boechler, the court has the task of categorizing a limitation period that relates to a “collection due process” procedure. ...
If the taxpayer wins in Boechler, the Supreme Court and federal courts generally, including the Tax Court, will find themselves more responsible for adjudicating the question of equitable tolling. Their more regular task will be to separate the equitably extraordinary circumstance from the “garden-variety” negligence that will not excuse late filing. In this exercise, the courts could refer to considerable precedent on the question of equitable tolling, some of which is cited in the Boechler briefs. Some commentators recommend a reacquaintance with the tools of adjustment offered by equity, including in particular equitable principles beyond courts’ capacity for issuing injunctions. Expanding the availability of equitable tolling in the federal income tax law would be one way to test such recommendations.