Morse: APA Challenges To Old Tax Guidance And The Six-Year Default Limitations Period

Susan C. Morse (Texas; Google Scholar), Out of Time? APA Challenges to Old Tax Guidance and the Six-Year Default Limitations Period:

The government has just begun to raise the six-year limitations period under 28 U.S.C. § 2401(a) to defend against administrative procedure challenges to old tax guidance. This defense should work. The tradeoff between accuracy and repose in these cases is solved by the six-year limitations period of 28 U.S.C. § 2401(a), which begins to run when guidance issues for such administrative procedure claims. One complication in tax is that most opportunities to raise administrative procedure claims arise in deficiency or refund cases, where the pre-litigation tax procedure can be lengthy and outside the control of the plaintiff. But the solution is not to hold the limitations period open indefinitely. That would give no weight to the value of repose. Instead, the right solution is to temper the effect of the limitations period with appropriate adjustments, including equitable tolling and estoppel and administrative practices, such as waiving the limitations period with respect to tax returns filed within six years of the issuance of challenged guidance.

Conclusion
The puzzle presented by administrative procedure challenges to old tax guidance boils down to a classic tension in law: the tradeoff between accuracy and repose. The puzzle is solved by the six-year limitations period of 28 U.S.C. § 2401(a), which, under a case law consensus, begins to run when guidance issues for administrative procedure claims.

One complication in tax is that most opportunities to raise administrative procedure claims arise in deficiency or refund cases, where the pre-litigation tax procedure is lengthy and can consume more than six years. But the solution is not to hold the limitations period open indefinitely. That would give no weight to the value of repose. Instead, the right solution is to temper the effect of the limitations period with appropriate adjustments, including equitable tolling and estoppel claims and administrative practices such as waiving the limitations period with respect to tax returns filed within six years of the issuance of challenged guidance.