Is a Statutory Time Limit Jurisdictional in a Collection Due Process Hearing before the U.S. Court?
The Center files an Amicus Brief in the U.S. Supreme Court in Boechler v. Commissioner of Internal Revenue
This week, the Tax Clinic at the Legal Services Center of Harvard Law School filed an amicus brief in the United States Supreme Court on behalf of the Center for Taxpayer Rights in the case Boechler v. Commissioner. You can read our amicus brief here. Because the issue to be decided is of universal importance to tax administration and procedural due process, I thought I’d discuss the case in this issue of the Taxpayer Rights Digest. I won’t go through all the case law underpinning this issue; Procedurally Taxing published a short blog containing the links to the petitioner’s brief and several other amicus briefs. You should really check these out, especially petitioner’s brief.
By way of background, in the United States, as in most countries, access to the courts is subject to timing deadlines. Thus, in order to petition the United States Tax Court (the only forum where the taxpayer can seek judicial review without have to first pay the proposed liability), the Internal Revenue Code provides that the taxpayer may “within 90 days” of the mailing of a notice of deficiency petition the Tax Court for a redetermination of the deficiency. IRC § 6213(a). (If the notice is addressed to a taxpayer outside the United States, the taxpayer has 150 days to file.) Similarly, where a taxpayer seeks to challenge the IRS proposed collection action in a Collection Due Process hearing (more on that later), IRC § 6330(d)(1) provides the taxpayer “may, within 30 days of a determination under this section, petition to the Tax Court for review of such determination (and the Tax Court shall have jurisdiction with respect to such matter).” (Emphasis added.) (There is no additional time for taxpayers outside the U.S.)
The Tax Court and several federal courts of appeal have held that the deadlines are jurisdictional and thus missing the deadline by one day means you cannot seek relief in the Tax Court. Taxpayers, on the other hand, and the Court of Appeal for the District of Columbia, have argued these deadlines are claims processing rules, and thus if you miss the deadline the taxpayer should be able to have a hearing to show why the deadline should be tolled (known as “equitable tolling”). Obviously, from the taxpayer perspective, losing access to a prepayment judicial forum or the only opportunity to challenge a collection action in court is a significant loss.
Over the last two decades, the United States Supreme Court, in cases involving agencies other than the Internal Revenue Service, has held that deadlines in statutes should be treated as claim-processing rules unless the statute clearly states the deadline is meant to be jurisdictional. In Boechler, the case turns on whether the language in IRC § 6330(d)(1) is a clear enough statement of congressional intent that the 30-day limit is jurisdictional, which in turn depends on statutory construction, sentence construction, the last antecedent rule, and the presence or absence of conditional language. The petitioner’s brief concludes (and I agree) that there is no such clear statement of jurisdictional requirement.
This brings us to the matter of equitable tolling of the claim-processing rule. It is a good starting point to remember that the tax laws of the U.S. are set forth in the Internal Revenue Code, which is not based in equity. Nevertheless, Congress has seen fit to introduce equitable relief into tax administration in both the assessment and collection of tax – e.g., offers in compromise of tax debt based on economic hardship, equity, and public policy (IRC § 7122); relief from joint and several liability of spousal tax debt; mandatory release of levy where the individual is experiencing economic hardship (IRC § 6015); and the creation of the Office of the Taxpayer Advocate (intervening where taxpayers experience significant hardship as a result of IRS action or inaction) (IRC § 7803(c)).
Boechler involves access to one of the most significant exercises of equity in the procedural arena — the Collection Due Process (CDP) hearing. Recall that since the beginning of the U.S. income tax, the Court has held that in the field of taxation, because “taxes are the lifeblood of government,” there is no requirement for a pre-deprivation hearing. Instead, a post-levy hearing will be sufficient to meet constitutional due process. (If you’d like more background on due process and tax administration, watch our video on Reimagining Tax Administration: Due Process and Taxpayer Protection here. You can also read my Griswold lecture on the subject here.)
Enter Congress in 1998 – when, after two years of hearings about disturbing taxpayer experiences with the IRS, particularly in the collection function, it enacted IRC §§ 6330 and 6331, which established the ability for a taxpayer to request a CDP hearing where the IRS proposes to levy for the first time with respect to a tax debt or files the first public notice of lien with respect to that debt. IRC § 6330, at issue in Boechler, grants the taxpayer an administrative hearing before the Independent Office of Appeals, at which the taxpayer may raise collection alternatives, including an installment agreement, offer in compromise, or spousal relief defenses, and may even challenge the underlying liability in certain circumstances.
The Appeals officer, in making a determination about the appropriateness of the proposed IRS collection action, must consider “whether any proposed collection action balances the need for the efficient collection of taxes with the legitimate concern of the person that any collection action be no more intrusive than necessary.” (IRC § 6330(c)(3)(C)) This balancing test is the essence of equity.
Once the Appeals Officer makes the determination, a Notice of Determination is issued, and IRC 6330(d)(1) gives the taxpayer the option to petition the Tax Court, within 30 days, to seek review of that Notice of Determination.
This is huge. CDP is Congress’ enacting greater due process protections in tax collection than what the Court has said is constitutionally required. What the Tax Court and the IRS are trying to do here is foreclose taxpayers’ access to those protections, which are already truncated by the very short 30-day claim-processing deadline. This is particularly disturbing when over 60 percent of the petitioners seeking CDP review in the Tax Court are pro se litigants – i.e., they are representing themselves and do not necessarily understand all the rules, including claim-processing deadlines.
I have to admit I have a vested interest in the outcome of this case. I was a witness before the Senate Finance Committee in February, 1998, when the idea of CDP hearings was first discussed – I was at its birth, really. At the time, the IRS resisted the proceedings – fearful it would delay collection (hence the 30-day time limits to request the administrative hearing and judicial review) and the floodgates would open with cases. Instead, CDP has provided much-needed sunlight on how the tax agency goes about collection of tax, especially where taxpayers present difficult circumstances. As National Taxpayer Advocate, I was required to report to Congress annually about the 10 most litigated issues; CDP litigation was on that list (often in the top 3) for every year I served as the NTA. Reading those cases, I saw the Tax Court begin to understand that a fair and just tax system must be as concerned about what was happening to taxpayers after a liability was assessed as with the determination of that liability.
On January 12th, 2022, the Supreme Court will hold oral arguments in Boechler. I hope to be there. At any rate, by the summer of 2022, we will know whether statutory time limits in the Internal Revenue Code will be treated like time limits in other areas of law, or if tax exceptionalism survives to live another day. And of course, we will be discussing this issue and many others relating to tax collection at the 7th International Conference on Taxpayer Rights, at Harvard Law School from May 18 to 20, 2022. We will have lots to talk about and I hope to see you there.
All the best, and for folks in the United States, have a happy and safe Thanksgiving!
Nina E. Olson