Missed one-day tax deadline leads to showdown over fairness, jurisdiction and grammar
January 11, 2022
Wednesday’s Argument Boechler v. Commissioner of Internal Revenue Consideration will be given to whether “fair fees” — allowing courts to waive missed deadlines in certain circumstances — apply to statutory federal income tax deadlines. The issue has split circuits, with the U.S. Court of Appeals for the 8th and 9th Circuits concluding that charges are not available, while the U.S. Court of Appeals for the District of Columbia Circuit has held that charges apply to similarly worded tax provisions. The court’s consideration of the issue will address issues of particular interest to low-income taxpayers and their advocates. It would also add to court precedent on the interplay between equity and the technicality of federal regulations. Partly because of a split circuit and partly because of a lack of clarity in regulations, this could be a close case.
The dispute arose after the IRS assessed a $19,250 penalty and issued a notice of intent to a small North Dakota law firm for failing to file an employee withholding tax return. After the hearing, the IRS issued a notice of decision to maintain the proposed tax. Under the Internal Revenue Code, the company has a 30-day window after issuing a decision notice to file a petition in U.S. Tax Court challenging the notice. Deadline is August 28, 2017. The company sent the petition on August 29, 2017. The question for the judge is whether the tax court can consider fair fees within this deadline; or whether the deadline has jurisdiction, which would prohibit consideration of fair fees under applicable precedent.
Arguments from both sides focus on a test raised in the 2015 case United States v. Kwai Fun Wong, Decision 5-4, detailing the framework established in the 1990 case Owen v. Department of Veterans Affairs. under Kwai Fen Huang In the test, there is a rebuttable fair fee presumption for lawsuits against the government. How to overturn the presumption? If the statute indicates that Congress has “expressly” given a time limit for “judicial consequences.” Time limits then have jurisdiction and are not affected by fair charges.
exist Bockler, the task of the court is to classify the limitation period in relation to the “due collection process” procedure. The CDP process applies when the IRS attempts to tax a taxpayer’s property to pay off a federal tax debt. Under the CDP process, the IRS must notify the taxpayer of the proposed levy and provide the taxpayer with a hearing at the IRS Independent Appeals Office. After the hearing, the Appeals Office issues a “Notice of Decision,” which may maintain the levy. Taxpayers have 30 days to seek judicial review of such decisions from the Tax Court.Charges for this 30-day period are Bockler.
The brief devotes considerable effort to advancing competing interpretations of the relevant legal texts, 26 USC § 6330(d)(1). This section reads as follows:
Apply to the Tax Court for review. The person may, within 30 days of making a decision under this section, apply to the Tax Court (which has jurisdiction over the matter) for review of the decision.
Both the law firm and the government agree that the language presents a grammatical dilemma centered on the term “such matters”, which are matters for which the tax courts have jurisdiction. The word “such” indicates that the phrase refers to an antecedent. But what is the antecedent of “this kind of thing”?
The government argues that “such matters” are petitions filed with the Tax Court, which it argues, in turn, means petitions must meet the 30-day filing requirement. The government maintains that it has jurisdiction over “such matters” only if the appeal is lodged within the 30 days allowed. Below, the Eighth Circuit agrees. It concluded that “such a matter” refers to a matter that qualifies for the joint test: it comes from the decision notification and is “submitted within 30 days of the decision”.The Ninth Circuit came to a similar conclusion in 2018 Dugan v. Commissioner of Internal Revenue.
On the other hand, the law firm argued that “the matter” was antecedent to “a determination under this section,” a notice of determination issued by the Office of Appeals, without any additional jurisdictional requirements for timely filing. The company argues (citing Antonin Scalia and Bryan Garner’s analysis of the “closest reasonable pre-conditions”) that “such matters” refers to “such decisions” and refers to “decisions made under this section”, 30 days Commit file unmodified period. According to this reading, the jurisdiction of the Tax Court is not limited to a decision to appeal within the 30-day window, but can also impose fair fees. DC Circuit agrees with the company’s approach in 2019 Myers v. Commissioner of Internal Revenue, when it parses a similarly worded regulations Relates to the right to seek tax court review of IRS disposition of whistleblower adjudication requests.
a workaround Bockler It’s taking sides in this grammatical debate, and the courts will likely do so.maybe one sentence graph may enter Bockler View? However, no charting tool can erase unexplained facts. From a grammatical point of view, the court may consider this a close decision.
Case will test the strength of the law if statutory interpretation issues come close Owen/Kwai Fen Huang rebuttable presumption. Despite the trend away from tax “exceptionalism,” both precedents suggest that the specific context of the statute may matter.This Owen The case, involving a lawsuit over veterans’ benefits, argued that Congress’ waiver of sovereign immunity should tacitly include the possibility of fair fees, as that would generally be in line with legislative intent.exist Kwai Fen Huang, which involves a claim under the Federal Tort Claims Act, Justice Elena Kagan wrote for the majority that, as far as the FTCA’s peculiarities are concerned, it favors a fair fee. The dissent (written by Justice Samuel Alito, joined by Chief Justice John Roberts, Justice Scalia, and Justice Clarence Thomas) disagreed, based in part on the history of the FTCA.
Of course, whether it’s a law firm or the government Bockler Think the background of the federal tax code is on their side. The company noted that the CDP process disproportionately targets immature taxpayers.according to An amicus brief, about 61% of CDP programs involve prose taxpayer. The government argues that the sound administration of the tax system requires strict deadlines, and the requirement for a fair fee would complicate and delay collection.
Given that the case is about the application of equity, the main brief clearly downplays the facts about the law firm at the center of the case, Boechler, PC, and what its arguments in favor of fair fees might be. The company admitted it sent the petition for a review by the Tax Court “a day late”. Without more of these facts, as the government has hinted, it’s not worth a fair charge. However, because of the jurisdictional framework provided by the jurisprudence of the court, it is clearly not necessary to consider the merits of a fair fee claim in deciding whether such a claim can be brought.
Amici in this case raises other circumstances in which a fair fee may be more appropriate. a briefing Demonstrate through a series of case summaries that the government sometimes misleads taxpayers; exceptional circumstances, such as delayed or misplaced mailing notices due to the sole fault of the Postal Service, may prevent timely filing; then prose Taxpayers sometimes mistakenly submit their petitions on the wrong forum, such as mailing a Tax Court petition to the IRS or the wrong Tax Court office. Another amicus brief Describes the case of Josefa Castillo, who received an incorrect notice in 2014 for untaxed income from a restaurant she sold in 2009. Despite the diligent representation provided by the Law School’s Tax Clinic, Castillo’s CDP decision notice was reportedly sent to the wrong address and/or lost in the mail. She filed her Tax Tribunal application 30 days after the wrong mailing address and/or missing mail, and the Tax Tribunal dismissed her application on the grounds of lack of jurisdiction and failure to consider the possibility of fair fees. Castillo’s case is on hold pending a ruling on the U.S. Court of Appeals for the Second Circuit. Bockler.
If the Supreme Court’s decision opens the door for the Second Circuit to consider fair fees, Castillo may be spending her day in tax court. Of course, that doesn’t mean Boechler deserves a seat in tax court.exist Owen, the court both established a rebuttable fair fees presumption in the lawsuit against the government and concluded that in that case the petitioner was unable to obtain fees, the interpretation of which was related to the absence of his attorney, the court found, “at best An oversight that a garden variety claims to be excusable.”
if the taxpayer wins Bockler, in general, the Supreme Court and federal courts, including the Tax Court, will find themselves more responsible for adjudicating issues of fair fees. Their more routine task is to distinguish fair exceptional circumstances from “ordinary” negligence that does not excuse late filings.In this work, courts can refer to a wealth of precedent on fair fee issues, some of which are in Bockler panties. Some commentator It is recommended to re-familiarize yourself with the adjustment tools provided by equity, including in particular principles of equity that go beyond the court’s ability to issue injunctions. Expanding the availability of fair charges in federal income tax law would be one way to test such proposals.