April 10, 2024
In Culp v. Commissioner, the Third Circuit held that § 6213(a)’s 90-day period for filing a Tax Court petition to redetermine a deficiency is not jurisdictional and is subject to equitable tolling. Relaxing strict compliance with the draconian filing rule would allow taxpayers to have their day in court even if they fail to meet the 90-day deadline.
The facts and background
In Culp, the appellants were a husband and wife who each received a little less than $9,000 from a lawsuit, which the couple claimed to have reported as prizes or awards on their 2015 income tax returns. The IRS determined that the couple failed to report those awards and, in 2017, issued a notice of deficiency reflecting an underpayment of tax and a penalty. The notice of deficiency stated that the Culps had 90 days to petition the Tax Court to redetermine the amounts reflected in the notice. The Culps did not file a petition within that 90-day period, which was prescribed by 26 U.S.C. § 6213(a), and which period expired in May 2018.
On April 22, 2021, the Culps petitioned the Tax Court to redetermine the 2015 deficiency. In September 2021, the IRS filed a motion to dismiss for lack of jurisdiction. Without citing any law, the IRS argued that the Tax Court lacked jurisdiction over the case because it was filed outside the 90-day period prescribed by § 6213(a).
Section 6213(a) provides: “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 § 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.”
The IRS’s motion implicitly argued § 6213(a)’s deadline was jurisdictional, which was consistent with well-established Tax Court precedent. The Tax Court granted the motion and dismissed the case in February 2022. The Culps timely appealed.
The Third Circuit’s opinion
On review, Judge Ambro framed the Culps’ argument as whether “§ 6213(a)’s 90-day requirement is jurisdictional or . . . a claims-processing rule.” Judge Ambro began his analysis by first citing Boechler, P.C. v. Commissioner (a U.S. Supreme Court case on the question of jurisdictionality) to explain what was at stake: if § 6213(a)’s 90-day deadline were jurisdictional, or non-jurisdictional but not subject to equitable tolling, the Culps could never see their day in Tax Court.
There is a presumption against procedural requirements being jurisdictional. In Boechler, the Supreme Court reasoned that even though § 6330(d)(1) explicitly refers to the Tax Court’s jurisdiction, the majority of the section refers to what the taxpayer must do (not what the Tax Court may do). Moreover, when compared to other Code sections passed contemporaneously, § 6330(d)(1) has no explicit grant of jurisdiction.
Turning to § 6213(a)’s 90-day deadline, the Third Circuit observed that there was no use of the word “jurisdiction” in reference to that filing requirement. By contrast, other portions of the section refer explicitly to the Tax Court’s lack of “jurisdiction to enjoin any action or proceeding,” meaning that Congress had demonstrated its capacity to limit the Tax Court’s jurisdiction. Judge Ambro dismissed the IRS’ arguments that § 6213(a)’s filing deadline was jurisdictional because it had historically been treated as such.
The court then addressed whether the 90-day deadline is subject to equitable tolling, starting from Boechler’s presumption that non-jurisdictional requirements are subject to equitable tolling. The inquiry was whether there is “good reason to believe that Congress did not want the equitable tolling doctrine to apply.” Seeing no “good reason” to the contrary, the Third Circuit held that § 6213(a) was subject to equitable tolling, in spite of the equitable exceptions to the 90-day deadline, as provided by § 6213(e).
Culp expressed two main concerns about rejecting equitable tolling: the 90-day deadline is very short, and many Tax Court petitioners file pro se. Without equitable tolling, it would be very easy for an unrepresented taxpayer to unintentionally forego any pre-payment relief. In a footnote, Judge Ambro noted that about 600 petitions per year are dismissed as untimely, meaning the Third Circuit’s holding would cause minimal burden for the IRS and the Tax Court while providing many people with access to the court.
The Third Circuit reversed the Tax Court’s decision and remanded to determine whether the Culps satisfied the test for equitable tolling.
Conclusions and takeaways
Culp is an exciting taxpayer victory, which may extend beyond the Third Circuit and beyond § 6213(a). Future appeals confronting the question of whether a rule is jurisdictional may look to Culp and adopt the same or a similar holding, especially in light of the Supreme Court’s decision in Boechler. Further, in the same way Culp translated Boechler’s analysis of § 6330(d)(1) to § 6213(a), taxpayers should monitor whether these holdings are extended to other Code sections, which would expand access to the court, consistent with Congressional intent.
The full article in its original form can be found here.
Sonya Bishop (LAW ’18) is an Associate at Baker McKenzie in the Global Tax Practice Group, where she represents clients in civil and criminal tax controversies in both agency and judicial proceedings. Sonya is based in New York City.