Supreme Court Upholds Day-Late IRS Levy Challenge

On September 30, 2021 we posted Is the CDP Petition Filing Deadline Jurisdictional? -  SC Agrees to Hear The Issue, where we discussed the U.S. Supreme Court agreed to hear Boechler v. Commissioner of Internal Revenue, appealed from the Eighth Circuit and the Question Presented Is Whether the Time Limit in Section 6330 (D)(1) Is a Jurisdictional Requirement or a Claim Processing Rule Subject to the Equitable Tolling?

Now according to Law360, the U.S. Supreme Court on April 21, 2022 found that the U.S. Tax Court had the authority to consider a North Dakota law firm's day-late challenge to an Internal Revenue Service levy, reversing an Eighth Circuit decision that sided with the agency.

Boechler PC's suit challenging the IRS collection actions is not barred by a 30-day deadline under Internal Revenue Code Section 6330(d)(1) for bringing lien and levy challenges in the Tax Court, the justices said in a unanimous opinion. 

That Deadline Isn't A Jurisdictional Bar That Needs
To Be Cleared To Get In Front Of The Tax Court,
According To The Justices.

"The text does not clearly mandate the jurisdictional reading," Justice Amy Coney Barrett said in the court's opinion. The statute's "30-day time limit to file a petition for review of a collection due process determination is an ordinary, nonjurisdictional deadline subject to equitable tolling."

The dispute between Boechler and the IRS centers on a notice Boechler received in 2015 from the IRS communicating a discrepancy between information reported by Boechler to the IRS and the Social Security Administration, according to court filings. The firm did not respond to the correspondence from the IRS, which thereafter assessed a roughly $19,000 penalty under IRC Section 6721 that the firm failed to pay.

The IRS indicated it would levy the firm's property, and the agency affirmed that determination in collection due process hearings, which are a means of challenging IRS collection actions like property levies and liens. The firm was required to file a petition with the Tax Court challenging that determination on or before Aug. 28, 2017, but it instead filed that case Aug. 29, according to court filings. 

The Tax Court dismissed Boechler's case because of this missed deadline in a decision ultimately affirmed by the Eighth Circuit. A three-judge panel said Congress intended for Section 6330's deadline to be jurisdictional based on the actual language of the statute, although U.S. Circuit Judge Jane Kelly noted concerns about the ruling's potential impact on low-income taxpayers.

Some have argued in briefs with the high court that interpreting Section 6330(d)(1) as creating a jurisdictional hurdle has the potential to disproportionately harm low-income people and those representing themselves in the Tax Court. The U.S. has rejected some of those arguments, contending that the data do not obviously support that low-income people are most likely to use collection due process procedures. 

Oral arguments in the case centered in part on the grammar of the statute, which says in a parenthetical that "the Tax Court shall have jurisdiction with respect to such matter." The firm and the U.S. government disagreed specifically over what "such matter" refers to and, more importantly, the phrase's jurisdictional implications.

This decision will help taxpayers who don't file petitions for review of CDP determinations within the 30-day filing period in Code Sec. 6330(d)(1). The IRS will still try to get late-filed petitions dismissed for lack of jurisdiction, but now late-filing taxpayers will be able to argue that they're entitled to equitable tolling of the filing deadline.

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