Petition to Challenge IRS Denial of Innocent Spouse Relief Filed Too Late Despite Filing on Date Provided for in IRS Correspondence

If the IRS erroneously informs a taxpayer that the last day for filing a Tax Court petition is later than the actual deadline (90 days after the IRS mailed its determination of final relief in this case as provided in IRC §6015(e)(1)(A)), does that extent the time the taxpayer has to file with the Tax Court?  In the case of Rubel v. Commissioner, CA3, No. 16-3526, the Third Circuit Court of Appeals ruled that the answer is no—the Tax Court lacks jurisdiction to hear the case once the 90-day period expires, despite the erroneous information provided by the IRS.

In the case in question the IRS had denied Nancy’s request for innocent spouse relief on January 4, 2016 for two tax years and on January 13, 2016 for another tax year.  The date 90 days from those dates were April 4, 2016 for the first two years and April 12, 2016 for the final year.

However, Nancy continued to provide information for consideration of her request for innocent spouse relief.  The IRS, after considering that information, still concluded that no relief should be granted.  The IRS went on to notify Nancy of the following:

Please be advised this correspondence doesn’t extend the time to file a petition with the U.S. Tax Court. Your time to petition the U.S. Tax Court began to run when we issued you our final determination on Jan. 04, 2016 and will end on Apr. 19, 2016. However, you may continue to work with us to resolve your tax matter.

The April 19 date was well after the actual expiration of both 90 day periods. 

Nancy, likely relying on that letter, mailed her petition to the Tax Court on April 19, 2016.  The Tax Court determined that, because it was received after the 90-day period provided for by Congress in the law, it could not hear Nancy’s case.  The Tax Court held that a question of jurisdiction is not subject to equitable relief—so even though fairness would seem to dictate that the IRS error should allow Nancy to move forward, that simply wasn’t the case.

Nancy appealed that decision to the Third Circuit Court of Appeals.  Unfortunately for Nancy, she did not receive the relief she wanted from the appellate panel either.

The panel explained the test for whether the Court could consider the equitable relief as follows:

The question in this case is whether the ninety-day deadline in § 6015(e)(1)(A) is a jurisdictional requirement or a claims-processing deadline.4 If 6015(e)(1)(A) is a claims-processing statute, Rubel’s failure to comply with it may be subject to waiver, forfeiture, and equitable tolling. John R. Sand & Gravel Co. v. United States, 552 U.S. 130, 133-34 (2008). If, on the other hand, the deadline in § 6015(e)(1)(A) is jurisdictional, Rubel’s failure to comply with it deprives the Tax Court of the authority to hear the case, “even if equitable considerations would support extending the prescribed time period.” United States v. Kwai Fun Wong, 135 S. Ct. 1625, 1631 (2015). Thus, determining that a deadline is jurisdictional has the important consequence of limiting a court’s power to decide a case. See Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428, 435 (2011).

The opinion notes that IRC §6015 specifically refers to the Tax Court’s jurisdiction to hear the case if the petition is filed within 90 days of the IRS determination.

Section 6015(e)(1)(A) states that “the Tax Court shall have jurisdiction” if an individual files a petition in the court no later than ninety days after the IRS mails its notice of final determination. For purposes of this analysis, we must presume that Congress knows that the term “jurisdiction” refers to the authority of a court to hear and decide a case and that it deliberately included that word in the statute. Shendock v. Dir., Office of Workers’ Comp. Programs, 893 F.2d 1458, 1462 (3d Cir. 1990) (en banc). Therefore, in circumstances like this, where Congress “clearly states that a threshold limitation on a statute’s scope shall count as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue.” Arbaugh, 546 U.S. at 515-16 (footnote omitted). Accordingly, Congress’s explicit statement that § 6015(e)(1)(A)’s time limit is jurisdictional means that it is and that the Tax Court lacks authority to consider untimely petitions.

The key item to note is that the burden is on the taxpayer and their advisers to determine the proper deadline for challenging a matter in Tax Court, and the taxpayer cannot rely on deadline dates provided by the IRS.