Tax Petition Filed Late and Case Dismissed, Despite IRS Giving Taxpayer Erroneous Deadline Date

The Fourth Circuit Court of Appeals affirmed the Tax Court’s determination that an individual who filed her Tax Court petition on the date IRS representatives twice told her was the final day to file had missed the deadline and the case could not be heard.  The case in question is Nauflett v. Commissioner, CA4, Case No. 17-1986.

The matter that Shari wanted to be heard by the Tax Court is described by the Circuit Court panel as follows:

The IRS charged Shari and Derek Nauflett, wife and husband and joint income tax filers, as jointly and severally liable for unpaid taxes, interest, and penalties for tax years 2002–04 and 2008.1 Nauflett requested relief under the innocent spouse doctrine. The letters of final determination from the IRS denying Nauflett's request were dated June 17, 2015, and contained the following statement: “If you disagree with our decision, you can file a petition with the United States Tax Court to review our denial. You must file your petition within 90 days from the date of this letter. . . . [T]he IRS cannot change the time period.” E.g., J.A. 15.

Sheri decided she wanted to challenge the IRS’s position and contacted the IRS to determine how to move forward.  The Court notes her statements on what the IRS told her:

Nauflett alleges that she contacted both the IRS contact person listed on the notification letter and an employee at the IRS Taxpayer Advocate Service for assistance in navigating the review process because she believed that she was entitled to relief as an innocent spouse. According to Nauflett, both individuals incorrectly informed her that she had until September 22, 2015, to file her petition.

She filed her petition on that date.  However, that was a week after the 90-day period beginning on June 17, 2015 (the date of the final determination letter).

The IRS noted this fact and asked the Court to dismiss her case for lack of jurisdiction:

The IRS moved to dismiss Nauflett's petition for lack of jurisdiction, asserting that the petition was untimely. It pointed out that the notification letters were dated June 17, thereby fixing September 15, 2015 — one week before Nauflett filed — as the last day to file a timely petition.

The Tax Court agreed with the IRS and dismissed Nauflett's petition for lack of jurisdiction. In doing so, the Tax Court relied on its previous decisions holding that the plain language of I.R.C. § 6015(e)(1)(A) conferred jurisdiction to consider only timely petitions for review. And while it expressed sympathy for Nauflett's circumstances, the Tax Court observed that the erroneous advice she allegedly received from two IRS employees was irrelevant under the plain language of the statute, which created a jurisdictional bar.

IRC §6015(e)(1)(A) reads as follows:

(e) Petition for review by Tax Court

(1) In general

In the case of an individual against whom a deficiency has been asserted and who elects to have subsection (b) or (c) apply, or in the case of an individual who requests equitable relief under subsection (f)—

(A) In general

In addition to any other remedy provided by law, the individual may petition the Tax Court (and the Tax Court shall have jurisdiction) to determine the appropriate relief available to the individual under this section if such petition is filed—

(i) at any time after the earlier of—

(I) the date the Secretary mails, by certified or registered mail to the taxpayer’s last known address, notice of the Secretary’s final determination of relief available to the individual, or

(II) the date which is 6 months after the date such election is filed or request is made with the Secretary, and

(ii) not later than the close of the 90th day after the date described in clause (i)(I)

The Sixth Circuit notes the following about this language in the law:

Congress gave the Tax Court “jurisdiction[ ] to determine the appropriate relief available to the [taxpayer] if such petition is filed . . . not later than the close of the 90th day after the date described in clause (i)(I).” Id. (emphasis added). We need not look beyond that mandate because Congress has, in fact, uttered “magic words,” expressly conditioning the Tax Court's power on the timely filing of a petition. See Matuszak, 862 F.3d at 196 (pointing to the statutory words “the Tax Court shall have jurisdiction . . . if [the] petition is filed” as proof that Congress “expressly conditioned the Tax Court's jurisdiction on the timely filing of a petition” (internal quotation marks omitted)); Rubel, 856 F.3d at 305 (“[W]e 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.”).

The panel notes how the taxpayer’s argument that she should have her day in Court despite filing a week late falls short.  It begins by dismissing her “fairness” argument as not being relevant:

She points to the equitable nature of the innocent spouse doctrine as a reason for believing Congress intended for the filing deadline to be subject to equitable tolling. But “[w]here, as here, Congress has balanced [the] interests and costs and embodied the result in an unambiguous statute, it is not for a court to depart from its words, whatever the equities of a particular case may be.” Anderson v. Dalkon Shield Claimants Tr. (In re A.H. Robins Co.), 996 F.2d 716, 720 (4th Cir. 1993).

The panel also did not find her argument based on grammatical points to be persuasive:

Nauflett makes several grammatical arguments, noting, for example, the placement of the jurisdictional language in subsection (e)(1)(A) in a prefatory clause somewhat removed from the clause containing the filing deadline. This argument ignores the natural reading of the subsection as a whole, as well as the proximity of the two within one subsection, even though that subsection is further divided. Contra Kwai Fun Wong, 135 S. Ct. at 1633 (“Congress’s separation of a filing deadline from a jurisdictional grant indicates that the time bar is not jurisdictional.”). And while it’s true that proximity alone is not dispositive, the words here are more than that: they are part of the same sentence. See Rubel, 856 F.3d at 305 n.7 (rejecting petitioner’s argument that § 6015(e)(1)(A), like the statute at issue in Auburn Reg’l Med. Ctr., contains both jurisdictional and non-jurisdictional provisions because § 6015(e)(1) “speaks in jurisdictional terms by it[s] use of the word ‘shall’ and ‘jurisdiction’ in the same sentence”).

Nauflett calls attention to the jurisdictional language’s placement inside a parenthetical. But this designation has no consequence and does not strip the words of their ordinary meaning. As the Supreme Court has recognized, where there is “compelling textual evidence” that words inside parentheses have a particular meaning read alongside the other words in the statute, the fact that they are in parentheses does not alter that meaning. See United States v. Woods, 571 U.S. 31, 45 (2013).

The panel concludes that Sheri is simply out of luck, as unfair as that result might be:

Because subsection (e)(1)(A) is jurisdictional, the Court lacks discretion to waive compliance based on equitable considerations. See Kwai Fun Wong, 135 S. Ct. at 1631. This is so despite Nauflett’s allegation that the IRS employees she contacted for clarification of her obligations contributed to her petition being untimely. A misinformed taxpayer faced the identical obstacle in Rubel. There, the taxpayer relied on a written statement from the IRS that she needed to file her petition for review by a date that turned out to be after the statutory 90-day deadline. 856 F.3d at 303. The taxpayer relied on that advice to her detriment, and the Tax Court dismissed her petition as untimely. Id. Even so, the Second Circuit recognized that subsection (e)(1)(A)’s deadline is jurisdictional and, under Supreme Court case law, “cannot be altered regardless of the equities of the case.” Id. at 306 (internal quotation marks omitted). So, too, here. In sum, neither this Court nor the Tax Court can consider Nauflett’s equitable arguments in light of the jurisdictional nature of subsection (e)(1)(A)’s 90-day filing deadline.