On June 2, 2016, the United States Tax Court issued Guralnik v. Commissioner denying a Motion to Dismiss for Lack of Jurisdiction the Internal Revenue Service (IRS) filed on the ground that the taxpayer’s petition was not timely filed.[1] As these motions are typically granted or denied by the court through a simple order, it seemed strange that the court would issue a division opinion, which is generally reserved for cases involving an issue of first impression or an important legal issue or principle. The court, however, used this case as a means to change precedent related to the date on which a petition must be filed in Tax Court to be considered timely.
The facts of the case are straightforward. On January 16, 2015, the IRS issued the taxpayer a Notice of Determination Concerning Collection Action, which sustained the filing of a notice of federal tax lien. The notice of determination provided that the taxpayer must file a petition in the Tax Court within 30 days from the day after the date of the letter if the taxpayer disagreed with the IRS determination. Accordingly, the last day on which taxpayer could file a timely Tax Court petition was February 17, 2015.[2] The taxpayer’s petition was delivered to the court on February 18, 2015. If this were the end of the story, the result would be simple: the taxpayer failed to file the petition before February 17. Thus, the government’s motion to dismiss should be granted and the case dismissed for lack of jurisdiction. This would have been the likely result before the issuance of this opinion.
On February 16, 2015, the Mayor of the District of Columbia, Muriel Bowser, announced that all D.C. Government offices would be closed on February 17, 2015, due to Winter Storm Octavia. All federal government offices, including the Tax Court, were also closed due to the storm. The court reopened on February 18, 2015, and the taxpayer’s petition was delivered to the court on that date.
The IRS filed a Motion to Dismiss for Lack of Jurisdiction on the ground the petition was not timely filed. The government likely expected that, after giving the taxpayer the proper time to respond to the motion, the court would grant the motion. Instead, on August 24, 2015, Special Trial Judge Armen issued a Recommended Findings of Fact and Conclusions of Law in which he recommended that the government’s motion be denied. The case was then assigned to a presidentially appointed judge who held that Special Trial Judge Armen’s recommendation should be adopted by the court.
The court analyzed four theories advanced by the taxpayer and rejected all but one. The Tax Court’s Rules of Practice and Procedure do not provide rules for computing time when the Clerk’s Office is inaccessible. Tax Court Rule 1(b) permits the court to refer to the Federal Rules of Civil Procedure when the Tax Court Rules are silent or unclear. In this case, the court looked to Federal Rules of Civil Procedure section 6(a)(3)(A), which provides that when the Clerk’s Office is closed due to inclement weather, government closings, or other reasons, the time for filing is “extended to the first accessible day that is not a Saturday, Sunday, or legal holiday.” Because the taxpayer filed his petition on February 18, 2015, the first day on which the court was accessible after Winter Storm Octavia, the Court held that his petition was timely.
This brings us to why this outcome is strange. Prior to this case, the court relied upon Internal Revenue Code section 7508A to decide motions to dismiss with a similar fact pattern. Section 7508A provides that the Secretary is authorized to postpone certain tax related deadlines if it is determined that the taxpayer has been affected by a federally declared disaster. To make this determination, the court would refer to the Federal Emergency Management Agency’s (FEMA) website to determine whether a presidential disaster declaration had been issued on the date(s) in question either in the location from which the taxpayer mailed the petition[3] or Washington D.C.,[4] where the petition was to be delivered. If no presidential disaster declaration had been made, the court would grant the government’s motion to dismiss for lack of jurisdiction. “In the absence of such a declaration, the storm, even if it caused a closure of Federal buildings, can provide no relief from the * * * deadline for purposes of section 7508A.”[5]
So, what now? The court’s decision certainly provides more leniency to procrastinating taxpayers. A presidentially declared disaster is far less common than federal and/or state closures due to weather conditions. In addition, the Tax Court was one of the few federal courts that did not follow the “inaccessibility of the clerk” provision; district courts, the U.S. Court of Federal Claims, and bankruptcy courts all follow provisions that are substantially identical to the one provided in the Federal Rules of Civil Procedure section 6(a)(3)(A).
The outcome of this case does, however, leave taxpayers with some ambiguity. What happens if the situation is reversed? Say a taxpayer living in Denver, Colorado drops his petition in his local U.S. Postal Service dropbox the day before it is due. Typically, the Post Office would process this envelope within 1-2 days; thus, the envelope would likely have a date stamp reflecting the petition was mailed by the taxpayer on or before the day it was due. The Tax Court generally follows the “timely mailed, timely filed” rule contained in section 7502(f). Accordingly, the petition would be considered timely so long as the envelope reflected that the petition was mailed on or before the due date. But what if our hypothetical taxpayer’s petition was not picked up and processed because a winter storm in his area caused closure of all federal buildings and offices, including his local U.S. Post Office. Does the same rule enunciated in Guralnik apply? Or would the taxpayer be subject to the presidential declaration rule of section 7508A? These questions will hopefully be addressed by the court in the future. In the meantime, if a taxpayer is lucky enough to mail a Tax Court petition to Washington D.C. during a Papal visit or winter storm, the taxpayer may be given the gift of more time.
[1] 146 T.C. No. 15 (2016).
[2] The 30th day after the date of the letter was Sunday, February 15, 2015, and the following day, Monday February 16, 2015, was Washington’s Birthday a legal holiday in the District of Columbia. As the last day to file may not be a Sunday or legal holiday in the District of Columbia, the last day on which the taxpayer could file a timely Tax Court petition was February 17, 2015.
[3] See Toxavidis v. Commissioner, Docket No. 1667-15S, available at https://www.ustaxcourt.gov/InternetOrders/DocumentViewer.aspx?IndexSearchableOrdersID=171217.
[4] See Aikey v. Commissioner, Docket No. 6340-14S, available at https://www.ustaxcourt.gov/InternetOrders/DocumentViewer.aspx?IndexSearchableOrdersID=135300.
[5] Nixon v. Commissioner, Docket No. 4702-15, available at https://www.ustaxcourt.gov/InternetOrders/DocumentViewer.aspx?IndexSearchableOrdersID=172790.
