Decisions — Neither rain nor snow

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You may be lonely if you’re punctual, but you’ll pay fewer tax penalties, and you won’t lose your day in tax court.

Deadlines for tax court filings are strict, and no extensions are allowed. The IRS notice you receive includes information on how many days you have in which to file your petition with the court. You count from the date the notice was mailed to you. For example, if you receive a notice of deficiency, you have to file your petition by the 90th day from the date of the mailing of the notice. If you’re outside the U.S., you have until the 150th day. If you want the tax court to review a collection determination, you have to file your petition within 30 days of the mailing of the notice of determination.

How do you prove you filed in time? The simplest way is to keep your postal or delivery service receipt. The timely-mailed, timely-filed rule applies to tax court petitions. That means your petition is considered filed on the date of mailing, if you used a recognized delivery service.

But what if you sent your petition on time and an event beyond your control delayed receipt by the court?

In 146 T.C. No. 15 (Guralnik), the taxpayer mailed a petition concerning a collection action to the court. He sent the petition via a private delivery service. The service he used was not a “designated delivery service” under the internal revenue code at the time he sent the petition (though it was added later).

The taxpayer was required to file the petition within the 30-day filing period, and the deadline was February 17, 2015. On that Tuesday, all federal government offices in the District of Columbia, including the tax court, were officially closed on account of Winter Storm Octavia. The court did not have an after-hours drop box to receive documents, and petitions could not be filed electronically.

The taxpayer’s petition was delivered to the court and filed on Wednesday, February 18, 2015, when the court reopened for business.

The IRS said the petition was late and should be denied.

The court considered four arguments on behalf of the taxpayer.

Argument 1. Equitable Tolling

The taxpayer argues that the law simply prescribes the period in which the tax court may enforce certain rights. The taxpayer says the court can toll, or extend, the deadline.

The IRS says the 30-day deadline is jurisdictional, which means the court has no authority under the statute to extend the time period. In other words, the language of the applicable code section limiting the allowable time period is clear and limits the court’s jurisdiction.

Here’s the relevant internal revenue code section.

From Internal Revenue Code section 6330(d)(1): Provides that a taxpayer “may, within 30 days of a determination under this section, appeal such determination to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).”

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Argument 2. Timely mailed, timely filed rule

Though the petition was delivered the day after the due date, the taxpayer says the petition was mailed on February 13, two days before the unextended due date. The taxpayer says his petition was timely under the timely mailed, timely filed rule of internal revenue code section 7502.

The IRS says the taxpayer used a delivery service that was not included on the qualified delivery service list provided by the IRS. Since the timely mailed, timely filed rule only applies to approved private delivery services, the petition was not timely filed.

The taxpayer admits the delivery service was not on the qualified list. However, the taxpayer says the service he used was more expedited and more expensive than all five services offered by the same company that the IRS (in Notice 2004-83) found to be acceptable. The taxpayer says the court should deem that the IRS designated the service used as meeting the statutory standards even though it was not listed in that notice.

In addition, the IRS added the service the taxpayer used to the list of designated private delivery services effective May 6, 2015, approximately three months after the petition was filed. The taxpayer says the court should give the notice retroactive effect and treat the petition as “timely mailed.”

Here’s the relevant code section.

From Internal Revenue code section 7502(a)(1): Provides that, if a taxpayer sends a petition for delivery to the court “by United States mail” within the prescribed period for filing the petition, and the court receives the petition after that period has ended, the date of the U.S. Postal Service postmark on the envelope containing the petition will be considered the date of delivery. Section 7502(f)(2) extends this “timely mailed, timely filed” rule to certain private delivery services “if such service is designated by the Secretary for purposes of this section.”

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Argument 3. Extension for certain days other than workdays

The taxpayer says the 30-day filing period is extended because the thirtieth day after the mailing of the IRS notice was Sunday, February 15. The following day, Monday, February 16, was Washington’s Birthday, a legal holiday in the District of Columbia. On Tuesday, February 17, all D.C. and federal government offices, including the tax court, were officially closed because of a “snow emergency” attributable to Winter Storm Octavia. The taxpayer contends that his petition was timely filed because February 17 was, in practical effect, a legal holiday in the District of Columbia.

The IRS says that a court cannot declare a “legal holiday” and that, “[i]n order to attain ‘legal holiday’ status, there must be legislative or executive enactment.” The taxpayer, in the absence of any relevant legislative enactment, relies on the declaration by the Mayor of the District of Columbia that local government offices would be closed on February 17, 2015, because of a “snow emergency.” However, the IRS says, although “snow emergency days” and “legal holidays” are generally treated similarly for purposes of local government operations, the D.C. Code and Municipal Regulations explicitly distinguish between them. The Mayor is authorized to declare a “legal holiday,” but that authorization appears in a different section of the D.C. Code from that which authorizes her to declare a state of emergency. This implies that “snow emergency days” are distinct from “legal holidays” under District of Columbia law.

The taxpayer says that a snow emergency day is reasonably regarded as a “holiday” because it is “a day on which one is exempt from work.”

The IRS says if a “snow emergency day” in the District of Columbia were treated as a “legal holiday,” it would extend the time, not only for filing documents in the tax court, but also “for performing any act” required to be performed anywhere in the country under the internal revenue laws. Thus, if the last date for filing a document or performing an act at an IRS office in Missouri happened to be a “snow emergency day” in the District of Columbia, the time for filing that document or performing that act would be extended until the next day that was not a “snow emergency day” in the District of Columbia. Because it may be difficult for taxpayers and IRS officials around the country to ascertain when “snow emergencies” in the District of Columbia begin and end, the IRS expresses concern that such a ruling would “open the door to potential administrative disputes and litigation as to whether local weather events * * * constitute ‘holidays’ under the Internal Revenue Code.”

Here’s the relevant code section.

From Internal Revenue code section 7503: Provides “When the last day prescribed under authority of the internal revenue laws for performing any act falls on Saturday, Sunday, or a legal holiday, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, or a legal holiday.” For this purpose, “the term ‘legal holiday’ means a legal holiday in the District of Columbia.” In the case of an act to be performed outside the District of Columbia, “the term ‘legal holiday’ also means a statewide legal holiday” in the state where the relevant IRS office is located.

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Argument 4. Inaccessibility of the Clerk’s Office

The taxpayer says the tax court’s rules do not address how time should be computed when the Clerk’s Office is inaccessible because of government closures, inclement weather, or other reasons. Civil Rule 6(a), captioned “Computing and Extending Time,” does address this subject. Civil Rule 6(a) enunciates principles for computing the time periods set forth in those rules or “in any statute that does not specify a method of computing time.” Civil Rule 6(a)(1) provides that, when a period is stated in days, the day of the event triggering the period shall be excluded; every intermediate day, including Saturdays, Sundays, and legal holidays, shall be included; and the last day shall be included unless it is a Saturday, Sunday, or legal holiday.

The IRS agrees that these procedural rules for computing time are fully applicable where the time period in question embodies a jurisdictional requirement. However, the IRS contends that the court should refrain as a prudential matter from exercising its authority under Rule 1(b) to “prescribe the procedure” by analogy to the Civil Rules.

The IRS says that adoption of an “inaccessibility” principle would be at odds with the court’s prior practice, at least where the computation of jurisdictional filing periods is concerned, and that the court should make such a change (if at all) only pursuant to the court’s formal rulemaking authority under Rule 1(a) “after giving appropriate public notice and an opportunity for comment.”

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***

Note: Taxing Lessons provides a summarized version of sometimes lengthy court decisions. The full case may include facts and issues not presented here. Please use the link provided in the post to read the entire case.

This information should not be considered legal, investment or tax advice. Taxing Lessons and Top Drawer Ink Corp. do not provide legal, investment or tax advice. Always consult your legal, investment and/or tax advisor regarding your personal situation.

***

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Sorry, wrong answer :(
Right answer!

The filing period and the grant of jurisdiction are set forth in the same sentence of the statute and are explicitly linked. Section 6330(d)(1) provides that a taxpayer “may, within 30 days of a determination under this section, appeal such determination to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).”

The plain meaning of these words is that the Tax Court “shall have jurisdiction” if and only if the condition precedent stated in the first half of the sentence is satisfied–that is, if the taxpayer has filed an appeal to our court “within 30 days of a determination under this section.”

In cases too numerous to mention, dating back to 1924, we have held that the statutorily-prescribed filing period in deficiency cases is jurisdictional. Even if the “equitable tolling” argument advanced by the taxpayer were otherwise persuasive, which it is not, we would decline to adopt that argument solely on grounds of stare decisis (Editorial Note: Stare decisis means determining points in litigation according to precedent.)

We thus reaffirm our rulings that the 30-day filing period prescribed by section 6330(d)(1) is jurisdictional and accordingly hold that equitable tolling does not apply.

Sorry, wrong answer :(
Right answer!

The taxpayer sent his petition via a service that did not exist in 2004 and therefore was not listed in the IRS notice of authorized private delivery services. Because the IRS did not publish an updated list of designated private delivery services during the ensuing 10-year period, the delivery service was not “designated by the Secretary” at the time the taxpayer filed his petition.

We have previously held that the “timely mailed, timely filed” rule does not apply when a taxpayer mails a petition using a non-designated private delivery service.

Although the taxpayer’s argument that the delivery service was better than the services on the IRS list has some common-sense appeal, we are unable to accept it. Our prior opinions held the “timely mailed, timely filed” rule unavailable, not because the private delivery service the taxpayer used was somehow inferior, but because that service had not been “designated by the Secretary.”

The fact that a new service is more expedited than a previously-designated service, while perhaps important to the customer, is not dispositive for the IRS. No matter how fast and expensive a new service is, the IRS may decline to designate it if it does not satisfy specified requirements.

At the time the petition was filed, the IRS had not made, with respect to the delivery service the taxpayer used, the determination that the statute delegates to the IRS. The statute does not authorize this court to make that determination in the IRS’s stead or to deem the IRS to have made a designation that it did not make.

As it happened, the IRS added the service to the list of designated private delivery services effective May 6, 2015. That list was issued approximately three months after the petition in this case was filed.

Section 7805(b)(8) provides that “[t]he Secretary may prescribe the extent, if any, to which any ruling (including * * * any administrative determination other than by regulation) relating to the internal revenue laws shall be applied without retroactive effect.” We conclude that this statement constitutes a determination by the IRS that the designation set forth in Notice 2015-38 “shall be applied without retroactive effect.”

Because the service the taxpayer used was not “designated by the Secretary” as of February 13, 2015, the date on which the petition was mailed, the taxpayer cannot avail himself of the “timely mailed, timely filed” rule to sustain our jurisdiction in this case.

The court did not resolve this issue. :(
The court did not resolve this issue. :(

The regulations provide that, “[f]or the purpose of section 7503, the term legal holiday includes the legal holidays in the District of Columbia as found in D.C. Code. section 28-2701.” (See treasury regulation 301.7503-1(b).)

The legal holidays found in D.C. Code section 28-2701 include the familiar federal holidays. The list also includes District of Columbia Emancipation Day (April 16); “every Saturday, after twelve o’clock noon”; and “any day appointed by the President of the United States as a day of public feasting or thanksgiving.”

The use of the verb “includes” in regulation 301.7503-1(b) indicates that the foregoing list is not exhaustive. Thus, there may be legal holidays in the District of Columbia other than those currently enumerated in the D.C. Code.

The IRS correctly notes that a court cannot declare a “legal holiday” and that, “[i]n order to attain ‘legal holiday’ status, there must be legislative or executive enactment.

In the absence of any relevant legislative enactment, the taxpayer relies on the declaration by the Mayor of the District of Columbia that local government offices would be closed on February 17, 2015, because of a “snow emergency.” The mayor exercised this authority by declaring a snow emergency on February 17, 2015, on account of Winter Storm Octavia. Pursuant to that state of emergency, all D.C. government offices were closed and all D.C. government employees received paid leave.

Although “snow emergency days” and “legal holidays” are generally treated similarly for purposes of local government operations, the D.C. Code and Municipal Regulations explicitly distinguish between them. The mayor is authorized to declare a “legal holiday,” but that authorization appears in a different section of the D.C. Code from that which authorizes her to declare a state of emergency.

And when the terms “snow emergency” and “holiday” appear together, they are invariably used in the disjunctive. This implies that “snow emergency days” are distinct from “legal holidays” under District of Columbia law.

The taxpayer urges that we give these provisions a practical rather than a technical construction. He suggests that a snow emergency day is reasonably regarded as a “holiday” because it is “a day on which one is exempt from work.” And our jurisdiction would arguably be clear if the mayor had used different verbiage in her executive order and declared February 17, 2015, to be “a legal holiday on account of the snow emergency.”

The IRS advances practical considerations of a different sort. If a “snow emergency day” in the District of Columbia were treated as a “legal holiday,” it would extend the time, not only for filing documents in the Tax Court, but also “for performing any act” required to be performed anywhere in the country under the internal revenue laws. Thus, if the last date for filing a document or performing an act at an IRS office in Missouri happened to be a “snow emergency day” in the District of Columbia, the time for filing that document or performing that act would be extended until the next day that was not a “snow emergency day” in the District of Columbia. Because it may be difficult for taxpayers and IRS officials around the country to ascertain when “snow emergencies” in the District of Columbia begin and end, the IRS expresses concern that such a ruling would “open the door to potential administrative disputes and litigation as to whether local weather events * * * constitute ‘holidays’ under the Internal Revenue Code.”

The parties have advanced reasonable arguments on both sides of this question.

We find that we need not resolve it. Instead, we resolve this case on a different issue.

Right answer!
Sorry, wrong answer :(

The Clerk’s Office of the tax court was indisputably “inaccessible” on Tuesday, February 17, 2015. The tax court was officially closed that entire day because of Winter Storm Octavia. And petitions could not be efiled that day because the court at the time did not permit petitions to be filed electronically. Thus, if the computational principle set forth in Civil Rule 6(a)(3)(A) applied here, the petition in this case would be timely. That is so even though the 30-day filing period specified in section 6330(d)(1) is jurisdictional.

Tax Court Rule 25(a), dealing with computation of time, was modeled on Civil Rule 6(a). But Rule 25(a), while resembling Civil Rule 6(a) in several respects, does not address how time shall be computed when the Clerk’s Office is inaccessible.

The Courts of Appeals have interpreted broadly our power under Rule 1(b) to “prescribe the procedure” by adopting principles from the Civil Rules. In sum, Rule 1(b) authorizes this Court to “prescribe the procedure” in situations such as this where “there is no applicable rule of procedure.” In such cases, we are required to “giv[e] particular weight to the Federal Rules of Civil Procedure to the extent that they are suitably adaptable to govern the matter at hand.”

We conclude that Civil Rule 6(a)(3) is “suitably adaptable” to specify the principle for computing time when our Clerk’s Office is inaccessible because of inclement weather, government closings, or other reasons. Civil Rule 6(a)(3) provides that the time for filing is then “extended to the first accessible day that is not a Saturday, Sunday, or legal holiday.”

Because the petition was filed on February 18, 2015, the first accessible day after the Court reopened for business, the petition was timely filed and we have jurisdiction to hear this case.

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