A Win for Taxpayers: The United States Supreme Court Rules in Favor of Equitable Tolling with Respect to Non-Jurisdictional Deadlines

May 20, 2022

The United States Supreme Court’s holding in Boechler P.C. v. Commissioner is not just a win for Boechler, but also for United States taxpayers in general.  Petitioner, Boechler P.C., (hereafter referred to as “Boechler”) is a small law firm in North Dakota. By a way of background of what was at issue in Boechler P.C. v. Commissioner, the Internal Revenue Service assessed Boechler with a liability connected with its alleged failure to file Forms W-2 and W-3.  When a liability has been assessed, the Internal Revenue Service can legally seize a taxpayer’s property to collect on its tax debts after it allows taxpayers an opportunity to challenge the levy action.  In Boechler P.C. v. Commissioner, the IRS mailed Boechler a Final Notice of Intent to Levy stating its intention to issue a levy on the law firm.  This same Final Notice of Intent to Levy provided Boechler the option to exercise its right to request a Collection Due Process Hearing pursuant to Internal Revenue Code Section 6330.  A Collection Due Process Hearing is an administrative proceeding at which the taxpayer can challenge the levy or offer collection alternatives such as an installment agreement.

While Boechler timely requested a Collection Due Process Hearing, and the hearing was ultimately held, the Internal Revenue Service mailed a Notice of Determination sustaining the levy on July 28, 2021.  Per Internal Revenue Code Section 6330(d)(1), the deadline to petition the United States Tax Court to challenge the determination was August 28, 2017 (August 27^th was a Sunday). Boechler petitioned the Tax Court, but the petition was mailed one day late on August 29, 2017.  According to the Internal Revenue Service, this tardiness extinguished Boechler’s opportunity to seek United States Tax Court review of the Internal Revenue Service’s determination. The Internal Revenue Service took that position as it insisted that the Section 6330(d)(1) deadline was jurisdictional, which would mean that the United States Tax Court had no authority to consider the late filed petition. 

The United States Supreme Court disagreed with the Internal Revenue Service and stated that the IRS “missed the mark” in this case.  While the United States Supreme Court stated that jurisdictional requirements limit the Court’s adjudicatory authority, it reminded its audience that not all procedural requirements are jurisdictional.  Rather, it is quite the opposite.  The Supreme Court cited its own case, Arbaugh v. Y & H Corp., 546 U. S. 500, 515 (2006), in ruling that the Supreme Court only treats a procedural requirement as jurisdictional only if Congress “clearly states” that it is.  In Boechler P.C. v. Commissioner, the United States Supreme Court ruled that the statute at issue, Internal Revenue Code Section 6330(d)(1), did not clearly state that the limitation period was jurisdictional, and as such, the timing requirement was not jurisdictional.  Therefore, because the limitation period in Internal Revenue Code Section 6330(d)(1) was not jurisdictional, the Supreme Court held that the limitation period is subject to equitable tolling.  Equitable tolling can be defined as a common principle of law stating that a limitation period shall not bar a claim in cases, despite an exercise of due diligence, could not or did not discover the injury until after the expiration of the limitation period.

While the issue in Boechler P.C. v. Commissioner concerned one specific statute, Internal Revenue Code Section 6330(d)(1), the United States Supreme Court affirmed its previous ruling that a rebuttable presumption in favor of equitable tolling applies to every non-jurisdictional statute.  More significantly, the United States Supreme Court likely intended for its holding to stand for the fact that most tax-related (and non-tax related) administrative and court-related limitation periods codified in the Internal Revenue Code and other Sections of the United States Code are non-jurisdictional.  This interpretation comes from the text of the opinion itself, which reads, “We simply hold that §6330(d)(1)’s filing deadline, like most others, can be equitably tolled in appropriate cases to cover every non-jurisdictional limitation period.”

The broad application of the holding in Boechler P.C. v. Commissioner can simply be a game changer in how taxpayers strategize in their cases against the Internal Revenue Service.  With the doctrine of equitable tolling reinforced by and provided a surgency of umph from America’s highest court, taxpayers can consider invoking the doctrine of equitable tolling so it does not lose its opportunity to challenge their liabilities in court or via an administrative proceeding.

Thus, if you are of the understanding that you exercised due diligence, but suffered from an intervening event that led you to “miss” a specific limitations period, you may be able to invoke the doctrine of equitable tolling.  If you seek to invoke the doctrine of equitable tolling, please do not hesitate to contact our firm if you have any questions or need any assistance. 

Author: Rami M. Khoury, Attorney