Snj Limited v. Cir ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
SNJ LIMITED; RITCHIE N. STEVENS; No. 20-70902
JULIE A. KEENE-STEVENS,
Petitioners-Appellants, Tax Ct. No.
11284-18
v.
COMMISSIONER OF INTERNAL OPINION
REVENUE,
Respondent-Appellee.
Appeal from a Decision of the
United States Tax Court
Argued and Submitted November 17, 2021
Pasadena, California
Filed March 10, 2022
Before: Jay S. Bybee and Mark J. Bennett, Circuit Judges,
and Joseph F. Bataillon, * District Judge.
Opinion by Judge Bennett;
Concurrence by Judge Bataillon
*
The Honorable Joseph F. Bataillon, United States District Judge
for the District of Nebraska, sitting by designation.
2 SNJ LIMITED V. CIR
SUMMARY **
Tax
The panel affirmed the Tax Court’s dismissal for lack of
jurisdiction of Ritchie N. Stevens and Julie A. Keene-
Stevens’s untimely petition for redetermination of federal
income tax deficiencies for the partnership SNJ Limited
(“SNJ”).
In 2017 and 2018, the Commissioner of Internal
Revenue issued SNJ Notices of Final Partnership
Administrative Adjustment (“FPAA”) for tax years 2006
and 2008, addressed to various individuals or entities at two
different addresses. The only material difference between
the 2017 FPAAs and the 2018 FPAAs was that the latter
corrected the name of the partnership on the schedules of
adjustments attached to the FPAAs. Appellants petitioned
the Tax Court for a redetermination of federal income tax
deficiencies for those years, and the Tax Court dismissed the
petition as untimely because Appellants failed to petition
within 150 days of November 1, 2017, when the
Commissioner issued the first FPAA.
Appellants argued that their petition was timely because
Internal Revenue Code (“I.R.C.”) § 6223(f) barred the
Commissioner from issuing more than one FPAA pertaining
to a partnership’s taxable year, and the last FPAA issued by
the Commissioner on March 6, 2018, was the only valid
FPAA. The panel concluded that the FPAA issued on
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
SNJ LIMITED V. CIR 3
November 1, 2017, was the only valid FPAA, and that
Appellants’ petition was therefore untimely.
First, the panel rejected Appellants’ argument that the
2017 FPAAs were invalid because they were sent to the
wrong addresses. Appellants argued that the FPAAs sent to
one address – the “Troon address” – were invalid because
Appellants had not lived there for a number of years. The
panel rejected this argument, explaining that Appellants’
petition stated that they “at all times herein had a legal
residence” at the Troon address, and that SNJ’s unsigned
partnership returns for 2006 and 2008, which were sent in
2014 and 2016, listed the Troon address. The panel agreed
with the Tax Court that the Commissioner was allowed,
though not required, to use information provided on the
unsigned returns, even though the unsigned returns did not
comply with the applicable regulations.
Appellants also argued that the 2017 FPAAs sent to
another address – the “Eastern address” – were invalid
because they were addressed only to the “tax matters
partner” (“TMP”) and not a named person. The panel
rejected this argument as foreclosed by Chomp Assocs. v.
Comm’r, 91 T.C. 1069 (1988). The panel also observed that
Appellants did not dispute that they used the Eastern address
in their filings in another case involving their individual
income tax liability. The panel wrote that the Internal
Revenue Service is not limited to relying on information
included in a partnership return or other statements, and
instead may use other information in its possession in
administering of the Internal Revenue Code.
Appellants also argued that the Commissioner knew (or
should have known) to send the FPAAs to their address in
Utah or to SNJ’s agent in Nevada, because that address was
4 SNJ LIMITED V. CIR
used in two prior Tax Court cases, the Commissioner’s
attorney in those cases was the same one involved in the
present case, the Commissioner previously issued a tax
refund to Ritchie Stevens at the Utah address, and SNJ had
a registered agent in Nevada. The panel rejected these
arguments, explaining that the Commissioner was not
obligated to use or search for any of that information, and
that Appellants provided no evidence that they furnished
their preferred addresses to the Commissioner in the legally
required manner.
Appellants next argued that the first 2017 FPAA was
void, under I.R.C. § 6231(a)(3), because it was sent before
expiration of the waiting period triggered by notice of the
beginning of administrative proceedings under I.R.C.
§ 6223(d)(1). The panel rejected this argument, concluding
that an August 1, 2017, letter sent to the partnership with a
summary report did not constitute notice of the beginning of
administrative proceedings under I.R.C. § 6223(d)(1), and
thus did not start the waiting period.
Appellants argued that the 2017 FPAAs were invalid
because they were superseded by the 2018 FPAAs. The
panel wrote that simply incorrectly or unnecessarily sending
a second FPAA does not equal fraud, malfeasance, or a
misrepresentation of a material fact under I.R.C. § 6223(f),
and thus does not necessarily invalidate the first set of
FPAAs. Because Appellants offered nothing more, the panel
concluded that the FPAAs issued on November 1, 2017,
were valid, the 2018 FPAAs were invalid, and the Tax Court
properly dismissed Appellants’ petition as untimely.
Appellants also argued for the first time on appeal that
the filing deadline in I.R.C. § 6226 was not jurisdictional and
that they were entitled to equitable tolling. The panel
SNJ LIMITED V. CIR 5
observed that Appellants forfeited both claims by failing to
raise them, or explain why they failed to raise them, before
the Tax Court. However, because Appellants’ contention
concerned a significant jurisdictional issue, the panel
exercised its discretion to reach it. The panel held that the
filing deadline in I.R.C. § 6226 is jurisdictional and cannot
be equitably tolled.
Judge Bataillon wrote separately to concur in the result,
but did not believe that the Court needed to address
jurisdictional/equitable tolling issue.
COUNSEL
Fritz Jay Firman (argued), Costa Mesa, California, for
Petitioners-Appellants.
Pooja Boisture (argued), Jacob Christensen and Marion
E.M. Erickson, Attorneys; David A. Hubbert, Deputy
Assistant Attorney General; Tax Division, United States
Department of Justice, Washington, D.C.; for Respondent-
Appellee.
6 SNJ LIMITED V. CIR
OPINION
BENNETT, Circuit Judge:
On June 7, 2018, appellants Ritchie N. Stevens and Julie
A. Keene-Stevens petitioned the Tax Court for a
redetermination of 2006 and 2008 federal income tax
deficiencies for the partnership SNJ Limited (“SNJ”). The
Tax Court dismissed because appellants failed to petition
within 150 days of November 1, 2017, when the
Commissioner of Internal Revenue (“Commissioner”)
issued the first Notices of Final Partnership Administrative
Adjustment (“FPAA”). Appellants argue that their petition
was timely because Internal Revenue Code (“I.R.C.”)
§ 6223(f) barred the Commissioner from issuing more than
one FPAA pertaining to a partnership’s taxable year, and the
FPAA issued by the Commissioner on March 6, 2018 was
the only valid FPAA. Appellants also argue that I.R.C.
§ 6226’s filing deadline is not jurisdictional, and that they
are entitled to equitable tolling. We have jurisdiction under
26 U.S.C. § 7482(a)(1) and affirm. 1
I.
The Tax Equity and Fiscal Responsibility Act
(“TEFRA”), Pub. L. No. 97–248, § 402, 96 Stat. 324, 648
(1982) required that the tax treatment of partnership items be
determined in partnership-level proceedings that are
generally binding on all partners. A partnership may identify
a tax matters partner (“TMP”) who will represent the
1
Although appellants make a due process argument in their reply
brief, this argument is deemed waived because it was not raised in the
opening brief. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir. 1999)
(“[O]n appeal, arguments not raised by a party in its opening brief are
deemed waived.”).
SNJ LIMITED V. CIR 7
partnership in these proceedings. See 26 C.F.R.
§ 301.6231(a)(7)–1; United States v. Woods, 571 U.S. 31, 39
(2013). Although the Bipartisan Budget Act of 2015, Pub.
L. No. 114–74, 129 Stat. 584 (2015) repealed TEFRA
effective after December 31, 2017, TEFRA’s provisions
govern here because this case concerns SNJ’s partnership
returns for 2006 and 2008. 2
The Commissioner must mail an FPAA to the TMP and
to other partners entitled to notice. I.R.C. § 6223(a)(2). If
the Commissioner makes adjustments to partnership items
with which the partnership disagrees, the TMP can petition
the Tax Court, federal district court, or the Court of Federal
Claims for readjustment of the partnership items within 90
days after the FPAA is mailed to the TMP. I.R.C. § 6226(a).
If the TMP does not timely file, non-TMP partners have an
additional 60 days to file such a petition. I.R.C.
§ 6226(b)(1).
On November 1, 2017, the Commissioner mailed FPAAs
for 2006 and 2008, addressed to the “Tax Matters Partner of
SNJ, LTD.” Each FPAA was sent to two addresses: 2090
Troon Dr., Henderson, NV (“Troon address”) and 3980 S.
Eastern Ave., Las Vegas, NV (“Eastern address”). On
December 18, 2017, the Commissioner mailed the same set
of FPAAs to the Troon address. 3 Although some of the
2
To avoid confusion, this Opinion cites Title 26 of the United States
Code prior to TEFRA’s repeal as “I.R.C.” and Title 26 after the repeal
as “26 U.S.C.”
3
Although the Commissioner claims that “[o]n December 18, 2017,
the Commissioner issued FPAAs . . . to the partners other than the tax
matters partner by certified mail to appellants at both the Eastern Ave.
and the Troon Dr. addresses,” the record shows that these FPAAs were
mailed only to the Troon address.
8 SNJ LIMITED V. CIR
December 18, 2017 FPAAs were addressed to “RNS
FAMILY IRREVOCABLE TR[UST]” instead of SNJ, the
December 18, 2017 FPAAs were addressed to Ritchie
Stevens or Ritchie Stevens and “J A Keen-Stevens” (in
apparent reference to appellant Julie A. Keene-Stevens).
The schedules of adjustments attached to the 2017 FPAAs
sometimes referred to “RNS, LTD” as the partnership but
listed SNJ’s taxpayer identification number. On February 1,
2018, the Commissioner sent a second set of FPAAs,
addressed to SNJ’s TMP, to both addresses. On March 6,
2018, the Commissioner sent the 2018 FPAAs to the Eastern
address, one set addressed to Ritchie Stevens and another set
addressed to both Ritchie Stevens and J A Keen-Stevens.
The only material difference between the 2017 FPAAs and
the 2018 FPAAs is that the 2018 FPAAs corrected the name
of the partnership on the schedules of adjustments attached
to the FPAAs.
On June 7, 2018, appellants filed a petition with the Tax
Court requesting a redetermination of the SNJ deficiencies,
with the March 6, 2018 FPAAs attached to the petition. The
Commissioner moved to dismiss, arguing that the Tax Court
lacked jurisdiction pursuant to I.R.C. § 6226 because
appellants failed to petition within 150 days of November 1,
2017, the date when the Commissioner issued the first
FPAAs. Appellants argued that “any notice in regard to
partnership determinations was invalid from the inception”
because, among other reasons, the FPAAs were sent to the
wrong addresses. Appellants also argued that the
Commissioner “had every opportunity at trial . . . on
December 5, 2017, to ask about the[ir preferred] address . . .
while Petitioner Ritchie N. Stevens[] was a witness” in other
proceedings before the Tax Court. Appellants never claimed
that I.R.C. § 6226 was not jurisdictional or that they were
entitled to equitable tolling.
SNJ LIMITED V. CIR 9
The Tax Court began its analysis with the FPAAs. “[I]f
the November 2017 FPAAs were valid, the February 2018
FPAAs were not,” and “the November 2017 FPAAs were
not invalid . . . .” Although appellants had never filed SNJ’s
signed partnership returns for 2006 and 2008, they sent the
Commissioner unsigned returns for 2006 and 2008
respectively in 2014 and 2016, listing the Troon address as
the partnership address. The Tax Court held that, although
I.R.C. § 6223(c) required the Commissioner to mail any
FPAA to the addresses provided in the partnership’s returns,
appellants had not provided signed returns, and the
applicable regulations permitted the Commissioner to “use
the information provided on the unsigned partnership returns
. . . in determining where to mail the FPAAs for the years in
issue.”
Appellants claimed that notices sent to the Troon address
were invalid because they had not lived there for “a great
number of years.” As for the Eastern address, appellants
claimed that it was “not the address of any partnership . . .
but . . . the address of the ‘medical facility’ in Las Vegas.”
Appellants also noted that the notices addressed to the TMP
at the Eastern address were not directed to any named
person. The court stated that it “accepted the validity of
FPAAs addressed generically to a partnership’s [TMP] that
do not specifically name that partner,” citing Chomp Assocs.
v. Comm’r, 91 T.C. 1069, 1073 (1988) (“[S]ection 6223 does
not require that a specific TMP be enumerated on the
FPAA.”). The court also found that, despite appellants’
claim that the Eastern address was a medical facility,
appellants attached to their petition the 2018 FPAA sent to
the Eastern address, indicating that they could receive mail
at the Eastern address.
10 SNJ LIMITED V. CIR
Because the petition was filed more than 150 days after
the Commissioner mailed the only valid FPAAs, the Tax
Court dismissed the case for lack of jurisdiction (titling its
order, “Order of Dismissal For Lack of Jurisdiction”):
“Leaving aside the defects in the form of petitioners’
petition, because they did not file it within 150 days after the
date on which respondent mailed to SNJ’s tax matters
partner the only valid FPAAs covering the taxable years in
issue, their petition was untimely. Consequently, we do not
have jurisdiction over the present case.”
Appellants moved to reconsider, arguing that the
Commissioner knew or should have known to send the
FPAAs to an address in Park City, Utah or to SNJ’s resident
agent in Nevada. The motion to reconsider disclaimed the
statement in the petition that the Troon address was the
appellants’ legal residence “at all times herein,” and
“apologized to th[e] court for any confusion caused
thereby.” Appellants also claimed that the Commissioner
had violated a waiting period of 270 days required by 26
U.S.C. § 6231(a)(3) before sending the FPAAs. The court
denied the motion, finding that appellants failed to
“establish[] that they provided a Park City address to
respondent in any manner.” The court also rejected the
Nevada “resident agent” and “waiting period” claims,
because those claims relied on 26 U.S.C. §§ 6223, 6231 as
amended in 2015 instead of I.R.C. § 6223, which applied to
SNJ’s partnership returns for 2006 and 2008.
II.
“Conclusions of law, including the Tax Court’s
interpretation of the Internal Revenue Code, are reviewed de
novo. Whether the Tax Court has subject matter jurisdiction
is a question of law and thus reviewed de novo.” Adkison v.
Comm’r, 592 F.3d 1050, 1052 (9th Cir. 2010) (citation
SNJ LIMITED V. CIR 11
omitted). “We review the Tax Court’s factual
determinations . . . for clear error.” Est. of Trompeter v.
Comm’r, 279 F.3d 767, 770 (9th Cir. 2002). “Under the
clear error standard, we will reverse the tax court only when
we are ‘left with the definite and firm conviction’” that the
Tax Court’s factual findings were wrong. Maciel v.
Comm’r, 489 F.3d 1018, 1027 (9th Cir. 2007) (citation
omitted). To have such a definite and firm conviction, we
must find that the Tax Court’s conclusion was “(1) illogical,
(2) implausible, or (3) without support in inferences that may
be drawn from the facts in the record.” United States v.
Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc).
III.
A.
Appellants first argue that the 2017 FPAAs are invalid
because they were sent to the wrong addresses. Appellants
claim that the Troon address is incorrect because, while they
lived there in 2006 and 2008, they no longer lived there in
2017 and 2018. But appellants’ petition stated that they “at
all times herein had a legal residence” at the Troon address,
and SNJ’s unsigned partnership returns for 2006 and 2008,
which were sent in 2014 and 2016, listed the Troon address.
As the Tax Court found, “the Commissioner [was] allowed,
though not required” to use information provided on the
unsigned returns, even though the unsigned returns “did not
comply with” the applicable regulations. See 26 C.F.R.
§ 301.6223(c)–1. Appellants’ claim that the Troon address
was invalid lacks merit.
Appellants argue that the Eastern address is invalid with
respect to the 2017 FPAAs but not the 2018 FPAAs. While
appellants state that “[t]he March 6, 2018 FPAA Notice [sent
to the Eastern address] was sent properly,” they argue that
12 SNJ LIMITED V. CIR
the FPAA sent to the same address on November 1, 2017
was invalid because it was addressed only to the “TMP” and
not to a named person. Appellants allege that the Eastern
address is a medical facility where SNJ “does not have an
office” and, “[w]ithout a name to connect SNJ to a person
. . . at the medical office, neither the postal carrier nor
anyone opening up the mail [there] would have anyway [sic]
to deliver the November 1, 2017 FPAA to Mr. or Ms.
Stevens.”
But Chomp explained that FPAAs need only provide
“‘minimal’ or adequate notice” because “[t]he concept of a
TMP is . . . part of the partnership audit procedures which
are to provide efficiency, convenience and economy to the
tax system.” 91 T.C. at 1074. Chomp held that “section
6223 does not require that a specific TMP be enumerated on
the FPAA” and an FPAA addressed to a TMP “provided
adequate, or ‘minimal’ notice, as contemplated under
[§] 6223(a).” Id. at 1073–74. Chomp rejected the contention
that minimal notice “requires at the very least an
identification of the taxpayer” and that the Commissioner
“failed to use information that he could ascertain readily
from his records” in that case, because he “mailed the FPAA
. . . to all requisite partners . . . at their known addresses, as
provided by the partnership.” Id. at 1074–75.
In this case, appellants do not dispute that they “used [the
Eastern] address in their filings in another case involving
their individual income tax liability.” “In addition to the
information on the partnership return and that supplied on
statements filed under this section, the Internal Revenue
Service may use other information in its possession . . . in
administering subchapter C of chapter 63 of the Internal
Revenue Code.” 26 C.F.R. § 301.6223(c)–1(f). Because the
Commissioner sent the November 1, 2017 FPAAs addressed
SNJ LIMITED V. CIR 13
to SNJ’s TMP to the address given by appellants, the Tax
Court properly held that “the November 2017 FPAAs were
not invalid by reason of being improperly addressed.”
B.
Appellants also claim that the Commissioner knew (or
should have known) to send the FPAAs to their address in
Utah or to SNJ’s agent in Nevada. Appellants claim that the
Commissioner knew or should have known their Utah
address because they were “parties in two [prior] Tax Court
cases” involving their individual income tax returns, and the
Commissioner’s attorney in the individual income tax cases
below was the same attorney for the Commissioner in the
partnership case below. Appellants also claim that the
Commissioner issued a tax refund in 2011 to Ritchie Stevens
and mailed the refund to him at a Park City, Utah address,
and that SNJ had a registered agent in Nevada.
But the Commissioner is not obligated to use or search
for any of that information, and appellants provide no
evidence that they furnished their preferred addresses to the
Commissioner in the legally required manner. In mailing
FPAAs or other notices, I.R.C. § 6223(c)(1) required the
Commissioner to “use the names, addresses, and profits
interests shown on the partnership return.” According to
§ 6223(c)(2), the Commissioner “shall use additional
information furnished . . . by the [TMP] or any other person
in accordance with regulations prescribed by the Secretary
[of the Treasury].” Moreover, 26 C.F.R. § 301.6223(c)–1(b)
states:
Any person may furnish additional
information at any time by filing a written
statement with the Internal Revenue Service.
However, the information contained in the
14 SNJ LIMITED V. CIR
statement will be considered for purposes of
determining whether a partner is entitled to a
notice described in section 6223(a) only if the
Internal Revenue Service receives the
statement at least 30 days before the date on
which the Internal Revenue Service mails the
notice to the tax matters partner. . . . A
statement furnished under this section
generally must be filed with the service
center where the partnership return is
filed. . . . The statement shall . . . [i]dentify
the partnership, each partner for whom
information is supplied, and the person
supplying the information by name, address,
and taxpayer identification number . . .
[e]xplain that the statement is furnished to
correct or supplement earlier information
with respect to the partners in the partnership
. . . [s]pecify the taxable year to which the
information relates . . . [s]et out the corrected
or additional information; and . . . [b]e signed
by the person supplying the information.
Further, “[i]n addition to the information on the partnership
return and that supplied on statements filed under this
section, the Internal Revenue Service may use other
information in its possession . . . [but it] is not obligated to
search its records for information not expressly furnished
under this section.” 26 C.F.R. § 301.6223(c)–1(f).
Appellants do not dispute that signed partnership returns
for 2006 and 2008 were never filed. Thus, there was no
address I.R.C. § 6223(c)(1) required the Commissioner to
use. There is no evidence that any other information that the
Commissioner had or should have had according to
SNJ LIMITED V. CIR 15
appellants—such as Ritchie Stevens’ Park City address to
which a tax refund was mailed—was furnished to the
Commissioner according to the applicable regulations. Even
though the Commissioner may have had access to the other
address information presented by appellants, the
Commissioner was not required to use it.
C.
Appellants claim that the “FPAA dated November 1,
2017 was void under I.R.C. § 6231(a)(3) because it was sent
sooner than 270 days after [an] August 1, 2017 letter was
sent to the partnership.” 4 On August 1, 2017, or about 92
days before the November 1, 2017 FPAAs were sent, the
Commissioner sent a letter addressed to the “Tax Matters
Partner” of SNJ to the Troon address including a copy of the
“summary report on the examination of [SNJ] . . .
explain[ing] all proposed adjustments including facts, law,
and conclusion” and informing the TMP that the TMP “and
the examining agent must agree on the date, time, and place
for the closing conference” to “discuss all proposed
adjustments in the summary report.” I.R.C. § 6223(d)(1)
required the Commissioner to send certain partners a
“[n]otice of beginning of [administrative] proceedings”
concerning a partnership, and to wait 120 days before
mailing any FPAA resulting from those administrative
proceedings. Though the Tax Court noted in its order
denying reconsideration that “Petitioners provide no
4
I.R.C. § 6223(d)(1) required the Commissioner to send a
notification of the beginning of an administrative proceeding at least 120
days before sending an FPAA. TEFRA, which included I.R.C.
§ 6223(d)(1), was repealed effective on January 1, 2018. See Bipartisan
Budget Act of 2015, Pub. L. No. 114–74, 129 Stat. 584 (2015). But the
repeal did not affect the applicability of the 120-day waiting period for
the years in question here—2006 and 2008.
16 SNJ LIMITED V. CIR
evidence that respondent failed to comply with that rule,” it
did not discuss whether the August 1, 2017 notice was a
“notice of beginning of administrative proceedings” under
I.R.C. § 6223. 5
The August 1, 2017 letter from the Commissioner is not
a notice of the beginning of an administrative proceeding,
and thus did not start the 120-day waiting period. The
August 1, 2017 letter does not claim to be such a notice and
does not describe any administrative proceeding. The
August 1, 2017 letter states that it “enclose[s] a copy of our
summary report on [SNJ]” that “explains all proposed
adjustments” and asks the TMP to “agree on the date . . . for
the closing conference.” Relevant regulations list “[c]losing
conference[s] with the examining agent” and “[p]roposed
adjustments” as information to be listed in “[o]ther notices”
that have nothing to do with notices of the beginning of
administrative proceedings. 26 C.F.R. § 301.6223(g)–
1(b)(i)–(ii). 6 Because the August 1, 2017 letter is not a
notification of the beginning of an administrative
5
Neither the appellants’ opening nor reply brief addresses whether
the August 1, 2017 letter is a notice of the beginning of an administrative
proceeding. The Commissioner’s answering brief merely claims that the
letter “was not even a notice of the beginning of an administrative
proceeding; it was a cover letter to the [TMP] sent with the summary
report following the examination of SNJ for its 2006 year.” Although
we could consider the issue waived, we choose to address it on the
merits.
6
26 C.F.R. § 301.6223(g)–1(a) requires a TMP to forward FPAAs
and notices of the beginning of administrative proceedings to other
partners. 26 C.F.R. § 301.6223(g)–1(b)(i)–(ii) lists “[o]ther notices or
information,” which include notices of “[c]losing conference[s] with the
examining agent” and “[p]roposed adjustments.”
SNJ LIMITED V. CIR 17
proceeding, the November 1, 2017 FPAAs did not violate
I.R.C. § 6223(d)(1). 7
D.
Appellants claim that the 2017 FPAAs are invalid
because they were superseded by the 2018 FPAAs. 8 I.R.C.
§ 6223(f) barred the Commissioner from issuing more than
one FPAA pertaining to a partnership for a taxable year to
7
Although there is no evidence in the record that the Commissioner
notified the appellants of the beginning of any administrative proceeding
before sending the FPAAs, appellants never argued or produced
evidence before this Court that they did not receive such a notice. Before
the Tax Court, appellants’ petition and their opposition to the
Commissioner’s motion to dismiss also failed to argue that they never
received a notice beginning administrative proceedings. Thus,
appellants forfeited this issue. See Sparkman v. Comm’r, 509 F.3d 1149,
1158 (9th Cir. 2007) (“Absent exceptional circumstances, this court will
not consider an argument that was not first raised in the Tax Court.”).
Appellants did claim, in one sentence in their motion to reconsider, that
“[n]or were there any notices of any initiation of any partnership
administrative proceeding.” Even assuming that one sentence in a
motion to reconsider sufficiently “raised” the issue below, appellants
waived the issue on appeal by failing to address it their opening brief.
See United States v. Salman, 792 F.3d 1087, 1090 (9th Cir. 2015) (“The
threshold question is whether [appellant] waived the present argument
by failing to raise it in his opening brief on this appeal, even though he
had raised it below . . . . Ordinarily, we will not consider ‘matters on
appeal that are not specifically and distinctly argued in appellant’s
opening brief.’” (internal quotation marks omitted)), aff’d, 137 S. Ct. 420(2016).
8
We have discussed above and rejected other reasons that the 2017
FPAAs were allegedly invalid, including appellants’ claims that they did
not live at the Troon address, that the FPAAs sent to the Eastern address
should have been addressed to a named partner instead of the TMP, and
that the Commissioner knew (or should have known) to send the FPAAs
to appellants’ preferred addresses.
18 SNJ LIMITED V. CIR
the same partner, absent “a showing of fraud, malfeasance,
or misrepresentation of a material fact.” According to
appellants, issuing the 2017 FPAAs violated 26 U.S.C.
§ 6231(a)(3) and this alleged violation constitutes
malfeasance. 9 We disagree. That a second set of FPAAs
was issued does not prove fraud, malfeasance, or
misrepresentation of a material fact. The Tax Court held in
Wise Guys Holdings, LLC v. Comm’r, 140 T.C. 193, 194,
199–200 (2013), that “the second FPAA is invalid (and thus
disregarded) because [§] 6223(f) precluded [the
Commissioner] from properly mailing the second FPAA . . .
[when] the mailing of the second FPAA was more the result
of a mistake . . . . on the part of the IRS than of fraud,
malfeasance, or a misrepresentation of a material fact.” We
agree that simply incorrectly or unnecessarily sending a
second FPAA does not equal fraud, malfeasance, or a
misrepresentation of a material fact. Here, appellants
offered nothing more. Thus, because there was no fraud,
malfeasance, or misrepresentation of a material fact, only the
2017 FPAAs were valid.
Appellants claim that the very fact that the
Commissioner mailed a second set of FPAAs indicates that
the first set of FPAAs was invalid. 10 But appellants’
argument can’t be reconciled with Wise Guys Holdings,
which held that sending a second set of FPAAs does not
necessarily invalidate the first set. 140 T.C. at 199–200.
9
As stated above, the applicable provision is I.R.C. § 6223(d)(1),
not 26 U.S.C. § 6231. See supra n.4.
10
The Commissioner claims to have sent the 2018 FPAAs “out of
an abundance of caution.”
SNJ LIMITED V. CIR 19
And we believe Wise Guys Holdings correctly decided the
issue.
Thus, the FPAAs issued on November 1, 2017 were
valid and the 2018 FPAAs were invalid. Because June 7,
2018 is more than 150 days after November 1, 2017, the Tax
Court properly dismissed appellants’ petition. See Wise
Guys Holdings, 140 T.C. at 200 (“We conclude that the
second FPAA is invalid, and we disregard it for purposes of
deciding whether petitioner’s petition was timely filed to
invoke the Court’s jurisdiction to decide this case.”).
IV.
Appellants argue for the first time on appeal that the
filing deadline in I.R.C. § 6226 is not jurisdictional and that
they are entitled to equitable tolling. Appellants forfeited
both claims because they never raised them before the Tax
Court and do not explain why they failed to raise those
claims. See Monetary II Ltd. P’ship v. Comm’r, 47 F.3d 342,
347 (9th Cir. 1995) (“[Appellant] neither raised this issue
below, nor provides any justification for its failure to do
so. . . . As no exceptional circumstances affecting failure to
raise the issue have been demonstrated, [appellant] is
deemed to have waived this claim.”). But because
appellants’ contention concerns a significant jurisdictional
issue, we exercise our discretion to reach it. Cf. Wood v.
Milyard, 566 U.S. 463, 472 (2012) (“Affording federal
courts leeway to consider a forfeited timeliness defense was
appropriate, we again reasoned, because [the Antiterrorism
and Effective Death Penalty Act’s] statute of limitations, like
the exhaustion doctrine, ‘implicat[es] values beyond the
concerns of the parties.’” (second alteration in original)).
We hold that the filing deadline in I.R.C. § 6226 is
jurisdictional and cannot be equitably tolled. See Dolan v.
United States, 560 U.S. 605, 610 (2010) (“[A]
20 SNJ LIMITED V. CIR
‘jurisdictional’ deadline prevents the court from permitting
or taking the action to which the statute attached the
deadline. The prohibition is absolute. The parties cannot
waive it, nor can a court extend that deadline for equitable
reasons.”).
The Supreme Court has held that “when Congress does
not rank a statutory limitation on coverage as jurisdictional,
courts should treat the restriction as nonjurisdictional in
character.” Arbaugh v. Y & H Corp., 546 U.S. 500, 516
(2006). Courts are instructed to “consider ‘context,
including [the Supreme] Court’s interpretations of similar
provisions in many years past’ as probative of whether
Congress intended a particular provision to rank as
jurisdictional.” Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S.
145, 153–54 (2013) (citations and original alterations
omitted). Congress need not “incant magic words in order
to speak clearly.” Id. at 153.
I.R.C. § 6226 is entitled “Judicial review of final
partnership administrative adjustments.” The deadlines at
issue are found in I.R.C. § 6226(a) and 6226(b)(1). I.R.C.
§ 6226(a) permits a TMP to petition for judicial review of an
FPAA within 90 days after the Commissioner mails the
FPAA to the TMP. If the TMP does not file such a petition
in the 90-day period, I.R.C. § 6226(b)(1) permits a partner
other than the TMP to petition within 60 days after the 90-
day period given in I.R.C. § 6226(a). I.R.C. § 6226(f),
entitled “Scope of judicial review,” provides:
A court with which a petition is filed in
accordance with this section shall have
jurisdiction to determine all partnership items
of the partnership for the partnership taxable
year to which the notice of final partnership
administrative adjustment relates, the proper
SNJ LIMITED V. CIR 21
allocation of such items among the partners,
and the applicability of any penalty, addition
to tax, or additional amount which relates to
an adjustment to a partnership item.
I.R.C. § 6226(f) (emphasis added). 11
Appellants claim that Congress did not intend § 6226 to
be jurisdictional because “the so[-]called link in jurisdiction
to timely filing is not in the same subsection.” However,
nothing requires a filing deadline and an indication of
whether the filing deadline is jurisdictional to be in the same
subsection. Moreover, § 6226(f)’s statement that “[a] court
with which a petition is filed in accordance with this section
shall have jurisdiction” does link the filing deadline to a
grant of jurisdiction. The Fifth Circuit, in A.I.M. Controls,
L.L.C. v. Commissioner, 672 F.3d 390 (5th Cir. 2012), found
that § 6226(f) “reflects that Congress intended to make
§ 6226’s time limits jurisdictional.” Id. at 394. The court
held that “while this provision does not explicitly exclude
jurisdiction without a timely filing, [§ 6226] provides
11
Following the repeal of the old I.R.C. § 6226(f), 26 U.S.C.
§ 6234(c) is now entitled “Scope of judicial review” and is materially
identical to the old I.R.C. § 6226(f) in both wording and function:
A court with which a petition is filed in accordance
with this section shall have jurisdiction to determine
all partnership-related items for the partnership
taxable year to which the notice of final partnership
adjustment relates, the proper allocation of such items
among the partners, and the applicability of any
penalty, addition to tax, or additional amount for
which the partnership may be liable under this
subchapter.
26 U.S.C. § 6234(c) (emphasis added).
22 SNJ LIMITED V. CIR
strong[] evidence of [c]ongressional intent for a
jurisdictional requirement.” Id. The Fifth Circuit also
observed that “§ 6226’s text . . . links the filing deadline to
the court’s jurisdiction.” Id. at 394.
We therefore hold that the filing deadline in I.R.C.
§ 6226 is jurisdictional. Because the filing deadline is
jurisdictional, equitable tolling is unavailable and we need
not consider appellants’ tolling arguments.
AFFIRMED.
BATAILLON, District Judge, concurring:
I write separately to concur in the result. However, I do
not believe the Court need address the
jurisdictional/equitable tolling issue. I therefore respectfully
do not join in Section IV of the opinion.
In the instant case, it is unnecessary to perform an
analysis of congressional intent for a statute with no specific
language concerning time-limited jurisdiction. Based on the
record at hand, it is apparent the Commissioner initially
believed its first notice was potentially invalid, otherwise no
second notice was necessary. Equitably, it would not be
unreasonable to compute any time limitation from the
Commissioner’s later notice. I have no doubt there are
instances in which equity would dictate a less rigid deadline
enforcement (e.g. death, disability, or incapacitation).
Whether Congress intended to preclude such exceptions is a
question not raised in the Tax Court below. There is no
record to fully appreciate any equitable tolling argument or
legislative history. Thus, the Majority’s finding of a
statutory jurisdictional filing limitation may be correct but it
is not supported by a fully developed record. Before limiting
SNJ LIMITED V. CIR 23
the court’s equitable jurisdiction, I would prefer to decide
the matter after both sides developed the record and the Tax
Court fully considered the matter.
In the instant case, it is sufficient to decide this matter
without addressing the jurisdictional issue which the
appellants failed to raise before the Tax Court. See
Monetary II Ltd. P’ship v. C.I.R., 47 F.3d 342, 347 (9th Cir.
1995) (“[Appellant] neither raised this issue below, nor
provides any justification for its failure to do so. . . . As no
exceptional circumstances affecting failure to raise the issue
have been demonstrated, [appellant] is deemed to have
waived this claim.”).
Accordingly, I believe the equitable tolling issue
addressed by the appellants is improperly raised before this
Court and is unnecessary to address.