Isobel Berry Culp v. Commissioner of Internal Revenue

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 22-1789
ISOBEL BERRY CULP; DAVID R. CULP,
Appellants
v.
COMMISSIONER OF INTERNAL REVENUE
On Appeal from the United States Tax Court
(Tax Court Docket No. 21-14054)
Tax Court Judge: Eunkyong Choi
Argued on
March 7, 2023
Before: SHWARTZ, BIBAS, and AMBRO, Circuit Judges
(Opinion filed: July 19, 2023)
Oliver D. Roberts (Argued)
Jones Day
2727 North Harwood Street
Suite 500
Dallas, TX 75201
Counsel for Appellants
Joan I. Oppenheimer
Isaac B. Rosenberg (Argued)
United States Department of Justice
Tax Division
950 Pennsylvania Avenue, NW
P. O. Box 502
Washington, DC 20044
Counsel for Appellee
T. Keith Fogg (Argued)
Audrey Patten
Legal Services Center of Harvard Law School
122 Boylston Street
Jamaica Plain, MA 02130
Carlton M. Smith
#4AW
255 W. 23rd Street
New York, NY 10011
Counsel for Amicus Appellants
2
OPINION OF THE COURT
AMBRO, Circuit Judge
Isobel Berry Culp and David Culp filed a petition for
redetermination of a tax deficiency in the United States Tax
Court. Because the Culps failed to file it within the time
prescribed by 26 U.S.C. § 6213(a), the Tax Court dismissed
their petition for lack of jurisdiction. However, because
Congress did not clearly state that § 6213(a)’s deadline is
jurisdictional, we hold it is not. Nor do we understand it to be
unbending, as nonjurisdictional time limits are presumptively
subject to equitable tolling and that presumption has not been
rebutted here. We thus reverse the Tax Court’s order and
remand for it to determine whether the Culps are entitled to
equitable tolling.
I. BACKGROUND
A. Legal Background
Taxpayers pay taxes in an amount determined by,
among other things, their annual income, deductions, and
credits. Taxpayers self-report that information, and the
Internal Revenue Service may check it. See 26 U.S.C. §§ 6212,
7602. If the IRS concludes a taxpayer owes additional taxes,
it may send him or her a notice of deficiency stating the
additional tax owed. 26 U.S.C. § 6212(a). If the taxpayer
disputes the purported deficiency, he or she may, per 26 U.S.C.
3
§ 6213(a), petition the Tax Court to step in and redetermine the
amount owed, if any.
Section 6213(a) of the Tax Code also sets the timeline
for this process. It provides most taxpayers 90 days to file
redetermination petitions, starting on the date the IRS mails the
notice of deficiency.1 26 U.S.C. § 6213(a). During that time,
the IRS may not levy on the taxpayer’s property or move to
collect the amount purportedly owed. Id. And if the taxpayer
files a redetermination petition, the IRS must await a ruling
from the Tax Court before levying on property or attempting
to collect the purportedly deficient amount. Id. But if the
taxpayer does not file a petition within the time allotted by
§ 6213(a), “the deficiency . . . shall be assessed, and shall be
paid upon notice and demand from the Secretary [of the
Treasury].” 26 U.S.C. § 6213(c).
B. Factual Background
In 2015, Isobel and David Culp each received $8,826.30
to settle a lawsuit. The couple reported their payments as
“Other income” and described it as “PRIZES, AWARDS” in
their 2015 tax return. A52. However, the IRS later came to
believe the Culps failed to report those payments. Thus, in
November 2017 it sent them a letter proposing to increase their
taxes owed for 2015 to reflect the perceived underpayment. It
gave the Culps 30 days to respond and told them it would send
a notice of deficiency if they failed to do so. When the Culps
did not respond, the IRS mailed them a notice of deficiency
1
If the IRS addresses a statutory notice of deficiency to a
person outside the United States, that individual has 150 days
to file a petition. 26 U.S.C. § 6213(a).
4
alleging a $3,363 underpayment for 2015, plus a $1,324
penalty under 26 U.S.C. § 6651(a). That notice informed the
Culps of their right to challenge the IRS’s determination by
filing a petition in the Tax Court within 90 days of the date of
the notice.
This process repeated in 2018. In May, the IRS sent the
Culps another letter stating they owed only $2,087 in 2015
taxes, penalties, and interest—less than the amount previously
assessed. It again gave them 30 days to respond, and again the
couple failed to do so. Thus, the IRS levied on their property,
collecting approximately $1,800 in total from the Culps’ Social
Security payments and 2018 tax refund.
Upset at the IRS for levying on their property, the Culps
filed a petition in the Tax Court seeking, among other things, a
“refund of all payments made under protest, or levied on, or
executed on by the IRS.” A20. The Tax Court dismissed their
petition for lack of jurisdiction, reasoning its “jurisdiction
depends upon the issuance of a valid notice of deficiency and
the timely filing of a petition.” A157 (citing 26 U.S.C.
§§ 6212, 6213, 6214). It found the petition was untimely
because the Culps did not file it within 90 days of the date the
IRS sent them the second notice of deficiency. They timely
appealed.
5
II. JURISDICTION & STANDARD OF
REVIEW
We have jurisdiction under 26 U.S.C. § 7482(a)(1).2
We give a fresh look to the Tax Court’s dismissal for lack of
subject matter jurisdiction, see Rubel v. Comm’r, 856 F.3d 301,
304 n.3 (3d Cir. 2017), and review its factual determinations
for clear error, Lattera v. Comm’r, 437 F.3d 399, 401 (3d Cir.
2006).
III. DISCUSSION
The Culps challenge the dismissal of their petition on
multiple grounds. First, they assert the IRS failed to mail them
a notice, and thus § 6213(a)’s 90-day clock had yet to start.
Second and third, they contend § 6213(a)’s timeline is not
jurisdictional and that it is subject to equitable tolling. We
address each in turn.
A. The Culps’ Petition Was Untimely.
We agree with the Tax Court that the Culps’ petition
was untimely. To repeat, § 6213(a) provides that taxpayers
may file a petition for redetermination of a deficiency “[w]ithin
90 days . . . after the notice of deficiency . . . is mailed.” The
Culps contend that the IRS never sent the notice of deficiency
or, if it was sent, they never received it. Thus, in their view,
2
The Tax Court retained jurisdiction over the Culps’
deficiency petition even though the IRS had already collected
a portion of the deficiency via levy. See 26 U.S.C.
§ 6213(b)(4).
6
the 90-day clock never started ticking, and so their petition
must have been timely.
We are not persuaded. The Tax Court did not err, let
alone clearly err, in its determination that the IRS properly
mailed the notice. The record contains not only copies of it,
but also a U.S. Postal Service Form 3877 showing the IRS sent
it. See Hoyle v. Comm’r, 136 T.C. 463, 468 (2011) (“[E]xact
compliance with Postal Service Form 3877 mailing procedures
raises a presumption of official regularity in favor of the
Commissioner and is sufficient, absent evidence to the
contrary, to establish that a notice of deficiency was properly
mailed.”). As for the Culps’ contention that they never
received the notice, “actual receipt of [it] by the taxpayers is
not required in order that the statutory filing period
commence.” Boccuto v. Comm’r, 277 F.2d 549, 552 (3d Cir.
1960). In short, the Culps filed their petition years after the
IRS properly sent the notice; thus we will not disturb the Tax
Court’s finding that they filed their petition after § 6213(a)’s
90-day period lapsed.
B. Section 6213(a)’s Deadline is Not
Jurisdictional.
The central question in this appeal is whether the Culps’
late filing deprives the Tax Court of jurisdiction to consider
their petition. Put another way, is § 6213(a)’s 90-day
requirement jurisdictional or is it a claims-processing rule?
“Jurisdictional requirements mark the bounds of a
‘court’s adjudicatory authority.’” Boechler, P.C. v. Comm’r,
142 S. Ct. 1493, 1497 (2022) (quoting Kontrick v. Ryan, 540
U.S. 443, 455 (2004)). If a jurisdictional requirement is unmet,
the court lacks power to hear the case. See Jaludi v. Citigroup
7
& Co., 57 F.4th 148, 151 (3d Cir. 2023) (“[V]iolating a
jurisdictional procedural requirement locks the courthouse
doors.”).
Because an unfulfilled jurisdictional requirement
carries harsh consequences, courts do not apply the
“jurisdictional” label casually. Wilkins v. United States, 143 S.
Ct. 870, 876 (2023). To determine whether a statutory deadline
is jurisdictional or claims-processing in nature, we examine the
“text, context, and relevant historical treatment” of the
provision, Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154, 166
(2010), and will “treat a procedural requirement as
jurisdictional only if Congress ‘clearly states’ that it is,”
Boechler, 142 S. Ct. at 1497 (quoting Arbaugh v. Y & H Corp.,
546 U.S. 500, 515 (2006)). We do not look for “magic words,”
Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S. 145, 153 (2013),
but the “traditional tools of statutory construction must plainly
show that Congress imbued a procedural bar with jurisdictional
consequences,” United States v. Kwai Fun Wong, 575 U.S.
402, 410 (2015).
Boechler represents the Supreme Court’s approach on
whether a deadline is jurisdictional. The Court analyzed
§ 6330(d)(1)’s 30-day time limit to petition the Tax Court for
review of collection due process determinations. That
provision reads that “[t]he person may, within 30 days of a
determination under this section, petition the Tax Court for
review of such determination (and the Tax Court shall have
jurisdiction with respect to such matter).” 26 U.S.C.
§ 6330(d)(1).
The Supreme Court held the deadline is not
jurisdictional. In its view, the plausible interpretations of the
8
statute—one supporting a jurisdictional reading and one
weighing against it—suggest “the text does not clearly
mandate the jurisdictional reading.” Boechler, 142 S. Ct. at
1498. Moreover, § 6330(d)(1)’s deadline speaks to what the
taxpayer may do, while the parenthetical at the end of the
provision contains the jurisdictional grant and speaks to the
Tax Court’s power to hear the case. Id. Further, other tax
provisions passed contemporaneously with § 6330(d)(1)
“much more clearly link their jurisdictional grants to a filing
deadline.” Id. at 1498–99 (citing 26 U.S.C. § 6404(g)(1) (1994
ed., Supp. II) (the Tax Court has “jurisdiction over any action
. . . to determine whether the Secretary’s failure to abate
interest under this section was an abuse of discretion . . . if such
action is brought within 180 days”); § 6015(e)(1)(A) (1994 ed.,
Supp. IV) (“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 during the 90-day period.”)).
Returning to our issue, § 6213(a) reads in relevant part:
Within 90 days, or 150 days if the notice is
addressed to a person outside the United States,
after the notice of deficiency authorized in
section 6212 is mailed (not counting Saturday,
Sunday, or a legal holiday in the District of
Columbia as the last day), the taxpayer may file
a petition with the Tax Court for a
redetermination of the deficiency. . . . [N]o
assessment of a deficiency . . . and no levy or
proceeding in court for its collection shall be
made, begun, or prosecuted until such notice has
been mailed to the taxpayer, nor until the
expiration of such 90-day or 150-day period, as
9
the case may be, nor, if a petition has been filed
with the Tax Court, until the decision of the Tax
Court has become final. . . . The Tax Court shall
have no jurisdiction to enjoin any action or
proceeding or order any refund under this
subsection unless a timely petition for a
redetermination of the deficiency has been filed
and then only in respect of the deficiency that is
the subject of such petition.
If the § 6330(d)(1) deadline in Boechler fell short of
being jurisdictional, § 6213(a)’s limit must as well. For one,
there is no “clear tie between the deadline and the jurisdictional
grant.” Boechler, 142 S. Ct. at 1499. The most pertinent part
of § 6213(a) provides that “[w]ithin 90 days . . . after the notice
of deficiency . . . is mailed . . . the taxpayer may file a petition
with the Tax Court for a redetermination of the deficiency.”
Nothing in that language links the deadline to the Court’s
jurisdiction. Yet, elsewhere in § 6213(a), Congress specified
that “[t]he Tax Court shall have no jurisdiction to enjoin any
action or proceeding or order any refund under this subsection
unless a timely petition for a redetermination of the deficiency
has been filed and then only in respect of the deficiency that is
the subject of such petition.” 26 U.S.C. § 6213(a). So
Congress knew how to limit the scope of the Tax Court’s
jurisdiction. It expressly constrained the Tax Court from
issuing injunctions or ordering refunds when a petition is
untimely. But it did not similarly limit the Tax Court’s power
to review untimely redetermination petitions.
Context does little to bolster the IRS’s case for the
deadline being jurisdictional. True, if it is not jurisdictional,
and a taxpayer’s redetermination petition is dismissed for
untimeliness, the assessed amount would have preclusive
10
effect in a refund suit under 26 U.S.C. § 7422. See 26 U.S.C.
§ 7459(d) (“If a petition for a redetermination of a deficiency
has been filed by the taxpayer, a decision of the Tax Court
dismissing the proceeding shall be considered as its decision
that the deficiency is the amount determined by the
Secretary . . . unless the dismissal is for lack of jurisdiction.”).
But this situation presents itself only if a taxpayer files a late
petition for redetermination of a deficiency, the Tax Court
dismisses his or her petition, the taxpayer then pays the
disputed deficiency, files for a refund, gets denied, and then
sues in federal court challenging the denial. That theoretical
possibility seems seldom, if ever, to occur, see Center for
Taxpayer Rights Amicus Br. at 14–16, and therefore does not
move the needle. See Boechler, 142 S. Ct. at 1499 (“[T]he
Commissioner’s interpretation must be not only better, but also
clear.”). But see Organic Cannabis Found., LLC v. Comm’r,
962 F.3d 1082, 1095 (9th Cir. 2019) (interpreting this context
to demonstrate that § 6213(a)’s deadline is jurisdictional).
Nor are we persuaded by the Commissioner’s argument
that relevant historical treatment (that is, our precedent)
compels us to treat § 6213(a)’s deadline as jurisdictional.
Although we have previously referred to it as such in passing,
see, e.g., Sunoco Inc. v. Comm’r, 663 F.3d 181, 187 (3d Cir.
2011), never have we so held. This is the first published
opinion to address squarely whether § 6213(a)’s deadline for
redetermination petitions is jurisdictional, and we hold it is not.
11
C. Section 6213(a)’s Time Limit May Be
Equitably Tolled.
We next consider whether § 6213(a)’s deadline may be
equitably tolled. We do so because we disagree with the
Commissioner’s contention that the Culps failed to preserve
this issue. True, they never argued equitable tolling in the Tax
Court. But they had no occasion to do so. The statute of
limitations defense is an affirmative defense that respondents
must raise. See Day v. McDonough, 547 U.S. 198, 207–08
(2006). In the Tax Court, the Commissioner never argued that,
if § 6213(a) is not jurisdictional, the Court should still dismiss
the Culps’ petition because the limitation period ran. Thus,
because the parties’ squabble in the Tax Court was limited to
whether the deadline is jurisdictional, the Culps had no logical
reason to assert their claims may be tolled. As such, they
neither forfeited nor waived this argument.
The equitable tolling doctrine “pauses the running of, or
‘tolls,’ a statute of limitations when a litigant has pursued his
rights diligently but some extraordinary circumstance prevents
him from bringing a timely action.” Lozano v. Montoya
Alvarez, 572 U.S. 1, 10 (2014). It “is a traditional feature of
American jurisprudence and a background principle against
which Congress drafts limitations periods.” Boechler, 142 S.
Ct. at 1500. Thus, “nonjurisdictional limitations periods are
presumptively subject to equitable tolling.” Id.; accord Young
v. United States, 535 U.S. 43, 49 (2002) (“It is hornbook law
that limitations periods are customarily subject to equitable
tolling.” (cleaned up)).
Given this presumption, we ask whether there is “good
reason to believe that Congress did not want the equitable
12
tolling doctrine to apply.” Arellano v. McDonough, 143 S. Ct.
543, 548 (2023) (emphasis in original) (internal quotation
marks omitted). We glean intent by looking to the relevant
provision’s text, context, and place in the broader statutory
scheme.
We begin with the text. See Nutraceutical Corp. v.
Lambert, 139 S. Ct. 710, 714 (2019) (“Whether a rule
precludes equitable tolling turns not on its jurisdictional
character but rather on whether the text of the rule leaves room
for such flexibility.”). A statute that “sets forth its time
limitations in unusually emphatic form . . . [and] a highly
detailed technical manner . . . cannot easily be read as
containing implicit exceptions.” United States v. Brockamp,
519 U.S. 347, 350 (1997). Moreover, when a legislature lays
out an “explicit listing of exceptions” to a deadline, it shows its
intent for “courts [not to] read other unmentioned, open-ended,
‘equitable’ exceptions into the statute.” Id. at 352; see also
Arellano, 143 S. Ct. at 550 (“That Congress accounted for
equitable factors in setting effective dates strongly suggests
that it did not expect an adjudicator to add a broader range of
equitable factors to the mix.”). Finally, express language
signifying that the only exceptions are those in the statute
signals that courts should not permit equitable tolling. See
Arellano, 143 S. Ct. at 551 (a statute requiring a receipt date to
begin a filing period “[u]nless specifically provided otherwise”
suggests the statute’s enumerated exceptions are exclusive).
Applying these rules, there is insufficient textual
evidence to persuade us that Congress sought to bar
§ 6213(a)’s deadline from being equitably tolled. The filing
period is neither emphasized nor set out in a technical way.
And though Congress provided for three equitable exceptions
13
to the deadline,3 there is good reason to believe these
exceptions are not exhaustive. Unlike the statutory deadlines
examined in Brockamp and Arellano, both of which the
Supreme Court held not subject to equitable tolling,
§ 6213(a)’s exceptions are neither many (the three here are less
than the six in Brockamp and fifteen in Arellano), nor are they
set out explicitly or “in a highly detailed technical manner,”
and they do not contain “substantive limitations” on the
amount of recovery. Brockamp, 519 U.S. at 350, 352; see
Arellano, 143 S. Ct. at 549. Finally, no express language in the
statute suggests the enumerated exceptions are exhaustive.
The statutory context also suggests that Congress did
not intend § 6213(a)’s filing limit to be unbending. The
deadline is targeted at the taxpayer, not the Tax Court. See
Boechler, 142 S. Ct. at 1500 (holding that a time limit directed
at the taxpayer supports equitable tolling). Moreover, “[t]he
presumption favoring equitable tolling is stronger when the
limitations period is short,” Hedges v. United States, 404 F.3d
744, 749 (3d Cir. 2005), and § 6213(a)’s 90-day time limit (or
150 days for notices sent to those outside the United States) fits
3
They are as follows. First, a taxpayer may file a
redetermination petition after § 6213(a)’s deadline if it is
within the date specified on the notice of deficiency he or she
receives, even if that date is after the statutory deadline. See
26 U.S.C. § 6213(a). Second, the filing period does not run
when the taxpayer is precluded from filing a redetermination
petition because he or she is in bankruptcy. See 26 U.S.C.
§ 6213(f)(1). Third, the limitations period pauses for “any
period during which the Secretary has extended the time
allowed for making correction[s] [to certain excise taxes]
under section 4963(e).” 26 U.S.C. § 6213(e).
14
the bill. Compare Boechler, 142 S. Ct. at 1500 (describing 30-
day time limit as “short”), with United States v. Beggerly, 524
U.S. 38, 48–49 (1998) (holding that an “already generous [12-
year] statute of limitations” cannot be tolled). It is also
important that this deadline applies to “a scheme in which
‘laymen, unassisted by trained lawyers,’ often ‘initiate the
process.’” Boechler, 142 S. Ct. at 1500 (quoting Auburn, 568
U.S. at 154); see United States Tax Court, Congressional
Budget Justification, Fiscal Year 2024, at 23 (Feb. 1, 2023)
(explaining that in Fiscal Year 2022 80% of the Tax Court
petitions were filed by taxpayers proceeding pro se).
We also believe the IRS’s arguments that permitting
equitable tolling would be inadministrable are overstated.
Section 6213(c) directs the Commissioner to demand payment
of deficient taxes “[i]f the taxpayer does not file a petition with
the Tax Court within” § 6213(a)’s filing period. 26 U.S.C.
§ 6213(c). The Commissioner contends that, if we permit
equitable tolling, “the United States would never have certainty
about the amount of taxes it will collect for a given tax year.”
IRS Br. at 47. But after the Commissioner issued
approximately two million notices of deficiency in Fiscal Year
2021, taxpayers filed only 34,049 redetermination petitions in
the Tax Court.4 Because taxpayers timely file the vast majority
4
See Table 22, Information Reporting Program, Fiscal
Year 2021, Internal Revenue Service Data Book, 2021 (May
2022), available at [https://perma.cc/YB5F-UHZ8] (number
of notices of deficiency sent in 2021); United States Tax Court,
Congressional Budget Justification, Fiscal Year 2023, at 19
(Feb. 28, 2022), available at [https://perma.cc/WWD3-
RUYR] (number of deficiency redetermination petitions filed
in Fiscal Year 2021).
15
of these petitions, permitting equitable tolling would only
affect a small subset of deficiency petitions filed after
§ 6213(a)’s period. This subset is quite small,5 therefore
indicating § 6213(a)’s deadline “serves a . . . limited and
ancillary role in the tax collection system.” Boechler, 142 S.
Ct. at 1501. And we doubt our holding will encourage more
taxpayers to file untimely petitions in the (longshot) hopes of
bringing a successful equitable tolling argument.
Nor do we perceive that the IRS’s ability to collect
deficient taxes will be thwarted if taxpayers can assert their
tardy petitions are timely due to equitable tolling. That is
because a taxpayer’s challenge will not undo the IRS’s lien
unless and until the taxpayer’s challenge is successful. After
the IRS provides a taxpayer notice of the deficiency’s existence
and amount, 26 U.S.C. § 6212, and the taxpayer does not file a
petition within the time prescribed by § 6213(a), the deficiency
shall be assessed, 26 U.S.C. § 6213(c), and becomes a lien on
the taxpayer’s property, § 26 U.S.C. § 6321. That lien “arise[s]
at the time the assessment is made and shall continue until the
liability for the amount so assessed . . . is satisfied or becomes
unenforceable by reason of lapse of time.” 26 U.S.C. § 6322.
Thus, the IRS’s power to collect a deficiency will not be
frustrated if a taxpayer could argue that § 6213(a)’s deadline
should be equitably tolled.
5
Amicus Center for Taxpayer Rights concluded, based
on its analysis, that the Tax Court dismisses approximately 600
redetermination petitions per year for being untimely. See
Center for Taxpayer Rights Amicus Br. at 14–15, 17.
16
For all these reasons, we hold that § 6213(a)’s deadline
is subject to equitable tolling. We remand this case to the Tax
Court to decide whether the Culps are entitled to that relief.
*****
Missing a statutory filing deadline is never ideal for the
filer. But the specific consequence for doing so depends on the
legislature’s intent. If the statute clearly expresses the deadline
is jurisdictional, the filer’s tardiness deprives a court of the
power to hear the case. Without a clear statement, courts will
treat a filing period to be a claims-processing rule that is
presumptively subject to equitable tolling. Because we discern
no clear statement that § 6213(a)’s deadline is jurisdictional,
we hold it is not. And because the presumption that
nonjurisdictional time limits are subject to equitable tolling has
not been rebutted here, we hold it may be tolled. We thus
reverse the Tax Court’s dismissal for lack of jurisdiction and
remand for that Court to determine whether the Culps are
entitled to equitable tolling.
17