Although the Supreme Court has been sharply divided on a host of issues this term, it ruled unanimously this spring in Boechler P.C. v. Commissioner of the Internal Revenue Service. That ruling affirmed a position LSC’s Tax Clinic and its students have fought for over many years – and reversed lower court rulings that had gone against the LSC position repeatedly.
For LSC alum Amy Feinberg ’18, the case brought work she began as a student in the Tax Clinic to an exciting conclusion. Because of her connections to LSC and prior litigation she undertook on the issue while in the Tax Clinic, LSC asked Feinberg to bring the case to her firm, Latham & Watkins, for representation. Feinberg was then part of an all-female team that argued the merits successfully before the Supreme Court.
A String of Cases Over Many Years
A string of cases – several led by LSC’s Tax Clinic – has for many years challenged the extent to which statutes setting forth filing deadlines are jurisdictional or mere “claims processing rules” that can be equitably tolled.
The Boechler case involved a small North Dakota law firm that handles asbestos litigation. In 2015, the IRS informed the firm about a discrepancy with its 2012 taxes. After Boechler did not respond, the IRS imposed a $19,250 penalty and notified Boechler of plans to seize its property. The IRS Office of Appeals sustained the levy because Boechler filed a petition with the Tax Court a day late, resulting in its dismissal. The 8th U.S. Circuit Court of Appeals affirmed that decision.
In Boechler, the Supreme Court has reversed lower court rulings, stating unanimously that the filing deadline for a Tax Court Collection Due Process petition is not jurisdictional and is subject to equitable tolling. The ruling could lead to waves of litigation as to jurisdiction and tolling against the IRS in the future.
“We started this issue many years ago, filing an amicus brief with the Tax Court arguing that missing the time period for filing a petition in Tax Court created a claims processing rule and not a jurisdictional barrier,” explains Keith Fogg, Director of LSC’s Tax Court. “The Tax Court ruled against us 17-0. Students from our clinic argued this issue in circuit courts around the country, and we filed amicus briefs in cases in which we were not directly representing the taxpayer. We lost every time.”
“This victory took a village of almost all pro bono attorneys and clinicians to make it happen,” says Carl Smith, long-time volunteer with the Tax Clinic and one-time-director of the Cardozo Tax Clinic. Fogg credits Smith with being the architect of the argument that time periods for filing a petition in Tax Court are not jurisdictional based on Smith’s reading of Supreme Court cases coming out in other areas of the law.
“Carl worked with the LSC Tax Clinic to assist in writing briefs and preparing the students to make oral arguments to circuit courts. He worked to identify cases in which we should make the arguments,” Fogg notes.
From Student Attorney to the Supreme Court
One of the Tax Clinic students involved in that long effort, Amy Feinberg ’18, argued and lost a case before the 4th Circuit while a student in 2018.
A few years later, LSC’s Fogg got a phone call from lawyers who had been representing Boechler P.C. in its fight with the IRS.
Those attorneys, who filed the Tax Court petition for Boechler, P.C, and who filed the appeal to the 8th Circuit, reached out to the Tax Clinic after finding the Tax Clinic’s briefs on the issue of jurisdiction.
Just a couple weeks before the oral argument in the 8th Circuit was to occur, the attorneys representing Boechler asked if the LSC Tax Clinic could take over the oral argument. With insufficient time to prepare a student for the argument, the Tax Clinic reached out to Feinberg, by then an attorney at Latham & Watkins, which agreed to take the case. Her firm agreed to continue representation seeking en banc review in the 8th Circuit before seeking certiorari in the Supreme Court. LSC, in turn, filed an amicus brief on behalf of Boechler.
An all-female legal team that included Feinberg then successfully represented Boechler before the Supreme Court. Melissa Arbus Sherry, a Latham & Watkins partner argued the case for Boechler. Caroline Flynn of Latham & Watkins was the third member of the team.
The Future of Tax Court Litigation After Boechler
Legal scholars and pundits writing about the ruling believe it could lead to waves of litigation as to jurisdiction and tolling. Roughly 25,000 cases are filed in Tax Court each year. The ruling could open the door for a large number of taxpayers to argue for equitable tolling if they miss the 90-day general filing deadline, for example. A host of other deadlines could be affected as well.
“This ruling does not mean that all federal deadlines are “claims processing rules” that can be missed,” says Fogg. “The specific decision in Boechler only applies to one type of Tax Court jurisdiction – Collection Due Process. The case could impact other cases both in the Tax Court and outside the Tax Court. The specific ruling narrowly determines that if a taxpayer files a petition late in a Collection Due Process matter, the late filing does not automatically cause the court to dismiss the case. Conversely, it does not necessarily mean that the court will accept the case. It means there is another step to take before dismissing or accepting the case.”
Fogg notes that the Boechler decision is now causing litigation of the other areas of Tax Court jurisdiction to determine if those areas are also claims processing rules rather than jurisdictional deadlines.
“I suspect it will also be the focus in other areas of the law besides tax but I cannot say that for certain,” he says.
“We argued Boechler because we saw Supreme Court decisions coming out in other areas of the law and though that those decisions could be transferable to tax litigation. I suspect Boechler will have a vice versa effect and be transferable to other areas of the law.”
As for cases dismissed by the Tax Court previously, Fogg believes that those cases dismissed within the last 90 days have an opportunity to appeal. “Taxpayers have 90 days to appeal a Tax Court decision. If a case was thrown out because the Tax Court said their petition was late and if that determination occurred more than 90 days ago, it’s now too late if they have not already appealed.
“If someone was thrown out within the last 90 days, they can file an appeal of the dismissal and seek to get back in. If they were thrown out of a Collection Due Process case, the courts will let them back in –subject to a subsequent determination that they had a good excuse for being late – equitable tolling.”
“I suspect that in those cases, once the court reopens the case the IRS will probably argue that the person did not have a good reason for missing the deadline,” Fogg adds. “It’s possible that the taxpayer will be able to show a good reason for missing the deadline and the court will let them continue to the merits of the case. It’s also possible that the person does not have a good reason for being late and the court will end the case.”
Fogg says the Clinic is now looking at the Collection Due Process cases that the Tax Court is no longer dismissing for lack of jurisdiction. “We are trying to find cases with good excuses to move forward into litigation first if that is possible,” he says. “There is an excellent case out of New York in which the IRS sent the taxpayer the notice giving the taxpayer the opportunity to bring a Tax Court case and the person did not act in time. The reason they did not act in time is because the post office never delivered the letter. Here, the IRS did what it was supposed to do. The Tax Court dismissed the case for lack of jurisdiction last year and the taxpayer appealed. The case will now be sent from the Second Circuit back to the Tax Court. This taxpayer has a perfect excuse. The case should make some good law.”
Fogg says they are also looking for cases involving taxpayers who filed late under other areas of the Tax Court’s jurisdiction. “Specifically, we want cases involving the Tax Court’s deficiency jurisdiction. Ninety-five percent of Tax Court cases are filed under the deficiency jurisdiction. These are cases where the Tax Court is deciding whether the taxpayer owes more money than they said on their tax return. We will argue that the reasoning of the Boechler decision should extend to the Tax Court’s deficiency jurisdiction” he concludes.