Tax Blog

Every Second Counts: Timely Filing in the U.S. Tax Court

by Kelly Hanley, Esq.

The world of tax law isn’t one that’s typically associated with high drama and suspense. However, the recent case of Sanders v. Commissioner, 160 TC No. 16 (June 20, 2023) injects a healthy dose of both into the realm of tax court timely filing. In this case, the court found that a petition logged just 11 seconds past the stroke of midnight was late and, therefore, the court lacked jurisdiction to hear the case. This landmark case brings to light the precision required when dealing with the Tax Court and electronic filings.

The Significance of 11 Seconds

The taxpayer, Mr. Sanders, decided to represent himself in this case, a complex endeavor which ultimately brought to question the jurisdiction of the Tax Court. With assistance from an amicus brief filed by Harvard Law School’s Tax Clinic on behalf of the Center for Taxpayer Rights, Sanders argued to the Tax Court that the starting time of the petition’s transmission should be the focal point, not when the electronic system (DAWSON) logged it. Unfortunately for him, the court rejected this argument.

For those interested in the mechanics of electronic filing and timestamping, the court’s record of Sanders’ attempts to use DAWSON makes for instructive reading. It’s no action-packed Hollywood blockbuster, but the case serves as a crucial reminder that every second counts when filing a case in the Tax Court. The potential consequences of late filing are significant – including the loss of the court’s jurisdiction to hear the case.

The Modern Era of U.S. Tax Court Timely Filing Method

Tax court’s past century was replete with disputes concerning the timeliness of mailing and private delivery services. However, we’ve now entered an era where electronic systems, and their meticulous timekeeping, play a decisive role. The court effectively made use of these digital records, offering comprehensive proof that the system was operational at the necessary times.

The court’s decision hinged upon Tax Court Rule 22, particularly Rule 22(a) and Rule 22(d), which concern the timing of electronic filing. Equally important was IRC 7451(b), added following Guralnik v. Commissioner, 146 T.C. 230 (2016). This case laid the groundwork for the argument that Tax Court petition filing deadlines are not jurisdictional, a perspective that would be central to future debates on timeliness.

The Importance of Technical Competence for Petitioners

Contrary to Sanders’ claim of system inaccessibility, the court found that the hiccup was due to his unfamiliarity with the online portal. The court equated problems like incorrect password entry or device issues to traffic jams on the way to a physical courthouse – these difficulties do not render the system inaccessible to the public. The court’s ruling here underscores that the ability to navigate the digital landscape is essential for taxpayers who choose to represent themselves.

The court determined that the decisive moment for assessing timeliness is the time of receipt, not the time of submission. It further clarified that the postmark rules stated in IRC 7502 don’t apply to electronic filing, as these regulations require an authorized electronic return transmitter, which is not involved in the filing of a Tax Court petition.

An Open Door for Regulatory Expansion?

The case brings up an interesting point regarding IRC 7502(c) and IRC 7502(d)(1) that potentially empowers the IRS to regulate timely filing in the Tax Court via electronic means. This could pave the way for broader taxpayer rights related to filing timings.

No Room for Equitable Tolling

Equitable tolling, unfortunately for Sanders, was deemed inapplicable because the court views timely filing as a jurisdictional prerequisite in deficiency cases. Nevertheless, this stance could change in the future, as has been the case with Collection Due Process (CDP) cases and whistleblower cases.

The Final Word: Timeliness Matters

Sanders v. Commissioner serves as a powerful reminder that time is of the essence when dealing with the Tax Court and electronic filings. To navigate this digital landscape effectively, taxpayers need to be technologically competent and mindful of the exacting nature of filing deadlines. Every second truly counts when your case’s jurisdiction hangs in the balance. So, don’t wait until the final countdown – filing early is always the best practice.

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How long do you have to file a Tax Court petition?

Filing a petition with the Tax Court in a timely manner is crucial when contesting proposed taxes. Upon receiving your notice, a strict timeline is set into motion. Typically, you have a 90-day window from the date of the notice to submit your petition to the Tax Court. However, if the notice is addressed to an individual located outside the United States, this period is extended to 150 days. To ensure your rights are protected, be vigilant about these deadlines and consider filing early to avoid any potential issues. Remember, the countdown begins from the date of the notice, not from when it’s received or read. Stay informed, stay prepared, and take swift action to challenge any tax proposals.

How long does IRS have to respond to Tax Court petition?

The process of challenging a tax proposal involves a clear timeline, not only for the taxpayer but also for the Internal Revenue Service (IRS). Upon receiving your petition, the IRS has a defined period to respond. Generally, the IRS has 60 days from the date your petition was served to file an answer. However, if the IRS chooses to file a related motion, such as a motion to dismiss, this timeline is reduced to 45 days from the date of service. It’s worth noting that a vast majority, in fact over 98%, of tax court cases result in a settlement, ensuring that your petition won’t fall on deaf ears. Understanding these deadlines is a critical component of effectively navigating the tax court process.

What happens if you miss Tax Court?

Navigating tax law involves adhering to strict deadlines, and missing these can lead to significant consequences. If you fail to file your tax deficiency petition within the designated timeframe or miss your Tax Court date, the ramifications are severe. The United States Tax Court holds the authority to dismiss your case on its own motion. Consequently, a failure to appear or a late filing can effectively close the door to your opportunity for a hearing. To ensure your case receives due attention, it’s crucial to stay vigilant about all relevant deadlines and court dates. Remember, in the world of tax law, punctuality is not just appreciated, it’s demanded.

What is the Rule 33 in Tax Court?

Rule 33 in the context of Tax Court is an essential tool designed to streamline proceedings and facilitate settlements. This rule allows the court to instruct attorneys and, when necessary, the parties themselves, to engage in one or more conferences. The primary purpose of these conferences is to address any matters that could expedite the resolution of the proceedings. This may involve simplifying the issues at hand or initiating settlement discussions. Rule 33, therefore, serves as a procedural strategy aiming to optimize the judicial process, ensuring a smooth, efficient resolution in the complex world of tax litigation.