Tax Court Petition Deadlines & Your Rights After Culp: Understanding the Shift

Decoding the IRS Notice of Deficiency and The Deadline Dilemma

The world of taxes is complicated, yet imperative to navigate. Let’s delve into the latest shift, specifically regarding the Tax Court petition deadlines – a rule historically deemed jurisdictional, and the meaning of this transformation for you, the taxpayer.

The Intricacies of the Tax Court Petition Deadline

In a recent landmark decision by the Third Circuit, the stringent deadline for filing deficiency petitions in the Tax Court has been reinterpreted. Contrary to traditional perception, the court ruled that the deadline is not ‘jurisdictional,’ rather, it’s a ‘claims processing rule.’ This shift has implications for ‘equitable tolling,’ a term used when the court decides to extend the deadline for filing a petition under special circumstances.

The Courtroom Drama: Culp v. Commissioner

The cornerstone for this shift was the case of Culp v. Commissioner, No. 22-1789 (3d Cir. 2023).Isobel and David Culp, retired employment discrimination attorneys, found themselves in a predicament with the IRS over a tax deficiency claim for the year 2015. After filing a late petition in 2021, the Tax Court dismissed their plea citing lack of jurisdiction. They took the battle up a notch, filing an appeal in April 2022.

The Boechler Precedent and the Power of Petitioners

The Culps, backed by the Center for Taxpayer Rights, contended that their situation was covered by the Supreme Court’s ruling in Boechler, P.C. v. Comm’r of Internal Revenue, 142 S. Ct. 1493 (2022). The argument held that their case, like Boechler’s, was subject to section 6213, and hence they were entitled to equitable tolling.

The Boechler case had determined that the deadline for filing a collection due process petition in the Tax Court was not jurisdictional. In essence, it set the precedent that a procedural requirement is only jurisdictional if Congress clearly states it to be.

How to File & Extend the Time to Petition the Tax Court

In the light of these rulings, the way you file and seek extensions for deficiency petitions might change. The Third Circuit, in agreement with the Tax Court on the tardiness of the Culps’ petition, found no explicit evidence that Congress intended the deadline under section 6213(a) to be jurisdictional.

Further, the court disagreed with the IRS’s stance, arguing that the history and context of the court do not favor jurisdictional treatment. The court noted that the Culps had every right to argue that the deadline could be equitably tolled.

Redefining the U.S. Tax Court Petition Form

In the Third Circuit’s view, the U.S. Tax Court petition form and the process attached to it might need revisiting. The court found no language in the statute that linked the deadline to the Tax Court’s jurisdiction.

Looking Forward: The Implications of the Shift

The IRS will now need to be more vigilant when taxpayers file petitions. IRS chief counsel attorneys will have to flag timing issues early on, or risk them being waived. Keith Fogg, director of the federal tax clinic at Harvard Law School, predicts that this decision might conclude the Tax Court’s habit of policing its docket.

While the road ahead still holds some uncertainty, the Third Circuit’s decision marks a turning point in the taxpayers’ favor, bringing with it the promise of more flexibility and potential fairness in the realm of tax court petition deadlines.

Questions on Tax Court Rules?

If you have an IRS tax debt and have questions about your rights in resolving it, whether it be unfiled returns, payment plans, offers in compromise, or levies, contact the experienced tax attorneys at The Tax Defenders for a FREE consultation. 312-345-5440.

Related questions

How long do you have to file a tax court petition?

When served an IRS notice, the duration to file a petition with the Tax Court is traditionally 90 days from the date on the notice. However, this extends to 150 days if the notice is sent to an individual residing outside the U.S. It’s crucial to respect these deadlines if you intend to dispute the proposed tax adjustments.

How long does a taxpayer have to extend the time to petition the tax court?

Typically, the time window a taxpayer has to petition the Tax Court is 90 days after receiving an IRS notice. For those outside the U.S, it’s extended to 150 days. However, in some cases, the deadline may not be jurisdictional and could be subject to equitable tolling, essentially extending the period. But this requires a clear justification, like not receiving the original notice, and is subject to the court’s discretion.

Is petitioning the tax court worth it?

Petitioning the Tax Court is often seen as a beneficial move, with over half of all petitioners achieving some level of tax reduction. In the ‘small cases’ category, those under $50,000, close to half, or 47%, of taxpayers attain at least a partial victory. For ‘regular cases’ involving sums exceeding $50,000, the success rate increases to 60%. Hence, taking the step to petition the Tax Court can prove worthwhile, especially if there’s a strong case.

What happens if you don’t petition the tax court?

Failure to petition the Tax Court after receiving an IRS notice can have significant consequences. If you later realize that you disagree with the IRS’ calculations, you won’t be able to present your case to a judge unless you’ve first paid the full amount the IRS claims is due. This remains true even if the IRS has evidently erred in their tax determination.

How do I respond to an IRS deficiency notice?

Responding to an IRS deficiency notice involves several steps. One option is to request a withdrawal of the notice. Alternatively, you can file a petition if you disagree with the IRS’s tax assessment, leading an IRS agent to respond to your petition. Submitting an offer in compromise is also a valid response. Keep in mind, the strategy you choose should align with your unique tax situation.