No Relief Available Where IRS Letter Gave Wrong Date for Filing Tax Court Petition

(Parker Tax Publishing June 2017)

A taxpayer could not rely on an IRS letter which incorrectly stated the date for filing a petition with the Tax Court to contest the denial of innocent spouse relief. According to the court, the 90-day deadline in Code Sec. 6015(e)(1)(A) for filing a petition with the Tax Court is a jurisdictional requirement and a taxpayer's failure to comply with it deprives the Tax Court of the authority to hear the case, even if equitable considerations would support extending the prescribed time period. Rubel v. Comm'r, 2017 PTC 230 (3d Cir. 2017).

Background

Nancy Rubel and her ex-husband filed joint income tax returns from 2005 through 2008. They had an unpaid tax liability for each year. In 2015, Rubel asked the IRS to relieve her from this liability under the innocent spouse provisions of Code Sec. 6015.

On January 4, 2016, the IRS sent Rubel three identical notices of its final determination denying her requests for relief for tax years 2006 through 2008. On January 13, 2016, the IRS sent Rubel a similar denial for the 2005 tax year. The determinations notified Rubel that, if she disagreed with the IRS's decision, she could file a petition with the Tax Court to review the denial for relief within 90 days from the date of the determination. Accordingly, Rubel needed to file a petition with the Tax Court by April 4, 2016 for the 2006 through 2008 tax years and by April 12, 2016 for the 2005 tax year.

Before filing a petition with the Tax Court, Rubel submitted additional information to the IRS. In a March 3, 2016 letter, the IRS informed Rubel that it considered the information and still proposed to deny relief in full. The IRS also notified Rubel that the correspondence didn't extend the time to file a petition with the Tax Court and that the time to petition the Tax Court began to run when the IRS issued its final determination to Rubel on January 4, 2016 and would end on April 19, 2016. This letter contained incorrect information because the deadlines for Rubel to petition the Tax Court regarding the final determinations were April 4 and 12, 2016, not April 19, 2016.

Taxpayer and IRS Arguments

Rubel mailed a petition challenging the IRS's determinations to the Tax Court on April 19, 2016. The IRS moved to dismiss the petition, arguing that because Rubel failed to file the petition within 90 days of the date of the notices of final determination, the Tax Court lacked jurisdiction to review the petition under Code Sec. 6015(e)(1)(A).

Rubel opposed the motion and argued that the March 3, 2016, letter started a new 90-day period for filing a petition and, in any event, that the IRS should be equitably estopped from relying on the statutory deadline because the March 3 letter contained erroneous information. The Tax Court agreed with the IRS and dismissed the petition. Rubel appeal to the Third Circuit.

The question before the Third Circuit was whether the 90-day deadline in Code Sec. 6015(e)(1)(A) is a jurisdictional requirement or a claims-processing deadline. The court noted that, if Code Sec. 6015(e)(1)(A) is a claims-processing statute, Rubel's failure to comply with it may be subject to waiver, forfeiture, and equitable tolling. If, on the other hand, the deadline in Code Sec. 6015(e)(1)(A) is jurisdictional, Rubel's failure to comply with it deprives the Tax Court of the authority to hear the case, even if equitable considerations would support extending the prescribed time period. Thus, the court stated, determining that a deadline is jurisdictional has the important consequence of limiting a court's power to decide a case.

The Third Circuit affirmed the Tax Court and held that the 90-day deadline in Code Sec. 6015(e)(1)(A) is a jurisdictional requirement and thus, the Tax Curt did not have jurisdiction to hear Rubel's case. The court noted that Code Sec. 6015(e)(1)(A) states that "the Tax Court shall have jurisdiction" if an individual files a petition in the court no later than 90 days after the IRS mails its notice of final determination. The court said that, for purposes of this analysis, it was required to presume that Congress knew that the term "jurisdiction" refers to the authority of a court to hear and decide a case and that it deliberately included that word in the statute. Therefore, in circumstances like this, where Congress clearly states that a threshold limitation on a statute's scope counts as jurisdictional, then courts and litigants will be duly instructed and will not be left to wrestle with the issue." Accordingly, Congress's explicit statement that Code Sec. 6015(e)(1)(A)'s time limit is jurisdictional means that it is and that the Tax Court lacks authority to consider untimely petitions.

The court also noted that the context of the provision - how Code Sec. 6015(e)(1)(A) fits within the statute as a whole - shows that it is jurisdictional. The statute's grant of jurisdiction to the Tax Court and the time limit for activating that jurisdiction, the court pointed, out are located within the same provision. Moreover, the court observed, the provision is located within the same subsection of Code Sec. 6015 that sets forth other conditions that trigger or limit the Tax Court's jurisdiction. The court concluded that the structure of Code Sec. 6015 reflects Congress's intent to set the boundaries of the Tax Court's authority.

For a discussion of innocent spouse relief and the procedures for contesting the IRS denial of such relief, see Parker Tax ¶260,560.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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