In Culp v. Commissioner, the Third Circuit held that the 90-day Tax Court filing deadline under section 6213(a) was not a jurisdictional requirement, but rather a claims processing rule because Congress failed to clearly state in the statute that the 90-day deadline was "a procedural bar with jurisdictional consequences."1 The court also held that section 6213(a)'s 90-day deadline was subject to equitable tolling because there was insufficient evidence that Congress sought to preclude section 6213(a)'s 90-day deadline from being equitably tolled.2As a result, the Third Circuit reversed the Tax Court's order dismissing taxpayers' petition for lack of jurisdiction and remanded the case back to the Tax Court to determine whether taxpayers were entitled to equitable tolling.
Background
Section 6213(a) provides that a taxpayer may file a redetermination petition with the Tax Court within 90 days after the IRS mails the notice of deficiency to the taxpayer.3If the taxpayer files a redetermination petition with the Tax Court, the IRS is prohibited from levying on the taxpayer's property or attempting to collect the assessed deficiency until the Tax Court renders a final decision.4
In 2015, Isobel and David Culp each received a settlement for a lawsuit, which they reported this income as "Other income" in their 2015 tax return. The IRS later claimed that the Culps underreported these payments, and in November 2017, sent them a letter proposing to increase their taxes owed by the underpayment amount. When the Culps failed to respond, the IRS mailed them a notice of deficiency informing the Culps that they had the right to challenge the deficiency by filing a redetermination petition with the Tax Court within 90 days. The Culps did not respond.5The Culps continued to ignore subsequent IRS notices the following year and in 2018, the IRS levied on their property. In response, the Culps filed a redetermination petition in Tax Court to challenge the assessed underpayment. The Tax Court dismissed the petition for lack of jurisdiction because it was not timely filed within 90 days. The Culps appealed.6
On appeal, the Third Circuit rejected the Culps assertion that the IRS never mailed them the notice of deficiency, and that section 6213(a)'s 90-day clock had not started. However, the Third Circuit held that the 90-day Tax Court filing deadline under section 6213(a) was not a jurisdictional requirement, and was subject equitable tolling, and therefore remanded the case to Tax Court to determine whether the Culps were entitled to equitable tolling.
90-Day Filing Deadline Not a Jurisdictional Requirement
The Third Circuit first addressed the issue of jurisdiction. In determining whether section 6213(a)'s 90-day deadline was a jurisdictional requirement or merely a claims processing rule, the court considered the "'text, context, and relevant historical treatment' of the provision," and reiterated the principle that a procedural requirement is treated as jurisdictional "only if Congress 'clearly states' that it is."7
The Third Circuit applied the Supreme Court's analysis in Boechler, P.C. v. Comm'r, __U.S.__, 142 S. Ct. 1493 (2022). In that case, the Supreme Court held that section 6330(d)(1)'s 30-day time limit to petition the Tax Court for review of collection due process determinations was not jurisdictional, but rather claims-processing in nature, for several reasons. First, the text of section 6330(d)(1) does not clearly state that it is a jurisdictional requirement, but rather "speaks to what the taxpayer may do . . ." Second, the Court reasoned that other Code sections enacted at the same time as section 6330(d)(1) "much more clearly link their jurisdictional grants to a filing deadline."8
Applying the same line of analysis to section 6213(a), the Third Circuit found no clear statement in the language of the statute linking section 6213(a)'s 90-day deadline to the Tax Court's jurisdiction.9The Third Circuit noted that the statutory language in other parts of section 6213(a) expressly limit the Tax Court's jurisdiction (see e.g., "[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").10 The court concluded that Congress clearly knew how to limit the Tax Court's jurisdiction, and the fact that it failed to do so in the very same statute with respect to the 90-day deadline was a clear indication that it was not intended to be a jurisdictional requirement.11
The Third Circuit rejected the IRS's argument that the assessed amount would have preclusive effect in a refund suit if the 90-day requirement is not jurisdictional and a taxpayer's petition is dismissed for late filing.12The court reasoned that such a scenario would be highly unlikely to present itself.13The Third Circuit was equally unpersuaded by the IRS's argument that the Third Circuit was bound by precedent to treat section 6213(a)''s 90-day rule as jurisdictional because the Third Circuit had referred to section 6213(a) as a jurisdictional requirement in passing in a previous opinion.14 The court emphasized that the Culp decision is the first time the Third Circuit has squarely addressed whether the 90-day deadline was jurisdictional.15
90-Day Filing Deadline Is Subject to Equitable Tolling
The Third Circuit then considered whether the 90-day deadline was subject to equitable tolling. Acknowledging that equitable tolling is a fundamental principle of American jurisprudence against which Congress drafts limitation periods, and that "nonjurisdictional limitation periods are presumptively subject to equitable tolling," the Third Circuit considered whether there was good reason to conclude that Congress did not intend for equitable tolling to apply to section 6213(a).16
Based on the plain text, the court determined that section 6213 does not exhibit the hallmarks of a statute that precludes equitable tolling. Because the period for filing "is neither emphasized nor set out in a technical way," and "no express language in the statute suggests the enumerated exceptions are exhaustive," the Third Circuit concluded there was "insufficient textual evidence" that Congress sought to preclude section 6213(a)'s 90-day deadline from being equitably tolled.17
Turning to the statutory context of section 6213, the court reiterated that "[t]he presumption favoring equitable tolling is stronger when the limitations period is short."18 The fact that the 90-day deadline is aimed at the taxpayer rather than the Tax Court, and applies to "a scheme in which 'laymen, unassisted by trained lawyers,' often 'initiate the process,'" supported the court's conclusion that equitable tolling was appropriate given the statutory context.19 Therefore, the court rejected the IRSs argument that permitting equitable tolling would create a significant administrative burden, held that section 6213(a)s 90-day deadline is subject to equitable tolling, and remanded the case to the Tax Court to determine whether the Culps were entitled to equitable tolling.
Looking Forward
The ruling is a setback for the IRS in its efforts to expeditiously levy against delinquent taxpayers. More broadly, the decision signals a willingness by the Third Circuit to scrutinize statutory language to determine whether Congress intended to preclude the possibility of equitable tolling. Following the decision, equitable tolling may be available to taxpayers who file untimely redetermination petitions in Tax Court due to extraordinary circumstances, extreme hardship, or other conditions beyond their control. Although the Tax Court is bound by this decision only in the Third Circuit, it may follow the Third Circuit's approach in future cases. In Organic Cannabis Foundation, LLC v. Commissioner, 962 F.3d 1082 (9thCir. 2020), the Ninth Circuit held that 90-day time limit for filing petition for redetermination was jurisdictional and not subject to equitable exceptions. It has yet to be seen whether the Supreme Court will take this issue up if the IRS appeals the Third Circuit's ruling in Culp.
Footnotes
1. __F.4th__, 2023 WL 4612024, at *3 (3rdCir. Jul. 19, 2023).
2. Id., at *1.
3. Sections 6213(a), 6212. 150 days if the notice is addressed to a person outside the United States.
4. Id.
5. Id.
6. Id., at *2.
7. __F.4th__, 2023 WL 4612024, at *3 (3rdCir. Jul. 19, 2023).
8Id. (citing Boechler, P.C. v. Comm'r, __U.S.__, 142 S. Ct. at 1498-99 (2022)). The Supreme Court specifically notes section 6404(g)(1) as a provision passed contemporaneously with section 6330(d)(1) that clearly links its jurisdictional grant to a filing deadline.
9. Id., at *4.
10. Id.
11. Id.
12. See sections 7459(d), 7422.
13. __F.4th__, 2023 WL 4612024, at *4 (3rdCir. Jul. 19, 2023).
14. Id. (The Third Circuit previously referred to Section 6213(a) as jurisdictional in passing in Sunoco Inc. v. Comm'r, 663 F.3d 181, 187 (3d Cir. 2011), but did not squarely address the issue in that case).
15. Id., at *5.
16. Id.
17. Id., at *6.
18. Id.
19. Id. (citing Boechler, 142 S. Ct. at 1500 (quoting Sebelius v. Auburn Reg'l Med. Ctr., 568 U.S. 145, 153, 133 S.Ct. 817, 184 L.Ed.2d 627 (2013))).
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