Practitioners say further relief is needed for Tax Court petitioners whose deadlines weren’t extended and for those who may be too sick or otherwise unable to file when the court reopens.
“The IRS wanted to get something out quickly, and perhaps they’re going to revisit these Tax Court deadlines,” Sheri A. Dillon of Morgan, Lewis & Bockius LLP told Tax Notes.
Notice 2020-23, 2020-18 IRB 1, provides welcome relief for some Tax Court petitioners, “but it left a gap that is worrying me,” said Dillon. In her role as vice chair of the Pro Bono & Outreach Committee of the American Bar Association Section of Taxation, Dillon went through several filing scenarios to see how COVID-19 could affect low-income and other vulnerable taxpayers who want to have their day in court.
The notice extended to July 15 the deadline for filing any Tax Court petition due between April 1 and July 15. However, it makes clear that any deadlines that expired before April 1 aren’t covered.
Given that the Tax Court clerk’s office shut down March 19, it’s puzzling that the IRS didn’t extend the deadlines for petitioners whose due date fell between March 19 and March 31, Dillon said. “With so many different deadlines to deal with, I was thinking maybe they just wanted to align all the dates in one notice,” she said.
Those who fall into that gap period may run into trouble if they're unaware of the rules on timely filing when the court is inaccessible, Dillon said. Taxpayers can prove they mailed their petition to the court on time by citing the section 7502 “timely mailed, timely filed” rule, which provides that a document will be deemed to have been filed on the date of the postmark stamped on the envelope.
However, taxpayers whose mail is returned to them won't be helped by section 7502 if they're unaware of the importance of saving the envelope and sending a copy of it as proof of timely filing when resending the petition.
The Tax Court website has a note instructing taxpayers to save original envelopes and containers, but that message won’t reach low-income taxpayers whose only access to the internet is at now-closed libraries or other public facilities, said Dillon. Some taxpayers may simply throw the envelope in the trash, “not realizing that was a very important thing to save,” she added.
Leaning on Guralnik
Petitioners who don’t benefit from the extension provided in Notice 2020-23 could cite Guralnik v. Commissioner, 146 T.C. 230 (2016), which held that when the clerk’s office was closed because of a snowstorm, the last date to file a petition was moved to the first accessible day that wasn’t a Saturday, Sunday, or legal holiday.
Applying Guralnik, a petitioner could argue that the March 19 closing of the Tax Court triggered an extended time to file petitions and that deadlines are now extended to the date the clerk’s office reopens.
But Guralnik may not solve every problem, Dillon said. “It helps as long as the taxpayer files the petition on the first day the court reopens,” she said. “However, the general public needs to be aware that the court is open. And the date the court opens may be a different date from when the states and cities lift their stay-at-home orders.”
Carlton Smith, former director of the tax clinic at the Benjamin N. Cardozo School of Law, agreed that some planning is needed to make the Guralnik rule effective.
“I would like the Tax Court to give some advance notice of when its clerk’s office will reopen — perhaps two weeks’ notice — since any extension caused by Guralnik stops instantly on the day the clerk’s office reopens,” said Smith, who outlined in an April 17 post on the blog Procedurally Taxing how the deadline extensions may be insufficient for people too ill or weak from the coronavirus.
Dillon pointed out that some taxpayers whose Tax Court petition deadlines were covered by the notice don’t actually get any extra time. For those who receive deficiency notices dated April 16 or later, the 90-day deadline to file a petition will fall after July 15, the last day of the postponement period in the notice.
Dillon said she’s also concerned about those who receive deficiency notices in mid-April. “If you’re a low-income or vulnerable taxpayer, you don’t have the time right now to be working on a Tax Court petition — you are trying to figure out how to work, how to take care of your kids, how to get food and pay rent,” she explained. “With many of the tax clinics shut down, they also don’t have the opportunity to get assistance on how to file a petition. Even trying to get the records they might need could be difficult if the places that have them are closed.”
Solutions
Smith and Dillon both said that the time has come for Congress to pass legislation clarifying that tax judicial filing deadlines aren’t jurisdictional and are subject to equitable tolling.
“Between shutdowns caused by snow, the government, or a pandemic, it seems like allowing for equitable tolling would certainly be a reasonable approach to take,” said Dillon.
T. Keith Fogg, director of the Harvard Law School Federal Tax Clinic, said another possible approach would be for the IRS to agree that the time period for filing a Tax Court petition in deficiency cases isn’t jurisdictional “and signal that it would not push dismissal of persons who have a good excuse based on COVID or other reasons.”
“I realize that the Tax Court would have the ultimate say over whether it had jurisdiction,” Fogg added. “But if the IRS changed its position, that would go a long way toward persuading the Tax Court, and then legislation would be unnecessary, at least for deficiency jurisdiction.”
The IRS could also help taxpayers better understand the deadline extensions by publishing an FAQ, said Fogg. He suggested the agency could adopt the approach he took in an April 16 post on Procedurally Taxing, in which he gave sample Tax Court filing deadlines under the extensions provided by Notice 2020-23 and by applying Guralnik.
“The Tax Court could also consider putting up guidance that includes Guralnik and how it impacts the timing of a petition,” Fogg said.