Today we welcome back guest blogger Bryan Camp. Professor Camp, my former colleague in the General Litigation Division (aka collection division) of Chief Counsel, IRS now teaches at Texas Tech. Because Bryan teaches a wide range of subjects including administrative law and civil procedure in addition to tax, he has a perspective on the Guralnik case that someone like me, who is grounded primarily in tax, does not have.
It is weird to receive congratulations about a case in which the Court rejected your argument 16-0. I had never had the pleasure of losing by that margin before and hope to not have that pleasure again. It gives me a better perspective of how all of the Republican Presidential wannabes felt when the voters rejected them though even their voting margins were not as bad as mine. Without going too deeply into an analogy I am ill-equipped to carry out, the case reminds me a bit of the superpower movies of the past 10-15 years. The characters frequently have misgivings about the powers they find they have and struggle to cope with their special powers. The Harvard tax clinic argued that the Tax Court has powers it has not previously exercised. The Court emphatically rejected that idea. Yet, it found it had another power it had not previously exercised and which it had rejected on more than one occasion. I might argue that the power it found it had is a more exceptional power than the one the Harvard tax clinic suggested since the Supreme Court has previously limited the power of court Rules to expand jurisdictional limits but I have had my time to argue and now it is Professor Camp’s turn to explain. Keith
Congratulations to Keith and Carl for helping the Tax Court find a way to get to the right decision in Guralnik v. CIR, 145 T.C. No. 15 (June 2, 2016). Yeah, they struck out on the home run swing, but Mr. Guralnik still managed to eke out a win, in part I think because Tax Court (mistakenly) thought the step it took was not nearly as large as what Keith and Carl urged. I am grateful to the Procedurally Taxing gang for allowing me to write my thoughts about this very interesting 37 page Tax Court opinion.
The judge I clerked for in the Court of Federal Claims used to say “where equity lies, the law will follow.” Of course, he usually said that while strictly construing jurisdictional requirements to deny the petitioner relief. So he might as well have added the caveat: “but the law has not yet followed in this case.” Like the Court of Federal Claims, the Tax Court is very, very cautious about not overstepping its Congressionally-given bounds. In Guralnik, however, the Tax Court at least found some “law” to follow “equity” and so came to a good result. But one has to be discouraged by the convoluted path the Court took, a path forced upon it, in part, by the Supreme Court.
I have three comments about this case that may be of interest to readers. First, the Court’s opinion relies on what I believe is a mischievous distinction between “claim processing rules” and “jurisdictional rules.” Second, the Court could have done a better job applying that distinction. Third, by applying FRCP 6(a), the Court actually may be contradicting its own rationale for not applying equitable tolling, because FRCP 6(a) is best viewed as itself nothing more than an equitable tolling rule, albeit one put into the “form” of a rule (hence the law following equity idea). While I think the Court was right to follow the FRCP, I wish it had given a better reason than it did.
For those unfamiliar with the case, here are the facts reduced to their essentials: taxpayer (TP) was trying to file a collection due process (CDP) petition. TP tried to deliver the petition on the last day of the filing period, but was unable make delivery because the Tax Court was officially closed that day due to a snowstorm. So TP had to file the next day. The question was whether the petition was untimely.
The TP, aided by Keith and Carl’s amicus brief, urged the Tax Court to find that these circumstances equitably tolled the period for filing a timely petition. The Tax Court rejected the argument because, it said, the statute granting the Court subject matter jurisdiction (SMJ) over a CDP petition made the timely filing of the CDP petition part of the jurisdictional grant. The Tax Court reasoned that while it could apply equitable tolling to what it called “claim-processing rules” it could “not apply equitable tolling to a jurisdictional filing requirement.” The Court cited to Sebelius v. Auburn Reg’l Med. Ctr., 133 S. Ct. 817, 824 (2014) for that proposition.
TP won his backstop position, however. Federal Rule of Civil Procedure 6(a)(3)(A) says that “Unless the court orders otherwise, if the clerk’s office is inaccessible…on the last day for filing…then the time for filing is extended to the first accessible day that is not a Saturday, Sunday, or legal holiday.” The Tax Court had no difficulty in applying FRCP 6(a)(3)(A) to save the taxpayer, reasoning that “procedural rules for computing time are fully applicable where the time period in question embodies a jurisdictional requirement. Rather than expanding a court’s jurisdiction, Civil Rule 6 simply supplies the tools for counting days to determine the precise due date.” (Internal quotes and cites omitted).
- The Silly Distinction between “Claim Processing” and “Jurisdictional” Timing Rules
The notion that courts have equitable powers to modify ordinary “claim processing” rules but have no ability to modify “jurisdictional” timing rules is a nefarious formalist distinction. This is not the Tax Court’s doing. The Court here is just obeying the distinction created by the Supreme Court in cases such as Irwin v. Department of Veterans Affairs. 498 U.S. 89 (1990). As that Court noted in Auburn Reg’l Med. Ctr., 133 S. Ct. 817 at 824, it has “tried in recent cases to bring some discipline to the use” of the term “jurisdiction” which it has called a “word of many, too many, meanings.” (Internal quotation marks and citations omitted).
I have two reasons for disliking the distinction. I think briefly stating them may help future courts (or to litigants educating courts!) who are called upon to make the distinction.
First, the word “jurisdiction” just means “power.” It is true there are many types of jurisdiction that one considers, but, for this type of case, we are concerned with the problem faced by all federal courts, whether established under Article I or III: their power over the substance of the lawsuit comes from statutes. We call that Subject Matter Jurisdiction (SMJ).
I do not believe rules about filing deadlines are usually really rules about power, such as to say “oh, you HAD power, but after this deadline passes, you no longer have power, nanny nanny boo boo.” All deadlines are “claim processing rules” in the sense that they speak to a party’s ability to invoke the power, to open the courthouse door, so to speak. They do not speak to a court’s power over a subject per se. Consider a statute that says “A party wishing to invoke the court’s subject matter powers must dance the Macarena for five minutes in the street before the party may open the courthouse door.” Determining whether a party actually performs the dance or leaves out a step is not a question about the court’s power over the subject of the lawsuit but is only a determination about whether the party has earned the right to come in. Determining whether a party has taken the proper action to have filed a timely petition is like evaluating whether the dance was properly done.
To be sure, there is a long-standing, never-ending, permanent, floating crap-game of arguments that one throws up to debate whether timing provisions are “substantive” or “procedural.” First year law students study one (and only one) dimension of this debate in the context of studying the Erie Doctrine. And when one looks carefully at the Erie case law, one finds that courts (and the Supreme Court) are careful to answer the question “is it substantive or procedural” with “why do you want to know.” So, while timing rules might be substantive for some purposes, that does not make them per se part and parcel of a jurisdictional grant.
The second reason I dislike the distinction is because it ignores the fundamentals of separation of powers. Every branch of government (legislative, executive, judicial) has the power to determine its own powers, subject to the allowed corrections from the other branches. So there is really no reason for courts not to apply equitable powers to modify even “jurisdictional” provisions. If the courts get it wrong, the legislatures can always come back and codify corrections. Maintaining the distinction between “claim processing rules” and “jurisdictional rules” just seems to create unneeded problems and litigation.
2. Applying the Silly Distinction to Section 6330.
Recognizing that the Tax Court was stuck with the distinction, I nonetheless wished it had given more attention to analyzing the particular statute that gives it SMJ over CDP claims. Section 6330(d) provides that the TP “may, within 30 days of a determination under this section, appeal such determination to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).” (Emphasis supplied, for reasons you will shortly read.)
In the Guralnik opinion, the Tax Court focuses on the fact that the parenthetical occurs in the same sentence as the SMJ grant. That’s a strange reason to find the timing rule jurisdictional. There are two better reasons to find otherwise. First, the use of the word “and” is, to me, a HUGE clue that the SMJ grant has nothing to do with the 30 day period. Grammatically, the connector “and” denotes the start of a new independent clause, a clause that can stand on its own as a separate sentence. I am all the time telling my students to write shorter sentences. That often means substituting a period for an “and.” So, functionally, the clause after the “and” in 6330(d) is a different sentence.
Second, the statute says the Tax Court has SMJ “with respect to such matters.” If you want to find a reference in the same subsection, the word “such” most naturally references the phrase “determination under this section” and not the clause “within 30 days.” However, I think the better reading is to read section 6330 as a whole. In the immediately preceding subsection, 6330(c) lists all the “Matters Considered at Hearing.” So it makes sense to me that 6330(c) tells the IRS what matters it must consider at the CDP hearing and then 6330(d) tells the Tax Court it has SMJ over “such matters.” I think THAT’s the reference as to what the Tax Court has power to review. Again, SMJ is just the power Congress gives a court over the subject of a lawsuit. Here, the subject is the review of the CDP hearing and the “matters” contained in the CDP hearing are listed in 6330(c).
3. Is The Tax Court’s Reason for Applying FRCP 6 Consistent With Its Reason for Refusing to Apply Equitable Tolling?
Once the Tax Court concludes that the 30-day requirements is not just a “claim-processing rule” but is jurisdiction, it rejects the Taxpayer’s equitable tolling argument because, it says, “A court may not apply equitable tolling to a jurisdictional filing requirement.” The Court never explains why it cannot apply equitable tolling to a jurisdictional filing requirement but instead just cites to the Supreme Court’s opinion in Sebelius v.Auburn Reg’l Med. Ctr., 133 S. Ct. 817 (2914) and to its own opinion in Pollock v. CIR, 132 T.C. 21 (2009). When one reads the cited opinions, however, and then reads the opinions cited in the cited opinions (!) one sees two basic concerns courts have articulated in explaining their reluctance to use equitable powers to jurisdictional filing requirements. First is a concern for finality. Here is how the 11th Cir. has explained it:
The principal reason underlying decisions which hold that statutory periods of limitation are jurisdictional… is to set a definite point of time when litigation shall be at an end, unless within that time the prescribed application has been made; and if it has not, to advise prospective appellees that they are freed of the appellant’s demands. In the specific context of direct appeals from decisions of administrative agencies, the time limitation serves the important purpose of imparting finality into the administrative process, thereby conserving administrative resources and protecting the reliance interests of regulatees who conform their conduct to the regulations.
Brown v. Dir., Office of Workers’ Comp. Programs, 864 F.2d 120, 124 (11th Cir.1989) (citations and internal quote marks omitted).
The second concern is about the proper separation of powers. Courts might abuse their equitable tolling powers and thereby screw up a carefully calibrated statutory scheme. That’s the thrust of the Supreme Court’s concern in United States v. Brockamp, 519 U.S. 347 (1997), when it refused to allow equitable tolling to the section 6511 limitations on refund claims and suits.
Section 6511’s detail, its technical language, the iteration of the limitations in both procedural and substantive forms, and the explicit listing of exceptions, taken together, indicate to us that Congress did not intend courts to read other unmentioned, open-ended, “equitable” exceptions into the statute that it wrote. There are no counter-indications. Tax law, after all, is not normally characterized by case-specific exceptions reflecting individualized equities.
The nature of the underlying subject matter—tax collection—underscores the linguistic point. The IRS processes more than 200 million tax returns each year. It issues more than 90 million refunds. To read an “equitable tolling” exception into § 6511 could create serious administrative problems by forcing the IRS to respond to, and perhaps litigate, large numbers of late claims, accompanied by requests for “equitable tolling” which, upon close inspection, might turn out to lack sufficient equitable justification. See H.R. Conf. Rep. No. 356, 69th Cong., 1st Sess., 41 (1926) (deleting provision excusing tax deficiencies in the estates of insane or deceased individuals because of difficulties involved in defining incompetence). The nature and potential magnitude of the administrative problem suggest that Congress decided to pay the price of occasional unfairness in individual cases (penalizing a taxpayer whose claim is unavoidably delayed) in order to maintain a more workable tax enforcement system. At the least it tells us that Congress would likely have wanted to decide explicitly whether, or just where and when, to expand the statute’s limitations periods, rather than delegate to the courts a generalized power to do so wherever a court concludes that equity so requires.
United States v. Brockamp, 519 U.S. at 352 (citations and internal quote marks omitted).
Tax exceptionalism alert!! Note the way the Supreme Court acknowledges how “the nature of the underlying subject matter” is an important part of its analysis. That’s tax exceptionalism, folks.
It would have been helpful for the Tax Court to explicitly acknowledge these two traditional concerns underlying the historic refusal of courts to apply equitable tolling to jurisdictional timing periods because the Tax Court then goes on to find a substitute for equitable tolling in FRCP Rule 6.
FRCP Rule 6, however, is just a rule that explicitly permits federal courts to equitably toll a filing limitation when the place of filing is “inaccessible.” My claim that this is an equitable rule rests on two observations. First, note how FRCP 6(a)(3)(A) starts: “Unless the court orders otherwise…” In order words, the courts have discretion to overrule the rule. Why would they do that? Why, for “good cause.” That’s all equitable tolling is, a determination that for a good reason or good cause a seemingly late-filed document will be deemed to have been filed within the applicable period. FRCP just reverses the presumption, but it still leaves the determination up to the court. If there is a good reason to NOT extend the time for filing despite the inaccessibility of the court, the court may “order otherwise.” So in this case, for example, if Mr. Guralnik’s Fed Ex delivery person had been scheduled to deliver the package late, the fact that the Court was inaccessible the day before scheduled delivery would probably be a good reason to “order otherwise.”
Second, note that the FRCP applies whenever the clerk’s office is “inaccessible.” What does that word mean? Does that mean physically inaccessible? Some courts think so. U.S. Leather, Inc. v. H & W Partnership, 60 F.3d 222, 225, (5th Cir. 1995). Other disagree and say it means only when legally closed. In re Bicoastal Corp., 136 B.R. 288 (Bankr.M.D.Fla.1990). Does the term include situations when the clerk’s office is physically open but the party is trying to electronically file from across the country and the servers are down? All of these questions rest in the good hands and heads of the judges applying the FRCP. They will decide in light of what is fair. That is what the drafters say they intended in the 2009 Advisory Committee Notes: “The rule does not attempt to define inaccessibility. Rather, the concept will continue to develop through case law.” And “case law” here just means the judicial application both legal rules and of equitable rules. After all, law and equity have been merged in the federal courts since 1938. There is no longer a “law” side and an “equity” side and both sets of rules—legal and equitable—are in the judicial tool box under every federal bench.
So if the Tax Court is not going to apply “equitable tolling” doctrines to the section 6330 30-day deadline, why does it decide to use FRCP 6? After all, not only does the Advisory Committee say that the FRCP will develop by case law, the FRCP itself is a judge-made rule, subject to case law development, just as is the doctrine of equitable tolling. To be sure, the FRCPs are promulgated by the Supreme Court pursuant to the Rules Enabling Act (REA), but it would be difficult to argue that the writers of the REA thought they were thereby giving courts license to alter SMJ! So is not using the FRCP to alter the jurisdictional timing rule of 6330 doing exactly what the Tax Court says it courts cannot do??
The Tax Court thinks applying FRCP 6 is different than applying equitable tolling. It says “Rather than expanding a court’s jurisdiction, Civil Rule 6 simply supplies the tools for counting days to determine the precise due date. Such rules of procedure do nothing more than provide the court and the parties with a means of determining the beginning and end of a statute of limitations prescribed elsewhere in the law.” (Internal quotes and cites omitted).
I confess I do not follow this reasoning. That is, I think one can make the same statements about equitable tolling. Let’s try: “Rather than expanding a court’s jurisdiction, the rules of equitable tolling simply supply the tools for counting days to determine the precise due date. Such rules do nothing more than provide the court and the parties with a means of determining the beginning and end of a statute of limitations prescribed elsewhere in the law.”
Hmmm. What’s the difference here? Both sets of rules are entirely judge made! Well, one obvious difference is that the “rules” of equitable tolling are manifold whereas FRCP 6 is narrower, dealing with only one (recurring) set of facts that, as such, warrant an actual rule. The Tax Court implicitly claims that FRCP 6 gives parties more certainty than the myriad rules of equitable tolling. So that may go to the first concern about allowing equitable tolling of jurisdictional timing rules: finality. It would have been better for the Court to explicitly discuss that concern.
The Tax Court’s reluctance to embrace a far-reaching ill-defined equitable tolling concept may also reflect the Brockcamp concerns. That is, at first blush the CDP provisions do not appear nearly as integral to tax administration as the 6511 periods. Something like 1% of taxpayers who receive a CDP Notice actually try for a CDP hearing. But perhaps the concern is that if the Tax Court allows equitable tolling, you will start getting double or triple the number of petitions to deal with. Or more. You will start getting really, really stale petitions and lame excuses. Hey, I am a professor. I know from lame excuses. So is that what the Tax Court fears? Is it worried about opening the proverbial floodgates of lame excuses?
If the flood-gate concern is what is really animating the Tax Court’s decision here, it would have been useful to see it and to see the Tax Court more explicitly tie it to Brockcamp. I personally think there is a plausible argument that sticking with a bright line rule is itself equitable, especially since there is absolutely no constitutional concern here about due process. Phillips v. Commissioner, 283 U.S. 589 (1931). So I am not unhappy with the Tax Court’s Solomonic decision to reject one form of equitable tolling in favor of what may well be a more limited exercise of equitable tolling. And for this TP, in this case, that’s all that is needed.