Guest blogger: Carlton Smith
There are many court of appeals opinion from a decade or more ago holding the 6532(c) 9-month period in which to file a wrongful levy suit and the 6532(a) 2-year post-disallowance period in which to file a tax refund suit “jurisdictional”. However, in recent years, the Supreme Court, in non-tax cases, has severely narrowed the instances in which mere “claims processing rules” — such as time periods in which to file in courts — are jurisdictional. See Sebelius v. Auburn Regional Medical Center, 133 S. Ct. 817 (2013) (holding a 180-day period in which Medicare providers had to file an administrative review board action not jurisdictional, though also not subject to equitable tolling); Henderson v. Shinseki, 131 S. Ct. 1197 (2011) (holding a 120-day period in which veterans were required to file in an Article I veteran’s court to complain of benefits denials not jurisdictional). Also see my article in Tax Notes, “Cracks Appear in the Code’s ‘Jurisdictional’ Time Provisions”,2012 TNT 210-4 (10/30/12). Will this trend in non-tax cases extend to the tax refund and wrongful levy suit statutes of limitations?
A case pending in the Ninth Circuit, Volpicelli v. U.S., 2011 U.S. Dist. LEXIS 140827 (D. Nev.2011), on appeal as 9th Cir. Docket No. 12-15029, is set to decide the issue of whether the wrongful levy statute of limitations is jurisdictional and, if not, whether it may be equitably tolled. Since the Third Circuit and a few others have previously held that the 6532(c) period is not subject to tolling, and the Ninth Circuit has previously held that the period is both not jurisdictional and is subject to equitable tolling, a conflict may be shaping up that winds up in the Supreme Court.
If it gets there, the Supreme Court will no doubt grapple with how its recent non-tax “jurisdictional” precedents apply to IRC time limits and whether any other time limits in the Code may be equitably tolled. It was in 1997 that the Supreme Court — without discussing whether the administrative refund claim filing periods under 6511(a) or (b) were jurisdictional — ruled in U.S. v. Brockamp, 519 U.S. 347 — that the periods were not subject to equitable tolling. Since then, the DOJ and IRS have usually argued in court that Brockamp stands for the proposition that no IRC time periods are subject to tolling and all are jurisdictional. Recognizing the importance of the Volpicelli case, the Ninth Circuit a few weeks ago assigned a pro bono counsel to the previously-pro se Mr. Volpicelli in both redoing his briefing and conducting the oral argument. The counsel appointed is Brian Goldman of Orrick’s San Francisco office. Mr. Goldman’s specialty is appellate litigation, and during the October 2013 Term of the Supreme Court, he clerked for Justice Sotomayor, after having previously clerked for a judge on the Ninth Circuit. Below is a description of Volpicelli’s facts and a little of the relevant law.
Logan Volpicelli was a minor child in 2003, when the Reno police were investigating his father for theft. Logan’s father, Ferrill, has had many run-ins with the law (see on www.PACER.gov Ferrill’s many cases in the Ninth Circuit) and is currently incarcerated in Lovelock, Nevada. After getting a search warrant for Ferrill’s safe deposit box, the police found two checks totaling around $10,000 that were made out to Ferrill from Ferrill’s parents. The police turned these over to the IRS, since Ferrill owed the IRS over $150,000 in back taxes. Within the 9-month period in section 6532(c) to bring a wrongful levy suit, Ferrill brought suit on behalf of Logan, arguing that the funds for the checks were intended as gifts from Logan’s great-grandparents, so were not really Ferrill’s property. However, the district court told Ferrill that he could not, as a parent, represent his minor son. He had to hire a lawyer for Logan’s suit to proceed. Ferrill lacked money to hire a lawyer, so the suit was dismissed without prejudice.
In 2010, when Logan reached the age of majority (18), he promptly brought a new wrongful levy suit in the Nevada district court. In two Ninth Circuit opinions from 1995, Supermail Cargo, Inc. v. U.S., 68 F.3d 1204, and Capital Tracing v. U.S., 63 F.3d 859, the court had held that the 6532(c) time period was not jurisdictional and could be equitably tolled under the rebuttable presumption in favor of tolling that the Supreme Court had announced in Irwin v. Department of Veterans Affairs, 498 U.S. 89 (1990). Citing these Ninth Circuit authorities, Logan asked the court to toll the 6532(c) time period. However, the district court dismissed this second suit for lack of jurisdiction as untimely. After noting the single exception in 6532(c) for tolling the 9-month period, the court wrote: “Because the limitations do not provide for an implicit reading of an equitable exception due to the age of majority, Plaintiff is barred by the statute of limitations pursuant to Brockamp.” In 1995, the Ninth Circuit, in Brockamp, had also held that the 6511 time periods for filing administrative refund claims could be equitably tolled under the Irwin presumption — a ruling the Supreme Court rejected two years later. Among the reasons why the Supreme Court rejected tolling for 6511 were the complexity of the numerous other exceptions in the statute, the possible administrative nightmare involved in reviewing late refund claims on tens of millions of tax returns, and the fact that (so the court said), “Tax law, after all, is not normally characterized by case-specific exceptions reflecting individualized equities.” In my article, I criticize this last comment of the Court and point out over a dozen instances in the tax collection process where equity determinations are made — e.g., equitable recoupment, suits in equity to foreclose on property, and, arguably, the Collection Due Process provisions.
In the Ninth Circuit, the government is arguing that both Supermail Cargo and Capital Tracing were wrong and were implicitly overruled by Brockamp. The government also cites a 2000 Third Circuit opinion — i.e., post-Brockamp — holding that the 6532(c) period may not be equitably tolled, Becton Dickinson & Co. v. Wolkenhauer, 215 F.3d 340, 352. But even Becton Dickinson was decided before the recent Supreme Court case law restricting the use of the word “jurisdictional”. For example, here is a quote from the Supreme Court’s 2011 opinion in Henderson v. Shinseki about how, even the Supreme Court acknowledges, it over-used the term “jurisdictional”:
Because the consequences that attach to the jurisdictional label may be so drastic, we have tried in recent cases to bring some discipline to the use of this term. We have urged that a rule should not be referred
to as jurisdictional unless it governs a court’s adjudicatory capacity, that is, its subject-matter or personal jurisdiction. Other rules, even if important and mandatory, we have said, should not be given the jurisdictional brand. Among the types of rules that should not be described as jurisdictional are what we have called “claim-processing rules.” These are rules that seek to promote the orderly progress of litigation by requiring that the parties take certain procedural steps at certain specified times. Filing deadlines, such as the 120-day filing deadline at issue here, are quintessential claim-processing rules. Accordingly, if we were simply to apply the strict definition of jurisdiction that we have recommended in our recent cases, we would reverse the decision of the Federal Circuit, and this opinion could end at this point. Unfortunately, the question before us is not quite that simple because Congress is free to attach the conditions that go with the jurisdictional label to a rule that we would prefer to call a claim-processing rule. The question here, therefore, is whether Congress mandated that the 120-day deadline be “jurisdictional.” In Arbaugh [v. Y & H Corp., ], we applied a “readily administrable bright line” rule for deciding such questions. Under Arbaugh, we look to see if
there is any “clear” indication that Congress wanted the rule to be “jurisdictional”.
Last year, the Federal Circuit held that the 6511(b) lookback tax payment periods were not jurisdictional (though, citing Brockamp, held that no equitable tolling could apply to those periods). Boeri v. U.S., 724 F.3d 1367, 1369, cert. denied 2013 U.S. LEXIS 8950 (Dec. 9, 2013). And the year before, the D.C. Circuit, citing Henderson, held that the time period in which to bring a wrongful collection activity damages suit under 7433 was not jurisdictional. Keohane v. U.S., 669 F.3d 625, 630.
But, of course, if a time period is not jurisdictional, that does not mean that it is necessarily subject to equitable tolling. It just means that the inquiry can proceed to the equitable tolling issue and the Irwin presumption in favor of tolling. See the Auburn Regional Medical Center opinion from the Supreme Court last year, which held that a time period was not jurisdictional, but also was not subject to tolling. If 6532(c)’s wrongful levy time period is not jurisdictional, there are good reasons for holding it subject to tolling in the appropriate case. For example, the 9-month period is relatively short and has only one exception (if one files an administrative claim first) — not complicated with multiple exceptions like 6511. Since there are very few wrongful levy lawsuits, there would be no administrative nightmare if tolling were allowed of the period.
There is no pending challenge that I am aware of in the courts of appeal over whether the 6532(a) 2-years-from-disallowance period to bring a tax refund lawsuit under 28 USC 1346(a)(1) is jurisdictional or subject to equitable tolling. In the past, all Circuits to consider the question — usually in cases quite old — have held the 6532(a) period to be jurisdictional and not subject to tolling. See, e.g., RHI Holdings, Inc. v. U.S., 142 F.3d 1459 (Fed. Cir. 1998). Surprisingly, recent lower court opinions facing this issue seem not to discuss the recent changes in Supreme Court case law on what is jurisdictional. For example, last year, in Aljundi v. U.S., 112 AFTR 2d 2013-7297 (C.D. Cal.) (cited in Stephen Olsen’s post earlier this week), the district court did not cite any Supreme Court or Ninth Circuit authority, but merely cited the RHI opinion of the Federal Circuit for the court’s holding that the 6532(a) period was jurisdictional.
It is time for the courts in tax cases to consider at length the recent Supreme Court opinions both on what is jurisdictional and what is subject to equitable tolling. Perhaps the Volpicelli case in the Ninth Circuit will bring some clarity to this issue — particularly if it goes further on to the Supreme Court.