Lack of facts precludes equitable tolling of 30-day filing deadline

The Tax Court granted the IRS’s motion to dismiss the case of a taxpayer who filed his petition 107 days past the 30-day period prescribed by Sec. 6330(d)(1) and offered no support for why he should be entitled to equitable tolling of the deadline.

Facts: In October 2021, Richard A. Shaw Jr. Had an unpaid federal income tax liability of $85,906 relating to the 2014 tax year. As a consequence, the IRS issued a notice of intent to levy on Oct. 13, 2021. Shaw timely filed Form 12153, Request for a Collection Due Process or Equivalent Hearing, noting that he was unable to pay the balance due and requesting a collection alternative in the form of an installment agreement.

His case was then assigned to a settlement officer in the IRS Independent Office of Appeals. The settlement officer verified the accuracy of the tax liability and compliance with other legal and administrative requirements and sent a letter scheduling a Collection Due Process (CDP) hearing with Shaw. The letter stated that Shaw had not filed federal income tax returns for 2015 through 2021 and that he would need to come into filing compliance by submitting the returns for those years before a collection alternative could be considered. Additionally, the letter asked Shaw to submit a completed financial statement with supporting documents in advance of a telephone conference hearing. He did neither of these things before the conference.

During the CDP hearing, the settlement officer reiterated that because Shaw had not filed the returns for the years 2015 through 2021, he was not in filing compliance and consequently was ineligible for a collection alternative. The settlement officer also explained that she could not consider an installment agreement because Shaw had not provided any of the financial information necessary for her to assess his ability to pay. She therefore told Shaw that Appeals would issue a determination letter sustaining the levy and advised him that he would have 30 days to petition the Tax Court.

On Jan. 10, 2023, Appeals issued a notice of determination sustaining the levy. The notice stated that if he wanted to dispute the determination, Shaw could file a petition with the Tax Court within 30 days from the date of the notice. On May 27, 2023, 107 days after the due date for the petition, Shaw mailed the Tax Court a letter with the notice of determination attached, which the court filed as a petition on May 30, 2023. In the letter, he acknowledged that he had “missed the 30-day petition period.”

The IRS filed a motion for summary judgment contending that because Shaw’s petition was not timely filed, the IRS was entitled to judgment as a matter of law. The Tax Court directed Shaw to respond to the motion and asked him to “address what facts (if any) explain why he was unable to file his Petition within the 30-day period for filing CDP petitions.” Shaw did not respond to the motion or provide any facts to explain his inability to comply with the 30-day deadline.

Issues: Sec. 6330(d)(1) provides that within 30 days of a CDP determination, a taxpayer may petition the Tax Court for a review of the determination. Shaw’s notice of determination from his CDP hearing was issued on Jan. 10, 2023, which meant that he had until Feb. 9, 2023, to petition the court within the prescribed 30-day period. The letter that served as Shaw’s Tax Court petition was mailed May 27, 2023, 107 days past the due date.

However, Shaw’s case could potentially have still been viable if he was entitled to equitable tolling. The Supreme Court has held that the 30-day deadline for filing a petition for review of a CDP determination is a procedural requirement that is not jurisdictional (Boechler, P.C., 142 S. Ct. 1493 (2022)). Therefore, as the Tax Court explained, it has the authority to consider a late-filed petition in a CDP case where the IRS raises the issue of whether a taxpayer timely filed his petition with the court, if the taxpayer shows that they are entitled to equitable tolling. For a further discussion of Boechler, see “Tax Matters: Late Filing of Petition Does Not Bar Tax Court Jurisdiction” (JofA, July 2022).

To be entitled to equitable tolling, a taxpayer must establish “that he pursued his rights diligently and that extraordinary circumstances prevented him from filing on time,” the court stated (citing Menominee Indian Tribe of Wisconsin, 577 U.S. 250, 255. 57 (2016)). Shaw, however, “offered no explanation for his late filing and alleged no facts that accounted for it.”

Holding: The Tax Court granted the IRS’s motion for summary judgment, which it recharacterized as a motion to dismiss for failure to state a claim upon which relief could be granted, because Shaw’s petition was beyond the 30-day filing deadline and he offered no explanation for his late filing that might have entitled him to equitable tolling.

■ Shaw, T.C. Memo. 2024-48

— Matthew Geiszler, Ph.D., is a lecturer in accounting in the Brooks School of Public Policy; John McKinley, CPA, CGMA, J.D., LL.M., is a professor of the practice in accounting and taxation in the SC Johnson College of Business; and Olivia Larson is a recent graduate of the School of Industrial Relations, all at Cornell University. To comment on this column, contact Paul Bonner, the JofA’s tax editor.