Second Circuit reverses Tax Court’s dismissal of deficiency petition

The Second Circuit held that the Sec. 6213(a) deadline to file a Tax Court deficiency petition is a nonjurisdictional, claim-processing rule subject to equitable tolling. Therefore, it reversed the Tax Court’s dismissal of the taxpayers’ untimely filed deficiency petition.

Facts: On Aug. 22, 2022, the IRS sent a notice of deficiency to Mark Buller and Sarah Beatty regarding their 2018 income tax returns. The couple had 90 days from the date the notice of deficiency was issued to file a petition with the Tax Court challenging it (Sec. 6213(a)). Their counsel missed the deadline, filing the petition nine days late. On Jan. 27, 2023, the IRS filed a motion in the case to dismiss the petition for lack of jurisdiction. In opposing the motion, the taxpayers argued that the Sec. 6213(a) deadline is nonjurisdictional and subject to equitable tolling. The Tax Court disagreed, stating that it lacked jurisdiction to hear the case because the IRS had properly mailed the notice of deficiency to the couple, who failed to file their petition timely (Buller, T.C. No. 25011-22, order of dismissal (3/8/24)). The couple timely appealed the decision to the Second Circuit.

Issues: The taxpayers again argued that Sec. 6213(a) is a nonjurisdictional, claim-processing rule. Sec. 6213(a) states that a taxpayer has 90 days from when a notice of deficiency is mailed (or 150 days if it is addressed to a person outside the United States) in which they may file a petition with the Tax Court for a redetermination of the deficiency.

The Second Circuit explained that it has long defined Sec. 6213(a) “as jurisdictional in nature” (Galvin, 239 F.2d 166 (2d Cir. 1956)). In recent years, however, the Supreme Court has tried to “bring some discipline” to the word “jurisdiction,” because judicial opinions have often dismissed cases for lack of jurisdiction without considering whether the procedural rule actually “govern[ed] [the] court’s adjudicatory capacity” (Henderson ex rel. Henderson v. Shinseki, 562 U.S. 428 (2011); see also Arbaugh v. Y&H Corp., 546 U.S. 500 (2006)). The Supreme Court has stated that “such imprecision can have significant consequences” for taxpayers and courts, since jurisdictional provisions “cannot be waived or forfeited, must be raised by courts sua sponte, and … do not allow for equitable exceptions” (Boechler, P.C., 596 U.S. 199 (2022)).

Therefore, the Second Circuit found that the question before it was whether the cases defining Sec. 6213(a) as jurisdictional but offering no explanation for that conclusion are still good law after “Arbaugh and its progeny.” Under Second Circuit precedent, its panels are bound by the decisions of its prior panels until they are overruled by a panel of all the judges of the Second Circuit or by the Supreme Court. The court noted that a narrow exception, though, exists where there has been an intervening Supreme Court decision that casts doubt on the court’s controlling precedent. In addition, the Supreme Court has held that a court’s dismissal of a case simply because it lacks jurisdiction, when some threshold fact has not been established, should receive no precedential effect (Wilkins, 598 U.S. 152 (2023)).

As the Supreme Court stated in Wong, 575 U.S. 402, 409 (2015), “the [g]overnment must clear a high bar to establish that a [procedural rule] is jurisdictional,” and Congress must plainly show, through “traditional tools of statutory construction,” that it “imbued a procedural bar with jurisdictional consequences” (id. at 410). The Second Circuit found that Congress had not done this with respect to Sec. 6213(a). To have jurisdictional consequences, the court found, the jurisdictional nature of the procedural requirement must be clear, not merely plausible or even better than its nonjurisdictional alternatives. The Second Circuit pointed to the Supreme Court’s observation in Wong that most time bars are nonjurisdictional, claim-processing rules, seeking to “promote the orderly progress of litigation” but not to “deprive a court of authority to hear a case” (Wong, 575 U.S. at 410).

Because Congress had not clearly imbued the Sec. 6213(a) filing deadline with jurisdictional consequences, the Second Circuit held that it is a nonjurisdictional, claim-processing rule. The court found that Sec. 6213(a) speaks to a claim’s timeliness, not to “a court’s power,” which is “mundane statute-of-limitations language” (id.). The court also noted that the language of Sec. 6213(a) simply states that a taxpayer “may file a petition” (emphasis added) and that the Supreme Court has held that similarly permissive language “does not speak in jurisdictional terms” (Sebelius v. Auburn Regional Medical Center, 568 U.S. 145 (2013)). In addition, the court stated that Sec. 6213(a) is “directed at the taxpayer, rather than the court,” which indicates that the filing deadline speaks more to a party’s procedural obligations than to the court’s authority.

Furthermore, the Second Circuit found that there is no “clear tie” between the Code’s jurisdictional provisions and Sec. 6213(a)’s filing deadline, observing that the word “jurisdiction” does not even appear in any relevant sentence in Sec. 6213(a). Moreover, unlike Sec. 6015(e)(1)(A), which the court had previously found “expressly condition[s] the Tax Court’s jurisdiction” on a timely filed petition (seeking relief from joint-and-several liability on a jointly filed return), Sec. 6213(a) contains no express link to the Tax Court’s jurisdiction. Finally, the court noted that, although Congress had amended Sec. 6213(a) multiple times since 1924, it had at no point said anything specific about the Sec. 6213(a) deadline imposing a jurisdictional bar.

Acknowledging in its brief that Sec. 6213(a)’s “bare text speaks to jurisdiction implicitly” at best, the IRS fell back on several arguments to support its position that the court lacked jurisdiction and must dismiss the case. The Service pointed out that a later sentence in Sec. 6213(a) states that the “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.” However, the Second Circuit found that a requirement does not become jurisdictional just because Congress places it in a section of the statute that also contains a jurisdictional provision. The court noted that the Supreme Court rejected an analogous argument in Boechler, explaining that the prospect that a statute deprives the Tax Court of the authority to issue an injunction in a subset of appeals “does not itself establish a clear jurisdictional statement” (Boechler, 596 U.S. at 208). If anything, in the Supreme Court’s view, the clear statement of jurisdiction regarding injunctive relief “‘highlights the lack of such clarity’ earlier in the statutory provision” (id.).

The IRS also emphasized that before 2023, every federal appellate court to reach the question had held that Sec. 6213(a)’s deadline is jurisdictional, and the Supreme Court has held that a requirement may be jurisdictional when a long line of Supreme Court decisions, left undisturbed by Congress, deem it to be jurisdictional (Fort Bend County v. Davis, 587 U.S. 541, 548 (2019)). The Second Circuit rejected this argument because it found that, with respect to the Sec. 6213(a) deadline, no line of Supreme Court decisions holding it to be jurisdictional existed.

The IRS further argued that treating Sec. 6213(a) as nonjurisdictional cannot be reconciled with Sec. 7459(d), which states that “a decision of the Tax Court dismissing the proceeding shall be considered as its decision that the deficiency is the amount determined by the Secretary … unless the dismissal is for lack of jurisdiction.” The IRS reasoned that treating Sec. 6213(a) as nonjurisdictional would harm taxpayers who file an untimely petition since it would lock in the deficiency amount for these taxpayers.

The Second Circuit determined that even if it accepted the IRS’s interpretation of Sec. 7459(d), that would not change the court’s analysis. As the court noted, the Third Circuit, when addressing this argument in Culp, 75 F.4th 196 (3d Cir. 2023), had explained that this situation presents itself only “if a taxpayer files a late petition for redetermination of a deficiency, the Tax Court dismisses his or her petition, [and] the taxpayer then pays the disputed deficiency, files for a refund, gets denied, and then sues in federal court challenging the denial.” The Third Circuit viewed this as theoretically possible but likely seldom, if ever, to occur.

The Second Circuit next addressed whether Sec. 6213(a) is subject to equitable tolling. In Boechler, the Supreme Court found that “[e]quitable tolling is a traditional feature of American jurisprudence and a background principle against which Congress drafts limitations periods” (Boechler, 596 U.S. at 208—09), and, as a result, nonjurisdictional limitation periods are presumptively subject to equitable tolling. Thus, the Supreme Court held that the Sec. 6330(d)(1) deadline for filing a petition for review of a Collection Due Process determination is subject to equitable tolling. The Second Circuit found that the rationale underlying the Supreme Court’s decision regarding Sec. 6330(d)(1) applied with equal force to Sec. 6213(a). According to the Second Circuit, like Sec. 6330(d)(1), Sec. 6213(a) “does not expressly prohibit equitable tolling,” and its short time frame is directed more at the taxpayer, not the court. Also, Sec. 6213(a) is in a section of the Code that is more protective of taxpayers and is often initiated by them, usually unassisted by a trained lawyer.

The Second Circuit also distinguished Sec. 6213(a) from Sec. 6511, which provides a limitation period for claiming a credit or refund of an overpayment, that the Supreme Court held is not subject to equitable tolling in Brockamp, 519 U.S. 347 (1997). The Supreme Court noted in its opinion that, specifically, Sec. 6511 sets forth its time limits in “unusually emphatic form” and in a highly technical manner that cannot be read as “containing implicit exceptions.” The same, the Second Circuit found, could not be said about Sec. 6213(a), which contains few exceptions, none of which are set out explicitly or in a highly detailed manner and do not contain substantive limitations on the amount of recovery.

Furthermore, in the Second Circuit’s view, the Sec. 6213(a) deadline “serves a far more limited and ancillary role in the tax collection system,” potentially affecting 0.011% of the tax base. The court reasoned that applying equitable tolling to Sec. 6213(a) will probably not “encourage more taxpayers to file untimely petitions in the (longshot) hopes of bringing a successful equitable tolling argument” (citing Culp, 75 F.4th at 204). Therefore, the court held that Sec. 6213(a) is subject to equitable tolling.

Holding: The Second Circuit held that Sec. 6213(a) is a nonjurisdictional, claim-processing rule subject to equitable tolling. Thus, the court reversed the judgment of the Tax Court and remanded the case to the Tax Court to determine whether the taxpayers were entitled to equitable tolling.

• Buller, No. 24-1557 (2d Cir. 8/14/25)

— 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 Matthew Geiszler, Ph.D., is a lecturer in accounting in the Brooks School of Public Policy, both at Cornell University in Ithaca, N.Y. To comment on this column, contact Paul Bonner the JofA‘s tax editor.