Tax Court petition deadline not tolled by identity theft claim

The Tax Court held that a taxpayer’s identity theft did not equitably toll the 30-day petition filing deadline under Sec. 6330(d)(1) where the petition was filed four years after a notice of determination was issued and the identity theft did not affect the tax year in question.

Facts: As of April 2018, Debra and Timothy Reed had unpaid federal income taxes of $1,866 for their 2015 tax year. To collect them, the IRS levied against their state tax refund, advising them in April 2018 of their right to a Collection Due Process (CDP) hearing, which they requested on April 9, 2018. In October 2018, during the CDP administrative process, the IRS Office of Appeals (Appeals, later renamed the IRS Independent Office of Appeals), verified Debra Reed’s claim of identity theft regarding the couple’s 2012 tax year. Appeals could not verify, though, an identity theft issue for 2015. The Reeds’ Forms W-2, Wage and Tax Statement, for that year matched the figures used in processing their return. According to the administrative record, the Reeds failed to provide to Appeals their 2015 Form 1040, U.S. Individual Income Tax Return; Form 14039, Identity Theft Affidavit; or their financial information on Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals, and failed to request a collection alternative.

On April 25, 2019, the IRS issued a notice of determination sustaining its initial levy and advising the Reeds they had 30 days to file a petition with the Tax Court. That period under Sec. 6330(d)(1) expired on May 28, 2019. The Reeds filed their petition with the court on June 26, 2023, more than four years after the IRS issued the notice of determination. The Reeds stated that the reasons for the delay were “IRS accounting errors” due to Debra Reed’s “being an identity theft victim in 2012” and the failure of the IRS to “credit garnished amounts against taxes owed.” In support of their arguments, the Reeds provided a copy of a letter from the U.S. Department of Justice (DOJ) “substantiating [Debra Reed’s] identity theft claim.” However, there was no indication that any of these “impairments or special circumstances” continued between April 2019 and June 2023.

The IRS asked the Tax Court, in a motion for summary judgment (which was recharacterized by the court as a motion to dismiss for failure to state a claim upon which relief could be granted), to address the remaining issue in the case of whether the Reeds’ petition was untimely pursuant to Sec. 6330(d)(1). In their response, the Reeds claimed that, based on the facts as stated, the time period for filing their petition was subject to equitable tolling.

Issues: A taxpayer may petition the Tax Court to review a notice of determination concerning a collection action under Sec. 6320 or 6330 within 30 days of such a determination (Sec. 6330(d)(1)). The 30-day deadline “is a procedural requirement that is not jurisdictional” in nature (Boechler, P.C., 142 S. Ct. 1493 (2022)). This unconditional authority was conferred by Congress to the Tax Court “for claims relating to collection activities” (id.). For a limitation to be jurisdictional, Congress must clearly state a condition precedent that grants jurisdiction. If no such condition exists, then the “jurisdiction is not conditional.” Currently, “no such condition exists under [Sec.] 6330(d)(1)” (id.).

Therefore, the Tax Court can consider a late-filed petition in a CDP case if the IRS raises the issue of timeliness and the taxpayer shows that they are entitled to equitable tolling. Failure to meet a deadline by a taxpayer eligible for equitable tolling “does not result in a lack of jurisdiction” (Hallmark Research Collective, 159 T.C. 126 (2022)). It does risk, though, dismissal for failure to state a claim upon which relief can be granted. To be entitled to equitable tolling, the taxpayer must establish that “they pursued their rights diligently” and “extraordinary circumstances outside their control” prevented them from filing on time (Menominee Indian Tribe of Wisconsin, 577 U.S. 250 (2016)).

Although the Reeds claimed Debra Reed’s identity theft as the reason for the lateness of their petition, the Tax Court found it had occurred in 2012, they were notified of it by the DOJ in 2016, and Appeals considered and verified the identity theft in its CDP hearing in 2018, all before the Service issued a notice of determination in 2019. Therefore, the court concluded that the critical facts that might provide a basis for tolling occurred “many years before [the IRS] issued the notice of determination.”

Holding: The Tax Cout granted the IRS’s motion to dismiss. It held that equitable tolling did not apply because the Reeds failed to establish that Debra Reed’s identity theft in 2012 affected their 2015 tax year and they did not establish a causal link between the identity theft and the late-filed petition.

The court noted that, given different facts, identity theft may establish a causal link “to clear the high bar needed to establish equitable tolling.”

■ Reed, T.C. Memo. 2025-4

— 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.