Taxpayer’s circumstances do not warrant equitable tolling

A taxpayer did not prove that he was entitled to equitable tolling for filing his Tax Court petition late, since he did not diligently pursue his rights and there were no extraordinary circumstances outside the taxpayer’s control to prevent filing.

Facts: In June 2021, Virgil Joseph Aiello owed $120,745 in unpaid federal income taxes for his 2015 tax year. To collect the liability, the IRS issued a notice of intent to levy, advising Aiello of his right to a Collection Due Process (CDP) hearing in its Appeals Office. In requesting a CDP hearing, Aiello challenged the proper crediting of $87,000 and requested an abatement of penalties due to significant medical problems he suffered between 2014 and 2019. In response to Aiello’s request for a CDP hearing, the Appeals Office requested documentation in the form of a canceled check reflecting the purported payment.

An Appeals officer scheduled a telephone CDP hearing for the middle of January 2022, which Aiello did not participate in. Aiello also did not provide the Appeals Office with any of the requested documentation. The Appeals officer sent a follow-up letter to Aiello, giving him two weeks to provide the requested information, including substantiation of the payment and copies of his 2019 and 2020 federal income tax returns.

On March 7, 2022, after not receiving the requested information from Aiello, the Appeals Office issued a notice of determination upholding the proposed levy. Aiello received the notice two days later, which stated that if he wanted to dispute the determination in court, he “must file a petition with the United States Tax Court within 30 days from [the] date of this letter.” The notice also provided the court’s mailing address and website for electronic filing. Eight days later, Aiello faxed the Appeals Office his response to the notice, claiming that he tried to contact the Appeals officer but to no avail. He also explained his position regarding the $87,000 credit, specifying that he “derived the number from assorted 2014 payments.” He also included a copy of a canceled check for $100,000.

A week later, Aiello transmitted to the Appeals Office his Tax Court petition along with the $60 filing fee. In a letter dated April 1, 2022, the Appeals officer returned Aiello’s petition and filing fee and directed that any further communications should be sent to IRS Accounts Management Services. The letter, however, made no reference to refiling with the Tax Court.

On Oct. 17, 2022, the Tax Court received Aiello’s petition signed and dated Oct. 5, 2022, challenging the notice of determination upholding the proposed levy. The petition also referenced, and included as an attachment, a letter from the Taxpayer Advocate Service (TAS) from June 2022 recommending Aiello file an offer in compromise, which Aiello claimed would not rectify the issue of “improper crediting of payments.”

In its answer, the IRS contended that the court lacked jurisdiction to hear the case because the petition was untimely and that Aiello had failed to allege facts supporting equitable tolling of the filing deadline.

Issues: Taxpayers may petition the Tax Court to review a notice of determination concerning a collection action under Sec. 6320 or 6330 within 30 days of the determination (Sec. 6330(d)(1)). The 30-day deadline for filing a petition is a procedural, not a jurisdictional, requirement (Boechler, P.C., 142 U.S. 1493 (2022)). Therefore, the court has the authority to consider a late-filed CDP case if the IRS raised the issue of timeliness, provided the taxpayer shows that they are entitled to equitable tolling.

To be entitled to equitable tolling, the taxpayer must establish that they pursued their rights diligently and that extraordinary circumstances outside the taxpayer’s control prevented the petition from being timely filed (see Menominee Indian Tribe of Wisconsin, 577 U.S. 250 (2016)). The First Circuit has held that the taxpayer bears the “heavy burden” of establishing entitlement to equitable tolling (Vázquez-Rivera v. Figueroa, 759 F.3d 44, 50 (1st Cir. 2014)).

The record showed that the petition was not timely filed by the 30-day filing deadline, and Aiello did not contest that he had received the notice of determination by certified mail two days after it was mailed by the IRS on March 7, 2022. As noted by the Tax Court, the petition was not received until Oct. 17, 2022, clearly outside the statutory deadline of April 6, 2022.

Additionally, the Tax Court found that Aiello did not meet his burden to show that he was entitled to equitable tolling. The court stated, “Equitable tolling is a rare remedy,” and that Aiello must show that he “diligently pursued his rights for the entire period he seeks tolled, not merely once he discover[ed] the underlying circumstances warranting tolling” (Quiroa-Motta v. Garland, 993 F.3d 25, 27 (1st Cir. 2021), quoting Neves v. Holder, 613 F.3d 30, 36 (1st Cir. 2010)).

Aiello first argued that he diligently pursued his rights by sending his Tax Court petition to the Appeals officer. However, the notice of determination clearly stated that he needed to file his petition with the Tax Court. The court noted that every circuit that has considered this question has held that filing an action in a state or federal agency that clearly lacks jurisdiction over the action does not toll the time for filing in federal court. Even if sending the petition to the Appeals officer represented an attempt to pursue his rights, the court determined that Aiello did not show that he continued to pursue those rights from the time his petition was returned from Appeals on April 1, 2022, until it was filed with the court on Oct. 17, 2022. In fact, Aiello could not even show that he took any action on the matter whatsoever in the four months following the issuance of the TAS letter on June 14, 2022.

The Tax Court concluded that Aiello also did not demonstrate that any extraordinary circumstances had precluded him from timely filing his petition. Even though he faced significant medical problems beginning in 2014, both Aiello and his doctor noted that these problems were resolved by 2019 and “played no part in his tardy filing.” Furthermore, when asked to explain any other extraordinary circumstances that might have led to the delay, Aiello stated, “Nothing stands out in my mind.”

Holding: Because Aiello did not meet either of the requirements for equitable tolling, the Tax Court granted the IRS’s motion to dismiss for failure to state a claim upon which relief can be granted.

An amicus curiae brief filed with the court observed that the First Circuit has left open the possibility that certain circumstances, including “actions by a defendant to hamper the bringing of a suit,” might justify equitable tolling (Martin v. Somerset County, 86 F.4th 938 (1st Cir. 2023)). The Tax Court, however, found that “[t]he undisputed record before us does not implicate any of the concerns contemplated by the First Circuit.”

Aiello, T.C. Memo. 2025-46

— 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.