The great snowfall of 2015 which saw the city of Worcester designated the snowiest city in America and caused the plows in Boston to create a pile that did not fully melt until July is now immortalized in a regular Tax Court decision – Felix Guralnik v Commissioner.

It Can Even Snow In Washington D.C.

In anticipation of Winter Storm Octavia, all federal offices in Washington DC had been shut down on Tuesday February 17, 2015.  So while the traditional snowball fights among workers with an extra day off were going on:

there was nobody at the Tax Court to receive Mr. Guralnik’s petition for a review of an IRS determination in a Collection Due Process hearing.

The IRS had sent Mr. Guralnik a Notice of Determination Concerning Collection Action on January 16, 2015.  If he wanted the Tax Court to review the determination he had to get his petition to the Tax Court “within thirty days”.  That works out to February 15th which was a Sunday.  And February 16th was a holiday.  So the drop dead date for the petition was February 17.

Mr. Guralnik might have taken advantage of the “timely mailed, timely filed” rule, but he had used Federal Express First Overnight service, which at that point in time was not yet a “designated delivery service”.  But the 17th was a snow day, which is kind of like a holiday, so Mr. Guralnik had an extra day – right?  The IRS did not think so.

Practical Interlude

At the this point, I am going to insert the practical lesson from this drama.  Don’t go to the wire on filing deadlines.  If they say it is thirty days, make believe that it is twenty days. And just use the United States Postal Service, even though there are other things you could use.  I know there is a belief out there that private enterprise always does things better, but our Constitution (Article I, Section 8, Clause 7) empowered Congress to establish post offices and I think that little bit of socialism approved by the Founding Fathers should be allowed to persist. One of my favorite movies is the Postman in which Kevin Costner brings hope to a dystopian America by appropriating a uniform and a mail bag from a dead body.

There used to be a postman on every street in America.  They wore uniforms and hats just like this one.  Getting a letter made you feel that you were part of something bigger than yourself.  I don’t think we ever really understood what they meant to us until they were gone.

Harvard To The Rescue

Last August, barely a month after the last of the 2015 snow had melted in Boston, Special Trial Judge Robert N. Armen, Jr.  put out a tentative ruling that the snow day was, for purposes of Section 7503, a legal holiday.  The IRS filed an objection.  The problem with the tentative ruling is that there is a section of the D.C. Code entitled “Holidays–Time for performing acts extended” that gives a very specific list.  So the snow day was not by definition a holiday.

That’s when Harvard comes into the picture – to be more precise the Harvard Federal Tax Clinic.  The case was of interest to the clinic, since the low income taxpayers they represent often get tripped up by filing deadlines.  The clinic filed an amicus brief authored by Professor T. Keith Fogg and Carlton Smith with assistance from student Amanda Klopp (Class of 2016).

As you might guess, that makes for a bit of a lawyerly discussion, but I’ll do my best to boil it down.  Hate to spoil the surprise, but I’m glad to say that the taxpayer prevailed and will get the Tax Court to consider the merits of his case.  The reasoning that prevailed was a little different than that of the original proposed decision.

We conclude that Civil Rule 6(a)(3) is “suitably adaptable to govern the matter at hand.” Giving particular weight to the analogous Civil Rule, as our Rule 1(b) prescribes, we conclude that the time for filing the petition should be “extended to the first accessible day that is not a Saturday, Sunday, or legal holiday.” Our Clerk’s Office first became accessible following Winter Storm Octavia on February 18, 2015, when the Court reopened for business. Because the petition was filed on that day, we conclude that it was timely filed. We will accordingly deny respondent’s motion to dismiss for lack of jurisdiction.

Federal Express

They did try to argue that the Federal Express First Overnight service should have the “timely mailed, timely filed” rule apply just like the good old United States Post Office, that the Founding Fathers thought was such a good idea.

First Overnight service, by contrast, is more expedited and more expensive than all five FedEx services that the Secretary in Notice 2004-83 found to be acceptable. Under these circumstances, petitioner urges that we deem the Secretary to have designated First Overnight service as meeting the statutory standards even though it is not listed in that Notice.

Although petitioner’s argument has some common-sense appeal, we are unable to accept it. Our prior opinions held the “timely mailed, timely filed” rule unavailable, not because the private delivery service the taxpayer used was somehow inferior, but because that service had not been “designated by the Secretary.”

I have to say that I think that there was a customer service fail by Federal Express here.  They should have known which of their services were approved for the “timely filed” rule and steered their customers accordingly.

Jurisdictional

There was also an argument that the 30 day time period was not “jurisdictional”.  If the time limit is not jurisdictional, then the Tax Court could have applied “equitable tolling”, which in a common sense sort of way would say “Yeah.  It says 30 days, but if you miss it because of an alien invasion or something like that, we can cut you a break”. If the time limit is jurisdictional though they don’t even get to look at it.

So the answer was that the 30 days was not really up until you get to a day when the Court was open for business.

I heard from Carlton Smith and Keith Fogg.  They were, of course glad that the taxpayer had won, but would have preferred to win on the jurisdictional argument. Mr. Smith wrote:

Like Keith, I am happy that Mr. Guralnik will get his day in court on the merits, but I am a little troubled by how the Tax Court got to its conclusion. I concur with Keith’s concerns expressed to you in his e-mail. We think the easier way for the court to rule would have been for it to follow the trend, since 2004, of recent Supreme Court opinions — which is to hold time periods in which to file not “jurisdictional”, except in rare cases, and usually subject to equitable tolling. Jurisdictional time periods are not subject the venerable judicial doctrine of equitable tolling, which allows courts to extend filing periods in certain circumstances — such as when extraordinary circumstances beyond the plaintiff’s control prevented timely filing. We think a snowstorm that closed down the Tax Court’s Clerk’s Office easily qualifies as such an extraordinary circumstance.

Most cases in the Tax Court are ones about audit disputes — so-called deficiency cases under section 6213(a). Keith and I are not arguing that the time periods in which to file in deficiency cases are not jurisdictional. But, we do argue that two newer types of cases, Collection Due Process cases under section 6330(d)(1) and “stand-alone innocent spouse cases” under section 6015(e)(1)(A) have time periods for filing in the Tax Court that are not jurisdictional and are subject to equitable tolling. Guralnik is a Collection Due Process case.

Mr. Smith also reminded me that I had covered another case in which he had authored an amicus brief on the subject of equitable tolling. The Vopicelli case has an even more interesting story behind the story than this one.  So check it out.

Other Coverage

Procedurally Taxing has been all over this case including a guest post this morning by Bryan Camp, which has a much more robust legal discussion than I give here, but no embedded videos.  There was also something by Keith Fogg last August and something by Amanda Klopp in December.

Tax Controversy 360 had – “Snow Day” Case Highlights Importance of Timely Filing Requirement.

Although it is unlikely that the situation in Guralnik will occur again in the future, the Tax Court’s analysis may have a wider implications. For example, one of the arguments advanced by the taxpayer was that IRC Section 6330(d) is a nonjurisdictional statute of limitations that is subject to equitable tolling (for a discussion of equitable tolling, see our prior article here). This argument was based on a line of US Supreme Court cases (outside the tax area) holding that, in suits against the United States, filing periods in the nature of claim-processing rules are not necessarily jurisdictional and are subject to a rebuttable presumption of equitable tolling. The Tax Court rejected this argument, holding that the filing period is, in fact, jurisdictional and cannot be extended by equitable tolling. We understand that there are other cases in the courts with this same issue, and it remains to be seen whether other courts will disagree with the Tax Court’s analysis and apply equitable tolling to petitions filed with the Tax Court.

Paul Caron, the TaxProf, had Snow Day Excuses Late Tax Court Petition Filing.

Of course, Lew Taishoff weighed in with Neither Equity Nor Designation.

Harvard wants to claim equitable extension, but they cite to Article III court authority. Poor l’il ole Tax Court is an Article I court, which lives and moves and has its being through an act of Congress. The thirty-day barrier cannot be moved one nanometer by all of Harvard’s piety and wit; it’s got Tax Court holdings going back to 1924 butressing.