Opinion
11951-20L
01-12-2023
DAVID SHERMAN, Petitioner v. COMMISSIONEROF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL
David Gustafson, Judge
This is a "collection due process" ("CDP") case brought under section 6330(d), regarding the income tax liabilities of petitioner David Sherman for the four years 2010, 2012, 2014, and 2015. Now pending is a motion for summary judgment that the Commissioner has filed. Also pending is a protective motion to dismiss for lack of jurisdiction, to the extent, if any, that the petition is construed to attempt to commence a deficiency case under I.R.C. section 6213(a). We will grant both motions.
Background
Notices of deficiency
Pursuant to section 6212, the IRS sent to Mr. Sherman notices of deficiency ("NODs") for three years, as follows:
| Year | Date of mailing |
| 2010 | July 15, 2013 (see Doc. 9, Exs. G-H) |
| 2012 | June 29, 2015 (Doc. 9, Ex. B) |
| 2014 | February 21, 2017 (Doc. 9, Ex. D) |
The IRS sent no NOD to Mr. Sherman for the year 2015.
Notice of determination
Pursuant to section 6330(c)(3), the IRS sent to Mr. Sherman a notice of determination (Doc. 9, Ex. I; Doc. 23, Ex. A) sustaining a notice of intent to levy to collect his income taxes for the years 2010, 2012, 2014, and 2015. The notice of determination was dated and mailed (by certified mail) on August 18, 2020 (Doc. 9, Ex. J; Doc. 23, Ex. B) and was delivered to Mr. Sherman's address four days later on August 22, 2020. The notice of determination notified Mr. Sherman (among other things) as follows:
If you want to dispute this determination in court, you must file a petition with the United States Tax Court within 30 days from the date of this letter. . . . The law limits the time for filing your petition to the 30-day period mentioned above.
That 30-day period ended on September 17, 2020 (which was a Thursday).
Mr. Sherman's petition
On September 18, 2020, Mr. Sherman mailed to the Tax Court a letter (Doc. 1) that requested a petition form and a copy of the Court's rules. The Court received the letter on September 29, 2020. We treated the letter as an informal petition and sent him the documents he requested. On January 6, 2021, he sent a petition form which the Court received on January 12, 2021, and treated as an amended petition.
By a checked box, the amended petition indicated that it challenged a "Notice of Deficiency"; and it indicated that there were four years at issue-- 2010, 2012, 2014, and 2015. In paragraph 5 ("Explain why you disagree with the IRS determination ..."), Mr. Sherman wrote: "Valuations of stock cost was never corrected in stock valuation." We understand this to indicate that the IRS adjusted his income to include proceeds from the sale of stock but that gain on the sale was not reduced by his cost basis in the stock. That is, the petition seems to raise an underlying liability issue, and we see in the petition no explicit indication of a collection-related issue (such as a proposal of a collection alternative or an argument about the impropriety of a levy).
The Commissioner's answer (Doc. 6) to the petition construed it as attempting to challenge a deficiency determination.
Previous motion to dismiss
Counsel for the Commissioner became aware of the NODs and the notice of determination described above. He filed a motion (Doc. 9) to dismiss for lack of jurisdiction. The motion asserts (apparently correctly) that the petition was evidently filed in response to the recent notice of determination concerning collection and not in response to the NODs, and the motion showed that the petition was untimely whether construed as being in response to the NODs or construed as being in response to the notice of determination. Mr. Sherman did not file a response to the motion to dismiss.
Our previous orders
On April 8, 2022, we issued an "Order of Dismissal for lack of Jurisdiction" (Doc. 11), addressing the petition as a response to the collection notices, and holding it untimely under section 6330(d)(1). Following our precedents, e.g., Gray v. Commissioner, 138 T.C. 295, 299 (2012), we dismissed the case for lack of jurisdiction.
However, on April 21, 2022, the U.S. Supreme Court issued its opinion in Boechler, P.C. v. Commissioner, No. 20-1472, holding that the 30-day deadline in section 6330(d)(1) is not jurisdictional but rather is subject to equitable tolling. We therefore issued an order (Doc. 12) on April 26, 2022, vacating our order of dismissal.
The Commissioner's motions
The Commissioner thereafter filed the two motions we now address-- a motion (Doc. 23) for partial summary judgment, which concerns the notice of determination sustaining the proposed levy, and a motion (Doc. 24) to dismiss for lack of jurisdiction, which concerns the NODs. We ordered (see Doc. 25) Mr. Sherman to respond to the motions, and he did so very briefly (see Doc. 26).
Discussion
I. Notices of deficiency
Under section 6213(a), a taxpayer who receives an NOD may challenge it in Tax Court, but the petition must be filed within 90 days after the issuance of the NOD. That is, the statute imposes two requirements-- the issuance of an NOD and the timely filing of a petition. Both these requirements are jurisdictional, see Hallmark Research Collective v. Commissioner, 159 T.C. No. 6 (Nov. 29, 2022), and the Tax Court cannot entertain a petition challenging a deficiency determination unless these requirements are met.
For the years 2010, 2012, and 2014, the IRS did issue NODs (thus fulfilling the first requirement), but the latest of the NODs (for 2014) was issued in February 2017--not 90 days but rather 3-1/2 years before Mr. Sherman filed his petition in September 2020. We therefore lack deficiency jurisdiction for those three years because the second jurisdictional requirement for a deficiency case was not met: No timely petition was filed.
For the year 2015, the IRS issued no NOD, so the first jurisdictional requirement was not met. We therefore lack deficiency jurisdiction for that year as well.
Consequently, we will grant the Commissioner's motion to dismiss the case for lack of jurisdiction, insofar as the petition seeks redeterminations of deficiencies.
II. Notice of Determination
Under section 6330(d)(1), a taxpayer who receives a notice of determination sustaining a collection notice may challenge that notice of determination in Tax Court, but the petition must be filed "within 30 days of a determination under this section". However, as we noted above, in April 2022 the Supreme Court held in Boechler that this 30-day deadline is not jurisdictional but rather is subject to "equitable tolling".
That is, where the taxpayer can show sufficient "equitable" cause to justify his untimely filing of a petition, the deadline may be "tolled", rendering his petition timely. As the Supreme Court has explained (and as the Commissioner reiterated in his motion (Doc. 23, para. 24)): "Generally, a litigant seeking equitable tolling bears the burden of establishing two elements: (1) that he has been pursuing his rights diligently, and (2) that some extraordinary circumstance stood in his way." Pace v. DiGuglielmo, 544 U.S. 408, 418 (2005) (citing Irwin v. Department of Veterans Affairs, 498 U.S. 89, 96 (1990).
Mr. Sherman's entire response to this issue in the Commissioner's motion was as follows:
As to the timeliness of my mailing my petition on September 18, 2020 I assumed wrongfully the U.S.P.S. would deliver the answer [sic] on time. That was my poor decision and I have accepted that fact, which I regret.
We appreciate Mr. Sherman's directness and candor, but we must hold that he fails to establish a predicate for equitable tolling.
Mr. Sherman's response may indicate that he misunderstands the deadline and the reason for his petition's untimeliness. Under section 7502 he could have met the filing deadline by timely mailing his petition. His petition was due September 17, 2020; and it was late not because the postal service failed to deliver it promptly but because Mr. Sherman did not mail it until the next day. Even if the postal service had instantly delivered the petition on the very day that Mr. Sherman mailed it (i.e., one day late on September 18), the petition would still have been untimely.
Consequently, any post office delay in the delivery of Mr. Sherman's petition is beside the point. To obtain equitable tolling, Mr. Sherman needed to explain why he delayed mailing his petition until September 18, 2020, but he offered no explanation for his own delay. We therefore hold that the non-jurisdictional deadline of section 6330(d)(1) was not equitably tolled, that the petition was therefore untimely, and that Mr. Sherman fails to state a claim on which relief can be granted. We can grant relief only as to timely petitions.
That is, we do not adjudicate Mr. Sherman's claim but simply hold that he failed to comply with a claim-processing rule that is a prerequisite for having his claim adjudicated. The Commissioner styled his motion (Doc. 23) on this point a "Motion for Partial Summary Judgment" and characterized it as being filed "pursuant to the provisions of Tax Court Rule 121". Strictly speaking, however, we will dismiss this case under Tax Court Rule 40(b) for "failure to state a claim upon which relief can be granted", rather than granting summary judgment under Rule 121. We find no fault with the Commissioner's motion, since Rule 40 provides: "If, on a motion asserting failure to state a claim on which relief can be granted, matters outside the pleading are to be presented, then the motion shall be treated as one for summary judgment and disposed of as provided in Rule 121 . . . ." That is, where "matters outside the pleadings" are presented in order to show (or to disprove) that the petition fails to state a claim, Rule 40 incorporates the summary judgment procedures of Rule 121, so that any genuine disputes of fact can be discerned and ventilated. In this case the Commissioner did appropriately present "matters outside the pleadings" (i.e., the notice of determination), so his motion is, for procedural purposes, to be "treated as one for summary judgment". However, the material fact--as to which we hold that there is no genuine dispute--is that there are no equitable grounds shown that might toll the deadline of section 6330(d)(1), so our ultimate holding is that Mr. Sherman fails to state a claim on which relief can be granted, and we will dismiss the petition on that ground. For the foregoing reasons, it is
ORDERED that, to the extent (if any) that the petition seeks a redetermination of deficiencies for 2010, 2012, 2014, and 2015, the motion to dismiss (Doc. 24) is granted, and the case is dismissed for lack of jurisdiction. It is further
ORDERED that, insofar as the petition seeks review of the notice of determination sustaining the proposed levy to collect income tax for 2010, 2012, 2014, and 2015, the motion for partial summary judgment (Doc. 23) is granted in that the case is dismissed for failure to state a claim on which relief can be granted.