HOW LONG DO I HAVE TO FILE AN APPEAL OF A WHISTLEBLOWER CASE?
/BACKGROUND:
I.R.C. § 7623(b)(4) provides in pertinent part, “Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter).”
The United States Tax Court in Kasper v. Commissioner, 137 T.C. 37 (2011), has interpreted this provision as being part of the subject matter jurisdictional requirement (filing prior to the end of the 30 day period) for seeking a review before the United States Tax Court. (See Kasper, 137 T.C. at 45 (holding that the Court does not have jurisdiction when a taxpayer does not meet the 30-day requirement) The Court also has stated that the deadline begins on the date of mailing or when the IRS personally delivers the determination to the whistleblower’s last known address. (See Kasper, 137 T.C. at 45).
The Tax Court has also held in Comparini v. Commissioner, 143 T.C. 274, 283 (2014), that when the IRS issues multiple determinations to a single whistleblower, each of the letters may establish the Court’s jurisdiction if timely petitioned within 30 days of the mailing date of the letter or personal delivery date of the letter.
MYERS I (TAX COURT CASE)
In Myers v. Commissioner, 148 T.C. 438, 449 (2017) (hereinafter referred to as Myers I), the Tax Court held that the Petitioner failed to timely file his petition (within the 30 days after the IRS’ determination letter was mailed or personally delivered to the whistleblower’s last know address). The Tax Court in determining whether it had subject matter jurisdiction had to determine: 1) whether IRS had issued a determination and 2) whether the petition was timely filed within the 30-day window.
In Myers I, the Tax Court determined that IRS sent five (5) letter to the Petitioner over 12 months from 2013-2014. As the Tax Court noted in Comparini, each of the five letters may have triggered the Tax Court’s subject matter jurisdiction if properly petitioned within the 30 days of mailing or personally delivered to Petitioner.
Also, in Myers I, the Court determined, as noted in Kasper, that the 30 day period to appeal the IRS’ determination begins on the date of mailing or personal delivery of the determination to the claimant at his last known address and that the Commissioner must prove by direct evidence the date and fact of mailing or personal delivery. The Tax Court then concluded that the Petitioner failed to timely file his petition with the Tax Court (i.e., the petition was filed after the 30-day period), and that the Court lacked jurisdiction to hear the Petitioner’s appeal.
DC COURT OF APPEALS HOLDING
Fast forward to July 2, 2019, and the Case is now on appeal to the United States Court of Appeals for the District of Columbia Circuit. In a written opinion, the DC Circuit Court of Appeals held that I.R.C. § 7623(b)(4) does not contain a “clear statement” that timely filing is a jurisdictional prerequisite to the Tax Court’s jurisdiction to hear a whistleblower appeal of the IRS determination. The DC Circuit Court of Appeals also held that the 30-day period under I.R.C. § 7623(b)(4) may be subject to equitable tolling.
In his appeal to the DC Circuit Court of Appeals, Myers challenged the Tax Court ruling by arguing: 1) the IRS letters were not determinations because they lacked necessary information to inform the whistleblower of his/her filing deadlines, 2) the IRS failed to show that the letters were mailed, and 3) the 30 day period was not jurisdictional in nature, and equitable tolling is applicable.
The DC Circuit Court of Appeals quickly disposed of the first two arguments holding that the Tax Court’s determination that the IRS letters were a determination and also holding that Mr. Myers “does not claim he filed his petition for review with the Tax Court within 30 days of receiving the notice those letters provided, his petition was untimely.”
The DC Circuit Court of Appeals having held that the petition was untimely, then had to determine whether the defect (untimely petition) deprived the Tax Court of subject matter jurisdiction. The DC Circuit Court of Appeals held that it did not because, as the Supreme Court had previously held, for a time bar to be a jurisdictional bar, Congress must “clearly state” (i.e., the statute must “expressly refers to subject-matter jurisdiction or speaks in jurisdictional terms”) that the time bar is a jurisdictional hurdle. In this case, the DC Circuit Court of Appeals held that Congress did not clearly state that the 30-day period was a jurisdictional bar to the Tax Court’s jurisdiction.
The DC Circuit Court of Appeals then held that because the 30-day period is not jurisdictional, the next question is whether equitable tolling may be applicable to extend the 30-day period. The DC Circuit Court of Appeals left that inquiry up to the Tax Court to determine if equitable tolling applies.
Equitable tolling is the legal doctrine that allows the plaintiff may proceed despite the expiration of the statue of limitation barring the claim, if the plaintiff can show: 1) diligent pursuit of its rights and 2) extraordinary circumstances beyond its control preventing timely filing. See Menominee Indian Tribe of Wisconsin v. U.S., 136 S. Ct. 750 (2016).
Legal Significance:
This case is a reprieve (i.e., get out of jail card) if a whistleblower fails to file a petition before the expiration of the 30-day period after the IRS mails the final determination. The DC Circuit Court of Appeals provides the get out of jail card to the whistleblower if he/she can show that they pursued their rights, and that there are extraordinary circumstances beyond their control that prevented the timely filing. While it is not clear whether Mr. Myers will be allowed to file his petition and challenge the IRS’ determination, at least the DC Circuit Court of Appeals has provided Mr. Myers and the US Tax Court a way to review the determination, despite the late filed petition by Mr. Myers.
The DC Circuit Court of Appeals’ resolution of the Myers case seems like the logical outcome because Mr. Myers should be allowed to have the US Tax Court review the IRS’ determination to see if it was properly made by the IRS, and/or if Mr. Myers can show that there were circumstances outside his control that prevented the timely filing.
The DC Circuit Court of Appeals appears to be signaling that kicking a review of the determination for a technicality (failing to file within the 30-day period) when the failure was caused by unforeseen circumstances would be unjust.The DC Circuit Court of Appeals also signals that it has problems with the IRS’ language on its determination letter, which fails to address the appealability of the determination and the deadline to file the appeal with the Tax Court. We question, whether there are a large number of cases that can take advantage of this exception, as the IRS has now amended its determination letter to include language about the deadline to file an appeal with the US Tax Court.
Author, SHINE LIN strives to present a balanced yet focused claim which allows the IRS to concentrate on the key facts, legal issues, law and legal analysis so that the IRS may successfully pursue the alleged wrongdoers.