Third Circuit Holds That 90-Day Tax Court Filing Deadline Is Not A Jurisdictional Requirement And Is Subject To Equitable Tolling

• Published date: 04 August 2023
• Subject Matter: Litigation, Mediation & Arbitration, Tax, Trials & Appeals & Compensation, Income Tax
• Law Firm: Steptoe LLP
• Author: Paul White

In Culp v. Commissioner, the Third Circuit held that the 90-day Tax Court filing deadline under section 6213(a) was not a jurisdictional requirement, but rather a claims processing rule because Congress failed to clearly state in the statute that the 90-day deadline was "a procedural bar with jurisdictional consequences."¹ The court also held that section 6213(a)'s 90-day deadline was subject to equitable tolling because there was insufficient evidence that Congress sought to preclude section 6213(a)'s 90-day deadline from being equitably tolled.²As a result, the Third Circuit reversed the Tax Court's order dismissing taxpayers' petition for lack of jurisdiction and remanded the case back to the Tax Court to determine whether taxpayers were entitled to equitable tolling.

Background

Section 6213(a) provides that a taxpayer may file a redetermination petition with the Tax Court within 90 days after the IRS mails the notice of deficiency to the taxpayer.³If the taxpayer files a redetermination petition with the Tax Court, the IRS is prohibited from levying on the taxpayer's property or attempting to collect the assessed deficiency until the Tax Court renders a final decision.⁴

In 2015, Isobel and David Culp each received a settlement for a lawsuit, which they reported this income as "Other income" in their 2015 tax return. The IRS later claimed that the Culps underreported these payments, and in November 2017, sent them a letter proposing to increase their taxes owed by the underpayment amount. When the Culps failed to respond, the IRS mailed them a notice of deficiency informing the Culps that they had the right to challenge the deficiency by filing a redetermination petition with the Tax Court within 90 days. The Culps did not respond.⁵The Culps continued to ignore subsequent IRS notices the following year and in 2018, the IRS levied on their property. In response, the Culps filed a redetermination petition in Tax Court to challenge the assessed underpayment. The Tax Court dismissed the petition for lack of jurisdiction because it was not timely filed within 90 days. The Culps appealed.⁶

On appeal, the Third Circuit rejected the Culps assertion that the IRS never mailed them the notice of deficiency, and that section 6213(a)'s 90-day clock had not started. However, the Third Circuit held that the 90-day Tax Court filing deadline under section 6213(a) was not a jurisdictional requirement, and was subject equitable tolling, and therefore remanded the case to...