On Thursday, the Supreme Court of the United States issued a 9-0 majority opinion in favor of a taxpayer and against the IRS in a lawsuit involving the interpretation of a confusing statutory deadline.
The taxpayer, a law practice in Fargo, North Dakota, was told by the IRS that there was a disparity in their 2015 tax returns in the case known as Boechler, P.C. v. Commissioner of Internal Revenue.
Boechler never responded to the initial notice for whatever reason. The agency then issued an “intentional disregard” penalty, as well as a threat to take and sell the legal firm’s assets to pay off the newly acquired government debt.
Boechler filed a request for a collection due process hearing with the IRS Independent Office of Appeals in response to the notice of intent to seize and sell their property.
Taxpayers have the right to such hearings in order to oppose the government’s general program or, at the very least, to propose alternatives to the mass seizure of their property. Taxpayers also have recourse through the Tax Court, where they can ask for a review of their case if they disagree with the decision.
In the case of such appeals, a federal statute provides some ambiguous guidance:
A person may petition the Tax Court for review of a determination made under this section within 30 days of the date of the determination (and the Tax Court shall have jurisdiction with respect to such matter).
One day after the IRS approved the levy, Boechler submitted his appeal. The Tax Court threw out the case due to a lack of jurisdiction. The taxpayer then took his case to the United States Court of Appeals for the Eighth Circuit, which upheld the Tax Court’s jurisdictional argument. Boechler then petitioned the nation’s highest court for a writ of certiorari.
What appears to be an easy win for the federal debt collection agency is really based on the statute’s text as well as the principle of equitable tolling. The common law principle states that statutes of limitations can be circumvented if the plaintiff did not or could not have known about their injury until after the limitations period had passed.
It’s always a good day when the IRS loses to a taxpayer.