On Wednesday, the Supreme Court turns once again to the age-old question of how government can – or should – make allowances for mistakes people make in fulfilling their legal duties. The case being heard turns on when the federal government can relax a formal legal deadline. Specifically, the case is about a tax deadline, but the principles at stake are considerably broader, going to the question of fundamental fairness.
Wednesday’s case: Boechler P.C. v. Commissioner of Internal Revenue. The “live” audio (no video) can be heard at Quick Links on the Supreme Court’s homepage – supremecourt.gov – and at c-span.org/supremecourt and C-Span Now App.
Background: The federal courts in the U.S., though they have very broad powers, are actually more limited in what they can do than what state courts can. That’s what the Founders who wrote the Constitution wanted, as part of their desire not to create a national government with such awesome power that the people’s liberty would be constantly threatened. And that’s why Article III specifies that the federal courts – including the Supreme Court – are to have only limited jurisdiction (that is, judicial power) and must stay within those bounds.
One such limitation is that a federal court must always be sure that it has jurisdiction to decide a case before it. A challenge to jurisdiction can be made at any time and at any level of the federal court system, even, for example, after a trial is over. A challenge must be resolved before the case can move forward. In short, no jurisdiction/no case.
The Supreme Court has said that, in operation, a jurisdictional limitation can be “drastic” with “harsh consequences.”
One way to stop a case in federal court is by raising the point that the person or entity involved missed a procedural deadline, a rule that specified when some legal step had to have been taken. The Supreme Court has said that “our legal system is replete with rules requiring that certain matters be raised at particular times.” Many of those rules set deadlines for filings.
Such a deadline, if it sets a hard-and-fast fixed point, can mean that missing it deprives the court of jurisdiction. However fair it might be to relax such a deadline, perhaps because there was an excuse or a justification for doing so, a hard deadline cannot be relaxed.
If, however, a deadline is only a kind of processing rule to determine how a case ordinarily should unfold, such a rule can be relaxed to make the system fairer. There is a process in the law to relax a deadline. Lawyers and judges call it “equitable tolling” (in that phrase, equitable means fair and tolling means suspend or stop). It is sort of like asking the court to “give me a break.”
In the past couple of decades, the Supreme Court has been engaged in a project of trying to bring what it has called “some discipline” into the rather common practice in federal courts of treating filing deadlines as jurisdiction-limiting rules. (The practice is also a strategic tactic by lawyers to try to scuttle a case.) In fact, in more than a dozen cases on this issue since 2004, the Court has never once ruled that a filing deadline in regular courts set up under Article III was to be treated as a jurisdictional limit. Those results have followed from the Court’s declaration that Congress can make a deadline a jurisdictional one, but it must do so with a “clear statement” to that effect so that courts and parties before them “will not be left to wrestle with the issue.”
Lawyers who have been taking those cases to the Court have often argued that treating such deadlines as rigid and fixed has been having a disproportionate impact on people who go to court without a lawyer or have low incomes. That argument has been renewed in the case set for hearing Wednesday.
The Justices will be reviewing what Congress meant in 1998 when it gave taxpayers a 30-day deadline to file an appeal with the specialized U.S. Tax Court, a tribunal set up under Article I, and thus is as much an administrative agency as it is a court. It hears taxpayers’ appeals seeking to challenge tax collectors’ demands that they owe additional taxes or penalties for improper returns.
Once notified of a tax debt or penalty, a taxpayer is entitled to a hearing within the Internal Revenue Service to challenge that notice, before IRS could take their property to satisfy the deficiency. Once that hearing has been held, a taxpayer still not satisfied has 30 days to appeal to the Tax Court to make a further challenge.
A lower federal appeals court ruled that Congress did speak plainly enough to make that a binding limit on the Tax Court’s powers, and that a taxpayer who fails to meet that deadline cannot seek “equitable tolling” to suspend the limitation. However, two other appeals courts appear to have ruled the opposite way.
The IRS tried to persuade the Justices not to hear this case, arguing that there is not a genuine conflict in the appeals courts on the question, that the Supreme Court has interpreted a similar appeals-filing deadline at another specialized federal court as a jurisdiction limit, and that no taxpayer can get a temporary order from the Tax Court to block actual collection of the debt or penalty if the appeal was filed late.
The case in which the Justices agreed to resolve the controversy involves a law firm that missed the 30-day appeal-filing deadline by one day. The firm’s appeal makes the point that the interpretation given by the appeals court will fall most heavily on the poor and those without lawyers. Seeking to place the law firm among those harmed by the lower court decision, the appeal stressed that the firm, Boechler P.C., “is a small firm in Fargo, North Dakota,” that it actually had good reasons for the one-day delay, and that it is seeking to avoid an IRS penalty of $19,250.37 that “would cause significant hardship.”
The question before the Court: Does the 1998 law that set a 30-day deadline for a taxpayer to file a Tax Court appeal to challenge a tax debt make that a jurisdictional limit or did it establish only a procedural rule that can be suspended for good reason and fairness?
Significance: The opportunity to get a case heard and decided by the Tax Court is an important one, because the taxpayer is assured review by a tribunal that is entirely separate from the IRS. Moreover, it is a court in which 85 percent of the cases are settled without going through a full trial before the single judges who handle the appeals, and those settlements frequently go in favor of the taxpayer.
That court is divided into two branches, with one handling cases in which the amount at issue is $50,000, and the other handling cases with higher amounts. It is not uncommon for a taxpayer challenging a smaller amount to proceed before that court without a lawyer.
This case, then, has much to do with how open the access to that court will be. A binding rule of 30 days to appeal or else the Tax Court door is closed to the taxpayer could make a major difference, especially to those with smaller tax debts.
Moreover, this case will provide the Supreme Court with a chance to spell out further just when a filing deadline has put up a barrier to an appeal in a federal court, perhaps to spell out further what it means by a necessary “clear statement” from Congress.
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The Court will be on holiday next Monday, honoring the Rev. Martin Luther King, Jr. It will resume hearings on Tuesday. The first case that day involves a constitutional challenge to the city of Boston for refusing to allow a religious organization to fly its flag on the pole outside City Hall even though other organizations are allowed to do so. The second case involves a plea by the survivors of a Holocaust victim, seeking to recover from a government-run museum in Spain a painting by the French impressionist painter, Camille Pissarro. The family says the painting was stolen by the Nazis in Germany during World War II.
