Tax Court Had Jurisdiction Over Petition Filed After 90-Day Limit and Before Date Listed in NOD

In a case of first impression, the Tax Court decided that a taxpayer’s Petition for Redetermination was timely even though the petition was filed after the statutory 90-day limit because it was filed before the filing date listed in the IRS’s Notice of Deficiency. (Dodson (1/3/2024) 162 TC No. 1)

Facts.

The IRS mailed a Notice of Deficiency (first NOD) to Douglas Dodson and Rebecca Dodson, on October 7, 2021. That NOD specified a petition filing deadline of December 5, 2022, which was more than a year after the date the IRS mailed the first NOD. On October 8, 2021, the IRS mailed a corrected notice (second NOD) to the taxpayers. That NOD specified January 6, 2022, as the last day to file a Petition for redetermination with the Tax Court.

The petitioners filed their Petition for Redetermination on March 3, 2022, with the first NOD attached.

Arguments.

The IRS argued that the Tax Court lacked jurisdiction over the taxpayers’ petition because it was filed more than 90 days after the IRS mailed both the first and second NODs. To support this argument, the IRS provided tracking information for the first NOD that reflected delivery to the taxpayers on October 12, 2021. The IRS didn’t provide any tracking information for the second NOD.

The taxpayers claimed that they never received the second NOD and provided tracking information that reflected the second NOD left the USPS distribution center on October 13, 2021. However, the tracking information didn’t indicate that the NOD was ever delivered to the taxpayers. Therefore, the taxpayer’s argued, the court had jurisdiction pursuant to the last sentence of Code Sec. 6213(a), which provides: “Any petition filed with the Tax Court on or before the last date specified for filing such petition by the Secretary in the notice of deficiency shall be treated as timely filed.”

Holding.

According to the Tax Court, the first NOD “unambiguously determines a deficiency against the petitioners and is therefore valid.” In addition, the petitioners filed their petition before December 5, 2022, the last day for filing a petition specified in the first NOD. Therefore, their petition was timely filed because “if a notice indicates a petition date that is more than 90 days after the date of mailing, that date controls.”

Moreover, there was no evidence that the petitioners agreed to rescind the first NOD. Absent a rescission with the petitioners consent, the first NOD was the only valid NOD. The IRS’s “issuance of the second notice without the petitioners’ consent did not have the effect of rescinding the first notice either in whole or in part.”

In this case, “the petition filing date on the first notice had independent legal effect, and petitioners were permitted to rely on it regardless of whether they retained counsel and regardless of whether prejudice would result from applying another deadline. Respondent’s position in this case attempts to create uncertainty about the meaning of the last sentence of section 6213(a) where there is none.”

For more information regarding the prohibition on assessment until a Tax Court decision becomes final, see Checkpoint’s Federal Tax Coordinator ¶T-3602.