ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – GETTING BOUNCED OUT OF THE TAX COURT BY 11 SECONDS – THE SANDERS CASE
By Robert S. Schriebman
Can you imagine losing your ability to litigate your matter because you filed your court case 11 seconds too late?!! Shouldn’t there be an element of fairness that would allow your case to be timely filed? Afterall, what does 11 seconds mean in the lifetime of a court case? Unfortunately, A.J. Sanders found out the hard way that 11 seconds makes all the difference in the world. In this article I will set forth the facts in the Sanders case and you can scratch your head figuring out how a judge could throw someone out of court over 11 seconds!
The Sanders Case
(Antawn Jamal Sanders v. Commissioner, 160 TC -, No. 16, June 20, 2023)
Mr. Sanders received an IRS notice of deficiency on September 12, 2022. The notice stated that the deadline for filing the petition in the US Tax Court was December 12, 2022. Sanders waited until December 12 to prepare his petition for electronic filing. He used his cell phone to prepare the petition, but he could not send it through his cell phone after trying several times. He went home to his desktop computer and managed to successfully file the petition electronically 11 seconds after midnight (12 am) on December 13.
An IRS lawyer saw that the electronic petition was filed 11 seconds too late, and he filed a motion in the US Tax Court to dismiss Sander’s petition due to lack of jurisdiction. The IRS lawyer was clearly a nitpicker, but was he justified? The US Tax Court sought the assistance of The Center for Taxpayer Rights, represented by the Tax Clinic at the Legal Services Center of Harvard Law School, to submit an amicus curiae brief, a practice common in the US Supreme Court. The brief urged the Tax Court to view the timeliness of an electronically filed petition “through the lens of equitable tolling.” In other words, the brief urged an element of fairness. The brief suggested that the Court apply the same principles as the “mailbox rule.” That rule is found in IRC § 7502 that states, in substance, that a petition deposited in the US Mail or carried by a company as Fed Ex or UPS, be deemed filed when deposited, even though the petition may arrive at the Tax Court after the filing deadline. Even late, the petition is deemed by law to be timely filed. This is known as the “mailbox rule.”
Unfortunately, for Sanders, US Tax Court Judge Buch found that the filing deadline in the Tax Court is set by statute and is jurisdictional. Even if the petition is filed one second after midnight on the due date, it is filed too late. It is very strict. The Court could not apply the above “mailbox rule” because that rule is also stated in a statute and does not apply to electronic filing. The doctrine of equitable tolling also does not apply because of the strict time limit in the statute. Where Congress clearly states that a deadline is jurisdictional, that deadline must be enforced regardless of equitable considerations.
What’s left for Mr. Sanders now that he cannot file a petition in the Court Tax? The Tax Court is the only federal court allowing a taxpayer to bring his case before a judge without first having to pay the taxes in full. Sanders must now fully pay what the IRS says he owes, file a claim for refund, and if the claim is denied, he may file a suit for refund in either the US District Court or the US Court of Federal Claims.
EDD Filing Rules
After an EDD auditor issues a Notice of Assessment, the taxpayer-employer must file a petition a timely petition with the CUIAB within 30 days of the receipt of the Notice. What happens if you are one day late? The CUIAB has a policy of extending an extra 5 days to allow for mail transit.
In law school we take a course in equity. Equity is an elastic term that allows a judge the freedom to do the right thing. Black’s Law Journal defines equity as justice administered according to fairness as contracted with the strictly formulated rules of common law. The term “equity” denotes the spirit and habit of fairness, justness, and right dealing which would regulate the intercourse of men with men. However, as we learned from the decision in Sanders, that a jurisdictional rule does not permit one second of flexibility. In law school we are also taught that hard cases make bad law.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
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