Background

The IRS issued a notice of deficiency dated 2 December 2019 to the taxpayers, who were Ohio residents at the time they received the notice. The notice stated that they had 90 days to challenge the deficiency. However, the taxpayers did not mail their petition to the Tax Court until 17 March 2020, approximately two weeks after the 90-day deadline. 

Subsequently, the IRS moved to dismiss the taxpayers’ petition on the grounds that it was not timely under section 6213(a) or 7502. In response, the taxpayers claimed that they were entitled to a mandatory 60-day extension under section 7508A(d), which subsection had been added to section 7508A on 20 December 2019. 

Section 7508A(d) provides relief to "qualified taxpayers." Under section 7508A(d)(2), qualified taxpayers include, inter alia, individuals "whose principal residence ... is located in a disaster area" or taxpayers whose principal place of business "is located in a disaster area ...". Section 7508A(d)(1) explains that the period "beginning on the earliest incident date specified in the declaration to which the disaster area referred to in paragraph (2) relates," and "ending on the date which is 60 days after the later of such earliest incident date . . . or the date such declaration was issued, shall be disregarded" in determining the timeframe within which certain acts enumerated in section 7508(a) must be performed. (Emphasis added.) Those acts include the filing of returns, payment of tax, and filing a Tax Court petition, among others. 

Taxpayers argued that section 7508A(d) applied to grant them additional time to file their Tax Court petition because, on 13 March 2020, the President declared the COVID-19 pandemic a federal disaster effective as of 20 January 2020. The President also approved major disaster declarations for each of the 50 states. And on 31 March 2024, the administrator of the Federal Emergency Management Agency declared the State of Ohio a major disaster area, which disaster was "beginning on January 20, 2020, and continuing." Thus, the taxpayers argued that their petition was timely because they were entitled to a 60-day extension due to the disaster declaration.

During the pendency of the case, Treasury issued proposed regulations under section 7508A(d), and then final regulations six months later. The final regulations applied retroactively to disasters declared on or after 21 December 2019. The final regulations provide in relevant part that, with the exception of four acts enumerated in the regulations, "section 7508A(d) does not apply to postpone any acts." Treas. Reg. § 301.7508A-1(g)(1). Those four acts included making  contributions to a qualified retirement plan, making distributions under section 408(d)(4), recharacterizing contributions under section 408A(d)(6), and making a rollover of certain tax-advantageous accounts. Id. § 301.7508A-1(g)(2). The regulations did not interpret section 7508A(d)(4) as providing a mandatory 60-day suspension period for anything other than those four enumerated acts, none of which acts included filing a Tax Court petition. 

Analysis

Ultimately, the Court held that the taxpayers were entitled to a 60-day extension for filing their petition. In reviewing the regulations, both parties agreed that the Court should follow Chevron, which analysis first requires a court to determine whether a statute is ambiguous. Speaking with the voice of all thirteen Tax Court judges, Judge Marshall, held that section 7508A(d) was not ambiguous. She framed the "precise question" of statutory interpretation as "whether section 7508A(d) automatically entitles a qualified taxpayer to a mandatory extension to file a petition with the Tax Court in the context of a federal disaster declaration containing an incident date." 

The court began its Chevron step-one analysis by looking at the plain meaning of section 7508A(d), distinguishing language that was permissive versus mandatory.  Compared to other subsections in 7508A, such as 7508A(a), the language in section 7508A(d) more explicitly established that the extension was meant to be mandatory as opposed to discretionary. For example, section 7508A(d) provides certain periods "shall be disregarded," with definitive start and end dates. Section 7508A(a) provided the Secretary "may specify a period," of time to disregard certain deadlines, "up to one year." A plain text reading showed that section 7508A(a) was clearly discretionary, and section 7508A(d) was clearly mandatory. Additionally, the court applied the "Title and Headings Canon" of construction to section 7508A(d), labelled "Mandatory 60-day extension," to conclude section 7508A(d) created a mandatory extension. The court did not need to address Chevron step two because section 7508A(d) was clear.

Because 7508A(d) was not ambiguous, the court invalidated Treas. Reg. § 301.7508A-1(g)(1)-(2) to the extent they conflicted with section 7508A(d). Specifically, the court held that these subsections were invalid because they failed to include the entire list of acts for which section 7508A(d) establishes a mandatory 60-day suspension. Accordingly, the taxpayers’ petition was timely filed.

Implications

Historically, many deadlines for filing claims for relief from tax have been considered jurisdictional, meaning that absent strict compliance with the filing deadline, a court would lack power to decide the merits of the case. Abdo, however, follows a line of recent cases challenging the strict filing rules for Tax Court cases. In Culp v. Commissioner, 75 F.4th 196, 205 (3d Cir. 2023), petition for cert. filed, No. 23-1037 (U.S. Mar. 19, 2024), the Third Circuit held that section 6213’s Tax Court petition filing deadline is not jurisdictional. And, in Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022), the Supreme Court held that section 6330’s Tax Court petition filing deadline is also non-jurisdictional.  

In her concurrence, Judge Jones noted that Abdo was part of the recent Culp and Boechler lineage. She noted that Abdo showed that the statutory deadlines in sections 6312(a) and 6330 were in fact jurisdictional because section 7508A(d)’s exception was statutory, and statutory exceptions are a standard tool for jurisdictional deadlines. Judge Jones took up three dense pages to defend the Anti-Injunction Act’s jurisdictional prohibition on suits whose purpose is "restraining the assessment or collection of any tax ..." Perhaps Judge Jones’ concurrence reflects judicial concerns about the recent trend reflected in Abdo, Culp, and Boechler, or perhaps it forecasts what’s to come. Only time will tell. Until then, Abdo is a win for taxpayers seeking access to courts in pursuit of justice.