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May 26, 2011
Friedland: Did the Tax Court Blow Its Whistleblower Jurisdiction?

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By Carlton M. Smith

Carlton M. Smith is a clinical associate professor of law and the tax clinic director at the Benjamin N. Cardozo School of Law.

This article analyzes Friedland, a recent Tax Court memorandum opinion, and concludes that in light of recent Supreme Court opinions, the Tax Court was wrong to hold that the 30-day period to file a petition in a whistleblower award action cannot be equitably tolled.

Copyright 2011 Carlton M. Smith.
All rights reserved.

"Well . . . there you go again."

-- Ronald Reagan to Jimmy Carter,
1980 presidential debate

Well, the Tax Court did it again. Congress keeps giving the court new areas of jurisdiction, but it seems set in its ways -- continuing to treat all tickets to the Tax Court alike. In an article last year,1 I argued that two recently created tickets to the Tax Court have some implicit flexibility in the time periods in which a petition must be filed. I wrote that contrary to recent Tax Court precedent, both the 90-day time period under section 6015(e) to petition the Tax Court to determine relief available under section 6015 (the innocent spouse provisions) and the 30-day time period under section 6330(d) to appeal a collection due process notice of determination to the Tax Court should be subject to unstated exceptions for equitable tolling. I pointed out that those periods did not have the same function as the 90-day period for the traditional deficiency case under section 6213(a). Further, those periods were enacted in 1998, years after the Supreme Court in Irwin v. Department of Veterans Affairs2 held that there would be a rebuttable presumption that time periods in the U.S. code are subject to unstated equitable tolling exceptions.

In April the Tax Court faced its first case concerning the 30-day period in which to file an action in the Tax Court under its new section 7623(b)(4) jurisdiction to review the denial of all or part of a whistleblower award.3 That review jurisdiction was given to the court in 2006.4 In Friedland, the Tax Court, without discussing Irwin or any of its progeny, held that the 30-day whistleblower action period is rigid. As support, the Tax Court cited a couple of memorandum opinions from the 1990s involving its deficiency jurisdiction under section 6213(a). The court refused to toll the 30-day period either because of confusion created by the IRS or because the whistleblower initially filed in the wrong court. The Tax Court stated: "This Court's jurisdiction is strictly statutory, and estoppel cannot create jurisdiction where none exists."

Once again, with all due respect, I believe the Tax Court got it wrong. The time period to file a whistleblower action in the Tax Court should be held not to be an inflexible "jurisdictional" period, but one subject to an unstated equitable tolling exception. Two nontax Supreme Court opinions issued after I wrote my article last year only strengthen my belief in this regard.

In the balance of this article, I give more details on the facts and holding in Friedland. Thereafter, I review post-Irwin case law, focusing particularly on the Supreme Court's recent opinions in Holland v. Florida5 and Henderson v. Shinseki.6 In the course of the article, I also will briefly note the sudden revival of interest in equitable tolling in the innocent spouse area that has occurred both in the Tax Court (in Judge Thomas B. Wells's concurrence in Hall v. Commissioner7) and in the Third Circuit (in Mannella v. Commissioner8) -- developments not entirely coincidental with the publication of my article last year. Finally, I will briefly discuss the somewhat surprising reason why I think the proper venue to appeal a Tax Court holding in a whistleblower case is always the Court of Appeals for the District of Columbia Circuit -- not the court of appeals for the circuit in which the petitioner resides.

Friedland Opinion

Before 2006, awards to whistleblowers under section 7623 for providing information to the IRS were discretionary and unreviewable by any court, but the issue of whether a contract had been entered into for an award (usually, one implied in fact) was the subject of occasional litigation in the Court of Federal Claims or its predecessor, the Court of Claims.9 If a contract had been entered into, those courts held that suit for the award under the Tucker Act10 had to be brought within the time period set forth under 28 U.S.C. section 2501,11 which provides: "Every claim of which the United States Court of Federal Claims has jurisdiction shall be barred unless the petition thereon is filed within six years after such claim first accrues."12 The date on which the judicial claim first accrued was held to be when the IRS refused the whistleblower's administrative claim.13

For years, the IRS advised whistleblowers in award denial letters that if they disagreed with the agency's decision, they should file suit in the Court of Federal Claims (or its predecessors). That referral became somewhat of a scandal earlier this year when it was revealed that until 2009 (long after section 7623 was amended to provide for nondiscretionary awards and a Tax Court review proceeding), the IRS continued to send letters to whistleblowers erroneously telling them to file complaints about award denials or underpayments in the Court of Federal Claims. In Colman v. United States,14 Judge Thomas C. Wheeler had to dismiss for lack of jurisdiction a suit brought by a whistleblower who was denied a discretionary award under the statute as it existed in 2003. The court found that the whistleblower did not have a contract with the IRS. Judge Wheeler twice ordered the Justice Department to investigate why the IRS continued to send letters denying discretionary whistleblower awards that erroneously directed unhappy applicants to bring suit in the Court of Federal Claims, even though it had been clear since at least 1941 that those denials were non-reviewable. Judge Wheeler never got a satisfactory answer and wrote:

    It is unfortunate that the IRS's erroneous form letter may have induced Mr. Colman to waste time and effort by filing suit in this Court. From Mr. Colman's perspective, the IRS instructed him to pursue his claim in this Court. When he followed the IRS's advice, another arm of the Government, the Department of Justice, moved to dismiss the claim for lack of jurisdiction. The public rightly should expect better from its federal agencies. At least the recent 2010 version of the IRS form letter has eliminated the language that invites suit in our Court.15

A 2006 amendment to section 7623 created a new, nondiscretionary whistleblower award at subsection (b), which, under paragraph (1), normally ranges from 15 to 30 percent of the amount collected from the taxpayer. In some circumstances, section 7623(b)(2) and (3) provide for lesser or no awards. Subsection (b) awards can be made only for information provided on or after December 20, 2006.16 Further, new section 7623(b)(4) states: "Any determination regarding an award under paragraph (1), (2), or (3) may, within 30 days of such determination, be appealed to the Tax Court (and the Tax Court shall have jurisdiction with respect to such matter)."

The Court of Federal Claims has since concluded that the Tax Court's jurisdiction to review whistleblower awards under subsection (b)(4) is exclusive and that any suit erroneously brought in the Court of Federal Claims cannot be transferred to the Tax Court, but must be dismissed.17

In September 2009 Murray Friedland, a New York accountant, submitted a Form 211, "Application for Award for Original Information," to the IRS Whistleblower Office. In it, he alleged that two C corporations of which he was a shareholder had failed to pay millions of dollars in income taxes by impermissibly treating real property sales as stock sales in a corporate liquidation. He asserted that the structure of the sales was a sham and solely motivated to evade income taxes.

On November 13, 2009, the Whistleblower Office denied Friedland's claim in a letter explaining that it had reviewed and evaluated the claim before making its decision. The office wrote that federal disclosure and other prevailing laws prevented it from explaining why it was denying his claim. The IRS then gave general explanations for disallowing awards, explaining that claims are denied if the claimant provided insufficient information, if the IRS already had the information, or if the information provided did not cause an investigation or result in the recovery of taxes, penalties, or fines.

Friedland was unsure why his claim was denied, so he called the Whistleblower Office and sent additional information. The Whistleblower Office later mailed him three additional letters. One letter referenced the phone conversation with him and told him that to challenge the Whistleblower Office's decision, he could "write to the US Court of Claim" (sic) in Washington. The two other letters from the Whistleblower Office were duplicates, confirming that his additional information had been received and considered and that the Office's "determination remains the same despite the information contained in . . . [his] latest letter."

On a later date not set out in the Tax Court opinion,18 Friedland filed a complaint in the Court of Federal Claims challenging the Whistleblower Office's decision. On May 26, 2010, the Court of Federal Claims dismissed his complaint for lack of jurisdiction. Less than 30 days later, on June 18, 2010, Friedland filed a petition in the Tax Court challenging the denial of the whistleblower claim.

The IRS filed a motion to dismiss for lack of jurisdiction, arguing principally that no determination notice had been issued to Friedland that could confer jurisdiction on the Tax Court. The IRS stated that Friedland's information had not been used to detect underpayments of tax or to collect proceeds and argued that there can be a determination for jurisdictional purposes only if the Whistleblower Office undertakes an administrative or judicial action and thereafter "determines" to make an award. Judge Diane L. Kroupa rejected the IRS's argument, relying on her own opinion in Cooper v. Commissioner.19 In Cooper, after two Forms 211 were filed, the IRS sent a letter to the whistleblower denying the claims and explaining that an award determination could not be made under section 7623 because the whistleblower did not identify federal tax issues on which the IRS could take action. The IRS further explained that an award was not warranted for either claim because the whistleblower's information did not "result in the detection of the underpayment of taxes." In Cooper, Judge Kroupa held -- over IRS objection -- that such a letter was a determination that could give the Tax Court jurisdiction under section 7623(b)(4).

In the alternative, the IRS argued in Friedland that if a determination notice had been issued, Friedland had failed to petition the Tax Court within the required 30-day period. Judge Kroupa granted the IRS's motion to dismiss on that basis. Her entire analysis on the issue reads as follows:

    To invoke the Court's jurisdiction, an individual must appeal the amount or denial of an award determination to this Court within 30 days of such a determination by the Whistleblower Office. Sec. 7623(b)(4). Failure to file within the 30 days deprives the Court of subject matter jurisdiction. The Whistleblower Office issued petitioner its determination on November 13, 2009. Petitioner thereafter had 30 days to file an appeal with this Court, which he failed to do. Petitioner eventually filed a petition on June 18, 2010, that is, 217 days after the first letter was issued.

    We recognize that petitioner may have relied on the erroneous advice of the Whistleblower Office in filing his initial appeal with the [Court of Federal] Claims. . . . We, however, are limited in the relief we can provide. This Court's jurisdiction is strictly statutory, and estoppel cannot create jurisdiction where none exists. See Lumber Prods., Inc. v. Commissioner, T.C. Memo. 1992-728. We sympathize with petitioner. We cannot expand our jurisdiction, however, even where the Commissioner provided bad advice. See Schoenfeld v. Commissioner, T.C. Memo. 1993-303. Accordingly, we find that petitioner failed to timely file a petition with this Court.

Both the Lumber Products and Schoenfeld opinions cited by Judge Kroupa interpreted the Tax Court's deficiency jurisdiction under section 6213(a). I submit that whistleblower jurisdiction is very different and so deserves a fuller discussion.

What Is Meant by 'Jurisdictional'?

Friedland filed pro se in the Tax Court. He filed his response to the IRS's motion to dismiss last October, and therefore cannot be faulted for not having cited Henderson v. Shinseki, issued by the Supreme Court on March 1. But Henderson was decided over a month before the Tax Court issued its opinion in Friedland, and should have been discussed in the opinion.

Henderson involved an untimely appeal of a denial of a claim for veterans' benefits to the Board of Veterans' Appeals (Board). Before 1988, such a denial, like the denial of a whistleblower award before 2006, was not reviewable in any further court. However, in 1988 Congress created the Court of Appeals for Veterans Claims (Veterans Court) to review Board decisions adverse to veterans. Under that court's rules, a veteran's appeal must be filed within 120 days of the proper mailing of the Board's final decision.

After the Board denied Henderson's claim for supplemental disability benefits, he filed an appeal in the Veterans Court, missing the 120-day filing deadline by 15 days. Henderson argued that his failure to timely file should be excused under equitable tolling principles. While his appeal was pending, the Supreme Court held in Bowles v. Russell20 that the statutory limit on extensions to file notices of appeal in civil cases in an Article III court is jurisdictional, and failure to file within that period cannot be excused. The question in Henderson's case was whether a similar jurisdictional designation applied to the period in which to file an appeal in the Veterans Court, an Article I court.

For a unanimous Supreme Court,21 Justice Samuel Alito wrote:

    Because the consequences that attach to the jurisdictional label may be so drastic, we have tried in recent cases to bring some discipline to the use of this term. We have urged that a rule should not be referred to as jurisdictional unless it governs a court's adjudicatory capacity, that is, its subject-matter or personal jurisdiction. Other rules, even if important and mandatory, we have said, should not be given the jurisdictional brand.

    Among the types of rules that should not be described as jurisdictional are what we have called "claim-processing rules." These are rules that seek to promote the orderly progress of litigation by requiring that the parties take certain procedural steps at certain specified times. Filing deadlines, such as the 120-day filing deadline at issue here, are quintessential claim-processing rules. Accordingly, if we were simply to apply the strict definition of jurisdiction that we have recommended in our recent cases, we would reverse the decision of the Federal Circuit, and this opinion could end at this point.

    Unfortunately, the question before us is not quite that simple because Congress is free to attach the conditions that go with the jurisdictional label to a rule that we would prefer to call a claim-processing rule. The question here, therefore, is whether Congress mandated that the 120-day deadline be "jurisdictional." In Arbaugh, we applied a "readily administrable bright line" rule for deciding such questions. Under Arbaugh, we look to see if there is any "clear" indication that Congress wanted the rule to be "jurisdictional."22

As an initial matter, the Court did not consider Bowles or any other case involving a filing in an Article III court controlling:

    This case, by contrast, involves review by an Article I tribunal as part of a unique administrative scheme. Instead of applying a categorical rule regarding review of administrative decisions, we attempt to ascertain Congress' intent regarding the particular type of review at issue in this case.23

After first noting that the sentence containing the 120-day time limit did not contain the word "jurisdiction" and was located in a different subchapter from the jurisdictional grant, Justice Alito wrote:

    While the terms and placement of section 7266 provide some indication of Congress' intent, what is most telling here are the singular characteristics of the review scheme that Congress created for the adjudication of veterans' benefits claims. "The solicitude of Congress for veterans is of long standing." And that solicitude is plainly reflected in the VJRA [Veterans' Judicial Review Act], as well as in subsequent laws that "place a thumb on the scale in the veteran's favor in the course of administrative and judicial review of VA [Department of Veterans Affairs] decisions."

    The contrast between ordinary civil litigation -- which provided the context of our decision in Bowles -- and the system that Congress created for the adjudication of veterans' benefits claims could hardly be more dramatic. In ordinary civil litigation, plaintiffs must generally commence their suits within the time specified in a statute of limitations, and the litigation is adversarial. Plaintiffs must gather the evidence that supports their claims and generally bear the burden of production and persuasion. Both parties may appeal an adverse trial-court decision, and a final judgment may be reopened only in narrow circumstances.

    By contrast, a veteran seeking benefits need not file an initial claim within any fixed period after the alleged onset of disability or separation from service. When a claim is filed, proceedings before the VA are informal and nonadversarial. The VA is charged with the responsibility of assisting veterans in developing evidence that supports their claims, and in evaluating that evidence, the VA must give the veteran the benefit of any doubt. If a veteran is unsuccessful before a regional office, the veteran may obtain de novo review before the Board, and if the veteran loses before the Board, the veteran can obtain further review in the Veterans Court. A Board decision in the veteran's favor, on the other hand, is final. And even if a veteran is denied benefits after exhausting all avenues of administrative and judicial review, a veteran may reopen a claim simply by presenting "new and material evidence." Rigid jurisdictional treatment of the 120-day period for filing a notice of appeal in the Veterans Court would clash sharply with this scheme.

    We have long applied "the canon that provisions for benefits to members of the Armed Services are to be construed in the beneficiaries' favor." Particularly in light of this canon, we do not find any clear indication that the 120-day limit was intended to carry the harsh consequences that accompany the jurisdiction tag.24

Comparing the procedures for applying for veterans' benefits and appealing their denial with those for whistleblowers' awards reveals many similarities: Both start with individuals whose actions Congress wants to reward filing claims with an agency. There is no time limit for filing those claims. The claims process is informal and the proceeding non-adversarial. If a claim is granted, the agency cannot appeal its internal office's decision. If a claim is denied, the individual can seek recourse by filing an appeal in an Article I court.25 The Tax Court also is an Article I court.26

There are also a few differences: principally, that there is no long-standing solicitousness in the courts for whistleblowers. Also, section 7623(b)(4) contains both the time limit and the jurisdictional grant.

While perhaps not quite as strong a case as that which can be made for the veterans, on the whole it is hard to say that Congress provided a "clear indication" that the deadline to file a whistleblower petition in the Tax Court is "jurisdictional." Because the government bears the burden of proving that the time limit is not tollable, it is hard to see that the IRS met that burden in Friedland. The issue certainly deserved some judicial discussion, at the very least.

Equitable Tolling

Another recent Supreme Court case that underscores the presumption that time limits are subject to unwritten equitable tolling exceptions is Holland v. Florida,27 decided in June 2010. Holland involved a provision of the Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA) that limits state prisoners sentenced to the death penalty to filing a writ of habeas corpus in federal district courts. The AEDPA states that a "1-year period of limitation shall apply to an application for a writ of habeas corpus by a person in custody pursuant to the judgment of a State court."28 In Holland, a lawyer missed the deadline to file a habeas corpus petition, despite repeated urging by his death row client to file on time. Eventually, the client learned of the event that triggered the running of the period and filed a habeas petition himself, but it was five weeks late.

The Supreme Court joined all 11 circuit courts of appeals that had decided on the issue and concluded that equitable tolling could apply to the statute, stating:

    First, the AEDPA "statute of limitations defense . . . is not 'jurisdictional.'" It does not set forth "an inflexible rule requiring dismissal whenever" its "clock has run."

    We have previously made clear that a nonjurisdictional federal statute of limitations is normally subject to a "rebuttable presumption" in favor "of equitable tolling."

    In the case of AEDPA, the presumption's strength is reinforced by the fact that "'equitable principles'" have traditionally "'governed'" the substantive law of habeas corpus, for we will "not construe a statute to displace courts' traditional equitable authority absent the 'clearest command'". The presumption's strength is yet further reinforced by the fact that Congress enacted AEDPA after this Court decided Irwin and therefore was likely aware that courts, when interpreting AEDPA's timing provisions, would apply the presumption.

    Second, the statute here differs significantly from the statutes at issue in United States v. Brockamp, 519 U.S. 347 (1997), and United States v. Beggerly, 524 U.S. 38 (1998), two cases in which we held that Irwin's presumption had been overcome. In Brockamp, we interpreted a statute of limitations that was silent on the question of equitable tolling as foreclosing application of that doctrine. But in doing so we emphasized that the statute at issue (1) "se[t] forth its time limitations in unusually emphatic form;" (2) used "highly detailed" and "technical" language "that, linguistically speaking, cannot easily be read as containing implicit exceptions;" (3) "reiterate[d] its limitations several times in several different ways;" (4) related to an "underlying subject matter," nationwide tax collection, with respect to which the practical consequences of permitting tolling would have been substantial; and (5) would, if tolled, "require tolling, not only procedural limitations, but also substantive limitations on the amount of recovery -- a kind of tolling for which we . . . found no direct precedent." And in Beggerly we held that Irwin's presumption was overcome where (1) the 12-year statute of limitations at issue was "unusually generous" and (2) the underlying claim "deal[t] with ownership of land" and thereby implicated landowners' need to "know with certainty what their rights are, and the period during which those rights may be subject to challenge."

    By way of contrast, AEDPA's statute of limitations, unlike the statute at issue in Brockamp, does not contain language that is "unusually emphatic," nor does it "re-iterat[e]" its time limitation. Neither would application of equitable tolling here affect the "substance" of a petitioner's claim. Moreover, in contrast to the 12-year limitations period at issue in Beggerly, AEDPA's limitations period is not particularly long. And unlike the subject matters at issue in both Brockamp and Beggerly -- tax collection and land claims -- AEDPA's subject matter, habeas corpus, pertains to an area of the law where equity finds a comfortable home. In short, AEDPA's 1-year limit reads like an ordinary, run-of-the-mill statute of limitations.[ 29 ]

How does the whistleblower legislation time limit stack up under this language from Holland? While section 7623(b)(4) does contain the word "jurisdiction," and one cannot say that whistleblower awards are traditionally equitable, all other parts of the legislation fall on the side of the Irwin presumption in favor of equitable tolling: The 30-day time period in section 7623(b)(4) was enacted after Irwin. It is not reiterated. It is short. Unlike tax collection, which usually necessitates speedy rulings and for which deadlines serve multiple purposes (such as stopping assessment and collection), whistleblower award proceedings in no way slow tax collection. The awards, if any, proceed on a separate track from those involving the taxpayer on whom the whistle was blown and are paid only out of money already collected from the taxpayer.

Equitable Tolling in Innocent Spouse

Brockamp, discussed by the Supreme Court in Holland, involved the tolling of section 6511's two- and three-year limitations periods for filing refund claims. The legislative partial repeal of Brockamp in the Internal Revenue Service Restructuring and Reform Act of 1998 -- that is, the enactment of a new section 6511(h) for tolling in the case of financial disability -- was paired with the adoption of the expanded innocent spouse rules at section 6015. That pairing suggests that Congress intended that all time limits in section 6015 be subject to equitable tolling.

In Pollock v. Commissioner,30 with which my article disagreed,31 the Tax Court in 2009 analyzed the Supreme Court's equitable tolling opinions since Irwin and concluded that the 90-day period in section 6015(e) in which to file a petition in the Tax Court for a stand-alone determination of innocent spouse relief was not subject to equitable tolling.32

But in Hall v. Commissioner33 last September, Judge Wells cited the Holland language in his concurrence as support for the argument that equitable tolling principles underscore why a regulation setting forth a two-year time limit to request equitable innocent spouse relief under section 6015(f) is invalid. Judge Wells went on to distinguish Pollock on the ground that by contrast, the regulation involved a statute of limitations -- not a time period that contained the word "jurisdiction." Although Judge Wells did not think the regulation's time period was valid, in a footnote at the end of his opinion, he wrote: "Even if the period of limitations in sec. 1.6015-5(b)(1), Income Tax Regs., is valid, I believe that such a period of limitations would be subject to the 'doctrine' of equitable tolling."34 Five other Tax Court judges, including Judge Kroupa (the author of Friedland), signed the concurrence.

The Tax Court judges who did not sign Judge Wells's concurrence did not give their views on the applicability of the equitable tolling case law to the time period in the regulation. However, in their dissent, judges Michael B. Thornton and Mark V. Holmes (joined by three other judges), wrote:

    We respectfully disagree with those concurring who believe that the concept of equitable tolling has any bearing on the validity of the regulation. If, as they suggest, equitable tolling might be available to provide relief from the regulatory deadline -- a theory, incidentally, that neither party has raised or addressed -- this circumstance would negate the assumption, central to the majority's reasoning, that the deadline is an absolute temporal bar to relief.35

I read that passage as indicating that those dissenting judges are open to the idea that equitable tolling might apply in some cases, but the parties must first argue the point and present appropriate facts.

Before Judge Wells's concurring opinion in Hall, I had briefed the issue of equitable tolling of the two-year time limit in the regulation under section 6015(f) in a different case.36 An appeal from a Tax Court opinion in Mannella v. Commissioner37 was pending in the Third Circuit for most of 2010. In that case, Denise Mannella alleged that her husband had hidden from her the notice of intent to levy that commenced the two-year period in the regulation to request equitable innocent spouse relief under section 6015(f). The Tax Court had not discussed the doctrine of equitable tolling when it held in her favor, finding that the regulatory time period was invalid. But I was concerned that the Third Circuit might uphold the regulation's time period, so in May 2010 (before the Supreme Court issued Holland), I filed an amicus brief in Mannella, arguing that if the time period was valid, it could be equitably tolled, and that in effect, Mannella (who originally was pro se) had been invoking that doctrine (although not by its proper legal name). My amicus brief repeated much of what I had said in my Tax Notes article.38

When the Third Circuit decided Mannella earlier this year, it upheld the two-year time period in the regulation under section 6015(f), but it expressed concern that the doctrine of equitable tolling might be applicable in the case. It therefore remanded the case to the Tax Court for further proceedings to determine both if the regulatory time limit might be subject to equitable tolling in any case and if it should be tolled specifically on the facts of Mannella's case.39 As of publication, there has been no activity in the case, other than its reassignment to Tax Court Judge Harry A. Haines last month.

In Mannella, the Third Circuit stated its precedent on equitable tolling as follows: "There may be equitable tolling (1) where the defendant has actively misled the plaintiff respecting the plaintiff's cause of action; (2) where the plaintiff in some extraordinary way has been prevented from asserting his or her rights; or (3) where the plaintiff has timely asserted his or her rights mistakenly in the wrong forum."40

I cannot tell from the meager facts in Friedland exactly when and what was said or written. But if, as I believe, the 30-day period to file a petition in the Tax Court under section 7623(b)(4) is subject to an unstated exception for equitable tolling, an inquiry should have been made as to factors (1) and (3) listed by the Third Circuit. It seems clear that the IRS actively misled Friedland about where to file, although it is not clear whether that misleading occurred before or after the 30 days had run. It is also clear that he filed in the wrong forum (the Court of Federal Claims), but it is not clear that his filing there was originally timely. Perhaps an additional factor that could help Friedland is that the IRS argued in 2009 and 2010 (at the time he was required to file) that the letter that the Tax Court now says started the 30-day period was not one that could be the subject of review in any court. Thus, the confusion in this area as to which letter (if any) started the review period might allow the Tax Court to decide that equity permits it to take Friedland's case and get to its merits.

Venue on Appeal From the Tax Court

If Friedland appeals the Tax Court's dismissal of his case, an interesting issue will be the proper venue for that appeal. As noted above, he resided in New York (in the Second Circuit) at the time he filed his Tax Court petition; one reflexively might conclude that an appeal goes to the Second Circuit. I am not so sure. Indeed, I think the proper venue on appeal -- absent the parties stipulating otherwise under section 7482(b)(2)41 -- is to the D.C. Circuit. Section 7482(b)(1) states that a decision of the Tax Court:

    may be reviewed by the United States court of appeals for the circuit in which is located --

      A. in the case of a petitioner seeking redetermination of tax liability other than a corporation, the legal residence of the petitioner,

      B. in the case of a corporation seeking redetermination of tax liability, the principal place of business or principal office or agency of the corporation, or, if it has no principal place of business or principal office or agency in any judicial circuit, then the office to which was made the return of the tax in respect of which the liability arises,

      C. in the case of a person seeking a declaratory decision under section 7476, the principal place of business, or principal office or agency of the employer,

      D. in the case of an organization seeking a declaratory decision under section 7428, the principal office or agency of the organization,

      E. in the case of a petition under section 6226, 6228(a), 6247, or 6252, the principal place of business of the partnership, or

      F. in the case of a petition under section 6234(c) --

        i. the legal residence of the petitioner if the petitioner is not a corporation, and

        ii. the place or office applicable under subparagraph (B) if the petitioner is a corporation.

    If for any reason no subparagraph of the preceding sentence applies, then those decisions may be reviewed by the Court of Appeals for the District of Columbia.

I do not see how any subparagraph applies to divert venue on appeal from a Tax Court decision under section 7623(b)(4) from the flush language at the end of the paragraph directing venue to the D.C. Circuit. The closest subparagraph (and the one that usually applies to individual taxpayers) is (A), but that only applies in the case of "a petitioner seeking redetermination of tax liability." A whistleblower is not the taxpayer, and he is certainly not petitioning for redetermination of the tax liability when he is petitioning to review the denial or amount of an award for providing information to go after the taxpayer. While no court has faced the venue issue in a whistleblower case, I am not the first person to write about it.42

A similar venue on appeal argument is currently being litigated in a case brought under section 6015(e) that challenges the validity of the regulation imposing the two-year period to file a request for equitable innocent spouse relief under section 6015(f). The Tax Court has held the regulatory period invalid in the section 6015(e) cases of Lantz v. Commissioner,43 Mannella, and Hall. But the Justice Department appealed each of those cases to regional appellate courts and has, to date, obtained reversals of the Tax Court in the Seventh Circuit in Lantz,44 and in the Third Circuit in Mannella. Similar cases are currently pending in four more circuits.

On May 5 the Tax Court issued an opinion in Pullins v. Commissioner45 -- a section 6015(e) case appealable to the Eighth Circuit. In Pullins, the Tax Court refused to follow the opinions of the Seventh and Third circuits in Lantz and Mannella because the woman's case was appealable to the Eighth Circuit, which has not ruled on the validity of the regulation. The Tax Court held that under the rule of Golsen v. Commissioner,46 it would only follow an opinion contrary to its precedent if it was issued by a circuit court of appeals to which the present case was appealable.

Only four days after Pullins was issued, a Tax Court petitioner residing in the Third Circuit who faced the same regulatory validity issue in her section 6015(e) case, Joanna A. Asante, No. 15914-10, filed a motion for summary judgment. The IRS stipulated that she would be entitled to relief if the regulatory two-year period were invalid. The IRS argues that her case is appealable to the Third Circuit, which held the two-year period valid in Mannella. Asante is asking the Tax Court to enter a judgment in her favor on the basis of its own precedents, arguing that contrary to what the Tax Court just held in Pullins and absent the parties stipulating to the contrary, all section 6015(e) cases are properly appealable only to the D.C. Circuit. She contends that an action under section 6015(e) for a determination of the relief available under section 6015(b), (c), or (f) is also not one "seeking redetermination of tax liability" under section 7482(b)(1)(A). Judge James S. Halpern termed the motion "interesting" and observed that the issue is one that could potentially affect Tax Court collection due process cases as well.

Judge Halpern gave the IRS 60 days to respond to the motion. If the case proceeds, the court will hear testimony from Asante on whether the two-year period should be equitably tolled -- the same issue as involved in the Mannella remand.

Has Asante just destroyed the government's careful, two-year litigating strategy for overturning the Tax Court's position in Lantz? If she is correct, the government has achieved victory in cases (and will receive in four other regional circuits) that bind no one but the parties to those cases, since the taxpayers therein did not object to improper venue. All I can say is "stay tuned." More than whistleblowers now have an interest in the venue-on-appeal issue.


In Mayo, the Supreme Court stated: "We are not inclined to carve out an approach to administrative review [of tax regulations] good for tax law only."47 So, too, Brockamp illustrates that there should be no tax exceptionalism in interpreting passages of the code creating time limits, although one should be careful in the tax area of the consequences of applying the Irwin presumption in favor of equitable tolling on the collection or administration of taxes. In Friedland, the Tax Court cited well-settled precedent that its jurisdiction to review notices of deficiency under section 6213(a) clearly prohibits equitable exceptions. But section 6213(a) was written long before Irwin, and the issuance of a notice of deficiency has effects other than being a ticket to the Tax Court. It stops the IRS from assessing the tax therein and tolls the assessment statute of limitations under section 6501 while the taxpayer decides whether to contest the deficiency.48 A notice of deficiency is an integral part of the assessment and collection mechanism for taxes, which have been described as "the life-blood of the government."49

By contrast, there is no time period in which to file an administrative whistleblower claim. And a whistleblower proceeding in Tax Court takes place either after the government has collected the tax or has declined to proceed on the information provided. It does not implicate either the collection of tax or the tax refund process and has no effects on any other activity under the code. Thus, there is no need for the extra care in applying equitable tolling principles that is necessary elsewhere in the tax code.

The next time a whistleblower comes before the Tax Court with a late-filed petition, I would encourage the court to engage in the Irwin analysis and more thoroughly consider whether equitable tolling might apply to this new jurisdiction. While the matter is not free from doubt, I think equitable tolling should apply if the right facts are presented.


1 Carlton M. Smith, "Equitably Tolling Innocent Spouse and Collection Due Process Periods," Tax Notes, Mar. 1, 2010, p. 1106, Doc 2010-3161, 2010 TNT 41-8.

2 498 U.S. 89 (1990).

3 Friedland v. Commissioner, T.C. Memo. 2011-90, Doc 2011-8863, 2011 TNT 80-16.

4 P.L. 109-423, Div. A, Title IV, section 406(a)(1).

5 130 S. Ct. 2549 (2010).

6 131 S. Ct. 1197 (2011).

7 135 T.C. 374, 383-387 (2010) (Wells, J., concurring), Doc 2010-20733, 2010 TNT 184-11.

8 631 F.3d 115 (3d Cir. 2011), Doc 2011-1183, 2011 TNT 13-10.

9 See, e.g., Krug v. United States, 168 F.3d 1307 (Fed. Cir. 1999), Doc 1999-6633, 1999 TNT 33-9 ; Saracena v. United States, 508 F.2d 1333 (Ct. Cl. 1975).

10 28 U.S.C. section 1491.

11 See Pinnavaia v. United States, No. 00-5068 (Fed. Cir. 2000), Doc 2000-28718, 2000 TNT 217-13.

12 In John R. Sand & Gravel Co. v. United States, 552 U.S. 130 (2008), the Supreme Court held that this six-year period could not be equitably tolled because the Irwin tolling presumption was overcome by stare decisis.

13 Id.

14 No. 1:10-cv-00219 (Fed. Cl. 2011), Doc 2011-2082, 2011 TNT 21-15.

15 Id.

16 Wolf v. Commissioner, T.C. Memo. 2007-133, Doc 2007-13044, 2007 TNT 105-11.

17 Dacosta v. United States, 82 Fed. Cl. 549 (2008), Doc 2008-15634, 2008 TNT 138-12.

18 PACER research reveals that the Court of Federal Claims suit was filed on January 20, 2010 -- 68 days after the first letter denying Friedland's claim.

19 135 T.C. 70 (2010), Doc 2010-21787, 2010 TNT 193-6.

20 551 U.S. 205 (2007).

21 Justice Elena Kagan recused herself.

22 Henderson, 131 S. Ct. at 1202-1203 (citations omitted).

23 Id. at 1199.

24 Id. at 1205-1206 (citations omitted).

25 Before congressional creation of those courts, neither veterans nor whistleblowers there had recourse following denial.

26 See section 7441.

27 130 S. Ct. 2549 (2010).

28 28 U.S.C. section 2244(d)(1).

29 Id. at 2560-2561 (citations omitted, emphasis added).

30 132 T.C. 21 (2009).

31 Smith, supra note 1, at 1108-1111.

32 Contrast this result with Judge Richard Posner's opinion in Flight Attendants Against UAL Offset v. Commissioner, 165 F.3d 572 (7th Cir. 1999), Doc 1999-2732, 1999 TNT 12-30, in which the Seventh Circuit refused to decide whether a similar 90-day period to file a Tax Court declaratory judgment petition on pension plan qualification under section 7476 could be subject to equitable tolling, but it expressed skepticism of the government's arguments that it could not be and that Brockamp prohibited tolling any time period in the tax code.

33 35 T.C. 374, 383-387 (2010).

34 Id. at 387, n.5.

35 Id. at 392-393 (Thornton and Holmes, JJ., dissenting).

36 In addition to Mannella, I also filed an amicus brief in the Fifth Circuit arguing for equitable tolling of the section 6015(e) 90-day period in Terrell v. Commissioner. The Fifth Circuit eventually held that the IRS had not sent the section 6015 notice of determination to the taxpayer's last known address, so the court never reached the issue of whether the section 6015(e) period is subject to equitable tolling. See 625 F.3d 254 (5th Cir. 2010), Doc 2010-23623, 2010 TNT 212-8. In fact, no court of appeals has yet decided on that issue.

37 132 T.C. 136 (2009), Doc 2009-8425, 2009 TNT 69-21.

38 See Smith, supra note 1, at 1110-1111. Indeed at n.40 on p. 1111, I wrote: "Indeed query whether the two-year periods to file Forms 8857 under section 6015(b) and (c) are properly statutes of limitations subject to equitable tolling? I think they are." The regulation borrowed those two-year periods. Tax Notes Today published my brief; see Doc 2010-21166 or 2010 TNT 189-24.

39 Mannella, 631 F.3d at 125-126.

40 Id. at 125 (internal quotation marks and citations omitted).

41 Section 7482(b)(2) allows the parties to stipulate venue in any court of appeals except the Federal Circuit.

42 See James Bamberg, "A Different Point of Venue: The Plainer Meaning of Section 7482(b)(1)," 61 Tax Lawyer 445 (Winter 2008) (the proper venue on appeal in many Tax Court newer-jurisdiction cases is only the Court of Appeals for the D.C. Circuit). Bamberg's paper won the Tannenwald Prize in 2007.

43 132 T.C. 131 (2009), Doc 2009-7979, 2009 TNT 65-8.

44 607 F.3d 479 (7th Cir. 2010), Doc 2010-12604, 2010 TNT 110-17.

45 136 T.C. No. 20 (May 5, 2011), Doc 2011-9726, 2011 TNT 88-9.

46 54 T.C. 742 (1970), affd. on other issue 445 F.2d 985 (10th Cir. 1971).

47 131 S. Ct. 704 (Jan. 11, 2011).

48 Section 6503(a).

49 Bull v. United States, 295 U.S. 247, 259 (1935).


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