I’ve been married to a Swiss for almost 40 years. I know the critical importance of timeliness. When you say “I’ll be ready in 5 minutes”, believe me, that Swiss watch is ticking. And, so it is with the Tax Court and filing a Tax Court petition in response to an Internal Revenue Service (IRS) Notice of Deficiency. The Notice of Deficiency is also called a “90-day letter”. Once a taxpayer receives such a notice, if he wants to challenge the proposed tax without having to first pay it and seeking a refund, the taxpayer has 90 days (150 days if the notice is addressed to a person who is outside the country) from the date of the notice to file a petition with the Tax Court. See IRC Sec. 6213(a).
Timing is Everything
In the complex world of taxation, time can be the taxpayer’s greatest ally or worst enemy. Timely responses to the IRS and filing Tax Court petitions are not merely bureaucratic formalities; they are essential steps in protecting one’s rights as a taxpayer. This importance becomes even more evident when considering factors such as time zone differences, a predicament more keenly faced by overseas Americans.
The US tax world operates on a strict timeline, often measured down to the second as the recent Tax Court case of Sanders v. Commissioner, No. 25868-22, (USTC June 20, 2023) demonstrates. Failing to adjust for time zone differences can lead to missed deadlines and dire consequences. The difference of a few hours between filing deadlines in various parts of the world can mean the difference between compliance and non-compliance. This challenge is particularly relevant for overseas Americans who must coordinate their US tax matters from different corners of the globe. For overseas Americans, understanding time zone differences and proactively managing them is paramount to ensure compliance and protect their rights as taxpayers.
The Tax Court case of Antawn Jamal Sanders is a striking example of what can go wrong when deadlines are not met. It underscores the gravity of timely filing and allowing for potential technical glitches or last-minute issues that might arise, especially during the electronic filing process. In Mr. Sanders’ case, he filed a Tax Court petition just 11 seconds late, and his petition was summarily rejected. The consequences of this seemingly negligible delay were significant – he lost the opportunity to have his case heard in Tax Court, potentially costing him substantial sums of money. When dealing with the IRS and Tax Court, literally, every second counts.
Tax Law, Tax Rules Cannot be Taken Lightly
The determination of whether a petition is “timely” filed hinges on when the Tax Court physically receives it. In accordance with Tax Court Rule 22(d), when a petition is submitted electronically, it must reach the Tax Court at or before 11:59 p.m. Eastern Time on the final day of the applicable filing period. This means that even a delay of a few seconds can have severe consequences. The stringent adherence to Eastern Time is a legal requirement and is enforced rigorously, not necessarily because the court is being harsh or inflexible, but because of legal mandates.
Like other federal courts, the Tax Court has what is called “limited jurisdiction”. As carefully explained by the Tax Court in Sanders at page 5, the Tax Court may exercise its jurisdiction only to the extent authorized by Congress. In tax deficiency cases, the Tax Court’s “jurisdiction” is predicated on a valid notice of deficiency and a timely filed petition. In the context of statutes with timing requirements, such as the 90- or 150-day deadline to file the petition imposed by Internal Revenue Code section 6213(a), if the statute is considered to be “jurisdictional”, then strict compliance with the filing deadline is mandatory. Missing the deadline of a “jurisdictional” statute means a court will not have power to decide the merits of the case. The Court cannot extend the deadline for filing a petition, and it must dismiss a case for lack of jurisdiction if the petition is not filed within the statutorily prescribed time.
Taxpayer Abroad – Beware Time Zones and Technical Glitches
In practice, these rules mean that individuals, especially those living in different time zones, need to be acutely aware of the Eastern Time deadline and plan accordingly. While modern technology has made electronic filing convenient, it has also made it imperative for taxpayers to accurately calculate the time difference between their location and Eastern Time and to anticipate the possibility of some technological glitches. Both of these elements are critical to ensure taxpayer submissions are received on time. As the Sander’s court opinion reminds taxpayers at page 6: electronic filing is not accomplished merely by logging into the system or beginning the filing process. An electronic petition is considered “filed,” when the “server receives the transmission.” In circumstances when the Tax Court Clerk’s office or a filing location is inaccessible (e.g., due to storm closings) or otherwise unavailable to the general public (e.g., due to the government website having a systems failure), a taxpayer may indeed have additional time to file a petition.
In the Sanders case, Mr. Sanders had logged in and started filing the petition, but he was slowed down because of certain intermediate steps required to verify the filing before the petition could actually be uploaded. He also needed to refer to the electronic filing instructions a few times. None of these technical problems related to the Tax Court’s filing system, which according to the court’s records was always operating during the time relevant to Mr. Sanders’s filing attempts and ultimate successful, filing. The result: 11 seconds of lost time and a failed petition.
Unfortunately, Mr. Sanders failed to allow for technical glitches he was experiencing in filing his Tax Court petition. In the world of taxes, there is no room for procrastination, indifference, time zone differences or technical glitches. Timely responses to IRS inquiries and precise adherence to filing deadlines can mean the difference between a favorable outcome and a financial setback. In conclusion, the sad case of Antawn Jamal Sanders should serve as a wake-up call for all taxpayers. The importance of timely responses to the IRS and filing Tax Court petitions cannot be overstated. Time zone differences and the challenges faced by overseas Americans only add to the urgency.
Posted October 19, 2023
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