In Debra Reed and Timothy Reed v. Commissioner of Internal Revenue, T.C. Memo. 2025-4, the Tax Court addressed whether it had the authority to review a petition filed outside the 30-day deadline for challenging a notice of determination in a collection due process (CDP) case. The court ultimately granted the Commissioner’s motion to dismiss, finding that the taxpayers had failed to demonstrate they were entitled to equitable tolling of the filing deadline. This case serves as an important reminder of the strict deadlines associated with Tax Court filings and the high bar for establishing equitable tolling.

Background

The taxpayers, Debra and Timothy Reed, had an unpaid federal income tax liability for 2015 totaling $1,866.37 as of April 2018. The IRS levied on their state tax refund to collect this liability and notified them of their right to a CDP hearing. The taxpayers requested a hearing, which was held, and during that process, the IRS Office of Appeals verified the taxpayers’ claim of identity theft with regard to the 2012 tax year. However, Appeals was unable to make a determination regarding an identity theft issue for the 2015 tax year. The taxpayers failed to provide the IRS with their 2015 tax return, an identity theft affidavit, or their financial information, nor did they request a collection alternative. As a result, the IRS issued a Notice of Determination sustaining the levy on April 25, 2019. The Notice of Determination advised the taxpayers that they had 30 days to file a petition with the Tax Court.

The taxpayers did not file their petition with the Tax Court until June 26, 2023, more than four years after the 30-day deadline. The taxpayers attributed their delay to longstanding IRS accounting errors, the IRS’s failure to credit garnished amounts against taxes owed, and their status as victims of identity theft. The taxpayers did present a letter from the Department of Justice (DOJ) substantiating their identity theft claim. The DOJ stated that a criminal defendant operated a Stolen Identity Refund Fraud scheme between 2010 and 2015 in which Debra Reed’s identity was stolen. However, the court found that none of the statements by the taxpayers, “accounting errors, credit for garnished wages, or identity theft,” indicated any continuing impairments or special circumstances between April 2019 and June 2023.

Tax Court Analysis

The Tax Court began its analysis by acknowledging that it is a court of limited jurisdiction, exercising jurisdiction only to the extent expressly provided by statute. While Section 6330(d)(1) of the Internal Revenue Code (IRC) provides for Tax Court review of a notice of determination within 30 days, this 30-day deadline is not a jurisdictional requirement, as clarified by the Supreme Court in Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022). Boechler established that, while the Tax Court has jurisdiction over these cases, the time limits for filing a petition can be subject to equitable tolling. Equitable tolling is available only when a taxpayer can demonstrate they pursued their rights diligently and that extraordinary circumstances beyond their control prevented them from filing on time. Menominee Indian Tribe of Wis. v. United States, 577 U.S. 250, 255 (2016).

In this case, the court noted that the 30-day period for filing a petition expired on May 28, 2019. The taxpayers’ petition, filed on June 26, 2023, was therefore significantly late. The taxpayers argued that their delay was due to their status as victims of identity theft. Although the court is required to construe pro se filings liberally, Erickson v. Pardus, 551 U.S. 89, 94 (2007), it found that the taxpayers’ claim was insufficient to invoke equitable tolling. Specifically, the identity theft occurred in 2012, the DOJ notified the taxpayers in 2016, and the IRS Appeals Office considered and verified the identity theft in 2018, prior to issuing the notice of determination in 2019. The court reasoned that these facts occurred too far in the past to justify the four-year delay in filing the petition, and that the taxpayers failed to show that the identity theft affected their 2015 taxable year or how it was causally linked to their late filing.

Conclusion

The Tax Court held that while identity theft could potentially justify equitable tolling in other cases, the taxpayers in this case had not met the high bar for such relief. Accordingly, the court granted the Commissioner’s motion to dismiss, based on the taxpayers’ failure to file within the statutorily prescribed time and failure to establish grounds for equitable tolling.

Key Takeaways

This case highlights the importance of adhering to statutory deadlines in Tax Court proceedings. Although the Supreme Court decision in Boechler opened the door for equitable tolling in Tax Court cases, such relief is only available in very limited circumstances. Taxpayers must pursue their rights diligently and demonstrate that extraordinary circumstances beyond their control prevented them from filing on time.

The text of the opinion is available at https://www.taxnotes.com/research/federal/court-documents/court-opinions-and-orders/tax-court-rejects-identity-theft-argument-excuse-late-filing/7qhp2

Article prepared with assistance from NotebookLM.