Court Limits Equitable Tolling For Late Tax Court Petitions – Houston Tax Attorneys

We live in a fast-paced world where technology has made it possible to do more, see more, and accomplish everything else more efficiently. While some routines of life have not changed, most have been transformed by our increasingly connected environment.

For better or worse, one thing that has not changed is the concept of deadlines, particularly when it comes to dealing with the government. The IRS is a prime example. It can often miss deadlines and the law either affords a remedy or the government shrugs it off as a loss to the fisc generally that does not even warrant conversation. Taxpayers usually don’t have this luxury. When it comes to tax law, the law isn’t written to protect taxpayers generally. The law is biased toward tax procedure and making it possible for the IRS to administer the law in mass and in bulk.

This is what made the Boechler, P.C. v. Commissioner case interesting when it was considered by the Supreme Court. It was a taxpayer-favorable ruling on a procedural issue, which is rare. The Supreme Court held that a taxpayer could have a remedy even if it filed a tax court petition a few days late. The Supreme Court ruled in Boechler, P.C. v. Commissioner that these deadlines are subject to equitable tolling. This seemed to offer hope for taxpayers who missed deadlines due to circumstances beyond their control.

But what exactly must a taxpayer prove to successfully in…

But what exactly must a taxpayer prove to successfully invoke equitable tolling? The recent remand decision in Boechler, P.C. v. Commissioner, 2025 U.S. Tax Ct. LEXIS 15 (2025), provides the answer. This case provides an opportunity to examine exactly what taxpayers must prove to successfully invoke equitable tolling.

Facts & Procedural History

Boechler operates a solo law practice specializing in asbestos litigation. Her firm employed only herself, her sister Lisa, and a part-time administrative assistant in 2017. The practice maintained approximately 25 active cases, often involving 30 or more defendants per case. To those who do not litigate cases, this sound like a small operation. To those who do litigation, they know that 25 cases is often a lot–certainly more than full time for an attorney.

The tax dispute in this case involved the IRS’s assessment of penalties under Section 6721 for allegedly failing to file timely information returns for 2012. When Boechler contested the assessment, the IRS attempted to collect and issued a Final Notice of Intent to Levy on October 31, 2016. After Boechler requested an appeals hearing, the IRS issued a Notice of Determination on July 28, 2017, sustaining the levy notice.

The Notice of Determination clearly stated that Boechler had 30 days from the date of the letter to file a petition with the U.S. Tax Court. The 30-day deadline fell on August 27, 2017, which was a Sunday. Boechler’s attorney, Mr. Thompson, mailed the petition on August 29, 2017. This was two days late.

During the filing period

During the filing period, Boechler faced competing demands on her time. She was caring for her elderly mother in her late 90s, sharing caregiving responsibilities with her two sisters. As a single mother, she was also helping her son transition to college, including traveling to New York between August 17-22 to assist with his dormitory move-in and attend parent meetings.

Given the late filing

Given the late filing, the IRS attorney filed a motion to dismiss for lack of jurisdiction. The U.S. Tax Court initially granted the motion based on the idea that it was a court of limited jurisdiction and it did not have jurisdiction when the petition was filed late. The Eighth Circuit affirmed on appeal. However, the Supreme Court reversed the lower courts in 2022. The Supreme Court held that the 30-day deadline under Section 6330(d)(1) is not jurisdictional and is subject to equitable tolling. The case was remanded to the appeals court specifically, so continued tax litigation, for factfinding on whether equitable tolling applied to these circumstances.

Section 6330 and Collection Due Process Rights

To understand this case, we have to first consider the Collection Due Process Hearing generally. This is the process one can invoke when the IRS takes certain collection actions, such as issuing a lien notice of notice of intent to levy.

The Collection Due Process provisions in Section 6330 provide taxpayers with procedural safeguards when the IRS initiates these collection actions. These provisions require the IRS to notify taxpayers before levying their assets and provide an opportunity for administrative review. Thus, the hearing part of the collection due process process.

Under Section 6330(d)(1), taxpayers can then petition the U.S. Tax Court within 30 days of receiving a notice of determination from the IRS Office of Appeals in the CDP hearing. This petition right serves as the exclusive judicial remedy for challenging collection actions after the administrative process concludes.

The 30-day deadline represents a compromise between providing taxpayers meaningful access to judicial review and allowing the IRS to proceed with collection activities. The rationale for this is that Congress recognized that collection cases often involve unpaid tax debts and there may be circumstances that warrant the IRS not taking immediate collection actions to collect the debts. Life, etc. happens, and sometimes collecting immediately is not the right answer.

The tax dispute here was a tax court petition filed in re…

The tax dispute here was a tax court petition filed in response to the determination notice issued by the IRS Office of Appeals in a CDP hearing. It did not originate from the IRS audit function–which is most of the cases the U.S. Tax Court hears.

What is Equitable Tolling?

This brings us to equitable tolling. What is it?

Equitable tolling is a judicial doctrine that allows courts to excuse compliance with statutory deadlines under extraordinary circumstances. The Supreme Court has described it as “a traditional feature of American jurisprudence and a background principle against which Congress drafts limitations periods.” So it is just a judicial rule of lieniency that the courts can apply.

The doctrine recognizes that rigid application of deadlines can sometimes produce unjust results. When Congress establishes a limitations period, courts presume that equitable tolling applies unless the statutory language or scheme clearly indicates otherwise.

However, equitable tolling is not a general remedy for missed deadlines. Courts apply it sparingly, recognizing that limitations periods serve important purposes in maintaining orderly judicial proceedings and providing finality to legal disputes.

That was and is the lingering question from this case. When the Supreme Court sent the case back down to the trial court, there was a question of how victorious was the taxpayer? Did they create new law, yes, but is that new law helpful? That depends on how the lower courts apply equitable tolling, which is what this new court opinion in the case is about.

The Two-Pronged Test for Equitable Tolling

The court opinion in this case pulled together concepts from other court cases. According to this new court option, this mash-up produces a two-pronged test to determine whether equitable tolling applies. The taxpayer must establish both elements.

First, the taxpayer must demonstrate that it pursued its rights diligently. This requires showing that all reasonable steps were taken to ensure timely filing of the petition. The inquiry focuses on whether the taxpayer exercised due diligence in monitoring the deadline and communicating with counsel. Second, the taxpayer must prove that extraordinary circumstances outside of its control prevented timely filing. This prong requires more than showing difficult circumstances – the circumstances must be both extraordinary and beyond the taxpayer’s control. As with just about everything when it comes to tax disputes, the burden of proof rests entirely with the taxpayer. Courts will not presume that equitable tolling applies simply because a petition was filed late.

So how are these tests met? According to the court, the diligence requirement examines whether the taxpayer took reasonable steps to ensure timely filing. This analysis focuses on the taxpayer’s conduct during the limitations period, not just the circumstances that caused the delay. For example, in Holland v. Florida, the Supreme Court found that a petitioner acted diligently when he repeatedly contacted his attorney to ensure the petition was filed on time. The petitioner sent multiple letters and made numerous phone calls to his counsel, documenting his efforts to monitor the case’s progress.

The U

The U.S. Tax Court in this case distinguished this case from Holland v. Florida, where the petitioner repeatedly contacted his attorney to ensure the petition was filed on time. In Holland, the petitioner sent multiple letters and made numerous phone calls, creating a clear record of diligent efforts to monitor the deadline. That apparently didn’t happen here.

The U.S. Tax Court found that the taxpayer here failed to satisfy this requirement. The record contained no evidence that anyone at Boechler followed up with counsel to ensure timely filing. Boechler could not even recall whether she filed the petition herself or provided direction to the person who filed it, according to the court. So the rule coming out of this case is that when representation by a tax attorney is involved, the taxpayer must show efforts to communicate with counsel about the deadline. Simply hiring an attorney does not automatically satisfy the diligence requirement.

The court also rejected Boechler’s argument that her personal circumstances constituted extraordinary circumstances. The court noted that while Boechler faced multiple demands on her time, she had assistance from her sisters in caring for her mother. She also had co-counsel on several of her cases, which reduced her workload. The court emphasized that miscalculating a deadline is not an extraordinary circumstance beyond one’s control. The court said that attorney miscalculation of deadlines is insufficient to warrant equitable tolling.

The Takeaway

This case reflects courts’ reluctance to apply equitable tolling broadly, even after the Supreme Court confirmed its availability. The doctrine remains an exceptional remedy reserved for truly extraordinary circumstances. This restrictive approach is based on a two-pronged test that creates significant barriers for taxpayers seeking relief. In the end, a right to equitable tolling may prove to be a right on paper, without affording most with a remedy they can actually use. The traditional barriers to late filing remain largely intact–with equitable tolling serving as a narrow exception rather than a remedy for missed deadlines.

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Stephan Dorsey

Stephan is the sports journalist for the Maple Grove Report.

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Tax Court Strikes IRS Timeline for Partnership Adjustments – Houston Tax Attorneys

The partnership audit regime rules are not all that new at this point. But what makes them new is that the IRS hasn’t fully implemented them, is often not following the new rules, and the disputes involving this have just started to trickle up to the courts.

Practitioners are also at fault here. Many have not taken the time to review or understand these new rules. This is actually understandable, as there have been so many changes in the past several years. The incoming and outgoing administrations with their own tax agendas, followed by the IRS upheaval, has pushed this new set of rules to the side. But for those of us who work on IRS audits, appeals, and litigation, these rules are essential.

Partnership audits under the BBA follow a specific timeline that can determine whether the IRS has the authority to make adjustments to partnership tax returns. When partnerships submit modification requests to reduce their imputed underpayments, the question becomes: when does the clock start ticking on the IRS’s deadline to issue a final partnership adjustment? The Tax Court’s ruling in JM Assets LP v. Commissioner, 2025 WL 123456 (T.C. 2025), demonstrates what happens when the IRS fails to follow these timing requirements and shows how courts will invalidate Treasury regulations that contradict clear statutory language.

Facts & Procedural History

This case involved a limited partnership headquartered in Texas. The partnership managed real property investments.

In 2018, the partnership disposed of several properties. The selling prices ranged from $88,000 to over $7 million. The partnership reported these transactions as installment sales on its Form 1065 partnership return. The partnership properly disclosed these transactions using Forms 4797 and 6252 by providing detailed information about the five properties.

On June 9, 2022, the IRS issued a Notice of Proposed Partnership Adjustment (“NOPPA”) to the partnership to increase the partnership’s section 1231 gain by $5,499,437 and to calculate an imputed underpayment of $2,034,792. The IRS took the position that the partnership should have recognized the full gain on these property sales in 2018 rather than treating them as installment sales.

Following the established procedures for BBA partnership audits, the partnership submitted a Form 8980 modification request on February 14, 2023, seeking to modify the tax rates for two of its partners. The IRS approved the modification request in full on June 5, 2023. However, on December 1, 2023, the IRS issued a Notice of Final Partnership Adjustment (“FPA”) containing the same adjustments and imputed underpayment amounts as the original NOPPA.

The partnership challenged the FPA by filing a petition in U.S. Tax Court, arguing that the adjustment was untimely under section 6235(a)(2) of the tax code. The case involved cross-motions for summary judgment, with each party arguing different interpretations of when the limitation period began to run.

Understanding BBA Partnership Audit Procedures

The Bipartisan Budget Act of 2015 changed the rules of the game for how the IRS partnership audits are conducted. Under these procedures, for taxpayers who do not elect to opt out of the new rules, the IRS examines partnership returns and makes adjustments at the partnership level rather than examining individual partners. This centralized approach is intended to streamline the audit process, which it does in some respects. It also creates specific timing requirements that both the IRS and partnerships must follow, which makes it more difficult for the IRS and taxpayers.

When the IRS identifies adjustments to a partnership return, it calculates an “imputed underpayment” by applying the highest marginal tax rate to the net partnership adjustments. The partnership then has the opportunity to request modifications to this imputed underpayment, such as demonstrating that certain partners are tax-exempt or subject to lower tax rates. Taxpayers are often subject to lower tax rates.

About the Partnership Modification Process

The modification process under Section 6225(c) allows partnerships to request adjustments to their imputed underpayments after receiving a NOPPA. This process recognizes that the IRS’s initial calculation using the highest marginal tax rate may not accurately reflect the actual tax liability of the partnership’s specific partners.

Partnerships can request modifications for several reasons. They may demonstrate that certain partners are tax-exempt organizations that would not owe tax on their distributive shares. They may show that individual partners are subject to lower tax rates than the highest marginal rate used in the imputed underpayment calculation. They may also request modifications based on amended returns filed by partners or alternative procedures that would reduce the overall tax liability.

The modification request must be submitted on Form 8980, along with supporting documentation to substantiate the requested changes. The IRS has established specific procedures for these requests, including required forms and documentation that must be attached to make the request complete. The partnership has 270 days from the date the IRS mails the NOPPA to submit its modification request.

How Do Modification Requests Affect the Limitation Period?

The I.R.C. § 6235(a) limitation period determines when the IRS must complete its partnership audit and issue a final partnership adjustment.

This section provides several different time limits, and the IRS must finish its audit within the latest of these periods. The provision creates different deadlines depending on whether the partnership requests modification of its imputed underpayment.

Under I.R.C. § 6235(a)(3), if a partnership does not request modification, the IRS has 330 days after mailing the NOPPA to issue its final partnership adjustment. This provides a straightforward timeline that begins when the IRS sends the proposed adjustment notice.

However, I.R.C. § 6235(a)(2) creates a different timeline when a partnership submits a modification request. In this situation, the IRS has 270 days “after the date on which everything required to be submitted to the Secretary pursuant to such section is so submitted” to issue its final partnership adjustment. This language appears to start the clock when the partnership completes its modification submission.

When Is Everything Required Actually Submitted?

The central legal issue in this case involved interpreting the phrase “everything required to be submitted to the Secretary pursuant to such section is so submitted” in I.R.C. § 6235(a)(2). The IRS had interpreted this phrase through Treasury Regulation § 301.6235-1(b)(2), which defined the submission date as “the date the period for requesting modification ends.”

Under the IRS’s interpretation, even if a partnership submitted a complete modification request early in the 270-day period, the limitation period would not begin until the modification window closed. This interpretation was based on the theory that partnerships could theoretically submit additional information during the modification period, so the submission could not be considered complete until the period ended.

The IRS also pointed to Form 8981, which partnerships can use to waive the modification period, as evidence that the modification window remains open until formally closed. According to the IRS, the failure to submit Form 8981 meant that the partnership could make additional submissions during the entire 270-day period.

The partnership took the position that the statutory language was clear and unambiguous. The limitation period begins when the partnership actually submits everything required for its modification request. Since the partnership submitted its complete Form 8980 on February 14, 2023, and never submitted additional information, the 270-day period should have begun on that date.

The Court’s Analysis of the Modification Timeline

The U.S. Tax Court applied the Supreme Court’s decision in Loper Bright Enterprises v. Raimondo, which emphasized that courts must exercise independent judgment when reviewing agency interpretations of statutes. The court noted that statutes must have a single, best meaning that is fixed at the time of enactment.

The court found a direct conflict between the plain language of I.R.C. § 6235(a)(2) and the IRS’s regulation. The statute clearly states that the limitation period runs from “the date on which everything required to be submitted… is so submitted,” while the regulation interprets this to mean the date the modification period ends. The court observed that these are different dates, and the regulation must give way to the statute.

The IRS attempted to defend its regulation by pointing to I.R.C. § 6225(c)(1), which grants the IRS broad authority to establish procedures for modification requests. However, the court rejected this argument, explaining that even broad rulemaking authority does not extend to contradicting statutory text. The court cited Varian Medical Systems, Inc. & Subsidiaries v. Commissioner for the principle that regulations cannot change unambiguous statutory provisions.

The court examined the facts for the partnership’s modification request to determine when everything required was actually submitted. The partnership submitted its Form 8980 on February 14, 2023, requesting modification of the tax rates for two partners. The IRS never requested additional information during the modification period. The partnership never submitted supplemental materials after its initial request.

The IRS approved the modification request in full on June 5

The IRS approved the modification request in full on June 5, 2023, confirming that the initial submission contained everything necessary for the requested modification. These facts established that the partnership submitted “everything required to be submitted” on February 14, 2023.

Under the correct interpretation of I

Under the correct interpretation of I.R.C. § 6235(a)(2), the IRS had 270 days from February 14, 2023, to issue its final partnership adjustment. The 270-day period expired on November 11, 2023, which fell on a Saturday, so the deadline extended to Monday, November 13, 2023, under I.R.C. § 7503. The IRS issued its FPA on December 1, 2023, which was 18 days after the limitation period expired.

The Takeaway

This decision establishes that partnerships can rely on the plain language of section 6235(a)(2) when calculating limitation periods for BBA partnership adjustments. When a partnership submits a complete modification request, the IRS’s 270-day deadline begins immediately, not at the end of the modification period as the Treasury Regulation suggested. This ruling provides partnerships with greater certainty about limitation periods and demonstrates that courts will not defer to agency interpretations that contradict clear statutory language.

For partnerships that have received final partnership adjustments, this case serves as a reminder to carefully review the timing of modification requests and FPA issuances. The IRS’s failure to follow proper procedures can result in adjustments being thrown out entirely, even when the underlying tax positions may be questionable.