3rd Circuit Holds that Collection Statute of Limitations Is Suspended through Supreme Court Finality (11/2/22; 11/3/22; 11/7/22)

Section 6330(e)(1) ( provides that certain levy actions and certain statutes of limitations (including collection) are suspended while Collection Due Process (“CDP”) “hearing and appeals therein are pending.”  Readers will recall that the taxpayer invokes the CDP hearing by making a timely request and then, if not satisfied, can petition the Tax Court for review.  The Tax Court will then review, and that taxpayer and the IRS have the standard appeals processes to the Court of Appeals and, by petition for writ of certiorari, to the Supreme Court.

In United States v. Weiss, 52 F.4th 546 (3rd Cir. 11/2/22), CA3 here, the Court held that, for statute of limitations suspension in CDP cases, “appeals therein” and “pending” mean not until all appeals processes (including Supreme Court, if invoked as it was in Weiss) are final.  That holding stated that way makes sense—even common sense. 

But, it was not so simple for the Third Circuit.  The authoring judge, Judge Phipps, seized the opportunity to elaborate in 15 pages not including the cover caption page -- bringing out the dictionaries and other interpretive tools to tackle the weighty issue of what “appeals therein” and “pending” mean.  Stating the standard pablum that you look to the meaning of statutory words at the time of enactment, the judge holds forth on that and finds some potential ambiguity that can be cleaned by going through dictionaries and maxims. 

For those interested in reading footnotes, I commend footnotes 2-4, covering most of pages 8-10, particularly n4 where he holds forth on the “autohyponym.”  That was a new word for me.  He explains in the footnote:

Suspensions of Statute of Limitations Make Collection Suit Timely (5/27/20)

In United States v. Weiss (E.D. Penn Dkt. 19-502 Order dated 5/21/20), here [GS here], the Court denied the taxpayer’s statute of limitations defense in a collection suit where the Government seeks judgment on the assessment.  The issue was whether the Government timely filed its suit to obtain judgment on assessments based on delinquent returns filed on October 10, 1994.  The assessments were made later in October 1994.  Those assessments triggered the 10-year collection statute of limitations under § 6502(a)(1).  The Government brought the collection suit on February 5, 2019, over 14 years after the collection statute would have normally expired on in October 2004.  The devil, of course, is in the word "normally."  The IRS cannot unilaterally extend or suspend the statute of limitations, but the taxpayer can take actions that will do so.  The trajectory of those actions are what caused the collection suit to be timely.

In my view, there is nothing particularly surprising in the way the Court pieced together the events causing the suspensions to apply over the years.  Although not surprising, the trajectory is a good lesson particularly for students trying to understand how suspensions work.  Indeed, I used to teach these in my class, with examples, and then, on the exam, would have a fact pattern starting with a notice of deficiency through the Tax Court proceeding and appeal (including a petition for certiorari) and ask the students to answer the earliest date the IRS could assess and the latest date the IRS could assess.  For each answer I wanted a specific date and then the relevant Code section(s), with any further explanation the student desired.  Usually the Code section(s) would be sufficient to tell me that they had the basis for the answer.

So, this case reminded me of my teaching and examinations.  For students of tax procedure the case is a good read.  I won’t summarize it because it is fairly short and well written.  I will say that the key legal issue is whether a petition for certiorari is an appeal that is within the suspension period for appeals under § 6330(e)(1), here.  So, I offer the facts from the opinion (these are just the facts, with references to Code and Regulations sections, usually in footnotes, omitted).  I invite readers to perform their own analysis of the statute suspensions (Note that I am including in the block quote below only the facts I think pertinent for the analysis and am using the cleaned up technique to eliminate discussion not relevant to the fact trajectory):