United States v. Weiss
| Decision Date | 02 November 2022 |
| Docket Number | 21-1592 |
| Court | U.S. Court of Appeals — Third Circuit |
| Parties | UNITED STATES of America v. Charles J. WEISS, Appellant |
Argued: May 3, 2022
On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 2:19-cv-00502) District Judge: Honorable Joel H. Slomsky
Michael J. Haungs
John Schumann [ARGUED]
UNITED STATES DEPARTMENT OF JUSTICE TAX DIVISION
Counsel for United States of America
James R. Malone, Jr. [ARGUED]
POST &SCHELL
Counsel for Charles J. Weiss
Before: GREENAWAY, JR., PORTER, and PHIPPS, Circuit Judges.
After assessing delinquent taxes, the United States has ten years to collect them, see 26 U.S.C. § 6502(a)(1), and this case comes down to a matter of days within that decade. Importantly, that limitations period does not necessarily run continuously; it may be tolled for several increments of time, including for the period during which a specific administrative hearing before the Internal Revenue Service "and appeals therein" are pending. Id. § 6330(e)(1). Here, the taxpayer requested an administrative hearing, and that began tolling the limitations period. After a series of unfavorable rulings - at the hearing, in the Tax Court, and before the D.C. Circuit - the taxpayer filed a petition for a writ of certiorari, which the Supreme Court denied. But the United States waited until after the denial of that petition to commence this action. By that time, even with tolling, much, if not all, of the limitations period had elapsed. Yet in interpreting the statute, petitions for writs of certiorari are 'appeals therein,' and also an appeal remains 'pending' until the time to file such a petition expires. Due to that additional tolling of the statute of limitations for those increments, this collection action is timely. Id.
(Undisputed by the Parties)
For the six-year period from 1986 through 1991, Charles Weiss did not pay federal income taxes. In October 1994, Weiss late-filed his tax returns for those years, self-reporting a liability of $299,202. Later that month, the Internal Revenue Service made tax assessments against him for each of those years.
By assessing those taxes, the IRS triggered a ten-year limitations period for collecting the unpaid taxes through a court proceeding or a levy, which is a legal seizure of property or a right to property. See 26 U.S.C. §§ 6331(b), 6502(a)(1). Weiss's subsequent bankruptcies tolled that limitations period three times between 1994 and 2009, yielding a new expiration date for the statute of limitations: July 21, 2009.
In anticipation of that deadline, the IRS began the process of collecting the unpaid taxes through a levy. It mailed a Final Notice - Notice of Intent to Levy and Notice of Your Right to a Hearing letter to Weiss on or about February 13, 2009. That notice, also referred to as a Letter 1058A, informed Weiss that the IRS intended to levy his unpaid taxes for the years 1986 to 1991, and that he had an opportunity to request a Collection Due Process hearing. A Collection Due Process hearing is an administrative proceeding before an appeals officer with the IRS Independent Office of Appeals in which a taxpayer may raise "any relevant issue relating to the unpaid tax or the proposed levy." Id. § 6330(c)(2)(A); see id. § 6330(b); cf. id. § 6330(c)(4) (). The notice, although expressing an intent to levy Weiss's property, was not sufficient to make a levy - that requires a notice of seizure - and thus, the statute of limitations continued to run. See id. § 6502(b) (); see also id. § 6335(a) (providing for notice of seizure).
In response to that notice, Weiss timely requested a Collection Due Process hearing through a Form 12153. See id. § 6330(a)(3)(B); see also Weiss v. Comm'r, 2018 WL 2759389, at *2-3 (D.C. Cir. May 22, 2018) (per curiam) (), cert. denied, 139 S.Ct. 612 (2018). That request suspended the statute of limitations for the period during which the hearing "and appeals therein" were "pending." 26 U.S.C. § 6330(e)(1). On the date that Weiss requested the hearing, no less than 129 days remained in the limitations period.
Weiss did not prevail at the hearing or in any of his review-as-of-right challenges in federal court. The IRS Independent Office of Appeals ruled against him at the Collection Due Process hearing. Weiss sought review of that determination by timely filing a petition with the United States Tax Court. See id. § 6330(d)(1). Over five years later, the Tax Court affirmed that determination. See Weiss v. Comm'r, 147 T.C. 179, 181 (2016). Weiss then timely appealed the Tax Court's ruling to the United States Court of Appeals for the District of Columbia Circuit, but he fared no better there. See 26 U.S.C. § 7483. The D.C. Circuit affirmed the Tax Court's judgment, and Weiss petitioned for panel rehearing and rehearing en banc. See Weiss v. Comm'r, 2018 WL 2759389 (D.C. Cir. May 22, 2018). After denying those petitions, the D.C. Circuit issued a mandate on August 23, 2018.
As a last resort, Weiss timely filed a petition for a writ of certiorari with the Supreme Court of the United States on October 24, 2018. See 28 U.S.C. § 1254(1) (allowing for review of court of appeals decisions by writ of certiorari). Through an order on December 3, 2018, the Supreme Court denied that petition. See Weiss v. Comm'r, 139 S.Ct. 612 (2018).
At that point, instead of proceeding to levy Weiss's property, the government initiated a collection action in the District Court. See 28 U.S.C. §§ 1340, 1345; see also 26 U.S.C. § 7402(a). Through a complaint filed on February 5, 2019, the government sought to collect from Weiss his delinquent taxes plus accrued interest, which together totaled $773,899.84.
The issue before the District Court was the timeliness of this action. The parties stipulated to the material facts and cross-moved for summary judgment. They disagreed as to the meaning of two terms in the tolling provision of § 6330(e)(1): whether the phrase 'appeals therein' includes petitions for writs of certiorari and whether a denial of a petition for a writ of certiorari constitutes a 'final determination' in a Collection Due Process hearing.
The District Court resolved both of those issues in favor of the government. It concluded that a petition for a writ of certiorari falls within the 'appeals therein' clause. It also held that the Supreme Court's denial of such a petition constitutes a 'final determination' in a Collection Due Process hearing. On those grounds, the District Court entered summary judgment for the government.
Through a timely appeal, Weiss invokes this Court's appellate jurisdiction and challenges both bases for the District Court's finding of timeliness. See 28 U.S.C. § 1291; Fed. R. App. P. 4(a).
This case lends itself well to de novo review of the summary-judgment record. See Fed.R.Civ.P. 56(a); see Cranbury Brick Yard, LLC v. United States, 943 F.3d 701, 708 (3d Cir. 2019). The material facts are undisputed. After the D.C. Circuit issued the mandate, no less than 129 days remained of the ten-year statute of limitations. Weiss filed a petition for a writ of certiorari 62 days later, and 40 days after that, the Supreme Court denied his petition. The date on which government commenced this action was 64 days after the Supreme Court's denial of Weiss's petition for a writ certiorari and 166 days after the D.C. Circuit's mandate.
Using those dates, the timeliness of this case turns on questions of law. If the statute of limitations, which had no less than 129 days remaining, is tolled for either the time between the D.C. Circuit's mandate and Weiss's petition (62 days) or the time from Weiss's filing of that petition to its denial (40 days), then the government's filing of this case 166 days after the D.C. Circuit's mandate would be timely. But if both of those increments associated with Weiss's petition fail to suspend the statute of limitations, then the government's filing would be too late. As elaborated below, the time associated with Weiss's petition (a combined total of 102 days) tolls the statute of limitations, and that renders this action timely - without the need to address the applicability of the 'final determination' provision relied upon by the District Court.
Under the statute of limitations, once a tax is assessed, the government has ten years to collect it "by levy or by a proceeding in court." 26 U.S.C. § 6502(a)(1). But § 6330(e)(1) operates as a tolling statute by suspending the statute of limitations for the period during which Collection Due Process hearings and appeals therein are pending:
Except as provided in paragraph (2), if a hearing is requested under subsection (a)(3)(B), the levy actions which are the subject of the requested hearing and the running of any period of limitations under section 6502 (), section 6531 (), or section 6532 () shall be suspended for the period during which such hearing, and appeals therein, are pending.
Id. § 6330(e)(1) (emphasis added).
In allowing tolling for that period, Congress did not define two relevant terms - 'appeals therein' and 'pending.' Without a controlling statutory definition, those terms take on their "ordinary contemporary, common meaning." Perrin v. United States, 444 U.S. 37, 42 (1979); see also Wis. Cent. Ltd. v. United States, 138 S.Ct. 2067,...
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