Organic Cannabis Foundation v. Cir ( 2020 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
ORGANIC CANNABIS FOUNDATION, No. 17-72874
LLC, DBA Organicann Health
Center, Tax Ct. No.
Petitioner-Appellant, 10593-15
v.
COMMISSIONER OF INTERNAL
REVENUE,
Respondent-Appellee.
NORTHERN CALIFORNIA SMALL No. 17-72877
BUSINESS ASSISTANTS, INC.,
Petitioner-Appellant, Tax Ct. No.
10594-15
v.
COMMISSIONER OF INTERNAL OPINION
REVENUE,
Respondent-Appellee.
Appeals from Decisions of the
United States Tax Court
Argued and Submitted October 22, 2019
San Francisco, California
2 ORGANIC CANNABIS FOUND. V. CIR
Filed June 18, 2020
Before: Jay S. Bybee, N. Randy Smith, and
Daniel P. Collins, Circuit Judges.
Opinion by Judge Collins
SUMMARY *
Tax
The panel affirmed the Tax Court’s dismissal, for lack of
jurisdiction, of untimely petitions for redetermination of
federal income tax deficiencies.
Taxpayers operate marijuana dispensaries. In response to
notices of deficiencies from the Internal Revenue Service,
taxpayers sought to file their petitions for redetermination by
April 22, 2015, the last day to file such petitions under I.R.C.
§ 6213(a). Taxpayers’ attorney used FedEx to send the
petitions for filing in the Tax Court. The petitions were
delivered to the Tax Court on the morning of April 23, 2015.
The panel first rejected the contention that the petitions
were timely because the Tax Court was inaccessible on the
filing deadline. The panel held that, for non-electronic
filings, a clerk’s office is “inaccessible” on the “last day” of
a filing period only if the office cannot practicably be
accessed for delivery of documents during a sufficient period
of time up to and including the point at which “the clerk’s
*
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
ORGANIC CANNABIS FOUND. V. CIR 3
office is scheduled to close.” The panel explained that here,
taxpayers presented no evidence to show that the Tax Court
Clerk’s Office could not be accessed during the substantial
remaining portion of the day after FedEx unsuccessfully
attempted delivery of the petitions earlier in the day on
April 22, 2015.
The panel next held that the petitions could not be
deemed timely under the mailbox rule set forth in I.R.C.
§ 7502, because the particular FedEx service used here was
not on the IRS’s formal list of designated delivery services
to which the mailbox rule applies.
The panel also held that because § 6213(a)’s time limits
are jurisdictional, equitable exceptions such as equitable
tolling and waiver do not apply.
Finally, the panel rejected Organic Cannabis
Foundation’s contention that its notice of deficiency was
invalid because it was improperly addressed and that the
error was not harmless, because the panel disagreed with the
premise that the notice was misaddressed.
COUNSEL
Matthew D. Carlson (argued) and Douglas L. Youmans,
Wagner Kirkman Blaine Klomparens & Youmans, Mather,
California, for Petitioners-Appellants.
Paul Andrew Allulis (argued), Francesca Ugolini, and
Patrick J. Urda, Attorneys; Richard E. Zuckerman, Principal
Deputy Assistant Attorney General; Tax Division, United
States Department of Justice, Washington, D.C.; for
Respondent-Appellee.
4 ORGANIC CANNABIS FOUND. V. CIR
Carlton M. Smith, New York, New York; Professor T. Keith
Fogg, Director, Federal Tax Clinic of the Legal Services
Center of Harvard Law School, Jamaica Plain,
Massachusetts; for Amicus Curiae Federal Tax Clinic of the
Legal Services Center of Harvard Law School.
OPINION
COLLINS, Circuit Judge:
This unhappy case presents a cautionary tale about the
need for lawyers to ensure that they have done exactly what
is statutorily required to invoke a court’s jurisdiction. The
unusual Internal Revenue Code (“I.R.C.”) provision at issue
here allows taxpayers to benefit from a “mailbox” rule—i.e.,
that a document will be deemed filed when dispatched—
only if the taxpayer uses one of the particular delivery
services that the Internal Revenue Service (“IRS”) has
specifically designated for that purpose in a published
notice. In preparing two Tax Court petitions for filing, the
attorneys here delegated the task of arranging delivery to a
secretary who, unfortunately, selected an overnight delivery
service that was not then on the published list (it was added
two weeks later). The error would not have mattered if the
petitions had nonetheless arrived the next day, but as it
turned out, they were not received by the Tax Court until two
days after being dropped off at a FedEx office in California.
Because the Tax Court concluded that the petitions had not
been timely received and that the mailbox rule did not apply,
it dismissed the petitions for lack of jurisdiction. Finding no
error, we affirm.
ORGANIC CANNABIS FOUND. V. CIR 5
I
These appeals involve a challenge to income-tax
deficiencies issued against two corporations, owned and
controlled by a woman named Dona Ruth Frank, that
planned or operated four California medical marijuana
dispensaries. Appellant Organic Cannabis Foundation, LLC
(“Organic Cannabis”) began operating a marijuana
dispensary in Santa Rosa in 2006. Appellant Northern
California Small Business Assistants, Inc. (“NCSBA”) held
a 99% ownership interest in the Oakland Cannabis Institute,
LLC and in The Petting Zoo, LLC, which respectively
opened marijuana dispensaries in 2008 in Oakland and San
Diego. 1 NCSBA also had a comparable interest in Napa
Organics, LLC, which was planning to open a dispensary in
Napa in 2010. However, according to NCSBA’s petition in
the Tax Court, “the dispensary never opened at the
designated location and Napa Organics ceased operations in
2011.”
A
On January 22, 2015, the IRS issued notices of
deficiency to both Appellants for tax years 2010 and 2011.
The notices stated that, by “operat[ing] a medical marijuana
dispensary,” Organic Cannabis and the three NCSBA-
owned LLCs were subject to I.R.C. § 280E, “which
disallows all deductions or credits paid or incurred during
the taxable year(s) in c[a]rrying on a trade or business that
1
NCSBA’s petition actually states that both dispensaries operated
in San Diego, but that appears to be an error.
6 ORGANIC CANNABIS FOUND. V. CIR
consists [of] trafficking in controlled substance[s].” 2 After
making these disallowances, the IRS’s notice to Organic
Cannabis calculated that, for the two years in question, it
owed total additional income taxes of $1,129,276.00 as well
as penalties of $225,855.20. Likewise, the notice to NCSBA
stated that, by virtue of the disallowances applicable to the
three LLCs, NCSBA’s “share of income from the[se] flow-
through entities” was increased, resulting in a total
additional tax liability of $531,707.00 and penalties of
$106,341.40.
The two IRS notices were separately sent by certified
mail from the IRS’s San Francisco office on January 22,
2015 for delivery to the same Post Office (“P.O.”) Box in
Santa Rosa (which was used by Dona Frank). 3 According to
the certified mail tracking records, the Organic Cannabis
notice arrived at the Santa Rosa post office for pickup on
January 24, and the NCSBA notice arrived on January 28.
Both items were retrieved at the same time on February 3.
2
Section 280E reads as follows:
No deduction or credit shall be allowed for any amount
paid or incurred during the taxable year in carrying on
any trade or business if such trade or business (or the
activities which comprise such trade or business)
consists of trafficking in controlled substances (within
the meaning of schedule I and II of the Controlled
Substances Act) which is prohibited by Federal law or
the law of any State in which such trade or business is
conducted.
I.R.C. § 280E.
3
As discussed below, Organic Cannabis claims that the IRS package
to it did not properly identify the P.O. Box, but we reject this contention.
See infra at 26–28.
ORGANIC CANNABIS FOUND. V. CIR 7
Each notice stated on the cover page that the last day to file
a petition for redetermination with the Tax Court was
April 22, 2015.
B
Using the same law firm in Mather, California, a suburb
of Sacramento, Organic Cannabis and NCSBA prepared
their respective Tax Court petitions, in which they
challenged both the applicability and the constitutionality of
§ 280E.
As the petitions were being finalized on the late
afternoon of April 21—the day before they were due—one
of the firm’s attorneys asked a secretary to prepare a FedEx
shipping envelope addressed for overnight delivery to the
Tax Court in Washington, D.C. After logging into her
account on the FedEx website, the secretary entered the
necessary addressing information and then reviewed the
delivery options. She selected the “FedEx ‘First Overnight’”
delivery option because, “given the attorneys’ obvious
concerns about meeting the filing deadlines, [she] felt [she]
should select the delivery method that would guarantee the
earliest possible delivery.” After preparing the appropriately
labeled FedEx package, the secretary gave it to one of the
attorneys and went home. A paper receipt from the FedEx
office in nearby Rancho Cordova states that the single
package (which contained both Appellants’ petitions) was
dropped off at 8:04 P.M. Pacific time on April 21.
The original FedEx label prepared by the secretary stated
that the shipping date was “21APR15” and that the package
was to be delivered “WED – 22 APR 8:30A” by “FIRST
OVERNIGHT.” At some point in processing the package,
however, FedEx apparently prepared a new label that bears
a notation indicating it was created on “04/22” and that
8 ORGANIC CANNABIS FOUND. V. CIR
redesignates the package for delivery on “THU – 23 APR
8:30A” by “FIRST OVERNIGHT.” This new label was
affixed directly over the prior label, and the package arrived
in that form at the Tax Court on the morning of April 23.
The limited FedEx tracking information that was later
available concerning the package no longer listed any of the
details of the package’s transit while being handled by
FedEx; instead, it merely stated that the “Ship date” was
“Wed 4/22/2015” and that the package was delivered at
“7:35 am” on “4/23/2015 – Thursday.”
On the morning of April 22 (the due date for the
petitions), one of the attorneys asked the secretary who had
prepared the FedEx package to check on its status. The
secretary checked her email and saw that she had not
received the usual automatic notice from FedEx confirming
its delivery. She called the Tax Court Clerk’s Office and
“was told something to the effect that the package had not
been received.” She then called FedEx’s customer service
number and spoke with a representative to whom she
provided the package’s tracking number. As the secretary
later described it, the FedEx representative responded that
“the driver’s delivery notes stated the driver had tried to
deliver but could not because . . . he or she could not get to
the door for some plausible reason like construction, or some
sort of police action (perhaps the representative said the
access was blocked off because of a safety threat).” The
record does not indicate that the law firm took any further
action that day. When the secretary arrived at the firm the
next morning, April 23, she saw that she had an email in her
inbox confirming that the package had been delivered that
morning at 7:35 a.m. Eastern time.
ORGANIC CANNABIS FOUND. V. CIR 9
C
On July 29, 2016—more than 15 months after the
petitions had been docketed in the Tax Court—the
Commissioner filed motions to dismiss both petitions for
lack of jurisdiction, arguing that they were received by the
Tax Court one day beyond the 90-day time limit set forth in
I.R.C. § 6213(a). The Commissioner also argued that
Appellants could not take advantage of the I.R.C. provision
deeming documents to be filed when mailed or dispatched to
a private courier. See id. § 7502(a), (f). According to the
Commissioner, that rule applied to a “delivery service
provided by a trade or business” only if the particular
service is first “designated by the [IRS]” for that purpose, id.
§ 7502(f)(2), and here, “FedEx First Overnight” was not
designated as an approved private delivery service under
§ 7502(f)(2) until May 6, 2015.
Appellants opposed the respective motions to dismiss,
arguing that the petitions should be deemed timely because
(1) delivery had been attempted on April 22, but the Tax
Court was inaccessible; and (2) Appellants’ use of FedEx
First Overnight should be deemed to satisfy § 7502(f) or to
substantially comply with that subsection. Organic
Cannabis’s opposition also argued that the deficiency notice
mailed to it omitted the P.O. Box; that therefore the mailing
should be deemed to be invalid; and that the 90-day limit
should be calculated from Organic Cannabis’s actual receipt
of the notice on February 3, 2015. 4 Relatedly, Organic
4
NCSBA’s opposition in the Tax Court also challenged the
adequacy of its separate deficiency notice on the grounds that, in the
IRS’s log of the mailing, the handwritten description of the mailing
address made what should have been a “2” in the P.O. Box look like a
“7.” The Tax Court disagreed as to NCSBA’s reading of the
10 ORGANIC CANNABIS FOUND. V. CIR
Cannabis filed its own “motion to dismiss for lack of
jurisdiction,” arguing that, in the event that its petition was
deemed untimely, the improperly addressed deficiency
notice was invalid and no proceedings could be had based on
it. Cf. Napoliello v. Comm’r, 655 F.3d 1060, 1063 (9th Cir.
2011) (“A determination that the Tax Court lacks
jurisdiction because of an invalid notice strips the IRS of
power to assess taxes based on that notice.”).
On July 25, 2017, the Tax Court granted the
Commissioner’s motions to dismiss, concluding that the
petitions were not filed within the 90-day time period
established in I.R.C. § 6213(a) and that it therefore lacked
jurisdiction. The court also denied Organic Cannabis’s
motion to dismiss, which had challenged the validity of the
deficiency notice it received. Organic Cannabis and
NCSBA timely filed separate notices of appeal in the Tax
Court within 90 days of the Tax Court’s decisions. See
I.R.C. § 7483. We have jurisdiction under I.R.C.
§ 7482(a)(1), (b)(1)(B).
II
In dismissing the petitions for lack of jurisdiction, the
Tax Court here did not purport to make any findings of fact
but instead took “the facts as pleaded in the petition[s] as true
for purposes” of the motions. Reviewing de novo the Tax
Court’s dismissals, Duggan v. Comm’r, 879 F.3d 1029, 1031
(9th Cir. 2018), we conclude that the Tax Court correctly
found the petitions to be untimely.
handwriting, but it also concluded that NCSBA’s argument failed in any
event. NCSBA does not challenge the validity of its deficiency notice in
this court.
ORGANIC CANNABIS FOUND. V. CIR 11
A
Appellants first argue that their petitions were timely
filed because the Tax Court was inaccessible on April 22,
thereby extending the due date for filing to the next day. The
Tax Court correctly rejected this argument.
Under Federal Rule of Civil Procedure 6(a)(3), if the
relevant clerk’s office is “inaccessible” on the “last day for
filing,” then “the time for filing is extended to the first
accessible day that is not a Saturday, Sunday, or legal
holiday.” See Fed. R. Civ. P. 6(a)(3)(A). But the federal
civil rules do not apply, of their own force, to proceedings in
the Tax Court, see Fed. R. Civ. P. 1 (civil rules govern “civil
actions and proceedings in the United States district courts”),
and the Tax Court’s Rules of Practice and Procedure do not
contain any comparable provision. However, the Tax
Court’s rules provide that “[w]here in any instance there is
no applicable rule of procedure, the Court . . . may prescribe
the procedure, giving particular weight to the Federal Rules
of Civil Procedure to the extent that they are suitably
adaptable to govern the matter at hand,” see Tax Ct. R. 1(b),
and the Tax Court has invoked that rule in holding that Rule
6(a)(3)’s inaccessibility provision “is ‘suitably adaptable’ to
specify the principle for computing time when [the Tax
Court] Clerk’s Office is inaccessible because of inclement
weather, government closings, or other reasons.” Guralnik
v. Comm’r, 146 T.C. 230, 252 (2016) (en banc). 5
Rule 6(a)(3) therefore governs here, and Appellants’
5
Guralnik also concluded that Rule 6(a)(3) is properly applied to
the computation of statutory deadlines, “except to the extent the statute
in question explicitly supplants” it. See 146 T.C. at 250; see also Union
Nat’l Bank v. Lamb, 337 U.S. 38, 40–41 (1949). The provision at issue
here, I.R.C. § 6213(a), contains no such contrary language.
12 ORGANIC CANNABIS FOUND. V. CIR
Petitions would be timely if the Tax Court’s Clerk’s Office
was “inaccessible” on April 22, 2015 within the meaning of
that rule.
Rule 6 does not define what the term “inaccessible”
means, and the omission was intentional. See Fed. R. Civ.
P. 6(a)(3), advisory committee’s note to 2009 amendment
(“The rule does not attempt to define inaccessibility. Rather,
the concept will continue to develop through caselaw.”). We
therefore look to its “ordinary meaning.” Pioneer Inv. Servs.
Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 388
(1993). “Inaccessible,” of course, means “not accessible,”
as in “not capable of being reached, entered, or approached.”
Inaccessible, Webster’s Third New International Dictionary
(1961) (“Webster’s Third”). The word, however, is not
limited to situations in which, strictly speaking, a place is
impossible to reach to conduct business, such as when the
“Clerk’s Office [is] officially closed.” Keyser v. Sacramento
City Unified Sch. Dist., 265 F.3d 741, 747 (9th Cir. 2001).
Because something is “accessible” if it is “capable of being
reached or easily approached,” see Accessible, Webster’s
Third (emphasis added); see also Accessible, American
Heritage Dictionary (5th ed. 2018) (“Easily approached or
entered”), we agree that a clerk’s office that is technically
open but that cannot be reached by a litigant “‘as a practical
matter without heroic measures,’” Chao Lin v. U.S. Att’y
Gen., 677 F.3d 1043, 1045 (11th Cir. 2012) (citation
omitted), is “inaccessible.” See, e.g., U.S. Leather, Inc. v.
H&W P’ship, 60 F.3d 222, 226 (5th Cir. 1995) (where “ice
storm . . . temporarily knocks out an area’s power and
telephone service and makes travelling dangerous, difficult
or impossible,” clerk’s office, even though open, was
rendered “inaccessible to those in the area near the
courthouse”), abrogated on other grounds by Kontrick v.
Ryan, 540 U.S. 443 (2004). Even assuming arguendo, as did
ORGANIC CANNABIS FOUND. V. CIR 13
the Tax Court, that a FedEx delivery person did
unsuccessfully attempt delivery of the package on the
morning of April 22, we agree that Appellants failed to show
inaccessibility within the meaning of Rule 6(a)(3).
Taking the secretary’s statement at face value, she was
informed by FedEx at some point in the mid- to late-morning
Pacific time that FedEx had attempted to deliver the package
earlier that day, but was unsuccessful due to “some plausible
reason like construction” or a “police action (perhaps the
representative said the access was blocked off because of a
safety threat).” But that says nothing about whether the Tax
Court’s Clerk’s Office could have been reached later, during
the remainder of the business day. As the Tax Court noted,
the nature of the obstacle that FedEx claimed to have
encountered was not one that, like “inclement weather,
government closings, or other reasons,” would be expected
to make it impracticable to reach the clerk’s office for the
“entire day.” Nor did Appellants suggest that the clerk’s
office was officially closed on April 22; indeed, the Tax
Court took judicial notice that “the Court’s Clerk’s Office
was open during its normal business hours” that day. A
temporary obstacle that is encountered earlier in the day
does not, without more, render the clerk’s office
“inaccessible” on “the last day for filing.” Fed. R. Civ. P.
6(a)(3) (emphasis added). Rule 6(a)(4) states that, for filing
by non-electronic means, “the last day ends . . . when the
clerk’s office is scheduled to close.” Fed. R. Civ. P. 6(a)(4)
(emphasis added). To render the clerk’s office inaccessible
for the “last day,” therefore, an obstacle to access must exist
for at least a significant portion of the final period of time
preceding the point at which “the clerk’s office is scheduled
to close.” Id. Appellants’ evidence made no such showing
that the Tax Court Clerk’s Office remained inaccessible for
the several hours that followed after FedEx’s unsuccessful
14 ORGANIC CANNABIS FOUND. V. CIR
attempt to deliver the package. Cf. Justice v. Town of
Cicero, 682 F.3d 662, 664 (7th Cir. 2012) (suggesting, in
dicta, that if a court’s e-filing system crashed during the last
hour of the day, the clerk’s office would be “inaccessible”
under Rule 6(a)(3)).
Our conclusion is strongly supported by the Eleventh
Circuit’s decision in Chao Lin, which adopted the same
construction of Rule 6(a)(3) when confronted with a similar
situation. In Chao Lin, on the day before the due date, the
petitioners gave their petition for review of a Board of
Immigration Appeals decision to FedEx for next-day
delivery to the Eleventh Circuit’s clerk’s office. 677 F.3d
at 1044. Due to “inclement weather” the next morning, the
clerk’s office delayed its opening until 10:30 A.M., and the
FedEx delivery person apparently showed up before then
and was therefore unable to deliver the package. Id. at 1044–
45. Although the clerk’s office thereafter was open from
10:30 A.M. until 5:00 P.M., FedEx did not attempt another
delivery that day but instead delivered the package the next
day. Id. The court concluded that, because the clerk’s office
was open for the remainder of the day, it was not impossible
for petitioners or the general public to access the clerk’s
office that day and that office was therefore not
“inaccessible.” Id. at 1046. The court rejected the
petitioners’ argument that “they should not suffer for the
delay by Federal Express,” holding that any such delay did
not establish inaccessibility, which is what the rule requires.
Id.We therefore hold that, for non-electronic filings (such
as those at issue here), a clerk’s office is “inaccessible” on
the “last day” of a filing period only if the office cannot
practicably be accessed for delivery of documents during a
sufficient period of time up to and including the point at
ORGANIC CANNABIS FOUND. V. CIR 15
which “the clerk’s office is scheduled to close.” Fed. R. Civ.
P. 6(a)(3), (4)(B). Because, as the Tax Court noted,
Appellants presented no evidence to show that the clerk’s
office could not be accessed during the substantial remaining
portion of the day after FedEx’s unsuccessful earlier
delivery attempt, the extension in Rule 6(a)(3) did not apply.
B
Appellants alternatively argue that their petitions should
be deemed timely under the mailbox rule set forth in I.R.C.
§ 7502. The Tax Court correctly rejected this argument as
well.
Section 7502(a) of the I.R.C. states that, if any
“document required to be filed . . . within a prescribed period
. . . under authority of any provision of the internal revenue
laws” is received by the relevant “agency, officer, or office”
after that prescribed period “by United States mail,” then
“the date of the United States postmark stamped on the cover
in which such . . . document . . . is mailed shall be deemed
to be the date of delivery.” I.R.C. § 7502(a)(1). The statute
further provides that, to be covered by this rule, the
“postmark date” must “fall[] within the prescribed period”
and the document must be timely “deposited in the mail in
the United States” in a properly addressed, postage-prepaid
“envelope or other appropriate wrapper.” Id. § 7502(a)(2).
By their terms, these provisions apply only to the “United
States mail,” but in 1996 the statute was amended to extend
this mailbox rule to any “designated delivery service.” Id.
§ 7502(f)(1). Specifically, § 7502(f)(1) provides that any
reference in § 7502 “to the United States mail shall be
treated as including a reference to any designated delivery
service” and that any reference to a “postmark” shall be
treated as applying “to any date recorded or marked” by the
designated delivery service according to certain
16 ORGANIC CANNABIS FOUND. V. CIR
specifications set forth in the statute. Id. The Tax Court
concluded that Appellants could not avail themselves of this
mailbox rule because the particular delivery service used
here did not fall within the statutory definition of a
“designated delivery service.” We agree.
Unlike Federal Rule of Appellate Procedure 25(a)(2)(ii),
which applies a mailbox rule to the timely delivery of a brief
to “a third-party commercial carrier,” § 7502 does not allow
taxpayers to use the services of any bona fide commercial
courier. Instead, the statute specifies that a particular
“delivery service provided by a trade or business” will count
as a “designated delivery service” only “if such service is
designated by the Secretary for purposes of this section.”
I.R.C. § 7502(f)(2). The term “Secretary” means “the
Secretary of the Treasury or his delegate,” id.
§ 7701(a)(11)(B), and here that delegate is the
Commissioner (or his further delegate). In addition to
requiring a formal designation, the statute states that the IRS
may designate a delivery service “only if [it] determines that
such service” meets four enumerated statutory criteria
designed to ensure that the delivery service is at least as
adequate as the U.S. mail. Id. § 7502(f)(2). Specifically,
these criteria require that a service be “available to the
general public”; that it be “at least as timely and reliable on
a regular basis as the United States mail”; that it employ
specified methods for showing “the date on which such item
was given to such trade or business for delivery”; and that it
meet “such other criteria” as the IRS may prescribe. Id.
§ 7502(f)(2)(A)–(D).
The year after § 7502(f) was added, the IRS published
Revenue Procedure 97-19, which outlined the additional
criteria that a delivery service must meet before it can be
designated under that section. See Rev. Proc. 97-19, § 4,
ORGANIC CANNABIS FOUND. V. CIR 17
1997-1 C.B. 644, 645. This document also made clear that
private couriers seeking designation under § 7502(f) would
not receive a blanket designation for every service they
offered; rather, the IRS announced that “[d]esignation will
be determined with respect to each type of delivery service
offered by a [courier] (e.g., next business morning delivery,
next business day delivery, etc.).” Id. § 3.03. Beginning
with Notice 97-26 in 1997, see 1997-1 C.B. 413, the IRS has
published lists in the Internal Revenue Bulletin of those
services that it has designated under § 7502(f). At the time
of the delivery at issue in this case, the operative list of
designated services was set forth in IRS Notice 2004-83,
which designated particular delivery services offered by
only three companies, FedEx, DHL, and UPS. See 2004-2
C.B. 1030. As to FedEx, the notice designated five
particular delivery services under § 7502(f), including
“FedEx Priority Overnight” and “FedEx Standard
Overnight,” but not “FedEx First Overnight.” Id. The notice
also specifically stated that “DHL, FedEx, and UPS are not
designated with respect to any type of delivery service not
identified above.” Id. Although the designated list had not
been changed in more than 10 years, the IRS coincidentally
updated the list effective May 6, 2015—just two weeks after
the package in question here was delivered to the Tax
Court—and the new list specifically added “FedEx First
Overnight” and two other FedEx services. See 2015-21
I.R.B. 984.
Appellants contend that “FedEx First Overnight” should
be deemed to be essentially the same delivery service as
“FedEx Priority Overnight” and “FedEx Standard
Overnight,” and that therefore the service Appellants used
here is actually covered by the then-existing designations in
Notice 2004-83. Alternatively, Appellants argue that,
because FedEx First Overnight was indisputably eligible for
18 ORGANIC CANNABIS FOUND. V. CIR
designation on the day they used it, and was formally
designated just two weeks later, Appellants should be
deemed to have substantially complied with § 7502(f)’s
mailbox rule. These arguments cannot be squared with the
language of the statute.
Congress did not merely require that a private delivery
service meet certain functional criteria concerning the
operation of that delivery service; it also pointedly insisted
that the service must be “designated by the Secretary for
purposes of this section.” I.R.C. § 7502(f)(2) (emphasis
added). Given the wide range of documents that are eligible
for § 7502(f)’s mailbox rule and the need for clear-cut rules
on questions of timeliness, Congress understandably elected
to establish a quality-control regime in which the IRS would
vet each such service in advance and then issue bright-line
designations as to which services are subject to the mailbox
rule and which are not. The statutory language also makes
clear that there must be separate designations for each
“service” offered by a private courier—and not merely a
designation of the courier itself—because § 7502(f)
expressly distinguishes between the “trade or business” that
engages in delivery of packages (e.g., FedEx) and the
various “delivery service[s]” by which it does so (e.g.,
FedEx Priority Overnight). See id. (Secretary may designate
a “delivery service provided by a trade or business” if, inter
alia, the service records “the date on which [an] item [to be
delivered] was given to such trade or business for delivery”
(emphasis added)). This additional requirement of separate
formal designations of each “service” offered by a given
“trade or business” would be read out of the statute if we
were to accept Appellants’ invitation to stretch the existing
designations to cover other similar services offered by a
particular courier. And the same would be true if we
accepted Appellants’ argument that use of a non-designated
ORGANIC CANNABIS FOUND. V. CIR 19
service should be deemed to substantially comply with the
statute.
Because the particular service Appellants used here was
not on the IRS’s formal list of designated delivery services,
the Tax Court correctly held that § 7502(f) was inapplicable,
and Appellants’ petitions therefore cannot be deemed to
have been delivered to the Tax Court on the date when
Appellants gave them to FedEx. Because the Tax Court did
not receive the petitions until one day after the April 22,
2015 due date, the petitions were untimely.
III
Appellants argue that, even if the petitions were
untimely, § 6213(a)’s 90-day deadline should be subject to
equitable exceptions, such as equitable tolling and waiver.
But no such exceptions may be applied if the deadline is
jurisdictional, Duggan, 879 F.3d at 1031, and we agree with
the Tax Court that § 6213(a)’s time limits are jurisdictional.6
6
The Commissioner argues that we should not reach this issue
because Appellants did not contend in the Tax Court that § 6213(a)’s
deadline was not jurisdictional. But “‘we have discretion’” to reach an
otherwise-forfeited issue in appropriate circumstances, see G&G Prods.
LLC v. Rusic, 902 F.3d 940, 950 (9th Cir. 2018) (citation omitted),
especially when (as here) “‘the issue presented is purely one of law and
either does not depend on the factual record developed below, or the
pertinent record has been fully developed.’” Cold Mountain v. Garber,
375 F.3d 884, 891 (9th Cir. 2004) (citation omitted). Moreover, the Tax
Court, sitting en banc, had specifically reaffirmed that § 6213(a) is
jurisdictional before the Tax Court ruled in Appellants’ case, see
Guralnik, 146 T.C. at 238, and the Tax Court expressly held that it was
jurisdictional in Appellants’ case. Appellants’ failure to raise the issue
below thus changed nothing. And the issue has been well briefed by both
sides, including with the helpful participation of amicus curiae from a
law school clinic.
20 ORGANIC CANNABIS FOUND. V. CIR
As Appellants acknowledge, controlling Ninth Circuit
precedent holds that § 6213(a) imposes jurisdictional
requirements and that, consequently, the Tax Court’s
“‘jurisdiction to redetermine a deficiency in tax depends
upon a valid notice of deficiency and a timely filed
petition.’” See, e.g., Meruelo v. Comm’r, 691 F.3d 1108,
1115 (9th Cir. 2012) (emphasis added) (citation omitted).
Indeed, we have consistently adopted a jurisdictional reading
of this statute (or its predecessor version, including one
governing appeals to what was then the Board of Tax
Appeals) for more than 80 years. See, e.g., Scar v. Comm’r,
814 F.2d 1363, 1366 (9th Cir. 1987); Healy v. Comm’r,
351 F.2d 602, 603 (9th Cir. 1965); Di Prospero v. Comm’r,
176 F.2d 76, 77 (9th Cir. 1949); Edward Barron Estate Co.
v. Comm’r, 93 F.2d 751, 753 (9th Cir. 1937). Other circuits
are in accord, some of them for even longer periods of time.
See, e.g., Tilden v. Comm’r, 846 F.3d 882, 886 (7th Cir.
2017) (“For many decades the Tax Court and multiple courts
of appeals have deemed § 6213(a) as a whole to be a
jurisdictional limit on the Tax Court’s adjudicatory
competence.”) (collecting cases); Lewis-Hall Iron Works v.
Blair, 23 F.2d 972, 974 (D.C. Cir. 1928). As a three-judge
panel, we are bound to follow this on-point Ninth Circuit
precedent unless intervening authority from the Supreme
Court or our en banc court has “undercut the theory or
reasoning underlying the prior circuit precedent in such a
way that the cases are clearly irreconcilable.” Miller v.
Gammie, 335 F.3d 889, 900 (9th Cir. 2003) (en banc).
Appellants contend that the Supreme Court’s recent
jurisprudence addressing when statutory deadlines should be
deemed jurisdictional has undermined this settled precedent
and requires us to reach a different conclusion here. The
Seventh Circuit rejected a comparable argument in Tilden,
and we likewise reject it here.
ORGANIC CANNABIS FOUND. V. CIR 21
In a series of recent cases, the Supreme Court has tried
“‘to bring some discipline to the use’ of the term
‘jurisdiction.’” Sebelius v. Auburn Reg’l Med. Ctr., 568 U.S.
145, 153 (2013) (quoting Henderson v. Shinseki, 562 U.S.
428, 435 (2011)). Given that labeling a statutory
requirement as jurisdictional produces “harsh
consequences”—such as the obligation to enforce it sua
sponte, or upon a party’s belated objection, and to do so
without regard to equitable considerations—the Court has
clarified that “procedural rules, including time bars, cabin a
court’s power only if Congress has clearly stated as much.”
United States v. Kwai Fun Wong, 575 U.S. 402, 409 (2015)
(cleaned up). This clear statement rule does not require that
Congress “incant magic words in order to speak clearly,” and
so the absence of the word “jurisdiction” is not necessarily
dispositive. Auburn Reg’l, 568 U.S. at 153. “But traditional
tools of statutory construction must plainly show that
Congress imbued a procedural bar with jurisdictional
consequences.” Kwai Fun Wong, 575 U.S. at 410.
“Congress must do something special, beyond setting an
exception-free deadline,” in order to create a jurisdictional
requirement, and that remains true “even when the time limit
is important (most are) and even when it is framed in
mandatory terms (again, most are).” Id. Considering the
“‘text, context, and relevant historical treatment’ of the
provision at issue,” Musacchio v. United States, 136 S. Ct.
709, 717 (2016) (quoting Reed Elsevier, Inc. v. Muchnick,
559 U.S. 154, 166 (2010)), we conclude that Congress has
indeed done “something special” to “plainly show” that
§ 6213’s time limit is “imbued . . . with jurisdictional
consequences.” Kwai Fun Wong, 575 U.S. at 410.
Specifically, three features of the statute confirm that its time
limit for filing a petition in the Tax Court is jurisdictional.
22 ORGANIC CANNABIS FOUND. V. CIR
First, § 6213(a) does use the magic word “jurisdiction”
with respect to one aspect of the Tax Court’s power
concerning deficiency redeterminations, thereby confirming
that the provision as a whole should be understood as
speaking to the manner in which the Tax Court acquires
subject matter jurisdiction in such cases. In authorizing
taxpayers to seek in the Tax Court, “[w]ithin 90 days, or
150 days if the notice is addressed to a person outside the
United States,” a “redetermination of the deficiency” set
forth in a “notice of deficiency authorized in section 6212,”
§ 6213(a) also states that, except in specified circumstances,
the IRS may not begin proceedings to collect that deficiency
until any such Tax Court proceedings have been completed.
I.R.C. § 6213(a). 7 The statute further provides that,
notwithstanding the normal statutory bar against enjoining
the collection of taxes, see id. § 7421(a), the IRS “may be
enjoined” from violating this no-collection prohibition “by a
proceeding in the proper court, including the Tax Court, and
a refund may be ordered by such court of any amount
collected within the period during which the [IRS] is
prohibited from collecting by levy or through a proceeding
in court under the provisions of this subsection.” Id.
7
The relevant sentence in § 6213(a) states:
Except as otherwise provided in section 6851, 6852,
or 6861 no assessment of a deficiency in respect of any
tax imposed by subtitle A, or B, chapter 41, 42, 43, or
44 and no levy or proceeding in court for its collection
shall be made, begun, or prosecuted until such notice
has been mailed to the taxpayer, nor until the
expiration of such 90-day or 150-day period, as the
case may be, nor, if a petition has been filed with the
Tax Court, until the decision of the Tax Court has
become final.
I.R.C. § 6213(a).
ORGANIC CANNABIS FOUND. V. CIR 23
§ 6213(a) (emphasis added). The statute then expressly
states, however, that the Tax Court’s “jurisdiction” to enter
such an injunctive order depends upon the timely filing of a
petition: “The Tax Court shall have no jurisdiction to enjoin
any action or proceeding or order any refund under this
subsection unless a timely petition for a redetermination of
the deficiency has been filed and then only in respect of the
deficiency that is the subject of such petition.” Id. (emphasis
added).
Appellants contend that this language in § 6213(a)
merely strips the Tax Court of jurisdiction to grant this
particular remedy in the case of an untimely petition and
does not otherwise address the Tax Court’s jurisdiction over
the case. We agree with the Seventh Circuit that it is “very
hard” to read the language of § 6213(a) that way. Tilden,
846 F.3d at 886. By also specifying that the Tax Court lacks
“jurisdiction” to issue such an injunction “unless” a petition
has been filed (and then only if the petition is “timely”),
§ 6213(a) seems clearly to reflect an understanding that the
manner in which the Tax Court acquires jurisdiction over a
deficiency dispute is through the filing of a “timely petition.”
I.R.C. § 6213(a) (emphasis added).
This reading of § 6213(a) is strongly confirmed by
considering how the statute phrases the no-collection
prohibition that this injunctive power is meant to enforce.
The IRS is subject to a prohibition on collection proceedings
“until such notice [of deficiency] has been mailed to the
taxpayer,” and thereafter “until the expiration of such 90-day
or 150-day period, as the case may be,” for filing a petition
and, “if a petition has been filed with the Tax Court, until the
decision of the Tax Court has become final.” Id. Under
Appellants’ non-jurisdictional reading of § 6213(a), this no-
collection prohibition would lapse at the end of the 90-day
24 ORGANIC CANNABIS FOUND. V. CIR
period but would then revive if the Tax Court subsequently
decides to accept a late-filed petition. Nothing in the statute
suggests that such a discontinuity was contemplated; on the
contrary, the three successive “until” clauses in the relevant
sentence of § 6213(a) seem unmistakably to refer to a single
unbroken time period. See supra note 7 (quoting the full
relevant sentence). To make matters worse, Appellants’
reading would mean that, having accepted a late-filed
petition and having thus re-activated the prohibition on
collection, the Tax Court would then unquestionably lack
jurisdiction to enjoin violations of that prohibition—thereby
necessitating a separate court proceeding in the district court
to do so. Nothing in the statute suggests that Congress
intended to pointlessly require such a peculiar dual-track
mode of procedure. The only sensible reading of the statute
is that, when no petition is timely filed, the Tax Court’s
jurisdiction to enjoin collection ends on day 91 because at
that point any possibility of invoking the Tax Court’s
jurisdiction at all has ended, and with it, so too the
underlying temporary prohibition on collection has likewise
definitively ended.
Second, the broader statutory “context” in which
§ 6213(a) operates confirms that it imposes jurisdictional
requirements. A taxpayer is not required to file a petition
for redetermination of a deficiency in the Tax Court; the
taxpayer always has the option of instead paying the
disputed sum, filing a claim for a refund, and then (if the
refund is denied) filing a suit for refund in the district court.
See I.R.C. §§ 6511(a), 6532(a), 7422. But if the taxpayer
does file a petition in the Tax Court, then a decision
“dismissing the proceeding shall be considered as its
decision that the deficiency is the amount determined by the
[IRS],” id. § 7459(d), and such decision as to “amount” is
entitled to preclusive effect in subsequent proceedings
ORGANIC CANNABIS FOUND. V. CIR 25
between the taxpayer and the IRS, see Malat v. Comm’r,
302 F.2d 700, 706 (9th Cir. 1962). However, there is no
such “decision” as to “amount,” and no preclusive effect, if
the Tax Court’s “dismissal is for lack of jurisdiction.”
26 U.S.C. § 7459(d) (emphasis added). Under Appellants’
non-jurisdictional reading of § 6213(a), the Tax Court’s
dismissal of a petition as untimely could potentially have the
perverse effect of barring the taxpayer from later challenging
the amount in a refund suit—ironically yielding precisely the
sort of “harsh consequence[]” that the Supreme Court’s
recent “jurisdictional” jurisprudence has sought to avoid.
Kwai Fun Wong, 575 U.S. at 409. That peculiar outcome is
avoided if § 6213(a) is read as being jurisdictional, because
then dismissals for failure to meet its timing requirement
would fall within § 7459(d)’s safe-harbor denying
preclusive effect to Tax Court dismissals “for lack of
jurisdiction.” Section 7459(d) thus confirms what the
language of § 6213(a) already suggests, which is that the
timing requirement in the latter section is properly
understood to be jurisdictional.
Third, the “‘historical treatment’ of the provision at
issue,” Mussachio, 136 S. Ct. at 717, further confirms that
§ 6213(a) imposes a jurisdictional time limit. As noted
earlier, the circuits have uniformly adopted a jurisdictional
reading of § 6213(a) or its predecessor since at least 1928.
See supra at 20. Congress presumptively “‘legislates against
the backdrop of existing law,’” Parker Drilling Mgmt.
Servs., Ltd. v. Newton, 139 S. Ct. 1881, 1890 (2019) (citation
omitted), and despite multiple amendments to the Code
(including two substantial overhauls in 1954 and 1986),
Congress has never seen fit to disturb this long-settled
understanding of § 6213(a). Cf. Fort Bend County v. Davis,
139 S. Ct. 1843, 1849 (2019) (“[T]he Court has stated it
would treat a requirement as jurisdictional when a long line
26 ORGANIC CANNABIS FOUND. V. CIR
of Supreme Court decisions left undisturbed by Congress
attached a jurisdictional label to the prescription.” (cleaned
up)). On the contrary, by adding in 1988 the above-
discussed language about Tax Court “jurisdiction” to enjoin
collection during the temporary prohibition period, see Pub.
L. No. 100-647, § 6243(a), 102 Stat. 3342, 3749 (1988),
Congress has confirmed the pre-existing jurisdictional
understanding of § 6213(a).
Accordingly, we agree with the Tax Court’s conclusion
that the untimeliness of the petitions deprived it of
jurisdiction to redetermine the deficiencies asserted against
Appellants.
IV
Lastly, we reject Organic Cannabis’s contention that we
should declare invalid the tax deficiency notice sent to it—a
ruling that would separately defeat the Tax Court’s
jurisdiction but that would do so in a way that assertedly
“strips the IRS of power to assess taxes based on that notice.”
Napoliello, 655 F.3d at 1063. Organic Cannabis contends
that the notice was invalid because it was improperly
addressed and—given Organic Cannabis’s late filing of its
petition—the IRS’s use of an incorrect address was not
harmless error. The Tax Court held that, even assuming the
notice was improperly addressed, it was still valid because
Organic Cannabis suffered no prejudice given that it actually
received the notice 78 days before a petition in the Tax Court
was due. We agree that the deficiency notice sent to Organic
Cannabis is valid, but we reach that conclusion for the
simpler reason that it was not misaddressed at all.
For purposes of sending a notice of deficiency to a
taxpayer, it is generally “sufficient” if the IRS mails the
notice to the taxpayer’s “last known address.” I.R.C.
ORGANIC CANNABIS FOUND. V. CIR 27
§ 6212(b)(1). Organic Cannabis agrees that the last known
address the IRS should have used is “P.O. Box 5286, Santa
Rosa, CA 95402-5286.” Organic Cannabis notes that the
address listed in the IRS’s mailing log omitted “P.O. Box
5286” and instead simply listed the address that was used as
“Santa Rosa, CA 95402-5286,” and Organic Cannabis
argues that the actual envelope used for mailing must be
presumed to have been similarly misaddressed. But even
assuming that the address was listed the same way on the
envelope as on the mailing log, we conclude that the
envelope was not misaddressed.
We take judicial notice of the fact that the U.S. Postal
Service has reserved the five-digit ZIP code “95402” solely
for P.O. Boxes in Santa Rosa. 8 See Dudum v. Arntz,
640 F.3d 1098, 1101 n.6 (9th Cir. 2011) (judicial notice may
be taken of official information that is posted on a
government website and that is “‘not subject to reasonable
dispute’” (quoting Fed. R. Evid. 201(b))). By using the Zip
Code “95402,” the IRS thereby designated that the item was
addressed to a P.O. Box for that Zip Code in Santa Rosa, and
the additional four digits that the IRS added to that Zip
Code—“5286”—provided the relevant P.O. Box number. 9
Thus, contrary to Organic Cannabis’s contention that the
IRS failed to address the envelope to “P.O. Box 5286,” the
IRS communicated precisely that information to the U.S.
8
See U.S. Postal Serv., Look Up a ZIP Code, By City and State,
https://tools.usps.com/zip-code-lookup.htm?bycitystate (entering inputs
“Santa Rosa” and “California” yields eight Zip Codes, and “95402”
contains the notation “This ZIP Code used for a specific PO BOX”).
9
See U.S. Postal Serv., ZIP Code - The Basics,
https://faq.usps.com/s/article/ZIP-Code-The-Basics (“Please note that
the ZIP+4 Code will likely include the actual PO Box number in the +4
part of the ZIP Code.”).
28 ORGANIC CANNABIS FOUND. V. CIR
Postal Service in the address it used, which was therefore
sufficient. As a result, there is no basis for declaring Organic
Cannabis’s notice of deficiency to be invalid.
* * *
We affirm the Tax Court’s dismissal of Appellants’
petitions for lack of jurisdiction.
AFFIRMED.