Denise Mannella v. Commissioner IRS
2011 U.S. App. LEXIS 1182
3rd Cir.2011Background
- Commissioner appeals Tax Court’s holding that TreasuryRegulation 26 C.F.R. §1.6015-5(b)(1) is invalid, nullifying the two-year filing deadline for 6015(f) claims.
- Tax Court previously ruled the 2-year deadline under §1.6015-5(b)(1) conflicts with §6015 and invalid; it otherwise found §6015(f) timely.
- Denise Mannella filed Form 8857 requests under §§6015(b), (c), and (f) after collection actions began on June 4, 2004; the IRS issued a 2007 denial.
- Notice of levy and related materials were sent to Mannella’s last-known address; Mannella asserts she did not actually receive the notices.
- Tax Court later held the §1.6015-5(b)(1) deadline invalid (Lantz v. C.I.R.), but the Seventh Circuit subsequently upheld the two-year deadline; this court reverses and remands for equitable tolling consideration.
- On appeal, the court reverses the Tax Court to the extent it invalidated the regulatory deadline and remands for consideration of equitable tolling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Can the Secretary validly impose a two-year deadline for §6015(f) relief by regulation? | Mannella argues no direct Congressional mandate allows a deadline. | The Secretary may set procedures and deadlines under §6015(f) within Chevron deference. | Regulation valid; two-year deadline permissible under Chevron Step 2. |
| Does Congressional silence regarding a deadline in §6015(f) preclude a regulatory deadline? | Silence means no fixed deadline; timing should be flexible. | Silence does not preclude regulation; timing can be delegated to the Secretary. | Ambiguity exists; regulation may implement §6015(f) deadline. |
| Was Chevron Step 2 satisfied given the Treasury's reasons for the deadline? | IRS provided little articulated reasoning; reliance on Lantz unsupported by record. | Regulation bears relation to statute; deference warranted by purpose and structure. | Court defers to regulation and does not strike it down on Chevron step 2. |
| Should equitable tolling apply to toll the two-year deadline in this case? | Equity tolling should excuse late filing due to lack of notice and fairness. | Need for factual record; tolling issue not decided on this record. | Remand to Tax Court to determine if equitable tolling applies. |
| Is remand appropriate to address equitable tolling before final disposition? | Remand is needed to develop a full record on tolling. | Proceedings can address tolling after ruling on regulation. | Remand approved for equitable tolling consideration. |
Key Cases Cited
- Lantz v. Commissioner, 607 F.3d 479 (7th Cir. 2010) (upheld two-year regulatory deadline under §1.6015-5(b)(1))
- Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) (establishes framework for reviewing agency regulations)
- Swallows Holding, Ltd. v. Comm’r, 515 F.3d 162 (3d Cir. 2008) (supports deference to agency rulemaking in tax context)
- Lopez v. Davis, 531 U.S. 230 (U.S. 2001) (discusses discretionary agency actions within statutory framework)
- Appalachian States Low-Level Radioactive Waste Comm’n v. O’Leary, 93 F.3d 103 (3d Cir. 1996) (affirms Chevron deference principles in agency interpretation)
- Motor Vehicle Mfrs. Ass’n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (U.S. 1983) (agency action must be upheld on basis articulated by agency)