Jay Dunn v. Commissioner

Taxpayer Exits Court 'Without Prejudice,' But Re-Entry Remains Doubtful

With potentially thousands of dollars in tax liabilities at stake for the 2018, 2019, and 2020 tax years, a Michigan taxpayer sought to withdraw his petition before the Tax Court to pursue an Offer-in-Compromise (OIC) with the IRS. While Judge Goeke granted the taxpayer’s motion to dismiss the case "without prejudice," the decision carries a cautionary note. Judge Goeke warned that the Supreme Court's recent Boechler decision creates a potential "trap for the unwary" regarding the ability to refile the petition, effectively signaling that re-entry into Tax Court may be more difficult than the taxpayer anticipates.

Ghosting the Conference: The Road to Dismissal

Following Judge Goeke's grant of the taxpayer’s motion to dismiss the case "without prejudice," to pursue an Offer-in-Compromise (OIC) with the IRS, the history of the case leading to that motion bears examination. The sequence of events highlights the taxpayer's initial engagement with the IRS and subsequent failure to adhere to scheduled proceedings.

The case originated after the IRS issued a Notice of Intent to Levy, signaling its intent to seize the taxpayer’s property to satisfy unpaid tax liabilities for the 2018, 2019, and 2020 tax years. In response, the taxpayer timely requested a Collection Due Process (CDP) hearing with the IRS Independent Office of Appeals. During this request, he challenged the underlying tax liabilities but did not propose any specific collection alternatives, such as an installment agreement.

An Appeals officer (AO) was assigned to the CDP hearing and scheduled a telephone conference for February 24, 2025. However, the taxpayer failed to call the AO at the scheduled time, effectively "ghosting" the hearing. The AO, in an attempt to salvage the process, mailed a "last chance" letter to the taxpayer, setting a March 10, 2025, deadline for a response. When the taxpayer again failed to respond by the deadline, the AO closed the case. Two days later, on March 12, 2025, the IRS issued a Notice of Determination sustaining the proposed levy.

Subsequently, the taxpayer filed a petition with the Tax Court to dispute the IRS's determination. However, on August 6, 2025, after the IRS filed its Answer to the petition, the taxpayer filed a Motion to Dismiss, asserting that he no longer wished to pursue the proceeding. He did not initially provide a reason for seeking dismissal. The IRS did not object to the taxpayer’s Motion, informing the Court that the taxpayer planned to submit an Offer-in-Compromise (OIC) and that the IRS was willing to consider it.

The Boechler Shift: Why 'Without Prejudice' Means Something New

As the taxpayer sought to exit the court via dismissal without prejudice, it is critical to understand how such a dismissal operates in the wake of a key Supreme Court decision. The Tax Court, in Wagner v. Commissioner, 118 T.C. 330 (2002), previously addressed the effect of a dismissal "without prejudice." In Wagner, the court confronted a similar situation in a Collection Due Process (CDP) case, ultimately granting the taxpayer's motion despite the IRS's objections. The Wagner court reasoned that because the statutory period for filing a petition under Section 6330(d)(1) had expired, the IRS would not be prejudiced by the dismissal, "as if the instant proceeding had never been commenced.”

However, the legal landscape shifted dramatically with the Supreme Court's decision in Boechler, P.C. v. Commissioner, 142 S. Ct. 1493 (2022). The Supreme Court addressed Section 6330(d)(1), which governs the judicial review of Collection Due Process (CDP) determinations and specifies that a taxpayer has 30 days to petition the Tax Court for review. Boechler held that this 30-day period is not a jurisdictional requirement, but rather a non-jurisdictional, procedural rule. This distinction is crucial because non-jurisdictional rules are subject to equitable tolling. Equitable tolling is a legal doctrine that allows a court to extend a deadline if a party, despite diligent efforts, was prevented from meeting it due to extraordinary circumstances.

Prior to Boechler, the Tax Court consistently held that the 30-day filing period under Section 6330(d)(1) was jurisdictional, meaning the court had no power to hear a case filed even a single day late. Thus, under Wagner, a dismissal "without prejudice" was effectively a dismissal "with prejudice," because the taxpayer could not refile a petition once the 30-day window had closed. In essence, the phrase "without prejudice" was a legal fiction.

Post-Boechler, however, the phrase "without prejudice" carries new weight. Because the Section 6330(d)(1) deadline is now subject to equitable tolling, a taxpayer could theoretically refile a petition even after the 30-day period, provided they can demonstrate that equitable tolling is warranted. As such, the court had to consider whether the IRS would be prejudiced by the dismissal because of the availability of equitable tolling of the Section 6330(d)(1) filing period.

The Court's Warning: A Theoretical Right, Not a Practical One

As a legal fiction.

Post-Boechler, however, the phrase "without prejudice" carries new weight. Because the Section 6330(d)(1) deadline is now subject to equitable tolling, a taxpayer could theoretically refile a petition even after the 30-day period, provided they can demonstrate that equitable tolling is warranted. As such, the court had to consider whether the IRS would be prejudiced by the dismissal because of the availability of equitable tolling of the Section 6330(d)(1) filing period.

The court, however, expressed concerns that the 'without prejudice' designation might mislead taxpayers. While Boechler, P.C. v. Commissioner (142 S. Ct. 1493 (2022)) opened the door to equitable tolling of the 30-day petition period under Section 6330(d)(1) – which governs judicial review of Collection Due Process (CDP) determinations – the court cautioned that actually achieving equitable tolling is an uphill battle. Taxpayers face a "heavy burden" of proof, as equitable tolling is to be used "sparingly." The court cited precedent, including Aiello v. Commissioner, T.C. Memo. 2025-46, which called equitable tolling “a rare remedy.”

The court worried that, despite the dismissal being "without prejudice," a taxpayer is unlikely to successfully refile and obtain court review of a collection action. This is particularly true for the large percentage of pro se taxpayers who may not fully grasp the stringent requirements for equitable tolling. The court noted that approximately 80% of its cases involve self-represented taxpayers, citing the U.S. Tax Court's Congressional Budget Justification for Fiscal Year 2026. It questioned whether a taxpayer could ever demonstrate entitlement to equitable tolling after having moved to dismiss their own case. The court emphasized the substantive impact of a dismissal, including the taxpayer's understanding that collection actions could proceed.

Ultimately, because the IRS did not object to the taxpayer’s motion, the court granted the dismissal without prejudice. However, the court explicitly warned the taxpayer—represented by counsel or not—that despite the “without prejudice” label, a successful refiling and subsequent review of the collection action was highly improbable. The court concluded by stating that an appropriate order of dismissal would be entered.