Dunn v. Commissioner: Tax Court Grants Dismissal Without Prejudice in CDP Case Post-Boechler

The $0 Stakes: Why a Taxpayer Walked Away from a CDP Case

The Tax Court’s January 7, 2026 ruling in Dunn v. Commissioner (T.C. Memo. 2026-2) exposes a harsh reality for taxpayers navigating Collection Due Process (CDP) hearings: a procedural misstep can erase all leverage, even when no tax is owed. The case centers on Jay Dunn’s motion to dismiss his CDP petition; filed after the IRS issued a final determination sustaining a levy for tax years 2018–2020. While the monetary stakes were never quantified in the court record, the broader implications are stark: a taxpayer’s ability to challenge an IRS collection action hinges entirely on a 30-day deadline, and the Tax Court’s interpretation of Rule 41(a)(2) has now made voluntary dismissals a near-impossible lifeline.

The ruling arrives at a pivotal moment for CDP litigation, where the Supreme Court’s 2022 decision in Boechler, P.C. v. Commissioner upended decades of precedent by declaring the 30-day filing deadline in Section 6330(d)(1) non-jurisdictional. Yet as Dunn’s case demonstrates, the court’s embrace of Boechler’s flexibility has done little to soften the procedural gauntlet taxpayers face. The Tax Court’s grant of Dunn’s motion to dismiss without prejudice; a rare concession; was not a victory for the taxpayer, but a cautionary tale about the limits of equitable tolling and the IRS’s unyielding enforcement of deadlines. For practitioners and taxpayers alike, the decision underscores a brutal truth: CDP hearings are a one-shot opportunity, and the Tax Court will not tolerate procedural gamesmanship, even when the stakes are zero.

This case matters beyond Dunn’s individual circumstances. It crystallizes the Tax Court’s evolving role as the final arbiter of CDP disputes, where its interpretation of Rule 41(a)(2); borrowed from the Federal Rules of Civil Procedure but applied with unique rigidity; now dictates whether taxpayers can ever get a second chance. The court’s willingness to grant a without prejudice dismissal in this instance may signal a narrow exception, but the underlying message is clear: the IRS’s procedural rules are now the Tax Court’s rules, and taxpayers who fail to navigate them flawlessly will find themselves with no recourse at all.

The Taxpayer Who Missed His Chance: A CDP Hearing Gone Wrong

Jay Dunn’s case began with a simple but critical misstep; one that would ultimately cost him his chance to challenge an IRS levy. On January 7, 2026, Dunn filed a Collection Due Process (CDP) hearing request with the IRS Independent Office of Appeals after receiving a Notice of Intent to Levy for tax years 2018, 2019, and 2020. His goal was to contest the underlying tax liabilities, though he did not propose any collection alternatives at the time.

The Appeals officer (AO) assigned to his case scheduled a telephone conference for February 24, 2025, but Dunn failed to participate. The AO followed protocol by sending a "last chance" letter, giving Dunn until March 10, 2025, to respond. When Dunn did not meet the deadline, the AO closed the case; a decision that would have lasting consequences.

Two days later, on March 12, 2025, the IRS issued a Notice of Determination sustaining the proposed levy. Dunn’s window to challenge the levy in Tax Court had already closed under Section 6330(d)(1), which requires taxpayers to file a petition within 30 days of the determination. The statute, which grants the Tax Court jurisdiction over CDP appeals, is unforgiving in its timing; unless equitable tolling applies, a rare exception post-Boechler.

Months later, after the IRS filed its Answer in the Tax Court proceeding, Dunn filed a Motion to Dismiss Without Prejudice on August 6, 2025. His request was notably silent on the reasons for dismissal, leaving the court; and the IRS; without explanation. The IRS, in its response, did not object to the dismissal, noting only that Dunn planned to submit an Offer in Compromise (OIC) and that the IRS was willing to consider it. The stage was set for a procedural showdown over whether Dunn’s case could be revived; or if his procedural missteps had permanently foreclosed his options.

Dismissal Without Prejudice: What Did the Taxpayer Really Want?

The court’s August 6, 2025 order granting Dunn’s motion to dismiss without prejudice left the IRS and the court without clarity. The petitioner’s request cited Wagner v. Commissioner, 118 T.C. 330 (2002), but offered no explanation for why he sought dismissal. The IRS, in its response, did not object to the motion, noting only that Dunn intended to submit an Offer in Compromise (OIC) and that the agency was willing to consider it. The IRS’s silence masked a deeper concern: the implications of Boechler, P.C. v. Commissioner, 142 S. Ct. 1501 (2022), which had upended the jurisdictional framework for CDP deadlines.

Dunn’s counsel later clarified under court order that the petitioner had no intention of refiling a Tax Court petition and understood that dismissal without prejudice would expose him to collection actions. The IRS, while not opposing the dismissal, highlighted the tension between Dunn’s stated intent and the practical reality of his options; particularly the high bar for equitable tolling under Boechler. The court, left to parse the petitioner’s motives, faced a procedural puzzle: Was this a strategic delay tactic, a genuine withdrawal, or a miscalculation of the post-Boechler landscape? The answer would shape not just Dunn’s case, but the Tax Court’s approach to future voluntary dismissals in CDP matters.

The Court’s Dilemma: Rule 41(a)(2) and the Boechler Effect

The court’s decision to grant Dunn’s motion for dismissal without prejudice; despite the IRS’s concession; laid bare the unresolved tensions between Tax Court procedure and the post-Boechler reality of CDP litigation. The ruling hinged on a procedural puzzle: How could the court reconcile the absence of a Tax Court rule governing voluntary dismissals with the Supreme Court’s dismantling of the jurisdictional barrier to late-filed CDP petitions? The answer required parsing Rule 41(a)(2) of the Federal Rules of Civil Procedure, the court’s equitable discretion, and the lingering shadow of Boechler; a combination that left the Tax Court navigating uncharted territory.

The Procedural Void and the Application of Rule 41(a)(2)

The Tax Court’s dilemma began with a simple fact: There is no Tax Court rule addressing voluntary dismissals. Unlike deficiency cases, where the court is statutorily required to enter a decision (IRC § 7459(d)), CDP cases exist in a procedural gray area. To fill this void, the court turned to Rule 41(a)(2) of the Federal Rules of Civil Procedure, which governs voluntary dismissals in federal court. Under this rule, a plaintiff may dismiss an action only by court order, and the dismissal is typically without prejudice unless the court specifies otherwise. The Tax Court has long deferred to Rule 41(a)(2) in procedural matters where no Tax Court rule applies, as seen in cases like Campus Educ., Inc. v. Commissioner (163 T.C. 175, 177 (2024)).

But Rule 41(a)(2) is not a one-size-fits-all solution. Its purpose is to protect the nonmoving party; here, the IRS; from unfair prejudice. Courts consider several factors when deciding whether to grant dismissal without prejudice, including the extent of the IRS’s discovery efforts, expenses incurred in preparing for trial, the taxpayer’s diligence, and the impact on judicial resources. As the court noted in Stein v. Commissioner (156 T.C. 167, 169 (2021)), dismissal without prejudice is appropriate unless the IRS would suffer "clear legal prejudice," such as the loss of a substantial right. The IRS’s lack of objection in Dunn’s case removed the primary obstacle to dismissal, but the court still had to grapple with the broader implications of allowing a taxpayer to walk away from a CDP case; only to potentially refile later.

The Court’s Discretion and the IRS’s Concession

The Tax Court’s authority to grant dismissal without prejudice under Rule 41(a)(2) is discretionary, guided by equitable principles. The court must weigh the interests of both parties, ensuring that the dismissal does not undermine the integrity of the judicial process. In Bridgeport Music, Inc. v. Universal-MCA Music Publ’g, Inc. (583 F.3d 948, 953 (6th Cir. 2009)), the Sixth Circuit emphasized that dismissal without prejudice is meant to protect the nonmoving party from unfair treatment, not to serve as a strategic tool for plaintiffs. The Tax Court has echoed this sentiment, as seen in McCants v. Ford Motor Co. (781 F.2d 855, 857 (11th Cir. 1986)), where the court stressed that the "crucial question" is whether the defendant would lose a substantial right due to the dismissal.

In Dunn’s case, the IRS’s concession that it would not be prejudiced by the dismissal removed the most significant barrier to granting the motion. The IRS’s willingness to forgo its right to oppose the dismissal signaled that the court’s intervention was unnecessary to protect its interests. This concession was critical, as the Tax Court has repeatedly held that dismissal without prejudice is appropriate when the IRS is not prejudiced by the plaintiff’s withdrawal. As the court noted in Wagner v. Commissioner (118 T.C. 330, 334 (2002)), the IRS’s lack of objection to dismissal without prejudice meant that the taxpayer’s right to refile was not foreclosed by the dismissal itself.

The Boechler Effect: How the Supreme Court’s Ruling Reshaped CDP Litigation

The Supreme Court’s decision in Boechler, P.C. v. Commissioner (142 S. Ct. 1493 (2022)) fundamentally altered the landscape of CDP litigation by holding that the 30-day filing deadline in IRC § 6330(d)(1) is not jurisdictional. Instead, the deadline is a procedural rule subject to equitable tolling; a rare remedy that pauses or extends a deadline in extraordinary circumstances. This ruling upended decades of Tax Court precedent, which had treated the 30-day deadline as jurisdictional, meaning that late-filed petitions could not be cured by any procedural maneuver, including voluntary dismissal.

Before Boechler, the Tax Court’s decision in Wagner effectively operated as a dismissal with prejudice, even though the court labeled it "without prejudice." In Wagner, the taxpayers’ petition was untimely, and the court granted dismissal without prejudice to allow them to refile in district court. However, because the 30-day deadline had already expired, the dismissal was a legal fiction; there was no practical way for the taxpayers to refile in Tax Court. As the court acknowledged in Wagner, the dismissal was effectively with prejudice, as the taxpayers could no longer seek review in the Tax Court. The Sixth Circuit later reinforced this principle in Duffy v. Ford Motor Co. (218 F.3d 623, 627 (6th Cir. 2000)), where it held that the legal effect of a dismissal; not its formal wording; determines whether prejudice results.

Boechler changed this calculus. By declaring the 30-day deadline non-jurisdictional, the Supreme Court opened the door to equitable tolling, allowing taxpayers to argue that extraordinary circumstances justified a late filing. However, the Court also made clear that equitable tolling is a rare remedy, reserved for cases where the taxpayer demonstrates both extraordinary circumstances and due diligence. The Tax Court has since applied this standard strictly, as seen in Reed v. Commissioner (T.C. Memo. 2025-4, at *3–4), where the court denied tolling to a taxpayer who missed the deadline due to a clerical error.

The Court’s Analysis of Wagner and the Post-Boechler Reality

The Tax Court’s decision in Dunn’s case required it to revisit Wagner in light of Boechler. The court acknowledged that Wagner’s dismissal without prejudice was, in practical terms, a dismissal with prejudice because the taxpayers could no longer refile in Tax Court. However, Boechler’s holding that the 30-day deadline is not jurisdictional meant that the legal landscape had shifted. Taxpayers now technically have another chance to refile a CDP petition if they can establish equitable tolling; but the court made clear that this chance is illusory for most.

The court’s analysis focused on the heavy burden of equitable tolling, which requires taxpayers to prove that they acted with due diligence and faced extraordinary circumstances beyond their control. As the court noted in Aiello v. Commissioner (T.C. Memo. 2025-46, at *4), equitable tolling is a "rare remedy," and courts apply it "sparingly." The Tax Court has echoed this sentiment in cases like Graham-Humphreys v. Memphis Brooks Museum of Art, Inc. (209 F.3d 552, 560–61 (6th Cir. 2000)), where the Sixth Circuit emphasized that tolling is not a substitute for diligence.

In Dunn’s case, the court recognized that while the IRS’s concession made dismissal without prejudice appropriate, the practical reality was that Dunn’s ability to refile was severely limited. The court cited Boechler’s holding that the 30-day deadline is non-jurisdictional, but it also noted that the taxpayer would still face an uphill battle in establishing equitable tolling. The court’s conclusion underscored the tension between the formal grant of dismissal without prejudice and the substantive limitations on refiling; a tension that reflects the broader uncertainty in CDP litigation post-Boechler.

The Conclusion: A Dismissal Without Prejudice, But With Severe Limitations

The Tax Court’s decision to grant Dunn’s motion for dismissal without prejudice was a procedural victory for the taxpayer, but one that came with a stark warning. The court’s ruling made clear that while Rule 41(a)(2) allows for voluntary dismissals in the absence of a Tax Court rule, the practical effect of such a dismissal is far from certain. The IRS’s concession removed the primary obstacle to dismissal, but the court’s analysis highlighted the severe limitations on refiling; a reality that Dunn, like many taxpayers, may not fully grasp.

The court’s decision also served as a reminder of the Tax Court’s evolving role in CDP litigation. By applying Rule 41(a)(2) and deferring to the IRS’s concession, the court exercised its discretion in a way that preserved the taxpayer’s right to refile; at least in theory. However, the court’s analysis of Boechler and the heavy burden of equitable tolling made clear that the path forward is fraught with challenges. For taxpayers like Dunn, the court’s ruling was a temporary reprieve, not a guarantee of future success. The Tax Court’s decision underscored the need for taxpayers to understand the substantive impact of a dismissal without prejudice; and the near-impossible standard they must meet to refile in a CDP case.

The Heavy Burden of Equitable Tolling: Why Taxpayers Rarely Get a Second Chance

The court’s ruling in Dunn’s case; while granting him a temporary reprieve; highlighted a harsh reality for taxpayers seeking a second chance in Collection Due Process (CDP) cases. The Tax Court’s analysis underscored that equitable tolling, though theoretically possible after Boechler, remains an elusive remedy reserved for the rarest of circumstances. For Dunn; or any taxpayer; refiling a petition after dismissal would require overcoming a burden so steep that success is nearly impossible.

The doctrine of equitable tolling allows courts to extend statutory deadlines when extraordinary circumstances prevent a party from filing on time. But the Tax Court has repeatedly emphasized that this remedy is applied sparingly, requiring taxpayers to prove not just hardship, but unusual and exceptional factors beyond their control. In Graham-Humphreys v. Memphis Brooks Museum of Art, Inc., the Sixth Circuit described equitable tolling as a "rare remedy", while the Supreme Court in Irwin v. Department of Veterans Affairs held that such relief is only warranted in cases of extraordinary circumstances coupled with due diligence. The Tax Court echoed this sentiment in Aiello, calling equitable tolling a "rare remedy" and cautioning that the standard is intentionally difficult to meet.

In Dunn’s case, even if he were to refile, the path forward would be nearly insurmountable. The court noted that equitable tolling requires proof of factors such as government misconduct, fraud, or circumstances that truly prevented compliance with the deadline. Missed deadlines due to simple negligence, confusion, or lack of awareness; even among self-represented taxpayers; do not suffice. The Tax Court’s own statistics reveal that 80% of its cases involve unrepresented taxpayers, many of whom may misunderstand the implications of a dismissal "without prejudice." The phrase, while technically preserving the right to refile, is often a false promise in CDP cases, where the 30-day deadline under Section 6330(d)(1) remains a practical bar to further review.

The court’s concern was not just legal but practical: taxpayers, particularly those without counsel, may misinterpret a dismissal "without prejudice" as an invitation to refile. Yet the reality is that even with such a dismissal, the substantive hurdles remain. The Tax Court’s decision in Wagner v. Commissioner long ago established that voluntary dismissals do not reset the statutory clock in CDP cases. And while Boechler opened the door to equitable tolling, it did not lower the bar. The court in Dunn’s case made clear that self-inflicted delays, lack of diligence, or even confusion about procedure would not justify tolling.

For Dunn, the court’s decision was a temporary relief; a dismissal without prejudice, at least in theory. But the underlying message was clear: the Tax Court’s tolerance for second chances in CDP cases is extremely limited. Taxpayers who miss their deadlines face a double bind: they cannot rely on procedural maneuvers like voluntary dismissal to reset the clock, and they cannot easily invoke equitable tolling to excuse their delay. The court’s ruling serves as a cautionary tale; one where the phrase "without prejudice" may offer little solace to the vast majority of taxpayers who find themselves in Dunn’s position.

What’s Next for Dunn; and Other Taxpayers in CDP Cases?

The Tax Court’s dismissal of Dunn’s case without prejudice; while leaving him exposed to collection actions and barred from refiling; serves as a stark reminder of the severe limitations of procedural maneuvers in CDP disputes. The outcome underscores a harsh reality: the phrase "without prejudice" offers little solace when the underlying deadline has already passed. For taxpayers and practitioners, the lesson is clear: CDP deadlines are not merely advisory; they are existential. Miss the 30-day window under § 6330(d)(1), and the Tax Court’s jurisdiction vanishes, leaving no procedural escape hatch.

The IRS’s willingness to consent to dismissal in Dunn’s case; while rare; highlights a narrow exception rather than a rule. Most taxpayers who miss the deadline will find themselves in a double bind: unable to refile, and unable to rely on equitable tolling unless they can demonstrate extraordinary circumstances under Boechler. The court’s post-Boechler framework makes it abundantly clear that tolling is not a safety net for negligence or miscalculation. Taxpayers who fail to act within the statutory period must show government-induced error, fraud, or incapacity; a burden that few can meet. The Tax Court’s reasoning in Dunn’s case reinforces this: even when dismissal is granted, the IRS retains full collection authority, and the taxpayer’s options shrink to near-nonexistence.

For practitioners, the ruling demands a proactive strategy. The CDP hearing is often the last meaningful opportunity to challenge an IRS collection action, and participation must be diligent and evidence-driven. Taxpayers should treat the 30-day deadline as immovable, document every interaction with the IRS, and preserve evidence of any procedural irregularities. The IRS’s flexibility in Dunn’s case; where it did not object to dismissal; should not be misconstrued as a sign of leniency. In the vast majority of cases, the IRS will vigorously defend against untimely petitions, and the Tax Court will enforce the deadline with little mercy.

The broader implications for taxpayer behavior are profound. Self-represented individuals, in particular, must understand that the Tax Court’s tolerance for second chances is vanishingly small. The court’s warning is implicit: procedural shortcuts are illusions. Whether through equitable tolling or voluntary dismissal, the path to relief is narrow and fraught with risk. For those who gamble on a late filing, the cost; collection actions, accrued penalties, and the permanent loss of judicial review; is often irreversible.

Dunn’s case, while dismissed without prejudice, leaves him with no practical recourse. The ruling serves as a cautionary tale for all taxpayers navigating CDP disputes: the clock starts ticking the moment the IRS issues its determination letter, and the Tax Court will not reset it. The only viable path forward is to act swiftly, document thoroughly, and prepare for the possibility that the IRS’s collection machinery will move forward unimpeded. For practitioners, the takeaway is equally stark: CDP cases are not procedural games; they are high-stakes battles where one misstep can mean the difference between relief and ruin.