In holding that the taxpayers in the case of McCaffery v. United States[1] had failed to prove their claim for refund was filed timely, the US Court of Federal Claims decision took the position that the US Tax Court had developed a method of showing timely filing for an envelope lacking a postmark that is at odds with the Internal Revenue Code.

The Court described the facts of this case as follows:

Plaintiffs filed their federal income tax return for the 2013 tax year on April 15, 2014 with a total tax liability of $70,977. Compl. ¶¶ 6-7; Def.’s App. B at B-1-B-2 (ECF 11-1). In 2017, Plaintiffs filed an amended tax return claiming an overpayment of $69,080 for the 2013 tax year and requesting a refund in that amount. Compl. ¶ 8; Def.’s Mot. to Dismiss at 3; Def.’s App. B at B-15, B-17. The parties agree (and it appears to the Court) that the deadline for claiming an overpayment was April 18, 2017. Def.’s Mot. to Dismiss at 5; Pls.’ Opp. at 1, 3.4 But the IRS noted the receipt date of Plaintiffs’ amended return as April 24, 2017 — six days later.[2]

The IRS did not keep a copy of the envelope in which the return was mailed, but the agency did have a scanned image of the envelope.  The opinion describes the image as follows:

The image has Plaintiffs’ surname and address handwritten on the top left, the IRS’s address centered, and four postage stamps in the top right corner. Each stamp bears the same two lines of text: “US POSTAGE $0.49” and “SOLD APR [ ] FIRST CLASS.”). Id. The bottom-right stamp appears to read “SOLD APR 17, 2017 FIRST CLASS,” but the exact dates on the others are illegible. Id. The envelope bears the partly legible date “04/24/201[ ]” near the bottom right, and an alphanumerical sequence — “09B 030” — across the stamps along the right edge. Several dots and lines appear near the middle of the top edge of the envelope, but they do not form any distinct characters, shapes, or images, and there is no way to tell how they were made.[3]

The IRS disallowed the claim as not timely filed, noting:

“The received date on your return is Apr. 24, 2017. The last day to file a timely claim or return for tax year 2013 was Apr. 15, 2017 [sic]. We can’t allow your claim or return because the received date isn’t on or before the deadline.” Pls.’ Ex. B (ECF 1-1).[4]

As a taxpayer must first file a timely claim for refund before being able to bring suit for a refund in the US Court of Federal Claims, the IRS argued when the taxpayers filed suit in the case that the Court had to dismiss the case for lack of subject matter jurisdiction.  As the parties agreed, the only issue was whether the taxpayers could show timeliness under the rules for mailing a document to the IRS:

The parties do not dispute that Plaintiffs’ refund application was delivered to the IRS after the April 18, 2017 actual-delivery deadline. Given that this Court lacks jurisdiction over tax refund claims that are not timely presented to the IRS, see Dalm, 494 U.S. at 602, the issue is whether Plaintiffs have established timeliness under the deemed delivery rule.[5]

The Court found that the envelope clearly lacked a postmark and the taxpayers had not used certified or registered mail (where the date stamped on the receipt by a USPS employee would establish a postmark date).  Thus, the issue was if there was a way to show timely filing of an envelope that lacked the postmark.

The taxpayers provided evidence other than a postmark or certified or registered mail receipt to show the document was mailed on April 17, 2021.  But the Court found it could not consider such evidence:

But on the plain text of section 7502, the deemed delivery rule only applies if a postmark or equivalent marking was made: The date of the postmark is what matters, not the date of the mailing. I.R.C. § 7502(a) (“[T]he date of the United States postmark stamped on the cover in which such return, claim, statement, or other document, or payment, is mailed shall be deemed to be the date of delivery[.]”). Similarly, the regulations provide for extrinsic evidence only to prove the contents of an illegible postmark, not to prove time of mailing when there was no postmark. 26 C.F.R. § 301.7502-1 (“If the postmark on the envelope is made by the U.S. Postal Service but is not legible, the person who is required to file the document or make the payment has the burden of proving the date that the postmark was made.”) (emphasis added). As noted above, exceptions to a statutory requirement should generally be treated as exclusive. Without even an illegible postmark, the deemed delivery rule does not apply, and extrinsic evidence about the date of mailing is beside the point. That leaves only the dispositive fact that the amended return was delivered to the IRS after the delivery deadline.[6]

But the taxpayers point to a series of cases from the United States Tax Court where such extrinsic evidence was deemed to show timely mailing in the absence of a postmark.  The opinion lists those various cases the taxpayer was relying upon:

They cite a line of cases from the Tax Court holding that extrinsic evidence as to timely mailing must be considered when an envelope contains no postmark at all. Pls.’ Opp. at 5 (citing to Sylvan v. Comm’r, 65 T.C. 548 (1975); Seely v. Comm’r, 119 T.C.M. (CCH) 1031, 2020 WL 201751 (2020); Williams v. Comm’r, 117 T.C.M. (CCH) 1328, 2019 WL 2373552 (2019); Blake v. Comm’r, 94 T.C.M. (CCH) 51, 2007 WL 2011294 (2007); Menard, Inc. v. Comm’r, 41 T.C.M. (CCH) 1279, 1981 WL 10531 (1981); Monasmith v. Comm’r, 38 T.C.M. (CCH) 60, 1979 WL 3117 (1979); Ruegsegger v. Comm’r, 68 T.C. 463 (1977)).[7]

But in this decision, the Court argues that these cases are based on what the judge finds to be a significant error in the Sylvan decision:

In that case, much like this one, the Tax Court confronted an envelope with no postmark that was delivered after a deadline. The court found a gap in the statute: “There is nothing at all in the statute or legislative history indicating what Congress intended where the postmark is illegible; where there is no postmark because the petition was inserted in a new postal cover when the original cover was damaged; or where no postmark is affixed due to oversight or malfunction of a machine.” Sylvan, 65 T.C. at 552. “[I]n these circumstances,” the court reasoned, its “task . . . is to ask what Congress would have intended on a point not presented to its mind, if the point had been present.” Id. (quotes omitted). The court concluded, over a dissent, that extrinsic evidence should be admitted to prove the date of mailing for purposes of the deemed delivery rule not only when a postmark is illegible, but where it is absent.[8]

The opinion begins an extended discussion about the issues it finds with the Sylvan decision.  The first is to object to the claim that the law did not provide for a result if there was no postmark applied:

That was erroneous for several reasons. To begin with, the Tax Court was mistaken that the Internal Revenue Code contains “nothing at all . . . indicating what Congress intended” in cases of absent postmarks. Id. Section 6511(a) contains a deadline, and section 7502 contains a deemed-delivery exception that is textually inapplicable when a postmark is missing. There is thus no gap to be filled; a late-received envelope lacking a postmark is simply untimely, whatever the extrinsic evidence might be. When a court treats circumstances covered by a general rule as falling into a gap, the court is not really “ask[ing] what Congress would have intended,” Sylvan, 65 T.C. at 552, but presuming that the statute should say something different. See also Antonin Scalia & Bryan Garner, Reading Law: The Interpretation of Legal Texts 94 (2012) (“As Justice Louis Brandeis put the point: ‘A casus omissus does not justify judicial legislation.’ And Brandeis again: ‘To supply omissions transcends the judicial function.’”) (citing Ebert v. Poston, 266 U.S. 548, 554 (1925), and Iselin v. United States, 270 U.S. 245, 251 (1926)).[9]

In the Court’s view, the law simply provided this document was not timely filed regardless of what evidence might otherwise be advanced to show the document was mailed on April 17.

The opinion also complained that the Tax Court was, effectively, creating additional provisions beyond those contained in the Treasury Regulations governing this provision:

Besides, when Sylvan was decided, the Treasury had already promulgated the regulation providing for extrinsic evidence of the contents of illegible postmarks, but not absent ones. See Republication, 32 Fed. Reg. 15241, 15355 (Nov. 3, 1967); see also Sylvan, 65 T.C. at 560 (Drennen, J., dissenting) (noting that the regulations then in effect “provide[ ] that if the postmark on the envelope is not legible, the petitioner has the burden of proving the time when the postmark was made”). By sanctioning proof by extrinsic evidence in other circumstances, the Tax Court merely created a new exception that neither Congress nor the administering agency authorized. That, too, is inappropriate: A judge should not “elaborate unprovided-for exceptions to a text, as Justice Blackmun noted while a circuit judge: ‘If the Congress had intended to provide additional exceptions, it would have done so in clear language.’” Scalia & Garner, supra, at 93 (citing Petteys v. Butler, 367 F.2d 528, 538 (8th Cir. 1966) (Blackmun, J., dissenting)). Nor should a court assume that because a legislature provided relief from a general rule in one circumstance, similar relief should be applied in other circumstances. See Easterbrook, supra, at 541 (“Legislators seeking only to further the public interest may conclude that the provision of public rules should reach so far and no farther[.]”)[10]

Thus, the Court of Federal Claims concludes that the missing postmark means automatically that the filing was late when it was not received by the IRS by the last date in the statute.  Despite the fact that the result may seem harsh, the opinion concludes that it must follow the text of the statute:

Yet the text controls. The Supreme Court recently addressed a strikingly similar situation in Pereida v. Wilkinson, which held that noncitizens challenging removal orders under the Immigration and Nationality Act have the burden of proving “all aspects of their eligibility” for relief. 141 S. Ct. 754, 758 (2021). Much like the McCafferys, the noncitizen facing removal in Pereida argued that under the Court’s interpretation, some individuals entitled to relief might be unable to prove it “through no fault of [their] own,” perhaps because of “poor state court record-keeping practices.” Id. at 766. The Court answered that it was bound to the policy choice reflected in the statute: “It is hardly this Court’s place to pick and choose among competing policy arguments like these along the way to selecting whatever outcome seems to us most congenial, efficient, or fair. Our license to interpret statutes does not include the power to engage in such freewheeling judicial policymaking.” Id. at 766-67; see also BP P.L.C. v. Mayor & City Council of Baltimore, 141 S. Ct. 1532, 1542 (2021) (observing that a court’s task “is to discern and apply the law’s plain meaning as faithfully as we can, not ‘to assess the consequences of each approach and adopt the one that produces the least mischief’”) (quoting Lewis v. Chicago, 560 U.S. 205, 217 (2010)). The same is true here.[11]

[1] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021, https://www.taxnotes.com/research/federal/court-documents/court-opinions-and-orders/court-holds-return-wasn%25e2%2580%2599t-timely-filed%253b-refund-suit-dismissed/7754m (retrieved August 10, 2021)

[2] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021

[3] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021

[4] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021

[5] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021

[6] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021

[7] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021

[8] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021

[9] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021

[10] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021

[11] McCaffery v. United States, Case No. 1:19-CV-01112, US Court of Federal Claims, August 9, 2021