With the increasing use of electronic filing for tax documents, many filings that were previously sent by mail can now be submitted online. Although the Internal Revenue Code (IRC) §7502 considers mail submissions timely filed if postmarked by the US Postal Service by the due date, electronic filings can be more complex to date-stamp, especially when the filer and the recipient are in different time zones. How can we determine the date of filing for an electronic document under these circumstances?

The Tax Court case Nutt v. Commissioner, 160 TC No. 10,[1] addressed a specific issue regarding the timing of filing a petition with the court. The case examined the time by which a taxpayer residing in the Central Time Zone must electronically file a petition to the Tax Court in order for it to be considered timely, given that the court itself has its offices in the Eastern Time Zone.

Rule for Returns Electronically Filed with the IRS

Because many readers may be primarily concerned with filing tax returns and extension requests with the IRS, let’s first examine the regulations under IRC §7502 that cover the timing requirements for electronic return transmitters filing on behalf of clients residing in different time zones. These rules specify the deadline by which the electronic transmitter must file the return or extension request, and provide guidance on determining the date of filing for such submissions.

Treasury Reg. §301.7502-1(d)(1) provides:

(d) Electronically filed documents.

(1) In general. A document filed electronically with an electronic return transmitter (as defined in paragraph (d)(3)(i) of this section and authorized pursuant to paragraph (d)(2) of this section) in the manner and time prescribed by the Commissioner is deemed to be filed on the date of the electronic postmark (as defined in paragraph (d)(3)(ii) of this section) given by the authorized electronic return transmitter. Thus, if the electronic postmark is timely, the document is considered filed timely although it is received by the agency, officer, or office after the last date, or the last day of the period, prescribed for filing such document.

In the context of electronic tax filing, the electronic return transmitter is the entity responsible for directly transmitting the tax return to the IRS.[2] However, in practice, most tax professionals serve as electronic return originators (EROs), who initiate the electronic submission of the return on behalf of their clients. [3] The ERO typically sends the submission files to the tax software vendor, who then acts as the electronic return transmitter in sending the files to the IRS.

The “electronic postmark date” is the key item, and Reg. §301.7502-1(d)(3)(ii) provides:

(ii) Electronic postmark. For purposes of this paragraph (d), the term electronic postmark means a record of the date and time (in a particular time zone) that an authorized electronic return transmitter receives the transmission of a taxpayer’s electronically filed document on its host system. However, if the taxpayer and the electronic return transmitter are located in different time zones, it is the taxpayer’s time zone that controls the timeliness of the electronically filed document.

In this case, it is the time zone of the taxpayer that controls whether or not the submission is timely.  Note that the regulation does not reference the IRS office where the submission is received, nor does it link timeliness to where the ERO or the electronic return transmitter is located.

Below is an example of applying this rule.

Example

Taxpayer X resides in Texas, which is in the Central Time Zone. Transmitter Y is an authorized electronic return transmitter, located in Colorado, which is in the Mountain Time Zone. Taxpayer X emails their tax documents to tax professional Z (an ERO) who is also located in Texas on April 18, 2023, at 7:00 PM Central Time. Tax professional Z receives the email and electronically sends the tax return to Transmitter Y at 8:00 PM Central Time. Transmitter Y then transmits the tax return to the IRS at 10:00 PM Mountain Time on April 18, 2023. The IRS acknowledges receipt of the tax return on April 19, 2023, at 1:00 AM Eastern Time.

Under the regulations, the tax return is deemed filed on the date of the electronic postmark given by the authorized electronic return transmitter. In this example, the electronic postmark is April 18, 2023, at 10:00 PM Mountain Time, which is timely as that is 11:00 pm Central Time when recast to the taxpayer’s time zone. Since the electronic postmark is timely, the tax return is considered filed timely, even though it was received by the IRS after the last day prescribed for filing.

The Facts of this Case

While the above tells us how to deal with tax returns under the IRS electronic filing system, does the same rule apply to petitions electronically filed with the Tax Court?

In this case the facts are as follows:

The Commissioner mailed a notice of deficiency to the Nutts on April 14, 2022, determining an income tax deficiency and an accuracy-related penalty for 2019. Notwithstanding the actual mailing date, the notice was dated April 18, 2022, and the notice stated that the last day to file a petition with this Court was July 18, 2022. That date was a Monday and was not a legal holiday in the District of Columbia. The notice stated that the Nutts could “get a petition form and the rules for filing from the Tax Court’s website at www.ustaxcourt.gov, or by contacting the Office of the Clerk at . . . 400 Second Street, NW, Washington, DC 20217.” The Commissioner also sent a letter dated June 7, 2022, to the Nutts in which he reduced the amount of the deficiency and reminded the Nutts of the July 18, 2022, deadline to file a petition in the Tax Court.

While residing in Alabama, the Nutts electronically filed their Petition. At the time of filing, the Court’s electronic case management system (DAWSON) automatically applied a cover sheet to their Petition. The cover sheet shows that the Court electronically received the Petition at 12:05 a.m. eastern time on July 19, 2022, and filed it the same day. When the Court received the Petition, it was 11:05 p.m. central time on July 18, 2022, in Alabama.[4]

The IRS filed a motion to dismiss the petition for lack of jurisdiction, arguing that, unlike the rule governing tax return filings, the date a petition is treated as filed before the court is determined by the court’s time zone, rather than the taxpayer’s.

The Court’s Decision

The Court’s discussion begins with an explanation of the filing date rule for petitions not electronically filed with the Court:

A petition is ordinarily “filed” when it is received by the Tax Court in Washington, D.C. See, e.g., Leventis v. Commissioner, 49 T.C. 353, 354 (1968) (“[A] petition, in order to be timely filed, must be received by the Court in Washington, D.C., on or before the 90th day.”). Although the Court may sit at any place within the United States, its principal office, its mailing address, and its Clerk’s office are in the District of Columbia. I.R.C. §7445; Rule 10. As a result, documents such as petitions are often mailed to the Court for filing. And unless the timely mailing rule of section 7502 applies, a document is not considered to be filed until it is received. See Guralnik, 146 T.C. at 240, 242; Eichelburg v. Commissioner, T.C. Memo. 2013-269, at *6-8.[5]

Now we get to a key distinction in the analysis—the Court points out that Section 7502 does not apply in this case, unlike in the electronic return filing situation we first discussed:

The timely mailing rule does not apply to an electronically filed petition. Under section 7502(a), a document that is mailed before it is due but received after it is due is deemed to have been received when mailed. But that rule applies only to documents that are delivered by U.S. mail or a designated delivery service. I.R.C. §7502(a)(1), (f). Because an electronically filed petition is not delivered by U.S. mail or a designated delivery service, the exception of section 7502 does not apply. Where section 7502 does not apply, “we must look to the date the ‘petition’ was actually received and filed by the Court to determine whether it was timely filed.” Cassell v. Commissioner, 72 T.C. 313, 319 (1979).[6]

Why doesn’t it apply in this case when it does apply to tax returns filed electronically?  Well, while the IRS provided equivalency rules under the regulations for tax returns and other items filed via their eFile system, there’s no similar equivalency provision in the regulations for petitions to the Tax Court.  IRC §7502(c)(2) provides:

(2) Certified mail; electronic filing. The Secretary is authorized to provide by regulations the extent to which the provisions of paragraph (1) with respect to prima facie evidence of delivery and the postmark date shall apply to certified mail and electronic filing.

The regulations only apply to items transmitted via an electronic return transmitter, but electronic return transmitters are not authorized to transmit Tax Court petitions electronically.  Rather, the Tax Court’s rules apply in this case.  As the discussion continues:

The Tax Court Rules are consistent with this statutory framework. Rule 22(a) provides that a paper “must be filed with the Clerk in Washington, D.C., during business hours” unless it is electronically filed. As for electronic filings, Rule 22(d) provides that a “paper will be considered timely filed if it is electronically filed at or before 11:59 p.m., eastern time, on the last day of the applicable period for filing.”

The Court’s website also instructs petitioners how to electronically file a petition through DAWSON in accordance with this Rule. See United States Tax Court, How to eFile a Petition, https://ustaxcourt.gov/efile_a_petition.html (last visited Mar. 30, 2023). The first instruction states:

Check the Deadline for Filing

You may have received a notice in the mail from the Internal Revenue Service (IRS). The Court must receive your electronically filed Petition no later than 11:59 pm Eastern Time on the last date to file. Petitions received after this date may be dismissed for lack of jurisdiction.

Id.[7]

The Tax Court goes on to point out that the Tax Court rules are consistent with those of other federal courts and the case law that has been applied in those cases:

The Tax Court Rules in this regard are consistent with other federal rules and caselaw. For example, Rule 6(a)(4) of the Federal Rules of Civil Procedure provides that the last day of a period for electronic filing ends “at midnight in the court’s time zone.” (Emphasis added.) Interpreting Federal Rule 6(a), the U.S. Court of Appeals for the Seventh Circuit observed that electronic filing systems have the effect of extending the number of hours available for filing — from when the Clerk’s office closes until 11:59 p.m. in the court’s time zone — but not the number of days. Justice v. Town of Cicero, Ill., 682 F.3d 662, 664 (7th Cir. 2012). As with Federal Rule 6(a), Rule 22(d) is consistent with the idea that the Court’s electronic filing system serves as “a substitute for the clerk of the court.” Royall v. Nat’l Ass’n of Letter Carriers, AFL-CIO, 548 F.3d 137, 142 (D.C. Cir. 2008). The electronic filing system stands in the Clerk’s place; it follows that if the “last day” has ended where the Clerk’s office is standing, the last day for electronic filing has ended as well.

The U.S. District Court for the Southern District of Indiana considered an issue similar to the one before us. See McCleskey v. CWG Plastering, LLC, No. 1:15-cv-01284, 2020 WL 9601835 (S.D. Ind. Nov. 2, 2020). In McCleskey, the court entered a judgment on June 5, 2020, holding CWG Plastering, LLC (CWG), liable to a fund for which McCleskey was the trustee. A motion for a new trial or for relief from the judgment was due to be filed “no later than 28 days after the entry of judgment.” Id., 2020 WL 9601835, at *1 (citing Fed. R. Civ. P. 59(b)). Twenty-eight days from June 5, 2020, was July 3, 2020. CWG filed its motion for new trial at 12:46 a.m. eastern time on July 4, 2020, in Indianapolis, Indiana, which was 11:46 p.m. central time on July 3, 2020, in Evansville, Indiana. Id. These locations are important because the case was pending in Indianapolis, which is in the eastern time zone, but it had been tried in Evansville, which is in the central time zone. Id. at *1 & n.1. CWG argued that the motion was timely because it was filed on July 3, 2020, in the time zone where the case was tried. Id. at *1. The court disagreed. Id. Citing a local rule that a “document due on a particular day must be filed before midnight local time of the division where the case is pending,” the court held that the motion was untimely because it was due no later than 11:59 p.m. eastern time on July 3, 2020. Id. (citing Justice, 682 F.3d at 664). Similar to that local rule, Rule 22(d) dictates that the “last day” of a period for electronic filing ends at 11:59 p.m. eastern time, the Tax Court’s local time zone.[8]

Therefore, the Tax Court concludes that the taxpayers had not timely filed their petition with the Tax Court, as their electronic filing was submitted five minutes too late.  Thus, they forfeited their chance to have their case heard by the Tax Court:

The Nutts’ Petition was untimely because it was filed in Washington, D.C., after the last day for filing prescribed by section 6213(a). The period within which to file a petition cannot be extended by the Court, and we must dismiss a case for lack of jurisdiction if the petition is not filed within the prescribed time. Rule 25(b)(2)(C); Hallmark Rsch. Collective v. Commissioner, No. 21284-21, 159 T.C., slip op. at 42 (Nov. 29, 2022); Blum v. Commissioner, 86 T.C. 1128, 1131 (1986). If we were to hold that the Nutts’ electronically filed Petition was timely because it was still the last day to file in Alabama, even though the last day had ended in the District of Columbia, we would impermissibly be extending the number of days available for filing. See Justice, 682 F.3d at 664; McCleskey, 2020 WL 9601835, at *1. Accordingly, we must dismiss this case for lack of jurisdiction.[9]

[1] Nutt v. Commissioner, 160 TC No. 10, May 3, 2023, https://www.taxnotes.com/research/federal/court-documents/court-opinions-and-orders/partnership-didn%e2%80%99t-have-unreported-income%2c-not-liable-for-penalty/7glrr (retrieved May 4, 2023)

[2] Revenue Procedure 2000-31, Section 3.01(4)

[3] Revenue Procedure 2000-31, Section 3.01(3)

[4] Nutt v. Commissioner, 160 TC No. 10, May 3, 2023

[5] Nutt v. Commissioner, 160 TC No. 10, May 3, 2023

[6] Nutt v. Commissioner, 160 TC No. 10, May 3, 2023

[7] Nutt v. Commissioner, 160 TC No. 10, May 3, 2023

[8] Nutt v. Commissioner, 160 TC No. 10, May 3, 2023

[9] Nutt v. Commissioner, 160 TC No. 10, May 3, 2023