In the case of Thomas v. Commissioner, TC Memo 2020-33[1] the taxpayers discovered the risk of dropping a tax related document in a mailbox that you think will be picked up and postmarked that day. In this case the document in question was their Tax Court petition.

The last day for Sara and David Thomas to file their petition with the Tax Court to challenge the IRS’s notice of deficiency was March 5, 2018.[2]

The U.S. Supreme Court has decided not to hear the appeal from the Ninth Circuit in the case of Baldwin v. United States, Case No. 19-402.[1] The denial leaves standing the Ninth Circuit’s ruling that Reg. §301.7502-1(e)(2) rendered irrelevant a prior Ninth Circuit decision in the case of Anderson v. United States, 966 F.2d 487 (9th Cir. 1992).

We previously wrote about this case when it was first decided by the Ninth Circuit in April 2019.[2]

The issue involved whether a taxpayer could only show timely mailing of their document by producing a certified or registered mail receipt stamped by a U.S. Postal Service employee or whether they could resort to other evidence showing the document had been timely mailed. In 1992 the Ninth Circuit had ruled that other evidence could be considered in the Anderson case. Other circuits had held that provisions Congress enacted in IRC §7502 for proof of timely filing of documents were meant to be the sole method of proving such timely mailing.

Update: On January 29, 2020 the District Court issued an order granting the motion for reconsideration and, at the same time, issued a revised judgment in favor of the taxpayer in the case.

The IRS is asking the District Court in the case of Harrison v. Internal Revenue Service, USDC WD Wisconsin, Case: 3:19-cv-00194-wmc[1] to reverse its holding in favor of the Government, supporting the taxpayer’s motion for reconsideration[2] in the IRS’s own notice of non-opposition to that motion.[3]  So why is the IRS asking the Court to reverse the holding in favor of the agency?

Well, it turns out that there existed controlling authority in favor of the taxpayers’ position but, in the words of the plaintiff’s motion for reconsideration, “all parties failed to cite the relevant authority and the Judge didn’t cite the case either.”

An attorney’s testimony that he recalled the date of mailing of a taxpayer’s Tax Court petition was not found to be sufficient to prove the document had been mailed in a timely fashion in the case of Williams v. Commissioner, TC Memo 2019-66.

The Tax Court, having been reversed on appeal by the Seventh Circuit Court of Appeals in a case with virtually identical facts, officially changed its position on how to determine if a document mailed with a Stamps.com mailing label meets the timely filing rules of IRC §7502.  In Pearson v. Commissioner, 149 TC No. 20, the Court rejected its prior position that entries in the U.S. Postal Service database amounted to the equivalent of U.S Postal Service applied postmark which took precedence over the Stamps.com mailing date.  Instead, a document mailed with a Stamps.com label (or any other sort of postage meter equivalent label) is tested under the regulations for a document with a postmark applied by other than the U.S. Postal Service.

While, as noted, this position had been adopted on appeal, reversing the prior Tax Court decision, the reversal only would have had effect for taxpayers in the Seventh Circuit had the Tax Court not reversed its prior position.

Image copyright albund / 123RF Stock Photo

One of the traditions of tax season for advisers is filing extensions for taxpayers on April 15.  The case of Laidlaw, et ux. et al v. Commissioner, TC Memo 2017-167 deals with a problem when the IRS claimed not to have received an extension that the taxpayer’s adviser claimed to have filed.

The taxpayers filed their tax returns for 2005 at the extended due date of October 16, 2006.  The taxpayers had filed Forms 4868 for each of the prior three years—but the IRS did not have a record of receiving one for 2005.  The forms were not sent by certified or registered mail, but rather the taxpayer’s adviser testified that he sent them in by regular mail.

Image copyright viktor88 / 123RF Stock Photo

The question of a taxpayer being able to establish timely mailing of a document when a private postage meter is used was considered in the case of Grimm v. Commissioner, TC Memo 2017-44.

IRC §7502 is what many professionals refer to as the “timely mailing equals timely filing” rule, but the rule isn’t quite so simple.  Rather, under IRC §7502(a) a document is deemed filed timely if the postmark applied by the United States Postal Service shows a date on or before the deadline for filing.  If a postmark is not applied by the U.S. Postal Service then the IRS is granted the authority to write regulations outlining whether and if such other postmark may be treated as evidence of timely filing

Image copyright abluecup / 123RF Stock Photo

In the case of Garalnik v. Petitioner, 145 TC No. 15 the question was a simple one at this point—had Felix managed to file his petition with the Tax Court to challenge the IRS’s Notice of Determination Concerning Collection Actions in a timely manner.  While this issue involved a court filing, the same basic rules govern timely filing in other contexts.

The issue involves the “timely mailing” rule of IRC §7502 and/or the simple timely delivery requirement for his petition under IRC §6330(d)(1).  In the end, Felix did not meet the requirements of the timely mailing but, due to a storm that rendered actual delivery impossible on the actual due date, the Court allowed the filing was timely under Tax Court Rule 25(a).  

After letting the list stand unchanged for 11 years, for the second year in a row the IRS has updated the list of authorized private delivery services in Notice 2016-30.  Although various all services from DHL Express were dropped in Notice 15-38 (the first update in 11 years to the list), the new notice adds various services offered by DHL Express.

Under IRC §7502(f) the IRS is authorized to designate certain private delivery services (referred to as “PDSs”) to count for the timely filing/timely paying rule of IRC §7502.  Generally this puts such services on a par with sending the document and/or payment via certified mail so long as the taxpayer retains the required proof of timely presentation of the package to the service. 

The attorney for the taxpayer in the case of Tilden v. Commissioner, TC Memo 2015-188 prepared the petition for the taxpayer’s Tax Court case on the last day for the petition to be filed.  The petition was sent to the IRS via certified mail.

So far all appears well, except the attorney used an online postage service (Stamps.com) to print the certified mail postage and supporting documents.  That’s not itself a problem except that the rules regarding “timely filing” provide protection not simply for filing by certified mail.

The Tax Court decided, at least for purposes of filing a petition with the Tax Court, that a federal “snow day” declared in the District of Columbia that falls on the last day for filing with the Court serves to push the due date back to the first day the office of the clerk of the Tax Court was open.  The issue was decided in an order filed in the case of Guralnik v. Commissioner, Docket No. 4358-15 L, Order dated August 24, 2015.