An annoyed taxpayer recently fumed that her check to the Internal Revenue Service took 16 days to travel fewer than 25 miles. It was the second time in a month that she had experienced a postal service related delay that affected her taxes. While I certainly had sympathy for her, it’s not nearly as bad as what happened to taxpayers in Washington state: A Tax Court petition took almost a month to arrive in Washington, D.C., putting the taxpayers’ appeal in jeopardy.
In the Washington state case, the IRS on March 28, 2017 mailed a notice of deficiency to the taxpayers. A notice of deficiency is typically referred to as a 90-day letter since taxpayers have 90 days from the date printed on the notice to file a petition in Tax Court for a redetermination of the deficiency under tax code Section 6213(a).
In this case, the notice of deficiency stated that the last day to petition the Tax Court was June 26, 2017. A statement on the IRS website notes, “Please note the court can’t consider your case if you file the petition late.”
The attorney for the taxpayers prepared and mailed a petition to the Tax Court on June 22, 2017. The Court received the petition on July 17, 2017, 111 days after the mailing of the notice of deficiency, and a full three weeks after the due date.
On September 8, 2017, the IRS moved to dismiss the matter on the grounds that the petition was not timely filed. The taxpayers objected, arguing that they did file timely since their attorney mailed the petition to the Tax Court on June 22, 2017, several days before the due date. That’s the mailbox rule: The IRS doesn’t need to receive most correspondence by the due date as long as it was mailed on time (some exceptions apply).
To support their claim, the taxpayers offered a statement from their attorney confirming that he had properly addressed and stamped the envelope, and the petition appeared to have been delivered by the U.S. Postal Service to the Tax Court. However, the envelope didn’t have a postmark.
The lack of a postmark was problematic because, under section 7502(a), a document delivered by U.S. mail is timely mailed if the postmark date falls on or before the prescribed date, and the document is mailed on or before that date in an envelope with “postage prepaid, properly addressed” to the recipient. If those conditions are met, the postmark serves as proof of the date of mailing, but in this case, since there was no postmark, the burden to prove that the petition was mailed before the due date fell to the taxpayer.
At the hearing, the IRS suggested that it can take between eight and 15 business days for the USPS to deliver a piece of mail to a government agency located in Washington, D.C., from any location in the United States. Why so long? The initial mailing—from popping it into a collection box to reaching Washington, D.C—can take between three to five days. Once sorted, the mail heads to a New Jersey location for irradiation, which takes an additional five to 10 days, and then is returned to Washington, D.C., to be delivered.
The IRS argued that if the petition had been mailed on June 22, 2017, then it would have been delivered to the Tax Court no later than July 14, 2017, which was a Friday. The Tax Court received the petition on Monday, July 17, 2017. Because the petition arrived in 16 days instead of 15 days, the IRS considered it late. The Tax Court disagreed.
The court noted that even using the IRS’ calculations, the petition arrived just one business day late. The IRS claims that is because the petition wasn’t mailed on time, but the court suggested an additional reason: the Fourth of July. It isn’t unreasonable, the court wrote, to believe that the legal holiday caused a delivery delay. Taking that into consideration and weighing it together with the taxpayers’ attorney’s sworn statement, the court found “it is more likely than not that the petition was mailed on June 22, 2017,” making it timely filed.
So what’s the takeaway? Obviously, the best practice is not to cut it close when it comes to deadlines. Planning ahead and leaving extra time for unexpected delays—like a stalled printer or bad weather—is always a good idea. Realistically, however, there are situations when forms, petitions, and other correspondence are mailed close to the due date. Consider sending important documents by a traceable method like Priority Mail and annotate the file contemporaneously.
Even better? If you send documents by registered mail, a postal employee will postmark the envelope. The date of the registration then serves as the postmark date, making your receipt evidence of timely delivery.
The opinion is available as a Tax Court Memo—that’s the case for about 90% of Tax Court opinions. Tax Court Memos general involve matters where the law is settled, and the result is dependent on circumstances. Tax Court Memos aren’t intended to be used as precedent, but taxpayers often cite them in their cases.
The case is Seely v. Commissioner, T.C., No. 2020-6, 1/13/20.
This is a weekly column from Kelly Phillips Erb, the TaxGirl. Erb offers commentary on the latest in tax news, tax law, and tax policy. Look for Erb’s column every week from Bloomberg Tax and follow her on Twitter at @taxgirl.