United States: U.S. Tax Court: 90 Days Is 90 Days, Shutdown Or Not

On October 1, 2013, the majority of the U.S. government shut down, including the U.S. Tax Court.  Despite the shutdown, the statutory deadline for filing a petition in the Tax Court cannot be extended.  Under these circumstances, the mailbox rule is the taxpayer's only hope.

On October 1, 2013, the U.S. government shutdown caused the U.S. Tax Court to close its doors.  Under Section 6213(a), however, the 90-day statutory deadline for filing a petition in the Tax Court cannot be extended.  During the shutdown, the Tax Court is not accepting hand delivery and likely is not opening its mail.  Under these circumstances, the mailbox rule is the taxpayer's only means to ensure that the Tax Court has jurisdiction over the taxpayer's case.

Background

Generally a taxpayer has 90 days from the date of the Statutory Notice of Deficiency or Statutory Notice of Determination to file a petition in the Tax Court.  Sections 6213(a); 6330(d)(1).  Without a timely filed petition, the Tax Court lacks subject-matter jurisdiction over the taxpayer's case and the taxpayer loses the Tax Court as a forum in which to litigate.  The remaining litigation forums require the taxpayer to pay the disputed tax, penalties and interest and sue for refund. 

Barring the government shutdown, a taxpayer can file the petition either by mail or by hand delivery.  Tax Court Rules of Practice and Procedure (Rule) 26 (establishing rules for electronic filing and specifically exempting "petitions and other papers not eligible for electronic filing"); Rule 34 ("the signed original of each petition is required to be filed").  A statutory filing requirement generally can be satisfied only by actual physical delivery to the government—a principle commonly called the "physical delivery rule."  United States v. Lombardo, 241 U.S. 73, 76 (1916).  When the Tax Court receives a petition prior to the 90th day, the physical delivery rule is satisfied.  However, if the petition is received after the deadline, the taxpayer must look to the common-law "mailbox rule" and the statutory "postmark rule" of Section 7502 to determine if it has satisfied the physical delivery requirement.  The Tax Court Rules of Practice and Procedure expressly reference Section 7502, stating that "In all cases, the jurisdiction of the Court also depends on the timely filing of a petition.  See Code sections 6213 and 7502."  Rule 13(c).

Under the common-law mailbox rule, when a taxpayer offers evidence that it sent documents to the government (e.g., the Internal Revenue Service or Tax Court) in a properly addressed and stamped envelope through the U.S. Postal Service, courts will presume that the documents were received within the customary time for mail delivery.  Philadelphia Marine Trade Assoc. v. Commissioner, 523 F.3d 140, 147 (3rd Cir. 2008).  The mailbox rule is a method of satisfying the physical delivery requirement.  Once proof is sufficiently established, the presumption is that the government received the document, but the government then has the opportunity to rebut this presumption with evidence of untimely receipt.  Hagner v. United States, 285 U.S. 427, 430 (1932). 

In 1954, Congress enacted Section 7502 of the Internal Revenue Code and created a postmark rule to satisfy the physical delivery requirement.  The relevant part of section 7502(a) provides:

If any return, claim, statement, or other document required to be filed, or any payment required to be made, within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws is, after such period or such date, delivered by United States mail to the agency, officer, or office with which such return, claim, statement, or other document is required to be filed, or to which such payment is required to be made, the 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 or the date of payment, as the case may be.

If the mailed document is lost or the post-marked envelope is not retained, then Section 7502(c) provides that proof of registered mail or certified mail constitutes prima facie evidence that the document was received.  Moreover, the date of registration or the postmark on the certified receipt constitutes the postmark date and also the delivery date.

Because the Tax Court currently is not accepting hand deliveries, the common-law mailbox rule and statutory postmark rule may provide the sole means for a taxpayer to satisfy the physical delivery requirement for timely filing petitions during the shutdown.  Taxpayers and practitioners must pay careful attention to the requirements to prove timely filing via the mailbox rule, because even a small foot fault will deprive the Tax Court of subject-matter jurisdiction. 

Proving the Mailbox Rule and the Circuit Split

Currently the U.S. courts of appeals are split as to whether extrinsic evidence may be presented to establish proof of a timely mailing (i.e., whether the taxpayer may present any evidence other than a receipt from the post office or approved private delivery service, or the actual postmark).  The U.S Courts of Appeals for the Eighth, Ninth and Tenth Circuits have adopted rules that allow the taxpayer to introduce extrinsic evidence that it in fact timely mailed the petition.  See Estate of Wood v. Commissioner, 909 F.2d 1155 (8th Cir. 1990), aff'g 92 T.C. 793 (1989); Anderson v. United States, 966 F.2d 487 (9th Cir. 1992); Sorrentino v. Internal Revenue Service, 383 F.3d 1187 (10th Cir. 2004).  The Second and Sixth Circuits have held that if the taxpayer cannot show an actual postmark, section 7502 is not "literally applicable" and the court cannot accept "testimony or other evidence as proof of actual date of mailing."  Deutsch v. Commissioner, 599 F.2d 44, 46 (2d Cir. 1979); Miller v. United States, 784 F.2d 728, 730-31 (6th Cir. 1986).

The most recent opinion to discuss the mailbox rule and the major hurdles a taxpayer must jump over in order to satisfy the evidentiary requirements of the mailbox rule is Stocker v. United States, No. 11-1890 (6th Cir. 2013).  Under the current jurisprudence of the Sixth Circuit, the taxpayer may only prove the mailbox rule by showing either a receipt from the post office (or other acceptable delivery service) or the actual postmark-stamped envelope.

Stocker v. United States

In Stocker v. United States, the taxpayers' accountant determined that the Stockers had overpaid their taxes for the 2003 tax year and prepared amended federal and state tax returns for Mr. Stocker to mail.  The accountant also prepared the Stockers' 2006 federal and state returns.  Each of those returns was due on October 15, 2007, the original 2003 return having been filed on October 15, 2004, under an extension, and the 2006 returns having been twice extended.  The accountant's assistant prepared postage-paid, certified mail, return-receipt-requested envelopes for the 2003 amended returns and regular postage prepaid envelopes for the 2006 returns; however, she accidentally retained the customer copies of the certified mail receipts for the 2003 amended returns.   

Mr. Stocker testified that he took his returns directly to the post office on October 15, 2007, and mailed all of the returns.  Mr. Stocker explained that he was unable to obtain the date-stamped receipts for the 2003 amended returns because he did not have the customer copies of the certified mail receipts.

The Stockers' 2003 and 2006 state tax returns were timely received by the Michigan Department of Treasury, and the 2006 federal return was timely received by the Internal Revenue Service (IRS).  However, the IRS claimed that it did not receive the 2003 amended return until October 25, 2007.  The IRS did not retain the envelope, and the IRS's records stated that the envelope had a postmark dated October 19, 2007.

The government disallowed the Stockers' claim for refund contending that the 2003 amended return was untimely.  The Sixth Circuit agreed, explaining that there are only two exceptions to the common law rule requiring actual physical delivery.  The exceptions, found in section 7502, indicate that delivery to the U.S. mail shall be deemed as delivery to the IRS, and that if the return is sent by U.S. mail, the postmark shall be the date of "registration."  Because the Stockers could not produce a receipt verifying delivery to the post office or a postmark dated prior to the due date, they could not avail themselves of the exceptions of section 7502.  The Sixth Circuit found that the taxpayers could not produce extrinsic evidence outside of the exact requirements of section 7502 and elected "to follow the decisions of other courts holding that the 'exceptions embodied in [§7502] [a]re exclusive and complete.'"

Current Ramifications

Shortly after the U.S. Court of Appeals for the Tenth Circuit decided Sorrentino, the IRS issued proposed regulations to eliminate the use of extrinsic evidence to prove the mailbox rule.  These regulations were revised and finalized in Treasury Regulation 301.7502-1(e)(2)(i), which states:

In the case of a document (but not a payment) sent by registered or certified mail, proof that the document was properly registered or that a postmarked certified mail sender's receipt was properly issued and that the envelope was properly addressed to the agency, officer, or office constitutes prima facie evidence that the document was delivered to the agency, officer, or office.  Other than direct proof of actual delivery, proof of proper use of registered or certified mail, and proof of proper use of a duly designated [private delivery service] as provided for by paragraph (e)(2)(ii) of this section, are the exclusive means to establish prima facie evidence of delivery of a document to the agency, officer, or office with which the document is required to be filed.  No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.

Whether the Tax Court will apply the statutory postmark rule as the exclusive means to establish prima facie delivery of the petition to the Tax Court is unclear.  In two recent cases, the Tax Court cited to the new Treasury Regulations; however, each case involved the date on which a return or form was filed with the IRS, not the date on which a petition was filed with the Tax Court.  For example, in Tesoriero v. Commissioner, T.C. Memo. 2012-261 at *7, the court applied the law of the Second Circuit—the circuit to which the case was appealable—which already does not allow extrinsic evidence.  In Herrera v. Commissioner, T.C. Memo. 2012-308 at *21 n. 12, the court mentions the Treasury Regulations, but declines to discuss the issue, finding that "even if extrinsic evidence were allowed, petitioners did not meet their burden of proof."  

The Tax Court has previously allowed taxpayers to introduce extrinsic evidence, such as testimony, to establish that they mailed a return to the IRS.  Estate of Wood v. Commissioner, 92 T.C. 793, 799 (1989), aff'd 909 F.2d 1155 (8th Cir. 1990).  While Treasury Regulation 301.7502-1(e)(2)(i) has established Section 7502 as the exclusive means to satisfy the physical delivery rule, Section 7502 and the regulations are by their terms limited to documents "addressed to the agency, officer or office" and do not expressly refer to documents addressed to the Tax Court.  It is also important to note that the Tax Court will apply the rule of the court of appeals to which the case it is trying is appealable.  Golsen v. Commissioner, 54 T.C. 742 (1970) aff'd on other issues 445 F.2d 985 (10th Cir. 1971).  Therefore, it is particularly important for taxpayers and practitioners to understand the rule in their circuit, and it may be prudent to stipulate appellate jurisdiction to a jurisdiction most favorable to the kind of evidence the taxpayer possesses.  Taxpayers and practitioners can avoid the circuit split evidentiary issues by retaining the receipt for certified or registered mail, or from an approved private delivery service.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Emails

From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.