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Timely-mailed equals timely-filed.

Timely-Mailed Equals Timely-Filed

Per Code Section 7502 a return, claim, statement, or other document is considered filed as of the date of the U.S. Postmark on the wrapper containing the document. This Section also applies to protests after 30-day letters and petitions to the tax court. This convenience is available so long as the document is properly addressed and mailed with postage prepaid. <bt> Section 7502 also provides that for registered mail, the date of registration shall be considered the postmark date. Regulation 301. 7502-1 addresses the issue of certified mail. Per that regulation, if a sender's certified mail receipt is postmarked by the postal employee to whom the document was presented, the date of the postmark on such receipt shall be treated as the postmark date of the document.

These rules also apply to deposit of withheld employment taxes and corporate estimated income taxes. However, for these items, the U.S. Postmark must be at least two days prior to the due date for the deposit to be considered timely. In addition, such deposits of $20,000 or more must be received by depositories by the due date whether hand delivered or through the mail.

Section 7502 timely mailing rules provide a tremendous convenience to taxpayers. Courts however, have adhered to a strict interpretation of its provisions. This article addresses several issues concerning these provisions.

U.S. Postmark and Private Meter Postmarks

The 1984 Magers case illustrates the strict application of the U.S. Postmark requirement of Section 7502. Magers timely mailed a refund claim on December 21, 1981. After significant delay, the IRS received the claim but not in the envelope Magers had used to mail the document (original envelope was destroyed in the mail). The postmark date on the new envelope was untimely (after the filing deadline). The court ruled the filing untimely despite its sympathy for the taxpayer. Presiding Judge Northrop explicitly stated:

"It does seem unjust to foreclose the Magers from collecting what is properly theirs simply because their envelope was lost and delayed prior to delivery. I cannot, however, change the law as it is written. Under certain unusual circumstances it is my regrettable duty to blindly enforce the law."

Rulings have been consistent in numerous other cases. As a result, taxpayers can expect virtually no flexibility on the U.S. Postmark requirement.

Private meter postage machines require users to set postmark dates. But just how reliable do courts consider such postmark dates? In the Lowman case, a petition for redetermination was private meter postmarked, and placed in the U.S. Mail. The private meter postmark was May 7, 1987 (last day for timely filing). Upon receipt of the petition however, the envelope contained a U.S. Postmark of May 8, 1988. The court cited Regulation 301.7502-(c)(1)(iii)(b) in ruling the U.S. Postmark was controlling. The court defended its decision by stating: Because of the unreliability of the

postmark date on metered mail,

the requirement in the case of

conflicting postmarks that the

postmark of the United States

Postal Service controls cannot be

said to be an arbitrary and

unreasonable means of ascertaining the

date of delivery.

Regulation 301.7502-1(c(1)(iii)(b) provides however, that a private meter postmark may be used to establish timely filing in cases where the return or document is received after a "normal allowance" for delivery time. To illustrate, assume a taxpayer uses a private meter machine and postmarks his return April 15. Assume the IRS then receives the return on April 18. If the taxpayer can prove three days as a "normal delivery time" the private meter postmark of April 15 would be considered proof of timely filing. The taxpayer in Rottenbury v. Commissioner established timely filing in this manner.

Registered and Certified Mail

Regulations make clear that the date on a registered or certified mail sender's receipt shall be considered the postmark date of the related piece of mail. In Storelli v. Commissioner, the taxpayer claimed his petition (to the Tax Court) was timely filed on July 26, 1984 via certified mail. However, Storelli was unable to produce a copy of the applicable certified mail sender's receipt. Storelli attempted to establish a timely July 26, 1984 mailing by other means which included the following:

1. A copy of his lawyer's photocopy

log showing where the lawyer

had charged Storelli for

photocopies on 7/26/84. 2. A copy of the lawyer's postage

log showing that storelli was

charged $2.65 for private meter

postage on July 26, 1984. 3. A copy of the lawyer's client

ledger showing Storelli was

charged for services on July 26,

1984.

Despite this near conclusive evidence, the petition was ruled untimely. In holding to a strict interpretation of the regulations, the Tax Court cited the 1964 Wood v. Commissioner case which held: Unless taxpayers are held to strict

proof of compliance with the

statute and regulations, the

temptation would be great to

conveniently misplace the sender's

receipt for certified mail and

attempt to prove by virtually

uncontestable oral testimony of

the sender, who would in most

cases be prejudiced, that the

receipt was postmarked on time.

In addition to registered mail and certified mail services, the Post Office can provide a "Certificate of Mailing" upon request. Taxpayers should not assume however that a "Certificate of Mailing" is the equivalent of a registered mail or certified mail sender's receipt. In the Haaland case, the taxpayer obtained a U.S. Post Office "Certificate of Mailing" (postal form 3817) upon mailing a petition for redetermination to the Tax Court. Haaland obtained this completed form on the last day for timely filing (90 days from date the Tax Court had mailed him a notice of deficiency). When received by the Tax Court however, this petition bore a U.S. Postmark 91 days past the date the notice had been sent to the taxpayer (one day late). The Tax Court ruled the petition was untimely and that the U.S. Postmark governed in such cases. The court went on to explain that a "certificate of mailing" is evidence of mailing only whereas the Post Office maintains delivery records for both registered and certified mail. The court indicated its conclusion might be "harsh" but that it had no choice but to stick with the statutory provisions of Section 7502.

These cases indicate courts generally adhere to a narrow interpretation of Section 7502. Nevertheless, courts sometimes rule against the IRS and for the taxpayer. In the Herrera case the taxpayer's representative timely mailed a petition by certified mail and obtained a proper receipt. Four days later, and after the deadline for timely filing, the package was returned to Herrera's representative but with the postage sticker no longer affixed. The representative immediately remailed the petition by certified mail for the second time. The IRS contended Section 7502 requirements had not been met. The court however, indicated that the taxpayer had done everything possible to comply with the filing deadline. In ruling for the taxpayer, the court indicated "only a magician" could have obtained a timely postmark upon remailing the package.

Presumption of Delivery for Mailed Documents

Does Section 7502 apply only to documents actually received by the IRS? Could taxpayers argue "presumption of delivery" as a legal defense in cases where the IRS claims no receipt of a mailed document? Numerous cases can be cited as precedent for such a delivery presumption. In fact, as early as 1884 it was ruled that absent contrary proof of irregularity, proof of a properly mailed document creates a presumption that the document was delivered and was actually received by the person to whom it was addressed.

The taxpayer argued "presumption of delivery" in the 1986 Brian Miller case. Miller contended his "timely and accurate" mailing raised a "presumption of delivery" to the IRS. The Sixth Circuit Court however, ruled that since (1) the return was never received by the IRS and (2) registered or certified mail was not used, that Section 7502 did not apply. The court indicated a taxpayer could not use a "presumption of delivery" argument. Thus despite credible evidence of a timely mailing by regular first-class U.S. mail, Miller's filing was ruled untimely.

In support of its decision, the court cited the 1979 Deutsch v. Commissioner case. There, the Second Circuit held that section 7502 did not operate to merely create "safe harbors" for taxpayers but that the exceptions of 7502 (registered and certified mail) were exclusive and complete. The Supreme court later refused to reconsider the matter (cert denied, 444 US 1015). In the 1989 Wood decision however, the Tax Court ruled that the common law "presumption of delivery" does apply to Section 7502 cases. In this case the taxpayer mailed his return by First-Class U.S. Mail. The Court accepted testimony from a small town postmistress that she personally recalled Wood timely mailing the return.

In the opinion, the Tax Court indicated that Congress never intended for registered or certified mail receipts to be the only means of proving a timely mailing. The testimony of the postmistress was considered as "credible as physical evidence of the postmarked envelope". The court went on to say that if other methods of proving delivery (i.e., other than registered and certified mail receipts) were not to be allowed, that Congress would have expressly indicated so in the law. The Court also stated that Section 7502(c) was not meant to prevent taxpayers from charging that the IRS had lost documents after delivery to them by the Post Office. In the Wood case, the IRS provided no records concerning receipt of mail and the Court ruled the IRS had simply lost the taxpayer's timely filed return.

Use of Electronic Mail and Private Carriers

In recent years, electronic transmission of documents has become commonplace. This raises the question of whether timely-transmitted equals timely-filed. In the Lois Blum case, the taxpayer electronically transmitted a petition for redetermination to the Tax Court. This was done on the 90th day after the notice of deficiency was mailed to the taxpayer (last day for timely filing).

The petition was transmitted by Federal Express Satellite at 10:58 from St. Paul Minnesota to Washington D.C. At 12:40 a Federal Express Employee attempted to make delivery of the transmitted document to the Tax Court. An employee of the Tax Court however, refused to accept the package.

The Tax Court indicated that this employee had acted properly. Refusal of the package was in accord with Rule 34(a)(1) of the Rules of Practice and Procedure of the Court. That rule provides that insofar as the TaxCourt is concerned "no telegram, cablegram, radiogram, telephone call, or similar communication will be recognized as a petition". Pursuant to this rule, the Court indicated it had been their long-standing practice not to accept any such documents for jurisdictional purposes.

What about delivery to a private carrier on the last day for timely filing? Would such delivery constitute timely filing under Section 7502? The issue was raised as recently as July 1991 in the 7th Circuit case of Petrulis v. Commissioner. There, taxpayers argued that "acceptable alternatives to the U.S. Postal Service available today" make Section 7502 "bad law". In ruling against the taxpayers, the earlier Pugsley v. Commissioner case was cited. There the 11th Circuit indicated: It is apparent from numerous

references to "United States Mail" in

the statue and regulations that

section 7502 is intended to

apply only to mail delivered by the

United States Postal Service and

not also to items delivered by a

private delivery service.

The Petrulis charge that the current changed environment makes Section 7502 "bad law", found some sympathy in the Court. Nevertheless, the Court pointed out that only Congress can change the law. Thus, Courts remain consistent in ruling private carrier postmarks (or delivery receipts) are not the equivalent of U.S. Postmarks for purposes of Section 7502 timely mailed equals timely filed rules.

Conclusion

Decisions concerning the timely-mailing timely-filing rules have generally held to a strict interpretation of Section 7502. The bulk of judicial decisions have been against taxpayers and their tax preparers. Courts have consistently ruled U.S. Postmark dates controlling over private meter postmark dates and dates on Certificates of Mailing. The courts have also been consistent in disregarding physical evidence suggesting an erroneous U.S. Postmark date. Finally, electronically transmitted documents and documents sent via private carriers, are not covered by the timely-mailed equals timely filed rules of Section 7502.

Problems are avoided by use of certified or registered mail and retention of applicable receipts. For registered or certified mail, returns are considered filed as of the date on the applicable receipt. Hand delivery of documents to Service Centers and Courts is an equally prudent alternative. Those making hand deliveries should take special care to obtain and retain applicable receipts.

Footnotes

(1)When the IRS assesses a deficiency, the taxpayer is notified by a letter. The taxpayer then has 30 days to protest the assessment. (2)Section 301.7502-2. (3)See Committee Report on Public Law 98-369 for discussion. (4)Richard H. Magers v. United States, 54 AFTR 2d 84-5937, 742 F2d 807 (DC Md: 1984). (5)Janice W. Lowman, TC Memo 1988-157. (6)When the tax court mails the taxpayer a deficiency notice, the taxpayer has 90 days from the postmark date of the notice to request a redetermination of tax. (7)Edward E. Rottenbury v. Commissioner, 62 AFTR 2d __, 847 F2d 229 (5th Circuit, 1988). (8)George S. Storelli, 86 TC 443 (1986). (9)David A. Haaland, TC Memo 1984-335. (10)Efren Herrera, TC Memo 1984-047. (11)Rosenthal v. Walker, 111 US 185, 193 (1984). (12)Brian Miller v. United States, 57 AFTR 2d 86-922, 785 F2d 70 (6th Circuit, 1986). (13)Deutsch v. Commissioner, 44 AFTR 2d 79-5063, 599 F2d 44 (2nd Circuit, 1979). (14)Lois Blum v. Commissioner, 86 TC 1128 (1986). (15)Albert J. Petrulis v. Commissioner, __ AFTR 2d 91-__, __ F2d __, 91-2 USTC 89, 306 (7th Circuit, 1991). (16)Hugh G. Pugsley v. Commissioner, 55 AFTR 2d 85-606, 749 F2d 691 (11th Circuit, 1985).

Robert D. Fesler, DBA, CPA, CMA, CIA, is an associaste professor of accounting at Tennessee Technological University. He received his doctorate from Mississippi State University. His primary teaching and research interests are in financial accounting, auditing and taxation.
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Author:Fesler, Robert D.
Publication:The National Public Accountant
Date:Jan 1, 1992
Words:2397
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