Deadlines are important in legal matters, especially when it relates to tax issues. There are estimated tax deadlines, tax return filing deadlines, and a host of deadlines if a return is audited and any adjustments are challenged. Once you get to court in a tax dispute – more deadlines. Anytime a taxpayer misses a deadline they usually lose some portion, if not all, of the rights associated with that deadline. Imagine, however, that a taxpayer attempts to meet the deadline by mailing a document that the IRS claims they never received.
If the taxpayer doesn’t have the proper proof of mailing, according to the IRS regulations, then they are usually out of luck. This was the issue in a recent District Court case in New Jersey (Crispino, Jr. et al. v. United States, Civ. No. 17-13751 (USDC D. NJ)).
In Crispino, the IRS collected $134,327 through levies of the taxpayer’s assets in May and June of 2013. Believing that the IRS was not entitled to the money collected, the taxpayer filed a claim for refund. An administrative claim for refund must be filed with the IRS within two years of payment of the tax. 26 U.S.C. §6511(a). If a timely administrative claim for refund isn’t filed, then a court will not have jurisdiction to hear the case if the refund claim is denied by the IRS. The parties agreed that a refund claim was due by June 2015; however, they disagreed about whether the deadline was met.
The taxpayer in Crispino asserted that the representative mailed the claim for refund on April 15, 2015, before the deadline. However, it was mailed using a Stamps.com postage meter and not certified or registered mail. At some point the representative realized that the IRS did not acknowledge receipt of the April 15, 2015 claim. Therefore, he mailed a second copy of the claim after the deadline (i.e. sometime in November 2015). This claim was received but rejected by the IRS as untimely. The United States argued that the only copy received was untimely and the taxpayer says that the second filing was merely a copy of the first, timely, filing.
The general rule is that a statutory filing requirement can only be satisfied by actual, physical delivery to the government. However, the Internal Revenue Code allows for relief from this harsh requirement if a taxpayer has a postmark of the mailing of the document before the deadline. 26 U.S.C. §7502(a)(1). This is commonly known as the “timely mailed, timely filed” rule that so long as a document is postmarked by the deadline the Government can receive it as a later time. Sending a document by registered mail also constitutes prima facie evidence that the document was delivered as addressed. 26 U.S.C. §7502(c)(1)(A). The courts split on whether the statute was the only way to establish timely mailing with some circuits allowing extrinsic evidence such as testimony to establish delivery if a taxpayer can’t meet the requirements of the statute. However, in 2011, the IRS issued a regulation in an attempt to resolve the conflict between the different court decisions. The regulation says that “other than direct proof of actual delivery” proof of “registered or certified mail” and “proper use of a duly designated [private delivery service]”, as outlined in the regulations, is the “exclusive means” to establish delivery and “no other evidence” is allowed to prove delivery. See 26 C.F.R. §301.7502-1(e)(2)(i). According to the Crispino court, this supplanted any previous rule that extrinsic evidence could be used for delivery.
As a general rule, if you are sending anything to the IRS with a deadline it should be sent by registered or certified mail. If using a private delivery service (e.g. Federal Express) you should consult the regulations, and any other applicable court rules, to make sure that the delivery service is approved and you selected the proper delivery method. For example, if you are filing a U.S. Tax Court petition (which has a strict statutory 90-day deadline) it must be delivered by the right provider using the right delivery method or it will be untimely. This recent case serves as a reminder to taxpayers, and their advisors, that failure to properly mail a claim or other document can have unrecoverable negative consequences. So be diligent and be careful.