Taxing Lessons From Court Decisions

Decision — The mailbox rule

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How well do you know the “timely mailed, timely filed” rule, also known as the “mailbox” rule?

Here’s the general rule: As long as you have properly addressed an envelope and included the right amount of postage, the timeliness of your tax filing is determined by the postmark date. (See section 7502-1 of the internal revenue code and related regulations.)

The regulations impose two requirements that must be met for the rule to apply when the envelope bears a postmark not made by the US Postal Service.

First, the postmark must show a legible date on or before the last day of the prescribed period.

Second, the item must have been received within the same amount of time as it would have had it been postmarked at the same point of origin by the US Postal Service on the last day of the prescribed period.

If the petition arrives later than that, then the postmark is disregarded unless the taxpayer can establish:

(1) that the item was actually deposited in the U.S. mail on or before the last day of the prescribed period,

(2) that the delay in receiving the document was due to a delay in the transmission of the US mail, and

(3) the cause of the delay.

Finally, if the envelope bears both a US Postal Service postmark and a postmark not made by the US Postal Service, the postmark not made by the US Postal Service is disregarded.

Got it?

Here are the facts in T.C. Memo. 2019-15 (Jordan). In this decision, the taxpayer was aware of the rule, which also applies to tax court filings.

The taxpayer mailed a petition through the US Postal Service using a private postage label printed from a website for buying postage. The date printed on the postage label was the last day for filing (March 6, 2018).

In addition to the private label, the envelope containing the petition also had two US Postal Service postmarks, one dated March 7, 2018, and one dated March 20, 2018. The envelope arrived at the tax court on March 26, 2018, 20 days after the date shown on the private label. According to USPS delivery standards, an item sent by first class mail from Detroit should arrive in Washington, D.C., in three days.

Given the above facts, what would you decide?

or

Editorial Note: Here’s a tool to determine whether the item was received within the same amount of time as it would have had it been postmarked at the same point of origin by the US Postal Service on the last day of the prescribed period: USPS RIBBS Service

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This information should not be considered legal, investment, or tax advice. Taxing Lessons and Top Drawer Ink Corp. do not provide legal, investment, or tax advice. Always consult your legal, investment, and/or tax advisor regarding your personal situation.

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Sorry, wrong answer :(
✓ Right answer!

The taxpayer's mailing fails under two regulations.

The US Postal Service postmarks were dated March 7 and March 20, 2018, and the private label postage was dated March 6, 2018. Under regulation section 301.7502-1(c)(1)(iii)(B)(3), we disregard the private label and determine the timeliness of the petition on the basis of the US Postal Service postmarks.

Neither of the two USPS US Postal Service postmarks is dated within the 90-day period for filing the petition. Therefore, the “timely mailed, timely filed” rule does not apply, and the petition was not filed timely.

But even if we were to accept the private label and make our determination on the basis of the date it displays, the petition would still be untimely.

While the March 6, 2018, date on the private label is the last day of the 90-day period, the petition was not delivered to the court within the normal amount of time it would have taken if the item had been postmarked by the US Postal Service at the same point of origin. The petition was received by the tax court on March 26, 2018. The 20 days that it took to arrive is well beyond the three days that it would normally take an item mailed from Detroit to get to Washington, D.C.

In the absence of an explanation for the delay, the timely mailing rule of section 7502 does not apply.

Because the petition was not timely mailed, it is filed as of the date it was received. It was received after the 90-day petition period had expired.
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