Taxing Lessons From Court Decisions

Timely Filing

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Generally, as long as you’ve properly addressed an envelope and included the right amount of postage, the timeliness of your tax filing is determined by the postmark date. (See Internal Revenue Code Section 7502 and related regulations.)

When you use a private delivery service (PDS) such as FedEx, the postmark date is either the date recorded electronically in the PDS’s database as the date you gave the package to the PDS for delivery, or the date marked on the cover of the package by the PDS.

Two recent opinions (Bell, T.C. Summary Opinion 2010-116 and Martinez, T.C. Summary Opinion 2010-117), spell out the rules for making sure your PDS delivery is timely.

In Bell, the taxpayer used stamps.com to print postage for a filing due to the court by January 5. The court received the mailing on January 19. The envelope had no postmark and the taxpayer offered no evidence except her statement that she mailed the package on time. The IRS presented testimony from a postal executive, who said the standard mailing time from the taxpayer’s address to the tax court was three days (plus three days for the post 9-11 irradiation procedure). Since 14 days elapsed between the due date and the receipt of the filing, the court agreed with the IRS that the document was not filed in a timely manner.

In Martinez, the taxpayer printed a FedEx “2-day” label on July 20, the due date for the filing. The package was delivered to the court on July 23. While FedEx records supported the taxpayer’s claim that the label was printed on July 20, the records also showed the package pickup date as July 21, the day after the due date. The IRS said July 21 was the actual postmark date, as proven by the July 23 (two-day) delivery, and the court agreed.

The court dismissed both cases, meaning the taxpayers now have to file claims for refund and pursue any denied claims through federal courts to get relief–a lengthy process that may or may not succeed.

Taxing Lesson: Plan ahead. Waiting until the last minute to ship documents doesn’t mean it’ll only take a minute.

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