Delivering Federal Tax-Related Documents
Busby, George S., Chaffin, Royce E., The National Public Accountant
Timely filing is critical when dealing with certain tax-related documents, notably the filing of tax returns or claims, making certain elections and filing petitions to the Tax Court. At first glance it would appear that the rules relating to timely filing are straightforward; however, the number of court cases that continue to arise in this area indicate otherwise. This article will review the laws, regulations and court cases dealing with delivering Federal tax-related documents and then suggest alternatives to minimize problems of delivery.
The Internal Revenue Service (IRS) is charged with enforcing the rules pertaining to the filing of federal tax-related documents. Where the requirements for complying with a statute are clearly set forth, there must be strict compliance with these provisions; the doctrine of substantial compliance is not applicable.(1) Failure to comply with the requirements will likely mean the taxpayer will be faced with adverse consequences such as penalties for failing to file timely, loss of rights to claim refunds or denial of a tax court hearing.
Overall, the U.S. Postal Service (USPS) is charged with delivering some 89.9 billion pieces of first class mail each year while the IRS receives and processes some 1.7 billion pieces of paper annually. It is to the credit of both these organizations that there is not more controversy about missing returns than currently exists, but controversies do occur.
What Constitutes Timely Filing?
The general rule is that the tax document being transmitted is considered filed when it is delivered to the IRS.(2) To eliminate the vagaries of postal delivery of mailed documents arising from difference in mail delivery times from one part of the country to another, Congress enacted, in 1954, Code Section 7502 which allows the postmark date to suffice as evidence of timely filing. This section was subsequently amended to specifically define "mailed" as being "filed." The Hotel Equities(3) case helped establish the concept that "timely mailed" is "timely filed." The taxpayer's 1970 tax return was due on July 15, 1970, and was properly mailed on July 14, 1970. The IRS received the return on July 17, 1970, and on July 17, 1973 mailed a deficiency notice to the taxpayer for the 1970 taxable year.
Hotel Equities maintained that under Section 7502 the return was properly filed when it was mailed. Since the notice of deficiency was mailed more than three years after that date, the taxpayer felt that the proposed deficiency assessment was barred by the statute of limitations. The Commissioner maintained that Section 7502 did not govern the time when a return was deemed filed for purposes of Section 6501 (a) (which requires that an assessment be made within three years of the time a return is "filed"); therefore, the return was filed only upon receipt by the IRS. Although Section 6501 (a) did not define "filed," it had long been understood that it meant "delivered" for purpose of determining the start of the statute of limitations period.
The court held that the amendment by Congress of Section 7502 providing that the date of mailing a document be deemed the date of its delivery was compelling evidence that "filed" meant "mailed" and not "received."
The IRS now concedes the issue, advising taxpayers in Publication 17, "Your Federal Income Tax," that:
"Your return is filed on time if it is properly addressed and postmarked no later than the due date. The return must have sufficient postage. If you send a return by registered mail, the date of registration is the postmark date. The registration is evidence that the return was delivered. If you send a return by certified mail and have your receipt postmarked by a postal employee, the date on the receipt is the postmark date. The postmarked certified mail receipt is evidence that the return was delivered."
While the IRS is aware of the problem of proving timely filing of mailed documents, it does not widely publicize or stress the importance of using certified or registered mail when mailing important Federal tax-related documents. …