Timely mailed is not always timely filed
TAX ALERT |
Practitioners who file documents or make payments with the IRS that are required to be filed or paid by a certain date or period are familiar with section 7502(a). Simply stated, if the submission is properly addressed, it will be considered timely filed or timely paid if it bears a United States Postal Service postmark that falls on or before the prescribed date. The U.S. District Court for New Jersey recently dismissed a tax refund suit for lack of jurisdiction on the ground of untimeliness, even though it was properly addressed and postmarked before the period of limitations ran, sending a reminder to practitioners that timely mailed is not timely filed when it comes to refund suits in federal court. Patel v. United States, 124 AFTR 2d 2019-5329 (DC NJ).
The taxpayer in Patel sought a refund when filing his tax return for 2011. He filed the return on Oct. 8, 2015. On Dec. 17, 2015, the Internal Revenue Service IRS) denied his refund claim because he was outside the three year period of limitations for refund (see section 6511), beginning the two year period of limitations under section 6532(a)(1). Under that section, the period within which a civil refund suit is timely filed begins to run on the date the IRS notifies the taxpayer of the disallowance of the claim. Therefore, the taxpayer in Patel had to file his suit no later than Dec. 17, 2017 in order to be timely. The taxpayer offered proof that he mailed his complaint on Dec. 15, 2017. However the clerk of the court stamped the complaint “filed” on Dec. 20, 2017.
The court explained that the taxpayer’s proof of mailing was credible but insignificant by itself because the date the clerk receives the complaint determines whether a filing is within the two year period of limitation prescribed by section 6532(a) - not the date the taxpayer mails the complaint. The Court emphasized that “A ‘civil action is commenced by filing a complaint with the court,’ Fed. R. Civ. P. 3, and ‘filing by mail is not complete until the complaint is delivered to an officer of the court who is authorized to receive it (citation omitted).’” Thus, under Patel, the familiar IRS standard of “timely mailed is timely filed” does not apply when filing civil refund suit in federal district court.
The United States Court of Federal Claims, which has concurrent jurisdiction over civil suits for IRS refunds, likewise determines timeliness based upon receipt of a complaint. In Liu v. United States, 93 Fed. Cl. 184 (Fed. Cl 2010), the court was similarly faced with a complaint for tax refund that was mailed prior to the expiration of the two year period but stamped filed after the period expired. However, the taxpayer in Liu, successfully presented evidence that the USPS Priority Mail would normally arrive in two to three days from the date mailed, and thus the complaint should have arrived by the deadline, notwithstanding the “filed” stamp after the deadline. The Court agreed, applied the presumption of “due course of mail”, and presumed the complaint was timely filed. Id. at 192; Charlson Realty Co. v. United States, 384 F.2d 434 (Ct. Cl. 1967).
The taxpayer in Patel also argued the ‘due course of mail presumption’ in an attempt to prove the clerk timely received his complaint, but the court rejected his proof as speculative at best. Practitioners should be aware that when jurisdiction is on the line in a civil suit for refund, one cannot rely on a postmark by itself. Attempting to prove timely receipt through the presumption of due course of mail is a highly factual analysis and not guaranteed.
Patel offers a final lesson about IRS timeliness. The IRS initially denied the taxpayer’s refund because he filed his return on Oct. 8, 2015, a date more than three years after the April 17, 2012, deadline for tax year 2011. The taxpayer claimed that he filed an extension to Oct. 15, 2012, and, therefore, his refund request to the IRS was timely. The IRS, however, claimed it had no record of receiving the extension. The Court noted that such a situation would normally be resolved through an evidentiary hearing. Again, the lesson is clear—pay attention to deadlines or a winning claim could be lost for want of timeliness or statutory jurisdiction.