Marcius and Andrea Scaggs will not be contesting their deficiency notice in Tax Court. They lost their right to appeal to Tax Court by economizing on their Federal Express charges. There is a website where you can figure these things out, but I’m not certain I got the details right. I think they saved about four dollars, but it could have been more. Here is the story from the Tax Court:
Respondent mailed a notice of deficiency to petitioners’ last known address on April 8, 2011. The 90th day after respondent mailed the notice was Thursday, July 7, 2011, which was not a legal holiday in the District of Columbia The petition was received by the Court and filed on July 12, 2011. The envelope in which the petition was received bears a Federal Express (FedEx) U.S. Airbill with handwritten entries dated July 7, 2011 (FedEx Airbill). 1 The delivery service selected on the FedEx Airbill is “Express Saver Third business day”.
I generally hate letting things go to the last minute, but a Tax Court petition is one of the last things you want to let go to the last minute. The reason is that if you go past the last minute the petition becomes pointless. It’s not that you pay a fine or get scolded by the judge. You simply do not get into the Tax Court which is a safe haven from the IRS wolf at least until the Court issues its decision. And who knows ? Maybe you will win in Tax Court.
Even if it is day 90, though, and you are nowhere near the Tax Court you still have hope. Timely mailed is timely filed.
A timely mailed petition may be treated as though it were timely filed. Sec. 7502(a). Thus, if a petition is received by the Court after the expiration of the 90-day period, it is nevertheless deemed to be timely filed if the date of the U.S. Postal Service postmark stamped on the envelope in which the petition was mailed is within the time prescribed for filing.
Surely you can find a post office. Some people prefer private delivery services, though. Quite a few years ago, rules were loosened to extend the timely mailed/timely filed rule to private delivery services as long as they are pre-approved by the IRS. Several FedEx programs were approved:
Thus, effective January 1, 2005, and insofar as FedEx is concerned, the list of designated private delivery services was as follows: FedEx Priority Overnight, FedEx Standard Overnight, FedEx 2 Day, FedEx International Priority, and FedEx International First.
Sadly “Express Saver third business day” is not on the list and:
The 2004 notice expressly states that FedEx is not designated with respect to any type of delivery service not expressly identified. Thus, “Express Saver Third business day” service is not a designated private delivery service
At least the Tax Court was a little sympathetic:
In so holding we acknowledge that the result may appear harsh ; however, the Court cannot rely on general equitable principles to expand the statutorily prescribed time for filing a petition.
And offered a ray of hope:
Although petitioners cannot pursue their case in this Court, they are not without a judicial remedy. Specifically, petitioners may pay the tax, file a claim for refund with the Internal Revenue Service, and, if their claim is denied, sue for a refund in the appropriate Federal District Court or the U.S. Court of Federal Claims.
I was glad to note that the Scaggs were pro se. Otherwise, I would have to visualize what the managing partner of a firm of tax attorneys would be ordering done to the economizing office manager who would be held responsible for this nightmare. Nobody expects the Spanish Inquistion, but sometimes they get it anyway.
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Originally published on Forbes.com on September 11th, 2012