Originally published on Forbes.com.
Today’s lesson from a recent ruling in Lincoln and Victoria Pearson v Comm is that the United States Tax Court and the United States Post Office are two institutions that support one another. And that tax practitioners should reverence that little bit of socialism that the Founder injected into the Constitution. Further that it is best to not be what my mother used to call a “Last Minute Louie”. As it happens, the taxpayer’s petition was ruled to be timely, just barely, but it was really silly to cut it as close as they did. Here’s is the story. Exact dates are important, so pay attention to them.
On January 22, 2015, the IRS sent, by certified mail, a deficiency notice for the years 2010, 2011 and 2012 to the Pearsons at their last known address. There was over $80,000 in additional tax claimed plus the nearly inevitable 20% accuracy penalty. If they wanted to take the matter before the Tax Court, they had to get their petition in within ninety days. That worked out to April 22, 2015 (9+28+31+22=90). April 22, 2015 was a Wednesday and Earth Day to the contrary notwithstanding is not a holiday in the District of Columbia. Could be the District of Columbia is on another planet – just saying? So not falling on a weekend or holiday, April 22, 2015, it was.
The Administrative Assistant
The Tax Court received the petition on April 29, 2015 and gave it docket number 11084-15 (The Tax Court gets about 30,000 petitions a year and docket numbers are assigned sequentially with the digits after the dash indicating the year, so you would expect them to be around 11,000 in April). That is a week after April 22, which brings us to the timely mailed timely filed rule and the testimony of the administrative assistant, that I will refer to as KM.
Petitioners have supplied a declaration under penalty of perjury from l, an administrative assistant at the law firm representing them. She avers that on April 21, 2015, she created through Stamps.com a postage label with official U.S. postage of $7.82 (the cost of ordinary postage plus the supplement for certified delivery). That label shows the Court’s correct address, the certified mail tracking number referenced above, and the date “04/21/2015,” reflecting the date on which the label was created.
further avers that she affixed this label to an envelope containing the petition and sealed that envelope. According to her declaration, she personally carried the sealed envelope later that day to the U.S. Post Office at 2350 Arbor Lane, Salt Lake City, Utah 84117, and deposited it in the U.S. mail.
Stamps.com was a new one on me. They promote themselves as being a much better deal than a postage meter. Well I don’t have a postage meter. When I want proof of mailing, I walk down to the Rochdale US Post Office building on Stafford Street and hand the envelope to the clerk who figures out the postage and has me fill out the little green card. And nobody can ever doubt when it was that I put the item in the hands of the US Post Office – typically at least a week before it is due. I think I am sticking with that method old school as it may be.
The USPS Expert
KM on the other hand apparently dropped the envelope in a mailbox, which raises some doubt. USPS tracks certified mail through its system using the 20 digit tracking number on the envelope. The earliest entry shows that the envelope arrived at Salt Lake USPS facility at 5:39 PM on April 23, 2015 – a day late, if not a dollar short. So now Judge Lauber had to hear what the IRS attorney learned from a USPS specialist.
That specialist advised respondent’s counsel of her determination that it was “highly unlikely the mail piece entered P&DC on 4/21 and sat for two days before processing.” However, on the basis of USPS “logistical data and the time stamp of processing for this certified mail piece,” the USPS specialist advised respondent’s counsel that “it is the belief of our Salt Lake P&DC Operations Support office that the mail piece in question was most likely deposited and collected between 4:30 pm and 6:10 pm on 4/22.” Respondent attached to his supplemental response the complete email exchange between the USPS specialist and respondent’s counsel.
As noted earlier, the last day for filing the petition in this case was April 22, 2015. On the basis of the information set forth above, respondent concluded that the petition was “most likely deposited with the USPS on April 22, 2015, which is within the time prescribed by sections 6213(a) or 7502.” Respondent accordingly joined petitioner in urging “that the Court deny respondent’s motion to dismiss for lack of jurisdiction.”
You would think that maybe if “respondent” i.e. IRS had checked with the postal specialist before filing the motion, this could have been avoided, but so it goes.
The Moral Of The Story
The fact that the taxpayers squeaked by does not change the practical lesson. If it says 90 days, make-believe it is 80 days. At Joseph B Cohan and Associates during tax season in the eighties, the hardcore guys would work till 10:30 PM most weeknights. One of our jokes was telling somebody leaving the office at three in the afternoon on Sunday to have a nice weekend. But on April 15, we sat around all day playing bridge and waiting for emergency calls and went drinking around 5:30. Well usually.
And if you need proof that you sent something, use the US Post Office and do it in person. Let the clerk figure out the postage and stamp your proof of mailing with the date. And anytime anybody tries to tell you that the Founders thought that private businesses do absolutely everything better than the government does tell them to reread the seventh item of Section 8, giving them the benefit of the doubt that they ever actually did read the Constitution.
This is not the first time I have posted on this topic and it will probably not be the last, but as always I will include a bit from the homage to the United States Postal Service that was the movie, Postman.
There used to be a postman on every street in America. They wore uniforms and hats just like this one. Getting a letter made you feel that you were part of something bigger than yourself. I don’t think we ever really understood what they meant to us until they were gone.
The Rest Of The Story?
This post would probably be a little more interesting if I could tell you want the eighty-odd thousand deficiency was all about. For that I would need to look at the petition and the response, which are public records on the docket, just like the ruling, but the Tax Court does not allow remote access to them and I don’t have time to travel four hundred miles and back today.
Other Coverage
Lew Taishoff was of course on this with Does Not The Wild Boar Break Cover Just As You’re Lighting A Weed? This is one of Mr. Taishoff’s references that I don’t get. I’ll have to check with him.
I point out that the same trusty attorney represented Rob’t. H. Tilden as represents Linc and Vic. His clients apparently make a habit of dashing in, SNOD in hand, at the last red-hot minute. Or maybe he likes photo-finishes.
Bryan Camp posted yesterday (12/11) on the TaxProf Blog – Lesson From The Tax Court: Using 7502 To Beat The Statute of Limitations which also covered an even more recent case.
Both cases thus teach the lesson that taxpayers can print their own stamps but must be very careful to actually deposit their petitions with the U.S. Post Office by the last day. Baham teaches the additional lesson that taxpayers who rely on third parties to do their mailing for them do so at their peril. The Bahams got lucky. Will you?
And Carl Smith had something today (12/12) on Procedurally Taxing – Tax Court Holds that Evidence of Internet Postage Purchase Constitutes Private Postmark for Timely Mailing Purposes. Apparently the case is a big deal over there because it contradicts an earlier decision. Mr. Taishoff also mentioned that.
On these virtually identical facts in Tilden, the Tax Court had held that it lacked jurisdiction because the petition was untimely filed. In the opinion, the Tax Court always referred to the stamps.com date stamp on the postage as a “postmark” – using quotes around postmark to apparently indicate that the court was dubious about calling a mere internet stamp purchase date a true postmark. However, even if it were a true private postmark, then the court held that USPS tracking data constitutes a USPS postmark, so that the second regulation quoted above governs and makes the USPS postmark determinative.
My picking this up in tandem with Bryan Camp and Carl Smith is coincidental. I am catching up on reviewing cases after being buried in the Tax Cuts And Jobs Act. As we wait for the other shoe to drop, I have time to look at decisions.
I find the difference in perspective between me and the lawyers kind of interesting. They seem fascinated by the Tax Court’s parsing of the issue, whereas my focus is on avoiding the problem in the first place.
Good points. I Agree.