Originally published on Forbes.com May 15th, 2014
If the IRS says you owe more taxes than you think you do, you have quite a bit of recourse. You know things are really getting serious when you receive a statutory notice of deficiency. That gives you the option of filing a Tax Court petition. One of the most critical things about that petition is that it has to be timely. You’ve got 90 days. Now in my mind, that means you should give yourself 60 days so that you have a really nice cushion. Apparently, Eric Lamart Sanders doesn’t think like that.
Mr. Sanders’s deficiency notice for 2009 was in the amount of $24,051 in tax with a fraud penalty of $17,798.25 tacked on. That 75% fraud penalty is nasty. It is about as bad as it gets short of forfeiting your liberty. You can understand why Mr. Sanders might want to appeal to Tax Court.
When Was The Petition Due?
The deficiency notice was dated February 2, 2013, mailed on February 1, 2013, and delivered on February 5, 2013, by the United States Postal Service. The notice indicated that the “Last Day to File A Petition With the United States Tax Court” was May 3, 2012. That would have been challenging if Mr. Sanders did not have access to a time machine. The Tax Court had another answer.
Obviously, the year appearing in the notice of deficiency as part of the “Last Day to File a Petition With the United States Tax Court” is incorrect and should instead be 2013. We regard the error to be so apparent as to be harmless.
According to the Tax Court
Ninety days after the date of the notice of deficiency (February 2, 2013) was May 3, 2013, a Friday.
I always get confused about those precise day counts which is why I like to give myself a generous cushion. At any rate, you’ve got 26 days remaining in February (2013 not being a leap year), 31 in March, 30 in April which brings you to 87. So May 3 it is.
A Miss Is As Good As A Mile
Mr. Sander’s petition did not arrive in the Tax Court that late. It was supposed to be there on Friday May 3.
On Monday, May 6, 2013, petitioner filed a petition with this Court seeking redetermination of the deficiency and a fraud penalty. The petition, which is dated Wednesday, May 1, 2013, was delivered to the Court by United Parcel Service, Inc. (UPS), a private delivery service, in an envelope bearing a UPS label dated May 2, 2013, and indicating that it had been sent by “UPS Ground” service.
Here’s the thing. If Mr. Sanders had used the United States Postal Service, he would have been fine, even if the petition had been delivered a few days later.
Picky Picky
Respondent filed his motion to dismiss for lack of jurisdiction on the ground that the petition was not timely filed. In this regard, respondent contends that UPS Ground is not a “designated delivery service” within the meaning of section 7502. Therefore, according to respondent, the petition must be treated as filed not on May 2, 2013, the date appearing on the UPS label affixed to the envelope in which the petition was sent to the Court, but rather on May 6, 2013, the date that the petition was actually received and filed by the Court. If this view is correct, then the petition was not timely filed and the Court would be obliged to grant respondent’s motion and dismiss this case for lack of jurisdiction.
The Tax Court agreed with the IRS.
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. Id.; sec. 301.7502-1, Proced. & Admin. Regs.
Petitioner did not use the U.S. Postal Service to mail his petition to the Court. Nevertheless, sending a petition by a designated private delivery service may also be treated as timely mailing. Sec. 7502(f)(1).
Section 7502(f)(1) provides as follows: SEC. 7502(f). Treatment of Private Delivery Services.— (1) In general.—Any reference in this section to theUnited States mail shall be treated as including a reference to any designated delivery service, and any reference in this section to a postmark by the United States Postal Service shall be treated as including a reference to any date recorded or marked as described in paragraph (2)(C) by any designated delivery service.
In Notice 2004-83, 2004-2 C.B. 1030, the Commissioner updated the list of companies and classes of delivery service that constitute designated private delivery services for purposes of section 7502. Thus, effective January 1, 2005, and insofar as UPS is concerned, the list of designated private delivery services is as follows: UPS Day Air, UPS Next Day Air Saver, UPS 2nd Day Air, UPS 2nd Day Air A.M., UPS Worldwide Express Plus, and UPS Worldwide Express.
You would really think that a sharp customer service person at UPS would alert people to which services qualify and which don’t, but they do handle a lot of packages.
Just A Bit of Sympathy But No Help
Under these circumstances, we conclude that the petition was not filed within the requisite period prescribed by section 6213(a). Consequently, this case must be dismissed for lack of jurisdiction, and we shall therefore grant respondent’s motion.
In so holding we acknowledge that the result may appear harsh, notwithstanding the fact that petitioner had nearly 90 days to file his petition but waited until the last moment to do so. However, the Court cannot rely on general equitable principles to expand the statutorily prescribed time for filing a petition.
The Option Nobody Seems To Think Of
If there were some reason why the petition could not get done before May 1 and Mr. Sanders totally did not trust the United States Postal Service and resented paying for a premium UPS service, according to mapquest Troy Michigan is a bit over a ten-hour drive to Washington DC.
You can follow me on twitter @peterreillycpa.