The United States Postal Service (USPS) is a very large, complex organization, as detailed in this webpage. It delivers some 146 billion pieces of mail a year. It has a reputation for reliability. The reputation is so strong that Congress actually made it the foundation of §7502’s statutory mailbox rule. You know the rule: timely mailing is timely filing.
In Michael J. Seely and Nancy B. Seely v. Commissioner, T.C. Memo. 2020-6 (Jan.y 13, 2020) (Judge Vasquez) the Post Office apparently failed to put a postmark on an envelope containing the taxpayer's Tax Court petition. The petition was received late but the Tax Court allowed the taxpayer the benefit of the timely-mailing rule, even though the statute requires a postmark and the regulations assume one. This case shows us how the common law mailbox rule still lives and breathes in the statutory and regulatory gaps. Details below the fold.
This is a case about a seemingly late-filed Tax Court petition.
Tax Court Rule 22 provides that the Tax Court will treat a late-received petition as timely if the reason for the late delivery falls under “the circumstances under which timely mailed papers will be treated as having been timely filed, see Code section 7502.”
Section 7502 is a rescue rule that applies to “any return, claim, statement, or other document required to be filed.” If any such document is filed late, then “the date of the United States postmark stamped on the cover” of the envelope or package “shall be deemed to be the date of delivery...” (emphasis added).
Yep. You read that right. The statute sure seems to require a United States postmark. Fortunately, §7502(f)(1) provides that the term United States postmark “shall be treated as including a reference to any date recorded or marked as described in paragraph (2)(C) by any designated delivery service.” The statute then goes on to delegate to the IRS the authority to designate what non-USPS delivery services taxpayer qualify, with one of the requirements being that the designated delivery service must be “at least as timely and reliable on a regular basis as the United States mail.” §7502(f)(2)(B).
Still, the statute appears to require a third-party postmark of some sort. The regulations then stretch the idea of postmark even further to include taxpayer-created postmarks. Treas. Reg. 301.7502-1(c) addresses situations where the taxpayers use USPS postmarks and “postmarks made by other than USPS.” (c)(1)(iii). Then (c)(3) takes designated delivery service postmarks out of that category and treats them separately in an entire additional set of rules, originally published in Rev. Proc. 97-19,. 1997-10 I.R.B. 55 and most recently updated in Notice 2016-30. So I think it is useful to think about the postmark requirement as dividing postmarks into three kinds: USPS postmarks, designated delivery service postmarks, and taxpayer-generated postmarks. The Tax Court has taught us important lessons about how those regulations work with online postage providers and taxpayer-generated postmarks in cases I discussed in “Using 7502 To Beat the Statute of Limitations” and “Murphy’s Law of Mailing.”
Still and still, it seems ya gotta have some kind of postmark! The regulations deal with situations where there are multiple postmarks. But they are silent about what happens when the document or payment or whatever is received late in an envelope and the envelope has no postmark at all.
That is the lesson for today.
Mr. and Ms. Seely received an NOD dated March 28, 2017. That gave them until June 26, 2017 to challenge the NOD in Tax Court. They hired attorney Scott G. Boyce to help them. He prepared a Tax Court petition and dropped it into a USPS collection box on the street on June 22, 2019. The Tax Court Clerk’s office received the petition on July 17, 2019. The envelope containing the petition had no postmark on it. The IRS moved to dismiss the case for lack of jurisdiction because the petition was not timely filed: the lack of a postmark meant the taxpayer could not invoke the statutory mailbox rule of §7502.
We would have no lesson today if Mr. Boyce had followed the right procedure. That is, Mr. Boyce ignored the most basic lesson of filing Tax Court petitions: use registered or certified mail. Treas. Reg. 301.7520-1(c)(2) provides that if you send a document registered or certified mail, the date of the registration, or the date stamped onto the sender's certified mail receipt, will be treated as the postmark date of the document or payment. The regulations emphasize the wisdom of always filing this way: “Accordingly, the risk that the document or payment will not be postmarked on the day that it is deposited in the mail may be eliminated by the use of registered or certified mail.”
Mr. Boyce did not do that. Instead he just tossed the envelope into a collection box four days before the due date. That might be ok for most deadlines. But not for sending stuff to the Tax Court or to the IRS, where there is normally quite a long processing time for mail, especially since the anthrax scare of 2001. Apparently it typically takes between 8 and 15 days for the USPS to deliver a piece of mail to a government agency in Washington D.C. I don’t know the basis for that assertion, but it's what the Chief Counsel attorney told Judge Vasquez in this case.
Even without certified mail, if the envelope containing the petition had a USPS postmark on it, it would have been an easy win for the Seelys. Treas. Reg. 310.7520-1(c)(1) provides that the date reflected on a legible USPS postmark will be deemed the date of filing (if the other requirements of §7502 are met, such as proper address, etc.).
If the envelope had a non-USPS postmark on it, the taxpayer would have been in a more difficult position. Treas. Reg. 301.7502(c)(1)(iii) requires that taxpayers who use non-USPS postmarks must show (1) that the document was delivered within the normal USPS time-frame (here 8-15 days) or (2) if not, then the taxpayer must prove the cause of the delay.
In this case, however, Judge Vasquez lamented, “the envelope bears no discernible postmark and has no other markings affixed by the USPS.” Lacking any sort of postmark is fatal to invoking the statutory mailbox rule.
Lesson: Common Law Mailbox Rule to the Rescue!
While Mr. Boyce may have created some trouble for himself and his clients by failing to follow the most basic rule of mailing documents with deadlines to the Tax Court, he got lucky in drawing Judge Vasquez. Judge Vasquez permitted him to submit an affidavit swearing he had indeed mailed the petition on June 22, 2017.
The IRS responded by saying “yeah, but then it should have reached the Tax Court by July 14, 2017 and it did not actually get there until July 17th. Judge Vasquez did not think much of the IRS argument because July 14th was a Friday and the 17th was a Monday. Same same. Judge Vasquez also cut Mr. Boyce a break by taking judicial notice of the July 4th holiday and adding that to the expected time frame.
Do you see what Judge Vasquez did here? He allowed a taxpayer to prove timely mailing outside the boundaries of the statute and regulation! The statute requires a third-party postmark and the regulations require at least some kind of postmark. And yet here is a taxpayer whose petition was filed in an envelope that had no postmark. Despite that, Judge Vasquez was able to conclude “we find that it is more likely than not that the petition was mailed on June 22, 2017.” Period. Folks, that is the common law mailbox rule: proving timely mailing creates a presumption of timely filing. The way to defeat the presumption is to prove that the item was never received.
To me this is a lesson of the common law at work in the Tax Court. There is some controversy over the extent to which §7502 and its regulations displace the common law mailbox rule. See discussion in McBrady v. United States, 167 F.Supp. 3d 1012 (D.Minn. 2016). This case falls firmly on the side of those who say that the common law mailbox rule is still alive. It may not work independently of the statute and regulations (otherwise the argument about whether the item arrived within the 8-15 day window would not be relevant), but it at least works as a backstop to fill in gaps in the statutory and regulatory scheme.
But please, mail your stuff registered or certified mail. That’s what $8/hour runners are for.
Bryan Camp is the George H. Mahon Professor of Law at Texas Tech University School of Law