The First Circuit Court of Appeals dismissed a suit for refund of FICA taxes Maine Medical Center mistakenly paid for its medical residents in the 2001 tax year, upholding a lower court determination that Maine Medical’s discovery requests were not warranted and that the information it sought from the IRS would not have proved that Maine Medical’s refund claim, which the IRS claimed it never received, was timely.
Maine Medical said it mailed its refund claim on April 15, 2005, and presented testimony about preparing the claim but did not present evidence to prove that the claim was actually mailed on that date. Timely filing of a refund claim is a prerequisite to a tax refund suit.
In rejecting the request for discovery, the court noted that Maine Medical had not been diligent in preserving its rights because it had not attempted to obtain a duplicate receipt for certified mail (which could have been obtained from the post office within two years of mailing) or investigated why the IRS had not responded to its refund claim until just before it filed suit.
The common law mailbox rule would not prove Maine Medical’s request was timely because the rule does not apply unless a document has been mailed in sufficient time to be received by the due date in the ordinary course of post office business. Since Maine Medical asserted an April 15 mailing date, the refund claim could not have been in the IRS’s hands on April 15.
The court found that the statutory mailbox rule (Sec. 7502), under which timely mailing is treated as timely filing, did not apply because there was no evidence to prove timely mailing and no evidence of delivery (which is required under the rule). Maine Medical also argued that it did not have to show actual delivery because it could prove by extrinsic evidence that its refund claim had a timely postmark. The Tax Court rejected this argument for two reasons: First, it found that all courts that had allowed proof by extrinsic evidence had allowed it to prove mailing under the common law mailbox rule, not the statutory mailbox rule. Second, even if this method of proof applied to the statutory mailbox rule, Maine Medical had not provided any evidence of a postmark or actual mailing.