Taxpayers’ petition to the Tax Court was untimely

The Tax Court granted the IRS’s motion to dismiss a married couple’s petition to the court to redetermine their tax deficiency. The court held that the petition’s U.S. Postal Service (USPS) postmark indicated it was filed a day late, despite the taxpayers’ testimony they placed it in the mail the day before, when they also stamped it with a private postage meter.

Facts: On Nov. 30, 2017, the IRS mailed a deficiency notice for tax year 2015 to the taxpayers, Sara and David Thomas. The letter was dated Dec. 4, 2017, and stated that March 5, 2018, was the last day that the taxpayers could petition the Tax Court for a redetermination of the deficiency. David Thomas completed the petition and on March 5, 2018, placed it in an envelope that Sara Thomas had stamped the same day using her employer’s private postage meter. He placed the petition in the mail at the USPS office in Fernley, Nev., on either March 5 or March 6.

The envelope had two postmarks, one dated March 5 from the private postage meter and one dated March 6 from the Fernley post office. The Tax Court received the petition on March 12, 2018. The IRS filed a motion with the Tax Court to dismiss the taxpayers’ petition, asserting that the court lacked jurisdiction over the matter since the petition had not been filed in a timely manner.

Issues: The Tax Court has jurisdiction to redetermine a deficiency only if the IRS has issued a valid notice of deficiency and the taxpayer files a timely petition with the court challenging the IRS’s determination. Sec. 7502(a) states that a petition will be considered timely filed if it is timely mailed. Petitions delivered by the USPS will be timely mailed if the document is mailed no later than the date stated by the IRS on the deficiency notice (prescribed date) in a properly addressed envelope with the proper amount of postage, with a postmark no later than the prescribed date.

A petition delivered in an envelope with postmarks not made by the USPS is timely mailed if it has the postmark with a legible date on or before the prescribed date and if the item is received within the same time period as if it had been mailed by the prescribed date through the USPS. Regs. Sec. 301.7502-1(c)(1)(iii)(B)(3) states that when a piece of mail has both a USPS postmark and a non-USPS postmark, the non-USPS postmark is disregarded.

The taxpayers argued that their petition was timely filed because the postage meter date was the prescribed date of March 5, 2018, and David Thomas had placed it in the mail on that date. The IRS argued that the USPS postmark shows the date March 6, 2018; thus, it was not timely mailed.

Holding: The Tax Court held that the petition was not timely mailed and therefore was not timely filed because the USPS postmark of March 6 (after the prescribed date) was legible and Regs. Sec. 301.7502-1(c)(1)(iii)(B)(3) clearly states the USPS postmark should be used when both a USPS postmark and a non-USPS postmark are present. Regs. Sec. 301.7502-1(c)(1)(iii)(A) states that when a taxpayer relies on the USPS postmark, the taxpayer assumes the risk that the postmark will show whether the petition was timely mailed. The court stated that the taxpayer could have mitigated that risk by using registered or certified mail, since Regs. Sec. 301.7502-1(c)(2) states that if registered or certified mail is used, the taxpayer can receive a postmarked receipt as evidence of the mailing date.

• Thomas, T.C. Memo. 2020-33

— By Charles J. Reichert, CPA, instructor of accounting, University of Minnesota—Duluth.