Tax Court petition held untimely

The Tax Court granted the IRS’s motion to dismiss a taxpayer couple’s petition for lack of jurisdiction because the petition was not filed within the time prescribed by Sec. 6213(a).

Facts: On May 23, 2022, the IRS sent by certified mail a notice of deficiency for tax year 2019 to the taxpayers, William and Nelle Evenhouse. The notice was for $65,980, which included $10,987 of accuracy-related penalties. It stated that the taxpayers had 90 days to file a petition with the Tax Court for a redetermination of the deficiency. Thus, their last day to timely petition the court, according to the notice, was Aug. 22, 2022.

The notice was mailed to the taxpayers’ last known address in Oakland, Calif., as documented in a U. S. Postal Service Form 3877, Firm Mailing Book for Accountable Mail. The Tax Court has determined that Form 3877 is direct evidence of the date a notice of deficiency was mailed (Magazine, 89 T.C. 321 (1987)).

On Oct. 18, 2022, 148 days after the notice of deficiency was mailed, the court received a signed letter from the taxpayers dated Oct. 8, 2022, in an envelope that bore no postmark. It was, however, entered into the record as being filed on Oct. 8 as the taxpayers’ petition under the assumption that the taxpayers mailed the letter to the court the same day they signed it. The letter stated that the petition was timely filed because the Evenhouses were “traveling outside of the United States” on the day the notice of deficiency was mailed. As a result, the taxpayers claimed, they had 150 days, not 90 days, to file their petition.

The Evenhouses provided documentation to the court showing that on the date the notice was mailed to them, they were traveling from Istanbul, Turkey, and arrived at San Francisco on the same day, May 23, 2022. The documents also showed that their next trip outside the United States did not occur until 10 months later on March 24, 2023.

Issues: The issue before the court was whether the taxpayers met the statutory requirements of Sec. 6213(a) in filing their petition after the 90-day, but before the 150-day, statutory deadline.

The Tax Court’s jurisdiction in a deficiency case is based on a valid notice of deficiency and a timely filed petition. Sec. 6213(a) generally provides that to be timely filed, a petition must be filed within 90 days of when the notice of deficiency is mailed. If the last day to file a petition falls on a Saturday, Sunday, or a legal holiday in the District of Columbia, the petition will be deemed timely filed as of the next business day. In this case, the 90-day period expired on Aug. 21, 2022, a Sunday. Therefore, the taxpayers had until the next business day, Aug. 22, 2022, to file their petition, which their notice of deficiency correctly stated.

The taxpayers did not dispute that they filed their petition after the 90-day period had expired. However, they argued that because they were absent from the United States “during part of the day” on May 23, 2022, this extended the date for filing their petition from 90 days to 150 days.

The 90-day period is extended to 150 days if the notice of deficiency is addressed “to a person outside the United States” (Sec. 6213(a)). The 150-day requirement applies not only to taxpayers “on some settled business and residential basis,” outside the United States that results in a delay in their receiving their mail (Levy, 76 T.C. 228 (1981)) but also to those temporarily outside the United States. In Levy, the Tax Court held the 150-day period applied to taxpayers on a five-day vacation in Jamaica beginning on the day the notice of deficiency was mailed because the taxpayers’ temporary absence from the country resulted in a delayed receipt of the notice.

However, in Malekzad, 76 T.C. 963 (1981), the taxpayers were out of the country when the notice of deficiency was mailed but returned to the United States less than 48 hours later and experienced no delay in receiving it. The Tax Court explained in Malekzad that, in determining whether the 150-day period applies, it considered both the date on which the IRS mailed the notice of deficiency and the date on which the taxpayer received it.

The Tax Court declined to apply the 150-day rule in Malekzad, finding that the crucial inquiry is whether a taxpayer falls into the category of persons that Congress intended to benefit from the longer filing period. The court found that the rule was intended to prevent any hardship for taxpayers absent from the United States who might not receive their mail in a timely manner (citing Looper, 73 T. C. 690 (1980)).

Applying these principles in the Evenhouses’ case, the Tax Court stated that its holding in Levy would not apply. The Evenhouses experienced no material delay in receiving the notice of deficiency from being out of the country because they were in the United States on the date the notice of deficiency was mailed and on the date the notice was received and were present in the United States during the ensuing 10-month period. Thus, their absence from the country did not delay their receipt of the notice of deficiency or otherwise adversely affect their ability to file a timely Tax Court petition. Accordingly, it found the 150-day rule did not apply to the Evenhouses.

Holding: Assuming arguendo that the Evenhouses had filed their petition on the day the letter they sent to the Tax Court was dated, the petition would have been filed 138 days after the IRS mailed the notice of deficiency to them. Thus, the petition was not timely filed within 90 days under the general rule. The Tax Court held that the Evenhouses were not entitled to the extended 150-day period for notices addressed to persons outside the United States because their absence from the country did not result in a delay in their receiving the notice. Thus, the Evenhouses’ Tax Court petition was not timely filed, and the court was obliged to dismiss the taxpayers’ case for lack of jurisdiction under Sec. 6213(a).

■ Evenhouse, T.C. Memo. 2023-113 .

—John McKinley, CPA, CGMA, J. D., LL.M., and Thomas Godwin, CPA, CGMA, Ph.D., are both professors of the practice in accounting and taxation in the SC Johnson College of Business at Cornell University in Ithaca, N.Y. To comment on this column, contact Paul Bonner, the JofA’s tax editor