Fourth Circuit Guidelines on Correct Mail Strategies for Taxes

Over time, case legislation has developed round when a mail supply technique is appropriate to show {that a} tax submitting was made.

The US Court docket of Appeals for the Fourth Circuit’s latest determination in Pond v. United States(1)  addresses how a taxpayer can show supply of a submitting the place the Inner Income Service (IRS) disputes bodily supply.

Stephen Pond, the taxpayer, filed two claims for refund in the identical envelope. One declare pertained to his 2012 tax 12 months and the opposite pertained to his 2013 tax 12 months. The federal government acknowledged receipt of Pond’s 2012 declare. An IRS agent contacted Pond for extra info in September 2017, after which Pond faxed a reproduction copy of his 2012 declare for refund however not his 2013 declare. In March 2018, the federal government issued a refund to Pond for his 2012 declare. Nonetheless, after receiving no response about his 2013 declare, Pond once more contacted the IRS. The IRS couldn’t find his declare for refund, so he faxed a reproduction copy of the 2013 declare.(2) Pond later acquired a “Discover of Denial” from the IRS informing him that it denied his 2013 declare for refund as a result of the statute of limitations on claiming a refund or credit score had expired.

Pond filed a refund go well with in US federal district court docket, the place the court docket dismissed his declare pursuant to Federal Rule of Civil Process 12(b)(6) for failure to allege details upon which the court docket’s subject material jurisdiction may very well be primarily based. Said in a different way, assuming all affordable inferences in favor of the taxpayer, the district court docket dominated that the taxpayer’s pleadings didn’t sufficiently set up that he well timed filed his 2013 declare for refund, a statutory requirement for the district court docket to have jurisdiction.

IRC Part 7502(a) creates a presumption of timeliness if a mailing despatched by US Mail is postmarked earlier than the deadline.(3) IRC Part 7502(c) creates a presumption of supply, however provided that the mailing is shipped by US Postal Service (USPS) registered or licensed mail.(4) Sadly, Pond despatched his refund claims through USPS first-class mail, somewhat than registered or licensed mail. Thus, he was not entitled to the presumption of supply below IRC Part 7502. Additional, in keeping with the Fourth Circuit (and in keeping with case legislation within the Second and Sixth Circuits), Pond couldn’t rely on federal widespread legislation ideas as a result of IRC Part 7502 supplanted the widespread legislation rule.(5) Thus, Pond wanted greater than the postmark alone to determine that he really filed his 2013 declare for refund. He needed to present that the declare for refund was bodily delivered.

Nonetheless, Pond was entitled to current proof to determine bodily supply. The Fourth Circuit cited three factual allegations that might set up a triable problem of reality. First, the envelope he claimed included the declare for a refund was postmarked. Though this reality will not be adequate within the case of mail despatched by means apart from USPS registered or licensed, it was nonetheless proof of supply. Second, Pond alleged that the 2012 and 2013 claims for refund have been despatched in a single envelope, and the IRS issued a refund for his 2012 tax 12 months. Third, the IRS letter denying Pond’s 2013 declare for refund listed July 17, 2017—the day earlier than the envelope was postmarked—because the date the declare was acquired.(6) These allegations have been adequate to state a declare, and so the district court docket’s order of dismissal was vacated.

Observe Level: Pond offers assist for the place {that a} taxpayer can set up bodily supply by means of extrinsic proof in a worst-case state of affairs. Extra importantly, nevertheless, Pond serves as a reminder to comply with greatest practices when submitting time-sensitive paperwork with the IRS. Taxpayers and their representatives ought to remember to file paperwork with the IRS utilizing USPS-certified or registered mail (ideally requesting a return receipt) or an accepted non-public supply service (e.gFedEx First In a single day) and may save copies of the dates on which the filings have been mailed. Additional, to keep away from IRS processing errors (the prices of which are sometimes borne by taxpayers) taxpayers ought to take into account submitting separate paperwork in separate envelopes. As Pond has discovered, the additional mailing prices are price it.

(1) 69 F.4th 155 (2023).

(2) By this level, the statutory interval in Inner Income Code (IRC) Part 6511 to file a declare for refund had expired.

(3) Nonetheless, a dated postmark is often not supplied except despatched by USPS registered or licensed mail.

(4) Personal supply providers, like FedEx and UPS supply, are included within the deemed supply paradigm. See, e.g., IRC Part 7502(f). The IRS maintains a listing of acceptable non-public supply providers on its web site. See https://www.irs.gov/filing/private-delivery-services-pds.

(5) Apparently, the Fourth Circuit held, in a footnote, that Treasury Regulation § 301.7502-1(e) was invalid as a result of the statute was unambiguous. This holding had little impact on the case itself, however the footnote raises further questions on the deference to which laws are entitled.

(6) The Fourth Circuit acknowledged that this reality may very well be interpreted numerous methods, however the necessary factor was that it might recommend that the IRS acquired a declare for refund throughout the limitations interval.