7502- 1(e)(2) is valid, the court employed the two- step analysis under Chevron U.S.A. Because timely filing is a mandatory requirement for maintaining a tax refund suit, and under the regulation the Baldwins had not filed their 2005 amended return timely, the court reversed the district court's decision and instructed it to dismiss the case. 7502- 1(e)(2) is a valid regulation and is the exclusive means for determining whether a return has been timely filed, so the court applied it to the Baldwins' case. 7502 provides the exclusive means to prove delivery, and recourse to the common law mailbox rule is no longer available. The regulation makes clear that, unless a taxpayer has direct proof that a document was actually delivered to the IRS, Sec. 7502 as creating the exclusive exceptions to the physical- delivery rule. Noting that this split caused similarly situated taxpayers to be treated differently based on where they lived, the Service sought to resolve this inequity by amending Regs. Other courts, including the Ninth Circuit, interpreted the statute as providing a safe harbor, not as limiting taxpayers' ability to resort to alternative exceptions to the physical- delivery rule. 7502 supplies the exclusive exceptions to the physical- delivery rule, thereby displacing the common law mailbox rule altogether. 7502, appellate courts took two positions regarding its effect on the common law mailbox rule. Over the years following the enactment of Sec. 7502(c)(1) provides a presumption that a document sent by registered mail (rather than regular mail) was delivered even if the IRS claims it did not receive it, so long as the taxpayer produces the registration as proof. If the document is never delivered at all (for example, because it gets lost in the mail), the exception by its terms does not apply. 7502(a)(1) provides that if a document is actually received by the IRS after the applicable deadline, it will nonetheless be deemed to have been delivered on the date that the document is postmarked if the document is postmarked on or before the deadline. In 1954, Congress took action on the subject by enacting Sec. Under this rule, proof of proper mailing, including by testimonial or circumstantial evidence, gives rise to a rebuttable presumption that the document was physically delivered to the IRS in the time such a mailing would ordinarily take to arrive. This rule could lead to harsh results due to no fault of taxpayers, so some courts responded by applying the less- stringent common law mailbox rule. 7502- 1(e) barred application of the common law mailbox rule and that, under the regulations, the Baldwins had not filed their amended return timely.īefore 1954, documents were timely filed only if they were physically delivered to the IRS by the applicable deadline. The IRS appealed the district court's decision to the Ninth Circuit, again arguing that Regs. Accepting the testimony of the Baldwins' employees, the court found that the Baldwins had timely filed the amended return under the common law mailbox rule, so the court had jurisdiction to determine if the Baldwins were entitled to a refund.Īfter a bench trial, the district court held in the couple's favor, awarding them a refund of $167,000 and litigation costs of $25,000. 7502- 1(e) supplemented, rather than supplanted, the common law mailbox rule. 7502- 1(e), which provides Treasury's exclusive rules for determining whether a return or document has been timely filed, the return had not been filed in time. The Baldwins argued that the return was filed timely under the common law mailbox rule and provided evidence in the form of testimony from their employees who had allegedly mailed the return. The Baldwins then filed a refund suit in district court. Thus, the IRS denied the couple's refund claim as untimely. The IRS did receive an amended return from the Baldwins in 2013, but it was not postmarked before the deadline. The IRS, however, did not receive that return or any other return from them mailed with a postmark on or before the deadline. They claimed that they sent the return long before the deadline, in June 2011. Under the statute of limitation for refunds, to obtain the refund, the Baldwins were required to file the amended return for 2005 by Oct. The couple filed an amended return for 2005, carrying back the 2007 loss to that year and claiming a refund of $167,000. Howard and Karen Baldwin had a net operating loss of $2.5 million from their movie production business in 2007. 7502- 1(e)(2) provides the exclusive rules regarding the means of proving delivery of an original or amended tax return, so the taxpayer could not prove an amended return was timely delivered based on the common law mailbox rule. The Ninth Circuit, breaking with its own precedent, held that Regs.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |