Taxpayers beware: intricacies of timely filing under secs. 7502 and 7503.

• Author: Hoshall, Diana

Taxpayers frequently rely on Sec. 7502, commonly known as the "mailbox rule," and Sec. 7503, which relates to timely filings of returns or other documents when a due date falls on a Saturday, Sunday, or holiday. As illustrated by a recent U.S. Tax Court order, taxpayers must follow strict procedural requirements to properly qualify under these provisions for a timely filing when the IRS receives a return or other document after the due date.

Guralnik

The U.S. Tax Court addressed whether a petition was timely filed in Guralnik, No. 4358-15 L. (Tax Ct. 8/24/15) (order denying motion to dismiss). In Guralnik, the IRS asserted that the taxpayer was late in fifing his Tax Court petition to appeal a notice of determination on a federal tax lien.

A taxpayer has 30 days from the date of the notice of federal tax lien to file a petition with the Tax Court (Sec. 6330(d)(1)). In Guralnik, the 30th day fell on Sunday, Feb. 15, 2015.

On the preceding Friday, Feb. 13, the taxpayer mailed his Tax Court petition using FedEx First Overnight delivery service. The petition was supposed to be delivered on Tuesday, Feb. 17, as Monday, Feb. 16 was a legal holiday; however, due to a snowstorm, the District of Columbia (District), and federal government offices, including the Tax Court, were officially closed that Tuesday. As a result, the taxpayer's petition was not delivered until Wednesday, Feb. 18.

The IRS sought to dismiss the filing on the grounds that the taxpayer's petition was not timely. Initially, both parties focused on the timely mailed, timely filed rule under Sec. 7502. The Tax Court agreed that Sec. 7502 did not apply, as the taxpayer failed to use a designated private delivery service (PDS) as specified by the IRS.

The Tax Court then examined whether the closure of District and federal government offices on Feb. 17, 2015, constituted a holiday for purposes of Sec. 7503. If so, then under Sec. 7503, the time for the taxpayer to file his petition was extended until Wednesday, Feb. 18. In its order, the Tax Court examined the legislative history of Sec. 7503 and noted the Tax Court did not have a drop box or means of fifing other than mail delivery, thus, filing on Feb. 17 would have been impossible. Ultimately, the Tax Court concluded that the closing of District and federal government offices and the Tax Court due to a snow day could be treated as a holiday under Sec. 7503.

Timely Mailed, Timely Filed: Sec. 7502

Generally, any return, claim...