When it comes to tax issues, deadlines are a crucial aspect of the process. However, the strictness and inflexibility of these deadlines can often seem absurd, especially given the consequences for the government.
Does it truly matter if the IRS receives a tax return a day late, especially if they don’t even plan on looking at it for another year? The same goes for missed deadlines related to audits, summonses, and other documents, leading up to filing a petition with the U.S. Tax Court. Is the government really harmed by a response that is slightly delayed?
Although the government may claim that these deadlines are critical, they are mostly arbitrary, but they are critical only because of the serious consequences the government attaches to them. The IRS is known to treat most deadlines as strict and unyielding, making missing them a serious issue.
This is particularly true in the case of filing a petition with the U.S. Tax Court, which has a strict 90-day deadline after receiving a notice of deficiency. The case of Austin v. Commissioner, T.C. Memo. 2007-11, is a prime example of the consequences of missing this deadline, which can ultimately result in the taxpayer being denied their day in court.
Facts & Procedural History
Austin failed to timely file federal tax returns. The IRS imposed failure to file and failure to pay penalties. The IRS mailed Austin a notice of deficiency (also known as a 90-day letter), which required Austin to file a tax court petition by May 7, 2006 – which was a Sunday.
The tax court received the tax court petition on May 10th, the handwritten FedEx label was marked May 8th, and the computer-generated FedEx label was marked May 9th. The FedEx tracking information showed that the package was picked up on May 9, 2006 at 5:22 p.m. It was two days late.
The IRS Attorney’s Response
The IRS attorney responded by filing a Motion To Dismiss for Lack of Jurisdiction. The basis was that the petition was not filed with the court within the 90-day time frame prescribed by statute.
The taxpayer objected to the IRS motion, stating that:
[O]n May 4, 2006, she flew to Baltimore, Maryland, to attend a trade show; that she stayed at the Days Inn while in Baltimore; that she signed the petition on Sunday, May 7, 2006; that she completed the customer handwritten label at about 8 a.m. on Monday, May 8, 2006, and affixed it to the FedEx envelope; that she placed the petition in the FedEx envelope, which she then handed to the front desk clerk of the Days Inn with the understanding that the envelope would be picked up later that day by FedEx; that the front desk clerk placed the envelope in the hotel’s “pickup box”; and that, upon returning to the hotel after the trade show later that day, she inquired about the envelope and was told by a front desk clerk that the “pickup box” was empty. In sum, petitioner asserts that “There was no reason for me to think that my FEDEX package had not been picked up on the 8th.”
As required by law, the tax court dismissed the taxpayer’s tax court case. This denied the taxpayer her day in court.
Why is this Date Absolute?
The U.S. Tax Court has limited jurisdiction over certain tax-related cases, and this is established by statute. The Tax Court is authorized to hear disputes between taxpayers and the IRS concerning federal income, estate, and gift taxes, among other tax-related matters. Its jurisdiction is set out in Section 7442 of the Internal Revenue Code, which defines the types of cases that can be heard by the Tax Court. The U.S. Tax Court is a court of limited jurisdiction. This issue is set out in a statute.
Section 6213(a) provides that the taxpayer’s petition must be filed with the Court “[w]ithin 90 days, or 150 days if the notice is addressed to a person outside the United States, after the notice of deficiency authorized in Section 6212 is mailed (not counting Saturday, Sunday, or a legal holiday in the District of Columbia as the last day).” A petition that is timely mailed is treated as timely filed if it is sent via United States mail or designated private delivery service. Sec. 7502(a), (f). This is known as the mailbox rule.
There is also a rule that extends the due date if the IRS was not open. This exception can be found in Guralnik v. Commissioner, 146 T.C. 230
(2016). In Guralnik, the taxpayer received a notice of deficiency on December 31, 2012, which gave him until March 31, 2013, to file a petition with the Tax Court. March 30, 2013, was a Saturday, and the IRS was closed on that day, as well as on the following Monday due to a federal holiday. The taxpayer mailed his petition on April 1, 2013, the next business day that the IRS was open. The Tax Court held that the petition was timely filed because the IRS was not open for business on the final day of the 90-day period. Therefore, the court applied the exception to extend the deadline to the next business day that the IRS was open.
Although the taxpayer argued that the delay was due to circumstances beyond her control, such as the hotel’s failure to properly handle the package, the court ultimately dismissed the taxpayer’s case. None of the exceptions that could have extended the due date applied, and thus the court had no jurisdiction over the case. The result was that the taxpayer was denied her day in court, and the IRS prevailed due to the missed filing deadline.
This serves as an example of how deadlines in tax issues can be critical and inflexible, leading to serious consequences for taxpayers. Although some deadlines may seem arbitrary, the government attaches significant importance to them. The U.S. Tax Court has a strict 90-day deadline for filing a petition after receiving a notice of deficiency, which is a crucial aspect of the process. In this case, the taxpayer missed the deadline by two days, and as required by law, the tax court dismissed the taxpayer’s case, ultimately denying her day in court. This highlights the importance of complying with deadlines, even when they may seem absurd.