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Seely v. Commissioner (T.C. Memo. 2020-6)

On January 13, 2020, the Tax Court issued a Memorandum Opinion in the case of Seely v. Commissioner (T.C. Memo. 2020-6). The issue presented in Seely was whether the taxpayers provided sufficient extrinsic evidence to demonstrate the timely mailing of a petition, even though the envelope in which the petition was mailed bore no postmark. If so, then the Tax Court had jurisdiction to redetermine the deficiency.  If not, then no jurisdiction would lie.

Background

The petitioners are residents of the Richland, Washington, about as far away from Washington, D.C., as one can get in the contiguous United States (2,603 miles, give or take). The IRS mailed a notice of deficiency on March 28, 2017, by certified mail, advising the petitioners of the 90-day deadline (from the date of notice) to file a petition with the Tax Court, or until June 26, 2017. The Tax Court received the petition on July 17, 2017 (111 days after notice). Somewhat mysteriously, although the petition arrived through the mail, the envelope bore no discernible postmarks, or any other markings affixed by the USPS for that matter.

The IRS moved to dismiss for lack of jurisdiction because the petition was untimely, and the petitioners objected, arguing that the petition was mailed timely on June 22, 2017. The attorney who mailed the petition submitted a declaration under the penalties of perjury attesting to mailing the petition on June 22, 2017. The attorney, either because this was his first rodeo, or because he’s a prize idiot, failed to send the petition by certified or registered mail; instead he declared that he just dropped the petition in a public mailbox and hoped for the best. Bad form, knucklehead. Bad form.

Tax Court is Court of Limited Jurisdiction

The Tax Court is a court of limited jurisdiction and may exercise jurisdiction only to the extent expressly authorized by Congress. Naftel v. Commissioner, 85 T.C. 527, 529 (1985); Breman v. Commissioner, 66 T.C. 61, 66 (1976). The taxpayer bears the burden of proving that the Tax Court has jurisdiction over the case. David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff’d, 22 F. App’x 837 (9th Cir. 2001); Fehrs v. Commissioner, 65 T.C. 346, 348 (1975); Wheeler’s Peachtree Pharmacy, Inc. v. Commissioner, 35 T.C. 177, 180 (1960). In the case of a notice of deficiency addressed to a taxpayer within the United States, the taxpayer must petition the Tax Court within 90 days after the notice of deficiency is mailed to invoke its jurisdiction. IRC § 6213(a).

Timely Mailed, Timely Filed

IRC § 7502(a) provides a “timely mailed, timely filed” rule, which is to say, regardless of when received, a document delivered by U.S. mail is “timely” if the postmark date (i.e., the date the petition was mailed) falls on or before the prescribed date, and the document was mailed, on or before that date, in a properly addressed envelope with prepaid postage to the recipient. IRC § 7502(a)(2). If those conditions are met, the date of the USPS postmark stamped on the cover is deemed the date of delivery. IRC § 7502(a)(1).

Illegible or Missing Postmarks – Extrinsic Evidence Considered

Treas. Reg. § 301.7502-1(c)(1)(iii) prescribes rules for postmarks, but there are no rules governing a situation where the envelope has no postmark whatsoever. When a postmark is completely missing, the Tax Court deems the postmark illegible and permits the taxpayer (and the IRS) to introduce extrinsic evidence to assist the Tax Court ascertain the mailing date. See Sylvan v. Commissioner, 65 T.C. 548, 553-555 (1975); Mason v. Commissioner, 68 T.C. 354, 356 (1977). The burden is on the party who invokes IRC § 7502 (generally the petitioner) to present “convincing evidence” of timely mailing. Mason, 68 T.C. at 356-357; Treas. Reg. § 301.7502-1(c)(1)(iii)(A).

Types of Extrinsic Evidence

When confronted with illegible or missing postmarks, the Tax Court considers various types of extrinsic evidence, including even the testimony of the person claiming to have mailed the envelope. See Mason, 68 T.C. at 357. The Tax Court also has been known, on occasion to don its detective cap and, in full consideration of the airspeed velocity of an unladen swallow, endeavors to determine the likely delivery time between the place of origin and the Tax Court in Washington, D.C. Selter v. Commissioner, T.C. Memo. 2000-316, *11; Robinson v. Commissioner, T.C. Memo. 2000-146, *5.

The Tax Court may even go full Sherlock Holmes and examine the envelope to see whether any markings indicate that the letter had been misplaced, inadvertently lost, or damaged. Robinson, T.C. Memo. at *3. You can just imagine a Tax Court judge pulling out a comically oversized magnifying glass, and muttering “Interesting, Watson. Very interesting.” Well, at least, I can.

The envelope that contained the petition in the present matter was not damaged, and curiously it had no marking of any kind to suggest that it was misdirected or misplaced. Neither did it bear a postmark. Therefore, the issue turned on whether the petitioners presented convincing evidence establishing that they timely mailed the petition. See Sylvan, 65 T.C. at 553-555.

In prior cases, the Tax Court has noted that holiday conditions at the post office (e.g., holiday closures, unusually large volumes of mail, inefficiencies attributable to temporary staff, elves on strike, et al.) could explain short delays in delivery. Rotenberry v. Commissioner, 847 F.2d 229 (5th Cir. 1988); Mason, 68 T.C. at 357. In the preset case, the Tax Court took judicial notice that the Fourth of July fell within the mailing period.*

*Author’s Note: The Tax Court took judicial notice that Independence Day was a national holiday in 2017. The Tax Court did not just say July 4th fell during the proposed period. No, the Tax Court had to take judicial freaking notice of this fact. Not only that, the Tax Court dedicates a supremely lengthy footnote (not as long as this Author’s note, mind you) setting out the authority for and procedure regarding judicial notice. The Fourth of July occurred in 2017 by virtue of the fact that Fed. R. Evid. 201(b) is applicable in Tax Court proceedings by operation of IRC § 7453 and Tax Court Rule 143(a). I am not sure if Judge Vasquez was worried about the opinion being too short (only 9 pages), or if, like Charles Dickens, he is compensated by the word (or wholly unnecessary invocations of esoteric legal principles to justify the observation that Treason Day occurred within the first four days of the seventh month of every year since the Gregorian calendar was adopted by Great Britain (and its colonies) in 1752, earning special significance in 1776, and being recognized as a national holiday since 1941). My guess, if I had to chance one, is that he had some judicial notice language hanging around from another opinion and thought, what the heck, better cover myself if the Government decided to take umbrage with a rather rudimentary exercise of common sense, which, you know, would be a first.

Ultimately, the sworn declaration of the petitioners’ attorney, and, you guessed it the Tax Court’s “judicial notice of the Fourth of July holiday,” persuaded the Tax Court that it was “more likely than not” that the petition was mailed on June 22, 2017, and was, therefore, timely.

But for the all-important judicial notice that a holiday, in which parents willingly light potassium perchlorate incendiaries in their young children’s hands that burn at over 2,000 degrees (the sparklers, not the hands… God willing), all the while singing Yankee Doodle Dandy and wondering why the hell he called it “macaroni,” occurred during the pendency of the mailing of the petition, who knows what the fate of the petitioners would have been…

Original opinion: (T.C. Memo. 2020-6) Seely v. Commissioner

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