Kelly Bullis: When a return is timely filed – Sec. 7502

We all know how to drive a car. A smaller number of us understand what’s under the hood that makes our car go. Today, we’re going to explore an “under the hood” topic. So, if you’re already stressed out, or feeling sleepy, perhaps reading today’s column right now is not a good idea.

Ask just about anybody on the street, “Is mailing a tax return on the due date acceptable as filing on time?” They will answer … YES. But how many can explain the complexity of the law that allows for that to happen?

Section 7502 was created to try to codify when a taxpayer has legally delivered a tax return. It uplifted the common law principle known as the “mailbox rule.” Sec. 7502(a) states that “a return, claim, or payment is deemed to be filed or paid on the date of the postmark stamped on the envelope in which it was mailed to the required IRS address with sufficient postage, even if it is received after the filing or payment due date.” Now there is a hitch. If the U.S. Postal Service fails to deliver the item to the IRS, then the taxpayer is deemed to have filed late. Your timeliness depends on a U.S. government agency that notoriously loses mail, delivers it to wrong addresses, etc.

So, the obvious solution is to use the Postal Service Delivery Confirmation or 1st Class Mail option, right? It should be noted that both of those options only work if the mail is actually delivered to the IRS, and you now have acceptable proof the IRS got it. But what if the U.S. Postal Service fails to deliver the item at all? You would never get proof that the IRS got it, just because you have proof that you mailed it is not enough.

Now comes the Fourth Circuit Court in a case called Pond, which muddied up the water, but did open a new door to allowing a taxpayer to provide other proof that the IRS received the item. Circumstantial evidence. After reading the Pond case, I came away feeling like the original problem of the U.S. Postal Service failing their duty to actually deliver the item has not been resolved.

Uh, “Houston, we have a problem!”

One of the alternatives is Section 7502(f) which addresses using private delivery services such as FedEx, UPS, etc. They automatically provide proof of delivery and usually are more dependable than the U.S. Postal Service, but they also make a mistake occasionally and fail to make the delivery. So, the poor U.S. taxpayer is still up the creek without a paddle if they can’t prove the IRS received their item, regardless of whether they followed Section 7502(a) or 7502(f).

If you are worried the IRS may not receive your mailed item, your only option is to call the IRS and then fax the item to them as well.

Have you heard? 1 Samuel 8:11-18 paraphrased…”This will be the way of the king who shall reign over you; He will take … you will cry out in that day because of your king whom you will have chosen, but Yahweh will not answer you in that day.”

Kelly Bullis is a Certified Public Accountant in Carson City. Contact him at 775-882-4459. On the web at BullisAndCo.com. Also on Facebook.