In Patel v. IRS, 124 AFTR 2d ¶2019-5097 (D. N.J. 7/29/19), a pro se CPA seeking a $4,000 refund of his income taxes found out the hard way that the timely-mailing-is-timely-filing rules of section 7502(a) do not apply to filings in district court. Section 7502(d)(1). Accordingly, even though he mailed his complaint seeking a refund to the district court just days before the 2-year deadline for filing under section 6532(a) was set to expire, because the complaint arrived after the 2-year period ended, the court dismissed his case.
On October 8, 2015, Mr. Patel filed his original 2011 Form 1040 showing a $4,000 overpayment. One has only three years from the date a return is filed to seek a refund under section 6511(a) (leaving aside the 2 years from payment rule that can also apply in some cases). When an original return is filed late (as in this case), the refund claim shown thereon is treated as filed the same day as the tax return, so the claim is treated as timely under the 3-year rule of section 6511(a). Rev. Rul. 76-511, 1976-2 C.B. 428. But, if one gets an extension to file to October 15, 2012 (as Mr. Patel claimed he had), then the amount of the claim is limited to the tax paid in the three years immediately preceding the claim plus the extension period. Section 6511(b)(2)(A). Since the tax involved was withholding, it was treated as paid on April 15, 2012. Section 6513(b)(1). Therefore, if Mr. Patel had gotten an extension to file, his claim could have been granted in full, since October 8, 2015 is less than three years and six months after April 16, 2012.
However, the IRS said it never got an extension request from Mr. Patel, so the amount limitation in this case reduced the allowable refund to $0 (the tax paid within three years prior to October 8, 2015).
Acting with what I find surprising speed, on December 17, 2015, the IRS sent Mr. Patel a notification of claim disallowance. Under section 6532(a)(1), Mr. Patel then had two years to file a complaint seeking a refund in either the district court or the Court of Federal Claims. The complaint arrived in the mail at the district court on Wednesday, December 20, 2017 – two days past the due date (FRCP 6(a)(1)(C) having extended the due date to Monday, December 18, 2017). The court found that Mr. Patel credibly testified that he put the envelope in the mail on Friday, December 15, 2017 – three days before the filing deadline expired.
In the opinion, the court notes that it is well-settled that district court filings are made on the day the court receives a document – even if the document is sent by mail. McIntosh v. Antonio, 71 F.3d 29, 36 (1st Cir. 1995). So, the court dismissed the case as untimely brought. The court did not decide the other issue of whether the administrative refund claim amount limit was $0 because that would have required an evidentiary hearing, since Mr. Patel showed the court a copy of a Form 4868 extension form for 2011 that he claimed he had filed, while the IRS denied receipt of such form.
Being a tax controversy lawyer, I would have expected the court to discuss the timely-mailing-is-timely-filing rules of section 7502(a). However, the court didn’t, for reasons that become obvious once you read those rules. Section 7502(a)(1) states:
If any return, claim, statement, or other document required to be filed, or any payment required to be made, within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws is, after such period or such date, delivered by United States mail to the agency, officer, or office with which such return, claim, statement, or other document is required to be filed, or to which such payment is required to be made, the date of the United States postmark stamped on the cover in which such return, claim, statement, or other document, or payment, is mailed shall be deemed to be the date of delivery or the date of payment, as the case may be.
But, section 7502(d) states, in part: “This section shall not apply with respect to—(1) the filing of a document in, or the making of a payment to, any court other than the Tax Court . . . .” (Emphasis added.) Since I have filed few refund suits in my life, and I have always filed those in person at the local New York district court courthouse, I was never aware of this limitation. Both petitions to the Tax Court and notices of appeals from the Tax Court (which I have more often filed, and always by mail) are filed in the Tax Court, so are subject to the section 7502(a) timely-mailing-is-timely-filing rules. I bet I am not the only tax controversy lawyer who is surprised to find these rule inapplicable to refund lawsuits. So, I write this post as a warning to people like me.
In one of his filings in response to the motion to dismiss, Mr. Patel argued that it must be the case that the district court actually received the mailing within two days, which would make the filing timely (on Monday, December 18, 2017), even if the receipt date governed. As evidence that it usually took only two days to mail something from his home in West New York, New Jersey to the district court in Newark, he attached a printout from a USPS website in connection with his mailing of a document in the refund suit to the court in May, 2019, indicating likely delivery in two days.
The district court in Mr. Patel’s case noted, however, that the mailing done of the complaint was done both over a weekend and at the height of the Christmas mailing season, so the court wouldn’t accept this proof from a more normal time of year. But, the court clearly felt bad for Mr. Patel, writing:
One may sympathize with the plaintiff here. The § 6532(a)(1) deadline, however, is a rigid one; it is not subject to equitable tolling on sympathetic or other grounds. See RHI Holdings, Inc. v. United States, 142 F.3d 1459, 1462 (Fed. Cir. 1998); cf. United States v. Brockamp, 519 U.S. 347, 348 (1997) (analogous statute of limitations in 26 U.S.C. § 6511 not subject to equitable tolling).
Still, the district court found that the filing deadline issue is jurisdictional, so the court dismissed the case for lack of jurisdiction (as opposed to failure to state a claim on which relief could be granted).
Readers of PT know that Keith and I have litigated whether certain judicial filing deadlines in tax are jurisdictional or subject to equitable tolling in light of Supreme Court changed case law since 2004. Indeed, for over a year now, the Second Circuit has been working on an opinion in Pfizer v. United States, 2d Cir. Docket No. 17-2307, where the Harvard clinic (as amicus) has asked the court to be the first appellate court since the Supreme Court changed the rules to reconsider the issue of whether the section 6532(a) filing deadline is still jurisdictional (as many other courts of appeal had held prior to 2004). In our brief, we criticize RHI Holdings as a case that both predated the 2004 change in the jurisdictional rules and improperly conflated the factors that go into the equitable tolling question with the jurisdictional question. We also found Brockamp distinguishable on many factors that went into the Supreme Court’s analysis there of the section 6511 filing deadline’s ability to be equitable tolled.
And I blogged last November on an opinion in Wagner v. United States, 353 F. Supp. 3d 1062 (E.D. Wash. 2018), where the district court, in a refund suit, considered the recent Supreme Court case law and held that the section 6532(a) filing deadline is not jurisdictional and is subject to equitable tolling (and actually tolled the deadline in the case). So, the Patel case is in clear conflict with Wagner.
It will be interesting to see if Mr. Patel appeals the dismissal. Although the clinic at Harvard doesn’t plan to volunteer to represent him, if he does appeal, we would likely want to file an amicus brief in the Third Circuit arguing that the filing deadline is not jurisdictional and is subject to equitable tolling under the right facts. Anyone else who thinks they want to help the pro se Mr. Patel file an appeal, be our guest.