Today Bob Kamman explores FedEx issues in Tax Court and brings us several interesting findings. The bottom line for practitioners (as always) is to be aware of the jurisdictional perils that await those who cut it close without carefully checking the list of designated private delivery services. Christine
Inspired by Keith Fogg’s post about the Tax Court petition that could not be delivered by FedEx during the January 2019 government shutdown, I searched recent Tax Court orders for similar cases. Here are five things I learned.
read more...1) You can’t always trust word searches on the Tax Court website.
I searched for orders with the word “FedEx” from October 1, 2018 through May 28, 2019. The search returned three hits. Then I searched for “FedEx” from April 30, 2019 through May 28, 2019. That search returned ten hits. So I searched for “FedEx” from only November 1 through December 31, 2018. That search returned five hits, none of which were in my first search.
My conclusion, or at least hypothesis, is that the search “times out” after a certain number of orders are searched. Results will be more accurate if done by month, rather than for longer periods.
2) The case described in Keith’s post is not unique.
In the Awad case, in response to an earlier order the Court writes
The petition, filed January 30, 2019, arrived at the Court in an envelope with a FedEx ship date of January 29, 2019. . . . petitioners indicated that the petition was originally mailed to the Tax Court on January 16, 2019, (2) petitioners provided respondent a copy of the envelope in which the petition was originally sent to the Tax Court on January 16, 2019, a copy of which was attached to the Response, and (3) petitioners also provided respondent a copy of the envelope in which the petition was returned to them, a copy of which was attached to the Response.
It is not clear whether the first attempt was through the U.S. Postal Service, or through FedEx.
And then there is the unfortunate petitioner in Chicas, whose deadline for filing was December 31, 2018 – a date the government was closed. He used UPS Ground to send his petition on January 3, 2019. It was returned by UPS, and he sent it again by UPS Ground on February 22, 2019. He was late the first time, and UPS Ground is not an acceptable service anyway.
3) IRS does not always question jurisdiction. Sometimes it needs help from the Tax Court.
That is what happened in Powerhouse Mortgage Corporation. In dismissing the case on November 29, 2018, Judge Foley explained,
Attached to the petition was a notice of determination concerning collection action dated July 17, 2018 . . .The petition had been received by the Court in an envelope sent by FedEx Express Standard Overnight and bearing a ship date of August 17, 2018. An answer to the petition followed on October 9, 2018, but did not address jurisdictional matters. Nonetheless, because review of the record suggested a fundamental jurisdictional defect, the Court by Order dated October 12, 2018, directed the parties, on or before November 2, 2018, to show cause in writing why this case should not be dismissed for lack of jurisdiction, . . .Shortly thereafter and in lieu of a response, respondent on October 17, 2018, filed a Motion To Dismiss for Lack of Jurisdiction on the identical ground of an untimely petition.. . .petitioner was afforded additional time, until November 9, 2018, to object to respondent’s motion as well.
The petitioner did not respond, and the motion to dismiss was granted.
See also Jones, dismissed by Judge Foley on December 3, 2018. IRS didn’t notice that the petitioners not only were late, but used the wrong FedEx service. However, the Court did:
The petition in the above-docketed proceeding was filed on September 4, 2018. Therein, petitioners alleged dispute with a notice of deficiency dated June 1, 2018, issued with respect to the 2015 and 2016 taxable years. The petition had been received by the Court in an envelope sent by FedEx Express Saver and bearing a ship date of September 1, 2018. Unexpectedly, respondent thereafter on September 21, 2018, filed an answer to the petition, not addressing the matter of timeliness.
Nonetheless, because review of the record continued to suggest a fundamental jurisdictional defect, the Court at that juncture issued an Order To Show Cause dated October 24, 2018, directing the parties to show cause in writing why this case should not be dismissed for lack of jurisdiction, on the ground that the petition was not filed within the time prescribed by section 6213(a) or 7502. . . . In particular, the Order To Show Cause noted, first, that the date of the notice of deficiency underlying this proceeding indicated a statutory deadline for filing a petition pursuant to section 6213(a) . . .that expired on August 30, 2018, and, second, that FedEx Express Saver is not a designated private delivery service for purposes of the section 7502 . . . timely mailing provisions.
Substantially the same facts have also led Judge Foley to request both parties in Rodriguez to explain by June 11 why the case should not be dismissed when FedEx Express Saver was used and the petition was not received by the required date. This May 22, 2019 order is somewhat confusing because it states the FedEx envelope “reflects a ship date of August 25, 2019.
I am sure that will be cleared up in later proceedings. Maybe it was just another FedEx mistake, as happened in Muramota. In that case, the petition was “in an envelope indicating that the petition was received and processed by FedEx on May 15, 2018, for delivery by FedEx 2-day mail.” But when Judge Thornton questioned jurisdiction, because the last date to petition was May 14, 2018, “the parties are in agreement that the petition was delivered to FedEx on May 14, 2018, as evidenced by a receipt provided by petitioners’ counsel, and the petition was therefore timely mailed.” A stipulated decision was entered the same day.
4) Petitioners continue to use FedEx services that do not qualify for “timely mailed” recognition.
Judge Foley’s four-page order of February 25, 2019, dismissing the Thompson case explains why FedEx Express Saver service is not a qualified “private delivery service.” The petitioners had noted that they followed the instructions on the second page of their Notice of Deficiency, which apparently did not explain “private delivery service” limitations. I looked at a couple Notices of Deficiency from 2018 and did not find a reference to private delivery services on them.
Similar language was used by Judge Foley in his four-page order of February 4, 2019, dismissing Griffiths.
5) The Tax Court uses FedEx also.
When it absolutely positively has to get there faster than the Postal Service can deliver, or when there may be other benefits, the Tax Court uses FedEx to contact Petitioners. (It probably gets a discounted government rate.)
For example, in McPhee, “On May 7, 2019, the Court was informed of an unsuccessful delivery attempt by FedEx of the Notice of Change of Beginning Date of Session, served on petitioners on May 1, 2019. Petitioners subsequently advised the Court that their address has changed. . . .”
1. If those are the problems the Tax Court has in connection with FedEx, then I shudder to even think about the problems the Court has in connection with the U.S. Postal Service.
2. With both the Postal Service and FedEx (and other authorized PDS’s), the “Cockroach Principle” no doubt applies, viz., if you see two cockroaches in the room, then there usually are fifty behind the wall whom you do not see.
1. Luckily this is Tax Court. With a District Court, if a witness’s notarized declaration is too embarrassing for the DOJ, then even after the server (resident in the US) receives the USPS certified mail return receipt signed by a court employee, the court simply rules that the court didn’t receive the mail. Also the IRS occasionally completes and returns registered mail return receipts, but only occasionally. Also, with your new status as non-resident, you’ll have the joy of your registered mail or your EMS not even qualifying for the mailbox rule.
2. And the IRS and DOJ and courts.
Norman,
Imprimis, what you (and many others) call the “mailbox rule” “is more properly titled the ‘postmark rule’.” So said Judge Kane in Sorrentino v. United States, 171 F. Supp. 2d 1150, 1153 (D. Colo. 2001), an opinion that cites to my own “Analysis of the Split Authority on Proof of a Postmark under Internal Revenue Code § 7502”, 21 U. Dayton L. Rev. 379 (1996), where I expound upon the distinction between “mailbox rule” and “postmark rule.” In light of the generalist judges’ oft-demonstrated substandard comprehension of tax law (the late Mr. Justice Robert H. Jackson notwithstanding), I strongly suspect that my article inspired Judge Kane’s observation.
Actually, Norman, Rev. Rul. 2002-23 places foreign postmarks and foreign Private Delivery Service packages on par with US Postal Service postmarks
[ https://www.irs.gov/pub/irs-irbs/irb02-18.pdf ].
Indeed, various international modes of FedEx, UPS, and DHL have been designated as approved Private Delivery Services
[ https://www.irs.gov/filing/private-delivery-services-pds ].
And as late as 1 January 2019, the Internal Revenue Manual makes clear to the GS-½’s (and their supervisors) in Austin that the postmark rule for timely-filed returns applies to foreign postmarks, whether official or PDS.
I.R.M 3.10.72.6.2.4 (01-01-2019)
[ https://www.irs.gov/irm/part3/irm_03-010-072r ].
“Actually, Norman, Rev. Rul. 2002-23 places foreign postmarks and foreign Private Delivery Service packages on par with US Postal Service postmarks”
Only for some kinds of mail to the IRS, excluding mail which the IRS denies having received.
Useless for mail to courts. Though US domestic mail is also useless for mail to courts when courts want it to be useless, postmarks from the rest of the world are deliberately intended to be useless.
Not surprising.
When bureaucracies such as the IRS and the courts (the Tax Court being part of the IRS bureaucracy, even though it occasionally rules against the IRS) give their bureaucrats cookies for doing the wrong things and electric shocks for doing the proper things, such is a natural and logical result.
The IRS set the example by rewarding Lois Lerner with a full pension; this did not go unnoticed by the rank-and-file IRS bureaucrats.