The California Office of Tax Appeals Weighs in on Boyle and Electronically Filed Returns

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Today’s guest blogger is Joseph Cole, LL.M.  He is an Associate Attorney at RJS Law in San Diego, California.  His practice includes federal and state tax controversy. Today’s post discusses a recent California case applying the Boyle doctrine to an electronically filed return.  Like many cases applying the Boyle doctrine, the California case denied relief to taxpayers who erroneously believed their accountants had timely e-filed their returns.  However, the California case demonstrates that there may be potential cracks in the wall of the Boyle doctrine as it applies to electronically filed returns.  Keith 

The Boyle Doctrine’s application to cases involving electronic filing of returns has been an issue of scholarly debate and litigation.  Some of the posts on this blog covering the Boyle doctrine and its application to electronically filed returns can be found here , here, and here.   The California Office of Tax Appeals (OTA) recently weighed in on the Boyle doctrine and its application to electronically filed returns in the recent Appeal of Fisher (2022-OTA-337P) decision.  While the OTA ultimately ruled against the appellant taxpayer, the decision’s approach may leave room for the Boyle doctrine to be contoured to meet the realities of the age of electronic filing.


The US Supreme court held in the 1985 US v. Boyle case that a taxpayer could not have its late filing or late payment penalties abated for reasonable cause because the taxpayer’s accountant failed to timely file tax returns or timely pay taxes for the taxpayer.  In other words, Boyle created a “bright line” rule that a taxpayer cannot delegate his or her duty to timely file and timely pay taxes to an accountant or professional tax preparer.  Under a broad reading of Boyle, a taxpayer is always liable for late payment and late filing penalties if their accountant or professional tax preparer fails to electronically file a return, regardless of how or why a taxpayer relied on their accountant or professional tax preparer to timely and properly file an electronic return.  Technical errors like software bugs, network connection issues, or any of the myriad of issues that can prevent the proper electronic filing of a tax return are irrelevant under a broad reading of Boyle

The broad reading of Boyle has come under attack in recent litigation.  Taxpayers have argued that Boyle was decided at a time when taxpayers mailed paper returns rather than electronically filed returns, so courts should not obtusely apply the Boyle holding to situations where taxpayers relied on their accountant to electronically file returns. The taxpayers argue a simple, bright line reading of Boyle made sense in a world where all that was generally required to timely meet tax obligations was to stick a tax return in a mailbox on or before April 15th (or March 15th, September 15th, or October 15th).  Taxpayers have argued in today’s world some nuance may be in order because filing a return in today’s world often involves the use of software and computers that are more complex than the hinge of a mailbox.   Taxpayers have also argued they exercised ordinary business care and prudence when they received assurances from their accountants and tax preparers that their accountants and tax preparers electronically filed returns.  The courts have generally not accepted these arguments, but they have not always categorically dismissed these arguments either. At times courts possibly left the door open for taxpayers to successfully distinguish Boyle as in Padda.

The Appeal of Fisher (2022-OTA-337P) involves a familiar fact pattern that many of us have come across.  The appellant taxpayers retained an accountant to file their 2016 tax returns.  The appellant taxpayers received confirmation from their accounting firm that the accounting firm electronically filed the appellant taxpayers’ returns before the deadline.  The accounting firm, however, did not receive any confirmation from the State that the 2016 return was either accepted or rejected by the State.  The software the accounting firm used would typically send a notice to the accounting firm indicating a return’s acceptance or rejection by the State.  The appellant taxpayers disputed their late filing penalties arguing they had reasonable cause for not timely filing their 2016 California State tax return. 

Like some other states, the California late filing penalty statute is substantially similar to IRC §6651.  Both the California statute and IRC §6651 use a “reasonable cause” standard in determining whether late penalties are applicable.  The Fisher opinion, as well as other California opinions regarding late filing and late payment penalties, cite Boyle and other federal precedents.  The Fisher opinion also uses the ordinary business care and prudence standard cited by the federal treasury regulations. (See Treas. Reg. §301.6651-1(c)(1)).

The Fisher Opinion took a few approaches in its ruling against the appellant taxpayers.  It first determined that the ordinary business care and prudence standard is not satisfied when taxpayers delegate the task of electronically filing a tax return to their accountant. According to Fisher, the ordinary business care and prudence standard also requires taxpayers to follow up with their accountant.  According to Fisher, the ordinary business care and prudence standard requires taxpayers to make sure returns are “successfully transmitted” and take “corrective action” if the returns are not successfully transmitted. 

The Fisher Opinion then cited recent federal court cases for the proposition that the advent of electronic filing did not create grounds to distinguish Boyle.  The Fisher Opinion reiterates the recent federal case law still takes the hard, “bright line” approach that Boyle non-delegation applies regardless of whether returns are mailed or electronically filed.  The Fisher opinion argues taxpayers still have the option mailing paper returns rather than using complex tax software.  It neglects to address how professional tax preparers are generally required to electronically file most returns.

The Fisher Opinion then finally addresses the argument the taxpayers made that electronically filing a return was analogous to mailing a paper return.  The Fisher Opinion dismissed this argument stating penalties are abated when a taxpayer mails a paper return only when the taxpayer produces the required proof of timely mailing like a certified mailing receipt.  In the Fisher case, the taxpayers had no proof of electronic filing because their accountant never received confirmation their tax return was transmitted to the State.

While the taxpayers in the Fisher Opinion did not prevail, the Fisher Opinion’s approach does potentially leave the door open for the case law to eventually accommodate taxpayers who reasonably rely on their accountants and professional tax preparers to electronically file returns.  Two aspects of the Fisher Opinion leave room for reasonable cause.  First, the OTA sides against the taxpayers because they did not adequately follow up with their accountants.  Under the Fisher decision approach, a taxpayer may be deemed to exercise ordinary business care and prudence if they get some assurance their accountant or tax preparer successfully transmitted to their return or take some other reasonably prudent follow-up measures with their accountant or professional tax preparer. 

Second, Fisher sides against the taxpayers because they did not have any proof of electronic filing.  A taxpayer who timely obtains some proof of timely electronic filing may be able to distinguish Fisher.  The taxpayer may be able to successfully argue not only did they exercise due diligence by obtaining a record of timely electronic filing from their accountant or professional tax preparer, but the unsuccessful electronic filing is more analogous to a mailed paper return because the taxpayer has a proof of filing comparable to a taxpayer that timely mailed a return and had proof of mailing. 

The OTA like other courts has used the Boyle doctrine to rule against taxpayers who mistakenly believed their accountants timely filed electronic returns.  However, the OTA is showing there are potential cracks in the wall of the Boyle doctrine and its application to electronically filed returns.  The Fisher decision suggests that Boyle can be contoured to allow a taxpayer to rely on their preparer provided there is appropriate follow up or diligence on the part of the taxpayer. 


  1. Norman Diamond says

    Everyone who pays a professional preparer to file a return electronically also has to mail a printed copy of the return. But is this enough?

    If a return is delivered late to the IRS and the IRS accepts that the return is filed, then proof of timely mailing is proof of timily filing. But if the return is not delivered at all to the IRS, I haven’t seen how proof of timely mailing helps at all. Also if a return is delivered either late or timely, but if the IRS doesn’t accept that the return is filed, then proof of timely mailing doesn’t help at all.

    In at least 3 instances when I sent registered mail from Japan to IRS offices in the US, USPS reported to Japan Post that the letters had reached the US but did not reach the IRS. In 1 instance when my wife sent registered mail from Japan to an IRS office in the US, USPS reported to Japan Post that the letter reached the US but did not reach the IRS, and Japan Post paid compensation to my wife. Canada Post does not provide registered mail to the US but provides something called a tracked packet. In 1 instance when I sent a tracked packet from Canada to an IRS office in the US, I don’t know if USPS reported to Canada Post but USPS’s web site told me the mail reached the US but did not reach the IRS, and Canada Post refunded the postage.

    Furthermore in 1 instance a server in the US sent US domestic certified mail to US District Court for the Central District of California, and the server received a return receipt with a signature and date, but the court ruled that the court did not receive the mail.

    A US resident can create some kind of account on the IRS’s web site to find out if the IRS has a transcript of a return, but a non-resident cannot. A non-resident can mail two Forms 4506-T (one for transcript of account including a return, one for transcript of US withholdings) but the IRS doesn’t have to provide the requested transcripts. I don’t know any way to find out if a mailed return was filed or not.

  2. Kenneth H. Ryesky says

    The Fisher opinion is couched in terms of “transmission” of the electronic tax return. The matter of defining/determining when the “transmission” process has concluded remains an issue.

    If the “transmission” of the tax return occurs after it leaves the computer of the tax preparer, then the tax preparer’s software’s documentation of the transmission should be proof that the tax return was “transmitted” to the IRS (or the California Franchise Tax Board or other relevant taxation authority).

    But what if the “transmission” process requires actual receipt by the IRS/FTB/etc? With paper returns, the document must actually be received by the IRS in order to benefit from Section 7502 [Surowka v. United States, 909 F.2d 148, 150 (6th Cir. 1990); Miller v. United States, 784 F.2d 728, 730 (6th Cir. 1986).]; thus, a timely postmark with subsequent receipt after the due date can benefit from Section 7502, but proof of a timely postmark without a showing or an admission of delivery does not make the taxpayer’s case. It accordingly would seem that successful “transmission” includes receipt by the IRS, so an acknowledgment of receipt from the IRS would be required to prove the “transmission.”

    {I have effectively argued earlier on this website that rejection of an electronic filing by the (antiquated) IRS computers constitutes proof of delivery to the IRS: }.

  3. The key line from the opinion is this:
    “Appellants then filed their 2016 California tax return late in April 2019, reporting tax due.”
    In most cases, there is no late-filing penalty if there is a refund or zero balance. If taxpayers know they owe money, they should know whether it came out of their bank account if they included payment instructions as part of the return filing. The late filing penalty here was more than $29,000. If it’s capped at 25% of tax owed, as under federal law, that means they owed more than $100,000. And they didn’t notice it hadn’t been paid? I suppose in California such things are possible.

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