ASK THE CALIFORNIA EMPLOYMENT TAX AND PAYROLL TAX ATTORNEY – WHEN FILING ELECTRONICALLY, PAY ATTENTION TO TIME ZONES – A NUTTY CASE
By Robert S. Schriebman
These days we do many things electronically. So much so that buying by retail in a brick-and-mortar store may soon be a thing of the past. We bank electronically. We pay bills electronically. We shop for what we desire electronically. We file our tax returns and make payments electronically. And we are allowed to file a petition in the US Tax Court electronically. Suppose however that you live in a different time zone than Washington, D.C., you file the petition electronically in a timely fashion in your time zone, but the East Coast time zone makes the petition late. This is exactly what happened in the Nutt case. (Roy A. Nutt and Bonnie W. Nutt v. Commissioner, 160 TC – No. 10, May 2, 2023)
The Nutt Case
Roy and Bonnie Nutt received from the IRS a Notice of Deficiency. A Notice of Deficiency is the equivalent to a Notice of Assessment from the EDD. Unlike the EDD version, the IRS notice tells the taxpayer the last date for timely filing a petition with the US Tax Court. For the Nutts the deadline was July 18, 2022. The Nutts lived in Alabama. They waited until the 11th hour to file the petition electronically. When they filed the petition, it was 11:05 pm, their time. However, in Washington D.C. it was 12:05 am on July 19, 2022 – one day too late. Under IRC § 7502(a), a document that is mailed before it is due, but received by the Tax Court after it is due, is deemed to have been received when mailed. But this rule applies only to documents that are delivered by US Mail or a designated delivery service, such as Fed Ex or UPS. Because an electronically filed petition is not delivered by US Mail, Fed, UPS, etc., the exception of § 7502(a) does not apply. Tax Court Judge Buch stated that where § 7502(a) does not apply “we must look to the date the petition was actually received and filed by the Court to determine whether it was timely filed.” Judge Buch said that there is no exception allowing a 5 min grace period. The Nutts are out of luck.
What’s left for the Nutts? Because the petition was not timely, their only recourse is to fully pay the deficiency, file a claim for refund, and try to resolve the matter with IRS Appeals. If this does not work out, they must file a suit for refund in either the US District Court, or the US Court of Federal Claims.
The Mailbox Rule
The US Tax Court follows the “mailbox rule.” If a petition is delivered to the post office or a recognized carrier such as Fed Ex, UPS, etc., timely, it is deemed timely filed even if it arrives at the Tax Court late. If the Nutts would have gone to the post office on July 18th and obtained a “round stamp” proving when the post office received the petition, that petition would be deemed timely filed even if it arrived on July 19th or thereafter. The lesson is clear – never wait to the last minute to file any type of legal document.
How the CUIAB Approaches a Late Petition
An EDD petition must be filed within 30 days from the date it is mailed to the taxpayer. In rare exceptions an additional 30 days is allowed. Having said this, the CUIAB allows a 5-day grace period for filing petitions.
During the Battle of the Bulge in World War II, the 101st Airborne (Screaming Eagles) was surrounded by German troops. The German commander sent a message to American General Anthony McAuliffe demanding his troops surrender. The good General responded with one word, “Nuts.” – Enough said.
Robert Schriebman has a successful practice in the Rolling Hills Estates area of Los Angeles County serving clients throughout California and the United States. He has successfully dedicated more than 50 years to helping individual taxpayers, business owners, CPAs, Enrolled Agents, and tax attorneys navigate the complicated tax systems of the federal and state governments. Mr. Schriebman is in private practice. He is not affiliated in any way with the EDD, and he is not employed by the EDD or any other agency of the State of California.
Robert Schriebman has written the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House.
Robert Schriebman has written over 20 books including the major manual used nationally by practitioners and the IRS, “IRS Tax Collection Procedures – A Manual for Practitioners” published by Commerce Clearing House in addition to the only 2 books ever published dealing with how California Employment Development Department (EDD) operates. See “California Tax Collection Practice and Procedures” and “California Taxation Practice and Procedure,” both published by Commerce Clearing House.
Web Site Article 729