The IRS has updated the list of private delivery services that are eligible for the “timely mailing” protection found in IRC §7502 in Notice 2015-38.
IRC §7502 governs the methods taxpayers can use to be treated as timely filing documents with the IRS when they do not arrive at the related service center on or before the last date for filing the document. Generally the rule provides that the postmark date on a document mailed to the IRS will be considered the date of delivery of the document to the IRS or date of payment for payments. [IRC §7502(a)]
That does present a couple of practical problems:
- If a taxpayer simply drops a document in a mailbox there is no postmark on the document at that point. Only if the postal service actually applies a postmark to the document that shows the date as on or before the date of mailing will it be deemed timely filed under this rule. If, for whatever reason, the taxpayer’s envelope doesn’t get postmarked until after that date (perhaps it got stuck in a bag or the taxpayer failed to notice that mail would not be picked up from the receptacle in question until the following day) the taxpayer will have made a late filing.
- Even if the postmark is properly applied, the taxpayer has no proof that such a postmark was applied to the envelope in question. Therefore if the IRS asserts that the document was not filed timely, the taxpayer will have no proof of the proper application of the postmark.
Congress, understanding these limitations, provided methods a taxpayer may use in order to establish a prima facia presumption of timely application of the “postmark” and, consequently, timely filing.
IRC §7502(c) provides one statutory option for proving a timely filing (registered mail in IRC §7502(c)(1)) and authorizes the IRS to issue regulations providing similar protection for certified mailings and electronic filing so long as the taxpayer follows the provisions of the regulations. IRC §7502(f) additionally authorized the IRS to prescribe rules similar to the certified mailing provisions for private delivery services that meet certain requirements and which apply to the IRS for this status.
Note that taxpayers cannot use what is known as the “common law mailbox rule” to establish mailings—the IRS specifically modified the regulations to provide that following the regulations represents the exclusive method a taxpayer may use to prove timely mailing if the IRS does not show the item was filed timely. Some Circuits had ruled prior to the revision of the regulations that, in certain cases, a taxpayer could use other methods to prove filing, but other Circuits had held differently. As a practical matter advisers should be aware the IRS will officially only accept filings in accordance with the regulations.
The Notice updates the list of services allowed (primarily to remove DHL services no longer offered in the United States) and provides rules for determining the postmark date if a taxpayer uses these services.
The exclusive list of services provided by private delivery services (PDSs) that will qualify for “timely mailing equals timely filing” protection are:
- FedEx First Overnight
- FedEx Priority Overnight
- FedEx Standard Overnight
- FedEx 2 Day
- FedEx International Next Flight Out
- FedEx International Priority
- FedEx International First
- FedEx International Economy
- UPS Next Day Air Early AM
- UPS Next Day Air
- UPS Next Day Air Saver
- UPS 2nd Day Air
- UPS 2nd Day Air A.M.
- UPS Worldwide Express Plus
- UPS Worldwide Express.
The notice cautions that only the services listed qualify. Both FedEx and UPS offer other types of delivery services. The use of those services will not qualify for the protection offered by this rule—rather, if a taxpayer uses those services the document must be actually delivered to the IRS on or before the last day for filing the item in question.
For instance both FedEx and UPS offer “economy” third day and ground services that the frugal might find attractive. Thus, advisers must take care to advise clients that they must use a specific service from the list and not just that they can “use FedEx or UPS” to deliver the document.
The notice goes on to describe the procedures for establishing the date of “mailing” when these services are used. The notice provides provides that, generally, the IRS will count backwards from the date the item is received to the date it should have been given to UPS or FedEx per the service level used. So if a taxpayer used UPS 2nd Day Air and the IRS received a return on Wednesday the 17th, the IRS would treat the items as having been “postmarked” on the 15th.
But what if FedEx or UPS slip up and don’t manage to deliver that package until Thursday the 18th? In that case the taxpayer will need to produce evidence that shows the date the item was recorded in the service’s electronic database as being received. The notice provides that this can be shown by a written confirmation produced and issued by the delivery service that provides such information.
However, the IRS notes that the services do not maintain this information indefinitely, though each does so for at least six months.
Taxpayers who wish to use a designated electronic delivery service will need to contact the delivery service to obtain this information, preferably immediately after they provide the item to the delivery services. As the IRS notes, if a taxpayer waits until receiving an IRS notice or having an issue arise in an examination the required documentation may not longer exist—thus putting the taxpayer in the same position as if the document simply been placed in mailbox.