The Tax Court decided, at least for purposes of filing a petition with the Tax Court, that a federal “snow day” declared in the District of Columbia that falls on the last day for filing with the Court serves to push the due date back to the first day the office of the clerk of the Tax Court was open. The issue was decided in an order filed in the case of Guralnik v. Commissioner, Docket No. 4358-15 L, Order dated August 24, 2015.
The taxpayer had filed his petition with the Tax Court by delivering it to Federal Express on the Friday before the due date of the petition. The following Monday was President’s Day, a federal holiday, so the expected due date of the filing would be the following Tuesday.
However, a snowstorm struck the Washington, DC area and federal offices in DC were ordered closed on that Tuesday. As such, there was no place for Federal Express to deliver the package on Tuesday, causing it to be finally delivered on the following morning.
While FedEx is a private delivery service (PDS) that the IRS has recognized for purposes of IRC §7502’s timely mailing is timely filing rule, the taxpayer selected a service that, at first glance, would seem the best option to use. The taxpayer selected the FedEx’s “First Overnight” service which promised the earliest next business day delivery. And all parties agreed that Federal Express had received the package on the Friday before the filing due date, so you might think there would be no issue.
Unfortunately, there was a problem with the choice of service, however reasonable it may appear. “First Overnight” did not exist as a service when Notice 2004-83 was issued, being added by FedEx after that notice was issued in 2004. To qualify for §7502’s timely mailing is timely filing rule the service must be one that is on the IRS approved list. First Overnight was not added to that list until May of 2015 in Notice 2015-38. Thus, the IRS argued, the taxpayer did not have the protection of §7502 and the petition had to reach the Tax Court by the final day for filing.
The Tax Court agreed with the IRS on this point. A taxpayer who uses a service other than one of those in the approved list has to insure actual delivery takes place on or before the deadline for the filing. But what the Tax Court did not agree with the IRS was the date that was the last date for filing.
IRC §7503 provides the following:
When the last day prescribed under authority of the internal revenue laws for performing any act falls on Saturday, Sunday, or a legal holiday, the performance of such act shall be considered timely if it is performed on the next succeeding day which is not a Saturday, Sunday, or a legal holiday. For purposes of this section, the last day for the performance of any act shall be determined by including any authorized extension of time; the term “legal holiday” means a legal holiday in the District of Columbia; and in the case of any return, statement, or other document required to be filed, or any other act required under authority of the internal revenue laws to be performed, at any office of the Secretary or at any other office of the United States or any agency thereof, located outside the District of Columbia but within an internal revenue district, the term “legal holiday” also means a Statewide legal holiday in the State where such office is located.
The IRS noted that the day after President’s Day is not a designated legal holiday in the District of Columbia. However, the Tax Court decided that was not the case for purposes of interpreting IRC §7503.
The Tax Court found the official closing of the offices of the Tax Court in the District of Columbia created a legal holiday for these purposes. The Court noted the rationale given in the legislative history that discussed the predecessor of current §7503, Section 272(a) of the Revenue Act of 1934 and subsequent broadening of the rule culminating in the International Organizations Immunities Act enacted in 1945.
The Court, describing the history, notes:
This report makes clear that Saturday was not to be counted as the last day to file a petition because the Court was closed for business on Saturday. See Rule 10(d) (regarding the Court’s business hours). Indeed, this is the same rationale for not counting Sunday or a legal holiday as the last day to file a petition. Id. In our view, this rationale applies to a day on which the Court is not open for business because both District and Federal government offices in the Washington, D.C. area are officially closed for business on account of a winter snowstorm.
Thus the Court denied the IRS’s motion that the petition be deemed to be untimely filed, noting:
Clearly, in the case at hand the closing of both District and Federal government offices, specifically including the Tax Court, because of a winter snowstorm, together with the fact that the Tax Court does not maintain an after-hours “drop-box” and does not presently allow petitions to be filed electronically, means that the Tax Court’s clerk’s office was inaccessible on the day of the winter snowstorm. Under such circumstances we find it inconceivable that Congress would have intended, absent a specific statutory provision requiring otherwise, to bar a taxpayer who fails to anticipate on a Friday that the Government will decide to close a filing office on the first workday of the following week on account of a snowstorm. See In re Swine Flu Immunization Prod. Liab. Litig., 880 F.2d at 1445; United Mine Workers v. Dole, supra. Because there is no such specific statutory provision requiring otherwise, we will deny respondent’s motion, as supplemented.
There are a couple of lessons to take from this case. First, it is important to note that any taxpayer who decides to forego the United States Postal Service’s certified or registered mail to use a private delivery service must consult the most current list of approved PDS services (found today in Notice 2015-38, but subject to modification at any time by the IRS) on the date the item is mailed.
The fact that FedEx had the petition in hand before the due date did not serve to give the taxpayer the protection of the timely mailing rule. In fact, any taxpayer who used “First Overnight” prior to May 6, 2015 (the effective date of Notice 2015-38) to mail a document on the last day for filing would not have timely filed the document in question. In fact, the IRS would have, via the FedEx records the taxpayer would likely believed protect him/her, unassailable proof that the item was filed late (a document dropped off to FedEx at 5:00 pm on the due date in Phoenix is not going to be delivered to the Tax Court in Washington, DC prior to the last day for filing).
Second, it’s important to note that this ruling dealt only with the narrow issue of whether a Tax Court petition had been timely filed with a snow day in Washington, D.C. It remains to be seen if the same logic would apply to a snow day occurring on a tax return filing deadline or even one on a petition filing date where the item was sent on the “extra” day, as the Tax Court spent much time discussing the impossibility of physical delivery on that date. Clearly, regardless of the amount of snow in Washington, D.C., a taxpayer in Phoenix likely will face no such obstacle to delivering of his/her document to the Post Office or private delivery service prior to the “regular” due date.
As well, there’s the question of whether this concept would apply to a case where something could be filed with a local IRS office under the provisions that grant an extension where an IRS office is closed due to a state holiday.