The question of a taxpayer being able to establish timely mailing of a document when a private postage meter is used was considered in the case of Grimm v. Commissioner, TC Memo 2017-44.
IRC §7502 is what many professionals refer to as the “timely mailing equals timely filing” rule, but the rule isn’t quite so simple. Rather, under IRC §7502(a) a document is deemed filed timely if the postmark applied by the United States Postal Service shows a date on or before the deadline for filing. If a postmark is not applied by the U.S. Postal Service then the IRS is granted the authority to write regulations outlining whether and if such other postmark may be treated as evidence of timely filing.
Reg. §301.7502-1(c)(1)(iii)(B) provides that a postmark made by other than the USPS will count for these purposes only if
- The postmark bears a legible date on or before the last date for filing and
- The document must be received by the date such mail would normally be received if it had been postmarked by the USPS on the date in question.
If the document is received after the date it would be expected to be received had it been postmarked by the USPS, then the taxpayer attempting to rely on the postmark date must show three things:
- The document was actually deposited in the U.S. before the last collection from the place of deposit on the last day for filing;
- The delay in receipt is due to a delay in transmission of the U.S. Mail and
- The cause of the delay.
In this case the document was a Tax Court petition that was received by the Court twenty-four days after the date shown on the postage meter applied postmark. The taxpayer mailed the petition from New Carlisle, Ohio to the court’s address in Washington, D.C. As the Court notes, normally a document would be delivered within three or four days.
The taxpayer described his procedures for mailing documents for which he used the postage meter:
At a hearing on respondent’s motion petitioner offered his own testimony as evidence to establish that the petition should be treated as timely filed. Petitioner testified that his usual business practice is to place items in the mail immediately after applying postage with his meter. A U.S. Postal Service letter carrier then picks up the items from a designated tray later that day or perhaps the next.
Petitioner sends a lot of mail, mostly invoices, in the course of his business, and he candidly testified that he could not recall the specific circumstances surrounding the mailing of the Tax Court petition. However, he testified that any envelope that was stamped with postage would be placed in the mail more or less immediately; his business needs to promptly collect on invoices to remain competitive. We note that even if the petition remained in petitioner’s office for a week after being stamped, he could still have established that it satisfied the first requirement of section 301.7502-1(c)(1)(iii)(B)(2), Proced. & Admin. Regs.
But establishing that he gave the document to the U.S. Postal Service before the final due date is not by itself sufficient—the burden is on the taxpayer to not only show there was a postal delay that caused late delivery, but to provide the specific reason for it.
Not surprisingly the taxpayer wasn’t able to meet that burden:
However, other than expressing a general view that the service provided by the U.S. Postal Service has declined over the years, petitioner could not point to any evidence that might establish that a delay in the Court’s receipt of the petition was due to a delay in transmission of the mail or the cause of such a delay. Accordingly, the petition does not satisfy the requirements of subdivision (ii) or (iii) of section 301.7502-1(c)(1)(iii)(B)(2), Proced. & Admin. Regs.
The obvious “take-away” from the case is that the use of a postage meter, or a postage meter equivalent such as online postage systems such as those offered by Stamps.com, should be avoided for any item for which a taxpayer may need to invoke the timely mailing rule. In most cases a taxpayer won’t be able to establish the reason a piece of mail was delayed in delivery—but if the taxpayer cannot do so, the meter postmark date is of no help in establishing timely filing.