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L & H CO. v. UNITED STATES

April 17, 1991

L & H COMPANY, INC., Plaintiff,
v.
THE UNITED STATES OF AMERICA, Defendant


Bernard Weisberg, United States Magistrate Judge.


The opinion of the court was delivered by: WEISBERG

BERNARD WEISBERG, UNITED STATES MAGISTRATE JUDGE.

 This is a suit for a tax refund. Plaintiff L & H Co., Inc. alleges that on March 5, 1984 it mailed to the Internal Revenue Service (IRS) an application for an automatic extension of time to file its corporate income tax return for the taxable year 1983. The IRS claims it never received it. Whether the IRS received it is the only fact at issue here. If L & H's application for an extension was received, its tax return would have been due September 17, 1984. If the application was not received, the tax return would have been due March 15, 1984. The return was filed September 10, 1984.

 On May 15, 1987 L & H filed a claim for a tax refund for the taxable year 1980 based upon operating loss and investment credit carry-backs from 1983. Under 26 U.S.C. § 6511(d)(2)(A) such a claim for refund must be made within three years after the time prescribed by law for filing the return. Since the IRS did not acknowledge that L & H had received an extension of time to file its return, it took the position that the 1983 return should have been filed before March 15, 1984 and the refund claim before March 15, 1987. The IRS therefore denied the claim as untimely. The notice of denial dated June 11, 1987 stated that L & H could dispute this determination by bringing suit within two years of the date of the notice.

 L & H did not bring suit within two years. Instead, the following year it made another claim for the same refund in a letter dated May 17, 1988. The IRS responded in a letter dated July 13, 1988, denying the claim for the same reason it had been denied the previous year. This second letter, however, did not state that L & H could sue within two years.

 L & H filed this suit July 12, 1990, more than two years after the first denial but less than two years after the second. The IRS has moved for summary judgment on two grounds: 1) because L & H sent the application for automatic extension by ordinary mail, rather than certified or registered mail, it cannot show the IRS received it (L & H has a pending motion to compel discovery from the IRS, apparently in an effort to show that the IRS probably lost it); and 2) this suit is barred in any event because not brought within two years of the first letter denying the refund as required by 26 U.S.C. § 6532(a). Jurisdiction is alleged under 28 U.S.C. § 1346(a)(1). The parties have consented to proceed before a magistrate judge in accordance with 28 U.S.C. § 636(c).

 The first ground raises an interesting issue of statutory construction. To mail a document to the IRS is not to file it; it is deemed filed only when received. It is an established rule, however, that a timely and accurate mailing raises a rebuttable presumption that it was received. In re Nimz Transportation Co., Inc., 505 F.2d 177, 179 (7th Cir. 1974). The IRS' position is that with respect to filings with the IRS (Nimz Transportation involved a claim in bankruptcy) this common law "mailbox rule" was superseded by 26 U.S.C. § 7502.

 Section 7502(a)(1) provides that if a return is delivered by the United States mail to the appropriate Internal Revenue Service office after the date prescribed for its filing, the date of the U.S. postmark on the envelope in which the return is mailed is deemed to be the date the return is filed. This establishes the date of filing if the mailing is eventually received.

 If the IRS denies that it was received, § 7502(c) provides that if the mailing is sent by registered mail, the registration is prima facie evidence that the mailing was delivered. The date of registration is treated as the postmark date, and thus the date of filing under § 7502(a)(1). IRS regulations accord the same treatment for a certified mail receipt postmarked by the post office. 26 C.F.R. § 301.7502-1(c)(2).

 The IRS claims that this is the only way that a taxpayer can establish, in the face of IRS's denial, that something mailed to the IRS was received. According to the IRS, § 7502 supplanted the common law presumption of delivery. If the taxpayer sends his return by ordinary mail, he accepts the risk that it will not be delivered and not filed -- and the risk that the IRS may receive it but lose it before creating any record of it.

 The question has not been addressed by the Seventh Circuit. Other circuits have reached different results. Estate of Wood v. Commissioner, 909 F.2d 1155 (8th Cir. 1990), held the taxpayer entitled to prove, by the testimony of the postmistress who accepted it for mailing, that a return was postmarked on a certain date, even though not sent by registered or certified mail. The court stated, however, that mere proof of mailing, which is all that L & H proffers here, would not be enough. There has to be proof that the return was postmarked by the due date. Id. at 1161. Although the court accepted the presumption of delivery, the court reasoned that mailing was not enough; the taxpayer had to show a postmark before the due date in order to show that delivery was timely under § 7502(a)(1). Other Courts of Appeals have simply accepted the position the IRS advocates here, that § 7502 supplanted the common law presumption of delivery and only by using certified or registered mail can the taxpayer prove timely delivery. Surowka v. United States, 909 F.2d 148, 66 A.F.T.R.2d (P-H) 5359 (6th Cir. 1990); Deutsch v. Commissioner, 599 F.2d 44 (2d Cir. 1979).

 L & H offers only evidence of mailing - and indirect evidence at that, since it appears not to know which of its employees actually mailed the application. If L & H is to avoid summary judgment, the court would have to go beyond the holding of the Eighth Circuit in Estate of Wood and hold that there is a presumption not only that items deposited in the mail are delivered, but that they are delivered in a timely fashion. In other words, if it can be shown that a return was mailed X number of days before the deadline, there would be a rebuttable presumption that it was timely filed.

 The language of § 7502 does not exclude this result, and at least one court has held that strong independent evidence of mailing may be sufficient. Lee Brick and Tile Co., Inc. v. United States, 132 F.R.D. 414, 418-20 (M.D.N.C. 1990). As Estate of Wood pointed out, Congress is presumed to have known of the common law presumption of delivery. Since the statute is consistent with the presumption, the court should abrogate the presumption only if it is clear that Congress so intended. The court could not find such an intent in the legislative history. Estate of Wood, 909 F.2d at 1160.


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