The court brought up an issue that it said was a question of first impression for the 7th Circuit Court of Appeals. The issue was that perhaps there are two different filing dates for the taxpayers' tax return and their refund claim (even though both were done with one document). The return was filed when it was received by the IRS, under Emmons. But maybe the refund claim was filed when it was mailed.
While the district court said it could find no support for this theory (and, in fact, the IRS cited many cases that consistently treated the date that an untimely tax return was received as the filing date of the administrative claim), it said that the 7th Circuit might have a different view.
Now in Harrison (DC WI 1/29/2020) 125 AFTR 2d ¶2020-397 the district court, vacating its own decision, has held that the postmark rule did apply to a late-filed tax return that sought a refund of taxes paid.
Under the postmark rule, a tax return is deemed to have been filed on the date of mailing but only if the postmark date is before the due date for the return. (Code Sec. 7502(a)(2))
But the postmark rule does apply, in some situations, to claims for refunds even if the postmark is after the due date for the return. Where a claim for credit or refund is made on an original tax return, and the timely mailing rule wouldn't apply to the return itself because it was postmarked after the return due date, the rule will apply separately to the claim for credit or refund if: (1) the postmark date is within the period that is three years (plus the period of any extension of time to file) from the day the tax is paid or considered paid; (2) the claim for credit or refund is delivered after this three-year period; and (3) the conditions of the postmark rule are otherwise met. (Reg. § 301.7502-1(f)(1))
The amount of a refund cannot exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to three years plus the period of any extension of time for filing the return. (Code Sec. 6511(b)(2)(A)) The period is often referred to as the look-back period.
A tax return that claims a refund qualifies as a claim for refund under Code Sec. 6511. (Reg. § 301.6402-3(a))
Taxes withheld during the year are deemed to have been paid on the 15th day of the fourth month following the close of the tax year. (Code Sec. 6513(b)(1)).
Twenty days after the original district court decision, the taxpayers motioned the court to reconsider based on Reg. § 301.7502-1(f)(1).
Upon seeing the taxpayer's new information, the IRS conceded it had no basis to oppose the motion for reconsideration, and the IRS confirmed that it will issue a refund in the amount sought in the taxpayer's complaint, plus statutory interest.
The district court vacated its previous decision that, since the tax return was filed late, the postmark rule did not apply. In accordance with Reg. § 301.7502-1(f)(1), the postmark rule did apply.
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