Split Widened: Does The Mailbox Rule Apply In Tax Cases?

Per Phila. Marine Trade Ass’n-Int’l Longshoremens’ Ass’n Pension Fund v. Comm’r., 2008 WL 1722730, *16-*33 (3d Cir. Apr. 15, 2008)

The Pension Fund collects contributions under various collective bargaining agreements between the trade association and locals of the Longshoremens’ unions. It is required to remit payroll and income taxes to the IRS from the moneys it distributes. In 2001, the IRS notified the O’Neill, the company in charge of administrating the Fund, of various filing errors, and assessed a levy against the Fund. This levy was only discovered by O’Neill during an audit 2003, after the employee who had received the notification had left the company. O’Neill then mailed two requests for a refund, but only has a record of the mailing on June 13, 2003. The IRS has no record of receiving either letter.

The Fund, O’Neill, and the IRS held various discussions throughout the summer. After these negotiations failed to produce an agreement, the Fund formally filed for (how’s that for alliteration) a refund in September 2003. The IRS refunded a portion of the levy, but declined to refund the full amount because the statute of limitations to request a refund on the remainder expired on June 25, 2003.

The common-law mailbox rule is that if a document is properly mailed, a court will presume that it was delivered to the addressee in the usual time. Section 7502 of the Internal Revenue Code makes the date of the postmark of any tax filing the equivalent delivery date. In effect, this section speeds up the common-law mailbox rule – instead of delivery in the usual time, this section authorizes an assumption of instantaneous receipt. Subsection c, which only applies to § 7502, makes registered mail prima facie evidence of delivery at the time of the postmark.

The question is whether Congress intended this section to entirely preempt the common law mailbox rule, or merely to provide additional protections. Judge Ambro, on behalf of a unanimous panel, holds that where, as in this case, the taxpayer does not need to rely on § 7502 and has offered external evidence of mailing, the common-law mailbox rule continues to apply. The panel noted that it would be illogical to read a statute conferring additional protections to be, sub silentio, repealing others. Furthermore, Congress needs to be explicit and clear when it is repealing common law protections. In so holding the CA 3 widens a split between the CAs 8,9,10 (so holding) and the CAs 2,6 (finding that § 7502 is exclusive).

This tax decision was delivered (pun intended) on tax day. Although, as noted above, it widens an already well-developed split of authority in the circuits, it is not a likely certiorari candidate. The Department of the Treasury has proposed a regulation that, if adopted, would clearly preempt the mailbox rule in all future cases, regardless of the circuit. 69 Fed. Reg. 56,377.