Hotel Equities Corp. v. Commissioner

65 T.C. 528, 1975 U.S. Tax Ct. LEXIS 13

• Court: United States Tax Court
• Decided: December 15, 1975
• Docket: Docket No. 7538-73
• Status: Published

Opinions

OPINION

Scott, Judge:

Petitioner Hotel Equities Corp., on February 10,1975, filed a motion for summary judgment pursuant to Rule 121, Tax Court Rules of Practice and Procedure. The issue presented for decision is whether a tax return, which is timely mailed within the provisions of section 7502,1.R.C. 1954,¹ with the other requirements of that section being met, is to be considered filed as of the postmark date for the purposes of determining when the statute of limitations for assertion of a deficiency expires.

■ The facts, which are undisputed for the purpose of the determination of the issue raised by the summary judgment, show that petitioner’s tax return for its taxable year ended January 31,1970, which otherwise would have been due on April 15 of that year, was due on July 15,1970, pursuant to a properly secured extension of time.² On July 14, 1970, an officer of petitioner mailed from Burlingame, Calif., in a postage prepaid envelope, properly addressed to the Internal Revenue Service ’Center in Ogden, Utah, the United States corporate income tax return of petitioner for the year ending January 31, 1970. The respondent did not keep the envelope in which the return was mailed.³

Petitioner’s return for its fiscal year 1970 had affixed thereto a stamp reading “Received, Western Service Center, Jul. 17,1970, No. 57, Internal Revenue Service, Ogden, Utah.” On July 17, 1973, respondent mailed to petitioner a statutory notice determining a deficiency for petitioner’s taxable year 1970. Petitioner timely filed with this Court a petition seeking review of that determination. The petition alleged that assessment and collection of the deficiency set forth in the notice with respect to the fiscal year ending January 31, 1970, are barred by section 6501(a), alleging in substance the facts we have heretofore recited.

Section 6501(a) states that except as otherwise provided any tax “shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed)” and section 6501(b) provides that an income tax return “filed before the last day prescribed by law * * * shall be considered as' filed on such last day.”⁴ Petitioner takes the position that its return was filed on July 14, 1970, the date of mailing of its tax return and presumably the postmark date on the properly addressed envelope in which that return was mailed. Petitioner contends that July 14,1970, is the date its return was filed under the provisions of section 7502.⁵

While petitioner in its memorandum in reply to respondent’s memorandum, refers to section 6501(b) as an answer to respondent’s argument that to interpret section 7502(a) in the manner petitioner contends is appropriate would require respondent “to indulge in a guessing game,” it does not specifically discuss whether under section 6501(b) its return should be deemed as filed on July 15, 1970, rather than its July 14 mailing date. However, since July 14, 1970, was a Tuesday and July 15, 1970, was a Wednesday, whether the return was filed on July 14 or July 15 is immaterial to the issue here presented.

Respondent, while conceding that petitioner’s return was timely filed for the purpose of avoiding any addition to tax under section 6651(a)(1)⁶ which might otherwise be determined against petitioner, contends that for the purpose of section 6501(a) the filing date of the return is the date on which the return was stamped received, July 17, 1970, and not the date of filing as determined in accordance with section 7502.

Section 6501 does not define the word “filed.” However, the longstanding definition of the word “filed” as used in Federal statutes is “delivered.” In United States v. Lombardo, 241 U.S. 73 (1916), a document was stated to be filed “when it is delivered.” That filing means “delivered” has been reiterated on numerous occasions in cases involving the filing date for purposes of applying the revenue laws to documents such as tax refund claims and tax returns. In Phinney v. Bank of Southwest National Assn., Houston, 335 F. 2d 266, 268 (5th Cir. 1964), the court, relying on the Lombardo case, held an estate tax.return to be filed “upon delivery” to the Office of the District Director. In holding a declaration of estimated tax not to be timely filed the court in Heard v. Commissioner, 269 F. 2d 911, 913 (3d Cir. 1959), modifying 30 T.C. 1093 (1958), stated that “unless otherwise defined by statute, filing does not occur until the paper to be filed is delivered.”

Against the background of the longstanding definition of “filed” as being when the document is “delivered” Congress enacted section 7502(a) providing that when a return, after the date prescribed for its filing, is “delivered” by United States mail to the proper office, the date of the United States postmark stamped on the cover in which the return is mailed “shall be deemed to be the date of delivery.”

There is no qualification contained in section 7502(a) that the postmark date is “deemed” to be the date of “delivery” making the postmark date the delivery date only for a limited purpose. That the words “deemed to be the date of delivery” are synonymous with deemed to be the date of “filing” is clear since, if the “deemed delivery” date were not intended to be the date of “filing,” the provisions of section 7502(a) would be meaningless. Section 6651(a) provides for an addition to tax for failure to “file” a return on the prescribed date not for failure to “deliver” the return on that date. The word “file” in section 6651(a) is the same as the words “was filed” in section 6501 providing for limitations on assessments. There is no rational basis for giving the word “file” a different interpretation under section 6651(a) from that given it in section 6501.⁷ To hold one date to be the filing date under section 6651(a) and another date to be the date the return was filed under section 6501 finds no support in the statutes or legislative history. Respondent in his memorandum relies on the following statement in S. Rept. No. 1625, 89th Cong., 2d Sess., to accompany Pub. L. 89-713, 1966-2 C.B. 803, 809:

The provision of this bill which permits the Secretary of the Treasury to require the filing of tax returns at service centers would technically require many taxpayers (for example, those in Hawaii) to mail their returns * * * at a much earlier date * * *

For these reasons, the bill amends the existing timely-mailing-timely-filing provisions to include returns and payments of tax. * * *

In our view, even if this limited quotation from the Senate report properly reflects the underlying reasons for the enactment of section 7502, it does not cause that section not to be properly interpreted in accordance with its clear language. However, other portions of the same Senate report give a clear indication that the Senate considered that when the provisions of section 7502 had been met the postmark date of the envelope in which the return was mailed was the filing date of the return.⁸

Further, in our view the case of Brown v. United States, 391 F. 2d 653 (Ct. Cl. 1968), dealing with the date of filing of a return to which the provisions of section 7503 are applicable indicates that provisions of such statutes as section 7502 and section 7503 are applicable to all sections of the Code with reference to the date a return is “filed.” That case involved a return which was “delivered” to the Office of the District Director on Monday, April 16. Section 7503,⁹ there involved, provides that when the last day for performance of an act falls on Sunday “the performance of such act shall be considered timely” if that act is performed on the next succeeding day. Therefore, the delivery on Monday, April 16, of a return was held to be a timely filing on April 16 and not a “deemed” filing on April 15. The Court referred to April 16 as being “the stipulated actual filing date.” Here the question is whether the “actual filing date” is the date of July 17 stamped on the return as the date of its receipt or is the statutory delivery date of the return of July 14 as shown by the postmark.

In the Brown case, the court stated its disagreement with the taxpayer’s contention that the effect of section 7503 “is to treat’ the return as if filed on April 15 since the clear words of the statute “merely considers” the filing on Monday, April 16, timely. In the present case, had the return been “actually filed” on July 17 it would have been untimely and not considered timely under section 7502(a) or any other provision of the Code. It is because under section 7502(a) the return was by statute “actually filed” on July 14 that it was timely. The import of the Brown case is that section 6501 is dependent on the sections governing filing, there section 7503 but here section 7502(a), for its application.

As contrasted to the “considered timely” words of section 7503, the provision of section 7502(a) is that the postmark date is “deemed” or is to be “treated as” the delivery date.

In our view, had section 7502(a) been intended to apply only to alleviate the addition to tax provided by section 6651(a), Congress would have clearly so stated or certainly would not have used the words that the postmark date shall be “deemed the date of delivery” in view of the longstanding rule of the delivery date of a document being synonymous with its filing date.

Petitioner’s motion for summary judgment is granted, and

An appropriate order will be issued.

Reviewed by the Court.

1 All references are to the Internal Revenue Code of 1954, unless otherwise indicated.

2 Respondent in his answer denied petitioner’s allegation that it obtained an extension of time for filing its tax return for its taxable year ending Jan. 31, 1970, to July 15,1970. However, there is attached to petitioner’s memorandum filed with its motion for summary judgment a copy of a request for automatic extension for 3 months and respondent has not questioned this exhibit for the purpose of this summary judgment.

3 Respondent for the purpose of this summary judgment motion admits the statements in an affidavit attached to petitioner’s motion as to the proper mailing of the return on July 14, 1970, and, when questioned by the Court as to the envelope, his attorney stated that he had been unable through proper channels to locate the envelope in which the return was mailed and apparently had not kept it. Since the only evidence possibly available to show a postmark date of July 14,1970, on the envelope was in effect conceded by respondent’s attorney to have been destroyed by respondent, we have assumed that a postmark date of July 14, 1970, appeared on the envelope. Respondent does not contend that we should do otherwise.

4 SEC. 6501. LIMITATIONS ON ASSESSMENT AND COLLECTION.

(a) General Rule. — Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed) or, if the tax is payable by stamp, at any time after such tax became due and before the expiration of 3 years after the date on which any part of such tax was paid, and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period.

(b) Time Return Deemed Filed—

(1) Early return — For purposes of this section, a return of tax imposed by this title, except tax imposed by chapter 3, 21, or 24, filed before the last day prescribed by law or by regulations promulgated pursuant to law for the filing thereof, shall be considered as filed on such last day.

5 SEC. 7502. TIMELY MAILING TREATED AS TIMELY FILING AND PAYING.

(a) General Rule.—

(1) Date of delivery. — If any return, claim, statement, or other document required to be filed, or any payment required to be made, within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws is, after such period or such date, delivered by United States mail to the agency,officer, or office with which such return, claim, statement, or other document is required to be filed, or to which such payment is required to be made, the date of the United States postmark stamped on the cover in which such return, claim, statement, or other document, or payment, is mailed shall be deemed to be the date of delivery or the date of payment, as the case may be.

6 Sec. 6651(a)(1) provides:

(a) Addition to the Tax — In case of failure—

(1) to file any return required under authority of subchapter A of chapter 61 (other than part III thereof), subchapter A of chapter 51 (relating to distilled spirits, wines, and beer), or of subchapter A of chapter 52 (relating to tobacco, cigars, cigarettes, and cigarette papers and tubes), or of subchapter A of chapter 53 (relating to machine guns and certain other firearms), on the date prescribed therefor (determined with regard to any extension of time for filing), unless it is shown that such failure is due to reasonable cause and not due to willful neglect, there shall be added to the amount required to be shown as tax on such return 5 percent of the amount of such tax if the failure is for not more than 1 month, with an additional 5 percent for each additional month or fraction thereof during which such failure continues, not exceeding 25 percent in the aggregate;

7 In fact, respondent in Rev. Rul. 74-236,1974-1 C.B. 348, ruled that “filed” as used in sec. 6611(e) referred to the postmark date where filing had been by timely mailing under the provisions of sec. 7502(a). This ruling states in part:

“Advice has been requested whether, under the circumstances described below, the 45-day period within which no interest is allowable on an overpayment of tax under section 6611(e) of the Internal Revenue Code of 1954 is computed from the date the return is timely mailed under the terms of an extension of time to file or from the date the return is actually received by the Internal Revenue Service.

“The taxpayer’s return for the taxable year 1970 was due on March 15, 1971. An extension of time to file was granted to September 15,1971. On September 15,1971, the taxpayer mailed its return, showing an overpayment, to the Service by registered mail. The return was received by the Service on September 17,1971.

“Section 6611(e) of the Code provides that no interest will be paid if a refund is made within 45 days after the last date prescribed for filing the return (determined without regard to an extension of time for filing) or, if the return is filed after such last date, the refund is made within 45 days after the return is filed. * * *

“The taxpayer’s return was sent by United States registered mail on September 15, 1971, which was the prescribed date for filing, including the extension granted. Under section 7502(c)(1)(B) of the Code, the registration date is deemed the postmark date. There is no provision excepting section 6611(e) from the provisions of section 7502. Therefore, the taxpayer’s return is considered filed on September 15, 1971, and not on September 17,1971, when the return was received by the Service.

“Accordingly, since the taxpayer timely mailed its return on September 15,1971, under the terms of an extension to file on or before that date, the date the return was mailed is to be used in computing the 45-day period within which no interest is allowable on an overpayment under section 6611(e) of the Code.”

8 Other portions of this report state as follows:

S. Rep. No. 1625,89th Cong., 2d Sess., 1966-2 C.B. 803,804,809:

4. The bill also provides that the timely mailing of a tax return or payment is to be considered timely filing or timely payment. As a result, where the postmark on an envelope in which an individual income tax return and payment are enclosed shows that it was mailed on or before the due date, the return and payment will be considered as filed or paid on time even though received after the due date.

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7. Timely Mailing Treated as Timely Filing Extended to Returns and Payments (Sec. 5 of the Bill and Sec. 7502 of the Code)

Present law provides that where a claim, statement, or other document, which is required to he filed by a specified date is properly mailed, the postmarked date is to be considered as the date on which it was filed. This provision, however, does not apply to a return or to a payment of tax. The bill extends this rule to tax returns and payments.

The existing timely-mailing-timely-filing provision was enacted in 1954. At that time the rule was a new concept with which the Internal Revenue Service had had no experience. For this reason, the Service was concerned with applying it to returns and payments because of unforeseen problems which it believed might develop. Experience with the present provision since 1954 has allayed these fears, and in fact, the Service has in practice generally treated returns and payments which were mailed before the due date as being filed or paid on time.

For these reasons, the bill amends the existing timely-mailing-timely-filing provisions to include returns and payments of tax. However, the special provision relating to registered mail which provides that registration is prima facie evidence of delivery is extended to returns but not to payments of tax. In addition, the timely-mailing-timely-filing provisions, as amended by the bill, are not applied to currency or other medium of payment unless they are actually received and accounted for, or to returns, claims, statements, or other documents or payments which are required to be delivered by any method other than by mailing. This latter exception applies, primarily, to certain dqcuments relating to alcohol taxes which are required to be submitted directly to the internal revenue officer present on the manufacturer’s premises.

Present law contains a special provision dealing with postmarks which are not made by the U.S. Post Office. Under the bill, this provision will apply to returns and payments as it has in the past to other documents filed with the Internal Revenue Service. Among the postmarks to which this provision applies are those made by postage metering machines. By continuing this provision of present law, this committee does not intend to downgrade postal metering devices. Applying the rule of present Treasury Department regulations, if an envelope (containing a tax return) bearing an April 15 postmark made by a postage meter is received by the Internal Revenue Service not later than the time'it would ordinarily have been received had it been postmarked April 15 by the U.S. Post Office at the same point of origin, the return is considered as filed on April 15. In addition, where there is a delay in the receipt of a metered return by the Internal Revenue Service, if the person who is required to file the return established that it was actually deposited in the mail at a time at which stamped letters deposited at that location received timely postmarks and the delay was due to the postal service, the return will be treated as timely filed as in the case of stamped returns.

Also, sec. 301.7502-1, Proced. & Admin. Regs., provides:

Sec. 301.7502-1. Timely mailing treated as timely filing — (a) General rule. Section 7502 provides that, if the requirements of such section are met, a document shall be deemed to be filed on the date of the postmark stamped on the cover in which such document was mailed. Thus, if the cover containing such document bears a timely postmark, the document will be considered filed timely although it is received after the last date, or the last day of the period, prescribed for filing such document.

This section does not reflect the amendments made by Pub. L. 89-713 but indicates to us that prior to that amendment a document was, as a “General rule,” considered filed as of the postmark date.

9 SEC. 7503. TIME FOR PERFORMANCE OF ACTS WHERE LAST DAY FALLS ON SATURDAY, SUNDAY, OR LEGAL HOLIDAY.

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 his delegate, 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.