This can't be correct, can it: Filed/postmarked 1040 for 2015 refund on 4/15/2019, but rejected as too late?

[John USA]

I normally never file a 1040 on time for a refund. I used to file 2 years later, but for the past few I filed 3 years later - within the 3 year deadline. So for instance, I filed for a 2014 refund on 4/17/2018, and it was paid, i.e. 3 years after the normal 4/2015 deadline. In fact you got 2 extra days in 2018.

This year, I filed on 4/15/2019 for 2015's refund, i.e. postmarked that day and by certified mail. However, I just got a letter stating the refund will not be paid the return was considered late.

That has to be a mistake and can't be correct, right? Wasn't 4/15/2019 the last day to have a 2015 1040 postmarked and considered filed in time for the 3 year refund deadline? Or else why was my 2014 refund paid and not considered late when it was postmarked 4/17/2018? This is just an error that should be corrected on appeal, right?

 

[davew9128]

What happened when you responded indicating you sent it in on the very last day to do so (knowing the risks involved instead of handling it timely like a responsible person)?

 

[adjusterjack]

That has to be a mistake and can't be correct, right? Wasn't 4/15/2019 the last day to have a 2015 1040 postmarked and considered filed in time for the 3 year refund deadline? Or else why was my 2014 refund paid and not considered late when it was postmarked 4/17/2018? This is just an error that should be corrected on appeal, right?

Common sense dictates that you write back with copies of your postal documents showing that you did mail it on 4/15.

Do that.

 

[LdiJ]

I normally never file a 1040 on time for a refund. I used to file 2 years later, but for the past few I filed 3 years later - within the 3 year deadline. So for instance, I filed for a 2014 refund on 4/17/2018, and it was paid, i.e. 3 years after the normal 4/2015 deadline. In fact you got 2 extra days in 2018.

This year, I filed on 4/15/2019 for 2015's refund, i.e. postmarked that day and by certified mail. However, I just got a letter stating the refund will not be paid the return was considered late.

That has to be a mistake and can't be correct, right? Wasn't 4/15/2019 the last day to have a 2015 1040 postmarked and considered filed in time for the 3 year refund deadline? Or else why was my 2014 refund paid and not considered late when it was postmarked 4/17/2018? This is just an error that should be corrected on appeal, right?

Do you have any proof that it was postmarked on 4/15/2019? Are you sure that you didn't put it in a mailbox after the last pickup for the day for that box?

You are really foolish to wait that late to file when you have a refund. I don't know what your rationale is for doing that, but all you are doing is giving the government a long term interest free loan.

 

[davew9128]

Do you have any proof that it was postmarked on 4/15/2019? Are you sure that you didn't put it in a mailbox after the last pickup for the day for that box?

You are really foolish to wait that late to file when you have a refund. I don't know what your rationale is for doing that, but all you are doing is giving the government a long term interest free loan.

It would not surprise me to find out that this is an exam question.

 

[LdiJ]

It would not surprise me to find out that this is an exam question.

Valid point.

 

[John USA]

You guys are one rough bunch, I must say. I only got the letter less than a week ago and haven't replied yet. I should be able to send a copy of my certified mail receipt and payment receipt showing it was mailed and marked for 4/15/2019. Assuming I can do that, it should be considered filed on the last day of the 3 year deadline, right? Or even if you can prove it was mailed and postmarked 4/15/2019 does anyone know if there is any reason that would not suffice? It was done with a live person at the PO service counter, not just dropped in a box.

 

[LdiJ]

You guys are one rough bunch, I must say. I only got the letter less than a week ago and haven't replied yet. I should be able to send a copy of my certified mail receipt and payment receipt showing it was mailed and marked for 4/15/2019. Assuming I can do that, it should be considered filed on the last day of the 3 year deadline, right? Or even if you can prove it was mailed and postmarked 4/15/2019 does anyone know if there is any reason that would not suffice? It was done with a live person at the PO service counter, not just dropped in a box.

Actually, the fact that you sent it certified is probably why the whole mess happened. You actually delayed it getting to where it needed to be by sending it certified. The IRS has their own post offices and mail get delivered much more efficiently if its just sent normal mail. Yes, if you can respond to the letter by providing a copy of any documentation you have that proves that it was postmarked on time (not the originals you keep those).

Again however, its simply foolish to wait until that late to file tax returns, and it gives you no benefit at all.

 

[Taxing Matters]

That has to be a mistake and can't be correct, right?

It is correct. Your refund claim was too late. This is something that even some tax pros mess up on. The rule in Internal Revenue Code (IRC) section 7502 that provides that the postmark on the mailing of a return is deemed the filing date of the return only applies if that post mark date is on or before the due date of the return. Specifically, the statute states that the postmark date only counts as the date of filing if:

(A) the postmark date falls within the prescribed period or on or before the prescribed date--​

(i) for the filing (including any extension granted for such filing) of the return, claim, statement, or other document​

IRC § 7502(a)(2)(A). What this means is that once the due date of the return has passed, the date of filing of the return is the date the IRS receives the return, not the date it is postmarked. Thus, in refund suits in federal court in which a taxpayers who were in exactly in your situation challenged the IRS denial of the refund, they lost because of that distinction. For example:

The Kings mailed their 1973 return/claim for refund to the I.R.S. on April 15, 1977. The document was received by the I.R.S. on April 20, 1977. The last prescribed date for filing the 1973 return was April 15, 1974. The Kings never obtained an extension to allow them to file their 1973 return after April 15, 1974. So, the Kings' 1973 return was mailed to the I.R.S. a full three years after the prescribed filing date. Since the return was filed after the prescribed April 15, 1974, filing date, 26 U.S.C. s 7502(a)(2)(A)(i) means that the Kings are unable to rely on the statutory rule of timely mailing treated as timely filing. The limitations on the statutory rule not being satisfied, the general rule applies, i. e., filing occurs on actual physical delivery of the document to the I.R.S.​

​

King v. United States, 495 F. Supp. 334, 336–37 (D. Neb. 1980).

However, it is clear that this exception cannot apply to the filing of Becker's return, which was due on April 15, 1986, since § 7502 applies only when the document is postmarked on or before the due date for that return. 26 U.S.C. 7502(a)(2). Becker's 1985 return was not filed on the date it was due, but over three years later. Therefore, the return must be deemed filed when it was actually received by the IRS, which could have been no earlier than April 18, 1989.​

Becker v. Dep't of Treasury/Internal Revenue Serv., 823 F. Supp. 231, 233 (S.D.N.Y. 1993).

In short, for your refund claim here to be timely, you had to ensure the IRS received the return by 4/15/2019 since the due date of the 2015 return was 4/15/2016. Having it postmarked on that date does not help you.

Or else why was my 2014 refund paid and not considered late when it was postmarked 4/17/2018?

The reason for that is that the IRS relies on automated systems to process returns. I cannot go into the details of it, but the IRS computers are programmed with certain assumptions to simplify that processing and make determinations of what is timely. There is a grace period of a day or two alloted there so a return that is received a day or two late may sometimes nevertheless be considered timely. But you should never, ever rely on that because you can't know if you'll get the benefit of that or not. By law if the IRS doesn't receive that return within the three year period allowed by law it cannot pay the refund. The IRS obviously found that your return was late, probably because the certified mailing actually slowed the delivery of the return, kicking past whatever the grace might be in the computer.

This is just an error that should be corrected on appeal, right?

No. Unless the appeals office just completely blows it on the law, you will lose the appeal given the statute and case law I cited above.

Waiting 3 years to file a refund return is foolish. The government does not begin to pay interest on the refund until 45 days the return is filed. So you give up 3 years of interest by doing that. And if you wait until the last minute, as you did, you can find you lose the refund altogether.

People hear all the time that the postmark is what matters, but that is always stated as the rule when the postmark is on or before the due date. Unfortunately, though, a lot of people don't catch that important requirement: it must be postmarked by the due date. After the due date, the postmark no longer matters. It is the date the IRS gets it. As I said, even some tax pros mess up on this because that postmark rule is so ingrained in people's minds.

 

[Taxing Matters]

Yes, if you can respond to the letter by providing a copy of any documentation you have that proves that it was postmarked on time (not the originals you keep those).

The IRS should reject that since the postmark does not matter here. It is the date the IRS received it. If the OP could show that the post office delivered the certified mail to the IRS by 4/15/2019 that would work. But that won't be the case here since the post office did not likely deliver it the same day it was mailed.

 

[davew9128]

The IRS should reject that since the postmark does not matter here. It is the date the IRS received it. If the OP could show that the post office delivered the certified mail to the IRS by 4/15/2019 that would work. But that won't be the case here since the post office did not likely deliver it the same day it was mailed.

We are assuming no extension was filed here and no other payments made that would fall under the 2 year rule. Any withholdings are now lost forever unless another exception to the three year pops up. If estimated tax payments were made along the way however...there is a trick in the IRM which I can get into another time.

 

[Taxing Matters]

We are assuming no extension was filed here and no other payments made that would fall under the 2 year rule.

That's true, although in this instance had the OP filed for an extension on the 2015 return I think he/she would have mentioned that, and furthermore the IRS would not have rejected the claimed refund unless it had somehow failed to log the extension in the computer.

If the OP did make payments after the due date of the return and that would have been within the two year period immediately preceding the date the refund claims was filed, e.g. 4/15/17 to 4/15/19 if the refund claim was received on 4/15/19 (I use that just as an example since I don't know the day it was received) the IRS should have refunded that, though of course most taxpayers filing initial refund returns are not in that situation.

 

[LdiJ]

The IRS should reject that since the postmark does not matter here. It is the date the IRS received it. If the OP could show that the post office delivered the certified mail to the IRS by 4/15/2019 that would work. But that won't be the case here since the post office did not likely deliver it the same day it was mailed.

The rules have always been that if its addressed correctly and is postmarked by the deadline that its considered to be mailed on time. What about this circumstance causes you to feel that it does not apply? I don't recall any specific instances of original returns mailed on the three year mark, but I have had many amended returns that were, and the postmark date was what mattered, not the date of reciept.

Edit to add: I have just seen where you posted case law on the subject but that is not what I have seen in practice. The amended returns have always been accepted.

 

[LdiJ]

We are assuming no extension was filed here and no other payments made that would fall under the 2 year rule. Any withholdings are now lost forever unless another exception to the three year pops up. If estimated tax payments were made along the way however...there is a trick in the IRM which I can get into another time.

That is wrong for sure. Withholdings are never lost. The opportunity for a refund is lost, but not the withholdings.

 

[Taxing Matters]

The rules have always been that if its addressed correctly and is postmarked by the deadline that its considered to be mailed on time. What about this circumstance causes you to feel that it does not apply? I don't recall any specific instances of original returns mailed on the three year mark, but I have had many amended returns that were, and the postmark date was what mattered, not the date of reciept.

Edit to add: I have just seen where you posted case law on the subject but that is not what I have seen in practice. The amended returns have always been accepted.

I dug a little deeper after thinking about your reply. And I find I need to correct my original answer. You are quite right that rule for a stand alone refund claim (i.e. not one contained in the originally filed return) like in an amended return would get the benefit of the benefit of the postmark rule in IRC § 7502 because under § 6511 the time for timely filing that claim is 3 years after the original return was filed. So an amended return postmarked on 4/15/2019 would be considered timely to get a refund from a 2015 return. The rule in the statute and case law, though, treated the refund claim on an original return differently, as I explained before. The result was a trap for the unwary as the postmark rule works for most filings but not in the case of the late filed original return. There is no logical reason to treat them differently for the purposes of a refund claim. That was simply the result of an anomaly in how the statute was drafted.

It got me thinking, has that problem not ever been addressed? And the answer is that it has. The IRS and Treasury modified the rule by a regulation effective in 2001. It got around the case law by making a distinction between the filing of the return, which under the statute would be treated as filed when the the IRS received it, and the filing of the refund claim, which is treated as filed by the postmark date. In other words, the IRS effectively views the filing of a late original return with a refund on it as the filing of two things: a return and a refund claim. It's a creative solution to the problem. Thus, Treas. Reg. § 301.7502-1(f) provides the following:

(f) Claim for credit or refund on late filed tax return—(1) In general. Generally, an original income tax return may constitute a claim for credit or refund of income tax. See § 301.6402–3(a)(5). Other original tax returns can also be considered claims for credit or refund if the liability disclosed on the return is less than the amount of tax that has been paid. If section 7502 would not apply to a return (but for the operation of paragraph (f)(2) of this section) that is also considered a claim for credit or refund because the envelope that contains the return does not have a postmark dated on or before the due date of the return, section 7502 will apply separately to the claim for credit or refund if—​

(i) The date of the postmark on the envelope 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 (see section 6513), and the claim for credit or refund is delivered after this three-year period; and​

(ii) The conditions of section 7502 are otherwise met.​

(2) Filing date of late filed return. If the conditions of paragraph (f)(1) of this section are met, the late filed return will be deemed filed on the postmark date.​

(3) Example. The rules of this paragraph (f) are illustrated by the following example:​

Example. (i) Taxpayer A, an individual, mailed his 2001 Form 1040, “U.S. Individual Income Tax Return,” on April 15, 2005, claiming a refund of amounts paid through withholding during 2001. The date of the postmark on the envelope containing the return and claim for refund is April 15, 2005. The return and claim for refund are received by the Internal Revenue Service (IRS) on April 18, 2005. Amounts withheld in 2001 exceeded A's tax liability for 2001 and are treated as paid on April 15, 2002, pursuant to section 6513.​

​

(ii) Even though the date of the postmark on the envelope is after the due date of the return, the claim for refund and the late filed return are treated as filed on the postmark date for purposes of this paragraph (f). Accordingly, the return will be treated as filed on April 15, 2005. In addition, the claim for refund will be treated as timely filed on April 15, 2005. Further, the entire amount of the refund attributable to withholding is allowable as a refund under section 6511(b)(2)(A).​

So if the OP responds to the IRS determination by citing the above regulation and proving that the mail was postmarked by April 15 he/she should indeed get his refund not withstanding the earlier case law that would have denied it.

Note that courts have stated that that it is the postmark that matters in determining the date of filing for § 7502, not a receipt or tracking information provided by the post office. So if the IRS can show the postmark was after the 3 year period the OP will lose not withstanding the certified mail receipt. That circumstance is not common as the post office usually postmarks the mail promptly when accepting the certified mail, but on occasion that can be a problem.