The Mailbox Rule in the time of COVID-19

As the July 15 filing deadline approaches, tax returns mailed to the IRS may sit in mail facilities for several days because of COVID-19. But, if a taxpayer follows the Code Sec. 7502 Mailbox Rule, a return will be treated as filed on the date of the postmark and, hence, the taxpayer has no need to worry about the timeliness of filing, if the IRS does not log in the return until several days, or even weeks, after timely mailing.

Background. The IRS has announced that the automatically postponed tax deadline of July 15, 2020, which was granted as COVID-19 relief, will not be further postponed.  The National Taxpayer Advocate has recently identified the uncertainty about when the IRS will be able to open and log all tax returns sitting in mail facilities as one of the adverse impacts to taxpayers caused by COVID-19. And the IRS admits that it is experiencing delays in processing paper tax returns due to limited staffing. The IRS will process paper returns in the order they received them. This delay may result in more utilization of the “Mailbox Rule” than normal. Below is a summary of some key provisions and requirements of the rule.

The Mailbox rule, in summary. Generally, the Code provides that a tax return, claim, statement, other required document, or payment (Tax Document) is deemed to be filed or made on the date of the postmark. This rule applies whether the taxpayer uses the US Postal Service (USPS) or a designated private delivery service (PDS)

If a taxpayer uses a non-designated PDS, making the Mailbox Rule unavailable, then, in order for the Tax Document to be timely, it must be received by the IRS on or before the due date. When a taxpayer does not satisfy the requirements of the Mailbox Rule, a Tax Document is considered filed on the date it is received by the IRS.

Delivery requirement. If a Tax Document is sent as first class mail via the USPS (that is, sent via the USPS but not as registered or certified mail), the taxpayer has the burden of proof to show, in addition to a timely postmark, that the Tax Document was actually delivered to the IRS.

However, that burden does not apply if the Tax Document is sent by certain enhanced mailing services.  A Tax Document (excluding a payment) sent by US registered mail, US certified mail, or by a designated PDS will be prima facie evidence that the document was delivered.

Mailing requirements. To qualify for the Mailbox Rule, a Tax Document must comply with certain mechanical rules regarding:

  • the envelope and address;
  • timely deposit in the U.S. mail; and
  • the postmark.

Envelope and address.  A Tax Document must be contained in an envelope and be properly addressed to the agency, officer, or office with which the Tax Document is required to be filed or made.

For an individual tax return, the proper address can be found in the Instructions for Form 1040 and Form 1040-SR (U.S. Individual Income Tax Return), p. 108, or at Where to File Paper Returns With or Without a Payment.

Timely deposit. A Tax Document must be deposited by the due date in the mail in the U.S. with sufficient postage prepaid. For this purpose, a Tax Document is deposited in the mail when it is deposited with the domestic mail service of the USPS. The Mailbox Rule does not apply to any Tax Document that is deposited with the mail service of any other country.

Postmark—USPS. If the postmark on the envelope of a Tax Document is made by the USPS, then the postmark must bear a date on or before the applicable due date.

If the postmark does not bear a date on or before the due date, then a Tax Document is considered not to be timely filed or paid, regardless of when the Tax Document is deposited in the mail. Thus, a sender who intends to rely on the applicability of the Mailbox Rule assumes the risk that the postmark will end up being an untimely date.

If a Tax Document is sent by U.S. registered mail, the date of registration is treated as the postmark date. If a Tax Document is sent by U.S. certified mail, and the sender’s receipt is postmarked by the USPS, the date of the postmark on the receipt is treated as the postmark date.

Postmark—PDS.  For each designated PDS, the delivery service records electronically the date on which an item was given to it for delivery, which is treated as the postmark date for purposes of Code Sec. 7502.

But Notice 2016-30 provides that the postmark date for a Tax Document delivered after the due date is presumed to be the day that precedes the delivery date by an amount of time that equals the amount of time it would normally take for an item to be delivered under the terms of the specific type of delivery service used (e.g., two days before the actual delivery date for a two-day delivery service).

Taxpayers who wish to overcome the presumption in the Notice must provide information that shows that the date recorded in the delivery service’s electronic database is on or before the due date, such as a written confirmation produced and issued by the delivery service.

Example. A uses UPS 2nd Day Air to send his tax return to the IRS. The filing is due July 15. The return is delivered to the IRS on July 18. The postmark date for A’s return is presumed to be July 16, two days before the actual delivery date for two-day service. To overcome this presumption and establish that the return was timely, A must show that the date recorded in UPS’s electronic data base is on or before July 15.

Postmark—USPS and non-USPS. If a Tax Document has both USPS and non-USPS postmarks, then the non-USPS postmark is disregarded.

Rules for payments. For a payment to qualify for the Mailbox Rule, whether made in the form of currency or other medium of payment, it must actually be “received and accounted for.” For example, if a check is used as the form of payment, the Mailbox Rule does not apply unless the check is honored upon presentation.

Rules for credit or refund claim. When a return also constitutes a claim for credit or refund, the Mailbox Rule is applicable to the determination of whether the claim was timely filed.

Electronically filed document rules. Separate timely submission rules apply to the use of electronic return transmitters and electronic postmarks. A Tax Document filed electronically with an electronic return transmitter is deemed to be filed on the date of the electronic postmark given by the authorized electronic return transmitter. Thus, if the electronic postmark is timely, the Tax Document is considered filed timely although it is received by the IRS after the last date, or the last day of the period, prescribed for filing such Tax Document.

An electronic postmark is a record of the date and time (in a particular time zone) that an authorized electronic return transmitter receives the transmission of a taxpayer’s electronically filed document on its host system.