Opinion
Docket No. 17056-19
03-09-2021
James J. Lillie & Donna Lillie Petitioners v. Commissioner of Internal Revenue Respondent
ORDER
Pursuant to Rule 152(b), Tax Court Rules of Practice and Procedure, it is
ORDERED that the Clerk of the Court shall transmit herewith to the parties a copy of the pages of the transcript of the trial in this case before Chief Special Trial Judge Lewis R. Carluzzo containing his oral finds of fact and opinion rendered at the trial session at which the case was heard.
In accordance with the oral finding of fact and opinion, an appropriate order will be entered.
(Signed) Lewis R. Carluzzo
Chief Special Trial Judge Pages: 1 through 11 Place: New York, New York (Remote Proceeding) Date: January 29, 2021 Jacob K. Javits Federal Building
26 Federal Plaza
Room 206, 2nd Floor
New York, New York 10278
(Remote Proceeding) January 29, 2021 The above-entitled matter came on for bench opinion, pursuant to notice at 10:04 a.m. BEFORE: HONORABLE LEWIS R. CARLUZZO Chief Special Trial Judge APPEARANCES: For the Petitioner: No Appearance For the Respondent: No Appearance
PROCEEDINGS
(10:04 a.m.)
THE CLERK: Calling from the calendar docket number 17056-19, James J. Lillie and Donna Lillie.
(Whereupon, a bench opinion was rendered.) Bench Opinion by Special Trial Judge Lewis R. Carluzzo January 29, 2021 James J. Lillie & Donna Lillie v. Commissioner Docket No. 17056-19
THE COURT: The Court has decided to render oral findings of fact and opinion in this case and the following represents the Court's oral findings of fact and opinion (bench opinion). Unless otherwise noted, section references made in this bench opinion are to the Internal Revenue Code of 1986, as amended, in effect for the relevant period, and Rule references are to the Tax Court Rules of Practice and Procedure.
This bench opinion is made pursuant to the authority granted by section 7459(b) and Rule 152. The order to be entered in this case resulting from this bench opinion shall not be treated as precedent for any other case, and except as provided in Rule 152(c), this bench opinion shall not be cited as authority.
This case for the redetermination of a deficiency is now before the Court on respondent's motion to dismiss for lack of jurisdiction, filed November 15, 2019. Respondent's motion is based upon the ground that the petition was not filed within the period prescribed by section 6213(a). Petitioners' objections to respondent's motion are embodied in their response, filed December 11, 2019, as supplemented.
By Order dated February 7, 2020, respondent's motion was assigned to me for disposition. See sec. 7443A(b)(7); Rule 180. By Order dated November 18, 2020, respondent's motion was set to be heard at the Court's New York, New York, remote trial session on January 25, 2021, which is petitioner's requested place of trial.
The case was called for hearing as scheduled. Michael J. De Matos appeared on behalf of respondent. Derek B. Wheeler appeared on behalf of petitioners.
The relevant facts in this case are relatively straight forward and easily summarized.
On June 10, 2019, respondent mailed petitioners, by certified mail to their last known address, a notice of deficiency for 2016 (notice). The notice advised petitioners that they had 90 days from the date of the notice to file a petition in the Tax Court for a redetermination of the deficiency. The notice also stated that the last day to petition the Court was September 9, 2019. The petition was received by the Court and filed on September 16, 2019, which date is 98 days after the mailing of the notice of deficiency.
According to petitioners, in or around April of 2019, petitioners' counsel was advised by an employee or employees of the United States Postal Service (USPS) that mailings of more than 13 ounces (applicable to the petition in this case) could be mailed in priority mail envelopes with certified mail labels, and that sending mail in this manner would not require additional postage beyond the USPS priority mail flat rate service. For purposes of the motion now before us, we will assume, without finding, that petitioners' counsel was so advised.
Relying on that advice, on September 9, 2019, petitioners' counsel placed the petition in a USPS priority mail envelope, attached a USPS certified mail tracking label to the envelope, and through the use of a postage meter attached a stamp showing postage of $7.35, which was sufficient to pay the cost of priority mail, but insufficient (by $3.50) to pay the additional cost for certified mail. According to petitioners, on the same day, the petition was deposited in a USPS mailbox. Again, for purposes of this motion, we will assume, without finding that the petition was first mailed as petitioners claim.
On September 10, 2019, the USPS returned the petition to petitioners' counsel due to insufficient postage. This was because the envelope suggested that the piece of mail should be sent by certified mail, but the postage was insufficient for that type of service. Later that day, petitioners' counsel brought the petition in the same USPS priority mail service envelope that it was mailed in the day before back to a USPS office. The additional fee for certified mail, $3.50, plus the fee for returned receipt service, $1.60, for a total of $5.10 was paid, and the petition still contained in the original USPS priority mail envelope was redeposited into the mail, this time showing the additional $5.10 postage and a USPS postmark date of September 10, 2019, a date that is one day after the last date the petition was due to be filed with the Court.
That being so, the petition arrived at the Court in an envelope bearing a USPS certified mail tracking label and two postmarks. One of the postmarks is not a USPS postmark, but a private postmeter postmark dated September 9, 2019, and the other is a USPS postmark dated September 10, 2019.
The Tax Court is a court of limited jurisdiction, and we may exercise our jurisdiction only to the extent authorized by Congress. Naftel v. Commissioner, 85 T.C. 527, 529 (1985). This Court's jurisdiction to redetermine a deficiency pursuant to section 6213(a) depends on the issuance of a valid notice of deficiency and a timely filed petition. Rule 13(a), (c); Monge v. Commissioner, 93 T.C. 22, 27 (1989); Normac, Inc. v. Commissioner, 90 T.C. 142, 147 (1988).
Subject to exceptions not relevant here, a petition for the redetermination of a deficiency must be filed with the Tax Court within 90 days from the date a notice of deficiency is mailed to a taxpayer. Sec. 6213(a). If a petition is not timely filed, this Court has no jurisdiction to redetermine the deficiency. Cataldo v. Commissioner, 60 T.C. 522 (1973), aff'd per curiam, 499 F.2d 550 (2d Cir.1974).
The petition filed on September 16, 2019, clearly was not filed within the period prescribed by section 6213(a). However, section 7502(a) provides a "timely mailed, timely filed" rule. A document delivered by U.S. mail is timely mailed if "the postmark date falls * * * on or before the prescribed date" and the document is mailed, on or before that date, in an envelope with "postage prepaid, properly addressed" to the recipient. Id. para. (2). If those conditions are met, "the date of the United States postmark stamped on the cover in which such * * * document * * * is mailed shall be deemed to be the date of delivery". Id. para. (1). In the case of postmarks not made by the USPS, the "timely mailed, timely filed" rule applies only to the extent provided by regulation. Id. subsec. (b).
In the motion to dismiss for lack of jurisdiction respondent bases his argument on two grounds: (1) pursuant to section 301.7502-1(c)(1)(iii)(B)(3), Proced. & Admin. Regs. (the regulation), the private postmeter postmark should be disregarded and the date of the USPS postmark controls; and (2) the envelope containing the petition delivered to the USPS on September 9, 2019, did not have sufficient postage because it failed to account for the certified mail fee; according to respondent, the envelope containing the petition did not have the proper amount of "postage prepaid". See sec. 7502(a)(2)(B).
The parties disagree regarding how the above-referenced regulation applies under the circumstances of this case. We appreciate respondent's rigid application of the literal language of the regulation, but we also appreciate petitioners' suggestion that the regulation might not apply to a situation such as theirs that involved not one, but two attempts to mail the petition to the Court. See, e.g., Estate of Cranor v. Commissioner, T.C. Memo. 2001-27; see also Van Brunt v. Commissioner, T.C. Memo. 2010-220. The dispute between the parties regarding the controlling effect of the regulation assumes and need only be addressed if section 7502(a) applies, and we think the motion is resolved not on how section 7502(a) applies, but whether section 7502(a) applies.
Viewed in that manner, we find respondent's second argument to be well-made. Section 7502(a) does not apply unless a petition is timely deposited in the United States mail with sufficient postage prepaid. Sec. 7502(a)(2)(B); sec. 301.7502-1(c)(1)(ii), Proced. & Admin. Regs. The risk of not satisfying the requirements of section 7502(a) is on the sender. The envelope containing the petition mailed on September 9, 2019, was returned for postage due of $3.50 (the cost of certified mail). Petitioners signaled the intent to send the petition by certified mail by attaching the certified mailing label to the envelope. That intent was confirmed by the payment of the additional postage due on September 10, 2019. Because petitioners did not affix sufficient postage for certified mail to the envelope mailed on September 9, 2019, containing the petition, section 7502(a) is not applicable. This is so even if, as petitioners claim, an employee or employees of the USPS provided erroneous advice. See Wedemeyer v. Commissioner, T.C. Memo. 1990-324.
Because section 7502(a) does not apply, for obvious reasons we need not resolve the dispute between the parties regarding the application of the regulation. Furthermore, because section 7502(a) does not apply, the date the petition was received by the Court and filed, that is September 16, 2019, must be taken into account in the resolution of respondent's motion. Because that date is not within the period prescribed by section 6213(a), the Court is without jurisdiction, and an appropriate order granting respondent's motion will follow.
This concludes the Court's bench opinion in this matter.
(Whereupon, at 10:22 a.m., the above-entitled matter was concluded.)
CERTIFICATE OF TRANSCRIBER AND PROOFREADER
CASE NAME: James J. Lillie & Donna Lillie v. Commissioner DOCKET NO.: 17056-19
We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 11 inclusive, are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Adrian Morris on January 29, 2021 before the United States Tax Court at its remote session in New York, NY, in accordance with the applicable provisions of the current verbatim reporting contract of the Court and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording.
/s/_________
Meribeth Ashley, CET-507
Transcriber
__________
2/5/21
Date
/s/_________
Lori Rahtes, CDLT-108
Proofreader
__________
2/5/21
Date