Like Cinderella, E-Filed Petitions Can Turn to Rags at Midnight

Advising taxpayers and tax practitioners to file petitions well before the deadline is so fundamental that it sounds akin to instructing children not to run with scissors. But waiting until the last minute must be a common practice, because the US Tax Court has used many recent opportunities to address and reiterate its filing deadline.

At a conference in early June, Tax Court Chief Judge Kathleen Kerrigan highlighted the 11:59 p.m. Eastern deadline—regardless of the petitioner’s time zone—for petitions filed through its electronic filing system known as DAWSON. Then on June 20, the Tax Court ruled in Sanders v. Commissioner that it had no jurisdiction over a case where a taxpayer e-filed a petition 11 seconds after the deadline.

The taxpayer had objected to the government’s motion to dismiss, asserting that difficulties filing his petition through his Android phone required him to switch to a Windows computer to complete filing. Amicus briefs filed by the Center for Taxpayer Rights urged the court to treat the petition as filed at the time the petitioner relinquished control of the petition, which would effectively apply the timely mailing rule of Section 7502 to an online submission.

The taxpayer argued that the system was unavailable on the filing deadline due to difficulty accessing the system. Section 7451(b) provides additional time to file a petition where the filing location, which includes DAWSON, is inaccessible or otherwise unavailable. Tax Court records of DAWSON activity showed that the system was operational during the relevant time frame.

The Tax Court sided with the government, finding that while inaccessibility can include outage of an electronic filing system, it doesn’t include user error or technical difficulties on the user’s side. The court reasoned that petitioner-side technical difficulties were analogous to getting stuck in a traffic jam on the way to paper file a petition before a deadline; one filer’s difficulties don’t render the system inaccessible to the public.

Likewise, Tax Court filing deadlines aren’t extended for petitioners located in FEMA designated disaster areas who may receive postponements of tax filing deadlines under Section 7508A; the filer’s predicaments simply don’t expand the limited jurisdiction of court.

The timely mailing rule—or mailbox rule—is an exception to the general rule that documents are filed when received. Under the mailbox rule, a document postmarked and properly mailed before the due date is deemed to have been filed on the mailing date, even if received after the due date. But Section 7502(d) exempts the Tax Court from adhering to the mailbox rule, and it declined to apply the mailbox rule to the electronically-filed petition in Sanders. Even so, the point was moot because the upload of the petition commenced nine seconds after midnight.

Shortly before the Sanders decision, the Tax Court issued an opinion in Nutt v. Commissioner, which flatly rejected the mailbox rule as it applies to e-filed documents. It ruled that petitions submitted online are considered filed when received, determined only by the Eastern time zone in the District of Columbia where the Tax Court is located and irrespective of the taxpayer’s local time zone. But the court reaffirmed the mailbox rule only for physically-mailed documents.

Prior to Sanders, the Supreme Court had weighed in on whether the 30-day period to petition the Tax Court in a collection due process case can be equitably tolled. In Boechler v. Commissioner, the justices held that the 30-day period to file a collection due process petition under Section 6330(d) wasn’t a hard jurisdictional deadline, but rather a procedural prerequisite to jurisdiction, that could be equitably extended.

After Boechler, the Tax Court reviewed whether equitable tolling could also apply to the 90-day time limit for deficiency petitions. In Hallmark Research Collective v. Commissioner, it distinguished Boechler and unanimously decided that a timely-filed deficiency petition is a jurisdictional, rather than procedural, requirement under Section 6213(a), which is restricted from equitable tolling. It noted that the justices in Boechler rejected comparison of the procedural 30-day limit for a collection due process petition to the jurisdictional 90-day limit for a deficiency petition.

This disparity in treatment could benefit taxpayers in a later time zone with access to a private delivery service with late service hours. The IRS identifies which private delivery services satisfy the standards enacted in Section 7502(f). A taxpayer in the Pacific time zone could create and print a shipping label remotely that will reflect the current date, affix the label to a petition package, and deliver the package to a private delivery servicer with extended hours—possibly after midnight in the Eastern time zone.

Limitations on access to Tax Court are especially impactful to pro se petitioners. As of June 7, 2023, there were 24,668 active cases in the general docket; approximately 21,000 of those were pro se cases. Pro se cases are usually small court cases with deficiencies totaling less than $50,000. A dismissal for lack of jurisdiction deprives petitioners access to a pre-payment forum.

A taxpayer could still contest the matter through refund litigation. However, paying the balance due and filing a refund claim isn’t a viable alternative for many pro se litigants. Taxpayers such as Mr. Sanders could conceivably find their way back to Tax Court through the collection due process, but the ability to contest the underlying tax liability would depend on the facts of each taxpayer’s case.

So filers beware: Come too close to the midnight deadline and your petition could very well turn into Cinderella’s rags—or her pumpkin.

This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law and Bloomberg Tax, or its owners.

Author Information

Cindy Hull, a CPA and attorney, is a tax controversy manager in Washington National Tax at RSM US. She advises clients on a variety of issues, including IRS collection procedures, examinations and appeals, among others.

Marissa Lenius is a senior manager in the tax controversy group in RSM US’s Washington National Tax practice. She guides clients using her experience as a former attorney with the IRS Office of Chief Counsel.

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