Timely Mailed = Timely Filed…Or Does It?

Last week we introduced the Mailbox Rule. This week we tell a tale of how serious it is when “timely mailed = timely filed” meets “he said-she said”.

This is a story, sad but true. Many years ago in 2005, a couple named the Baldwins, paid their taxes to the IRS. In 2007, their movie production business lost $2.5M which they opted to carry back to 2005. To get the 2005 refund, they had to amend the 2005 return and file it by October 15th, 2011. In classic he said-she said, the Baldwins said we mailed it in June 2011 and the IRS said we never got it.

The IRS said no refund for you. And the Baldwins displeased, said, well we will see you in court. And they did, after all there was $167,663 at stake. Armed with corroborated, circumstantial evidence in the form of employee testimony that the return was mailed on June 21, 2011 at a post office in Hartford, CT – off they went to district court (Central District of CA) on the premise of the common law mailbox rule. The IRS came armed with the rules they put in place in 2011. In August 2015 it was on. Taxpayer -1; IRS – 0.

The IRS doesn’t like to lose and presumably displeased, they appealed. Which brings us to Circuit Court (the 9th Circuit). In January 2019 it was on. And as we declared last week, district and circuit court decisions can be all over the place. The 9th, in the past had ruled against the IRS in similar cases, meaning there was (judicial) precedent. For a couple of reasons beyond this scope, the 9th determined that the circumstantial evidence was no good because the 2011 Treasury Regulations said it wasn’t. Bubble burst, parade rained on – Taxpayer – 1; IRS -1.

What happened? “Chevron Deference” happened. What is Chevron Deference? It is an administrative law principle that compels federal courts to defer (bow down) to a federal agency’s interpretation of an ambiguous or unclear statute that Congress delegated to the agency to administer. Not federal law, not common law, not constitutional law – administrative law.

The 9th time-travelled to the 1984 Supreme Court Case that established the two-step legal test for whether a government agency’s interpretation of a statute that it administers should prevail in disputes. Simply put, when agencies interpret statutes that they administer, and when those statutes are ambiguous, courts are required to defer to the agencies’ interpretations as long as they’re reasonable. Reasonable meaning being grounded in fact or law and not arbitrary. At the end of the day, the agency, in our case, the IRS is now the lawmaker because the court did not interpret the statute but bowed to the IRS’ rules.

And worse – after Chevron, Brand X happened. Brand X was a 2005 Supreme Court decision in which the court decided that cable internet providers were information services and not telecommunications services. The agency was the FCC and the statute dated back to 1934. Blahblahblah. But what it did was force Chevron Deference despite judicial precedent. So, if an agency makes a new rule after a court has previously ruled or there is a history of consistent rulings, the court must still bow down to the agency rule by overruling its own precedent. And at the end of the day, the agency, in our case, the IRS is now the court because not only can it continue to make rules (Treasury Regulations) it can jump over judicial precedent.

Ask yourselves, how is it now possible to get a fair shake?

The Baldwins didn’t like losing and were righteously displeased and said well, we will see you in court. And they did – SCOTUS. They asked the Supreme Court of the United States to reconsider their 2005 Brand X decision authored by Clarence Thomas. And September 2019 it was on and tied at 1 -1.

February 24, 2020. Other current judges have criticized Chevron in the past, yet Justice Thomas flew solo on the side of the Baldwins. (Remember he wrote the Brand X decision.) SCOTUS, in an 8-1 decision said nope we’re not going to reconsider. The crux of his dissent is that the Chevron Doctrine gives unconstitutional power to federal agencies and the Brand X decision takes away constitutional power from the judiciary. He quoted Justice Robert Jackson in a 1950 ruling, “It is never too late to surrender former views to a better considered position.”

Well now, Justice Clarence Thomas is probably displeased right alongside the Baldwins. A judge clapping back at his own ruling is rare indeed and the Baldwins are out $167,663 + many years of statutory interest + the $25,000 in awarded legal fees. Taxpayer -1; IRS -2.


Granted we are not lawyers, but the thing to do seems to be to go after the Chevron Doctrine. And Brand X will follow.

For the foreseeable future there will be situations that result in paper filing. We recommend document, document, document. If it isn’t documented, it didn’t happen. File by registered or certified mail or use an IRS designated private delivery service IRS Approved Private Delivery Services . Keep a copy of the envelope to prove the address, the contents mailed, and the postmarked green card or receipt. Additionally, obtain delivery confirmation by following the tracking number online. Scan and upload the packet for posterity.


The Howard and Karen Baldwin produced this Oscar nominated movie –

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McAtee and Associates’ Disclaimer:
Our blog is intended for educational and awareness purposes. The general information provided about taxes, accounting, and business-related topics is by no means intended to provide or constitute professional advice. Reading our blog does not create a Client/CPA relationship between you and us. The blog, including all contents posted by the author(s) as well as comments posted by visitors, should not be used as a substitute for professional advice or as a substitute for communicating with a competent, human professional.

Our blog posts are written using current information and current or proposed rules and regulations. Information becomes old and outdated. Rules and regulations are frequently changed, added, amended, and/or left to expire. This is extremely true with most things tax and to a lesser and slower extent, most things accounting. We usually do not go back and update posted blogs. Always check with your CPA or accountant regarding not only rules and regulations but available options and how it all applies to your fact pattern and you.

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