Once again, a taxpayer has learned the critical importance of securing evidence that adheres to the regulations set forth in IRC §7502. In the case of Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin,[1] the IRS contended that the taxpayer's 2016 return was not filed within the requisite time frame, thereby disqualifying him from receiving a refund for an overpayment of taxes for that year.

Proving Timely Filing Under IRC §7502

A key protection for taxpayers from IRS claims that a return was never filed with the IRS or was filed untimely is found in IRC §7502. The first key part of the protection is found under IRC §7502(a) which reads:

(a) General rule.

(1) Date of delivery. If any return, claim, statement, or other document required to be filed, or any payment required to be made, within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws is, after such period or such date, delivered by United States mail to the agency, officer, or office with which such return, claim, statement, or other document is required to be filed, or to which such payment is required to be made, the date of the United States postmark stamped on the cover in which such return, claim, statement, or other document, or payment, is mailed shall be deemed to be the date of delivery or the date of payment, as the case may be.

However, there are several key limitations to this protection:

• First, the taxpayer typically lacks proof of the postmark stamped on the envelope containing the return, as that envelope—bearing the crucial postmark—should ideally be in the IRS’s possession, not the taxpayer’s.

• Second, the date indicated on the postmark must be on or before the final day for filing the return. Again, the taxpayer generally must rely on the U.S. Postal Service to correctly apply a postmark with the appropriate date, and then must substantiate what that displayed date was.

• Third, §7502(a)’s postmark rule is only applicable if the document is ultimately delivered to the IRS. Should the IRS claim not to have received the envelope, the onus falls on the taxpayer to prove actual delivery to the IRS.

IRC §7502(c) outlines methods by which the taxpayer is deemed to have established both the date and existence of the postmark, as well as providing prima facie evidence of actual delivery to the IRS. The section states:

(c) Registered and certain mailing; electronic filing.

(1) Registered mail. For purposes of this section, if any return, claim, statement, or other document, or payment, is sent by United States registered mail—

(A) such registration shall be prima facie evidence that the return, claim, statement, or other document was delivered to the agency, officer, or office to which addressed; and

(B) the date of registration shall be deemed the postmark date.

(2) Certified mail; electronic filing. The Secretary is authorized to provide by regulations the extent to which the provisions of paragraph (1) with respect to prima facie evidence of delivery and the postmark date shall apply to certified mail and electronic filing.

IRC §7502(f)(1) offers an additional safeguard by permitting the use of certain designated private delivery services.

(f) Treatment of private delivery services.

(1) In general. Any reference in this section to the United States mail shall be treated as including a reference to any designated delivery service, and any reference in this section to a postmark by the United States Postal Service shall be treated as including a reference to any date recorded or marked as described in paragraph (2)© by any designated delivery service.

(2) Designated delivery service. For purposes of this subsection, the term “designated delivery service” means any delivery service provided by a trade or business if such service is designated by the Secretary for purposes of this section. The Secretary may designate a delivery service under the preceding sentence only if the Secretary determines that such service—

(A) is available to the general public,

(B) is at least as timely and reliable on a regular basis as the United States mail,

(C) records electronically to its data base, kept in the regular course of its business, or marks on the cover in which any item referred to in this section is to be delivered, the date on which such item was given to such trade or business for delivery, and

(D) meets such other criteria as the Secretary may prescribe.

(3) Equivalents of registered and certified mail. The Secretary may provide a rule similar to the rule of paragraph (1) with respect to any service provided by a designated delivery service which is substantially equivalent to United States registered or certified mail.

The existing regulations under IRC §7502 furnish guidance on how taxpayers can avail themselves of the protections afforded by IRC §7502, and specifically elucidate the enhanced protections gained through the use of registered or certified mail.

Reg. §301.7502-1(c)(2) offers the following details on substantiating the date of mailing through the use of registered or certified mail:

(2) Registered or certified mail. If the document or payment is sent by U.S. registered mail, the date of registration of the document or payment is treated as the postmark date. If the document or payment is sent by U.S. certified mail and the sender's receipt is postmarked by the postal employee to whom the document or payment is presented, the date of the U.S. postmark on the receipt is treated as the postmark date of the document or payment. Accordingly, the risk that the document or payment will not be postmarked on the day that it is deposited in the mail may be eliminated by the use of registered or certified mail.

The analogous safeguard for the utilization of a private delivery service is delineated in Reg. §301.7502-1(c)(3):

(3) Private delivery services. Under section 7502(f)(1), a service of a private delivery service (PDS) may be treated as an equivalent to United States mail for purposes of the postmark rule if the Commissioner determines that the service satisfies the conditions of section 7502(f)(2). Thus, the Commissioner may, in guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter), prescribe procedures and additional rules to designate a service of a PDS for purposes of the postmark rule of section 7502(a).

The critical matter of securing the presumption of actual delivery, also requisite for the protection under IRC §7502(a)(1), is addressed in Reg. §301.7502-1(e)(2):

(2) Exceptions to actual delivery.

(i) Registered and certified mail. In the case of a document (but not a payment) sent by registered or certified mail, proof that the document was properly registered or that a postmarked certified mail sender's receipt was properly issued and that the envelope was properly addressed to the agency, officer, or office constitutes prima facie evidence that the document was delivered to the agency, officer, or office. Other than direct proof of actual delivery, proof of proper use of registered or certified mail, and proof of proper use of a duly designated PDS as provided for by paragraph (e)(2)(ii) of this section, are the exclusive means to establish prima facie evidence of delivery of a document to the agency, officer, or office with which the document is required to be filed. No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.

(ii) Equivalents of registered and certified mail. Under section 7502(f)(3), the Secretary may extend the prima facie evidence of delivery rule of section 7502(c)(1)(A) to a service of a designated PDS, which is substantially equivalent to United States registered or certified mail. Thus, the Commissioner may, in guidance published in the Internal Revenue Bulletin (see § 601.601(d)(2)(ii)(b) of this chapter), prescribe procedures and additional rules to designate a service of a PDS for purposes of demonstrating prima facie evidence of delivery of a document pursuant to section 7502(c).

A pivotal point of guidance to underscore is the final sentence in Reg. §301.7502-1(e)(2)(i), which states, “No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.” Consequently, alternative forms of proof for timely mailing, such as a proof-of-mailing receipt, will not suffice to safeguard the taxpayer.

The Taxpayer’s Case

The case concerned a taxpayer who had not initially filed his income tax returns in a timely manner. The court characterizes the situation as follows:

This case concerns plaintiff Wrhel’s 2016 and 2018 income taxes. Those taxes were one of the subjects of Wrhel’s Chapter 13 bankruptcy proceedings in the United States Bankruptcy Court for the Western District of Wisconsin, No. 19-13772-13. In that case, the IRS filed a proof of claim identifying Wrhel’s estimated federal income tax liabilities for 2014, 2015, 2016, and 2018; the IRS had no record of Wrhel having filed tax returns for those years. Wrhel objected, stating that after the IRS filed its proof of claim, he had mailed tax returns for 2016 and 2018 showing that he was entitled to refunds for both of those years. The IRS amended its proof of claim to remove Wrhel’s purported liabilities for 2016 and 2018.

Wrhel contends that he completed both federal and Wisconsin tax returns for 2016, 2017, and 2018 in late October 2019 and mailed each return in separate envelopes in early November 2019. He submits copies of those documents dated October 29, 2019, but without any postmarked envelopes. Dkt. 24-2; Dkt. 24-3; Dkt. 24-4. As relevant to Wrhel’s claims in this lawsuit, his 2016 federal return states that he was owed a refund of $558.12 and his 2018 federal return states that he was owed a refund of $345.86. In late November 2019, Wrhel received state-tax refunds for 2016, 2017, and 2018. Wrhel also produces a refund notice and check from the United States Treasury reflecting his refund for his 2017 taxes, both dated December 2019. But there is no evidence directly showing that the IRS received Wrhel’s federal returns for 2016 and 2018.[2]

After waiting for more than a year without receiving his refunds on those returns, Mr. Wrhel submitted a separate claim for refund in December 2020:

In December 2020, Wrhel filed claims for refund with the IRS concerning his 2016 and 2018 taxes, including copies of his 2016 and 2018 returns. The IRS marked those documents received December 21, 2020. The IRS amended its proof of claim in the bankruptcy proceeding, offsetting the $345.86 overpayment of Wrhel’s 2018 taxes against the approximately $15,000 debt that the IRS claimed for Wrhel’s 2014 taxes.[3]

The matter under scrutiny involving IRC §7502 pertains to Mr. Wrhel’s 2016 income tax returns and his ability to substantiate the timely filing of his refund claim. The opinion elaborates on the law and regulations governing the timeframe within which such a claim for a tax refund must be submitted.

Claims brought under §7422 are an exception to the United States’ general sovereign immunity from suit. But the government’s sovereign immunity is waived only when the taxpayer follows IRS regulations for such claims. 26 U.S.C. §7422(a). The government contends that Wrhel failed to file his claim for refund within the time allowed.

Taxpayers must file administrative claims for tax refunds, and treasury regulations construe a taxpayer’s tax return as his administrative claim, 26 CFR § 301.6402-3(a)(5), so Wrhel has fulfilled the requirement that he file an administrative claim. Nonetheless, there is a limit to how late a claim can be filed. Under 26 U.S.C. §6511(b)(2)(A), “the amount of the credit or refund shall not exceed the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return.” “This ‘look back’ rule thus precludes even a timely filed claim from seeking a refund of amounts paid more than three years prior.” Israel v. United States, 356 F.3d 221, 223 (2d Cir. 2004); see also Curry v. United States, 774 F.2d 852, 855 (7th Cir. 1985). And generally a tax return is considered “filed” when it is delivered to the IRS. See, e.g., Davis v. United States, 230 F.3d 1383, 1383 (Fed. Cir. 2000) (“To be properly filed, a claim for refund must be physically delivered to and received by the IRS, unless . . . an exception to the physical delivery rule applies.”).

It is undisputed that Wrhel had the full amount of his 2016 and 2018 taxes withheld by his employer; the IRS deems those taxes paid on April 15 the following year, see 26 U.S.C. §6513(b)(1), so Wrhel’s 2016 taxes were deemed paid on April 15, 2017. In its brief-in-chief, the government argued that Wrhel’s overpayment-refund claim fails because his December 2020 return was filed beyond the three-year deadline for Wrhel to recoup overpayments made in April 2017. I agree that under §6511(b)(2)(A) the December 2020 return was too late. See Curry, 774 F.2d at 855 (“Because the Currys are deemed to have paid all the withheld taxes for which they seek refund on April 15, 1976 and April 15, 1977 and these dates are more than three years preceding the July, 1980 date on which they filed for refund, the Currys may not obtain any of the refund sought.”); Israel, 356 F.3d at 226 (“the ‘look back’ rule . . . seeks to prevent taxpayers from asserting stale claims for credits or refunds.”).[4]

It is important to note that Mr. Wrhel asserts he submitted a set of returns a year earlier, prior to the final date for filing a return to claim the refund owed on his 2016 return.  But the IRS claimed they never received the 2016 or 2018 returns at that time.

In response, Wrhel contends that he filed another set of returns before December 2020, within three years of April 2017: he says that he mailed his 2016, 2017, and 2018 federal and state returns in early November 2019. I take him to be saying that he mailed each of these six returns in separate envelopes. The IRS states that it didn’t receive those copies of his 2016 and 2018 returns.[5]

Initially, the government attempted to contend that the taxpayer was precluded from asserting that his returns had been filed punctually on grounds other than non-compliance with the regulations under IRC §7502. However, the court dismissed this argument from the IRS.

The government argues that Wrhel’s assertions should be excluded under the “shamaffidavit” rule because he didn’t mention the November 2019 mailings in his complaint, and because unsworn statements in a brief are not evidence. But the government doesn’t cite any authority stating that the sham affidavit rule applies to statements inconsistent with a plaintiff’s unsworn complaint, and Wrhel’s new statements only supplement — not contradict — his complaint. As for statements in Wrhel’s briefs, I am inclined to give a pro se litigant some leeway with summary judgment procedures, and any in any event, Wrhel’s statement about when he originally mailed his 2016 tax return is supported by the evidence. He submits: (1) his returns dated October 2019; and (2) his 2017 federal refund and 2016-2018 state refunds dated December 2019, which suggest that he indeed mailed all six of his 2016-2018 federal and state returns in December 2019 within the three-year look-back period.[6]

At this juncture, one might presume the outlook is favorable for the taxpayer, given that the Court not only allows him to present his case but also acknowledges that he has provided evidence suggesting he did indeed mail all three federal returns in October 2019, within the timeframe to claim his 2016 refund. However, this would be the final instance of seemingly positive news for the taxpayer concerning the issue of substantiating the timely filing of his 2016 return.

The Court notes the issue posed by IRC §7502’s statutory method of proving delivery by mailing and why that puts into question whether, even if Mr. Wrhel can be found to have proven he timely placed the 2016 in the mail in October 2019, he would be allowed to gain any presumption of timely filing based on that evidence.

Ordinarily, a party’s assertion that he mailed a document on a certain day might be enough to force a trial on that issue. See, e.g., Vincent v. City Colls. of Chi., 485 F.3d 919, 922 (7th Cir. 2007) (“Evidence of mailing is evidence of delivery.” (citing Hagner v. United States, 285 U.S. 427 (1932))). But that does not hold true for tax claims like Wrhel’s. Under 26 U.S.C. §7502, the only exceptions to the “physical delivery rule” are (1) when a document is postmarked before the deadline and received by the IRS after the deadline; and (2) when a taxpayer has proof that he sent a document by registered mail before the deadline. After the passage of §7502, courts split on the question whether that statute supplanted the common-law mailbox rule (there are no binding Seventh Circuit cases on the issue). Compare Miller v. United States, 784 F.2d 728, 731 (6th Cir. 1986) (“the only exceptions to the physical delivery rule available to taxpayers are the two set out in section 7502“); Deutsch v. Comm’r, 599 F.2d 44, 46 (2d Cir. 1979), with Sorrentino v. IRS, 383 F.3d 1187, 1193 (10th Cir. 2004); Est. of Wood v. Comm’r, 909 F.2d 1155, 1161 (8th Cir. 1990) (“we think that [§7502(c)] is better read as a safe harbor which does not exclude application of a presumption of delivery in those cases in which the terms of the statute are otherwise met.”).[7]

The court observes that the IRS took steps in 2011 to resolve this divergence in judicial opinion on the matter by amending the regulations under IRC §7502. The revisions clarified that IRC §7502 would serve as the exclusive means to secure such a presumption of delivery.

In response to this split, the Department of the Treasury issued a regulation resolving this dispute by clarifying that §7502 replaced the common-law mailbox rule:

Other than direct proof of actual delivery, proof of proper use of registered or certified mail, and proof of proper use of a duly designated [private delivery service], are the exclusive means to establish prima facie evidence of delivery of a document to the agency, officer, or office with which the document is required to be filed. No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.

26 C.F.R. § 301.7502-1(e)(2) (as amended August 2011).[8]

The opinion points out that since the release of that regulation, courts have concurred that §7502 supersedes the common-law mailbox rule, which would otherwise serve as the foundation for Mr. Wrhel to establish the timeliness of his refund claim filing.

Courts have applied this regulation to foreclose claims like Wrhel’s. Baldwin v. United States, 921 F.3d 836, 841-42 (9th Cir. 2019) (“The regulation makes clear that, unless a taxpayer has direct proof that a document was actually delivered to the IRS, IRC §7502 provides the exclusive means to prove delivery. In other words, recourse to the common-law mailbox rule is no longer available.”); see also Crispino v. IRS, No. CV 17-13751, 2021 WL 3910000, at *5 (D.N.J. July 26, 2021); Taha ex rel. His Deceased Brother v. United States, 148 Fed. Cl. 37, 44 (Fed. Cl. 2020), aff’d sub nom. Taha v. United States, 28 F.4th 233 (Fed. Cir. 2022).[9]

Consequently, the court concurs with the government’s position that Mr. Wrhel is unable to demonstrate that he filed a claim for refund in a timely manner.

Wrhel doesn’t present any evidence that he met either of the exceptions to §7502 Under 26 C.F.R. § 301.7502-1(e)(2), I cannot consider his other evidence suggesting that he mailed his 2016 return in November 2019. So I will grant summary judgment to the government on Wrhel’s claim for refund of overpayment of his 2016 taxes.[10]

[1] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023, https://www.taxnotes.com/research/federal/court-documents/court-opinions-and-orders/individual%e2%80%99s-refund-suit-doomed-by-untimely-filing%2c-offset/7hcmj (retrieved September 23, 2023)

[2] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023

[3] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023

[4] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023

[5] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023

[6] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023

[7] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023

[8] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023

[9] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023

[10] Wrhel v. United States, No. 3:21-cv-00424, U.S. District Court for the Western District of Wisconsin, September 18, 2023