Not All Postmarks Are Valid To The IRS

While printing postage from the internet is convenient, it may not be a good idea to do so for payments or petitions mailed to the IRS. That’s what one taxpayer recently learned when her correspondence was regarded as being late despite the timely date her private postage label clearly displayed.

In this case, the woman received a Notice of Deficiency (NOD) from the IRS and was given the right to challenge it with a petition filed by the deadline shown on the notice. The IRS warns that the court will not consider a case if the petition is late. On the day her petition was due, she placed it in an envelope and printed an Endicia.com postage label from the internet in place of a stamp. The problem in doing this, however, is that by the time the petition reached the tax court, it was 20 days late, and the U.S. Postal Service had added two additional postmarks: one the day after the deadline and another 14 days later.

Even though the original postage label was marked with the deadline date, the petition was thrown out. What happened? IRS statutory mailbox rule §7502 and related regulations are in effect. As Texas Tech University School of Law’s Bryan Camp dissected the situation, several issues were at play:

  1. The IRS considers postmarks by private postage meters or their modern equivalents such as Endicia.com postage labels to be non-official postmarks.
  2. If the envelope holds both kinds of postmarks, only the USPS postmark counts for meeting the postmark requirement.
  3. Even if a non-USPS postmark is the only postmark, the Tax Court must receive the petition within the period it “would ordinarily be received if it were postmarked at the same point of origin by the U.S. Postal Service.” The Tax Court received the petition 20 days late, which is far longer than one would expect it would take to travel through the mail.

It seems sending via USPS Registered Mail or Certified Mail services could have helped her avoid both the postmarking and delay-in-delivery issues. While there might not be as much at stake as it was in this case, following this advice for tax returns and any other IRS communication sent on or close to deadlines could save you from relying on a postmark that the IRS may not accept.

Photo by Christin Hume on Unsplash

April 16, 2019

Client Spotlight

If your business generates $1.5 million or more in revenue, how do you capture the tax benefits of family payroll while keeping your business fully…
If you’re setting aside money for your kids or grandkids, the new IRC Section 530A may be a tax-smart way to do it….
When two high earners say “I do,” protecting pre-marital wealth isn’t unromantic—it’s essential strategic planning….
Cryptocurrency may have gone mainstream, but tax compliance is rapidly catching up with updated IRS property classifications and Form 1099-DA broker reporting to evolving regulations….
You might be sitting on a valuable tax strategy without realizing it. Before you make any moves, keep these critical rules in mind….
Under certain circumstances, an S corp election can be great for tax savings, but it’s not always great for growth. Here’s what you should know…
As a business owner, what can you do to eliminate tax surprises? Before jumping on tax liability insurance to insure your tax bill, consider what…
From accountant to owner, and now to a successful exit! Amir Kamel proved that “everything good takes time”—including walking away on your own terms. Read…
After waiting 11 years for his visa, Amir Kamel’s journey from Cairo to building a multi-million dollar Texas business is a true masterclass in grit,…
Used wisely, 100% bonus depreciation can fuel growth and protect cash flow; used poorly, it can create unnecessary debt and future tax friction….
Discover how this San Antonio entrepreneur transitioned from managing communities to constructing them—doubling his commercial construction firm’s size year over year….

Blogs and Articles

Spotting Illegal Trusts and Private Family Foundation Arrangements

Spotting Illegal Trusts and Private Family Foundation Arrangements

Read More

Family Business Payroll Tips and Traps

If your business generates $1.5 million or more in revenue, how do you capture the tax benefits of family payroll while keeping your business fully...

Family Business Payroll Tips and Traps

Read More

Is the Trump Account a Safe Bet for Gift Tax Savings?

If you're setting aside money for your kids or grandkids, the new IRC Section 530A may be a tax-smart way to do it....

Is the Trump Account a Safe Bet for Gift Tax Savings?

Read More

Protecting Dual-Income Pre-Marital Wealth

When two high earners say "I do," protecting pre-marital wealth isn't unromantic—it's essential strategic planning....

Protecting Dual-Income Pre-Marital Wealth

Read More

Crypto Tax Changes Are Coming, But What Does That Mean?

Cryptocurrency may have gone mainstream, but tax compliance is rapidly catching up with updated IRS property classifications and Form 1099-DA broker reporting to evolving regulations....

Crypto Tax Changes Are Coming, But What Does That Mean?

Read More

What Is Tax Loss Harvesting?

You might be sitting on a valuable tax strategy without realizing it. Before you make any moves, keep these critical rules in mind....

What Is Tax Loss Harvesting?

Read More

Is an S-Corp Election Still Right for Small Business Owners?

Under certain circumstances, an S corp election can be great for tax savings, but it’s not always great for growth. Here’s what you should know...

Is an S-Corp Election Still Right for Small Business Owners?

Read More

Do Businesses Need Tax Liability Insurance?

As a business owner, what can you do to eliminate tax surprises? Before jumping on tax liability insurance to insure your tax bill, consider what...

Do Businesses Need Tax Liability Insurance?

Read More

Princess Professional

From accountant to owner, and now to a successful exit! Amir Kamel proved that "everything good takes time"—including walking away on your own terms. Read...

Princess Professional

Read More

Princess Beauty Supply

After waiting 11 years for his visa, Amir Kamel's journey from Cairo to building a multi-million dollar Texas business is a true masterclass in grit,...

Princess Beauty Supply

Read More

100% Bonus Depreciation: Hits and Misses

Used wisely, 100% bonus depreciation can fuel growth and protect cash flow; used poorly, it can create unnecessary debt and future tax friction....

100% Bonus Depreciation: Hits and Misses

Read More

DJS Resources

Discover how this San Antonio entrepreneur transitioned from managing communities to constructing them—doubling his commercial construction firm's size year over year....

DJS Resources

Read More

College Athlete NIL Tax Implications: When Fantasy Becomes Reality

In the eyes of the IRS, student-athletes landing NIL deals are now self-run businesses. Learn the tax implications and four golden rules critical to their...

College Athlete NIL Tax Implications: When Fantasy Becomes Reality

Read More

Profit-Sharing Disputes: IDing What Went Wrong

Disputes in closely held businesses rarely stem from simple math errors. Instead, they arise from "creative" accounting that obscures the business's true economic reality....

Profit-Sharing Disputes: IDing What Went Wrong

Read More

What’s the Deal with Trump’s Forever Tax-Immunity Loophole?

While you might not be signing an addendum with the Acting Attorney General, you CAN use closing agreements and statutes of limitation to create your...

What’s the Deal with Trump’s Forever Tax-Immunity Loophole?

Read More

Now Accepting New Clients

Let’s Start the Conversation

Let’s take a look at your finances together. We offer a complimentary 1-hour call to review your past tax returns. If we see a way to help you, we will.

Want to receive tax strategies and tips direct to your inbox?

Name(Required)