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Faxing a Courtesy Copy of Taxpayer's Return to IRS Doesn't Qualify as a "Filing"

(Parker Tax Publishing March 2021)

The faxing of a "courtesy copy" of a taxpayer's return to an IRS revenue officer by the taxpayer's return preparer does not qualify as "filing" of the return. Thus, the taxpayer's return for that year was never filed with the IRS and the income taxes for that year could not be discharged in bankruptcy. Harold v. U.S., 2021 PTC 50 (E.D. Mich. 2021).

Patrice Harold and her husband, Thomas Barrow, obtained a six-month extension for filing their 2008 tax return. Thus, the return was due on October 15, 2009. In 2009, Harold hired Akono Gross of Lothamer Tax Resolution, Inc. (Lothamer) to negotiate an installment agreement with the IRS regarding outstanding federal income tax liabilities dating back to 2003. On June 2, 2009, Gross sent a fax to IRS Revenue Officer Antoinette Cooley, with whom he negotiated an installment agreement. The fax enclosed the first two pages of Harold and Barrow's 2008 tax return and stated that the 2008 return "was sent to the IRS for filing on June 1, 2009." On June 16, 2009, Gross also faxed Cooley a signed copy of the full 2008 Form 1040, which Gross described as a "courtesy copy." Gross did not remember if he actually filed the 2008 tax return, but said that if he did so, it would have been his practice to file the return by regular mail, sent to the IRS service center (not to an IRS revenue officer) on or before June 1, 2009.

In January of 2016, after becoming aware that the IRS had no record of Harold's and Barrow's 2008 tax return being filed, IRS Revenue Officer Christopher Smith contacted Lothamer and requested a copy of the 2008 tax return. On January 8, 2016, Bridgette Austin, a senior case manager at Lothamer, sent an email to Smith attaching the 2008 tax return and stating that it had been filed with Revenue Officer Cooley on June 16, 2009. Smith then caused the Form 1040 to be filed on or about January 15, 2016. That same day, the IRS assessed taxes based on the filed return.

On January 20, 2016, Harold filed a voluntary Chapter 7 bankruptcy petition. The IRS filed an adversary proceeding complaint. With respect to Harold's 2008 tax return, the government argued that, under binding Sixth Circuit precedent set forth in Miller v. U.S., 784 F.2d 728 (6th Cir. 1986), the "physical delivery rule" governs tax return filing, subject to two limited statutory exceptions contained in Code Sec. 7502, and that the "physical delivery rule" was not met with respect to the Form 1040 for tax year 2008 until January 2016, when the IRS received the Form 1040. The government also argued that neither of the statutory exceptions in Code Sec. 7502 applied because Harold failed to provide any evidence of a postmark or certified mail card for the filing of the 2008 return.

In 2018, the U.S. Bankruptcy Court for the Eastern District of Michigan granted the government's motion for partial summary judgment after concluding that Harold's 2008 and 2010 tax liabilities were nondischargeable in bankruptcy pursuant to 11 U.S.C. Section 523(a)(1)(B). The bankruptcy court held that the June 16, 2009, faxing of the 2008 tax return was a transmittal of a mere "courtesy copy" and did not constitute a "filing" of the 2008 tax return. The bankruptcy court therefore concluded that Harold's federal income tax liability for 2008 was nondischargeable because the return was filed late (i.e. less than two years before the bankruptcy petition). In reaching this conclusion, the bankruptcy court rejected Harold's argument that the June 16, 2009 fax from Gross to Cooley constituted delivery of the 2008 return for filing because it was expressly intended to provide a courtesy copy of the return, and Gross testified at his deposition that his general practice was to (i) mail a return by standard U.S. Mail and not fax it, and (ii), mail it directly to the IRS service center and not to a revenue officer, if he did mail a return for filing.

Harold appealed to the district court for the Eastern District of Michigan. She argued that the bankruptcy court should have found that Gross's fax to Cooley on June 16, 2009, which included a copy of the 2008 tax return, constituted a timely "filing" of the tax return. Harold took issue with the bankruptcy court's conclusion that the fax did not constitute a filing because the fax did not state that the copy of the tax return "was intended for filing" and, further, that Gross testified that the copy "was a courtesy copy that was not intended for filing." She argued that there was no requirement that any communication directly or implicitly state that a copy is "intended for filing." Harold also argued that the bankruptcy court should have considered "other evidence" that the 2008 tax return was filed by fax on June 16, 2009. The "other evidence" included: (1) Harold's husband's deposition testimony that as far as he knew, Gross filed the return with the revenue officer, and (2) the January 8, 2016, letter sent by Austin to Revenue Officer Smith stating, "the 2008 tax return was filed with RO Antoinette Cooley on June 16, 2009."

The district court affirmed the bankruptcy court's holding that the June 16, 2009, faxing of the 2008 tax return did not constitute a "filing" for two reasons. First, the court said, although it is true that there is no requirement per se that a communication state that a tax return "is intended for filing," the situation in this case did not involve the mere absence of words demonstrating an intent to file. Rather, the court observed, it involved express words negating an intent to file. Whatever "intent" may mean in connection with a tax filing, the court found that it would be unreasonable to hold that a transmitting a "courtesy copy" to a revenue officer constitutes filing a tax return. According to the court, the term "filing" denotes an intent to do something to create a permanent record. Conversely, a "courtesy copy" denotes a casual transmittal, as in a sending a copy that the recipient may keep or not, as he or she wishes. Consequently, the court found it difficult to imagine how a tax return sent as a "courtesy copy" could be considered as a filing. According to the district court, the bankruptcy court correctly concluded that the June 16, 2009, fax was a transmittal of a courtesy copy of the 2008 tax return, not a filing of the 2008 tax return.

Second, the district court said, the 2008 tax return was not filed via the June 16, 2009, fax because the fax did not constitute delivery of the tax return to the proper place for filing. The court noted that Code Sec. 6091(b)(1) specifies the place where tax returns are required to be filed. For persons other than corporations, that provision states that a return must be made to the Secretary of Treasury in the internal revenue district in which is located the legal residence of the person making the return, or at the IRS Service Center serving that district. The court cited Reg. Sec. 1.6091-2(a)(1), which provides that income tax returns of individuals must be filed with any person assigned the responsibility to receive returns at the local IRS office that serves the legal residence of the person required to make the return. The court also noted that the Tax Court, in Friedmann v. Comm'r, T.C. Memo. 2001-207, held that an individual failed to file his tax return by giving photocopies of the tax return to a revenue agent, holding: "Clearly, the revenue agent was not the prescribed place for filing those returns pursuant to section 6901(b)(1)."

With respect to Harold's argument concerning the "other evidence," the court found that it failed for at least two reasons. First, the argument ignored the fact that much of the evidence could not be considered on a motion for summary judgment. Second, even if the "other evidence" were considered, it did not demonstrate that the 2008 tax return was delivered to the proper place for filing. At most, the court said, it supported the fact that the June 16, 2009, fax delivered the 2008 tax return to Revenue Officer Cooley.

For a discussion of the discharge of income taxes in bankruptcy, see Parker Tax ¶16,160.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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