September 2020

Travis Thompson comments for Law360’s “Pandemic Amplifies Calls To Fix Tax Deadline Rule Disparity”


By David van den Berg

The novel coronavirus pandemic has amplified the need for the IRS to treat electronically submitted tax payments and those sent through postal mail the same when determining whether they were sent on time.

Two different standards apply to payments sent electronically or through the mail regarding whether they were submitted by the deadline…

Some are hoping to change the discrepancy in treatment. Reps. Darin LaHood, R-Ill., and Suzan DelBene, D-Wash., who both serve on the House Ways and Means Committee, aim to advance legislation to apply what’s known as the “mailbox rule” equally to payments sent electronically through the Treasury system and those sent through regular mail…

“The common-law mailbox rule is inoperative, but 7502 and its regs are essentially the mailbox rule codified, except it does not allow for circumstantial or testimonial evidence to rebut that a document was mailed to the IRS on a certain date,” said Travis Thompson of Sideman & Bancroft LLP…

The legislation would respond to the trend of more people paying bills electronically and avoiding the mail, according to Thompson of Sideman & Bancroft. The law as it stands now essentially penalizes taxpayers that pay electronically because it gives them one fewer day to make a payment, he said.

While the code section doesn’t address electronic payments, Thompson suggested LaHood’s bill should be expanded to include language stating that IRS electronic payment authorization pages or electronic payment receipts would be considered prima facie evidence of a payment having been made on a specific date.

“IRC Section 7502 as it is currently written essentially encourages taxpayers to use standard mail to make payments to the IRS because taxpayers will have until the actual due date to make such payments,” Thompson said.

[subscription site]