What's "Sufficient Postage" to Insure Your IRS Response is Timely Filed?

The Internal Revenue Service (IRS) typically requires documents and payments to be filed or made within specific timeframes. For instance, it is well-known that individuals' federal tax returns are generally due every April 15th. It is less commonly known that the Internal Revenue Code (IRC) and corresponding regulations, which provide the rules for determining when a document is considered as timely mailed or filed, are often the subject of significant controversy-and the stakes can be quite high.

Recently, in Lillie v. Commissioner,1 the Tax Court considered yet another matter involving whether or not taxpayers' petition in response to a notice of deficiency was timely filed as required under IRC §7502. Significantly, a notice of deficiency: (1) informs a taxpayer that the IRS has found a deficiency in the tax liability shown on a taxpayer's return as contrasted to the tax liability as determined by the IRS, (2) proposes an assessment of the correct tax amount and any penalties and interest, and (3) informs the taxpayer of the 90-day period in which to file a petition with the Tax Court if he or she wants to contest the deficiency. If the petition is not timely filed, then the IRS will assess the tax and begin collection action. Interestingly, in this case, the Tax Court needs more information to determine whether taxpayers used "sufficient postage."

Applicable Law

The timely mailing/timely filing rule in IRC §7502 provides that when a taxpayer's Tax Court petition is mailed to the Tax Court, and the U.S. Postal Service (USPS) postmarked date on the envelope is either the filing deadline (or an earlier date), then the petition is deemed timely filed-even if the court receives it after the filing deadline.

Regs. §301.7502-1(c)(1) provides that taxpayer's petition "must be contained in an envelope, properly addressed to the agency, officer, or office with which the document is required to be filed or to which the payment is required to be made" and "deposited within the prescribed time in the mail in the United States with sufficient postage prepaid."


Taxpayers received a notice of deficiency dated June 10, 2019 for tax year 2016 and for which they had 90 days to respond. Taxpayers deposited their petition, contained within an envelope, in a USPS deposit box on September 9, 2019, along with the correct amount of $7.35 in postage prepaid for mailing a Priority Mail Flat Rate Envelope

On September 10, 2019, the USPS returned the taxpayers' envelope, indicating that taxpayers had not paid for the requested Certified Mail service.

Taxpayers immediately returned the envelope to the USPS along with the payment for Certified Mail services.

The IRS filed a Motion to Dismiss for Lack of Jurisdiction, claiming that the petition was not timely filed. Taxpayers countered with an objection, asserting that the petition was timely filed as required under IRC §7502.


Ultimately, the Tax Court was unable to decide without additional information, ordering that:

petitioners shall file a First Supplement to their objection. In that First Supplement petitioners shall set forth and discuss fully: (1) whether petitioners requested the petition deposited on September 9, 2019, be sent to the Tax Court by both priority mail and certified mail; and (2) whether the USPS properly returned the envelope bearing that petition for lack of proper postage to petitioners.

While we all wait for the Tax Court's answer as to whether postage under these circumstances was "sufficient postage" as required under IRC §7502, taxpayers must remember that failing to respond timely to a notice of deficiency will preclude them from contesting any IRS determination of tax liability in such notice.

If you have any tax questions or concerns regarding IRS examination or representation before state or federal tax authorities contact Frost & Associates, LLC today at 410-497-5947.

1 Docket No. 17056-19 (U.S.T.C. Dec. 18, 2019).

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