Howard L. Baldwin; Karen Baldwin, Plaintiffs-Appellees,
United States of America, Defendant-Appellant.
and Submitted January 8, 2019 Pasadena, California
Appeals from the United States District Court for the Central
District of California R. Gary Klausner, District Judge,
Presiding D.C. No. 2:15-cv-06004-RGK-AGR
Nathaniel S. Pollock (argued), Joan I. Oppenheimer, and
Gilbert S. Rothenberg, Attorneys; Richard E. Zuckerman,
Principal Deputy Assistant Attorney General; Tax Division,
United States Department of Justice, Washington, D.C.; for
Wayne Keaster (argued), Chamberlin & Keaster LLP, Encino,
California, for Plaintiffs-Appellees.
Before: Susan P. Graber and Paul J. Watford, Circuit Judges,
and Jack Zouhary, [*] District Judge.
panel reversed the district court's judgment, after a
bench trial, in favor of taxpayers in their tax refund
action, and remanded with instructions to dismiss because
taxpayers had not filed a timely claim for a refund with the
Internal Revenue Service (IRS).
prerequisite to bringing their refund action, taxpayers first
had to file a timely amended return, claiming the refund,
with the IRS. In this case, the IRS did not timely receive
such a return. The district court credited the testimony of
two employees of taxpayers to find that, under the common-law
mailbox rule, the amended return had been timely filed.
common-law mailbox rule provides that proof of proper
mailing-including by testimonial or circumstantial
evidence-gives rise to a rebuttable presumption that the
document was physically delivered to the addressee in the
time such a mailing would ordinarily take to arrive. In
contrast, Internal Revenue Code § 7502 allows documents
to be deemed timely filed only if they are actually delivered
to the IRS and postmarked on or before the deadline. For
documents sent by registered mail, § 7502 provides a
presumption that the document was delivered even if the IRS
claims not to have received it, so long as the taxpayer
produces the registration as proof. Under Treasury Regulation
§ 301.7502-1(e)(2), IRC § 7502 provides the
exclusive means to prove delivery, rendering the common-law
mailbox rule unavailable.
panel accorded Chevron deference to Treasury
Regulation § 301.7502-1(e)(2) as a permissible
construction of IRC § 7502. Because that regulation
applies to this case, the panel reversed the district
court's judgment and remanded with instructions to
dismiss, and reversed the award of litigation costs to
taxpayers because they were no longer the prevailing party.
WATFORD, CIRCUIT JUDGE.
and Karen Baldwin filed this action to obtain a refund of
taxes they paid for the 2005 tax year. After a bench trial,
the district court entered judgment in their favor, awarding
them a refund of roughly $167, 000 plus litigation costs of
$25, 000. We conclude that the district court lacked the
authority to hear this suit. As a prerequisite to bringing
this action, the Baldwins first had to file a timely claim
for a refund with the Internal Revenue Service (IRS). They
filed their claim too late. As a result, we must reverse the
district court's judgment and remand with instructions to
dismiss the case.
the merits of the underlying tax dispute are irrelevant to
our disposition, we provide only a brief summary of the
facts. The Baldwins' 2007 tax return reported a net
operating loss of approximately $2.5 million from their movie
production business. They wanted to carry that loss back to
the 2005 tax year in order to offset their 2005 tax
liability. Based on that carryback, the Baldwins prepared an
amended 2005 tax return claiming entitlement to a refund of
approximately $167, 000.
obtain a refund, the Baldwins were required to file their
amended 2005 tax return by October 15, 2011-three years from
the extended due date for their 2007 tax return. See
26 U.S.C. § 6511(b)(1), (d)(2)(A). The Baldwins assert
that they sent their amended 2005 tax return to the IRS by
U.S. mail in June 2011, well before the October 15th
deadline. But the IRS never received that return, or any
other return postmarked by the October 15, 2011, deadline.
The IRS did eventually receive an amended 2005 return from
the Baldwins ...