The IRS, like the government’s money manager, sometimes struggles with tax returns. They can lose or mishandle them, whether sent by mail, e-filed, or hand-delivered. It’s frustrating when taxpayers provide their returns multiple times with proof, yet the IRS denies receiving them. This occurs frequently, especially with certain IRS employees. Know more about IRS Tax Help Michigan
Seaview Trading LLC v. Commissioner, No. 20-72416 (9th Cir. 2022), exemplifies this scenario. The taxpayer settled the primary tax issue but contested whether they properly submitted their return to IRS employees.
The case involves a partnership owned by two LLCs, one with a 99% interest and the other with 1%.
The taxpayer claimed they sent a 2001 partnership tax return in July 2002. However, in 2005, the IRS agent stated they hadn’t received it. The taxpayer’s accountant promptly sent a copy with proof of mailing.
In 2007, the person’s lawyer gave a copy of the 2001 partnership tax form to the IRS’s lawyer.
In 2010, over three years after the last submission, the IRS issued an adjustment notice.
The taxpayer argued in U.S. Tax Court that it was too late for the IRS to seek more.
Typically, the IRS has three years from the partnership tax return’s submission to make changes or request more.
However, if they never receive it, the IRS can start the clock when they eventually do.
The U.S. Tax Court agreed that the return was provided in 2005 and 2007. The key was whether handing it to an IRS worker counted as filing.
Filing a Tax Return:
A tax return is filed when it reaches the designated location. For partnership tax returns, it’s considered filed when it reaches the assigned place.
The instructions state that partnership tax returns should go to the IRS Service Center in Ogden, Utah.
The taxpayer referenced a previous case where giving a tax return to an IRS special agent was sufficient. However, the U.S. Tax Court clarified that it must follow specific rules, not just any method.
Since it didn’t go to the designated place, the U.S. Tax Court ruled it wasn’t filed, supporting the IRS’s claim for more money.
Late Tax Returns:
The taxpayer appealed, and the Ninth Circuit Court ruled that if an IRS worker requests a late tax return, and the taxpayer submits it as requested, it’s considered filed for tax purposes.
In this case, as the return was late, it was acceptable to give it directly to the IRS worker.
It’s important to know that the IRS can misplace tax returns, particularly late ones. If this happens, especially when delivering to an IRS worker, cases like Seaview Trading LLC v. Commissioner offer insights. You may have options, like taking legal action, filing a claim, or proposing an alternative based on doubts about your owed amount.Top of Form