Part Two: Are Tax Returns Given to an IRS Agent Considered Filed?
By Joel N. Crouch on June 8, 2022
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Joel N. Crouch
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In 2015, I wrote a blog post with this same title (here) concluding that based on case law, a tax return that is given to a representative of the IRS is not considered filed and, therefore, the statute of limitations does not start. I followed that up with a blog post (here) last year discussing a case which confirmed that tax returns are not considered filed if merely given to an IRS representative. Furthermore, in 2015 the 9th Circuit reversed a CPA’s convictions for tax evasion because “filing” is an element of tax evasion and the CPA handed his fraudulent tax returns to the IRS agent instead of filing them. United States v. Boitano
That position was recently turned on its head in Seaview Trading LLC v. Commissioner where the 9th Circuit reversed the Tax Court on the meaning of a “filed” return. In Seaview, representatives of the partnership thought they had timely filed the partnership’s 2001 Form 1065 in July 2002. They learned that the return had not been filed when the IRS opened an examination of the partnership’s tax return in 2005. Seaview’s accountant immediately faxed a signed copy of the return to the agent. In addition, Seaview’s attorney mailed a copy to the IRS in 2007.
The IRS issued a notice of deficiency in October 2010 and Seaview filed a petition with the Tax Court. Seaview argued that the IRS was timed-barred because the notice of deficiency had been issued more than three years after Seaview had filed its 2001 tax return by faxing it to the IRS agent. The Tax Court disagreed, holding that Seaview never filed its 2001 return for limitations purposes because it didn’t meticulously comply with reg. section 1.6031(a)-1(e)(1), which states that the designated place for filing is the “service center prescribed in the relevant IRS revenue procedure, publication, form, or instructions to the form.”
The Ninth Circuit majority agreed with Seaview that because the section 6031 regulations don’t prescribe how delinquent returns should be filed, the ordinary meaning of the term “file” should govern whether Seaview’s 2005 and 2007 submissions constituted a filing of its 2001 return. In holding that those submissions were filed for statute of limitations purposes, the majority pointed out that the IRS’s internal guidance “verifies that delinquent returns need not be sent to an IRS service center and may be filed with authorized IRS officials.”
Seaview was decided by a three judge panel, one of whom disagreed and wrote a long dissent. It is likely we have not seen the last of this case or this issue.
For questions regarding this blog post or any other civil or criminal tax related matter, please feel free to contact Joel Crouch at (214) 749-2456 or jcrouch@meadowscollier.com.
That position was recently turned on its head in Seaview Trading LLC v. Commissioner where the 9th Circuit reversed the Tax Court on the meaning of a “filed” return. In Seaview, representatives of the partnership thought they had timely filed the partnership’s 2001 Form 1065 in July 2002. They learned that the return had not been filed when the IRS opened an examination of the partnership’s tax return in 2005. Seaview’s accountant immediately faxed a signed copy of the return to the agent. In addition, Seaview’s attorney mailed a copy to the IRS in 2007.
The IRS issued a notice of deficiency in October 2010 and Seaview filed a petition with the Tax Court. Seaview argued that the IRS was timed-barred because the notice of deficiency had been issued more than three years after Seaview had filed its 2001 tax return by faxing it to the IRS agent. The Tax Court disagreed, holding that Seaview never filed its 2001 return for limitations purposes because it didn’t meticulously comply with reg. section 1.6031(a)-1(e)(1), which states that the designated place for filing is the “service center prescribed in the relevant IRS revenue procedure, publication, form, or instructions to the form.”
The Ninth Circuit majority agreed with Seaview that because the section 6031 regulations don’t prescribe how delinquent returns should be filed, the ordinary meaning of the term “file” should govern whether Seaview’s 2005 and 2007 submissions constituted a filing of its 2001 return. In holding that those submissions were filed for statute of limitations purposes, the majority pointed out that the IRS’s internal guidance “verifies that delinquent returns need not be sent to an IRS service center and may be filed with authorized IRS officials.”
Seaview was decided by a three judge panel, one of whom disagreed and wrote a long dissent. It is likely we have not seen the last of this case or this issue.
For questions regarding this blog post or any other civil or criminal tax related matter, please feel free to contact Joel Crouch at (214) 749-2456 or jcrouch@meadowscollier.com.
