Pace Oil Co. v. Comm'r of Internal Revenue, Docket No. 7840-78.

• Decision Date: 05 November 1979
• Docket Number: Docket No. 7840-78.
• Parties: PACE OIL COMPANY, INC., PETITIONER v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

73 T.C. 249

PACE OIL COMPANY, INC., PETITIONER

v.COMMISSIONER of INTERNAL REVENUE, RESPONDENT

Docket No. 7840-78.

United States Tax Court

Filed November 5, 1979.

Petitioner's income tax return for the taxable year ended July 31, 1974, after extensions of time for filing, was required to be filed on or before Apr. 15, 1975. Petitioner mailed its return to respondent on Apr. 7, 1975, in a properly addressed envelope with postage prepaid. Respondent received the return on Apr. 9, 1975. Respondent mailed his statutory notice of deficiency to petitioner on Apr. 10, 1978 (Apr. 9 being a Sunday). Held: The return was timely filed without regard to the provisions of sec. 7502(a), I.R.C. 1954. Such section does not apply to a tax return unless it is untimely filed. Its purpose is to have returns treated as being filed on time when they would not otherwise be so treated, but its purpose is not to create a new starting point for the statute of limitations for returns that are timely filed without reference to such section. Therefore, respondent's notice of deficiency was timely mailed, and petitioner's motion for summary judgment will be denied. Wright Tisdale, Jr., for the petitioner.

Carolyn A. Boyer, for the respondent.

OPINION

DAWSON, Judge:

This motion was assigned to and heard by Special Trial Judge Fred S. Gilbert, Jr., pursuant to section 7456(c), Internal Revenue Code. The Court agrees with and adopts his opinion which is set forth below.¹

OPINION OF THE SPECIAL TRIAL JUDGE

GILBERT, Special Trial Judge:

This case is before the Court on the petitioner's motion for summary judgment, under Rule 121, Tax Court Rules of Practice and Procedure.

Respondent determined a deficiency of $316,427.13 in petitioner's Federal income tax for its taxable year ended July 31, 1974. Petitioner filed a timely petition seeking a review of that determination and alleging, in essence, that the adjustments proposed by respondent in the statutory notice of deficiency were without factual foundation. Subsequently, petitioner amended its petition to allege, also, that respondent had failed to issue the notice of deficiency within the 3-year period prescribed by section 6501, Internal Revenue Code. ² This is the allegation upon which petitioner bases its motion for summary judgment.

Whether the statutory notice was timely depends upon the further question whether section 7502(a) applies where a tax return is delivered by mail to the proper office of the Commissioner of Internal Revenue (Commissioner) prior to the expiration of an extended period for filing granted pursuant to section 6081, so that the date of mailing is to be deemed the date of delivery.

Petitioner's income tax return for its taxable year ended July 31, 1974, was due initially on October 15, 1974. However, under requests for extensions of time for filing, granted by the respondent, it was required to be filed on or before April 15, 1975. On April 7, 1975, petitioner mailed its return in an envelope, postage prepaid, properly addressed to the office with which the return was required to be filed. Respondent received the return on April 9, 1975. On April 10, 1978, respondent mailed a statutory notice of deficiency to petitioner for the year in question.

Section 6501(a) provides that, except as otherwise provided, any tax “shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed).” As used in this section, the term “filed” means “delivered.” Hotel Equities Corp. v. Commissioner, 65 T.C. 528 (1975), affd. 546 F.2d 725 (7th Cir. 1976).

Section 7502 provides in pertinent part as follows:

(a) GENERAL RULE. —-

(1) DATE OF DELIVERY. —-If any return, * * * required to be filed, * * * within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws is, after such period or such date, delivered by United States mail to the agency, officer, or office with which such return * * * is required to be filed, * * * the date of the United States postmark stamped on the cover in which such return * * * is mailed shall be deemed to be the date of delivery * * *

(2) MAILING REQUIREMENTS. —-This subsection shall apply only if—-

(A) the postmark date falls within the prescribed period or on or before the prescribed date—-

(i) for the filing (including any extension granted for such filing) of the return * * ** * * and

(B) the return * * * was, within the time prescribed in subparagraph (A), deposited in the mail in the United States in an envelope or other appropriate wrapper, postage prepaid, properly addressed to the agency, officer, or office with which the return * * * is required to be filed * * *³Under this section, if applicable, the deemed delivery date referred to in paragraph (1) is the filing date for purposes of determining when the statute of limitations for asserting a deficiency expires. Hotel Equities Corp. v. Commissioner, supra.

It is the petitioner's position that section 7502(a) applies to the factual situation herein and that, under this section, the filing date of the tax return in question is the date that it was mailed, April 7, 1975. For that reason, petitioner asserts that respondent's notice of deficiency was not timely, being sent after the statutory period for assessment had expired. Respondent's position, however, is that section 7502(a) is not applicable here. He asserts that the return at issue was filed on the date of its receipt, April 9, 1975, and that, therefore, the deficiency notice was timely when issued on April 10, 1978.⁴

There is no question that petitioner mailed its tax return “within the prescribed period or on or before the prescribed date * * * for the filing (including any extension granted for such filing) of the return” and that the other requirements of paragraph (2) of section 7502(a) were met. However, respondent asserts that, since the return was delivered 6 days prior to the date that it was actually due, petitioner did not meet the requirement of paragraph (1), that the return be delivered after the period or date for filing prescribed “under authority of any provision of the internal revenue laws.”

In support of its position, petitioner points out that, while paragraph (2) of section 7502(a) makes specific reference to extensions of time for filing in setting out the period within which a return must be mailed, paragraph (1) of that subsection makes no such reference in stating the period outside of which a return must be delivered in order for the provisions of the section to be effective. Petitioner argues that, therefore, the “prescribed period” or “prescribed date” referred to in section 7502(a)(1) is the initial period or date for filing prescribed specifically by section 6072(b) (in this case, October 15, 1974)⁵ and not the period or date prescribed by the Commissioner in an extension of time for filing granted under authority of section 6081.⁶ In essence, then, petitioner contends that, so long as a tax return is mailed during an extended period for filing, it will meet the requirements of section 7502(a)(1), regardless of whether the return is received by the Commissioner before or after the extended due date for filing, because, in all such cases, it will be received by him after the initial due date.

Clearly, if the petitioner's interpretation were correct, section 7502(a) would apply here. So construed, that section would also, as petitioner contends that it was intended to, establish a general rule that any return mailed during an extended period for filing is deemed to be delivered on the date of its mailing. We, however, do not agree that such a rule is within the scope of section 7502(a).

If the Congress had intended to enact any such rule as that for which petitioner contends, it could not have been more indirect in doing so. On its face, section 7502(a) evidences the express purpose that the date of mailing of a return be deemed to be the date of its delivery only where it would otherwise be considered as untimely filed. There is no indication that this rule is to apply to returns that are timely without regard to section 7502(a), i.e., returns that are delivered prior to the expiration of an extended period for filing.

The only basis for petitioner's argument is the difference in phraseology used in paragraphs (1) and (2) of section 7502(a) in describing the prescribed period or prescribed date for filing. However, we are not persuaded that the specific reference to extension periods in paragraph (2) diminishes the breadth of the language used by Congress to describe the filing period in paragraph (1). It seems clear that the phrase “within a prescribed period or on or before a prescribed date (for filing) under authority of any provision of the internal revenue laws” used in paragraph (1) is sufficiently broad to include a period or date for filing prescribed by the Commissioner under authority of section 6081. The words “any provision of the internal revenue laws” must surely be intended to embrace something more than the section of the Internal Revenue Code that prescribes the initial filing date, section 6072.

Any doubt regarding the proper construction of section 7502(a) is removed by reference to its legislative history. The section was enacted as a new...