Criminal Statute of Limitations and the Timely-Mailing, Timely-Filing Rule

In Luparella v. United States, 335 Fed. Appx. 212, 2009 U.S. App. LEXIS 12440 (3d Cir. 2009) (unpublished), the defendant was convicted of tax crimes (conspiracy, aiding and assisting and, apparently, tax perjury). In relevant part, defendant signed his tax return on 9/24/96. Defendant alleged that he mailed the return on 9/25/96. The IRS received the return by mail on 10/2/96, "six postal days after Luparella allegedly mailed the return." The indictment was returned on 9/25/02, There are no other relevant facts recounted in the opinion. The issue in this habeas corpus case was whether the indictment was untimely.

Defendant argued that, under the timely mailing, timely filing rule in Section 7502, since he filed the return on 9/25/96, the indictment on 9/25/02 was one day short of the 6 year statute of limitations. Here's how the court handled / mishandled the argument:

Luparella argues that a tax return is "filed" on the date it is mailed, and insists that his tax return was mailed on the date it was signed, September 25, 1996. Since the Indictment was not returned until September 25, 2002, he contends that it is untimely by one day, and that his counsel was ineffective for failing to object to the admissibility of the tax return and for failing to move to strike Count 2 as untimely.

We are not persuaded. This is because Luparella has offered no relevant support for his assertion that a tax return is considered "filed" for statute of limitations purposes on the date it is mailed. He cites to 26 U.S.C. § 7502, which states that "[t]imely mailing [is] treated as timely filing and paying" for the purposes of processing a tax return. This provision does not speak to when the statute of limitations begins to run for a charge of criminal tax fraud. n5

n5 Although we do not reach the merits of this issue, we note that the Government's position -- that the statute of limitations begins to run on the date the return is filed with the IRS (which is also the date of receipt by the IRS service center) -- finds support in caselaw. See United States v. Matis, 476 F.Supp. 1287, 1293 (S.D.N.Y. 1979) (noting that the statute of limitations began to run in a tax fraud case on the date the return was received by the IRS); United States v. Stella, 745 F. Supp. 195, 197 (S.D.N.Y. 1990) (stating that the date of the "receipt" stamp by the IRS indicates the date at which the receipt was filed, and begins the statute of limitations for a tax fraud prosecution).

Further, even if Luparella's legal argument had legal support, he has provided no evidentiary support for the assertion that his return was mailed on the date it was signed. In the absence of such support, his assertion is unconvincing, particularly since the IRS did not receive the tax return until October 2, 1996 -- six postal days after Luparella allegedly mailed the return.

The Court got the right result -- timely indictment -- but for the wrong reasons. Section 7502(a), the timely-mailing, timely-filing rule, provides in pertinent part:

If any return * * * required to be filed * * * on or before a prescribed date * * * is, after such period or such date, delivered by United States mail to the agency * * * with which such return, claim, statement, or other document 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* * * *.

The provision is a relief provision designed to treat a return that is otherwise untimely when filed (i.e., the date received by the IRS) as timely filed. Stated otherwise, this provision applies only if the return is untimely filed (for this purpose, received by the IRS) but timely mailed, in which case it is deemed timely filed. If the return is timely filed (i.e., received by the IRS during the period that it is required to be filed), then it is filed on the date that it is received and 7502 does not apply. For example, if the taxpayer mails his 01 return to the IRS on 4/1/02 and it is received and filed 4/4/02, then it is actually filed 4/4/02. (There is another rule that says that a return received before the original due date for the return, in this case 4/15/02, is deemed filed on the original due date (4/15/02); this rule does not apply during extensions.) So for all purposes, including criminal prosecution purposes, the starting due date in this example is 4/15/02. But the taxpayer in Luparella did not mail or file by the original due date (4/15/02 in the example and 4/15/96 in the actual case).

So we now look to the rules that apply to returns filed after the original due date. Keep in mind that the actual filing date is the date the IRS receives it. In Luparella, the taxpayer could benefit only if the timely-mailing, timely-filing rule permitted an earlier filing date. We have two possible scenarios.

1. If the taxpayer applied for and obtained an extension (let's say the usual one through 10/15/02 in the example and 10/15/96 in the case), then the IRS would have received the return within the filing date as extended and 7502 would not apply. (When teaching this, I encourage my students to think about why that is the case -- that taxpayer, having timely filed, does not need timely-mailing, timely-filing relief and the statute thus does not provide the relief.)

2. If the taxpayer did not file for the extension and thus was not timely when he mailed the return or it was received by the IRS, § 7502 simply does not apply because it requires a timely mailing in any event.

Under either of these scenarios (the only two possible), the taxpayer loses on a straight-forward application of the statute. The Court just did not get it. (I have not read the briefs, so do not know whether the Government served it up to the Court.) For more reading on this, I offer my current draft of the relevant portion of my Tax Procedure book here (note that in my book materials I discuss the § 7502 timely-mailing, timely-filing rule and the common law mailbox rule (which also would not apply in the Luperella facts) and provide extended examples).