Thursday, October 24, 2019
Ninth Circuit Says Declarations Failed to Show Tax Return Was Timely
By a MetNews Staff Writer
The Ninth U.S. Circuit Court of Appeals has rebuffed an effort by a downtown Los Angeles law firm, with roots going back to the late 1800s, to recoup a $9,360 penalty the Internal Revenue Service imposed on it for filing its 2015 partnership tax return late, giving short shrift to its insistence that it timely mailed a form entitling it to a five-month extension.
Jones, Bell, Abbott, Fleming & Fitzgerald’s tax return was due April 18, 2016. David Lickhalter, a certified public accountant and the firm’s then-controller, said in a declaration under penalty of perjury that he “prepared and caused to be filed and mailed to the IRS…on or before April 18, 2016” a Form 7004 which, if in fact mailed on that date, would have extended the deadline to Sept. 19, 2016.
A statute, abrogating the common law rule, states that, with respect to forms sent to the IRS, the date of mailing “shall be deemed to be the date of delivery.”
The partnership’s return was sent to the IRS on Sept. 14, 2016. The issue was whether an extension had been obtained by a timely mailing of the Form 7004, which was not sent by registered or certified mail, and with no evidence in the record as to the postmark.
Lickhalter said in his declaration that he stuck the form in an envelope addressed to the IRS and placed the envelope in law firm’s mailing system. A clerk in the office, Andrew T. Tisnado, put forth in a declaration that he collects mail twice a day, puts postage on each envelope, and either places each envelope in a U.S. Postal Service receptacle in the building or, with respect to envelopes collected after 3 p.m., takes them to the Post Office.
Those declarations did not suffice, District Court Judge Percy Anderson ruled in awarding judgment, on stipulated facts, to the government. He said on June 15, 2018:
“[B]ecause Lickhalter does not indicate when he placed the envelope into the office mailing system, it is not certain if he did it in time for Tisnado to collect it or for it to be taken to a Postal Service depository on April 18, 2016.”
Possibilities Set Forth
“On the record before the Court, it is equally plausible that Plaintiff’s Form 7004 could have been deposited for mailing in a Postal Service depository on April 18, 2016 after 5:30 p.m.; April 19, 2016; or some other date. As a result. Plaintiff has not sustained its burden that it is more likely than not that Plaintiff’s Form 7004 was deposited for mailing in a Postal Service depository on April 18, 2016. The fact that the IRS received Form 7004 on April 26, 2016, eight days after April 18, 2016, suggests, at least circumstantially, that Form 7004 was deposited with the Postal Service after April 18, 2016.”
The Ninth Circuit, in affirming on Tuesday in a memorandum opinion, cited the circuit’s 1998 opinion in Lewis v. United States which declares that a protesting taxpayer must provide “credible evidence” that a document was timely mailed.
“The district court therefore properly concluded that the IRS properly assessed a penalty against appellant for not timely filing its 2015 partnership return,” Tuesday’s opinion says.
The case is Jones, Bell, Abbott, Fleming & Fitzgerald, LLP v. United States, 18-55934
The plaintiff, originally known as Stephens & Stephens, is one of the oldest law firms in Los Angeles (the oldest being O’Melveny & Myers, formed in 1885).
Founders were Albert M. Stevens and Albert M. Stevens Jr. The first listing of the firm in the city directory was in 1899, but it could have been launched in late 1898; Albert M. Stephens Jr. was admitted to law practice on Oct. 11, 1898—one of only 19 new admittees in the county.
The firm was soon joined by another of the father’s four sons, William W. Stephens, and later by son Raymond W. Stephens.
Albert M. Stevens Sr. served as a judge of the Los Angeles County Court from 1877 until his term ended, along with the court’s existence (with the District Court and the County Court being supplanted by the Superior Court), on Jan. 5, 1880. He was president of the Los Angeles Bar Association in 1888—the first chief of that group (now the Los Angeles County Bar Association) since it went into a slumber in 1880, and was an organizer and chair of the committee that brought about its reawakening.
William W. Stephens in 1888 became the first librarian of the Los Angeles County Law Library.
Jones Bell says on its website that it has “been courted by several large firms to merge their practice for decades” but has opted to remain relatively small—with 16 lawyers—for quality control purposes.
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