question archive Harold and Jill Jones live in the State of California (which is in the 9th Circuit)

Harold and Jill Jones live in the State of California (which is in the 9th Circuit)

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Harold and Jill Jones live in the State of California (which is in the 9th Circuit). They filed a 2007 income tax return that reflected a net operating loss ("NOL"). They wished to carry this NOL to 2005. Under IRC §651 1(b)(1) and (d)(2)(A), in order to obtain a refund of taxes paid with respect to 2005, they were required to file a claim for a refund by October 5, 2011. In June, 2011 (before the deadline), they attempted to file an amended 2005 return and claimed a refund therein. The IRS never received the June, 20111 filing. Later on, in 2013 (after the deadline), they filed an a replacement amended return for 2005.


The taxpayers filed a suit claiming a refund in the appropriate District Court. In that lawsuit, they claimed that they had timely filed the 2005 amended return in June, 2011 (before the deadline). In support of their claim, they asserted a "common law" rule called the "mailbox rule" which had been developed and applied by some courts in the past. At trial, they put on testimony by two of their employees who each stated that they had gone together to the Post Office in June, 2011, using regular (that is, NOT certified mail). The District Court allowed this testimony and ruled that, under the mailbox rule, this testimony raised a rebuttable presumption that the amended return was physically delivered to the IRS in time for it to arrive before the October 5, 2011 date. So, at trial, the taxpayer won.


The IRS, however, appealed this decision to the Ninth Circuit Court of Appeals. (Assume that this case will be heard by the Court sometime in 2020.)


1. What is the most probable outcome of this case on appeal? (Pay careful attention to where the taxpayers live and the applicable Court of Appeals that will hear this case.)


2.   Does the common law "mailbox rule" apply to this case?


3.   If not, what is the applicable law for measuring the filing of a claim for a refund?


4.    Are there any Treasury Regulations that might affect the outcome of this case? If so, discuss the impact of any such regulations on this case.


5.    Does the Chevron vs. National Resources case discussed on Pag 113 of the textbook have any application to any regulations?


6.    Assuming that the taxpayers had lived in Texas rather than in California, is there anything you can find that might cause a different result:

a)   Before the Treasury's adoption of any applicable regulations; or

b)  After the Treasury's adoption of any applicable regulations?



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