Timely US Tax Filings:  What are the Rules for Taxpayers in Foreign Countries?

Quite often, US taxpayers living in a foreign country are faced with tight deadlines for timely filing of tax returns, refund claims, documents and the like with the Internal Revenue Service (IRS)  before the statute of limitations expires.  They are often confused as to how to send these physical documents to the IRS and be considered to have sent them in a timely fashion when the foreign (i.e., non-US) post office may be unreliable at best. Now with COVID-19 issues, many post offices are not offering certain services such as registered or certified mail.  Since tax filing season is here, it’s a good time to review the complicated rules for timely filing when a taxpayer resides in a foreign country.

Filing Timely: What Does it Mean When Taxpayer is Overseas?

The US Internal Revenue Code and Treasury Regulations don’t make life easy for the US person living overseas. Below follows a summary of the general rules and how on their face they do not apply to the typical American abroad who relies on a foreign post office.

Paper tax returns, statements, or other documents required or permitted to be filed with the IRS are generally treated as filed timely if the same is mailed in an envelope that is properly addressed to the IRS office where the document must be filed, contains sufficient postage, and is postmarked no later than the due date (e.g., due date for the filing of the tax return).  Here’s the rub: The general rule is that a tax document is considered filed only when it is actually delivered to the IRS.

Internal Revenue Code Section 7502 provides an exception to this “physical delivery” rule if a document is postmarked before the deadline, but is only received after the deadline. Furthermore, the great news is that sending the document by registered or certified mail, or with an authorized private delivery service, will establish a rebuttable presumption under the law that the document was received even if the document never was received or the IRS has no record of having ever received it.

The relevant Treasury Regulations (Treas. Reg. Section 301.7502-1) promulgated under Code Section 7502 state:

In the case of a document (but not a payment) sent by registered or certified mail, proof that the document was properly registered or that a postmarked certified mail sender’s receipt was properly issued and that the envelope was properly addressed to the agency, officer, or office constitutes prima facie evidence that the document was delivered to the agency, officer, or office. Other than direct proof of actual delivery, proof of proper use of registered or certified mail, and proof of proper use of a duly designated PDS …. are the exclusive means to establish prima facie evidence of delivery of a document to the agency, officer, or office with which the document is required to be filed. No other evidence of a postmark or of mailing will be prima facie evidence of delivery or raise a presumption that the document was delivered.

For those needing a little help with the legal mumbo jumbo, “prima facie evidence” generally means evidence that is sufficient to establish a fact or raise a presumption unless it is disproved or rebutted.

Whoaaa! Foreign Postmarks Don’t Count?

Unfortunately, the postmark rules adopted under Code Section 7502 do not apply to foreign postmarks. Section 7502(b) states that its provisions apply to non-U.S. postmarks only if and to the extent provided by regulations, and the Treasury Regulations at section 301.7502-1(c)(1)(ii)) state: “Section 7502 does not apply to any document or payment that is deposited with the mail service of any other country”.

Fortunately, the IRS has had a long-standing policy on accepting foreign postmarks for federal tax returns, refund claims, statements, or other documents. This policy is currently reflected in Revenue Ruling 2002-23, 2002-1, C.B. 811, summarized below.  Significantly, the Revenue Ruling (published in the Internal Revenue Bulletin) is authoritative and can be relied upon as precedent. The Internal Revenue Bulletin is published weekly and was compiled semi-annually into the Cumulative Bulletin (C.B.).  The C.B. ceased publication in 2008.

Federal tax returns mailed by taxpayers from foreign countries will be treated as timely filed if they bear an official postmark dated on or before the last date prescribed for filing, including any extension of time for such filing. If the last date for filing falls on a Saturday, Sunday, or a legal holiday within the meaning of Code section 7503, returns have been considered timely if postmarked on or before the next succeeding day which is not a Saturday, Sunday, or a legal holiday. The term legal holiday means a legal holiday in the District of Columbia in the United States, or a Statewide legal holiday in the State where the federal tax return, claim for refund or other document is required to be filed or sent. The term does not include legal holidays in foreign countries unless such holidays are also legal holidays in the District of Columbia or applicable State, as described above.

In addition, pursuant to the authority granted by Section 6081(a) of the Internal Revenue Code, which permits the Commissioner to grant a reasonable extension of time for filing any return, declaration, statement or other document, the Revenue Ruling expands the application of the timely mailing is timely filing rules to claims for refund, statements or other documents required or permitted to be filed with the IRS. Accordingly, claims for refund, statements and other documents will be treated as timely filed if the conditions described above are satisfied. If, however, the envelope that contains a claim, statement or other document has a timely postmark, but it is received after the time when an envelope postmarked and mailed at that time and location would ordinarily be received, the sender may be required to prove that it was timely mailed.

It is highly recommended that a taxpayer use the foreign country’s version of certified or registered mail because the receipt can serve as proof of timely mailing/filing.

The Internal Revenue Manual (IRM) contains a policy statement (see IRM Section 1.2.1.4.3, Policy Statement 3-3 (rev. 7/27/67)) which also reflects the agency’s acceptance of foreign postmarks:

1.2.1.4.3 (07-27-1967)

Policy Statement 3-3 (Formerly P-2-9, Timely mailed returns bearing foreign postmarks to be accepted

  1. Timely mailed returns bearing foreign postmarks to be accepted
  2. Returns mailed by taxpayers in foreign countries will be accepted as timely if postmarked on or before midnight of the last date prescribed for filing, including any extension of time for such filing. If the last day for filing falls on a Saturday or Sunday, returns will be considered timely if postmarked on or before midnight of the next day. Whenever appropriate for the answering or anticipating of public inquiries, all offices of the Service are authorized to announce this policy.

Significantly, the foreign postmark rule does not apply to Tax Court filings (such as tax Court petitions or appeal notices).  Timely filing treatment will not granted to foreign-postmarked documents, unless given to a designated international private delivery service, as discussed below.

Use of Private Delivery Services 

Taxpayers may also use a private delivery service (PDS) to meet the “timely mailing as timely filing/paying” rule for tax returns and payments if it is specifically designated by the IRS.  The postmark date generally is the date recorded electronically by the delivery service reflecting when the document entered its database, or as marked on the envelope in which the item is to be delivered. Remember, as mentioned above, the next-business-day rule under does not treat a holiday in a foreign country as a holiday.

The following are the only IRS designated private delivery services – taxpayers and tax professionals must make sure that the international PDS that is to be used is on the list!

DHL Express:

  1. DHL Express 9:00
  2. DHL Express 10:30
  3. DHL Express 12:00
  4. DHL Express Worldwide
  5. DHL Express Envelope
  6. DHL Import Express 10:30
  7. DHL Import Express 12:00
  8. DHL Import Express Worldwide

FedEx:

  1. FedEx First Overnight
  2. FedEx Priority Overnight
  3. FedEx Standard Overnight
  4. FedEx 2 Day
  5. FedEx International Next Flight Out
  6. FedEx International Priority
  7. FedEx International First
  8. FedEx International Economy

UPS:

  1. UPS Next Day Air Early A.M.
  2. UPS Next Day Air
  3. UPS Next Day Air Saver
  4. UPS 2nd Day Air
  5. UPS 2nd Day Air A.M.
  6. UPS Worldwide Express Plus
  7. UPS Worldwide Express

The private delivery service can tell you how to get written proof of the mailing date.

Make sure to use the street addresses of the submission processing centers for delivery by a PDS

Posted January 27, 2022

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