Nossaman eAlerts

Signed, Sealed, But Not Delivered? Don’t Wonder About Taxes Under New Postal Service RulesEven in the digital age, most federal and many state agencies consider important documents (like tax returns) filed on time if the filer can prove the documents were mailed by the due date. The postmark (really, a stamp with a place, date and time) on a mailing is the gold-standard proof that the mailing was filed on time. The Internal Revenue Service (IRS) even coined a catchy saying for it – “timely mailed, timely filed.”On December 24, 2025, the United States Postal Service (Postal Service) issued final rules on how a “postmark” works – and the new rules may not align with our common-sense assumptions. The rules – just in time for the 2026 tax filing season – affect how we make tax filings and other submissions to the IRS going forward. We explain the new rules below and propose best practices for ensuring and provingthat submissions were filed on time.What does the new USPS rule say?The final Postal Service rule (FR Doc. 2025-20740) adds Section 608.11, "Postmarks and Postal Possession," (the "Postmark Rule") to the Domestic Mail Manual. The Postmark Rule “clarifies” that the postmark is not always the date a letter is dropped in the mail. Instead:the Postal Service will not stamp every piece of mail;if it does stamp, the postmark may be stamped well after receipt, by a machine at the processing center; andthe postmark date could be days after the Postal Service takes possession of the mail.While this rule is technical, it can have a huge impact on our non-tax lives. For example, mail-in ballots must be postmarked by a certain date, and stragglers can’t rely on the postmark any longer.How do these rules affect taxes?Currently, under Internal Revenue Code (Code) section 7502 (a/k/a the "mailbox rule"), a return or payment is deemed to be delivered to the IRS on the postmark date (so long as there is adequate postage and the item is properly addressed). So, for example, if you mail a check to the IRS for taxes due on April 15, the payment is “delivered” to the IRS if the postmark is on or before April 15 – even if the check does not actually reach the IRS or clear until after April 15. (Of course, the check still must be “good”!)The IRS once argued that the mailbox rule applied only to returns and payments that the Code required, not to elections and procedures that the Code allowed but did not require. The Tax Court declined to engage in this game of “gotcha” and consistently ruled against the IRS, and the IRS has not made this argument for many years. So, the mailbox rule also applies to elections with the IRS under the Code (e.g., a Form 2553 “S corporation” election, a Form 8382 “check the box” election to have an LLC taxed as a corporation, or a Code section 83(b) election to lock in the value of “sweat equity” subject to vesting).What do we do going forward?To best protect yourself moving forward, use one of the following mailing methods which create a clear, dated record:For regular mail, wait in line at the post office to get a hand-stamped postmark at the counter.Use Priority Express, the Postal Service’s fastest delivery option, which includes proof of delivery with a signature record (if requested).Use Certified Mail® with a Return Receipt, both extra services through the Postal Service which prove the mail was sent and provide a tracking number and confirmation of delivery. The sender should keep a record of the trackingnumber on the green return receipt postcard – not the same as the articlenumber on the white certified receipt – so that the sender can try to track the progress of the mailing at the Postal Service.If you prefer private delivery services, Code section 7502 also authorizes a “quasi mailbox rule,” and the date applied by the private delivery service is accepted by the IRS as the postmark date. Keep in mind, only some private delivery services qualify, which you can check on the IRS website at IRS | Private Delivery Services. You can expect to see designated services from major mail carriers, like DHL, FedEx or UPS, but your local messenger service is not one designated by the IRS. The IRS is very strict about the use of private delivery services, so always double-check to make sure your service is covered before handing off your mailing!Of course, since we are in the digital age, there are methods other than “snail mail” for filing and payment of important documents. For example:A Code section 83(b) election can now be filed electronically (see our recent eAlert)Form 2553 S election can be filed in physical form or by facsimile.Form 1023, 1024-A or 1024 exemption applications now must be filed online.And many payments now can or must be made online, by electronic transfer from a designated bank account, or by wire (e.g., payroll tax and withholding deposits).One Final Warning! The mailbox rule does not apply to notices and other actions involving third parties (as opposed to the IRS, e.g., how and when a charitable contribution is considered made so that the taxpayer can claim the deduction). In those instances, practitioners and taxpayers need to review the IRS’ rules and case law (if any) on how and when to give notice or make payment.A good example is “deferred” real property exchanges under Code section 1031(a)(3) (which allow real estate owners to defer capital gains taxes by reinvesting proceeds). Section 1031 sets specific deadlines about when the taxpayer must identify the replacement property (45 days after the property is sold) and then close on the replacement property (180 days). In this case, taxpayers need to review Regulation section 1.1031(k)-1 about how and to whom they identify the replacement properties.Key Takeaways?DON’T wait until the last day to mail important documentsDON’T rely on automatic postmarks, or drop mail in a blue box without a receiptDO choose Certified Mail, Return Receipt or Priority Express, which each come with proof of mailing and deliveryDO mail at least 3-5 days prior to the deadlineDO get a hand-stamped receipt, if you can’t use the other three optionsDO keep copies of the documents and the receipt, in case the IRS comes knockingIf you follow these steps, you will have strong proof that you filed on time—even if the Postal Service never places a readable postmark on your envelope.