FedEx encourages people to use its delivery service “when it absolutely, positively has to be there overnight.” But it also provides other services that guarantee delivery two or more days later. In a new case, Belagio Fine Jewelry, 164 TC No. 7, 4/15/25, an office mix-up authorizing the wrong FedEx service resulted in a missed tax deadline. The Tax Court addressed whether the “equitable tolling” doctrine grants the taxpayer a reprieve.
Briefly stated, equitable tolling is a long-standing legal doctrine that enables a court to temporarily suspend or extend a statute of limitations on occasions when it would be inequitable to strictly enforce the regular time limit. In other words, it “stops the clock” if someone is unable to comply due to circumstances beyond their control. Besides legal issues, the equitable tolling doctrine may be appliable in instances where tax filing or payment due dates aren’t met.
But the equitable tolling doctrine is rarely allowed in cases involving tax matters. Missing a tax deadline unintentionally, by itself, is not enough to get you off the hook.
Facts of the new case: The dispute between the taxpayer and the IRS involved a failure to file employment tax returns and pay employment taxes in a timely manner. The IRS assessed a deficiency covering all four quarterly payments required for 2016 and 2017. On August 24, 2021, it issued a notice of employment tax determination that gave the taxpayer 90 days to respond. So, the taxpayer had until Monday, Nov. 22, 2021, to file a petition with the Tax Court.
On Thursday, Nov.18, 2021, the taxpayer’s attorney instructed his staff to send the taxpayer’s petition overnight to the Tax Court via FedEx. However, the staff instead mistakenly used Fed Ex’s Express Saver service, which guarantees delivery by the third business day. Unfortunately, the documentation then arrived at the Tax Court on Tuesday, Nov. 23, 2021—a day late and a dollar short.
According to the attorney, the late delivery was entirely the fault of his staff, not his. He said he gave implicit instructions that the documentation had to arrive by Monday, Nov. 22, 2021. The court noted that the petition would have been received by Friday, Nov. 19—before the Nov. 21 deadline—had they used FedEx’s overnight service.
The judge in this case cautioned the equitable tolling doctrine is used sparingly. To qualify, the taxpayer must prove (1) they had pursued their rights diligently, and (2) extraordinary circumstances outside of their control prevented them from filing on time. The taxpayer’s attorney argued that the taxpayer had pursued their rights diligently and that the error by the attorney’s staff was outside of their control (and his).
But the court wasn’t sympathetic to this argument. It also noted that the taxpayer could still have met the deadline if they had checked on the delivery status the following day and then used FedEx overnight.
Practical advice: Don’t let things fall through the cracks in your own office. Follow up on completion of duties or delegate this job to someone you trust.
Thanks for reading CPA Practice Advisor!
Subscribe Already registered? Log In
Need more information? Read the FAQs
Tags: Income Taxes, IRS, tax court, Taxes
