Comptroller of Maryland v. James R. Myers, et al, No. 95, September

Comptroller of Maryland v. James R. Myers, et al, No. 95, September Term, 2020, Opinion

by Graeff, J.

TAXATION – INCOME TAXES – PAYMENT – RECOVERY OF TAXES PAID –

STATUTE OF LIMITATIONS – EVIDENCE OF TIMELY FILING

The limitations period in Md. Code Ann., Tax-General Article (“TG”) § 13-1104(c)(1) is

inextricably keyed to § 6511 of the Internal Revenue Code (“I.R.C.”), and therefore,

pursuant to TG § 10-107, the Comptroller and Tax Court must apply administrative and

judicial interpretations of I.R.C. § 6511, including Treas. Reg. § 301.7502-1 and I.R.C. §

7502. Accordingly, in a situation where a taxpayer mails a claim for a refund, but the

Comptroller does not receive the claim within the limitations period, the taxpayer can show

timely filing only by a receipt of registered mail or other proof permitted pursuant to Treas.

Reg. § 301.7502-1 and I.R.C. § 7502.

Circuit Court for Anne Arundel County

Case No. C-02-CV-19-003096

REPORTED

IN THE COURT OF SPECIAL APPEALS

OF MARYLAND

No. 0095

September Term, 2020

______________________________________

COMPTROLLER OF MARYLAND

JAMES R. MYERS, ET AL.

______________________________________

Graeff,

Kehoe,

Zic,

JJ.

______________________________________

Opinion by Graeff, J.

______________________________________

Filed: July 1, 2021

*Ripken, Laura S., J., did not participate in the

Court’s decision to designate this opinion for

publication pursuant to Md. Rule 8-605.1.

Pursuant to Maryland Uniform Electronic Legal

Materials Act

(§§ 10-1601 et seq. of the State Government Article) this document is authentic.

Suzanne C. Johnson, Clerk

2021-07-06 12:21-04:00

This appeal addresses what a taxpayer must show to prove that he or she “filed” a

document with the Comptroller. James and Monica Myers, appellees, prepared amended

tax returns seeking a refund for tax years 2007, 2008, 2009, 2010, 2011, 2012, and 2013.

The Comptroller denied refunds for tax years 2008, 2009, and 2012, alleging that appellees

had failed to file their amended returns for those years within the applicable limitations

period. The Tax Court, based on the testimony of appellees that they timely mailed the

amended returns, reversed the Comptroller’s decision and ordered refunds for the 2008,

2009, and 2012 tax years. The Circuit Court for Anne Arundel County affirmed the

decision of the Tax Court.

On appeal, the Comptroller presents the following questions for this Court’s review,

which we have rephrased, as follows:

1. In a situation where the Comptroller did not acknowledge receipt of a

tax return, did the Tax Court err in relying on evidence other than a

receipt of registered mail?

2. Did the Tax Court err in failing to grant summary judgment to the

Comptroller, when the only material facts in the record established

that the Comptroller received the refund claims after the statute of

limitations had expired?

For the reasons set forth below, we shall reverse the decision of the circuit court.

FACTUAL AND PROCEDURAL BACKGROUND

The evidence indicated that appellees routinely filed their federal and state tax

returns in a timely fashion. Appellees filed their original 2008 income tax return on

October 15, 2009, their 2009 income tax return on October 15, 2010, and their 2012 income

tax return on October 15, 2013.

During this time frame, an issue relating to Maryland’s tax scheme was working its

way through the courts. On May 18, 2015, the Supreme Court issued its opinion in

Comptroller of the Treasury of Maryland v. Wynne, 575 U.S. 542 (2015). Wynne addressed

a provision in Maryland’s tax law that provided a credit to offset State taxes for income

taxes paid to other states on income earned in other states, but did not issue a credit to offset

county income taxes. Id. at 545–46. The Court held that this was unconstitutional because

it taxed income earned interstate at a higher rate than income earned intrastate, and

therefore, it discriminated against interstate commerce in violation of the dormant

Commerce Clause. Id. at 547–48, 564–65. “As a result, Wynne and others similarly

affected who paid county income taxes as well as taxes to other states for income earned

therein became entitled to refunds of a portion of their Maryland ‘piggy back’ taxes.”

Holzheid v. Comptroller of the Treasury of Maryland, 240 Md. App. 371, 382 (2019), cert.

denied sub nom., 469 Md. 655 (2020).

In 2011, prior to the Wynne decision, but while the case was working its way through

the court system, appellees’ accountant, Ms. Truly, informed them that, if they filed

amended tax returns, there was a possibility that they could benefit from the outcome of

the Wynne decision. Ms. Truly advised appellees that, given the three-year statute of

Although tax returns typically are due on April 15, appellees habitually requested

extensions and filed their tax returns on October 15, which is within the extension period.

limitations for filing a refund on tax returns, appellees would need to file their amended

returns prior to the outcome of the Wynne case.

Ms. Truly testified that, with appellees’ agreement, she prepared amended tax

returns for the 2007 through 2013 tax years.

Mr. Myers testified that he mailed all the

amended returns to the Comptroller, but he did not send them by certified mail, and

therefore, he did not have a receipt showing they were mailed. After the Supreme Court’s

2015 decision in Wynne, appellees advised Ms. Truly that they previously had mailed all

of the amended returns that Ms. Truly had prepared, but they did not receive all of their

refunds. They asked Ms. Truly to follow up with the Comptroller.

On November 16, 2016, Ms. Truly filed a Form 156, requesting appellees’ tax

records. The Comptroller did not respond to this request. Ms. Truly then called the

Comptroller’s office, which stated that it had not received Ms. Truly’s Form 156. Ms.

Truly sent the form a second time, but again, the Comptroller did not respond.

In 2017, Ms. Truly became aware that the Comptroller was not in possession of

appellees’ 2008, 2009, and 2012 amended returns. She testified that she followed the

accepted procedure, i.e., to resubmit the amended returns for those years. Ms. Truly

included a letter advising the Comptroller that the 2008, 2009, and 2012 amended returns

had been timely filed, but they were missing in the Comptroller’s office.

Appellees then

Ms. Truly testified that she prepared the 2008 amended tax return on January 24,

2012, the 2009 amended tax return on July 8, 2013, and the 2012 amended tax return on

August 4, 2015.

The Comptroller ultimately received amended returns for the 2007, 2010, and

2011 tax years and granted tax refunds for those years.

mailed a second set of amended returns, as well as an original amended return for 2013, on

August 11, 2017. The Comptroller received them on August 16, 2017.

The Comptroller denied appellees’ refund requests for the 2008, 2009, and 2012 tax

years. The Comptroller alleged that he had not received appellees’ amended returns for

these years until August 16, 2017, which placed the refund requests outside of the three-

year limitations period.

On March 13, 2018, the Comptroller held an informal hearing. Andre Aviles, a

member of the Revenue Administrative Division of the Comptroller’s Office, testified that

the Comptroller received appellees’ 2008, 2009, and 2012 amended returns requesting

refunds on August 16, 2017. Appellees alleged that they had timely filed their amended

returns several years before, within the limitations period. On August 11, 2017, after their

accountant was advised that the Comptroller could not locate their 2008, 2009, and 2012

amended returns, appellees refiled their amended returns for these years.

On May 9, 2018, the Hearing Officer issued appellees a Notice of Final

Determination, affirming the denial of appellees’ 2008, 2009, and 2012 refund requests.

The Hearing Officer found that appellees’ amended returns for these tax years were not

filed until August 16, 2017, and therefore, the claims were untimely.

On June 11, 2018, appellees filed a Petition of Appeal to the Maryland Tax Court.

They listed the amount in controversy as $58,419, which included: $18,314 for 2008;

$21,845 for 2009; and $18,260 for 2012.

The Comptroller subsequently filed a motion for summary judgment, alleging that

appellees failed to timely file amended returns for tax years 2008, 2009, and 2012. He

attached an affidavit of the custodian of records, Mr. Aviles, who stated that the

Comptroller did not possess any filings from appellees for these tax years other than those

that the Comptroller received on August 16, 2017.

Appellees filed an opposition to the Comptroller’s motion for summary judgment.

The opposition did not include an affidavit, but the pleading stated that, “upon reasonable

belief and evidence to be provided,” appellees’ original claims for refunds were timely

submitted, and “the Comptroller misplaced the timely filed original amended returns for

the tax years in issue.”

The Comptroller filed a reply to appellees’ opposition. The Comptroller argued that

appellees did not offer a compelling basis to deny summary judgment because they failed

to attach an affidavit showing a dispute of a material fact, and the opposition assumed “an

incorrect understanding of the mailbox rule.”

In response, appellees filed a motion to supplement their opposition with affidavits.

The affidavits signed by appellees stated that, based on personal knowledge, the facts

contained in their opposition and their Petition of Appeal were “true to the best of [their]

knowledge, information and belief.”

The Comptroller subsequently filed a motion to strike the motion to supplement and

appellees’ affidavits. He argued, among other things, that the affidavits were defective

because they did not contain specific facts, but instead, they generally referenced pleadings

and then stated that the statements were true to the best of their knowledge, information,

and belief.

On October 24, 2018, the Tax Court held a motions hearing. It denied the

Comptroller’s motion to strike, stating that, as an administrative agency, it had “great

flexibility” with regard to the admission of evidence.

With respect to the motion for summary judgment, the Comptroller argued that he

had established by affidavit that the amended returns were not timely filed. He argued that,

pursuant to Md. Code Ann., Tax-General Article (“TG”) § 13-1104, the amended returns

needed to be filed within three years after the tax was paid, and the August 16, 2017 filings

fell outside of that time period. The Comptroller argued that, if a taxpayer alleges that the

Comptroller lost tax returns, pursuant to the Internal Revenue Code, 26 U.S.C. § 7502

(“I.R.C. § 7502”), they needed to show proof of mailing through a return receipt of certified

mail.

Counsel for appellees argued that there were facts in dispute, and therefore,

summary judgment was not appropriate. Counsel argued for the opportunity to present

corroborative evidence of mailing. The Tax Court reserved on the summary judgment

motion and set the case for trial.

The Comptroller subsequently filed a Request for a Ruling on a Question of Law.

He presented the Tax Court with the following question: “Whether [appellees] must enter

into evidence receipts of registered mail, as applied under [I.R.C.] §§ 7502(c) and (f), to

prove timely filing of their claims for refund of taxes for years 2008, 2009, and 2012, when

the Comptroller denies timely filing?” The Comptroller noted that appellees testified at

their depositions that they timely sent three amended returns to the Comptroller, on three

different occasions, but they sent the amended returns by first-class mail, not registered

mail as required by the IRS pursuant to § 7502(f). The Comptroller asserted that his office

did not receive the amended returns in the years that they allegedly were sent, and it

received the amended returns on August 16, 2017, which was past the three-year statute of

limitations. The Comptroller argued that, in this situation, to determine timely filing

pursuant to TG § 13-1104(c), I.R.C. § 7502 must be applied, which required filing to be

shown by physical delivery, a postmark on an envelope, or, if the document was not

received, a receipt of registered mail.

Appellees disputed the Comptroller’s interpretation of TG § 13-1104(c). Over the

course of several months, appellees and the Comptroller submitted multiple replies and

counter-replies regarding the question of law presented.

The case went to trial in the Tax Court on August 14, 2019. Ms. Truly testified that

she had prepared appellees’ amended returns based on the Wynne litigation for the 2007

through 2013 tax years. She prepared the 2008 refund claim on January 24, 2012, the 2009

refund claim on July 8, 2013, and the 2012 refund claim on August 4, 2015. The firm at

which Ms. Truly worked billed appellees for all of the amended returns, and appellees

testified that they paid those invoices prior to the limitations period.

Ms. Truly testified that she personally sent, by certified mail, the 2007 amended

return requesting a refund because it was very close to the amended due date. The other

amended returns were sent to appellees to sign and mail. In 2015, appellees informed her

that they had mailed the amended returns to the Comptroller. Ms. Truly testified, however,

that she typically did not follow up to see if the amended returns had been received.

After the 2015 Wynne decision, appellees received refunds for some years, but not

others. In 2016, Ms. Truly contacted the Comptroller regarding the status of appellees’

refund requests. On April 25, 2017, Ms. Truly advised Mr. Myers in an email that the

Comptroller did not have a record of receiving the 2008, 2009, or 2012 amended returns,

and she asked if he had receipts for certified mail from when he sent them. She testified,

however, that taxpayers are not required to mail returns certified.

Mr. and Mrs. Myers testified extensively regarding the dates on which they mailed

the 2008, 2009, and 2012 amended returns. When asked on what date he mailed the 2008

amended return, Mr. Myers initially stated that he did not know the exact date, but he had

“a very good estimate and deduction about what that date is.” He testified that he would

have mailed the 2008 amended return on January 28, 2012, based on his and Mrs. Myers’

schedules. He explained that he would have signed the amended return in private after his

morning exercise, then presented the amended return to Mrs. Myers for her signature, then

placed the signed refund claim in a large 8.5” by 11” envelope, and then taken it to the

Glen Echo post office to be weighed and mailed. Mr. Myers consistently encountered the

same postal clerk, Tiffany, who would weigh the envelope and then provide the appropriate

amount of postage. Mr. Myers testified that he followed the exact same routine for the

2009 and 2012 amended returns, and he mailed the 2009 amended return on July 13, 2013,

and the 2012 amended return on August 8, 2015. Mr. Myers did not have a receipt for

certified mailing for any of those returns.

Mrs. Myers corroborated this testimony. She stated that she had signed each of the

2008, 2009, and 2012 amended returns after Mr. Myers requested her signature, and Mr.

Myers took the amended returns to the post office immediately thereafter.

Mr. Aviles, the Custodian of Records for the Comptroller, also testified. When

asked if he personally searched for appellees’ 2008, 2009, and 2012 amended returns, he

stated that he did, but only to a certain extent. He personally searched the files in the

Annapolis office, but others searched files in other locations. He stated that returns

identified as “Wynne returns were segregated and put in a different folder to keep all the

taxpayers with those claims in one area.” Amended tax returns, including refund claims,

could not be electronically filed and had to be manually verified. Mr. Aviles noted that the

Comptroller had sent appellees a letter informing them that the Comptroller was in receipt

of their 2007 amended return. A letter of receipt also was sent for the 2010 amended return,

but it was incorrectly addressed and never reached appellees’ mailbox.

Before Mr. Aviles left the stand, the following colloquy occurred between Mr.

Aviles and the Tax Court:

THE COURT: All right, I have a question for you, Mr. Aviles. Say a

taxpayer -- you can’t -- the Comptroller’s office can not locate a certain

return that was filed, okay? Allegedly was filed. However, the taxpayer

produces a certification that it was mailed, okay? Doesn’t necessarily say

restricted delivery, just a certified mailing. Let’s deal with that one first.

What would the position of the Comptroller be?

MR. AVILES: Without the receipt is what you’re asking me?

THE COURT: I’m saying that the taxpayer produces a certificate from the

postal service indicating that it was mailed, but the Comptroller’s office has

not located the return. What would be the position of the Comptroller’s

office in that situation? Would you accept a -- the same return that the

taxpayer allegedly filed and has proof that he filed? Would the Comptroller’s

office accept that return?

MR. AVILES: Yes. Generally speaking if that is the proof of mailing, if it

was sent to our address at 110 Carroll Street and the Comptroller for any

reason can not locate the returns, and the benefit of the doubt then it gives to

the taxpayer that we process the return as it being filed timely.

THE COURT: Okay.

In closing argument, counsel for the Comptroller made clear that he was not

challenging the veracity of appellees’ testimony that they timely mailed the amended

returns. Rather, the Comptroller was asking the Tax Court to accept the legal proposition

that the uncorroborated testimony of a taxpayer regarding mailing was not enough, and

there needed to be other evidence of mailing, such as a certified receipt or testimony of a

postal clerk.

The Tax Court then issued its oral ruling. It stated that Ms. Truly’s testimony that

Mr. Myers was diligent and timely in filing returns was circumstantial evidence that

appellees paid their taxes and filed their returns on time, and it indicated a course of conduct

of compliance over many years, which the Tax Court found supported appellees’ claim.

The Tax Court further credited Ms. Truly’s testimony, supported by bills, that the amended

returns seeking refunds were prepared on the dates to which she testified. The Tax Court

found it “inconceivable” that Mr. Myers would not have filed the 2008, 2009, and 2012

amended returns, noting that Mr. Myers had testified, with great detail, concerning the days

and manner in which he had mailed the amended returns for those years. The Tax Court

stated that “[t]here was really no contest about whether or not Mr. Myers did or did not in

fact do exactly what he said he did,” but rather, the Comptroller’s position was that there

needed to be affirmative proof that appellees did mail the returns.

In dismissing that contention, the Tax Court explained the following:

THE COURT: When I asked Mr. Aviles, you know, if a certified mailing

was given to the Comptroller’s office in a situation where the returns could

not be filed -- were not -- could not be found, Mr. Aviles indicated, yes, under

those circumstances they would accept -- they would accept the returns

indicating that somehow or another the returns were in fact misplaced, lost

or whatever, by the Comptroller’s office or they were in fact mailed and for

whatever reason were not delivered to the Comptroller’s office. Again, if the

Comptroller has the ability to accept a certified mailing from a taxpayer, it

seems to me that the Court ought to be able to judge the credibility of a

witness and find that the taxpayer did in fact file the returns that he indicated

that he filed.

So in this situation the Court is really merely just substituting its

opinion for the Comptroller when the Comptroller has . . . certified evidence.

I think hearing a taxpayer testify that he did everything he could to mail the

returns, I think that’s sufficient from the Court’s standpoint. And the Court

in the past has ruled so. And I’m not going to – I’m not going to change the

decisions or the policy of this court with respect to that particular evidentiary

filing.

I’m not going to preclude the Court from requiring some written

documentation from the post office or some other witness when I am

convinced, without any doubt, that the taxpayer did in fact mail the returns.

I don’t know where the returns are. And I don’t -- I don’t know. And it was

never indicated that the returns were returned to the taxpayer, so I’m

assuming they are either lost in the United States Postal Service, and I would

venture to say there’s not anybody in this room -- no, there’s not anybody in

this building who has not sent out a letter to someone and it has not been

received and it was not returned to the sender. I guarantee.

On September 24, 2019, the Tax Court issued an order reversing the denials of the

refund claims for the tax years 2008, 2009, and 2012. The Comptroller sought review of

the Tax Court’s decision in the Circuit Court for Anne Arundel County.

On March 17, 2020, after a hearing, the circuit court issued an order affirming the

Tax Court. In its memorandum opinion, the court noted that the Comptroller did not

dispute that the Tax Court’s factual findings were supported by the evidence, but rather, he

argued that the Tax Court erred as a matter of law for two reasons. First, the Comptroller

argued that the Tax Court erred by allowing appellees to prove timely filing in the absence

of receipts of certified mail. Second, the Comptroller argued that the Tax Court erred when

it reserved on the issue of summary judgment “despite being constrained to rule in the

Comptroller’s favor for procedural reasons.” The court stated that it was not persuaded by

either of the Comptroller’s arguments.

With respect to the Comptroller’s argument that the Tax Court improperly reserved

ruling on its motion for summary judgment because the opposition was not supported by

an adequate affidavit as required by Md. Rule 2-501(a), the court concluded that the Tax

Court’s procedural rules were not as strict as Md. Rule 2-501. Moreover, the circuit court

determined that it was reasonable and not an abuse of discretion for the Tax Court to reserve

its ruling until it had a complete factual record.

The court then turned to the Comptroller’s argument that the Tax Court erred as a

matter of law in deciding that the amended returns were timely filed in the absence of

receipts of registered mail showing when the returns were mailed. The court noted that the

“Comptroller [could] not point to a Maryland statute or administrative regulation [which

stated] that a receipt of registered mail is necessary to prove timely filing in an action,” but

rather, it argued that Maryland law must incorporate federal tax law to this effect. The

court found that the federal law regarding the evidence necessary to establish a timely-filed

tax return, i.e., a registered mail receipt, was not controlling law in Maryland. Rather, the

Tax Court was entitled to weigh the evidence, and based on that evidence, it properly found

that the amended returns were filed within the limitations period.

This appeal followed.

STANDARD OF REVIEW

The Tax Court is an administrative agency “subject to the same standards of judicial

review as other administrative agencies.” Maizel v. Comptroller of the Treasury, No. 508,

2021 WL 1681271, at *6 (Md. App. April 29, 2021) (quoting Frey v. Comptroller of the

Treasury, 422 Md. 111, 136–38 (2011)). As such, we look through the decision of the

circuit court and review the decision of the agency. Id. Our review is “limited to

determining if there is substantial evidence in the record as a whole to support the [Tax

Court’s] findings and conclusions, and to determine if the [Tax Court’s] decision is

premised upon an erroneous conclusion of law.” Comptroller of the Treasury v. Taylor,

465 Md. 76, 86 (2019) (quoting Comptroller of the Treasury v. Taylor, 238 Md. App. 139,

145 (2018)). We will not affirm an agency if its order “is premised solely upon an

erroneous conclusion of law.” Comptroller of the Treasury v. World Book Childcraft Int’l,

Inc., 67 Md. App. 424, 438, cert. denied, 307 Md. 260 (1986). If the agency did not err in

its interpretation of the law, we review the agency’s “factual findings to determine if they

are supported by substantial evidence.” Id. at 438–39.

DISCUSSION

The Comptroller’s first contention is that the Tax Court erred in determining that

appellees timely filed their amended returns seeking refunds when they did not submit

evidence of a receipt of registered mail. Before addressing the different views of the

parties, we note that they agree on the dates on which the amended returns needed to be

filed.

Statute of Limitations

TG § 13-1104(a) addresses the time for filing claims for a refund as follows:

(a) Except as otherwise provided in this section, a claim for refund under this

article may not be filed after 3 years from the date the tax, interest, or penalty

was paid.

* * *

or credit of overpayment of . . . income tax may not be filed after the periods

of limitations for filing claims for refund or credit of overpayment set forth

in § 6511 of the Internal Revenue Code [(“I.R.C. § 6511”)].

I.R.C. § 6511, provides, in pertinent part, as follows:

(a) Claim for credit or refund of an overpayment of any tax imposed by this

title in respect of which tax the taxpayer is required to file a return shall

be filed by the taxpayer within 3 years from the time the return was filed

or 2 years from the time the tax was paid, whichever of such periods

expires the later[.]

26 U.S.C. § 6511.

Accordingly, the parties agree that appellees had three years to file their amended

returns seeking a refund. The dates in this case were as follows: (1) for 2008, the initial

return was filed on October 15, 2009, and the amended return needed to be filed by October

15, 2012; (2) for 2009, the initial return was filed by October 15, 2010, and the amended

return needed to be filed by October 15, 2013; and (3) for 2012, the initial return was filed

on October 15, 2013, and the amended return needed to be filed on October 15, 2016.

Parties’ Contentions

The parties agree that the Comptroller did not receive the documents during the

three-year limitations period. They disagree, however, on whether appellees proved that

the documents were timely “filed” within that time period.

Appellees assert that they timely filed their amended returns by mailing them within

the limitations period. In support, they presented testimony relating to the mailing of each

return.

The Comptroller does not dispute that there was a basis for the Tax Court to accept

this testimony. He argues, however, that this evidence did not permit a finding that the

returns were timely filed because “a taxpayer must establish timely mailing through a

receipt of registered mail.” Because appellees did not have a receipt of registered mail, the

Comptroller argues that the Tax Court erred in reversing its decision denying appellees’

refund claims.

Appellees contend that proof of mailing is not limited to a receipt of registered mail.

Rather, they assert that Maryland has a long history of relying on the common-law

“mailbox rule,” a “rule of evidence that the testimony of a witness that he properly

addressed, stamped and mailed a letter raises a presumption that it reached its destination

at the regular time and was received by the person to whom it was addressed.” Kolker v.

Biggs, 203 Md. 137, 144 (1953). Accord Landover Assocs. Ltd. P’ship v. Fabricated Steel

Prod., Inc., 35 Md. App. 673, 681 (“Maryland has recognized a ‘legal presumption’ from

proof of proper mailing that the communication was received” based on the “presumption

that in delivering the mail the postal authorities do what the law requires of them.”), cert.

denied, 281 Md. 740 (1977). Appellees argue that the Tax Court “was entitled to judge the

credibility of all party witnesses and weigh all direct and circumstantial evidence before

determining” that they timely mailed/filed their amended refund claims for tax years 2008,

2009, and 2012.

The Comptroller’s argument to the contrary is predicated on the principle that

“Maryland income tax law is to be construed in a fashion conformable to the Internal

Revenue Code to which it is inextricably keyed.” Comptroller of the Treasury v. Diebold,

Inc., 279 Md. 401, 408 (1977). It notes that TG § 10-107 provides that, “[t]o the extent

practicable, the Comptroller shall apply the administrative and judicial interpretations of

the federal income tax law to the administration of the income tax laws of this State.” The

Comptroller contends, through an extended analysis, discussed in more detail, infra, that

the law regarding timely filing of refund claims set forth in TG § 13-1104(e) is

“inextricably keyed” to I.R.C. § 6511 through its express reference in the text, and in

applying I.R.C. § 6511, the Tax Court must apply IRS administrative and judicial

interpretations of § 6511, including I.R.C. § 7502(c) and Treas. Reg. § 301.7502.1, which

require a registered mail receipt in circumstances similar to those present in this case.

Analysis

In assessing the parties’ claims, we must determine two things. First, what is the

applicable federal law regarding the evidence that may be presented regarding the filing

date of tax documents that were mailed? Second, is this federal law applicable to appellees’

claim in the Tax Court?

Federal Law Regarding Filing

In determining when a claim for a refund has been filed, the original rule, the

physical delivery rule, provided that a federal tax return is filed when it is received by the

IRS. Miller v. United States, 784 F.2d 728, 730 (6th Cir. 1986). Because this rule “left

taxpayers vulnerable to the vagaries of the postal service,” where documents could be

delayed or lost “through no fault of the taxpayer,” some courts applied the common-law

mailbox rule, which permitted proof of mailing that gave rise to a presumption that the

document was physically delivered “in the time such a mailing would ordinarily take to

arrive.” Baldwin v. United States, 921 F.3d 836, 840 (9th Cir. 2019), cert. denied, 140

S.Ct. 690 (2020).

In 1954, Congress created exceptions to the physical delivery rule when tax

documents are sent by mail, providing a statutory mailbox rule when certain requirements

are met. I.R.C. § 7502(a); Maine Med. Ctr. v. United States, 675 F.3d 110, 114 (1st Cir.

2012). The first statutory exception provides that, if a document is mailed by the due date,

the postmark is deemed the date of delivery, even if it is received after the due date. I.R.C.

§ 7502(a)(1). This exception applies only if the document is actually delivered to the IRS.

Baldwin, 921 F.3d at 840. The second exception provides that, if a document is sent by

registered mail, such registration is prima facie evidence that the document was delivered,

even if the IRS claims not to have received it. I.R.C. § 7502(c)(1). See also Baldwin, 921

F.3d at 840–41 (“Section 7502(c)(1) provides an exception to the physical-delivery rule

applicable to documents sent” by registered mail, and subsection (A) “provides a

presumption that a document sent by registered mail was delivered even if the IRS claims

not to have received it, so long as the taxpayer produces the registration as proof.”).

In the years that followed the enactment of this statute, courts rendered conflicting

decisions regarding the effect the statute had on the common-law mailbox rule. See

Baldwin, 921 F.3d at 841 (collecting cases). Some courts held that § 7502 superseded the

common-law mailbox rule and provided the exclusive exceptions to the physical delivery

rule, and therefore, other extrinsic evidence could not be offered as proof of a timely

mailing. See, e.g., Miller, 784 F.2d at 730; Deutch v. Comm’r., 599 F.2d 44, 46 (2d Cir.

1979), cert. denied, 444 U.S. 1015 (1980); Parr v. United States, 694 F. Supp. 146, 147

(D. Md. 1988). Other courts, however, held that § 7502 did not preempt the common-law

presumption of delivery by proof of mailing, and extrinsic evidence could be used to show

timely filing. See, e.g., Philadelphia Marine Trade Ass’n-Int’l Longshoremen’s Ass’n

Pension Fund v. Comm’r, 523 F.3d 140, 151 (3d Cir. 2008); Lee Brick and Tile v. United

States, 132 F.R.D. 414, 419 (M.D.N.C. 1990).

The Treasury Department subsequently issued a regulation to address the different

interpretations of § 7502. Treas. Reg. § 301.7502-1 was published in 2011 and made

applicable to documents postmarked after September 21, 2004. 76 FR 52561-01 (August

23, 2011). It provides, with respect to a document that is mailed, as follows:

(i) Registered and certified mail. 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 [private delivery service] as provided

for by paragraph (e)(2)(ii) of this section, 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.

26 C.F.R. § 301.7502-1(e)(2)(i). As the Comptroller notes, this regulation indicates that,

unless a taxpayer has direct proof that a document was delivered to the IRS, the statute

provides the sole means to prove delivery. Id. (“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.”).

In Baldwin, 921 F.3d at 842–44, the United States Court of Appeals for the Ninth

Circuit addressed the validity of this regulation in circumstances similar to those in this

case. In that case, the taxpayers claimed that they mailed their amended tax returns prior

to the end of the limitations period, but the IRS stated that it never received the amended

return. Id. at 839. The taxpayers subsequently sent another amended return, which the

IRS received outside of the limitations period. Id. The IRS determined that the amended

return was not timely filed. Id.

The Baldwins offered testimony from their employees that they mailed the

document on a certain date, and they argued that, under the common-law mailbox rule, if

the court credited the testimony, it gave rise to a presumption that the return was delivered

to the IRS by the deadline. Id. at 842. The district court credited the testimony and found,

based on the common-law mailbox rule, that the refund claim had been timely filed. Id.

The district court “viewed IRC § 7502 as unambiguously supplementing, rather than

supplanting, the common-law mailbox rule, thus leaving no room for the agency to adopt

the construction of the statute reflected in Treasury Regulation § 301.7502-1(e)(2).” Id.

The Ninth Circuit reversed. Id. at 844. The court noted that, in determining whether

an agency construction of a statute is entitled to “Chevron deference,” the court follows a

two-step analysis under Chevron, U.S.A., Inc. v. National Resource Defense Council, Inc.,

467 U.S. 837 (1984).

First, it asks whether “Congress has directly spoken to the precise

question at issue.” Id. at 842 (quoting Chevron, 467 U.S. at 842). If the answer to that

question is yes, “Congress’ resolution of the issue controls and the agency is not free to

adopt an interpretation at odds with the plain language of the statute.” Id. If the statute is

“silent or ambiguous” on the issue, the court asks “whether the agency’s interpretation is

The Supreme Court subsequently held that “Chevron deference” may apply to

Treasury Department regulations interpreting the Internal Revenue Code if they are a

“reasonable interpretation” of the statute. Mayo Foundation for Medical Educ. & Research

v. United States, 562 U.S. 44, 58–59 (2011).

‘based on a permissible construction of the statute.’” Id. (quoting Chevron, 467 U.S. at

843.)

Applying that analysis, the Ninth Circuit concluded that I.R.C. § 7502 “was silent

as to whether the statute displaces the common-law mailbox rule.” Id. It then turned to

whether the Treasury Regulation was based on a permissible construction of the statute.

Id. at 842–43. The court pointed to the split in court decisions in concluding that “IRC §

7502 could reasonably be construed in one of two ways: as intended merely to supplement

the common-law mailbox rule, or to supplant it altogether.” Id. at 843. The court held that

the Treasury Department’s adoption of the view that § 7502 provided the sole means to

prove timely delivery in the absence of direct proof of actual delivery was a permissible

construction of the statute, “even if another equally permissible construction of the statute

could also be upheld.” Id. at 843. Accordingly, pursuant to the deference given to an

agency decision, it held that the regulation was valid. Id. at 843–44. Thus, the Ninth

Circuit concluded that I.R.C. § 7502 and Treas. Reg. § 301.7502-1(e)(2)(i) had eliminated

the common-law mailbox rule with respect to proof of timely filing of federal tax claims.

Accord McBrady v. United States, 167 F.Supp.3d 1013, 1017 (D. Minn. 2016) (“The Court

perceives no reason why it should not defer, under Chevron . . . to these regulations as

reasonable interpretations of § 7502, especially because Congress expressly delegated to

the Secretary of the Treasury the authority to regulate in this area.”).

The parties do not cite any other cases that have addressed the validity of Treas.

Reg. § 301.7502-1(e)(2)(i) and its impact on I.R.C. § 7502. Some courts, however,

continue to refer to the issue as unsettled or involving a split in the circuits. See, e.g., Maine

Med. Ctr., 675 F.3d at 114 n.8 (The First Circuit noted the split among the circuits as to

whether § 7502 “supplants the common law mailbox rule,” but stated that, because the

regulation was not necessary to its holding, the court would “leave to another day the

decision of whether we will give [it] Chevron deference.”). Accord Boudreau v. United

States, 622 B.R. 817, 828 (B.A.P. 1st Cir. 2020) (noting that the First Circuit had “not

decided whether IRC § 7502 provides the exclusive method by which a taxpayer may prove

timely mailing of a tax return to the IRS”).

We note that Oregon has a statute similar to TG § 10-107, in that it directs the

Department of Revenue, “[i]nsofar as is practical,” to apply administrative and judicial

interpretations of the federal income tax law. Or. Rev. Stat. (“ORS”) § 316.032(2) (2019).

That statute goes on to give guidance to the Department when there is not a uniform view

regarding federal law. ORS § 316.032(2) provides: “When a provision of the federal

income tax law is the subject of conflicting opinions by two or more federal courts, the

department shall follow the rule observed by the United States Commissioner of Internal

Revenue until the conflict is resolved.” Maryland’s statute does not contain a similar

provision.

Despite the lack of definitive federal law regarding whether § 7502 supersedes the

common-law mailbox rule, we agree with the analysis set forth by the Ninth Circuit in

Baldwin. We conclude that Treas. Reg. § 301.7502-1 is a valid regulation, and pursuant to

federal law, when a refund request is mailed, but the Comptroller denies that he received

it, a taxpayer can show timely filing only through a receipt of registered mail, or other

methods set forth in the regulation.

Federal Law Applies if “Inextricably Keyed” to Maryland Law

The next question is whether the Maryland Tax Court was bound by this federal

law. The Comptroller’s argument that he was bound by that law involves several steps.

Initially, as indicated, the Comptroller notes that TG § 10-107 requires that, “[t]o

the extent practicable, [he] shall apply the administrative and judicial interpretations of the

federal income tax law to the administration of the income tax laws of this State.” He

acknowledges that TG § 10-107 “is not a direct authorization to . . . incorporate into the

Maryland tax code whatever I.R.C. provisions it sees fit to apply,” but rather, the statute

applies only “where the Maryland tax code is ‘inextricably keyed’ to the federal tax code

by virtue of its adoption of federal law.” Comptroller of the Treasury v. Gannett Co., Inc.,

356 Md. 699, 720 (1999) (quoting Lyon v. Campbell, 324 Md. 178, 185 (1991)).

The Comptroller argues that the Maryland law regarding limitations on filing a

refund request, TG § 13-1104(c), is “inextricably keyed” to I.R.C. § 6511 by its specific

reference to it. Therefore, he asserts, application of TG § 13-1104(c) requires application

of administrative and judicial interpretations of I.R.C. § 6511, including Treas. Reg. §

301.7502-1, which links I.R.C. § 7502 to I.R.C. § 6511 and provides that, where the taxing

authority does not acknowledge receipt of a return, a registered mail receipt or other

methods set forth in the statute, are the exclusive methods of establishing a timely filing.

Appellees contend that I.R.C. § 7502 is not incorporated into TG § 13-1104 because

it is “not inextricably keyed to Maryland evidentiary law.” They assert that “[w]hether the

IRS has instituted a specific evidentiary standard is not relevant when it comes to Maryland

law.” Appellees contend that the Tax Court properly reviewed the totality of the evidence,

applied Maryland law adopting the common-law mailbox rule, and “without any doubt,”

found that appellees filed their refund claims in a timely fashion.

The Court of Appeals has addressed the directive in TG § 10-107 that the

Comptroller, to the extent practicable, “apply the administrative and judicial interpretations

of the federal income tax law to the administration of the income tax laws of this State,”

on several occasions. In Lyon, 324 Md. at 185, the Court stated that TG § 10-107 applies

only “where the Maryland tax code is inextricably keyed to the federal tax code by virtue

of its adoption of the federal law.” (Cleaned up.) The statute does not grant the

Comptroller sweeping power or authority:

Section 10-107 is not a direct authorization for [the Comptroller] to

incorporate into the Maryland tax code whatever I.R.C. provisions it sees fit

to apply; rather, section 10-107 expresses a policy of comity that, when

exercising any legislatively-authorized powers that parallel an I.R.C.

provision, [the Comptroller] must comply with the judicial and

administrative interpretations of that federal statute. . . .

* * *

Section 10-107 does not grant any authority to [the Comptroller]. The

statute merely states that, when [the Comptroller] is specifically empowered

to enforce an I.R.C. provision, it must obey the previous administrative and

judicial interpretations of the tax law at issue as precedent. The statute does

not allow [the Comptroller] to put forth its own interpretation that a federal

tax law is incorporated into the Maryland tax code.

Gannett, 356 Md. at 720–21.

Here, TG § 13-1104, in setting forth the limitations period to file a claim for a

refund, specifically incorporates I.R.C. § 6511, stating that a claim for a refund may not be

filed after the limitations “set forth in § 6511.” TG § 13-1104(c). Thus, TG § 10-107

requires the Comptroller to follow the administrative and judicial interpretations of I.R.C

§ 6511, including: (1) Treas. Reg. § 301.7502-1(b)(2), which provides that § 7502 “is

applicable to the determination of whether a claim for credit or refund is timely filed for

purposes of section 6511(a)”; and (2) § 301.7502-1(e)(2)(i), which provides that, unless

the taxpayer has direct proof that a document was delivered to the IRS, proof of registered

or certified mail, or use of a certified private delivery service, is the sole means to prove

delivery.

In Diebold, 279 Md. at 409, the Court of Appeals held that limitations under

Maryland law should be calculated in the manner prescribed by I.R.C. § 6511(a) to avoid

“the anomalous result that a refund of U.S. income taxes might [not] necessarily produce

a refund of Maryland income tax.” Thus, when the Comptroller determines whether there

has been a timely filing under TG § 13-1104(c), and when a court reviews whether the

Comptroller’s decision in this regard was proper, we look to the limitations period of I.R.C.

§ 6511(a), i.e., whether the taxpayer filed amended returns “within 3 years from the time

the [original] return was filed or 2 years from the time the tax was paid, whichever of such

periods expires the later.” Treas. Reg. § 301.7502-1 provides an administrative

interpretation regarding how to determine if documents were timely filed pursuant to I.R.C.

§ 6511 and I.R.C. § 7502. These federal provisions are “inextricably keyed” to

interpretation of timely filing pursuant to TG § 13-1104(c). Accordingly, the Comptroller

and the Tax Court were required to follow federal law in this regard.

Conclusion

Maryland’s income tax law should be construed consistent with federal law “to

which it is inextricably keyed.” Diebold, 279 Md. at 408. The limitations period in TG §

13-1104(c) is inextricably keyed to I.R.C. § 6511(a), and the Comptroller and Tax Court

must apply the administrative and judicial interpretations of I.R.C. § 6511(a), including

Treas. Reg. § 301.7502-1 and I.R.C. § 7502. Accordingly, in a situation where a taxpayer

mails a claim for a refund, but the Comptroller does not receive the claim within the

limitations period, the taxpayer can show timely filing only by a receipt of registered mail

or other proof permitted pursuant to Treas. Reg. § 301.7502-1 and I.R.C. § 7502.

Here, appellees did not have evidence of timely filing based on a receipt of

registered mail, and the Tax Court allowed appellees to testify regarding mailing within

the limitations period. It then applied the common-law mailbox rule to find that the

amended returns were timely filed. In so ruling, the Tax Court erred as a matter of law.

The circuit court then erred in affirming the Tax Court’s ruling in this regard.

II.

Summary Judgment

Parties’ Contentions

The Comptroller next contends that the Tax Court erred when it failed to grant his

motion for summary judgment. In support, he argues that appellees failed to file proper

affidavits to contradict his claims, and therefore, they “admitted for purposes of summary

judgment” that they filed the amended returns after the period to claim refunds had expired.

The Comptroller asserts that, under these circumstances, the “Tax Court should have

awarded summary judgment, by default, to the Comptroller.”

Appellees contend that the Comptroller’s argument is without merit. They assert

that the Tax Court was not required to follow the affidavit requirements set forth in the

Maryland Rules of Procedure, and the court properly exercised its discretion in denying

the Comptroller’s motion for summary judgment.

Analysis

Although, given our resolution of the first issue, we need not address this issue, we

will do so briefly. This Court previously has set forth the standard of review involving a

motion for summary judgment as follows:

A trial court may “enter judgment in favor of or against the moving party if

the motion and response show that there is no genuine dispute as to any

Maryland Rule 2-501 provides, in pertinent part, as follows:

(b) A response to a motion for summary judgment shall be in writing and

shall (1) identify with particularity each material fact as to which it is

contended that there is a genuine dispute and (2) as to each such fact, identify

and attach the relevant portion of the specific document, discovery response,

transcript of testimony (by page and line), or other statement under oath that

demonstrates the dispute. A response asserting the existence of a material

fact or controverting any fact contained in the record shall be supported by

an affidavit or other written statement under oath.

be made upon personal knowledge, shall set forth such facts as would be

admissible in evidence, and shall show affirmatively that the affiant is

competent to testify to the matters stated in the affidavit.

material fact and that the party in whose favor judgment is entered is entitled

to judgment as a matter of law.” Md. Rule 2–501(f). Although a trial court’s

decision to grant a motion for summary judgment is subject to de

novo review on appeal, see Harford County v. Saks Fifth Ave. Distrib.

Co., 399 Md. 73, 82, 923 A.2d 1 (2007) (citing Haas v. Lockheed Martin

Corp., 396 Md. 469, 478, 914 A.2d 735 (2007)), a trial court has

discretionary authority to deny a motion for summary judgment in favor of a

full hearing on the merits, even when the moving party “has met the technical

requirements of summary judgment.” Dashiell v. Meeks, 396 Md. 149, 164–

65, 913 A.2d 10 (2006) (citations omitted). “Thus, on appeal, the standard of

review for a denial of a motion for summary judgment is whether the trial

judge abused his [or her] discretion and in the absence of such a showing, the

decision of the trial judge will not be disturbed.” Id. (citations omitted). See

also Bouton v. Potomac Edison Co., 288 Md. 305, 311, 418 A.2d 1168

(1980) (“on appeal from a final judgment entered following a full trial of the

general issue, we would not review a pretrial denial of a motion for summary

judgment, other than for an abuse of discretions”) (citing Metro. Mortgage

Fund v. Basiliko, 288 Md. 25, 28–29, 415 A.2d 582 (1980)).

Fischbach v. Fischbach, 187 Md. App. 61, 75 (2009).

Accordingly, we review the Tax Court’s denial of the motion for summary

judgment, “in favor of a full hearing on the merits,” for an abuse of discretion. Id. An

abuse of discretion occurs when “the discretion was ‘manifestly unreasonable, or exercised

on untenable grounds, or for untenable reasons,’ or when ‘no reasonable person would take

the view adopted by the [trial] court.’” Wilson-X v. Dep’t of Hum. Res., 403 Md. 667, 677

(2008) (quoting Schade v. Maryland State Bd. of Elections, 401 Md. 1, 34 (2007)). As

explained below, we conclude that there was no abuse of discretion here.

The Comptroller argues that the Tax Court erred in denying its motion for summary

judgment based on appellees’ failure to comply with Maryland Rule 2-501. Title 2 of the

Maryland Rules, however, “applies to civil matters in the circuit courts.” Md. Rule 1-

101(b). Both COMAR 14.12.01.11 (“Rule 11”) and TG § 13-523 provide that proceedings

in the Tax Court “shall be conducted in a manner similar to” a circuit court. The term

similar, however, does not mean identical.

Given the inapplicability of Maryland Rule 2-501 to the proceedings here, the Tax

Court was not required to grant summary judgment to the Comptroller based on any

violation of Maryland Rule 2-501. The Tax Court, after receiving the Comptroller’s

motion for summary judgment, and several replies from both appellees and the

Comptroller, reserved on the issue and set the matter for a trial on the merits. The Tax

Court wanted a complete factual record to determine whether appellees timely mailed their

amended returns requesting refunds. We perceive no abuse of discretion in the ruling in

this regard.

JUDGMENT OF THE CIRCUIT COURT

FOR ANNE ARUNDEL COUNTY

REVERSED. CASE REMANDED TO THE

CIRCUIT COURT TO REMAND TO THE

TAX COURT FOR FURTHER

PROCEEDINGS CONSISTENT WITH

THIS OPINION. COSTS TO BE PAID BY

APPELLEES.

As the Court of Appeals has explained:

The word “similar” does not mean identical but that which resembles.

Webster defines it as “like; resembling; having a general resemblance but not

exactly the same.” WEBSTER’S NEW UNIVERSAL UNABRIDGED

DICTIONARY, 2d ed. at 1691. Ultimately, of course, similarity is

determined by comparing the two laws and making some judgment regarding

any variances between them. A departure that is relatively minor or that

simply accounts for a local context that is different from the State context

does not preclude a finding of similarity.

Seipp v. Balt. City Bd. of Elections, 377 Md. 362, 373–74 (2003).