The American College of Tax Counsel is urging the chief counsel of the Internal Revenue Service to re-evaluate a legal standard holding taxpayers responsible for verifying tax return filings. The organization’s Board of Regents said there is no way for taxpayers to electrically file verify that filings have been received by the Internal Revenue Service.The current standard is what is called the “Bright-Line Text”, which was announced in United States v. Boyle, 469 U.S. 241 (1985). In that case, a taxpayer who relied on a professional preparer to submit hs return was assessed a late-filing fee. In the Boyle case, the Supreme Court held that relying on tax professional to file the return can never constitute “reasonable cause” for a taxpayer to have late-filing penalties abated.
The College said while the rule may have made sense when filings were via paper and taxpayers could use methods such as mailing documents via certified mail, return receipt requested, efilers have no such tools.
Also taxpayers who use do-it-yourself software also cannot determine actual transmission since those returns are filed by Electronic Return Originators, which are approved by the IRS.
The U.S. District Court for the Middle District of Tennessee said although tax-filing procedure has changed significantly since 1985, the taxpayer has the discretion to use a preparer who must efile or use one who files paper returns. The court’s opinion was Boyle should still apply until efiling is universally mandatory or paper filing becomes “sufficiently unwieldy.”
The College noted that of 154 million returns filed for the 2018 tax year, 135 million were filed electronically, 87.7 percent.
