Robert Stocker, II v. United States

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 13a0021p.06

UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________

X
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ROBERT W. STOCKER, II and LAUREL A.

Plaintiffs-Appellants, --
STOCKER,

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No. 11-1890

,
>
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v.

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Defendant-Appellee. N-
UNITED STATES OF AMERICA,

Appeal from the United States District Court
for the Western District of Michigan at Grand Rapids.
No. 1:09-cv-955—Robert Holmes Bell, District Judge.
Decided and Filed: January 17, 2013
Before: BATCHELDER, Chief Circuit Judge; COLE, Circuit Judge; ROSEN, Chief
District Judge.*
_________________
COUNSEL
ON BRIEF: James F. Mauro, Jeffery V. Stuckey, Michael J. Pattwell, DICKINSON
WRIGHT PLLC, Lansing, Michigan, for Appellants. Tamara W. Ashford, Richard
Farber, Carol Barthel, UNITED STATES DEPARTMENT OF JUSTICE, Washington,
D.C., for Appellee.
_________________

OPINION
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ROSEN, Chief District Judge.

*
The Honorable Gerald E. Rosen, Chief United States District Judge for the Eastern District of
Michigan, sitting by designation.

1
No. 11-1890 Stocker, et al. v. United States Page 2

I. INTRODUCTION

This case truly presents a “$64,000 Question”1 — namely, what sort of proof the
Plaintiff/Appellant taxpayers, Robert W. Stocker, II and Laurel A. Stocker (the
Stockers), may introduce in order to demonstrate the timely filing of a tax return in
which they sought a federal tax refund of just over $64,000. The Internal Revenue
Service (IRS) denied this claim for a refund on the ground that the Stockers failed to file
their amended 2003 federal tax return within the statutory three-year period for
amending a return. The Stockers then brought this suit challenging the IRS’s denial of
their claim, but the district court dismissed the case for lack of subject matter
jurisdiction, finding that the Stockers could not establish the jurisdictional prerequisite
of a timely-filed tax return under any of the methods recognized in the Internal Revenue
Code or this Circuit’s precedents for determining the date of delivery of a federal tax
return.

On appeal, the Stockers contend that the decisions relied upon by the district
court are distinguishable, and that the pertinent tax code provisions and case law leave
room for proof of timely mailing of a tax return through taxpayer testimony and
circumstantial evidence. We conclude that the district court properly construed our
precedents, and we therefore AFFIRM the dismissal of this action for lack of subject
matter jurisdiction.

II. FACTUAL AND PROCEDURAL BACKGROUND

A. The Stockers’ Alleged Overpayment of Taxes

This suit arises from the claim of Plaintiffs/Appellants Robert W. Stocker, II and
Laurel A. Stocker that they overpaid their federal taxes for the 2003 tax year. After
securing two extensions, the Stockers filed their initial 2003 federal income tax return
on October 15, 2004. A few years later, in March of 2007, the IRS settled an audit of

1
For the benefit of our younger readers, “The $64,000 Question” was one of the earliest and most
popular of the television game shows broadcast in the 1950s. It became embroiled in the game show
scandals of the late 1950s, and was cancelled in 1958.
No. 11-1890 Stocker, et al. v. United States Page 3

Windward Communications II, a “flow-through entity” in which the Stockers had
invested and lost money. In light of this development, the certified public accountant
who prepared the Stockers’ tax returns, Michael Flintoff, determined that the Stockers
had overpaid their 2003 federal taxes in the amount of $64,058.00.

B. The Preparation and Mailing of the Stockers’ Amended 2003 Return

To assist the Stockers in securing the refund he believed they were owed, Mr.
Flintoff prepared an amended 2003 federal tax return for Mr. Stocker to mail. He also
prepared an amended state return for the 2003 tax year, as well as the Stockers’ 2006
federal and state tax returns. Each of these returns was due on October 15, 2007, with
the Stockers having secured an extension of the due date for their 2006 returns, and with
federal law dictating that any claim for a refund of the Stockers’ 2003 taxes had to be
filed within three years of the October 15, 2004 filing of their initial 2003 return. See
26 U.S.C. § 6511(a).

On October 15, 2007, Mr. Flintoff’s office manager, Karrin Fennell, prepared
postage prepaid, certified mail, return receipt requested envelopes for the Stockers’
amended 2003 federal and state tax returns, as well as ordinary postage prepaid
envelopes for the Stockers’ 2006 federal and state returns. Mr. Stocker drove to his tax
preparer’s office that afternoon to collect and sign the 2003 and 2006 returns, and was
advised by both Mr. Flintoff and Ms. Fennell that all four returns were due and had to
be mailed that same day. Ms. Fennell, however, mistakenly retained the customer copies
of the certified mail receipts for the Stockers’ 2003 amended returns, rather than giving
these copies to Mr. Stocker so that he could present them at the post office as he mailed
the returns.

Mr. Stocker testified that upon receiving the four tax returns and accompanying
envelopes, he proceeded to the post office and timely mailed all four returns on the day
he received them, October 15, 2007. By using certified mail for the 2003 amended
returns, Mr. Stocker ordinarily would have been able to obtain date-stamped receipts
from the post office reflecting that he mailed the returns that day. He explained,
however, that he was unable to get any such date-stamped receipts, due to Ms. Fennell’s
No. 11-1890 Stocker, et al. v. United States Page 4

failure to give him the customer copies of the certified mail receipts while he was at his
tax preparer’s office.

The record discloses that the Stockers’ amended 2003 state tax return and
2006 state return were timely received by the Michigan Department of Treasury, and the
Stockers received the refund sought in their amended 2003 state return. In addition, the
IRS has acknowledged the timely receipt of the Stockers’ 2006 federal tax return. As
for the Stockers’ amended 2003 federal tax return, however, the IRS claims that it did
not receive this return until October 25, 2007, ten days after the date Mr. Stocker
testified that he mailed the return. In addition, the agency’s records reflect that the
envelope containing the Stockers’ amended 2003 federal return bore a postmark date of
October 19, 2007.2 The IRS concedes, however, that it did not retain the envelope in
which the Stockers’ amended 2003 return was sent. Moreover, although the Stockers
requested a return receipt when they mailed their amended 2003 federal return, the
portion of the return-receipt card that is to be completed by the recipient upon delivery
was left blank when it was returned to the Stockers’ tax preparer. (See Certified Mail
Receipt, R.22-3, Page ID# 239.)

C. The IRS’s Rejection of the Stockers’ Claim for a Refund

On November 27, 2007, the IRS sent the Stockers a notice disallowing the refund
claimed in their amended 2003 federal tax return, citing the return’s untimely postmark
past the October 15, 2007 deadline. On June 23, 2008, Mr. Flintoff submitted a written
request for the IRS to reconsider its rejection of the Stockers’ claim for a refund, but the
IRS denied this request on September 26, 2008.

2
An IRS representative, Ericka Watford, testified that the postmark date and date of receipt as
reflected in the agency’s records are derived from dates that were stamped onto the face of the Stockers’
amended 2003 return by a clerk who is responsible for opening and sorting returns. The amended return,
for example, bears a stamp stating “ENVELOPE POST MARKED OCT 19 2007.” (Form 1040X,
Amended 2003 Federal Tax Return, R.26-4, Page ID# 291.)
No. 11-1890 Stocker, et al. v. United States Page 5

D. Procedural History

The Stockers commenced this action on October 15, 2009, challenging the IRS’s
denial of their request for a refund of a portion of their 2003 federal tax payment. In
their complaint, the Stockers alleged that their amended 2003 federal return was timely
filed on October 15, 2007. The Government answered by denying that the Stockers’
amended 2003 return was timely filed, and it asserted the three-year statute of limitations
codified at 26 U.S.C. § 6511 as an affirmative defense.

The Stockers later moved for summary judgment, arguing that their amended
2003 federal tax return was properly mailed on October 15, 2007. In support of this
contention, the Stockers pointed to evidence in the record reflecting the timely mailing
of their amended 2003 return, including the testimony of Mr. Stocker and the evidence
that the other three returns mailed contemporaneously with the amended 2003 federal
return were deemed by the federal and state taxing authorities to be timely sent and
received. The Stockers also requested that the district court draw an adverse inference
of timely filing against the Government as a spoliation sanction, in light of the IRS’s
failure to retain the postmarked envelope in which the Stockers had mailed their
amended 2003 return.

The Government opposed the Stockers’ motion, and also moved to dismiss the
complaint under Fed. R. Civ. P. 12(b)(1) and (2), arguing that the district court lacked
subject matter jurisdiction and that the Stockers’ suit was barred by sovereign immunity
due to the Stockers’ failure to file their amended 2003 return within the three-year period
for doing so. The district court agreed with the Government and held that it lacked
jurisdiction over the case, and it therefore denied the Stockers’ summary judgment
motion as moot. This appeal followed.
No. 11-1890 Stocker, et al. v. United States Page 6

III. ANALYSIS

A. The Standards Governing This Appeal

We review de novo the district court’s dismissal of the Stockers’ complaint for
lack of subject matter jurisdiction. See Wagenknecht v. United States, 533 F.3d 412, 415
(6th Cir. 2008). In this case, the existence of subject matter jurisdiction turns upon
whether the Stockers can show that they filed their amended 2003 federal tax return
within three years of the October 15, 2004 filing date of their original 2003 return.
See 26 U.S.C. § 6511(a); see also Thomas v. United States, 166 F.3d 825, 828-29
(6th Cir. 1999) (recognizing that the timely filing of an administrative claim is a
jurisdictional prerequisite to a suit for a refund); Miller v. United States, 784 F.2d 728,
729 (6th Cir. 1986) (holding that the taxpayer bears the burden of establishing this
jurisdictional prerequisite). Thus, the federal courts may exercise subject matter
jurisdiction over this suit only if the Stockers can establish, through some accepted
means, that they filed their amended 2003 return within this three-year statutory period,
or by October 15, 2007. Accordingly, we now turn to this question.

B. The District Court Properly Concluded That the Stockers Failed to Produce
Cognizable Evidence of the Timely Filing of Their 2003 Amended Return.

Under well-established and familiar principles of sovereign immunity, the United
States may not be sued without its consent, and the terms of this consent define the
jurisdiction of the courts to entertain a suit against the Government. See United States
v. Testan, 424 U.S. 392, 399 (1976). In this case, the pertinent expression of the
Government’s consent to be sued is found at 28 U.S.C. § 1346(a)(1), which vests
jurisdiction in the federal district courts to hear suits “against the United States for the
recovery of any internal-revenue tax alleged to have been erroneously or illegally
assessed or collected.” This waiver of sovereign immunity is limited, however, by an
Internal Revenue Code provision mandating that no such suit may be brought “until a
claim for refund or credit has been duly filed with the Secretary [of the Treasury],
according to the provisions of law in that regard.” 26 U.S.C. § 7422(a).
No. 11-1890 Stocker, et al. v. United States Page 7

Here, in determining whether the Stockers satisfied this jurisdictional
requirement of a “duly filed” claim, the dispositive question is whether they timely filed
their claim for a refund of a portion of their 2003 federal tax payment “within 3 years
from the time [their original 2003] return was filed.” 26 U.S.C. § 6511(a). As the
Supreme Court has emphasized, “unless a claim for refund of a tax has been filed within
the time limits imposed by § 6511(a), a suit for refund, regardless of whether the tax is
alleged to have been ‘erroneously,’ ‘illegally,’ or ‘wrongfully collected,’ may not be
maintained in any court.” United States v. Dalm, 494 U.S. 596, 602 (1990) (citing 28
U.S.C. § 1346(a)(1) and 26 U.S.C. § 7422(a)).

1. The Law Governing the Determination of the Filing Date of a
Federal Tax Return

In order to decide whether the Stockers have established the jurisdictional
prerequisite of a timely filed claim for a refund, we first must survey the law that
determines the date upon which a federal tax return is deemed to be filed. As we
explained in Miller, the courts initially determined the date of a tax filing by resort to the
“physical delivery rule,” under which filing was “not complete until the document [wa]s
delivered and received.” 784 F.2d at 730 (internal quotation marks, footnote, and
citation omitted). Over time, however, some courts “carved out an exception” to the
physical delivery rule, under which proof of “timely and accurate mailing raise[d] a
rebuttable presumption that the mailed material was received, and thereby filed.” Miller,
784 F.2d at 730 (internal quotation marks and citation omitted).

Against this backdrop, Congress enacted an Internal Revenue Code provision
that established two statutory exceptions to the common-law physical delivery rule.
First, a return or other document that is “delivered by United States mail” to the IRS is
deemed to have been delivered — and hence filed, under the physical delivery rule —
on “the date of the United States postmark stamped on the cover” of this mailing. 26
U.S.C. § 7502(a)(1). Next, if a return or other document “is sent by United States
registered mail,” this registration “shall be prima facie evidence that the return . . . or
No. 11-1890 Stocker, et al. v. United States Page 8

other document was delivered” to the IRS, and “the date of registration shall be deemed
the postmark date.” 26 U.S.C. § 7502(c)(1).3

2. The Stockers Cannot Establish the Timely Filing of Their Amended
2003 Return Through the Means Set Forth in § 7502, Nor Through
Any Other Method of Proof Recognized Under the Law of This
Circuit.

Returning to the facts of the present case, it is immediately apparent that neither
of the two above-cited statutory exceptions to the physical delivery rule can assist the
Stockers in their effort to demonstrate the timely filing of their amended 2003 federal
tax return. First, the Stockers cannot show that the envelope in which they mailed this
amended return bore a postmark date of October 15, 2007 or earlier, as necessary to
establish timely delivery under § 7502(a)(1). Instead, the IRS’s records indicate that the
envelope containing the Stockers’ amended return was postmarked October 19, 2007,
four days after the due date.4 Next, while the Stockers state that they sent their amended
return by certified mail, they failed to secure a date-stamped receipt that would
corroborate their assertion that they timely delivered this return to the post office on
October 15, 2007. Thus, they cannot avail themselves of § 7502(c)(2) and its
corresponding administrative regulation, 26 C.F.R. § 301.7502-1(c)(2), under which a
document sent by certified mail is deemed to be filed on the date stamped on the
sender’s receipt by the postal employee to whom the document is presented.

Nonetheless, the Stockers insist that the two methods set forth in § 7502 for
establishing timely filing are not the sole avenues of proof for overcoming the physical
delivery rule, and that taxpayers remain free to prove timely filing through other means.

3
Under § 7502(c)(2), the Secretary of the Treasury is “authorized to provide by regulations the
extent to which” the provision governing registered mail also applies to certified mail. A regulation
adopted pursuant to this authority provides that if a document “is sent by U.S. certified mail and the
sender’s receipt is postmarked by the postal employee to whom the document . . . is presented, the date
of the U.S. postmark on the receipt is treated as the postmark date of the document.” 26 C.F.R. §
301.7502-1(c)(2). As explained in this regulation, “the risk that the document . . . will not be postmarked
on the day that it is deposited in the mail may be eliminated by the use of registered or certified mail.” Id.
4
As noted earlier, the IRS failed to retain the envelope in which the Stockers sent their return, so
there is no way to confirm the statement in the agency’s records that this envelope had an October 19, 2007
postmark. The possible significance of this lost envelope is addressed below.
No. 11-1890 Stocker, et al. v. United States Page 9

This contention, however, runs directly counter to our decision in Miller, in which we
expressly held that “the only exceptions to the physical delivery rule available to
taxpayers are the two set out in section 7502.” 784 F.2d at 731. In that case, the
plaintiff sought to rely on an affidavit from his attorney stating that he had timely sent
a claim for a refund by ordinary mail, but the IRS had no record of ever receiving this
claim. Because the plaintiff could not produce a postmarked envelope that could
confirm the timely filing of his claim, and because this claim had been sent by ordinary
rather than registered or certified mail, we found that “the exceptions in section 7502 do
not apply to the filing of [the plaintiff’s] refund claim.” Id. at 730. We then rejected the
plaintiff’s contention that the two exceptions set forth in § 7502 merely created “safe
harbor[s]” to which a taxpayer could appeal “without question, while not barring him
from relying on other exceptions created by the courts.” Id. Instead, we elected to
follow the decisions of other courts holding that the “exceptions embodied in [§ 7502]
[a]re exclusive and complete.” Id. at 731 (following Deutsch v. Comm’r, 599 F.2d 44,
46 (2d Cir. 1979), and other cases cited therein).5

The Stockers seek to distinguish Miller, however, on the ground that the
taxpayer’s claim in that case was never received, whereas the postmarked envelope in
which the Stockers sent their amended return was received by the IRS and then lost or
destroyed. In support of this proposed distinction, the Stockers point to language in
Miller which, in their view, operates to limit the ruling in that case to situations where
the taxpayer’s submission never reaches the IRS. In particular, the court in Miller
construed the statutory “mailbox rule” set forth in § 7502(a)(1) as “appl[ying] only in
cases where the document is actually received by the I.R.S. after the statutory period,”

5
As noted by the Stockers, there is a circuit split on this issue, with other circuits having
concluded that § 7502 does not altogether displace the common-law rules, such as the mailbox rule, that
the courts have invoked to determine whether a tax return or other document has been timely filed with
the IRS. See, e.g., Philadelphia Marine Trade Ass’n — Int’l Longshoremen’s Ass’n Pension Fund v.
Comm’r, 523 F.3d 140, 150 (3d Cir. 2008) (reasoning that Congress’s intent in enacting § 7502 “was to
supplement, not supplant, [the] means by which taxpayers can timely file documents with the IRS”);
Anderson v. United States, 966 F.2d 487, 491 (9th Cir. 1992) (“[W]e decline to read section 7502 as
carving out exclusive exceptions to the old common law physical delivery rule.”). We, of course, are
bound to adhere to this Circuit’s resolution of this issue in the published Miller decision. See Carroll v.
Comm’r, 71 F.3d 1228, 1232 (6th Cir. 1995) (expressing reservations about the ruling in Miller but
confirming that it “remain[s] good law in the Sixth Circuit”).
No. 11-1890 Stocker, et al. v. United States Page 10

and it reasoned that the taxpayer in that case could not satisfy this statutory provision
because his “claim was never received by the I.R.S.” Miller, 784 F.2d at 730 (emphasis
in original) (footnote omitted). Similarly, in a more recent decision that reaffirmed the
ruling in Miller, we stated that § 7502(a)(1) “do[es] not apply to this case” because
“[t]he IRS did not receive” the tax return at issue in that case. Surowka v. United States,
909 F.2d 148, 150-51 (6th Cir. 1990). It follows, according to the Stockers, that Miller
and its progeny do not preclude a taxpayer from satisfying § 7502(a)(1) (or perhaps
some related common-law rule) through extrinsic evidence in cases where the IRS did
receive the tax return or claim at issue, and where the only question is whether this
document was timely filed.

We see no principled basis for distinguishing Miller on this ground. In both
Miller and this case, the plaintiff taxpayers were met with the objection that they could
not bring suit for a refund because they had failed to timely file a claim with the IRS.
In both cases, this purported absence of a timely filing — whether owing to late delivery
to the IRS or to the IRS’s failure to receive the claim at all — could only be rebutted
through extrinsic evidence indicating that the taxpayer presented the claim to the post
office for mailing on or before the pertinent deadline. If we did not allow this extrinsic
evidence to rebut the IRS’s claim of lack of receipt in Miller, we fail to see how we
could consider such evidence here, based solely on the IRS’s acknowledgment that it
received the Stockers’ amended return ten days late (and with a postmark four days after
the filing deadline), rather than not at all.6

Indeed, it seems to us that this factual distinction from Miller cuts against the
taxpayers here. As we explained in Miller, § 7502 is intended, at least primarily, to
address cases in which a document reaches the IRS after a filing deadline. 784 F.2d at
730 & n.3; see also Philadelphia Marine Trade Ass’n, 523 F.3d at 149 (reasoning that
“[b]y its terms, § 7502(a) applies only to cases where the pertinent document was
delivered to the Government after the filing deadline”). Since this is precisely the

6
There is, of course, the separate question whether the Government might be subject to an adverse
inference of a timely postmark, as a sanction for the IRS’s failure to preserve the envelope in which the
Stockers sent their amended return. Again, we consider this matter below.
No. 11-1890 Stocker, et al. v. United States Page 11

situation presented here, there is all the more reason for us to hold the Stockers to the
terms of this statute and to insist that they meet the conditions imposed by Congress for
excusing late delivery, rather than looking to judge-made rules that are intended to
address different situations. Compare, e.g., id. at 149-152 (finding that the common-law
mailbox rule should remain available where the “taxpayer does not need the protection
of § 7502,” but instead seeks to invoke a presumption of timely delivery of a claim
mailed well in advance of a deadline). Because § 7502 addresses the very dilemma
confronted by the Stockers here — namely, the need for an exception to the physical
delivery rule that would overcome the admitted arrival of a document after a filing
deadline — we conclude, in accordance with Miller, that the Stockers’ failure to produce
evidence that would satisfy either of this statute’s two specified exceptions is fatal to
their suit for a refund.7

Moreover, the Stockers’ proposed basis for distinguishing Miller runs afoul of
a prior (albeit unpublished) decision in which we applied Miller to a case involving late
delivery of tax returns. In Schentur v. United States, No. 92-3605, 1993 WL 330640, at
*1-2 (6th Cir. Aug. 30, 1993), the plaintiff taxpayers filed claims for refunds that were
received by the IRS a year or more past the pertinent deadlines, and the IRS did not save
the envelopes in which the plaintiffs submitted these claims. Although the plaintiffs
offered affidavits from themselves, their secretary, and their accountant attesting that

7
We pause to observe, as an aside, that there is nothing inherently more suspicious or less
plausible about the IRS’s claim in this case of a postmark after the filing deadline, as compared to the
agency’s claim in Miller that a document was never received. In either case, the claim cannot be verified.
Indeed, this potential predicament is explicitly acknowledged in the regulatory counterpart to § 7502,
which advises that “the risk that [a] document . . . will not be postmarked on the day that it is deposited
in the mail may be eliminated by the use of registered or certified mail.” 26 C.F.R. § 301.7502-1(c)(2).
Accordingly, just as it is a recognized risk that mail might get lost in transport or that an IRS employee
might inadvertently misplace a document upon its delivery to the agency, it is likewise a recognized risk
that a postal employee might not postmark a document on the same day the taxpayer brings it to the post
office. Section 7502(c) grants immunity from all of these risks through the use of registered or certified
mail, but a taxpayer who uses ordinary mail and hopes to rely on § 7502(a)(1) is equally vulnerable to each
of these risks. See Carroll, 71 F.3d at 1229 (“In this circuit, a taxpayer who sends a document to the IRS
by regular mail, as opposed to registered or certified mail, does so at his peril.”).
In this case, then, it is possible to credit the Stockers’ extrinsic evidence that they delivered their
amended 2003 tax return to the post office on October 15, 2007, while also crediting the statement in the
IRS’s records that the envelope in which the Stockers’ return arrived at the agency bore a postmark date
of October 19, 2007. Thus, while we find that Miller precludes us from considering the Stockers’ extrinsic
evidence that they brought their return to the post office on October 15, 2007, nothing in this mailing effort
necessarily ensured that their return would bear an October 15, 2007 postmark, such that they could
successfully invoke § 7502(a)(1) as establishing the timely filing of their return.
No. 11-1890 Stocker, et al. v. United States Page 12

their tax returns were timely filed, we cited Miller as holding that § 7502 defines the
“only exceptions” to the physical delivery rule, and we declined to consider the
plaintiffs’ affidavits in ruling as a matter of law that the plaintiffs had failed to satisfy
either of the statutory exceptions to the physical delivery rule. Schentur, 1993 WL
330640, at *3-4. While Schentur is not binding here, we concur in the panel’s
determination in that case that Miller applies equally to late-delivered and never-
delivered claims.

Finally, taking a somewhat different tack, the Stockers suggest that their proffer
of extrinsic evidence is not necessarily inconsistent with Miller’s holding that § 7502
states the only two exceptions to the physical delivery rule. In particular, the Stockers
maintain that nothing in Miller prevents them from satisfying the “postmark”
requirement of § 7502(a)(1) circumstantially through evidence of timely mailing, in lieu
of direct evidence of the postmark date stamped on the envelope in which they mailed
their amended 2003 return. In effect, the Stockers invite us to substitute the evidence
of the October 15, 2007 mailing of their return for the statutory recognition of a
postmark date as an acceptable proxy for the date of delivery.

We once again conclude that Miller forecloses this proposed method of proof.
In that case, as here, the plaintiff taxpayer was unable to produce the evidence called for
under the statutory “postmark” exception — namely, proof of “the date of the United
States postmark stamped on the cover” of the envelope or package in which the plaintiff
taxpayer mailed his refund claim. 26 U.S.C. § 7502(a)(1). To be sure, the reasons for
this absence of proof differ in the two cases — the mailing in Miller was never received,
while the envelope containing the Stockers’ return was lost or destroyed. Yet, as
explained earlier, we see no principled basis for concluding that § 7502(a)(1) confers
upon taxpayers whose claims are delivered late additional avenues of proof that, under
Miller, are unavailable to those whose claims are never received. Indeed, we declined
to allow such an avenue of proof in Schentur — a case where, as here, the IRS failed to
preserve the envelopes in which the plaintiffs mailed their tax returns — and instead
found that the timeliness of the plaintiffs’ tax filings should be determined “without
No. 11-1890 Stocker, et al. v. United States Page 13

looking to the affidavits” in which the plaintiffs sought to establish the date of mailing.
1993 WL 330640, at *4 (footnote omitted).

In any event, it bears emphasis that the extrinsic evidence put forward by the
Stockers does not purport to establish the fact of significance under § 7502(a)(1) —
namely, the “date of the United States postmark” on their amended 2003 return — but
instead is directed at the separate factual question of when they presented this return to
the post office for mailing. As the Eighth Circuit has observed, “in section
7502 Congress dealt with issues of proof, and determined that a postmark is evidence
verifiable beyond any self-serving testimony of a taxpayer who claims that a document
was timely mailed.” Estate of Wood v. Comm’r, 909 F.2d 1155, 1161 (8th Cir. 1990).
Thus, “[t]he act of mailing is not significant for purposes of the statute but placement of
a postmark is.” Id. Consequently, we affirm the district court’s finding that the
Stockers’ extrinsic evidence had no role to play in determining whether they could
satisfy either of § 7502’s two exclusive exceptions to the physical delivery rule, and we
further affirm the lower court’s ruling that neither of these exceptions is available here
to establish the timely filing of the Stockers’ amended 2003 federal tax return.

C. The District Court Did Not Abuse Its Discretion in Declining to Draw an
Adverse Inference of Timely Filing as a Spoliation Sanction for the
Government’s Failure to Preserve the Envelope in Which the Stockers
Mailed Their Amended 2003 Tax Return.

Apart from challenging the district court’s refusal to consider the extrinsic
evidence that they mailed their amended 2003 federal tax return at the October 15, 2007
deadline, the Stockers also take issue with the district court’s failure to impose spoliation
sanctions against the Government arising from the IRS’s failure to retain the envelope
in which they sent this return. More specifically, the Stockers sought an inference that
this lost or destroyed envelope bore a postmark date of October 15, 2007, but the district
court declined without comment to draw such an adverse inference against the
Government, or to otherwise impose any sort of spoliation sanctions based on the IRS’s
loss or destruction of this envelope. We review the district court’s failure to impose the
requested spoliation sanctions for an abuse of discretion, see Beaven v. U.S. Dep’t of
No. 11-1890 Stocker, et al. v. United States Page 14

Justice, 622 F.3d 540, 553 (6th Cir. 2010), and we conclude that the court acted within
its discretion when it declined to impose such sanctions here.

As we recently explained, a “party seeking an adverse inference instruction based
on the destruction of evidence must establish (1) that the party having control over the
evidence had an obligation to preserve it at the time it was destroyed; (2) that the records
were destroyed with a culpable state of mind; and (3) that the destroyed evidence was
relevant to [a] party’s claim or defense such that a reasonable trier of fact could find that
it would support that claim or defense.” Id. (internal quotation marks and citations
omitted). The requisite “culpable state of mind” may be established through a “showing
that the evidence was destroyed knowingly, even if without intent to breach a duty to
preserve it,” but even negligent conduct may suffice to warrant spoliation sanctions
under the appropriate circumstances. Id. at 554 (internal quotation marks, alteration, and
citations omitted).

Turning to the first of these factors, the Stockers point to a provision in an IRS
internal policy manual that seemingly requires the agency to retain the envelopes in
which amended returns are received. In their view, this internal policy gave rise to an
obligation to preserve the postmarked envelope in which they sent their amended
2003 return, and the Government does not contend otherwise. Thus, we agree that the
first factor cited in Beaven has been established here.

We conclude, however, that the Stockers have not demonstrated that the IRS
acted with a sufficiently culpable state of mind to warrant an adverse inference of a
timely postmark date. We explained in Beaven that “an adverse inference for evidence
spoliation is appropriate” if the party with control over the evidence “knew the evidence
was relevant to some issue at trial” or to “future litigation,” but nonetheless engaged in
culpable conduct that “resulted in its loss or destruction.” Id. at 553 (internal quotation
marks and citations omitted). The Stockers contend that the IRS knew or should have
known that the evidence at issue here could prove relevant to future litigation, given
(i) the legal significance that § 7502(a)(1) confers upon postmarks stamped on
envelopes, and (ii) the recognition in the IRS’s internal policy manual that envelopes
No. 11-1890 Stocker, et al. v. United States Page 15

containing amended returns should be retained and that postmark dates are used to
determine timely filing. The Government, on the other hand, argues that the IRS
reasonably could have failed to perceive the relevance of the envelope to future
litigation, where (i) according to the agency’s records, the postmark date on the envelope
was October 19, 2007, four days after the applicable deadline, and (ii) the Stockers’ use
of certified mail to send their return gave rise to the reasonable assumption that they had
obtained a date-stamped receipt at the post office that could establish timely filing under
§ 7502(c).

On balance, we find that these considerations would warrant the adverse
inference sought by the Stockers only if there were evidence that the IRS acted with a
degree of culpability beyond mere negligence. To be sure, we have recognized that
spoliation sanctions may properly be imposed even for lesser degrees of fault such as
negligence. See Beaven, 622 F.3d at 554. Yet, the choice of an appropriate sanction
should be linked to the degree of culpability, with more severe sanctions reserved for the
knowing or intentional destruction of material evidence. Id. at 553-54. Here, the record
discloses no culpable conduct beyond the negligent failure to preserve an envelope in
accordance with internal agency regulations. Moreover, as we noted earlier, the
extrinsic evidence produced by the Stockers, even if fully credited, does not definitively
establish that the IRS employee who received and opened the Stockers’ amended 2003
return incorrectly recorded the postmark date on the envelope as October 19, 2007. To
the contrary, it is possible that this notation in the IRS record was accurate, and that the
fault for the late postmark date lies with a postal worker. If so, the lost or destroyed
envelope would not have aided the Stockers’ cause in this litigation.

As we have observed, under the present state of the law in this Circuit, “a
taxpayer who sends a document to the IRS by regular mail, as opposed to registered or
certified mail, does so at his peril.” Carroll, 71 F.3d at 1229. The Stockers recognized
as much when they sent their amended 2003 federal return by certified mail, but they
failed to take the necessary steps to ensure that they obtained the date-stamped receipt
of certified mailing that would establish timely filing under § 7502(c). It is unfortunate,
No. 11-1890 Stocker, et al. v. United States Page 16

to be sure, that the IRS did not retain the envelope that possibly could have enabled the
Stockers to establish timely filing through the alternative route made available in
§ 7502(a)(1). Yet, as the Government points out, a review of the case law reveals no
decisions in which the IRS’s failure to preserve a postmarked envelope resulted in an
adverse evidentiary inference of timely mailing. Indeed, our unpublished decision in
Schentur featured a similar failure by the IRS to retain the postmarked envelopes in
which the plaintiff taxpayers mailed their returns, but we nonetheless held that the
plaintiffs’ suit for a refund was time-barred. 1993 WL 330640, at *1-2, *4. Against this
backdrop, we conclude that the district court did not abuse its discretion in declining to
grant an adverse inference of timely filing as a spoliation sanction for the IRS’s loss or
destruction of the envelope in which the Stockers mailed their amended 2003 federal tax
return.

IV. CONCLUSION

For the reasons set forth above, we AFFIRM in all respects the district court’s
June 20, 2011 opinion granting the Government’s motion to dismiss this suit for lack of
subject matter jurisdiction.