Baley Allred, III v. United States
689 F. App'x 392
| 6th Cir. | 2017Background
- Baley Allred and Fred Bayne each owned 50% of an LLC; Bayne died in 2007 and Allred temporarily reported 100% of LLC income for 2007 onward until litigation with Bayne’s estate over membership interest was resolved.
- While litigation was pending, Allred and the LLC filed amended returns allocating income 50/50 for 2007–2013; the estate later filed its own amended returns and paid tax for those years except 2009.
- On October 10, 2013 (five days before the October 15 deadline), an assistant mailed Allred’s 2009 refund claim but did not obtain a certified-mail receipt or postmark; the IRS received the claim on October 23, 2013 and denied it as untimely.
- The estate’s amended 2009 return was rejected by the IRS; as a result, the IRS collected all 2009 tax from Allred, although he asserts he owned only 50% of the LLC that year.
- Allred sued for a refund, arguing (1) his 2009 claim was timely under the mailbox/postmark rules and (2) alternatively, he was entitled to relief under the mitigation provisions (26 U.S.C. §§ 1311–14). The district court dismissed; the Sixth Circuit affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was the 2009 refund claim timely filed under § 6511/§ 7502? | Allred: claim was mailed Oct 10, within deadline—mailbox rule/postmark should control. | U.S.: physical delivery rule applies; no postmark or certified receipt in record, so filing not timely. | Held: untimely—no acceptable postmark or certified-mail evidence; physical delivery rule controls. |
| Could the record be supplemented or remanded for discovery of envelope/postmark? | Allred: district court should not have ruled before producing envelope; appellate supplementation requested. | U.S.: record before district court lacked evidence; remand unnecessary. | Held: denied supplementation/remand; plaintiffs failed to raise/request such discovery below. |
| Do mitigation provisions (§§ 1311–14) permit relief absent timely filing? | Allred: mitigation applies because IRS’s actions caused double inclusion of income (collection of tax on 150% of LLC income) or IRS should have applied § 6501(e) six-year exception to the estate. | U.S.: mitigation applies only where statutory prerequisites are met; no double inclusion occurred and the six-year exception is permissive, not mandatory. | Held: mitigation does not apply—plaintiffs cannot show any § 1312 circumstance (no double inclusion); six-year exception does not force IRS action. |
| Can court compel IRS to apply § 6501(e) to create a double inclusion? | Allred: court should require IRS to accept estate return/apply six-year exception to produce double inclusion. | U.S.: § 6501(e) is permissive ("may be assessed"); court should not order IRS to assess. | Held: denied—plaintiffs only speculate IRS would assess; statute does not mandate assessment and plaintiffs cite no authority to compel such relief. |
Key Cases Cited
- Miller v. United States, 784 F.2d 728 (6th Cir.) (physical delivery rule governs tax filing)
- Stocker v. United States, 705 F.3d 225 (6th Cir.) (postmark/certified-mail are exclusive extrinsic proof of timely filing)
- United States v. Brockamp, 519 U.S. 347 (Supreme Court) (tax refund limitations not subject to equitable tolling)
- Kavanagh v. Noble, 332 U.S. 535 (Supreme Court) (statutes of limitations must be strictly adhered to)
- Haas v. United States, 107 Fed. Cl. 1 (Fed. Cl.) (purpose and limits of mitigation provisions)
- Cocchiara v. United States, 779 F.2d 1108 (5th Cir.) (double inclusion explained for mitigation relief)
- Longiotti v. United States, 819 F.2d 65 (4th Cir.) (mitigation provisions are not a general equitable exception)