Does Timely Filing of the Federal Return Equal Timely Alabama Filing?

It might, at least if you are filing electronically. That was the conclusion reached in a recent Administrative Law Division decision (Gregory P. and Amanda Chapman v. Department of Revenue, Docket Number 03-972); but a cryptic comment by the ALJ in the later appeal hearing left the issue in doubt. The DOR had assessed late filing penalties of $54, saying that it did not receive the Chapman's 2002 return until April 21, 2003. The taxpayers contended that they had electronically filed both their federal and state returns on April 15, 2003.

In his discussion, the Administrative Law Judge, Judge William Thompson, pointed out that when taxpayers electronically file federal and state returns, the combined file is transmitted first to the IRS, who batches the information for the various states and relays it to the state. There was no dispute that Mr. and Mrs. Chapman had transmitted their federal and state returns on April 15, and the return was treated as timely filed by the IRS. According to the ALJ, if a combined federal and Alabama return is timely filed with the IRS, "... Alabama will treat the State return as timely filed, even if it is actually received after the due date". The penalty assessment was dismissed.

DOR Appeals, Doubt Cast on Decision

The Department of Revenue appealed the Chapman decision, saying that the ALJ had not fully understood all of the technical aspects of electronic filing. In his opinion, released on January 28, the ALJ, without amplifying his comments, said that "The Department may be correct...". He went on to state, however, that the penalty assessed against the Chapmans should still be waived for reasonable cause.

Judge Thompson's comment in the appeal hearing leaves the issue of what constitutes timely filing of electronic returns in doubt. There will almost certainly be additional litigation before this question is finally resolved.

This page last updated 2/15/04

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