Dissenting:

For several reasons I would affirm the opinion by Judge Levi holding that the position of the United States was substantially justified.

First is the decision in Estate of Wood v. Commissioner, 909 F.2d 1155 (8th Cir.1990), by the Eighth Circuit, affirming an en banc decision of the Tax Court. The court rejected the United States’ position that 26 U.S.C. § 7502 required production of the postmark and that the section preempted the common law mailbox rule. The Wood decision, however, insisted that there be “direct” evidence of the postmark, accepting the testimony of the Postmaster that she did postmark the envelope. The court below admitted evidence of an attorney who testified he saw the postmark being stamped but the Eighth Circuit relied only on the Postmaster’s evidence. Wood also rejected the submission of the United States that the common law mailbox rule was preempted by § 7502.

Second this circuit found the facts in Anderson v. United States, 966 F.2d 487 (9th Cir.1992), similar to those in Wood and adopted its reasoning. Contrary to the presentation by the IRS, Anderson concluded that § 7502 did not set forth exclusive limitations on admissible evidence to prove timely mailing. In Anderson the district court admitted the testimony of the taxpayer who saw the postmark being stamped on the envelope as well as the testimony of the friend who had stayed in the taxpayer’s automobile. In deciding the appeal, the court chose to mention only the evidence of the taxpayer and adopted the direct evidence rule of Wood as well as the common law mailbox rule.

Judge Levi relied upon Wood and Anderson .

The majority’s reference to the common law mailbox rule as the law of this circuit provides no help to the taxpayers in this case. The common law mailbox rule provides “that a timely and properly mailed document is presumed timely delivered. ” Anderson, 966 F.2d at 489 (emphasis added). The rule can help a taxpayer in two ways: 1) a mailed document is presumed delivered; and 2) the delivery is accomplished in a timely manner. See id.; Carroll v. Commissioner, 71 F.3d 1228, 1230, 1232 (6th Cir.1995), ce rt. denied, 518 U.S. 1017 , 116 S.Ct. 2547 , 135 L.Ed.2d 1067 (1996); 9 Wigmore, Evidence § 2519 (Chadboum rev. 1981 & Best Supp.1997). Under the rule, a taxpayer could establish timely filing by proving that the document was mailed such that it would be received by the Commissioner prior to the filing deadline if the postal service followed its normal delivery schedule. See Arkansas Motor Coaches v. Commissioner, 198 F.2d 189, 190-91 (8th Cir.1952) (stating rule that document must be mailed such that it would be timely received by the Commissioner in the ordinary course of the mails). The Sixth Circuit has discussed the contours of this rule:

Carroll, 71 F.3d at 1230 (emphasis added) (citations omitted). In sum, the mailbox rule does not extend the filing deadline for tax documents.

The taxpayers in this case clearly understand that reliance on the common law mailbox rule provides no help to them (indeed, as just noted, they lose if it provides the governing law): “Taxpayers do not assert that they are entitled to judgment based upon the ‘common law mailbox rule.’” Appellants’ Opening Br. at 26; see id. at 30 (“The issue demands resolution based upon the provisions of IRC § 7502.”). Perhaps the majority interprets Anderson as applying a presumption that a document is postmarked the same day it is mailed, and therefore the taxpayers are entitled to the benefit of § 7502. However, the majority does not explain how to interpret Anderson in this manner, and Anderson allowed the taxpayer to introduce extrinsic evidence because she “provided direct proof of a timely postmark because she actually saw the postal clerk stamp her document.” 966 F.2d at 491 .

Third, Judge Levi remarked that in his view the issue had not been particularly decided by the Ninth Circuit although it was a close case. This, it seems to me, is enough to support the position of the United States. See TKB Int’l, Inc. v. United States, 995 F.2d 1460, 1468 (9th Cir.1993); Minor v. United States, 797 F.2d 738, 739 (9th Cir.1986).

Fourth, the United States did not admit error in this case. Even if it had erred on the merits, the government’s position, could be substantially justified. See Pierce v. Underwood, 487 U.S. 552, 568 , 108 S.Ct. 2541 , 101 L.Ed.2d 490 (1988) (“The unfavorable terms of a settlement agreement ... cannot conclusively establish the weakness of the Government’s position. To hold otherwise would not only distort the truth but penalize and thereby discourage useful settlements.”); Kali v. Bowen, 854 F.2d 329, 332, 334 (9th Cir.1988).

The standard of review in this ease is highly deferential. See Meinhold v. U.S. Dep’t of Defense, 123 F.3d 1275 , 1279 (9th Cir.1997). “We may reverse only if the district court based its decision that the [govr ernment] was not substantially justified ‘on an erroneous conclusion of law or when the record contains no evidence on which [it] rationally could have based that .decision.’ ” Id. at 1278 (quoting Oregon Natural Resources Council v. Marsh, 52 F.3d 1485, 1492 (9th Cir.1995)). “Our role is limited to determining whether the district court abused its discretion. The question is whether the district.court was entirely without foundation, in law and in- fact, for its decision -awarding fees.” Meinhold, 123 F.3d at 1279. Judge Levi was correct and surely did not abuse his discretion.