T.C. Memo. 1996-440
UNITED STATES TAX COURT
ROBERT D. AND ANNE T. LEWIS, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 11282-95. Filed September 25, 1996.
Woodford Gregory Rowland, for petitioners.
Patricia Montero, for respondent.
MEMORANDUM OPINION
DAWSON, Judge: This case was heard by Special Trial Judge
D. Irvin Couvillion pursuant to the provisions of section
7443A(b)(4)1 and Rules 180, 181, and 183. The Court agrees with
1
Unless otherwise indicated, section references are to the
Internal Revenue Code in effect for the years at issue. All Rule
references are to the Tax Court Rules of Practice and Procedure.
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and adopts the opinion of the Special Trial Judge, which is set
forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
COUVILLION, Special Trial Judge: This case is before the
Court on petitioners' Motion to Dismiss for Lack of Jurisdiction,
on the ground that no valid notice of deficiency was mailed to
petitioners, and respondent's cross Motion to Dismiss for Lack of
Jurisdiction, on the ground that the petition was not timely
filed under section 6213(a). A hearing was held on the motions,
at which time evidence was adduced. In addition, some of the
facts were stipulated, and those facts with the annexed exhibits
are so found and are incorporated herein by reference. In the
notice of deficiency, respondent determined the following
deficiencies and additions to tax with respect to petitioners'
tax years as indicated:
Additions to Tax
Year Deficiency Sec. 6651 Sec. 6653(a)1 Sec. 6661
1982 $1,912 $478 $96 --
1983 39,739 9,935 1,987 $9,935
1984 58,887 14,722 2,944 14,722
1985 13,453 3,363 673 3,363
1986 50,112 12,528 2,506 12,528
1987 626 157 31 --
1
Additions to tax (50 percent of interest due) under sec.
6653(a)(1)(B) and/or sec. 6653(a)(2) will be determined.
At the time the petition was filed, petitioners' legal residence
was Central Point, Oregon; however, the motions before the Court
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involve a home and an address at 1222 Grand Avenue, San Rafael,
California (the Grand Avenue address).
Background
Petitioners, husband and wife, filed their 1982 through 1991
Federal income tax returns with the Internal Revenue Service
(IRS) Center at Fresno, California, listing the Grand Avenue
address on each of these returns. Petitioners have maintained a
residence at this address since 1961. Sometime in 1988,
respondent began an audit of petitioners' 1982 through 1987
returns. During the course of the audit, which continued until
the latter part of 1990, the revenue agent assigned to the audit
telephoned, interviewed petitioners, and examined their records
at the Grand Avenue address. As part of the audit, the revenue
agent also received letters from and spoke with petitioners'
attorneys to verify the purpose and amount of legal expenses
claimed on petitioners' returns for legal services these
attorneys had provided petitioners. These attorneys, however,
did not represent petitioners in connection with the audit of
petitioners' returns. In August 1990, the revenue agent made
proposed adjustments to petitioners' returns. By letter dated
November 10, 1990, petitioners protested these proposed
adjustments. Thereafter, the Appeals Division of the IRS took
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over the audit, and the case was assigned to an Appeals Officer.
The Appeals Officer, who eventually caused a statutory notice of
deficiency to be issued, contacted petitioners by mail and by
telephone and held a conference with petitioner Robert D. Lewis
(Mr. Lewis) at the Grand Avenue address. Mr. Lewis purported to
represent petitioners at all times during the audit of their
income tax returns. Petitioners were not represented by an
attorney or by any other third party at any time in connection
with the audit. Accordingly, petitioners did not provide either
the revenue agent or the Appeals Officer with a power of attorney
authorizing a third party to represent them in the audit. At no
time during the audit did petitioners notify either the revenue
agent or the Appeals Officer of any change of address.
On April 14, 1994, respondent sent to petitioners, by
certified mail, a notice of deficiency (or deficiency notice)
addressed to the Grand Avenue address.2 Shortly thereafter, the
deficiency notice was returned undelivered by the post office
with the envelope marked "Unclaimed". The returned envelope
indicates that the U.S. Postal Service attempted to deliver the
deficiency notice twice, and returned it to respondent on May 4,
1994. After the notice of deficiency was returned, respondent
2
The Court notes that petitioners executed Forms 872-A,
Special Consent to Extend the Time to Assess Tax, for each of the
taxable years at issue, which consent was still in effect on
April 14, 1994.
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did not send a copy of the deficiency notice to petitioners by
ordinary mail, did not attempt to telephone petitioners regarding
the deficiency notice, and did not attempt to contact any of the
attorneys who had previously been contacted by respondent's
agent.
The parties agree that petitioners did not receive the
deficiency notice because they were in Oregon and not at the
Grand Avenue address in California at the time the deficiency
notice was mailed. Beginning in 1992, about 2 years prior to
issuance of the deficiency notice, petitioners began dividing
their time between the Grand Avenue address and their residence
in Oregon due to the health of petitioner Anne T. Lewis.
Petitioners, however, never informed respondent that they would
not be at the Grand Avenue address at or near the time the
deficiency notice was sent. Nor did petitioners take any
measures to have anyone monitor their mail at the Grand Avenue
address during their absences.
On or about April 26, 1995, petitioners obtained a copy of
the deficiency notice pursuant to a Freedom of Information Act
request. Thereafter, on June 26, 1995, petitioners filed their
petition with this Court, which date was 438 days after the
deficiency notice was mailed. If the deficiency notice was
mailed to petitioners' last known address, the period for filing
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a petition with this Court expired on July 13, 1994, which is 90
days from the date of the deficiency notice. Sec. 6213(a).
Discussion
It is well settled that, in order to maintain an action in
this Court, there must be a valid notice of deficiency and a
timely filed petition. Abeles v. Commissioner, 91 T.C. 1019,
1025 (1988). Section 6212(a) authorizes the Secretary or his
delegate, upon determining that there is a deficiency in income
tax, to send a notice of deficiency "to the taxpayer by certified
mail or registered mail." Section 6212(b)(1) provides that a
notice of deficiency, with respect to any income tax, "shall be
sufficient" if it is "mailed to the taxpayer at his last known
address". Respondent is entitled to treat the address on the
taxpayer's most recently filed return as the last known address
absent "clear and concise notification" of a new address. Abeles
v. Commissioner, supra at 1035; see also United States v. Zolla,
724 F.2d 808, 810 (9th Cir. 1984). Where respondent, before
mailing a notice of deficiency, becomes aware of an address other
than the one on the taxpayer's return, respondent must exercise
reasonable care and due diligence in ascertaining the taxpayer's
correct address. Monge v. Commissioner, 93 T.C. 22, 33-34
(1989).
Petitioners agree that the notice of deficiency was mailed
to their last known address. They contend, however, that:
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(1) Respondent had a due process obligation to provide actual
notice of the deficiency notice, and (2) respondent did not
exercise due diligence in ensuring actual notice to them.
Petitioners cite Tulsa Professional Collection Servs., Inc. v.
Pope, 485 U.S. 478 (1988), in support of their first contention.
In support of their second contention, petitioners argue that
respondent should have sent a copy of the deficiency notice by
ordinary mail, or should have contacted either petitioners or
their attorney by telephone. Petitioners aver they had a
telephone answering machine at their Grand Avenue address where a
message could have been left by respondent's agent that a notice
of deficiency had been mailed and returned to respondent
undelivered.
As a general rule, the Commissioner has no duty to
effectuate delivery of the notice after it is mailed. Monge v.
Commissioner, supra at 33. The legislative history of the last
known address rule suggests that Congress considered but rejected
requiring actual receipt of the notice because such a requirement
would impose an almost impossible burden on the IRS to prove
actual receipt and to keep track of the whereabouts of all
taxpayers. See H. Rept. 2, 70th Cong., 1st Sess. (1927), 1939-1
C.B. (Part 2) 384, 399; S. Rept. 960, 70th Cong., 1st Sess.
(1928), 1939-1 C.B. (Part 2) 409, 430. Instead, Congress adopted
the "last known address" rule, thus giving the IRS a safe harbor:
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a notice sent to the last known address is valid whether or not
the taxpayer actually receives it. See, e.g., United States v.
Zolla, 724 F.2d at 810. Nothing in the Code required respondent
to take additional steps to effectuate delivery of the instant
notice of deficiency after it was returned undelivered by the
post office. King v. Commissioner, 857 F.2d 676, 681 (9th Cir.
1988), affg. 88 T.C. 1042 (1987); Armstrong v. Commissioner, 15
F.3d 970 (10th Cir. 1994), affg. T.C. Memo. 1992-328; Pfeffer v.
Commissioner, 272 F.2d 383 (2d Cir. 1959); Monge v. Commissioner,
supra; McCart v. Commissioner, T.C. Memo. 1992-3, affd. without
published opinion 981 F.3d 1247 (3d Cir. 1992). As a
consequence, petitioners' arguments that respondent had an
obligation to provide actual notice and that respondent did not
exercise due diligence must fail.
With respect to petitioners' reliance on Tulsa Professional
Collection Servs., Inc. v. Pope, supra, the Court finds that case
to be distinguishable from this case. The Tulsa case involved a
"nonclaim" provision of the Oklahoma Probate Code, under which a
creditor's claim against a decedent's estate would be completely
extinguished unless the claim was presented to the executor or
executrix within 2 months after the publication of notice of the
beginning of probate proceedings. The creditor in that case,
having failed to meet that 2-month deadline, successfully argued
that notice by publication was insufficient to protect the
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creditor's property interest, and that actual notice was required
to satisfy the creditor's right of due process. In the present
case, by contrast, where respondent mailed the deficiency notice
to petitioners' last known address, actual notice of the income
tax deficiencies was not required. Unlike the creditor in Tulsa,
whose claim would have been totally extinguished under the
Oklahoma Probate Code, petitioners have alternative routes for
pursuing their claims because the Tax Court is not the sole venue
for litigation of a tax liability. The fact that taxpayers can
pay a deficiency, file an administrative claim for refund, and if
the claim is disallowed, bring an action for a refund in Federal
District Court or the Court of Federal Claims provides sufficient
due process.
The Court also notes, with respect to petitioners' argument
that their attorney should have been notified, the record in this
case is clear that, at all times during the audit of their
returns, Mr. Lewis, and not an attorney, purported to represent
petitioners. No powers of attorney were ever filed with
respondent authorizing a third party to represent petitioners.
The only contact respondent had with petitioners' attorneys was
to verify legal expenses claimed on petitioners' returns. This
communication did not rise to the level of client representation
such that a power of attorney was required, nor did petitioners
ever execute a power of attorney. Moreover, this Court has held
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that, even if a taxpayer directs that a copy of all
communications be sent to the taxpayer's agent, the notice of
deficiency is valid where it was mailed directly to the taxpayer
at the taxpayer's last known address, even though a copy was not
sent to the taxpayer's agent. McDonald v. Commissioner, 76 T.C.
750 (1981); Allen v. Commissioner, 29 T.C. 113 (1957); Madsen v.
Commissioner, T.C. Memo. 1988-179.
The petition in this case was filed with the Court on
June 26, 1995, 438 days after the date the deficiency notice was
mailed. Section 6213(a) provides, in pertinent part, that a
petition must be filed with the Tax Court within 90 days from the
date a statutory notice of deficiency is mailed to a taxpayer
residing in the United States. This Court has no jurisdiction if
a petition is filed beyond the prescribed 90-day time period.
Pyo v. Commissioner, 83 T.C. 626, 632 (1984). Since the petition
here was not filed within 90 days from the date the notice of
deficiency was mailed, the Court has no jurisdiction over the
case.
Accordingly, respondent's motion to dismiss for lack of
jurisdiction will be granted, and petitioners' motion will be
denied.
An appropriate order will
be entered.