T.C. Memo. 1998-24
UNITED STATES TAX COURT
NEAL A. SANDERS, d.b.a. LAW OFFICES OF NEAL A. SANDERS,
Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 128-97. Filed January 21, 1998.
Neal Alan Sanders, pro se.
Peter J. Gavagan, for respondent.
MEMORANDUM OPINION
JACOBS, Judge: This matter is before the Court on the
parties' cross-motions to dismiss for lack of jurisdiction.
Respondent moves to dismiss this case as to income tax deficiencies
for 1992 and 1993 for lack of jurisdiction on the grounds that the
amended petition (in which the allegations concerning those income
tax deficiencies were first raised) was filed more than 90 days
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after the notice of deficiency was issued, and to strike all
references thereto from the amended petition. Petitioner requests
the Court to dismiss respondent's claim for 1992 income tax
deficiencies and for section 4975 excise tax deficiencies for years
before 1993 on the grounds that petitioner did not receive notices
of deficiency with respect to the determined deficiencies for these
taxes until after the limitations period.1 In this respect,
petitioner avers that the two notices of deficiency (one relating
to excise tax deficiencies pursuant to section 4975 for 1992-95 and
the other relating to income tax deficiencies for 1992 and 1993)
were not mailed to him at his correct address. To resolve these
competing procedural disputes, we must determine whether respondent
mailed the notices of deficiency to petitioner at petitioner's last
known address.
All section references are to the Internal Revenue Code as in
effect for the years in issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
Background
Respondent issued three notices of deficiency, each dated
October 11, 1996. The first notice determined Federal excise tax
deficiencies pursuant to section 4971 and additions to tax pursuant
1
In response to petitioner's motion, respondent filed a
supplement to respondent's original motion requesting the Court
to extend the scope of respondent's motion to dismiss to include
the sec. 4975 excise taxes for years 1992-95.
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to section 6651 for 1991-95 with respect to asserted accumulated
funding deficiencies for the law offices of Neal A. Sanders' money
purchase pension and profit sharing plans (the first deficiency
notice), as follows:
Addition to Tax
Year Sec. 4971(a) Deficiency Sec. 4971(b) Deficiency Sec. 6651(a)
1991 $772 --- $193
1992 1,310 $12,604 327
1993 3,250 31,999 812
1994 3,042 53,624 ---
1995 5,362 53,624 804
The second notice determined Federal excise tax deficiencies
pursuant to section 4975 and additions to tax pursuant to section
6651 for 1992-95 (the second deficiency notice) with respect to an
asserted prohibited transaction (the borrowing of money) engaged in
by the law offices of Neal A. Sanders with both its money purchase
pension and profit sharing plans, as follows:
Addition to Tax
Year Sec. 4975(a) Deficiency Sec. 4975(b) Deficiency Sec. 6651(a)(1)
1992 $87 --- $22
1993 294 --- 74
1994 518 --- 130
1995 775 $17,087 116
The third notice determined Federal income tax deficiencies and
accuracy-related penalties pursuant to section 6662 for 1992 and
1993 (the third deficiency notice) with regard to Neal Alan and
Linda Sanders, husband and wife, as follows:
Accuracy-Related Penalty
Year Deficiency Sec. 6662(a)
1992 $22,927 $4,585
1993 18,478 3,696
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The first deficiency notice was addressed to the law offices
of Neal Sanders at "106 S. Main St., Ste. 808, Butler, PA 16001".
The second deficiency notice was addressed to Neal Sanders at "118
Hickory Hills, Slippery Rock, PA 16057" (the Hickory Hills
address), and the third deficiency notice was addressed to Neal
Alan and Linda Sanders at the Hickory Hills address.
On January 2, 1997, Neal A. Sanders, d.b.a. Law Offices of
Neal A. Sanders (petitioner), filed a petition in this Court2 in
which he contested respondent's determinations relating to "excise
taxes and penalties in an accumulated amount in excess of $10,000
* * * for the years 1991, 1992, 1993, 1994 and 1995." Attached to
the petition were copies of the first deficiency notice only.
The 90-day period for filing a petition with respect to each
of the three notices of deficiency expired on January 9, 1997,
which was not a Saturday, Sunday, or legal holiday in the District
of Columbia.
On June 5, 1997, petitioner filed an amended petition in which
he disputed the income tax deficiencies determined against Neal
2
The petition was captioned "Neal A. Sanders, d.b.a. Law
Offices of Neal A. Sanders, Law Offices of Neal A. Sanders
Pension Plan, and Law Offices of Neal A. Sanders Profit Sharing
Plan, by Plan Administrator, Neal A. Sanders." On Feb. 27, 1997,
respondent filed a Motion to Dismiss for Lack of Jurisdiction as
to Law Offices of Neal A. Sanders Pension Plan and Law Offices of
Neal A. Sanders Profit Sharing Plan and to Change Caption. On
July 7, 1997, we granted respondent's motion and ordered the
caption of this case changed to read "Neal A. Sanders, d.b.a. Law
Offices of Neal A. Sanders, Petitioner v. Commissioner of
Internal Revenue, Respondent."
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Alan and Linda Sanders, as set forth in the third deficiency
notice, as well as the deficiencies set forth in the first and
second deficiency notices. The amended petition states in
pertinent part:
The deficiencies (or liabilities) as
determined by the Commissioners [sic] are
in excise taxes and penalties in an
accumulated amount in excess of
$10,000.00 and are all in dispute by the
Petitioners as set forth herein for years
1991, 1992, 1993, 1994, and 1995. This
includes Form 1040, 1992, Form 1040, 1993
and Sections 4975 and 4971.
On July 31, 1997, respondent filed a motion to dismiss for
lack of jurisdiction with respect to that part of the amended
petition relating to Neal Alan and Linda Sanders' 1992 and 1993
income tax deficiencies. Respondent asserts that because the
January 2, 1997, petition contained no reference to respondent's
income tax determinations, petitioner is attempting, through the
filing of the amended petition, to seek a judicial redetermination
of a matter that could not come within the Court's jurisdiction
because of the expiration of time for filing a petition. See Rule
41(a). Accordingly, respondent contends that the amended petition
should be dismissed for lack of jurisdiction insofar as it attempts
to confer jurisdiction on the Court over Neal Alan and Linda
Sanders' 1992 and 1993 income taxes.
On August 22, 1997, petitioner filed an objection to
respondent's motion to dismiss; on October 2, 1997, petitioner
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filed amended objections. In these documents, petitioner contends
that his petition was timely filed:
as to all Notices of Deficiency allegedly
issued by IRS [Internal Revenue Service] in
October, 1996 including F1040 1992, 1993 and
Section 4975 because of the language Petitioner
uses in said Petition and because the
Respondent had sufficient Notice that
Petitioner was contesting all Notices of
Deficiency whether or not said Notices were
attached to the Petition.
In addition, petitioner asserts that respondent's motion to dismiss
should be denied on the ground that the second and third deficiency
notices were not sent to petitioner's last known address. In this
regard, petitioner maintains that he was informed of the second and
third deficiency notices only when he received (on August 1, 1997)
respondent's motion to dismiss.
On September 22, 1997, the Court held a hearing on respondent's
motion to dismiss.
On October 20, 1997, petitioner filed a "Motion to Dismiss--
(F1040 1992 Income Taxes) (Section 4975 Excise Taxes Pre 1993)".
In this motion, petitioner contends that the mailing address used
by respondent to contact him should not have been the Hickory Hills
address with respect to the second and third deficiency notices.
Consequently, petitioner continues, the second and third deficiency
notices were improperly mailed and the period of limitations for
making a deficiency assessment expired with respect to his and his
wife's 1992 income tax liability as well as his liability for
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section 4975 excise taxes for years before 1993. In arguing that
respondent used an erroneous mailing address, petitioner claims
that: (1) His rural box number, R.D. #1, Box 108-2 (R.D. #1), was
replaced with a house number and street address (the Hickory Hills
address) in order to accommodate implementation of an E-911
Emergency Notification System; (2) this mailing address modification
did not officially occur until after December 31, 1996; and (3) the
first time petitioner used the Hickory Hills address was on his 1996
return, which the IRS did not receive until August 15, 1997.
On January 5, 1998, respondent filed an objection to
petitioner's motion to dismiss. In this objection, respondent
maintains that petitioner used the Hickory Hills address as his
address in dealings with respondent's representatives before the
issuance of the notices at issue herein. In this regard, respondent
states that on August 15, 1995, petitioner and his spouse filed a
joint 1994 Federal income tax return, listing 118 Hickory Hills as
their current address. (The 1994 return was the last return
petitioner filed before October 11, 1996, the date on which the
notices were mailed.) Moreover, respondent asserts that the
envelope petitioner used to mail his 1994 return lists 118 Hickory
Hills as petitioner's return address.
Respondent further states that on September 21, 1995, the chief
of the IRS' Philadelphia Error Resolution Section wrote to
petitioner and his spouse using the Hickory Hills address.
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Respondent states: (1) In that letter petitioner was asked to
complete and return Form 4684, Casualties and Thefts, with regard
to petitioner's 1994 return; (2) on October 16, 1995, petitioner
returned a completed Form 4684 to respondent and listed the Hickory
Hills address as his personal residence; and (3) the envelope
petitioner used to return Form 4684 to respondent bears the Hickory
Hills address.
Finally, respondent disputes petitioner's position that the
modification of petitioner's address from R.D. #1 to 118 Hickory
Hills occurred after December 31, 1996. Respondent claims that
according to the U.S. Postal Service that modification occurred
approximately in February 1993. Continuing, respondent maintains
that the R.D. #1 and Hickory Hills addresses are one and the same,
and that mail sent in October 1996 to either address would have been
delivered to petitioner. In sum, respondent claims that the second
and third deficiency notices were properly sent to petitioner's last
known address.
On January 5, 1998, respondent filed a supplement to
respondent's motion to dismiss dated July 31, 1997. In the
supplement, respondent maintains that because petitioner claims (in
his motion to dismiss) that he did not receive the second and third
notices until August 1, 1997, then a fortiori the January 2, 1997,
petition could not relate to the determinations made in those
notices. Accordingly, respondent requests the Court to dismiss for
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lack of jurisdiction petitioner's request for a redetermination of
the 1992 and 1993 income tax deficiencies as well as the 1992-95
section 4975 excise tax deficiencies.
Discussion
The jurisdiction of this Court to redetermine a deficiency
depends upon the issuance of a valid notice of deficiency and a
timely filed petition. Rule 13(a) and (c); Levitt v. Commissioner,
97 T.C. 437, 441 (1991); Monge v. Commissioner, 93 T.C. 22, 27
(1989); Normac, Inc. v. Commissioner, 90 T.C. 142, 147 (1988). In
essence, petitioner contends that the second and third deficiency
notices were not valid because they were issued beyond the
limitations period, and respondent contends that we do not have
jurisdiction to consider the second and third deficiency notices
because there was no indication that respondent's determinations set
forth therein were being contested in a timely filed petition (i.e.,
the January 2, 1997, petition).
We shall first consider respondent's motion to dismiss for lack
of jurisdiction. The Rules of this Court provide that
Ordinarily, a separate petition shall be filed
with respect to each notice of deficiency or
each notice of liability. However, a single
petition may be filed seeking a redetermination
with respect to all notices of deficiency or
liability directed to one person alone or to
such person and one or more other persons or to
a husband and a wife individually, except that
the Court may require a severance and a
separate case to be maintained with respect to
one or more of such notices. Where the notice
of deficiency or liability is directed to more
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than one person, each such person desiring to
contest it shall file a petition, either
separately or jointly with any such other
person, and each such person must satisfy all
the requirements of this Rule in order for the
petition to be treated as filed by or for such
person. The petition shall be complete, so as
to enable ascertainment of the issues intended
to be presented. * * * Failure of the petition
to satisfy applicable requirements may be
ground for dismissal of the case. * * *
Rule 34(a).
Section 6213(a) provides that in general a petition must be
filed within 90 days after the notice of deficiency authorized under
section 6212(a) is mailed. Our jurisdiction is narrowly defined by
statute, and we have no power to extend the 90-day period for filing
a petition. Rule 25(c); see Pyo v. Commissioner, 83 T.C. 626, 632
(1984). Here, the 90-day period for filing a timely petition
expired on January 9, 1997--a date that is before the date the
amended petition was filed.
We agree with respondent that the original petition (that is,
the petition filed on January 2, 1997) did not indicate that
petitioner was contesting respondent's income tax determinations and
accuracy-related penalties for 1992 and 1993, as set forth in the
third deficiency notice. There was no mention of income taxes in
that part of the petition informing us as to the nature of the case,
nor could we ascertain from the caption of the case that Mr. Sanders
intended to contest respondent's determination in any capacity other
than as it related to his law firm. Other than a statement in the
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petition that "All tax forms or their equivalent have been timely
filed by Petitioner with the IRS (Form 5310, 5330, 5500, 1040)",
there is no indication that would enable us to ascertain that
petitioner intended to contest respondent's 1992 and 1993 income tax
determinations. Thus, petitioner failed to file a timely petition
requesting a redetermination of these taxes, and consequently,
respondent's motion to dismiss and request to strike those
allegations in petitioner's amended petition concerning income tax
deficiencies for 1992 and 1993 must be granted. O'Neil v.
Commissioner, 66 T.C. 105 (1976).
The petition did not specifically refer to the section 4975
excise tax deficiencies. However, there is an allegation in a
paragraph of the petition claiming error by respondent referring to
the "Plan loans/hardship withdrawals for employee/owners". We
believe it proper to give petitioner the benefit of the doubt and
to infer that petitioner intended to contest the section 4975 excise
tax deficiencies as well as the section 4971 excise tax deficiencies
in the petition. Consequently, respondent's motion to dismiss and
request to strike those allegations in petitioner's amended petition
concerning the section 4975 excise taxes will be denied.
We now turn our attention to petitioner's request to dismiss
respondent's claim for 1992 income tax deficiencies (as set forth
in the third notice of deficiency) and for section 4975 excise taxes
for years before 1993 (as set forth in the second notice of
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deficiency). Petitioner asserts that the 3-year period of
limitations on assessment and collection with respect to 1992 income
tax deficiencies (which are joint deficiencies) and for section 4975
excise taxes for years before 1993 had expired. Petitioner
characterizes this assertion as a jurisdictional issue.
The statute of limitations is an affirmative defense and does
not affect the jurisdiction of this Court. Rule 39; Badger
Materials, Inc. v. Commissioner, 40 T.C. 1061, 1063 (1963);
Sutherland v. Commissioner, T.C. Memo. 1996-1, affd. without
published opinion 111 F.3d 127 (3d Cir. 1997). Accordingly, were
we to agree with petitioner's argument (which we do not, as
explained infra), we would recharacterize petitioner's motion as a
motion for summary judgment and enter a decision of no deficiency
as to income tax and section 4975 excise taxes for 1992.
Section 6212(a) authorizes the Commissioner to send a notice
of deficiency to a taxpayer by certified or registered mail. For
jurisdictional purposes, it is sufficient if the notice of deficiency
is mailed to the taxpayer's "last known address". Sec. 6212(b);
Frieling v. Commissioner, 81 T.C. 42, 52 (1983). If the notice is
mailed to the taxpayer's last known address, actual receipt of the
notice is not required. Yusko v. Commissioner, 89 T.C. 806, 810
(1987); Frieling v. Commissioner, supra. Both the mailing of the
notice to a taxpayer's last known address and the time for filing
a petition are jurisdictional requirements, and if either is not
satisfied, the Court must dismiss the case for lack of
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jurisdiction.3 Monge v. Commissioner, 93 T.C. 22 (1989); Yusko v.
Commissioner, supra at 807.
The phrase "last known address" is not defined in the Internal
Revenue Code or the regulations. However, we have held that a
taxpayer's last known address is the address shown on his most
recently filed return, absent clear and concise notice of a change
of address. Abeles v. Commissioner, 91 T.C. 1019, 1035 (1988);
accord Aibejeris v. Commissioner, T.C. Memo. 1995-31. We have also
held that "last known address" is the address where the Commissioner
reasonably believed the taxpayer wished to be reached. Weinroth v.
Commissioner, 74 T.C. 430, 435 (1980); Keeton v. Commissioner, 74
T.C. 377, 381-382 (1980); Snow v. Commissioner, T.C. Memo. 1996-457.
The taxpayer bears the burden of proving that the notice of
deficiency was not sent to the taxpayer's last known address. Yusko
v. Commissioner, supra at 808. "Taxpayers are required to send a
clear and concise notification directing respondent to use a
different address to be assured of effecting a change in the 'last
known address.' Alta Sierra Vista, Inc. v. Commissioner, 62 T.C.
367, 374-375 (1974), and cases collected therein." Looper v.
Commissioner, 73 T.C. 690, 696 (1980). To supplant the address on
the most recent return, the taxpayer must clearly indicate that the
3
However, a notice of deficiency sent to the wrong
address is valid if it is received by the taxpayer without
prejudicial delay. Berger v. Commissioner, 404 F.2d 668 (3d Cir.
1968), affg. 48 T.C. 848 (1967); Goodman v. Commissioner, 71 T.C.
974 (1979).
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former address is no longer to be used. Tadros v. Commissioner, 763
F.2d 89, 92 (2d Cir. 1985).
Respondent has established through the submission of U.S.
Postal Service Form 3877 that the second and third deficiency
notices were mailed to petitioner on October 11, 1996. See Magazine
v. Commissioner, 89 T.C. 321, 324, 327 (1987). Moreover, we
conclude that the second and third deficiency notices were mailed
to the address shown on petitioner's most recently filed return;
hence, both deficiency notices were properly mailed to petitioner's
last known address. See, e.g., Follum v. Commissioner, supra. (As
an aside, we agree that respondent was not given clear and concise
notification of a change of address.)
To summarize, those parts of respondent's motion as
supplemented that seek to dismiss the 1992 and 1993 income tax
deficiencies and accuracy-related penalties will be granted, and
that part of respondent's motion as supplemented that seeks to
dismiss the section 4975 excise tax deficiencies will be denied.
Conversely, petitioner's motion to dismiss as to income tax
deficiencies for 1992 and as to section 4975 excise taxes before
1993 will be denied.
To reflect the foregoing,
An appropriate order
will be issued.