T.C. Memo. 1998-108
UNITED STATES TAX COURT
GREGORY POWELL & ARAMINTA D. MORTON, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 16476-97. Filed March 17, 1998.
Gregory Powell, pro se.
Ruth Perez, for respondent.
MEMORANDUM OPINION
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of section 7443A(b)(3) and Rules 180,
181, and 182.1
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended, and all Rule references
are to the Tax Court Rules of Practice and Procedure.
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This case is before the Court on respondent's motion to
dismiss for lack of jurisdiction, filed pursuant to Rule 53.
Respondent contends that dismissal is warranted on the ground
that the petition was not filed within the time prescribed by
sections 6213(a) and 7502. In contrast, petitioners contend
respondent's motion to dismiss should be denied on the theory
that the original notice of deficiency was rescinded and
supplanted with an "amended" notice of deficiency which is the
subject of their timely filed petition.
Background
At the time the petition was filed with the Court,
petitioners resided in Upper Marlboro, Maryland.
On April 28, 1997, respondent mailed a joint notice of
deficiency to petitioners determining a deficiency in their
Federal income tax for 1994 in the amount of $2,392. Included
with the notice of deficiency was a Form 4549 (also known as an
examination report) dated March 13, 1997. The examination report
reveals that the deficiency is attributable primarily to the
disallowance of Schedule C deductions.
At the time the notice of deficiency was issued in this
case, petitioners were advised that respondent's agent would
continue to review materials submitted by petitioners for the
purpose of substantiating their claimed deductions. In this
regard, on June 4, 1997, respondent's agent issued a revised
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examination report to petitioners proposing to reduce the amount
of the previously determined deficiency to $2,227.
Upon receiving the revised examination report, petitioners
believed that the notice of deficiency dated April 28, 1997, had
been rescinded, that the revised examination report was intended
to serve as an "amended" notice of deficiency, and that the 90-
day period for filing a timely petition for redetermination with
the Court would run from June 4, 1997.
On August 4, 1997, petitioners filed a joint petition for
redetermination with the Court. Attached to the petition is a
copy of the examination report dated June 4, 1997. The petition
was delivered to the Court in an envelope bearing a U.S. Postal
Service postmark date of July 31, 1997.
In response to the petition, respondent filed a motion to
dismiss for lack of jurisdiction on the ground that the petition
was not timely filed. Petitioners filed an objection to
respondent's motion to dismiss alleging that "a New and amended
Deficiency Notice dated June 4, 1997 was mailed to Petitioner,
but, a NEW Certified Letter which was to be mailed along with the
NEW Deficiency Notice was never issued". Respondent filed a
response to petitioners' objection denying that the revised
examination report issued to petitioners on June 4, 1997,
constituted a "new and amended" notice of deficiency or served to
rescind the notice of deficiency dated April 28, 1997.
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Petitioners filed a response to respondent's response which
states in pertinent part as follows:
Petitioners were informed by I.R.S. Auditor that
additional information received late was being
considered and processed. This action by the I.R.S.
Auditor constitutes an implied extension on the part of
the Respondent. Petitioners would not have any way of
knowing what if any deduction had to be petitioned to
the Court until a final decision was rendered by the
Auditor. * * *
A hearing was conducted at the Court's motions session in
Washington, D.C. Petitioner Gregory Powell and counsel for
respondent appeared at the hearing and presented argument
respecting respondent's motion to dismiss. During the hearing,
Mr. Powell conceded that the revised examination report was
mailed to him without a cover letter and that he did not
otherwise discuss the continuing validity of the April 28, 1997,
notice of deficiency with respondent's agent. There is no
evidence in the record that petitioners ever requested Form 8626
(Agreement to Rescind Notice of Deficiency) from respondent or
that respondent's agents ever proffered Form 8626 to petitioners.
Discussion
The Court's jurisdiction to redetermine a deficiency depends
upon the issuance of a valid notice of deficiency and a timely
filed petition. Rule 13(a), (c); Monge v. Commissioner, 93 T.C.
22, 27 (1989); Normac, Inc. & Normac Intl. v. Commissioner, 90
T.C. 142, 147 (1988). Section 6212(a) expressly authorizes the
Commissioner, after determining a deficiency, to send a notice of
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deficiency to the taxpayer by certified or registered mail. A
notice of deficiency is sufficient if it is mailed to the
taxpayer at the taxpayer's last known address. Sec. 6212(b)(1).
Pursuant to section 6213(a), the taxpayer has 90 days (or 150
days if the notice is addressed to a person outside of the United
States) from the date that the notice of deficiency is mailed to
file a petition with the Court for a redetermination of the
deficiency.
Section 6212(d) authorizes the Commissioner, with the
consent of the taxpayer, to rescind any notice of deficiency
mailed to the taxpayer. If a notice of deficiency is rescinded,
the taxpayer has no right to file a petition with the Court based
on such a notice. Moreover, a notice that is rescinded is not
treated as a notice of deficiency for purposes of section
6212(c)(1), which restricts the issuance of further notices of
deficiency. Sec. 6212(d).
The parties do not dispute that the notice of deficiency was
mailed to petitioners at petitioners' last known address, nor do
the parties dispute that the petition was mailed and filed more
than 90 days after the issuance of such notice.2 Respondent
contends that this case should be dismissed for lack of
2
The 90-day period for filing a timely petition for
redetermination with respect to the notice of deficiency dated
Apr. 28, 1997, expired on July 28, 1997. However, the petition
was not mailed to the Court until July 31, 1997.
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jurisdiction because the petition was not filed within the time
provided by sections 6213(a) and 7502. In contrast, petitioners
contend that the notice of deficiency was rescinded and
supplanted by the revised examination report dated June 4, 1997,
and that their petition was timely filed when measured from the
date of mailing of such report.
Petitioners' contention that the notice of deficiency was
rescinded is similar to an argument that the Court considered and
rejected in Slattery v. Commissioner, T.C. Memo. 1995-274. In
Slattery, we declined to find that the notice of deficiency had
been rescinded as follows:
We now turn to the question of whether the notice
of deficiency was rescinded. Section 6212(d) provides
that the Secretary may, with the consent of the
taxpayer, rescind any notice of deficiency mailed to
the taxpayer. Clearly, the statute requires mutual
consent by the Secretary and the taxpayer to effect a
rescission of a notice of deficiency.4 We know of no
authority deeming a notice of deficiency rescinded in
absence of a formal rescission. While the facts
presented herein may suggest that respondent considered
a rescission, she did not consent to a rescission.
Returning a case file from the 90-day section of
respondent's office to the examination division for
purposes of a conference is not tantamount to a
rescission, even though the conference, due to
miscommunication, was eventually scheduled for a date
subsequent to the running of the 90-day period.
Accordingly, we conclude that the notice of deficiency
involved herein was not rescinded pursuant to section
6212(d).
_________________
4
The Internal Revenue Service has provided
guidance to taxpayers wishing to consent to the
rescission of a notice of deficiency. See Rev. Proc.
88-17, 1988-1 C.B. 692. This revenue procedure
requires the taxpayer to request Form 8626, Agreement
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to Rescind Notice of Deficiency, which becomes
effective when executed on behalf of the Commissioner.
Although petitioners in the present case may have believed
that the notice of deficiency had been rescinded, the rescission
of a notice of deficiency is not a function of the taxpayer's
subjective belief. Rather, the rescission of a notice of
deficiency requires mutual consent by the Commissioner and the
taxpayer, and such mutual consent must be objectively apparent.
In the present case, there is no objective manifestation of
mutual consent by respondent and petitioners to rescind the
notice of deficiency. In fact, there is no evidence that
respondent ever contemplated the rescission of such notice.
Further consideration of a taxpayer's case after the mailing
of the notice of deficiency, coupled with respondent's concession
of a portion of the previously determined deficiency, does not
result in the rescission of the notice of deficiency.3 Hesse v.
Commissioner, T.C. Memo. 1997-333; Mullings v. Commissioner, T.C.
Memo. 1997-114; Slattery v. Commissioner, supra. Accordingly, we
hold that the notice of deficiency was not rescinded pursuant to
section 6212(d).
3
Although Rev. Proc. 88-17, sec. 3.04(2), 1988-1 C.B. 692,
693, states that the Commissioner may (with the taxpayer's
consent) agree to rescind a notice of deficiency "If the taxpayer
submits information establishing the actual tax due to be less
than the amount shown in the notice", the revenue procedure is
permissive rather than mandatory and does not alter our holding
in this case.
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We now turn to petitioners' alternative contention that the
revised examination report dated June 4, 1997, constitutes a
second notice of deficiency. In this regard, petitioners point
out that their petition was timely filed if measured from the
date of mailing of such letter.
It is well established that the Court lacks jurisdiction
over a petition that is filed with respect to a letter from the
Commissioner to the taxpayer that was not intended to constitute
a notice of deficiency. See Lerer v. Commissioner, 52 T.C. 358,
362-366 (1969); Schoenfeld v. Commissioner, T.C. Memo. 1993-303,
n.2. In applying this principle in the present case, we are
satisfied that respondent did not intend for the revised
examination report to be considered a notice of deficiency.
Rather, the report merely served to advise petitioners that
respondent had considered the information that petitioners had
furnished and had concluded that such information provided
adequate substantiation for a small reduction in the amount of
the determination previously made. The notice of deficiency
dated April 28, 1997 states in clear language that "This letter
is a NOTICE OF DEFICIENCY * * *. * * * you have 90 days from the
above mailing date of this letter * * * to file a petition with
the United States Tax Court". We note that there is no record of
a transmittal letter having been sent with the revised
examination report dated June 4, 1997. Thus, there is nothing in
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this record indicating that petitioners were advised that the
revised examination report constituted a notice of deficiency or
that petitioners had additional time to file a petition.
Consequently, we hold that the revised examination report does
not constitute a second notice of deficiency.
Conclusion
Because petitioners did not file their petition with the
Court within the time prescribed by sections 6213(a) and 7502, we
lack jurisdiction to redetermine petitioners' tax liability for
the year in issue. Accordingly, we must grant respondent's
motion to dismiss for lack of jurisdiction.4
To reflect the foregoing,
An order granting respondent's
motion to dismiss for lack of
jurisdiction will be entered.
4
Although petitioners cannot pursue their case in this
Court, they are not without a judicial remedy. Specifically,
they may pay the tax, file a claim for refund with the Internal
Revenue Service, and, if their claim is denied, sue for a refund
in the appropriate Federal District Court or the United States
Court of Federal Claims. McCormick v. Commissioner, 55 T.C. 138,
142 (1970).