T.C. Memo. 1999-123
UNITED STATES TAX COURT
KEITH R. BASHAM, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 24676-96. Filed April 15, 1999.
Keith R. Basham, pro se.
Donald E. Edwards, for respondent.
MEMORANDUM OPINION
CARLUZZO, Special Trial Judge: This case was heard pursuant
to the provisions of section 7443A(b)(3) of the Internal Revenue
Code of 1986, as amended, and Rules 180, 181, and 182 of the Tax
Court Rules of Practice and Procedure. Unless otherwise
indicated, subsequent section references are to the Internal
Revenue Code of 1986, as amended and in effect for 1989.
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Respondent determined a deficiency in petitioner's 1989
Federal income tax in the amount of $6,892, an addition to tax
under section 6651(a)(1) in the amount of $1,723, and an addition
to tax under section 6654 in the amount of $467. The issues for
decision are: (1) Whether the period of limitations prohibits
the assessment and collection of the deficiency here in dispute;
if not, (2) whether petitioner received and failed to report
certain income attributed to him in the notice of deficiency; (3)
whether petitioner is entitled to claim certain deductions; (4)
whether petitioner is liable for the section 6651(a)(1) addition
to tax for failure to file a return for 1989; and (5) whether
petitioner is subject to the addition to tax under section 6654
for failure to pay estimated income tax.
Background
Some of the facts have been stipulated and are so found.
Petitioner resided in Little Rock, Arkansas, during all relevant
periods, including when the petition was filed in this case.
Except for a brief period during 1987 or 1988, from 1984
through at least some portion of 1989, petitioner was employed as
a salesperson for Swink and Company, Inc. (Swink), an investment
banking firm. Swink was forced into bankruptcy sometime in 1989
and went out of business by the end of that year.
While employed by Swink, petitioner was compensated on a
commission basis. For the year 1989, petitioner received at
least $38,304 in compensation from Swink, as reflected on a Form
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W-2 issued to petitioner by Swink. Apparently, petitioner was
required to reimburse Swink for certain trading losses and
customer bad debts. It is unclear whether the compensation
reported on the Form W-2 is net of reimbursements petitioner made
to Swink for trading losses and customer bad debts. Sometime in
1992 or 1993, petitioner discarded all records relating to 1989
that he might have kept.
Respondent's Information Returns Master File transcript
indicates that two payors issued information returns to
petitioner for 1989, one from Swink and the other from Worthen
Bank and Trust Co.
The notice of deficiency upon which this case is based was
issued and mailed to petitioner on September 18, 1996. In that
notice of deficiency, adjustments to petitioner's 1989 income
were made as though he did not file a Federal income tax return
for that year. Specifically, respondent (1) increased
petitioner's income by the amount of compensation reported on the
W-2 issued to petitioner by Swink; (2) increased petitioner's
income by $44 attributable to a distribution from Worthen Bank
and Trust Co.; (3) allowed petitioner a personal exemption
deduction; and (4) allowed petitioner the standard deduction
applicable to a single individual. Also in the notice of
deficiency, respondent determined that the additions to tax under
sections 6651(a)(1) and 6654 are applicable.
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Discussion
Petitioner agrees that in 1989 he received compensation from
Swink in at least the amount reported on the Form W-2 issued to
him by that company, as reflected in the notice of deficiency.
He has no recollection of the $44 distribution; however, he
believes that it might have been from a section 401(k) plan.
Regardless, petitioner contends that he filed a timely 1989
Federal income tax return and reported his compensation from
Swink and any other income he might have received that year.
Respondent, on the other hand, denies that a 1989 return was
received from petitioner.
As a general rule, an income tax assessment must be made
within 3 years after the return was filed. See sec. 6501(a). If
a taxpayer fails to file a Federal income tax return for any
year, as respondent contends petitioner failed to do for 1989,
the period of limitations is, in effect, unlimited for that year.
If petitioner filed his 1989 Federal income tax return as he
claims, the period of limitations for 1989 expired long before
the notice of deficiency for that year was issued to him.
Generally, a document is considered filed with the Internal
Revenue Service when it is received by that agency. See United
States v. Lombardo, 241 U.S. 73, 76 (1916). "The 'filing' of a
return * * * by a taxpayer is completed when the return * * *
reaches the collector's office." Jones v. United States, 226
F.2d 24, 28 (9th Cir. 1955).
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Direct evidence of actual receipt of a document by the
Internal Revenue Service is not always necessary in order to
effectuate its filing. For example, section 7502(c)(1) provides
that if certain documents are sent by registered mail then such
registration shall be prima facie evidence that the document was
delivered to the agency, officer or office to which it was
addressed. Furthermore, except in situations where we are
constrained to do otherwise pursuant to Golsen v. Commissioner,
54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir. 1971), this
Court considers proof that a document was properly mailed to give
rise to a presumption that the document was delivered to, and
received by, the person to whom it was addressed even though the
document was not sent by registered mail. See Estate of Wood v.
Commissioner, 92 T.C. 793, 798 (1989), affd. 909 F.2d 1155 (8th
Cir. 1990); accord Anderson v. United States, 966 F.2d 487 (9th
Cir. 1992). But see Carroll v. Commissioner, 71 F.3d 1228 (6th
Cir. 1995), affg. T.C. Memo. 1994-229; Surowka v. United States,
909 F.2d 148 (6th Cir. 1990); Miller v. United States, 784 F.2d
728 (6th Cir. 1986) (holding that the provisions of section 7502
supersede and extinguish the common law presumption of delivery).
The presumption of delivery is subject to rebuttal by the
addressee. See Walden v. Commissioner, 90 T.C. 947, 951 (1988).
Petitioner testified that in March 1990 he sent his 1989
return by regular mail to respondent's Memphis Service Center
(which was appropriate for an individual living where petitioner
did at that time). He attributed his specific recollection of
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the event to Swink's bankruptcy proceeding that occurred during
1989. According to petitioner, he reported no 1989 Federal
income tax liability because of the extent of deductions for
losses he incurred during that year, and he made no claim for
refund on the return.
Petitioner explained that he prepared his 1989 return with
the assistance of a friend. Petitioner further explained that he
was unsure of whether he properly accounted for certain items on
the return so he attached to the return a handwritten letter that
identified his concerns. Petitioner did not produce a copy of
his 1989 return at trial. He explained that he discarded any
copies of the return that might have existed along with all other
documents and information relating to 1989 several years before
he received the notice of deficiency in 1996.
We are satisfied from petitioner's testimony that he mailed
his 1989 Federal income tax return as claimed. There were no
internal inconsistencies in his testimony, and nothing in the
record suggests that his description of the event is improbable.
Petitioner did not specify the exact date in March that he
mailed the return, but even if mailed on the last day of that
month, it should have been delivered to respondent's Memphis
Service Center in due course of the mails. See Arkansas Motor
Coaches, Ltd. v. Commissioner, 198 F.2d 189, 190 (8th Cir. 1952).
That being so, we presume that petitioner's 1989 return was
delivered to respondent prior to the date it was due to be filed.
See sec. 6072(a).
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Respondent has offered no evidence to rebut the presumption
of delivery that results from petitioner's testimony. We find,
therefore, that petitioner timely filed his 1989 Federal income
tax return. It follows that the assessment and collection of the
deficiency here in dispute is barred because the notice of
deficiency was not issued within the period prescribed by section
6501(a).
To reflect the foregoing and the provisions of section
7459(e),
Decision will be
entered for petitioner.