Spivey v. Commissioner

T.C. Memo. 2001-29

UNITED STATES TAX COURT

JOHN D. SPIVEY AND PAMELA K. SPIVEY, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 19180-99. Filed February 8, 2001.

David D. Aughtry and Brett W. Beveridge, for petitioners.

Gwendolyn C. Walker, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

CHIECHI, Judge: This case is before us on cross-motions to

dismiss for lack of jurisdiction (cross-motions). On September

11, 2000, the Court held a hearing (hearing) on the parties’

cross-motions.

Petitioners moved to dismiss this case for lack of jurisdic-

tion on the following alternative grounds: (1) No notice of
 - 2 -

deficiency was mailed to petitioners, and (2) any notice of

deficiency mailed to petitioners was not mailed to them at their

last known address. Respondent moved to dismiss this case for

lack of jurisdiction on the ground that the petition was not

timely filed pursuant to section 6213.1

FINDINGS OF FACT

Some of the facts have been stipulated and are so found.

For the six-year period preceding the date of the hearing on

the parties’ cross-motions, including the date on which the

petition was filed, petitioners John D. Spivey (Mr. Spivey) and

Pamela K. Spivey (Ms. Spivey) resided at 4425 Northside Drive,

Atlanta, Georgia 30327.

Mr. Spivey, who is president of Perimeter Bob Cat, Inc.

(Perimeter), and Ms. Spivey filed a joint Form 1040, U.S. Indi-

vidual Income Tax Return, for taxable year 1997 with the Internal

Revenue Service Center in Chamblee, Georgia. Perimeter timely

filed Form 1120, U.S. Corporation Income Tax Return (corporate

return), for its taxable year ended January 31, 1997.

At all relevant times, Nancy Runyan (Ms. Runyan), who was a

member of respondent’s quality measurement staff,2 was a senior

reviewer and a notice-of-deficiency coordinator in respondent’s

1
All section references are to the Internal Revenue Code in
effect at all relevant periods.
2
Around the mid-1980's, respondent’s quality measurement
staff was known as respondent’s review staff.
 - 3 -

office in Atlanta, Georgia (Atlanta office). As such, Ms.

Runyan’s duties included preparing and finalizing notices of

deficiency for so-called revenue agent or field cases (field

cases) in respondent’s Atlanta office. Pursuant to respondent’s

procedures that were in effect at all relevant times for such

cases, Ms. Runyan’s responsibilities included reviewing each such

case, preparing a notice of deficiency for issuance to the

taxpayer, having that notice proofread by an assistant, and

finalizing the notice of deficiency to be issued to the taxpayer

by making any necessary corrections or changes to that notice

resulting from that proofreading. (We shall refer to any notice

of deficiency that Ms. Runyan prepared and finalized pursuant to

the foregoing procedures of respondent as a final notice of

deficiency.)

Once Ms. Runyan finalized a notice of deficiency pursuant to

the foregoing procedures of respondent, three copies of the final

notice of deficiency were made, one of which was to be sent along

with the original of the final notice of deficiency to the

taxpayer, one of which was to remain in respondent’s administra-

tive file pertaining to that taxpayer, and one of which was to be

retained by respondent’s quality measurement staff. After the

three copies of the final notice of deficiency were made, the

original and those three copies of that notice were returned to

Ms. Runyan, who then signed the original and one copy of the

final notice of deficiency (signed original and signed copy,
 - 4 -

respectively) and initialed the remaining two copies thereof

(initialed copies). Thereafter, Ms. Runyan sent the signed

original and the signed copy, as well as the initialed copies, of

the final notice of deficiency to a support staff of clerks known

as 90-day notice (or suspense) clerks (90-day notice clerks).

Pursuant to respondent’s procedures that were in effect at

all relevant times for the issuance of notices of deficiency for

field cases in respondent’s Atlanta office, one of the 90-day

notice clerks stamped on the signed original, the signed copy,

and the initialed copies of the final notice of deficiency the

date on which the notice was to be mailed by certified mail to

the taxpayer and wrote by hand on that original and those various

copies the final date on which that taxpayer may file a petition

in the Court. Pursuant to those procedures, the 90-day notice

clerk also completed and initialed U.S. Postal Service (Postal

Service) Form 3877 (PS Form 3877), an official mailing list form

of the Postal Service that was prepared and used by a sender for

mailing so-called accountable mail items (e.g., items mailed by

certified mail or registered mail). In order to complete PS Form

3877 with respect to the mailing by certified mail of a final

notice of deficiency, the 90-day notice clerk indicated on that

form the name(s) and address(es) of the addressee(s) of such

certified mail, the article number(s) of such mail, the nature of

the article(s) being mailed (i.e., notice of deficiency), the

year to which the article(s) being mailed pertained, the type of
 - 5 -

mail (i.e., certified mail), and the postmark and date of receipt

by the Postal Service of PS Form 3877 and the article(s) listed

on that form. After the 90–day notice clerk completed PS Form

3877, that form and the article(s) listed on that form were

brought to an office of the Postal Service where an employee of

the Postal Service (1) confirmed by signing PS Form 3877 that the

article(s) listed on that form was delivered to that office for

mailing on the date listed on that form and (2) stamped on that

form the date on which the Postal Service received the article(s)

listed on that form (i.e., the postmark for those articles).

The 90-day notice clerk responsible for the issuance to the

taxpayer of a final notice of deficiency placed the initialed

copies of that final notice in a suspense file for the 90-day

period (90-day suspense period) following the date on which that

notice was mailed by certified mail to the taxpayer and during

which the taxpayer may file a petition in the Court. After the

expiration of the 90-day suspense period, the 90-day notice clerk

noted the status of the case (e.g., whether the taxpayer had

filed a petition in the Court, that is to say, whether the case

was a docketed case in the Court) in handwriting on the initialed

copies of the final notice of deficiency. One of those initialed

copies of the final notice of deficiency containing the handwrit-

ten notation regarding the status of the case was then placed in

the administrative file pertaining to the taxpayer and the other

of those copies was sent to respondent’s quality measurement
 - 6 -

staff. At all relevant times, respondent retained the two

initialed copies of the final notice of deficiency that had been

issued to a taxpayer and did not retain any copies thereof that

contained the original signature or a copy of the original

signature of Ms. Runyan (or another representative of respondent)

who signed both the original and the copy of the final notice of

deficiency that were sent to the taxpayer by certified mail. (We

shall refer to all of the foregoing procedures of respondent

relating to the preparation, finalization, and mailing of notices

of deficiency that were in effect at all relevant times for field

cases in respondent’s Atlanta office as respondent’s 90-day

letter procedures.)

At all relevant times, pursuant to the procedures of the

Postal Service that were in effect in its Atlanta offices, if the

addressee of certified mail (or another accountable mail item)

was not available to sign for such mail when the Postal Service

first attempted to deliver it, the Postal Service left a notice,

i.e., U.S. Postal Service Form 3849 (PS Form 3849), in the

addressee’s mailbox, and the certified mail in question was

returned to the Post Office. About five days thereafter, the

Postal Service again attempted to deliver the certified mail in

question to the addressee. If the addressee was not available to

sign for that mail, the Postal Service left another PS Form 3849

in the addressee’s mailbox, and the certified mail in question

was again returned to the Post Office. About ten days after its
 - 7 -

initial attempt to deliver the certified mail in question, the

Postal Service again attempted to deliver that certified mail to

the addressee. If the addressee was not available to sign for

the certified mail in question, the Postal Service left a third

and final PS Form 3849 in the addressee’s mailbox, and that

certified mail was returned to the Post Office. Thereafter, on

or about the 15th day after the initial attempted delivery by the

Postal Service of the certified mail in question, the Postal

Service sent that mail to its claims and inquiry section. That

section then logged the undelivered certified mail in question

into its records as unclaimed and returned that mail to the

sender. (We shall refer to the above-described procedures in the

Atlanta offices of the Postal Service in attempting to deliver

certified mail as the Postal Service certified-mail procedures.)

Ms. Runyan prepared and finalized a notice of deficiency

with respect to petitioners’ taxable year 1997 in accordance with

respondent’s 90-day letter procedures. In that final notice,

respondent determined a deficiency in, and a penalty under

section 6662 on, petitioners’ Federal income tax (tax) for 1997

of $64,864 and $12,973, respectively.

In accordance with respondent’s 90-day letter procedures,

after Ms. Runyan finalized the notice of deficiency with respect

to petitioners’ taxable year 1997, copies of that notice were

made, the original and those copies were returned to Ms. Runyan

for her signature or initials, and she sent the signed original
 - 8 -

and the signed or initialed copies thereof to the support staff

of 90-day notice clerks. In accordance with respondent’s 90-day

letter procedures, on May 5, 1999, one of the 90-day notice

clerks properly prepared and initialed a PS Form 3877 relating

to, inter alia, the final notice of deficiency with respect to

petitioners’ taxable year 1997 (PS Form 3877 in question). The

PS Form 3877 in question showed that on May 5, 1999, respondent

mailed by certified mail a final notice of deficiency with

respect to petitioners’ taxable year 1997 to each petitioner at

4425 Northside Drive, Atlanta, Georgia 30327. The PS Form 3877

in question also showed that on the same date, respondent mailed

by certified mail (1) a final notice of deficiency with respect

to Perimeter’s taxable year ended January 31, 1997, to Perimeter

and (2) a copy of that notice to Paul Frederick Kelly (Mr. Kelly)

to whom Perimeter had granted a power of attorney. The PS Form

3877 in question contained a Postal Service stamp and the signa-

ture of a Postal Service employee, which showed that on May 5,

1999, a Postal Service office located in Atlanta, Georgia,

received that form and the articles listed thereon.

The 90-day notice clerk who prepared the PS Form 3877 in

question placed the initialed copies of the final notice of

deficiency with respect to petitioners’ taxable year 1997 in a

suspense file for the 90-day suspense period. Respondent did not

retain any copies thereof that contained the original signature

or a copy of the original signature of Ms. Runyan. After the
 - 9 -

expiration of the 90-day suspense period, the 90-day notice clerk

noted the status of the case in handwriting on the initialed

copies of the final notice of deficiency with respect to peti-

tioners’ taxable year 1997, and one of those initialed copies

containing that handwritten notation was sent to respondent’s

quality measurement staff.

The Postal Service followed the Postal Service certified-

mail procedures in attempting to deliver to each petitioner the

certified mail addressed to each of them that was listed on the

PS Form 3877 in question. On May 27, 1999, after having unsuc-

cessfully attempted to deliver that certified mail to each

petitioner, the Postal Service returned that mail to respondent.

Petitioners did not receive the final notice of deficiency with

respect to their taxable year 1997 that respondent mailed to each

of them by certified mail on May 5, 1999.

Respondent’s 90-day letter procedures also were followed in

preparing, finalizing, and mailing by certified mail on May 5,

1999, to Perimeter a final notice of deficiency with respect to

its taxable year ended January 31, 1997.3 Mr. Spivey, as presi-

dent of Perimeter, received that final notice, which the PS Form

3877 in question showed was mailed to Perimeter by certified mail

on May 5, 1999. Mr. Kelly received a copy of that final notice,

3
In accordance with respondent’s 90-day letter procedures,
respondent’s quality measurement staff retained an initialed copy
of that notice, which contained a handwritten notation of the
status of the case.
 - 10 -

which the PS Form 3877 in question showed was mailed to him by

certified mail on May 5, 1999.

Respondent mailed to petitioners, and petitioners received,

a notice dated October 4, 1999, relating to petitioners’ taxable

year 1997 (October 4, 1999 notice). That notice stated in

pertinent part:

WE CHANGED YOUR ACCOUNT

THE CHANGE(S) BELOW RESULTED FROM AN EXAMINATION
OF YOUR TAX RETURN SHOWN ABOVE [FORM 1040 FOR TAX
PERIOD DECEMBER 31, 1997]. PLEASE SEE YOUR COPY OF THE
EXAMINATION REPORT FOR A DETAILED EXPLANATION OF THE
CHANGES.

* * * * * * *

STATEMENT OF ACCOUNT

ACCOUNT BALANCE BEFORE EXAMINATION ACTION NONE
INCREASE IN TAX BECAUSE OF
EXAMINATION ACTION $64,864.00
CIVIL PENALTY ADDED 12,972.80
INTEREST CHARGED 7,745.98
DECREASE IN INTEREST PREVIOUSLY ALLOWED 57.03

AMOUNT YOU NOW OWE $85,639.81

PLEASE PAY THE FULL AMOUNT BY OCT. 25, 1999. IF
YOU’VE ALREADY PAID YOUR TAX IN FULL OR ARRANGED FOR AN
INSTALLMENT AGREEMENT, PLEASE DISREGARD THIS NOTICE.

On November 8, 1999, respondent mailed a notice to petition-

ers with respect to their taxable year 1997 (November 8, 1999

notice). That notice stated in pertinent part:

We previously wrote to you about your unpaid account,
but you haven’t contacted us about it. Penalties and
interest on the unpaid balance are continuing to in-
crease. Please pay the amount you owe now. * * *

In response to the November 8, 1999 notice, on November 11,
 - 11 -

1999, petitioners, through their counsel, filed a Freedom of

Information Act (FOIA) request (petitioners’ FOIA request).

Petitioners’ FOIA request sought, inter alia, respondent’s

administrative file relating to petitioners’ taxable year 1997.

In various letters sent to petitioners over the period December

14, 1999, through April 27, 2000, respondent requested additional

time from petitioners to respond to petitioners’ FOIA request.

The reason for respondent’s request for an extension of time to

respond to petitioners’ FOIA request was that respondent had been

unable to locate petitioners’ administrative file with respect to

their taxable year 1997. As of the hearing on the parties’

cross-motions to dismiss for lack of jurisdiction, respondent

still had not located petitioners’ administrative file relating

to petitioners’ taxable year 1997.

On December 13, 1999, respondent mailed a notice to peti-

tioners with respect to their taxable year 1997 (December 13,

1999 notice). That notice stated in pertinent part:

We intend to levy on certain assets. Please respond NOW.

* * * * * * *

Our records indicate that you haven’t paid the amount
you owe. The law requires that you pay your tax at the
time you file your return. This is your notice, as
required by Internal Revenue Code Section 6331(d), of
our intent to levy (take) any state tax refunds that
you may be entitled to if we don’t receive your payment
in full. In addition, we will begin to search for
other assets we may levy. * * * To prevent collection
action, please pay the current balance now. * * *
 - 12 -

In response to the December 13, 1999 notice, petitioners

filed a petition with the Court on December 30, 1999, alleging,

inter alia, that no notice of deficiency was ever mailed to, or

received by, petitioners.

OPINION

Although petitioners argue that respondent has the burden of

proving both the existence of a final notice of deficiency with

respect to petitioners’ taxable year 1997 as well as the date of

the certified mailing of that notice to petitioners, our resolu-

tion of the parties’ cross-motions does not depend on who has the

burden of proof.

In support of petitioners’ position that their motion to

dismiss for lack of jurisdiction should be granted and that

respondent’s motion to dismiss for lack of jurisdiction should be

denied, petitioners rely principally on Pietanza v. Commissioner,

92 T.C. 729 (1989), affd. without published opinion, 935 F.2d

1282 (3d Cir. 1991). We find Pietanza to be distinguishable from

the instant case in certain material respects and petitioners’

reliance thereon to be misplaced. As we stated in that case,

Pietanza was a case of first impression, and we limited our

holding therein to the unusual facts presented there. See

Pietanza v. Commissioner, supra at 736. No such unusual facts

are presented in the instant case.

One material distinction between Pietanza v. Commissioner,

supra, and the instant case is that in Pietanza the Commissioner
 - 13 -

of Internal Revenue (Commissioner) did not provide the Court with

a copy of the notice of deficiency that the Commissioner claimed

had been prepared for the taxable year in question and issued to

the taxpayers involved in that case.4 Nor did the Commissioner

introduce other evidence in Pietanza that established the exis-

tence of such a notice of deficiency. The Commissioner produced

only a draft of such a notice, which did not contain the same

information that allegedly appeared in the notice of deficiency

that the Commissioner claimed was issued to the taxpayers. See

id. at 734. Moreover, the Commissioner “made no attempt to

present evidence indicating that a final notice was typed, dated,

and signed.” Pietanza v. Commissioner, supra at 740-741.

In contrast, in the present case, we have found that Ms.

Runyan prepared and finalized a notice of deficiency with respect

to petitioners’ taxable year 1997. The record contains an

initialed copy of that final notice. We are satisfied on the

record before us, including Ms. Runyan’s testimony,5 that that

4
After we issued our opinion in Pietanza v. Commissioner, 92
T.C. 729 (1989), affd. without published opinion 935 F.2d 1282
(3d Cir. 1991), respondent located a copy of the notice of
deficiency in question and filed motions to reconsider and revise
that opinion and to vacate our Order of dismissal in that case.
We denied those motions because respondent failed to show that
respondent had exercised due diligence in previously attempting
to locate the notice of deficiency in question. See Pietanza v.
Commissioner, T.C. Memo. 1990-524.
5
Although at trial the Court sometimes found Ms. Runyan’s
testimony to be confusing, Ms. Runyan subsequently clarified her
testimony, and we found Ms. Runyan to be credible. Ms. Runyan
(continued...)
 - 14 -

initialed copy, which was retained by respondent’s quality

measurement staff, is identical in content to the final notice of

deficiency with respect to petitioners’ taxable year 1997 that

Ms. Runyan prepared, except for her initials and the handwritten

notation appearing on that initialed copy.6 That handwritten

notation, which relates to the status of the matter, was placed

on that initialed copy by one of respondent’s 90-day notice

clerks after the expiration of the 90-day suspense period appli-

cable to the final notice of deficiency with respect to petition-

ers’ taxable year 1997. On the instant record, we find that the

existence of a final notice of deficiency with respect to peti-

tioners’ taxable year 1997 has been established.

Another material distinction between Pietanza v. Commis-

sioner, supra, and the instant case relates to the presumption of

5
(...continued)
testified that she prepared and finalized a notice of deficiency
with respect to petitioners’ taxable year 1997 in accordance with
respondent’s 90-day letter procedures and that, except for the
handwritten notation and Ms. Runyan’s initials (instead of her
signature) that appear on the initialed copy of the final notice
of deficiency with respect to petitioners’ taxable year 1997,
that initialed copy is a copy of that final notice.
6
It is noteworthy that the respective amounts of the defi-
ciency in, and the penalty on, petitioners’ tax for their taxable
year 1997 that were reflected in the initialed copy of the final
notice of deficiency with respect to petitioners’ taxable year
1997, which is part of the record in this case, are identical to
the respective amounts of the increase in tax and civil penalty
that were reflected in the October 4, 1999 notice from respondent
to petitioners, which petitioners attached to their motion to
restrain collection that they filed in the Court on Apr. 18,
2000, and in which respondent requested payment of those amounts
as well as interest thereon.
 - 15 -

official regularity that generally applies in the case of a

properly prepared PS Form 3877. Pursuant to that presumption,

“The presumption of regularity supports the official acts of

public officers and, in the absence of clear evidence to the

contrary, courts presume that they have properly discharged their

official duties.” United States v. Chemical Found., Inc., 272

U.S. 1, 14-15 (1926); see Keado v. United States, 853 F.2d 1209,

1213 (5th Cir. 1988); United States v. Zolla, 724 F.2d 808, 810

(9th Cir. 1984); United States v. Ahrens, 530 F.2d 781, 784 (8th

Cir. 1976); Coleman v. Commissioner, 94 T.C. 82, 91 (1990).

In Pietanza v. Commissioner, supra, we were unwilling to

rely on the presumption of official regularity. Critical to our

unwillingness to do so in Pietanza was the failure by the Commis-

sioner to establish the existence of the notice of deficiency

that the Commissioner claimed had been prepared and issued to the

taxpayers involved in that case. See Pietanza v. Commissioner,

supra at 739-742. In contrast, we have found on the record

presented the existence of a final notice of deficiency with

respect to petitioners’ taxable year 1997. The instant record

also contains a properly completed PS Form 3877. That form shows

that on May 5, 1999, respondent mailed to each petitioner by

certified mail a final notice of deficiency with respect to

petitioners’ taxable year 1997 that was addressed to 4425
 - 16 -

Northside Drive, Atlanta, Georgia 30327.7 The PS Form 3877 in

question was properly completed and initialed by a representative

of respondent and contained a stamp showing receipt on May 5,

1999, of the items listed on that form by an office of the Postal

Service in Atlanta, Georgia, as evidenced by the stamp of the

Postal Service on the PS Form 3877 in question and the signature

of a Postal Service representative.

A PS Form 3877 reflecting receipt by the Postal Service

represents direct documentary evidence of the date and the fact

of mailing. See Coleman v. Commissioner, supra at 90. A prop-

erly completed and executed PS Form 3877 also reflects compliance

with respondent’s established procedures for mailing deficiency

notices. See Keado v. United States, supra at 1212-1213; Coleman

v. Commissioner, supra. Where the existence of the notice of

deficiency is not disputed, or, as is the case here, has been

established, a properly completed PS Form 3877 by itself is

sufficient, absent evidence to the contrary, to show that the

notice of deficiency was properly mailed to a taxpayer, that is

to say, raises a presumption of official regularity in favor of

respondent. See Keado v. United States, supra; United States v.

Zolla, supra at 810; United States v. Ahrens, supra; Coleman v.

7
The PS Form 3877 in question also shows that on May 5,
1999, respondent mailed to Perimeter by certified mail a final
notice of deficiency with respect to Perimeter’s taxable year
ended Jan. 31, 1997, and that on the same date a copy of that
notice was mailed by certified mail to Mr. Kelly to whom
Perimeter had granted a power of attorney.
 - 17 -

Commissioner, supra at 91.

On the record before us, we have found the existence of a

final notice of deficiency with respect to petitioners’ taxable

year 1997. The record also contains a PS Form 3877 relating to

that final notice of deficiency, which was properly completed and

initialed by one of respondent’s 90-day notice clerks and signed

by a representative of the Postal Service. We conclude on the

instant record that the PS Form 3877 in the record raises a

presumption of official regularity in favor of respondent. See

Keado v. United States, supra; United States v. Zolla, supra;

United States v. Ahrens, supra; Coleman v. Commissioner, supra.

Pursuant to that presumption, the PS Form 3877 in question by

itself is sufficient, absent evidence to the contrary, to estab-

lish that on May 5, 1999, respondent mailed to each petitioner by

certified mail the final notice of deficiency with respect to

petitioners’ taxable year 1997 that was addressed to 4425

Northside Drive, Atlanta, Georgia 30327.

We conclude that petitioners have failed to introduce

evidence that rebuts the presumption of official regularity

raised by the PS Form 3877 in question. In this regard, peti-

tioners offered no evidence that respondent failed to adhere to

respondent’s 90-day letter procedures.8 See United States v.

8
Nor have petitioners offered any evidence that the Postal
Service failed to adhere to the Postal Service certified-mail
procedures in attempting to deliver the certified mail in ques-
(continued...)
 - 18 -

Ahrens, supra at 785-786; Coleman v. Commissioner, supra.

Instead, the focus of petitioners’ evidence was that Mr. Spivey

considers mail that he receives to be very important and that

neither petitioner received the final notice of deficiency with

respect to petitioners’ taxable year 1997.

Applying the presumption of official regularity in this

case, we find that on May 5, 1999, respondent mailed by certified

mail to each petitioner the final notice of deficiency with

respect to petitioners’ taxable year 1997 that was addressed to

4425 Northside Drive, Atlanta, Georgia 30327. The parties

stipulated that petitioners resided at that address for the six-

year period preceding the date of the hearing on the parties’

cross-motions. We find that the address to which respondent

mailed the final notice of deficiency with respect to

petitioners’ taxable year 1997 is petitioners’ last known ad-

dress. Although petitioners did not receive that notice, actual

receipt of a notice of deficiency by the taxpayer is not required

to begin the 90-day period within which a taxpayer may file a

petition in the Court. See Keado v. United States, 853 F.2d at

1211-1212; DeWelles v. United States, 378 F.2d 37, 39 (9th Cir.

1967); Estate of McKaig v. Commissioner, 51 T.C. 331, 335 (1968).

We have considered all of the contentions and arguments of

petitioners that are not discussed herein, and we find them to be

8
(...continued)
tion to each petitioner.
 - 19 -

without merit and/or irrelevant.

We conclude that we shall grant respondent’s motion to

dismiss for lack of jurisdiction and that we shall deny

petitioners’ motion to dismiss for lack of jurisdiction.

To reflect the foregoing,

An appropriate order will be

entered denying petitioners’ motion

to dismiss for lack of jurisdiction

and granting respondent’s motion to

dismiss for lack of jurisdiction.