T.C. Memo. 2003-115
UNITED STATES TAX COURT
CARTER B. TATUM, JR. AND BARBARA B. TATUM, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 1126-01L. Filed April 22, 2003.
David L. Miller, for petitioners.
Nina P. Ching, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
JACOBS, Judge: This case arises from petitioners’ request
for our review (pursuant to section 63301) of respondent’s decision
to proceed with collection by levy with respect to their
outstanding 1990 and 1991 tax liabilities. The issue to be
1
All section references are to the Internal Revenue Code
in effect for the years in issue.
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resolved is whether such decision by respondent constitutes an
abuse of discretion.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found. The
stipulation of facts and the exhibits submitted therewith are
incorporated herein by this reference.
At the time the petition was filed in this case, petitioners
resided in Atlanta, Georgia.
By letter dated March 4, 1994, the Internal Revenue Service
(IRS) notified petitioners that their 1990 and 1991 joint Federal
income tax returns had been selected for examination. On November
7, 1994, the IRS sent petitioners a copy of the examination report,
which contained adjustments increasing petitioners’ tax obligation
for 1990 and 1991. By letter dated November 22, 1994, the IRS
informed petitioners that they had 15 days to request that their
case be transferred to an IRS Appeals Officer. By letter dated
December 2, 1994, instead of requesting that their case be so
transferred, petitioners requested a meeting with an examiner and
stated that they did not agree with the examination report. On
January 9, 1995, petitioners executed Form 872, Consent to Extend
the Time to Assess Tax, extending the period for assessing taxes
for both 1990 and 1991 to April 15, 1996.
On April 12, 1995, respondent, by certified mail, sent a
statutory notice of deficiency to petitioners at their last known
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address, 80 North Star Trail, Atlanta, Georgia 30331-7862
(hereinafter referred to as the 80 North Star Trail address). That
notice detailed respondent’s determinations regarding income tax
deficiencies, additions to tax, and penalties for 1990 and 1991, as
follows:
Addition to Tax Penalty
Year Deficiency Sec. 6651(a)(1) Sec. 6662(a)
1990 $19,680 $5,455 $3,936
1991 23,616 --- 4,723
The U.S. Postal Service (USPS) returned the notice of
deficiency to the IRS on April 27, 1995. The envelope in which the
notice of deficiency was mailed indicates that the USPS made but
one delivery attempt before returning the envelope and its contents
to the IRS as “unclaimed”.
Petitioners did not claim the certified letter containing the
notice of deficiency from the USPS because they did not receive
from the USPS notice of the existence of such letter. Had they
received a notice of certified mail, they would have gone to the
post office to pick up the letter.
Petitioners did not contest respondent’s determinations as set
forth in the notice of deficiency by filing a petition with this
Court. Had petitioners received the notice of deficiency, they
would have petitioned this Court for a redetermination of the tax
liabilities asserted in the notice of deficiency.
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On September 11, 1995, respondent assessed the amounts shown
in the notice of deficiency, together with statutory interest, and
thereafter began collection procedures against petitioners.
On November 25, 1999, respondent issued to petitioners a Final
Notice, Notice of Intent to Levy and Notice of Your Right to a
Hearing, Letter 1058, pursuant to sections 6330(a) and 6331(d)(2),
pertaining to petitioners’ 1990, 1991, and 1995-98 Federal income
tax liabilities.2 Respondent mailed this notice to petitioners’ 80
North Star Trail address.
On December 22, 1999, respondent received a timely filed Form
12153, Request for a Collection Due Process Hearing, submitted on
behalf of petitioners. Petitioners’ return address on the Form
12153 was the 80 North Star Trail address. Petitioners, in the
Form 12153, provided the following explanation of their
disagreement with the notice of levy: “The assessment of the tax
was in error; want the opportunity to dispute the assessed
liability and then, to the extent owed, discuss payment options.”
On October 17, 2000, Appeals Officer C.S. Sheppard spoke by
telephone with petitioners’ representative, David R. Miller, with
respect to petitioners’ request for a hearing.3 During the
2
In their petition, as well as at trial, petitioners
contested only their 1990 and 1991 income tax liabilities;
therefore, the years 1995-98 are not before us.
3
At trial, Mr. Miller did not contest that this telephone
conference served as the required statutory hearing. However, Mr.
Miller asserts that the “hearing did not go far enough” in that
(continued...)
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telephone conference, Appeals Officer Sheppard advised Mr. Miller
that petitioners could not challenge the underlying tax liability
for the 1990 and 1991 tax years since petitioners had received a
statutory notice of deficiency dated April 12, 1995, covering those
years. In addition, during the October 17, 2000, telephone
conference, Appeals Officer Sheppard informed Mr. Miller that
petitioners had agreed to the 1996 adjustment, that the 1995 and
1997 deficiencies were based on the returns as filed, and that
those returns could be amended by the petitioners. Mr. Miller did
not propose any collection alternatives.
On January 11, 2001, respondent issued to petitioners a
“Notice of Determination Concerning Collection Action(s) Under
Section 6320 and/or 6330” (notice of determination), notifying
petitioners of the determination to proceed with collection of the
1990, 1991, 1995, 1996, and 1997 income tax liabilities.
Petitioners filed a petition with this Court under section 6330(d)
disputing respondent’s notice of determination.
OPINION
In general, section 6330 prohibits the Commissioner from
proceeding with collection by levy until the taxpayer has been
given notice and an opportunity for an administrative review of the
matter (in the form of a hearing before the IRS’s Office of
3
(...continued)
Appeals Officer Sheppard refused to consider the underlying tax
liability for the 1990 and 1991 tax years.
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Appeals). If the Commissioner issues a determination letter to the
taxpayer following an administrative hearing, section 6330(d)(1)
allows the taxpayer to file a petition for judicial review of the
administrative determination. Davis v. Commissioner, 115 T.C. 35,
37 (2000); Goza v. Commissioner, 114 T.C. 176, 179 (2000). We have
jurisdiction over this matter because petitioners filed a timely
petition for review of respondent’s determination to proceed with
collection by levy. Sec. 6330(d)(1); Lunsford v. Commissioner, 117
T.C. 159 (2001); Sarrell v. Commissioner, 117 T.C. 122 (2001); Sego
v. Commissioner, 114 T.C. 604, 610 (2000); Offiler v. Commissioner,
114 T.C. 492, 498 (2000).
A taxpayer may raise the issue of the underlying tax liability
if he/she “did not receive any statutory notice of deficiency for
such tax liability or did not otherwise have an opportunity to
dispute such tax liability.” Sec. 6330(c)(2)(B). For purposes of
section 6330(c)(2)(B), receipt of a statutory notice of deficiency
means receipt in time to petition this Court for redetermination of
the deficiency asserted in such notice. Sec. 301.6330-1(e)(3),
Q&A-E2, Proced. & Admin. Regs. It is therefore clear that section
6330(c)(2)(B) contemplates actual receipt of the notice of
deficiency by the taxpayer.4
4
By contrast, for purposes of assessing a deficiency in
tax, respondent is authorized to send a notice of deficiency to the
taxpayer. For that purpose, mailing a notice of deficiency to the
taxpayer at the taxpayer’s last known address is sufficient
regardless of receipt or nonreceipt. Sec. 6212(b); Pietanza v.
(continued...)
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Here, the envelope with its contents, i.e., the notice of
deficiency for 1990 and 1991, was returned unclaimed to respondent.
Thus, there is no dispute that petitioners did not actually receive
the notice of deficiency.
In the context of a section 6330 proceeding, we have held that
taxpayers cannot defeat actual receipt by deliberately refusing
delivery of a notice of deficiency. Sego v. Commissioner, supra;
accord Ashley v. Commissioner, T.C. Memo. 2002-286; Carey v.
Commissioner, T.C. Memo. 2002-209; Hochschild v. Commissioner, T.C.
Memo. 2002-195; Baxter v. Commissioner, T.C. Memo. 2001-300. In
this case, respondent mailed, by certified mail, a notice of
deficiency to petitioners at their last known address, the 80 North
Star Trail address. Petitioners did not actually receive the
notice because it was returned to the IRS after one attempted
delivery by the USPS.
In Sego v. Commissioner, supra, we held that the taxpayer was
precluded from challenging her underlying tax liability under
section 6330 even though she did not actually receive a notice of
deficiency. We did so on the basis of Erhard v. Commissioner, 87
F.3d 273 (9th Cir. 1996), affg. T.C. Memo. 1994-344, and Patmon &
Young Profl. Corp. v. Commissioner, 55 F.3d 216, 218 (6th Cir.
1995), affg. T.C. Memo. 1993-143, wherein we held that the conduct
4
(...continued)
Commissioner, 92 T.C. 729, 735-736 (1989), affd. without published
opinion 935 F.2d 1282 (3d Cir. 1991); Shelton v. Commissioner, 63
T.C. 193 (1974).
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of the taxpayers “constituted deliberate refusal of delivery and
repudiation of their opportunity to contest the notices of
deficiency in this Court”. Sego v. Commissioner, supra at 611;
accord Baxter v. Commissioner, T.C. Memo. 2001-300.
Relying on Sego v. Commissioner, supra, and Baxter v.
Commissioner, supra, respondent herein contends that petitioners’
failure to claim the certified letter cannot support any claim they
may have that they did not receive the notice. Those cases are
distinguishable from the case now before us. In those cases, it
was demonstrated that the USPS made multiple attempts to deliver
the notices of deficiency and the taxpayers intentionally refused
delivery. See also Ashley v. Commissioner, T.C. Memo. 2002-286;
Carey v. Commissioner, T.C. Memo. 2002-209; Hochschild v.
Commissioner, T.C. Memo. 2002-195. By contrast, in this case, the
USPS made only one attempt at delivery before returning the notice
as unclaimed. On the basis of our observation of petitioners
during their testimony, we are satisfied that petitioners did not
deliberately refuse delivery of the notice.
Absent clear evidence to the contrary, employees of the USPS
are presumed to properly discharge their official duties. United
States v. Chem. Found., Inc., 272 U.S. 1, 14-15 (1926) (“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
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duties.”). At trial, both petitioners credibly testified that they
did not receive a notice of attempted delivery from the USPS and
that they did not know that the USPS was attempting to deliver a
certified letter to them.
An individual’s claim that he/she did not receive notice of
attempted delivery of a certified letter may lack credibility when
the USPS makes more than one attempt to deliver the certified
letter and leaves separate notices of each attempt at the address
on the envelope. Under those circumstances, it may be unlikely
that the individual did not receive at least one of the notices;
instead, it may be apparent that the individual chose to ignore the
notices. In such event, the individual’s conduct constitutes
deliberate refusal of delivery and repudiation of the opportunity
to contest the notices of deficiency in this Court.
In the case herein, petitioners failed to claim the notice of
deficiency because they did not receive the USPS’s notice of
attempted delivery of a certified letter. Petitioners did not
deliberately avoid delivery of the certified letter. They did not
receive the notice of deficiency, and the avoidance exception to
actual receipt is not applicable in this case.
To conclude, we find that, under section 6330(c)(2)(B),
petitioners should have been allowed to challenge their underlying
tax liabilities for 1990 and 1991 at the hearing. In cases where
the taxpayer did not receive a notice of deficiency for a
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particular year and did not have an opportunity to challenge the
underlying tax liability, we have remanded the matter to the
Commissioner’s Office of Appeals for a hearing pursuant to which
the taxpayer has an opportunity to dispute his/her Federal income
tax liability for that year. See, e.g., Rivera v. Commissioner,
T.C. Memo. 2003-35; Nestor v. Commissioner, T.C. Memo. 2002-251.
We shall similarly do so in this case.5
To reflect the foregoing,
An appropriate order will
be issued.
5
To date, petitioners’ litigation position in this case
indicates that they will use the hearing to raise bona fide issues
relating to their underlying tax liability for 1990 and 1991. If,
however, they use the hearing only for purposes of delay or to
raise frivolous issues, we will consider an appropriate dispositive
motion made by respondent and the imposition of a penalty of up to
$25,000 under sec. 6673. See Nestor v. Commissioner, T.C. Memo.
2002-251.