T.C. Memo. 2011-243
UNITED STATES TAX COURT
SHELBY L. AND DONZELLA H. JORDAN, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent*
Docket No. 14572-07L. Filed October 5, 2011.
Pierce J. Guard, Jr., for petitioners.
Miriam C. Dillard, for respondent.
SUPPLEMENTAL MEMORANDUM OPINION
WELLS, Judge: This case is before the Court on the parties’
cross-motions for summary judgment pursuant to Rule 121.1 We
*
This opinion supplements Jordan v. Commissioner, 134 T.C. 1
(2010).
1
Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, and Rule references
(continued...)
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must decide whether, on remand, respondent’s Appeals Office
properly verified that a notice of deficiency was mailed to
petitioners for their 1986, 1988, and 1989 tax years.
Background
Many of the relevant facts are set forth in our prior
Opinion in Jordan v. Commissioner, 134 T.C. 1 (2010) (prior
Opinion), and are incorporated by reference. Additionally, some
of the facts discussed in this Opinion are taken from the
parties’ moving papers and attachments.2
At the time they filed their petition, petitioners resided
in California.
Respondent sent a Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330 (notice of
determination) to petitioners with respect to a lien filed to
collect petitioners’ unpaid tax liabilities for their 1986, 1987,
1988, 1989, 1994, and 1995 tax years. Petitioners timely filed a
petition with this Court seeking review of respondent’s
determination. Petitioners’ taxes for their 1987, 1994, and 1995
tax years were assessed on the basis of their joint tax returns
1
(...continued)
are to the Tax Court Rules of Practice and Procedure.
2
Those attachments include certified copies of the Forms
4340, Certificate of Assessments, Payments, and Other Specified
Matters, and copies of the notices of deficiency on which
respondent’s Appeals Office relied during the hearing on remand.
The parties do not dispute the authenticity of the attachments.
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after petitioners failed to pay the taxes shown on those returns.
There are no remaining factual or legal issues concerning
petitioners’ 1987, 1994, and 1995 tax years, and the parties
agree that the Court should enter a decision sustaining
respondent’s determination with respect to those years.
Petitioners filed their 1986 tax return on December 9, 1987;
their 1988 tax return on June 22, 1990; and their 1989 return on
September 21, 1990. Petitioners’ taxes for the 1986, 1988, and
1989 tax years were assessed following audits. In the reply
brief they filed before we entered our prior Opinion, petitioners
contended for the first time that the administrative record
showed that a notice of deficiency had not been issued for those
years. Petitioners did not testify at trial that they did not
receive notices of deficiency. Nonetheless, because the
administrative record did not state that the Appeals Office had
verified that notices of deficiency were sent, we remanded the
case for the Appeals Office to clarify the record. In our prior
Opinion, we stated:
The record before us is unclear as to whether a notice
of deficiency was sent to petitioners for their 1986, 1988,
and 1989 tax years. We have held that a verification
generally is proper if the Appeals officer relied on a Form
4340, Certificate of Assessments, Payments, and Other
Specified Matters, or a transcript containing similar
information. Nestor v. Commissioner, 118 T.C. 162 (2002).
There is no mention of a Form 4340 in the record. Moreover,
the original assessment dates in the early 1990s covered
petitioners’ 1986, 1988, and 1989 tax years; however, the
transcript provided covers only petitioners’ tax years 2000
and forward. We therefore remand the instant case to
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respondent’s Appeals Office to clarify the record as to
whether a notice of deficiency was sent to petitioners for
each of the 1986, 1988, and 1989 tax years.
Jordan v. Commissioner, supra at 12-13.
On remand, respondent’s Appeals Office placed in the
administrative file certified copies of Forms 4340, Certificate
of Assessments, Payments, and Other Specified Matters, for each
of petitioners’ 1986, 1988, and 1989 tax years, each dated
February 4, 2010. Although the Forms 4340 do not state that a
notice of deficiency was mailed to petitioners, the Forms 4340
each contain an entry stating: “additional tax assessed by
examination audit deficiency per default of 90 day letter.”
Petitioners signed a consent to extend the time to assess tax for
their 1986 tax year on December 5, 1990. The assessment for
petitioners’ 1986 tax year was made on June 1, 1992, and the
assessments for petitioners’ 1988 and 1989 tax years were made on
April 26, 1993.
In addition to the Forms 4340, the Appeals Office placed in
the administrative file copies of the notices of deficiency. The
notice of deficiency for petitioners’ 1986 tax year is stamped
with the date December 6, 1991. The notice of deficiency for
petitioners’ 1988 and 1989 tax years is stamped with the date
October 28, 1992. Both notices of deficiency are addressed to
petitioners’ last known address, which is the same address
petitioners used when they filed their petition in this Court.
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After reviewing the Forms 4340 and copies of the notices of
deficiency for petitioners’ 1986, 1988, and 1989 tax years,
respondent’s Appeals Office issued supplemental notices of
determination.
Discussion
Rule 121(a) allows a party to move “for a summary
adjudication in the moving party’s favor upon all or any part of
the legal issues in controversy.” Rule 121(b) directs that a
decision on such a motion shall be rendered “if the pleadings,
answers to interrogatories, depositions, admissions, and any
other acceptable materials, together with the affidavits, if any,
show that there is no genuine issue as to any material fact and
that a decision may be rendered as a matter of law.” In the
instant case, the parties have made cross-motions for summary
judgment, and each party contends that there are no genuine
issues of material fact and that the party is entitled to summary
judgment as a matter of law.
Generally, the Commissioner is not entitled to collect a tax
by administrative means until it has been formally and timely
assessed. When the taxpayer files a return, the Commissioner may
summarily assess the amount shown on the return without issuing a
notice of deficiency. Sec. 6201(a). However, when a deficiency
exists, the Commissioner must issue a notice of deficiency and
wait 90 days before assessing the tax. Secs. 6212(a), 6213(a).
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To be timely, the assessment generally must be made within the
3-year period of limitations. Sec. 6501(a).
When we review an Appeals Office determination under section
6330(d), we review the Appeals Office’s consideration of all
issues that were raised by the taxpayer, and we also consider
whether the Appeals Office conducted the verification required by
section 6330(c)(1). Jordan v. Commissioner, 134 T.C. at 12;
Hoyle v. Commissioner, 131 T.C. 197, 202 (2008). Section
6330(c)(1) requires that, as part of its review, the Appeals
Office verify that a valid notice of deficiency was issued to the
taxpayer. Jordan v. Commissioner, supra at 12; Hoyle v.
Commissioner, supra at 202.
The act of mailing the notice of deficiency generally is
proven by evidence of the Commissioner’s mailing practices
corroborated by direct testimony or documentary evidence of
mailing. Coleman v. Commissioner, 94 T.C. 82, 90 (1990);
Magazine v. Commissioner, 89 T.C. 321 (1987). A Postal Service
Form 3877 reflecting Postal Service receipt represents direct
documentary evidence of the date and the fact of mailing and also
shows compliance with established Internal Revenue Service (IRS)
procedures for mailing notices of deficiency. Coleman v.
Commissioner, supra at 90; Magazine v. Commissioner, supra at
324, 327. Exact compliance with Postal Service Form 3877 mailing
procedures raises a presumption of official regularity in favor
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of the Commissioner and is sufficient, absent evidence to the
contrary, to establish that a notice of deficiency was properly
mailed. Hoyle v. Commissioner, 136 T.C. ___, ___ (2011) (slip
op. at 10); Coleman v. Commissioner, supra at 91. A certified
mailing list containing the same information as Postal Service
Form 3877 may also be relied upon to establish mailing. Hoyle v.
Commissioner, 136 T.C. at ___ (slip op. at 10).
Respondent contends that the certified mailing lists related
to petitioners’ tax years 1986, 1988, and 1989 were destroyed
after 10 years pursuant to IRS procedures for document retention.
Because respondent does not have the certified mailing lists in
his possession, he contends that the Appeals Office should be
allowed to rely on Forms 4340 to verify that the notices of
deficiency were mailed to petitioners.
We have held that a verification that a notice of deficiency
was issued generally is proper if the Appeals Office relied on a
Form 4340, unless the taxpayer demonstrates an irregularity in
the assessment procedure that would raise a question about the
validity of the assessments. Jordan v. Commissioner, supra at
12-13; Nestor v. Commissioner, 118 T.C. 162, 166 (2002); Davis v.
Commissioner, 115 T.C. 35, 41 (2000). In Hoyle v. Commissioner,
131 T.C. at 205 n.7, we stated that “where a taxpayer alleges no
notice of deficiency was mailed he has * * * ‘[identified] an
irregularity’, thereby requiring the Appeals officer to do more
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than consult the computerized records”, including the Form 4340.
In that footnote in Hoyle, we referred to Chief Counsel Notice
CC-2006-19 (Aug. 18, 2006), which cited Nestor v. Commissioner,
supra, for the proposition that the Appeals Office may rely on
the Form 4340 in the absence of an irregularity identified by the
taxpayer. In Nestor v. Commissioner, supra at 167, we stated:
“The Forms 4340 that respondent gave petitioner before trial
showed that the amounts at issue were properly assessed, and
petitioner did not show at trial any irregularity in the
assessment procedure that would raise a question about the
validity of the assessments.” (Emphasis added.) According to
our holding in Nestor, therefore, the burden is on the taxpayer
to show at trial that an irregularity existed. If the taxpayer
does not offer any evidence to show an irregularity, the IRS may
rely on computerized records, including the Form 4340, to verify
that the notice of deficiency was sent and the tax properly
assessed. See id.
When we remand a case to the Appeals Office to clarify the
record as to whether a notice of deficiency was mailed to a
taxpayer, the Appeals Office is not limited to what the Appeals
Office considered during the first administrative hearing. Hoyle
v. Commissioner, 136 T.C. at ___ (slip op. at 10). Rather, on
remand the Appeals Office is to independently verify that a
notice of deficiency was properly mailed to the taxpayer. Id.
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Petitioners did not proffer any evidence suggesting an
irregularity in the assessment procedure. At trial petitioners
did not testify that they never received the notice of
deficiency. Nor did they raise the issue at any other time
during the proceedings before this Court or before respondent’s
Appeals Office. Indeed, it was not until their reply brief that
they contended that the administrative record showed that no
notice of deficiency had been sent. A contention in a brief that
the administrative record showed that no notice of deficiency was
mailed is not a showing of irregularity. In contrast, the
taxpayer in Hoyle v. Commissioner, 131 T.C. at 200 n.3, testified
at trial that he did not receive a notice of deficiency. In the
instant case, there is no such factual dispute. Instead, the
parties’ disagreement is about what documents respondent is
required to produce to show that the notice of deficiency was
properly mailed.
Accordingly, because petitioners did not show that there was
an irregularity, we hold that Forms 4340, combined with copies of
the notices of deficiency, may be used to verify that the notices
of deficiency were mailed to petitioners’ last known address and
that the tax was properly assessed.
The Forms 4340 do not contain entries stating that notices
of deficiency were mailed to petitioners, but the Forms 4340 do
state: “additional tax assessed by examination audit deficiency
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per default of 90 day letter.” Chief Counsel Notice CC-2006-19
(Aug. 18, 2006) notes that the Form 4340 “currently provide[s]
verification of assessment of the liability and the sending of
collection notices”, but it is silent on whether the Form 4340
provides verification that the notice of deficiency was mailed.3
In two recent District Court cases, the Forms 4340 the IRS
provided did not state that a notice of deficiency had been
mailed to the taxpayers, but those courts nonetheless held that
the IRS could rely on the designation “additional tax assessed by
examination audit deficiency per default of 90 day letter” as
evidence suggesting that a notice of deficiency had been mailed.
See United States v. Stevenson, 105 AFTR 2d 2010-2933 (E.D. Pa.
2010); Laeger v. United States, 105 AFTR 2d 2010-1707 (W.D. La.
2010). In neither case did the taxpayers provide credible
evidence that they did not receive the notices of deficiency.
In the instant case, the dates stamped on the copies of the
notices of deficiency are more than 90 days before the assessment
dates on the Forms 4340. The copies of the notices of deficiency
show petitioners’ last known address. We conclude that the Forms
4340, combined with the copies of notices of deficiency, are
sufficient to show that the respective notices of deficiency were
timely mailed to petitioners at their last known address.
3
It is unclear whether it is IRS practice to make an entry
on the Form 4340 stating that the notice of deficiency has been
mailed.
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Consequently, we hold that respondent’s Appeals Office properly
verified on remand, pursuant to section 6330(c)(1), that “the
requirements of any applicable law or administrative procedure
have been met.”
In reaching these holdings, we have considered all the
parties’ arguments, and, to the extent not addressed herein, we
conclude that they are moot, irrelevant, or without merit.
To reflect the foregoing,
An appropriate order and
decision will be entered.