T.C. Memo. 2017-39
UNITED STATES TAX COURT
JOANNE C. RUDDY AND JOSEPH C. RUDDY, JR., Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 14602-15L. Filed February 22, 2017.
Joanne C. Ruddy and Joseph C. Ruddy, Jr., pro sese.
William J. Gregg and Bartholomew Cirenza, for respondent.
MEMORANDUM OPINION
LAUBER, Judge: In this collection due process (CDP) case, petitioners
seek review pursuant to section 6330(d)(1) of the determination by the Internal
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[*2] Revenue Service (IRS or respondent) to uphold a notice of intent to levy.1
The IRS has moved for summary judgment under Rule 121, contending that there
are no disputed issues of material fact and that its determination to sustain the levy
was proper as a matter of law. We agree and accordingly will grant the motion.
Background
The following facts are derived from the parties’ pleadings and motion pa-
pers, including the declarations and the exhibits attached thereto. Petitioners
resided in Maryland when they petitioned this Court.
Petitioners filed on August 10, 2010, a joint Federal income tax return for
2009. A revenue agent (RA) in the Baltimore, Maryland, IRS office conducted an
examination of that return and determined a tax deficiency of $27,745 and an ac-
curacy-related penalty of $5,549. The RA prepared a notice of deficiency, ad-
dressed to petitioners jointly, setting forth this determination. The notice is dated
July 26, 2013, and has “CERTIFIED MAIL” imprinted at the top left corner.
The RA mailed separate copies of the notice of deficiency to petitioner-
husband and petitioner-wife at an address on Forest Road in Cheverly, Maryland
1
All statutory references are to the Internal Revenue Code in effect at all
relevant times, and all Rule references are to the Tax Court Rules of Practice and
Procedure. We round all monetary amounts to the nearest dollar.
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[*3] (Forest Road address).2 Petitioners concede that the Forest Road address was
their last known address. The RA concurrently mailed two substantially identical
notices of deficiency for 2009 to petitioners at another address in Cheverly,
Maryland (64th Avenue address).
The RA placed each notice of deficiency in a separate envelope, which had
a transparent or “look-through” window through which the address imprinted on
each notice would appear. Each envelope bore a distinct 20-digit U.S. Postal Ser-
vice (USPS) certified mail number evidencing that each envelope was sent by cer-
tified mail. The record includes copies of all four notices of deficiency and copies
of the four envelopes in which the notices were mailed. All four envelopes were
returned to the IRS as undeliverable on August 20, 2013.
Respondent included with his summary judgment motion copies of two
USPS Forms 3877. These show that four articles, with certified mail numbers
matching those on the four envelopes, were received by the USPS in Baltimore,
Maryland, on July 26, 2013. The Forms 3877 show that two of the articles were
2
Section 6212(b)(2) provides that, where a joint return was filed, the IRS
may send a single joint notice of deficiency. However, the IRS is required,
“whenever practicable,” to send any notice relating to a joint return separately to
each spouse. Internal Revenue Service Restructuring and Reform Act of 1988,
Pub. L. No. 105-206, sec. 3201(d), 112 Stat. at 740; see also Internal Revenue
Manual pt. 4.10.1.6.8 (Feb. 24, 2015) (entitled “Separate Notice Requirements for
Joint Returns”).
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[*4] sent to petitioners at the Forest Road address, and that two of the articles were
sent to petitioners at the 64th Avenue address. Each Form 3877 is signed by a
USPS employee, bears the stamp of the USPS facility in Baltimore, Maryland, and
confirms that the number of items received by USPS equaled the number of items
listed on each Form 3877.
Respondent also included with his summary judgment motion a USPS “Pro-
duct & Tracking Information” sheet for the notice of deficiency sent to petitioner-
wife at the Forest Road address. This document shows that the notice left the
USPS facility on July 27, 2013; that a delivery was attempted that same day; and
that a notice of attempted delivery was left for petitioner-wife at the Forest Road
address.
Petitioners did not petition this Court for review of those notices, and on
December 20, 2013, the IRS assessed the tax and penalty for 2009. In an effort to
collect this outstanding liability the IRS timely sent petitioners a Notice of Intent
to Levy and Your Right to a Hearing. They timely requested a CDP hearing.
A settlement officer (SO) from the IRS Appeals Office wrote petitioners to
acknowledge receipt of their hearing request and to inform them that he had
scheduled a telephone CDP hearing for November 18, 2014. The SO informed
petitioners that, if they wanted a collection alternative, they should provide a
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[*5] completed Form 433-A, Collection Information Statement for Wage Earners
and Self-Employed Individuals. Petitioners supplied no documents before the
hearing.
During the CDP hearing petitioners argued that the levy was invalid on the
theory that the IRS had made the assessment after the period of limitations for as-
sessment had expired. See sec. 6501. Since petitioners had filed their 2009 return
on August 10, 2010, the three-year limitations period was originally set to expire
on August 10, 2013. However, upon proper mailing of the notice of deficiency,
that period was extended until January 7, 2014. See sec. 6503(a)(1). Because the
IRS had assessed the tax on December 20, 2013, the SO determined that the as-
sessment was timely.3
Petitioners and the SO held multiple calls and exchanged multiple letters
and faxes during the next few months. Petitioners continued to argue that the
assessment period of limitations had expired, principally by questioning whether
the notices of deficiency had been properly mailed. In response to that argument,
the SO retrieved and sent petitioners copies of the first pages of the four notices of
3
A question arose during the CDP hearing as to whether petitioners had
signed a Form 872, Consent to Extend the Time to Assess Tax, that extended the
assessment period of limitations even further. The SO informed petitioners that he
did not need to resolve that question because the December 20, 2013, assessment
was timely regardless of whether petitioners had signed a Form 872.
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[*6] deficiency and of the envelopes in which they had been mailed. When
petitioners continued to express dissatisfaction with this evidence and proposed no
collection alternative, the SO concluded that further discussions would be
fruitless. On May 6, 2015, the IRS issued petitioners a notice of determination
sustaining the levy.
Petitioners timely petitioned this Court for review of this determination. In
their petition, petitioners acknowledged that the Forest Road address was the ad-
dress shown on their 2009 income tax return, was their current address, and was at
all relevant times their last known address. Their sole contention was that, be-
cause the IRS assertedly had not sent a notice of deficiency to this address, the
assessment period of limitations had expired. Respondent moved for summary
judgment, and petitioners filed an objection.
Discussion
A. Summary Judgment
The purpose of summary judgment is to expedite litigation and avoid un-
necessary and time-consuming trials. Fla. Peach Corp. v. Commissioner, 90 T.C.
678, 681 (1988). The Court may grant summary judgment when there is no genu-
ine dispute as to any material fact and a decision may be rendered as a matter of
law. Rule 121(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),
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[*7] aff’d, 17 F.3d 965 (7th Cir. 1994). In deciding whether to grant summary
judgment, we construe factual materials and inferences drawn from them in the
light most favorable to the nonmoving party. Sundstrand Corp., 98 T.C. at 520.
However, where the moving party properly makes and supports a motion for
summary judgment, “an adverse party may not rest upon the mere allegations or
denials of such party’s pleading,” but must set forth specific facts, by affidavit or
otherwise, showing that there is a genuine dispute for trial. Rule 121(d).
In light of respondent’s motion, the supporting affidavit, the administrative
record attached as exhibits to that affidavit, and petitioner’s filings, we find that
there exists no dispute as to any material fact and that summary adjudication is ap-
propriate.
B. Standard of Review
Petitioners have not challenged the amount of their underlying tax liability
for 2009, and we accordingly review the IRS determination for abuse of discretion
only. See Goza v. Commissioner, 114 T.C. 176, 181-182 (2000). Abuse of dis-
cretion exists when a determination is arbitrary, capricious, or without sound basis
in fact or law. See Murphy v. Commissioner, 125 T.C. 301, 320 (2005), aff’d, 469
F.3d 27 (1st Cir. 2006).
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[*8] In deciding whether the SO abused his discretion in sustaining the collec-
tion action we consider whether he: (1) properly verified that the requirements of
any applicable law or administrative procedure have been met; (2) considered any
relevant issues petitioners raised; and (3) considered whether “any proposed col-
lection action balances the need for the efficient collection of taxes with the
legitimate concern of * * * [petitioners] that any collection action be no more
intrusive than necessary.” See sec. 6330(c)(3). The only issue petitioners raised,
at the CDP hearing or in their petition, is whether the SO properly verified that the
tax was properly assessed, given their assertion that the IRS failed to send them a
notice of deficiency for 2009.
C. Analysis
Under section 6501(a), the IRS is generally required to assess a tax within
three years after a tax return is filed. The assessment period of limitations is tolled
when the IRS mails a notice of deficiency to the taxpayer under section 6212(a).
Sec. 6503(a). The assessment period of limitations is tolled for 90 days once a
notice of deficiency has been mailed and then for an additional 60 days if the
taxpayer has failed to petition the Tax Court within that time. Secs. 6213(a),
6503(a); Dritz v. Commissioner, T.C. Memo. 1969-175, aff’d, 427 F.2d 1176 (5th
Cir. 1970). If a notice of deficiency was properly mailed to petitioners, the period
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[*9] of limitations on assessment, originally set to expire on August 10, 2013, was
extended by 150 days, to January 7, 2014. The December 20, 2013, assessment
was thus timely so long as the notice of deficiency was properly mailed.
Section 6212(a) provides that the IRS may “send notice of such deficiency
to the taxpayer by certified mail or registered mail.” Actual receipt of the notice
by the taxpayer is not required to establish the validity of an assessment. See, e.g.,
Keado v. United States, 853 F.2d 1209, 1211-12 (5th Cir. 1988); Cohen v. United
States, 297 F.2d 760, 772 (9th Cir. 1962). However, the IRS must present per-
suasive evidence that the notice of deficiency was actually mailed to the taxpayer
on a particular date before it can rely on a mailing to toll the period of limitations.
August v. Commissioner, 54 T.C. 1535, 1536-37 (1970).
A properly completed USPS Form 3877 represents direct documentary evi-
dence of the date and fact of mailing and demonstrates IRS compliance with its
established procedures for sending deficiency notices. Keado, 853 F.2d at 1212-
13; Magazine v. Commissioner, 89 T.C. 321, 327 (1987); Cataldo v. Commission-
er, 60 T.C. 522 (1973), aff’d, 499 F.2d 550 (2d Cir. 1974). Exact compliance with
the Form 3877 mailing procedures raises in favor of the IRS a presumption of
official regularity that shifts the burden of going forward to the taxpayer. United
States v. Zolla, 724 F.2d 808, 810 (9th Cir. 1984); United States v. Ahrens, 530
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[*10] F.2d 781, 784 (8th Cir. 1976). A taxpayer may rebut this presumption by
affirmatively showing that the IRS failed to follow its established procedures. A
properly completed Form 3877 by itself is generally sufficient, absent evidence to
the contrary, to establish that the notice was properly mailed to the taxpayer.
Zolla, 724 F.2d at 810; Ahrens, 530 F.2d at 785-786; Coleman v. Commissioner,
94 T.C. 82, 90-91 (1990).
Even without the presumption of official regularity, the IRS can still prevail
so long as it provides “otherwise sufficient” evidence of mailing. Welch v. United
States, 678 F.3d 1371, 1377 (Fed. Cir. 2012). Broadly speaking, the more docu-
mentation the IRS presents, the less likely it is that minor errors or omissions will
defeat its proffer. And when “the existence of a notice of deficiency is not in
dispute,” as is the case here, all that is required is “evidence corroborating an
actual timely mailing of the notice of deficiency.” Id. at 1378-79.
Here, respondent has supplied copies of two USPS Forms 3877 showing
that a total of four articles, with certified mail numbers matching those on the four
envelopes, were received by the USPS in Baltimore, Maryland, on July 26, 2013.
That date matches the date on the notices of deficiency. Each Form 3877 is signed
by a USPS employee and bears the stamp of the USPS facility in Baltimore, Mary-
land. One of the Forms 3877 shows that two articles were addressed to petitioners
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[*11] at the Forest Road address, which they concede was their last known
address.4
These Forms 3877 give rise to a presumption of official regularity, and peti-
tioners have not rebutted this presumption by showing that the IRS failed to follow
its established procedures. Petitioners allege as a defect that the certified mail
numbers matching those on the Form 3877 are imprinted, not on the notices, but
on the envelopes. However, as we noted in Garrett v. Commissioner, T.C. Memo.
2015-228, at *6, there is “no authority that establishes that a notice of deficiency
sent by certified mail must bear the certified mail number.”
Here, the notices of deficiency are imprinted with the words “CERTIFIED
MAIL”; the notices bear the same date as the Forms 3877; the certified mail num-
bers on the envelopes match those on the Forms 3877; and one of the Forms 3877
establishes that separate notices were sent to petitioner-husband and petitioner-
wife at what they concede was their last known address. We thus hold here, as we
did in Garrett, that the Forms 3877 are sufficient as a matter of law to establish the
4
Petitioners assert that the Forms 3877 are incomplete because they are “not
signed by a Postal employee and do not indicate the number of pieces of mail that
the Postal employee received.” Both assertions are incorrect. Each Form 3877 is
signed by a USPS employee and indicates that the “total number of pieces listed
by sender (8)” matches “the total number of pieces received at post office (8).”
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[*12] validity of the assessments. See id. at *7 (ruling that “the certified mail list
evidences that the notice of deficiency was mailed to” the taxpayer).
Even if the presumption of official regularity were somehow thought inap-
plicable here, respondent would still prevail because he has provided “otherwise
sufficient” evidence of mailing. See Welch, 678 F.3d at 1377. Apart from the
Forms 3877, respondent has supplied mailing envelopes bearing the four certified
mail numbers that appear on the Forms 3877. He has also supplied a USPS
Product & Tracking Information sheet confirming that the notice of deficiency
sent to petitioner-wife at the Forest Road address departed the USPS facility on
July 27, 2013, and was delivered that same day. Collectively, this evidence
convinces us that the notices of deficiency were mailed to petitioners at their last
known address on July 26, 2013. See Cropper v. Commissioner, 826 F.3d 1280,
1286 (10th Cir. 2016) (holding that proof of mailing was “otherwise sufficient”
where IRS produced copies of the deficiency notices, the defects in the USPS
Forms 3877 were minor, and the Forms 3877 were datestamped with the date on
which the notices were submitted to USPS), aff’g T.C. Memo. 2014-139; Welch,
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[*13] 678 F.3d at 1379-80 (affirming summary judgment for the IRS despite
absence of a Form 3877).5
Finally, petitioners note that one of the IRS transcripts of their 2009 account
does not specify the date on which the notice of deficiency was mailed. That is
true, and this may have constituted an arguable irregularity in the assessment pro-
cess. But the remedy that petitioners seek (invalidation of the assessment) is im-
proper. In the event of such an irregularity, the IRS and the Court are required “to
examine underlying documents in addition to the tax transcripts,” such as the no-
tices of deficiency, the envelopes in which they were mailed, and the certified
mailing list. See Hoyle v. Commissioner, 131 T.C. 197, 205 n.7 (2008); Meyer v.
Commissioner, T.C. Memo. 2013-268, at *15-*16 & n.10. Although it is not clear
that the circumstances required the SO to examine such underlying documents
here, he did so and we have done the same. These underlying documents establish
the mailing of the notices of deficiency to petitioners’ last known address.
In sum, we conclude that the SO properly verified that the notices of defi-
ciency were properly mailed to petitioners at their last known address and hence
5
Petitioners note that the envelopes do not themselves contain petitioners’
address. This is not a defect: the envelopes are “look-through” envelopes, such
that the address imprinted on the notice would show through the window. See
Noyes v. Commissioner, T.C. Memo. 2017-27, at *9 & n.4.
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[*14] that the tax for 2009 was timely assessed. Finding no abuse of discretion in
this or in any other respect, we will grant summary judgment for respondent
sustaining his determination to uphold the levy.
To implement the foregoing,
An appropriate order and decision
will be entered.