Pietanza v. Commissioner

RUWE, J.,

dissenting: I agree that this case should be dismissed. I do not think we should have dismissed it by granting petitioners’ motion. It is unnecessary to find a specific factual basis for our lack of jurisdiction where petitioners fail to allege or invoke our jurisdiction. I also believe that the majority failed to properly apply the presumption of official regularity.

A. Jurisdiction

Since we are a court of limited jurisdiction, a taxpayer must allege jurisdictional facts. Peruna Co. v. Commissioner, 11 B.T.A. 1180, 1187 (1928). Rule 34(b)(2) requires that a petition to this Court include “The date of the notice of deficiency or liability, or other proper allegations showing jurisdiction in the Court, and the City and State of the office of the Internal Revenue Service which issued the notice.” Rule 34(b)(8) requires that a copy of the notice of deficiency be appended to the petition. These requirements exist because a notice of deficiency is a taxpayer’s “ticket” to the Tax Court. McKay v. Commissioner, 89 T.C. 1063, 1070 (1987); Mulvania v. Commissioner, 81 T.C. 65, 67 (1983). In this case, it is clear that the petitioners’ only real argument is that they were never given their ticket and that we should decide that we have no jurisdiction to hear their case.1

On the surface, this case appears to be a futile action on petitioners’ part. Without going beyond petitioners’ allegations, it is clear that we must dismiss because there is a total failure to state a claim over which we have jurisdiction to grant any relief. Respondent agrees we have no jurisdiction albeit for different reasons. Inasmuch as it is patently clear that there is no possibility that we have jurisdiction, there is no need to hold a hearing, review evidence, and make difficult legal decisions. Granted, we have jurisdiction to decide our own jurisdiction, but one would think this to be a simple matter when the petitioners argue there is none, allege facts that if proven would remove any doubt, and respondent is not arguing for a different result. Under such circumstances, we should dismiss for petitioners’ failure to allege or invoke the jurisdiction of this Court. It is a waste of our time and an improper use of our authority to go further.

I must acknowledge that we have deemed it appropriate (if not necessary) in past cases to decide the grounds for our lack of jurisdiction even though both parties argued that we lacked jurisdiction. See Pyo v. Commissioner, 83 T.C. 626 (1984) and Shelton v. Commissioner, 63 T.C. 193 (1974). In such cases, unlike the instant case, the parties were in agreement that the IRS had actually prepared and mailed notices of deficiency. The taxpayers in those cases were claiming that the notices were improperly addressed. It was arguably necessary, therefore, to decide the factual basis for our lack of jurisdiction under the facts presented in those cases since some courts have found that jurisdiction might exist where respondent failed to use the proper last known address which resulted in the filing of a petition more than 90 days after the mailing of the notice. For a discussion of this possibility, see Pyo v. Commissioner, supra at 638. See also Wallin v. Commissioner, 744 F.2d 674 (9th Cir. 1984), revg. a Memorandum Opinion of this Court and McPartlin v. Commissioner, 653 F.2d 1185 (7th Cir. 1981), revg. a Memorandum Opinion of this Court, where improperly addressed notices of deficiency were mailed and the taxpayers filed their petitions long after the normal filing period which ends 90 days from the mailing of the notice of deficiency. The circuit courts found that petitions to this Court were proper when filed within 90 days of actual notice.

In the instant case, petitioners allege the total absence of a mailing of the notice of deficiency. If they are correct, we have no jurisdiction. If they are wrong, there are no facts alleged by either party that would support jurisdiction on any alternate approach like that taken in Wallin v. Commissioner, supra or McPartlin v. Commissioner, supra.2 A simple dismissal because of petitioners’ failure to allege any possible basis for our jurisdiction would and should decide nothing that would impact on the merits of the underlying factual dispute.

One could argue that if petitioners had no prepayment remedy for respondent’s alleged total failure to mail a notice of deficiency we should provide that forum. However, petitioners do have a prepayment remedy. In the same statutory provision granting this Court jurisdiction to redetermine deficiencies where there is a proper notice of deficiency and a timely petition, Congress also specifically provided that if an assessment is made without first mailing the required notice “the making of such assessment or the beginning of such proceeding [for collection of the tax] or levy * * * may be enjoined by a proceeding in the proper court, including the Tax Court.” Sec. 6213(a). (Emphasis added.) Injunctive power was first given to the Tax Court by section 6243(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat. 3342, 3749. That section provides, however, that “The Tax Court shall have no jurisdiction to enjoin any action or proceeding under this subsection unless a timely petition for a redetermination of the deficiency has been filed and then only in respect of the deficiency that is the subject of such petition.” Sec. 6213(a) (emphasis added). Because the petition in this case was not timely, this Court could not have issued an injunction. The proper court for petitioners to seek injunctive relief in this case is a U.S. District Court.

Our dismissal of this case does not result in claim preclusion (res judicata) regarding petitioners’ tax liability since we had no jurisdiction over that question. If our disposition of this case results in issue preclusion (collateral estoppel) as to whether a notice of deficiency was mailed, we have unnecessarily usurped the District Court’s jurisdiction to decide the operative facts on which to base any injunctive relief pursuant to section 6213(a). To that extent, our disposition of the instant case amounts to a declaratory judgment which we clearly do not have jurisdiction to issue in this situation.

The majority’s finding regarding the mailing of the notice of deficiency should properly be characterized as dictum since there was no need to decide that issue where petitioners failed to allege any possible basis for jurisdiction. As the majority opinion states, before it discusses the merits of the parties’ respective positions, “The one thing that is clear is that we have no jurisdiction over this case.” (Majority opinion at p. 735) Once that conclusion was arrived at, additional findings were unnecessary.

Petitioners never asked that we take jurisdiction of their case. They filed a petition and alleged facts which, if true, conclusively show that we have no jurisdiction. The majority’s disposition results in a declaration from this Court that purportedly controls the statute of limitations defense to the underlying tax assessment and collection. Petitioners could hope for little more if we had jurisdiction, which we do not. In addition, section 6213(a) provides that a petition to this Court stays collection activity pending our decision or dismissal. The majority effectively places the burden of proof as to proper mailing of the notice of deficiency upon respondent and requires production of detailed evidence. It is therefore likely that resolution of these jurisdictional issues will take substantial time. During that time petitioner will be protected from collection activity. These are unexpected (and I submit unintended) results, to be derived from a court whose jurisdiction was never alleged and whose lack of jurisdiction was never in doubt.

The petition in this case is based upon a collection notice. The proper forum in which to contest such matters is in the U.S. District Court. That fact being abundantly clear, we should not use the scarce resources of this Court to decide facts whose only real relevance pertains to matters over which Congress has given us no jurisdiction.

B. Presumption of Official Regularity

The Internal Revenue Manual, which is referred to by the majority, specifies that notices of deficiency should be sent by certified mail and that the date stamped Postal Service Form 3877, receipt of certified mail, should be retained in a separate file. Compliance with the Internal Revenue Manual procedures provides adequate proof of mailing. Keado v. United States, 853 F.2d 1209, 1213 (5th Cir. 1988); United States v. Ahrens, 530 F.2d 781, 784-786 (8th Cir. 1976). A properly prepared Form 3877, in the absence of contrary evidence, is sufficient proof that the notice of deficiency was properly sent. Keado v. United States, supra; United States v. Zolla, 724 F.2d 808, 810 (9th Cir. 1984); United States v. Ahrens, supra; Catalado v. Commissioner, 60 T.C. 522, 524 (1973), affd. per curiam 499 F.2d 550 (2d Cir. 1974).

Respondent has introduced a copy of the appropriate Form 3877.3 The form was prepared in accordance with Internal Revenue Manual section 4462.2. The Form 3877 is stamped “Statutory Notice of deficiencies for the year(s) indicated, have been sent to the following taxpayers.” The form contains petitioners’ name, address, and identification of the year involved. The form is postmarked and signed on behalf of the postmaster. Petitioners concede that the Form 3877 is foundational evidence of mailing, but argue that it is uncorroborated. Such an argument flies in the face of the aforementioned cases holding that the Form 3877 is sufficient proof of mailing in the absence of proof to the contrary.

The majority contends that any presumption of official regularity that might arise from the Postal Service Form 3877 has been successfully rebutted by petitioners. In support of this claim, the majority points to the “various confusing and non-responsive IRS answers to [petitioners’] inquiries about the collection practices, coupled with the failure of the IRS to present adequate evidence in regard to its various administrative operations in this matter.” (Majority opinion at p. ) These factors do not establish that respondent failed to follow his established procedures for mailing a statutory notice of deficiency in this case. The various responses made by IRS to petitioners’ inquiries were made many months after the mailing date shown on the Form 3877. The nature of that correspondence is indicative of a lack of knowledge by the responding IRS employee, the absence of an available administrative file, and a bureaucratic indifference that places the respondent in a bad light. I do not wish to condone this conduct; I simply do not believe that it is sufficient to destroy the presumption of regularity that arises from the existence of the Form 3877, the information contained therein, and the respondent’s actions prior to mailing evidenced by the Form 3877. The facts show that respondent was in the process of preparing a notice of deficiency and that District Counsel had reviewed and approved it several days prior to the mailing date shown on the Form 3877. The majority finds that “something” was mailed by certified mail to petitioners at their address on April 15, 1985. (Majority opinion at p. ) Respondent produced the Form 3877 with notations on it that the certified mailing to petitioners contained a notice of deficiency for the year in issue, all in accordance with procedures contained in the Internal Revenue Manual. It seems that the only thing missing is direct testimony by the envelope stuffer that the notice of deficiency was actually placed into the envelope.

If the presumption created by the Form 3877 can be destroyed by respondent’s failure to provide testimony by the envelope stuffer, then the presumption is worth little. Likewise, respondent’s failure to provide evidence of envelope stuffing procedures, containing minute details on how to place notices into envelopes (presumably to preclude the possibility that employees might otherwise think it acceptable to mail empty envelopes) should not negate the presumption created by the Form 3877.

The majority also seems to hold that the presumption of official regularity was destroyed by the respondent’s failure to produce a copy of the deficiency notice. The cases discussing the presumption arising from the Form 3877 do not require that a copy of the notice of deficiency be produced and some cases note that all copies of the notice of deficiency had been destroyed. United States v. Zolla, supra at 810; United States v. Ahrens, supra at 785.

The presumption of official regularity operates to effectively preclude a court, in the absence of proof to the contrary, from insisting that the Government introduce transmittal memos and the testimony of envelope stuffers. Respondent has supplied evidence that a notice of deficiency was prepared in the days preceding the certified mailing to petitioners. Respondent also produced a copy of the Form 3877 indicating that the notice was timely mailed to petitioners at their correct address in a manner consistent with Internal Revenue Manual procedures. No more is required unless petitioners produce evidence that the notice was not mailed. No such evidence was produced in this case.

Parker, Hamblen, Jacobs, and Gerber, JJ., agree with this dissent.

Petitioners originally claimed in the alternative that the notice was mailed to the wrong address. As the majority finds, this alternative claim was without merit. (Majority opinion at p )

By referring to Wallin v. Commissioner, 744 F.2d 674 (9th Cir. 1984), revg. a Memorandum Opinion of this Court and McPartlin v. Commissioner; 653 F.2d 1185 (7th Cir. 1981), revg. a Memorandum Opinion of this Court, I do not wish to imply agreement with the rationale of those cases. See Roszkos v. Commissioner, 87 T.C. 1255, 1266-1267 (1986), revd. on other grounds 850 F.2d 514 (9th Cir. 1988), for our recent discussion of Wallin.

The majority notes that the copy of the Form is not itself certified. Inasmuch as petitioners have not challenged the authenticity of the Form, lack of its certification is meaningless.