Maxfield v. Comm'r , 2007 Tax Ct. Summary LEXIS 81 ( 2007 )

T.C. Summary Opinion 2007-79
UNITED STATES TAX COURT
DOUGLAS LEROY AND NANCY HELENE MAXFIELD, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 8135-06S. Filed May 22, 2007.
Douglas Leroy and Nancy Helene Maxfield, pro sese.
Michele A. Yates and Ann M. Welhaf, for respondent.
PANUTHOS, Chief Special Trial Judge: This case was heard
pursuant to the provisions of sections 6330(d) and 7463 of the
Internal Revenue Code in effect when the petition was filed.
Pursuant to section 7463(b), the decision to be entered is not
reviewable by any other court, and this opinion shall not be
treated as precedent for any other case. Unless otherwise
indicated, subsequent section references are to the Internal
Revenue Code, and all Rule references are to the Tax Court Rules
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of Practice and Procedure.
This proceeding arises from a petition for judicial review
filed in response to a Notice of Determination Concerning
Collection Action(s) Under Section 6320 and/or 6330 (the notice
of determination) sent to petitioners in April 2006. The issue
for decision is whether respondent abused his discretion in
sustaining a proposed levy action against petitioners.
Background
Some of the facts have been stipulated, and they are so
found. The record consists of the stipulation of facts and
supplemental stipulation of facts with attached exhibits,
additional exhibits introduced at trial, and the testimony of
petitioner Douglas Maxfield.
From at least 1995 through the time the petition was filed,
petitioners resided in Bowie, Maryland. All references to
petitioner are to Douglas Maxfield.
Petitioners filed a joint 1999 Federal income tax return.
In March 2003, respondent issued petitioners a notice of
deficiency determining, inter alia, that petitioners were not
entitled to certain claimed deductions. Petitioners did not
petition the Court in response to the notice, and respondent
assessed tax, penalties, and interest against petitioners on
August 4, 2003.
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Petitioners did not pay all of the amount assessed for 1999.
Respondent issued petitioners a Notice of Intent to Levy and
Notice of Your Right to a Hearing in July 2004. Petitioners
timely submitted a Form 12153, Request for a Collection Due
Process Hearing. Petitioners’ case was assigned to a settlement
officer, who conducted a telephone hearing with petitioners.
Petitioners attempted to challenge the underlying tax liability
during the hearing, but the settlement officer refused to
consider the issue because respondent had sent petitioners a
notice of deficiency.
After the hearing, respondent issued the notice of
determination sustaining the proposed levy. The notice of
determination states in part that the proposed levy was no more
intrusive than necessary and that the requirements of applicable
law and administrative procedure were met. Petitioners filed a
timely petition for review of respondent’s determination.
Discussion
Section 6331(a) authorizes the Secretary to levy upon
property and property rights of a taxpayer liable for taxes who
fails to pay those taxes within 10 days after a notice and demand
for payment is made. Section 6331(d) provides that the levy may
be made only if the Secretary has given written notice to the
taxpayer 30 days before the levy. Section 6330(a) requires the
Secretary to send a written notice to the taxpayer of the amount
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of the unpaid tax and of the taxpayer’s right to a section 6330
hearing at least 30 days before the levy is begun.
If a section 6330 hearing is requested, the hearing is to be
conducted by the Office of Appeals, and the Appeals officer
conducting it must verify that the requirements of any applicable
law or administrative procedure have been met. Sec. 6330(b)(1),
(c)(1). The taxpayer may raise at the hearing any relevant issue
relating to the unpaid tax, including a spousal defense or
collection alternative. Sec. 6330(c)(2)(A). The taxpayer also
may challenge the existence or amount of the underlying tax
liability at a hearing if the taxpayer did not receive a
statutory notice of deficiency with respect to the underlying tax
liability or did not otherwise have an opportunity to dispute
that liability. Sec. 6330(c)(2)(B); Montgomery v. Commissioner,
122 T.C. 1 (2004).
This Court has jurisdiction under section 6330 to review the
Commissioner’s administrative determinations. Sec. 6330(d);
Iannone v. Commissioner, 122 T.C. 287, 290 (2004). Where the
validity of the underlying tax liability is properly at issue, we
review the determination de novo. When the underlying liability
is not properly at issue, the Court will review the
Commissioner’s determination for abuse of discretion. Sego v.
Commissioner, 114 T.C. 604, 610 (2000); Goza v. Commissioner, 114
T.C. 176, 183 (2000).
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I. Whether Petitioners Can Challenge the Underlying Tax
Liability
Petitioners contend that the assessment of tax was untimely.
In the alternative, petitioners contend that the adjustments in
the notice of deficiency are erroneous. Each contention
constitutes a challenge to the underlying tax liability. See
Hoffman v. Commissioner, 119 T.C. 140, 145 (2002); Butti v.
Commissioner, T.C. Memo. 2006-66.
Respondent argues that petitioners cannot dispute the
underlying tax liability because they received a notice of
deficiency. See sec. 6330(c)(2)(B). Petitioners concede that
respondent mailed a notice of deficiency but assert that it was
never delivered to them.
If the Commissioner properly mails a notice of deficiency to
a taxpayer’s last known address, a presumption arises that the
notice was delivered to the taxpayer in the normal course of the
mail. Zenco Engg. Corp. v. Commissioner, 75 T.C. 318, 323
(1980), affd. without published opinion 673 F.2d 1332 (7th Cir.
1981); Hovind v. Commissioner, T.C. Memo. 2006-143. The
Commissioner bears the burden of proving proper mailing of a
notice of deficiency. Coleman v. Commissioner, 94 T.C. 82, 90
(1990). Proper mailing may be shown by evidence of the
Commissioner’s mailing practices corroborated by direct testimony
or documentary evidence of mailing. Magazine v. Commissioner, 89
T.C. 321, 326 (1987); Hovind v. Commissioner, supra. A U.S.
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Postal Service certified mailing list reflecting delivery of a
document by the Commissioner to the Postal Service represents
direct evidence of mailing. August v. Commissioner, 54 T.C.
1535, 1536-1537 (1970); Hovind v. Commissioner, supra.
Respondent introduced the testimony of a settlement officer
who described respondent’s mailing practices. Respondent also
introduced a certified mailing list indicating that a notice of
deficiency had been mailed to petitioners at their address in
Bowie, Maryland. The settlement officer testified there was no
indication of irregularity in the preparation or mailing of the
notice of deficiency.1
We find that respondent properly mailed the notice of
deficiency to petitioners’ last known address. A presumption of
delivery therefore arises. See Zenco Engg. Corp. v.
Commissioner, supra. We conclude, however, that petitioners have
rebutted the presumption of delivery. Our conclusion is based on
petitioner’s credible testimony as well as their history of
1
The settlement officer acknowledged that respondent’s
administrative file did not contain a copy of the notice that was
sent to petitioners. The Commissioner’s failure to produce a
copy of a notice of deficiency may indicate that no notice was
mailed. See Pietanza v. Commissioner, 92 T.C. 729, 735-736
(1989), affd. without published opinion 935 F.2d 1282 (3d Cir.
1991). However, that is not necessarily the case where, as here,
the Commissioner introduces a copy of a certified mailing list
and the corroborating testimony of an Internal Revenue Service
employee. See Webb v. Commissioner, T.C. Memo. 1996-449.
Because petitioners concede the notice was mailed, we need not
address this issue further.
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aggressively asserting their rights in dealings with respondent.
See Butti v. Commissioner, supra.
Petitioners have litigated in this Court previously. In
Maxfield v. Commissioner, T.C. Summary Opinion 2006-27,
petitioners challenged respondent’s deficiency determinations for
the taxable years 2000 and 2001. This supports petitioners’
contention that they always reply to respondent’s notices and
letters.
Petitioners also have a long history of dealing with
respondent. According to petitioners, respondent has examined at
least nine of their tax returns. The parties acknowledge that
the examination of petitioners’ 1999 return was particularly
contentious. For example, petitioners sent letters to the
Commissioner of Internal Revenue and the National Taxpayer
Advocate complaining about the examination. One letter states in
part: “On 14 February 2002 * * * [an Internal Revenue Service
agent] came out to my home and conducted an audit of my 1999 tax
return. I produced all my 1999 tax records and for 9 and ½ hours
we went through the audit. I enjoyed it, it was fun.” While the
sarcasm in the letter is evident, we have no doubt that
petitioner derives a sense of satisfaction from challenging
respondent.
Petitioners ultimately asked respondent to close the
examination and issue a notice of deficiency. After respondent
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informed petitioners that a notice of deficiency had been issued
for 1999, petitioners repeatedly asked respondent for a copy of
the notice and proof of delivery. When respondent was unable to
provide such information, see supra note 1, petitioner visited
the Bowie, Maryland, Post Office and asked a manager to conduct a
search of the Post Office’s records for delivery information.
The manager found no indication that the notice of deficiency had
been delivered.2
Petitioners’ course of conduct indicates they would have
sought review of the notice of deficiency had they received it.
We therefore conclude that petitioners have rebutted the
presumption of delivery. See Butti v. Commissioner, supra.
Because respondent introduced no other evidence establishing that
petitioners actually received the notice, we conclude that
petitioners can challenge the underlying tax liability. See sec.
6330(c)(2)(B). Our standard of review is de novo. Sego v.
Commissioner, 114 T.C. 610.
2
As respondent notes, petitioner introduced no evidence
concerning the length of time the Post Office maintains records
of certified mail deliveries. Thus, respondent argues that
petitioner’s failure to obtain delivery information may indicate
only that the Post Office deleted such information from its
files, and not that the Post Office failed to deliver the notice.
We agree the absence of delivery information does not necessarily
indicate that the notice was not delivered. Rather, we find
petitioner’s visit to the Post Office to be further evidence of
petitioners’ aggressiveness in challenging respondent’s
determinations. See Butti v. Commissioner, T.C. Memo. 2006-66.
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II. Whether the Assessment of Tax Was Timely
Petitioners contend that the assessment of tax for 1999 was
untimely. In general, the Commissioner must assess tax within 3
years after the due date of a timely filed return. Sec. 6501(a)
and (b)(1). The due date of petitioners’ return was April 17,
2000.3 Because respondent did not assess tax until August 4,
2003, petitioners assert that the limitations period had expired.
We disagree.
Pursuant to section 6503(a)(1), the period of limitations on
assessment is suspended during the 90-day period following the
mailing of a notice of deficiency and, where the taxpayer does
not petition the Court in response to the notice, for an
additional 60 days thereafter. Estate of Mandels v.
Commissioner, 64 T.C. 61, 77 n.8 (1975). A properly addressed
notice of deficiency is sufficient to suspend the running of the
assessment period even if the taxpayer never receives the notice.
Mollet v. Commissioner, 82 T.C. 618, 623-624 (1984), affd.
without published opinion 757 F.2d 286 (11th Cir. 1985); McGarvie
v. Commissioner, T.C. Memo. 1988-85.
The notice of deficiency was properly addressed and mailed
to petitioners in March 2003, within 3 years of the due date of
3
In general, a tax return must be filed on or before the
15th day of April following the close of the calendar year. Sec.
6072(a). Because Apr. 15, 2000, was a Saturday, petitioners’ tax
return was due on the next business day, which was Apr. 17, 2000.
See sec. 7503.
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their 1999 return. Because petitioners did not petition the
Court in response to the notice, the assessment period did not
expire until September 15, 2003.4 See sec. 6503(a)(1). Thus,
the assessment of tax on August 4, 2003, was timely.
As discussed above, petitioners also wish to contest the
adjustments made in the notice of deficiency. Respondent’s
refusal to consider this issue was an abuse of discretion. See
sec. 6330(c)(2)(B). The Court therefore will issue an order
setting this case for further trial on the issue of the
underlying tax liability.
To reflect the foregoing,
An appropriate order will
be issued.
4
Three years after the due date of petitioners’ 1999 return
was Apr. 17, 2003. See supra note 3. Although 150 days after
that date was Sunday, Sept. 14, 2003, the assessment period was
extended until the next business day. See sec. 7503; see also
Orrock v. Commissioner, T.C. Memo. 1982-293 (holding that sec.
7503 applies to the acts of either a taxpayer or the
Commissioner); sec. 301.7503-1(a), Proced. & Admin. Regs.