DocketNumber: Docket No. 10753-80
Citation Numbers: 81 T.C. 42, 1983 U.S. Tax Ct. LEXIS 60, 81 T.C. No. 4
Judges: Shields,Wiles,Wilbur,Sterrett,Goffe
Filed Date: 7/20/1983
Status: Precedential
Modified Date: 1/13/2023
*60 Petitioners' 1976 tax return listed an address for petitioners in Allentown, Pa. Twelve days before the 3-year limitations period was to expire, petitioners orally notified respondent by telephone of their new address in Niles, Mich. That same day, respondent mailed to petitioners at the new address a Form 872 to extend the period of limitations on assessment of tax for that year. Petitioners signed the Form 872 and mailed it to respondent but it was not received before the last day of the 3-year limitations period. On the last day of the 3-year limitations period, respondent mailed a notice of deficiency to petitioners at the old Allentown address. The U.S. Postal Service forwarded the notice of deficiency to petitioners at their Niles address. Within 90 days of the mailing of the notice of deficiency to them, petitioners timely filed a petition in the Tax Court.
*43 Respondent determined a deficiency in petitioners' 1976 Federal income tax in the amount of $ 7,040. 1 The case is presently before the Court on petitioners' motion to dismiss for lack of a timely notice of deficiency. See
The general issue for decision is whether a valid notice of deficiency was issued within the 3-year*66 statute of limitations provided in
FINDINGS OF FACT
Most of the facts have been stipulated and are so found. The stipulation of facts and exhibits attached thereto are incorporated herein by this reference.
Petitioners Gerald H. Frieling, Jr., and Joan L. Frieling, husband and wife, resided in Niles, Mich., at the time they filed the petition in this case. On or before April 15, 1977, they filed*67 a joint Federal income tax return for the calendar year *44 1976 with the Internal Revenue Service Center at Philadelphia, Pa. The address set forth on that return was 9 Maulfair Drive, R.D. #2, Allentown, Pa. 18103 (Allentown address).
During 1976, petitioner Gerald Frieling was a limited partner in the Parke Lessors-Yorkville partnership. Sometime after April 15, 1977, respondent commenced an audit of the partnership and of petitioners' 1976 tax return. At all relevant times, the Office of the Returns Program Manager for the Office of the District Director of Internal Revenue at Philadelphia, Pa., was responsible for monitoring the limitations periods on assessment and requesting consents to extend those periods for tax years of certain taxpayers who were members of partnerships which were either already under audit or to be audited. The Office of the Returns Program Manager thus was responsible for monitoring the limitations period for petitioners' 1976 return and for obtaining their consent to extend that period.
In April of 1979, petitioners moved from the Allentown address shown on their 1976 return to a new address at 514 Laurel Drive, Niles, Mich. 49120 (Niles address). *68 They resided at the Niles address at all times between April of 1979 and the filing of the petition in this case.
On November 1, 1979, the Office of the Returns Program Manager mailed a "Consent to Extend Time to Assess Tax" (Form 872) for the taxable year 1976 to petitioners at the Allentown address. Petitioners received the Form 872 sometime after it was mailed but did not execute it. On February 25, 1980, the Office of the Returns Program Manager mailed a second request to extend the period of limitations for the year 1976 to petitioners at the Allentown address. Again, petitioners received that request sometime after it was mailed but did not execute it.
On or about April 3, 1980, petitioner Gerald Frieling orally advised an employee in the Office of the Returns Program Manager by telephone that petitioners' new address was the Niles address. On that same date, the Office of the Returns Program Manager mailed a Form 872 for the taxable year 1976 to petitioners at the Niles address. The portion of the Form 872 pertaining to petitioners' address stated "Per Return: 9 Maulfair Dr., R.D. 2, Allentown, PA 18103" and *45 "Presently: 514 Laurel Drive, Niles, MI 49120." Petitioners*69 received this Form 872 on or about April 10, 1980.
Petitioners signed this Form 872 3 and mailed it on April 14, 1980, in a pre-addressed envelope to "Internal Revenue Service, 600 Arch Street, Philadelphia, Pennsylvania 19106, Attention: Returns Program Manager, P.O. Box 12836, Philadelphia, Pennsylvania 19106." The District Director's Office received the Form 872 on April 16, 1980. However, the Form 872 was received after April 15, 1980, and therefore was never executed on behalf of the Internal Revenue Service. 4 The last day for assessment of petitioners' 1976 tax liability was April 15, 1980.
*70 On April 15, 1980, the District Director's Office mailed a notice of deficiency for 1976 by certified mail to petitioners at the Allentown address. On April 16, 1980, the notice was received by the Allentown Post Office and delivered to the mail carrier serving the area that included the Allentown address. On that same date, the mail carrier crossed out the Allentown address, wrote in the Niles address on the envelope, and returned the notice to the Allentown Post Office. The U.S. Postal Service (Postal Service) subsequently delivered the notice of deficiency to petitioners at the Niles address. The record does not indicate exactly when petitioners received the notice of deficiency, only that it was received sometime between April 16, 1980, and June 26, 1980, the date on which the petition was received by the Court. On June 26, 1980, within 90 days after the notice of deficiency was mailed to them, petitioners timely filed their petition with this Court.
Petitioners made two alternative contentions in their petition:
(a) Respondent erred in failing to mail the Notice of Deficiency to petitioners at their last known address within the statutory period for assessment of a deficiency*71 with respect to the petitioners' 1976 income taxes.
*46 (b) Alternatively, if it is determined that the Notice of Deficiency was timely mailed to petitioners' last known address, respondent erred in determining that petitioners overstated their distributive share of loss from the Parke Lessors-Yorkville partnership by the amount of $ 14,081, or any lesser amount.
Respondent filed his answer with the Court in which he generally denied petitioners' contentions. Thereafter, petitioners filed the present motion to dismiss for lack of a timely notice of deficiency.
OPINION
Our jurisdiction in deficiency cases depends upon the Commissioner's issuing a valid notice of deficiency to the taxpayer and the taxpayer's timely filing his petition in this Court. The notice of deficiency 5*73 triggers three separate but interrelated events. The mailing of a notice of deficiency tolls the running of the period of limitations on assessment or collection of any deficiency.
The issues in this case are (1) whether or not the notice of deficiency was sent to petitioners' "last known address" as that term is used in
Respondent's first argument is that the notice of deficiency was mailed to petitioners*77 at their "last known address." If respondent is right and the foregoing rules apply, then we need go no further. Petitioners contend, however, that respondent failed to mail the notice of deficiency to them at their "last known address." As a consequence, they argue, the notice was not effective until it was actually received by them, at which time the statute of limitations under
In arguing that the notice of deficiency was not mailed to their "last known address," petitioners emphasize that, 12 days before the notice was mailed, they orally notified an employee of the Office of the Returns Program Manager by telephone that their new address was the Niles address. They also point out that on the same day they gave their notification, respondent mailed a Form 872 to them at the Niles address which specifically listed their present address as the Niles address. Petitioners received that Form 872, executed it, and returned it to respondent. However, the Form 872 was not received by respondent until the day after the 3-year period of limitations would have otherwise run. On the last day of the 3-year period, respondent*78 mailed a notice of deficiency to petitioners at their old Allentown address.
Respondent argues that petitioners failed to give clear and concise notification of a change of address to the Niles address. In this regard, respondent contends (1) that the oral notification by telephone was inadequate due to problems with identifying the caller and proving the substance of the *49 conversation, and (2) that notification of an employee of the Office of the Returns Program Manager did not constitute notice to an appropriate employee of respondent. We agree with petitioners that the notice of deficiency was not mailed to their last known address.
Neither
Absent "clear and concise notification" from the taxpayer directing respondent to use a different address, respondent is entitled to treat the address shown on the return for which the notice of deficiency is being issued as the taxpayer's "last known address." However, once respondent becomes aware of a change in address, he must exercise reasonable care and diligence in ascertaining and mailing the notice of deficiency to the correct address. Whether respondent has properly discharged this obligation is a question of fact.
The facts here show that respondent received "clear and concise notification" prior to the issuance of*80 the notice of deficiency that petitioners no longer lived at the Allentown address. Petitioners' oral notification by telephone was sufficient to put respondent on notice that they had changed their address to the Niles address. See
*81 In
In
*83 *51 We hold that petitioners gave adequate notice of their change of address, that the Niles address was petitioners' "last known address," and that, therefore, the notice of deficiency mailed to the Allentown address was not mailed to petitioners at their "last known address."
Since we have held that respondent failed to mail the notice of deficiency to petitioners at their "last known address," we must decide whether the notice nevertheless was valid for purposes of tolling the limitations period under
Respondent maintains that a notice of deficiency need not be mailed to the taxpayer's last known address in order to be valid. Respondent argues that since petitioners here received the notice within the period for petitioning this Court and timely filed a petition, the notice was valid under
*85 *52
*86 Some opinions contain language stating that, under
Although the notice of deficiency in the present case was not mailed to petitioners at their "last known address," it was sent to them by certified mail as authorized in
Petitioners acknowledge the line of cases holding that a notice not mailed to the taxpayer's last known address is valid so long as the taxpayer receives it in time to petition this Court and files a timely petition. Petitioners do not appear to contest the general proposition that such a notice may be valid for purposes of
Petitioners maintain that a notice*89 of deficiency must be mailed to the taxpayer's last known address in order to toll the period of limitations on the date it is mailed. Petitioners argue that a notice which is not so mailed does not toll the period of limitations, if at all, until it is actually received. Petitioners reason that since they did not receive the notice here until after the limitations period had run, the notice was invalid. Respondent argues that the mailing of a notice that complies with
We have held that the date the notice of deficiency is mailed, not the date on which it is received by the taxpayer, determines whether that notice is timely. See
At the same time, we have not specifically decided whether the notice of deficiency must be mailed to the taxpayer's "last known address" in order to toll the period of limitations on the date it is mailed. Despite dicta in some of our earlier opinions relating to the question, we have never had to decide when, if ever, a notice which complies with
*55
Furthermore, in
We held (
*56 The Ninth Circuit chose not to follow our reasoning that the error in the mailing address used was inconsequential and our conclusion that the notice was mailed to the taxpayers' *94 "last known address." The Ninth Circuit reasoned that the notice was valid under
The Ninth Circuit's opinion in
The Ninth Circuit's holding in
Finally, as previously stated, whether the notice of deficiency is received by the taxpayer is irrelevant if the safe harbor in
Based on the express language of
Petitioners argue that cases that hold or suggest that the mailing date of a notice of deficiency is determinative for purposes of tolling the statute of limitations where the notice is not sent to the "last known address" are not controlling here. See
In both
Our emphasis on *99 the technical nature of the errors in the mailing addresses of the deficiency notices in those cases related to the time that it took for those notices to be received. In both opinions, we reasoned that the notices would have been valid even if we had concluded that they were not mailed to the last known address. The basis for such reasoning was that, so long as the notice is received within the period for petitioning this Court and a timely petition is filed, the notice will be valid under
Petitioners cite
We held that the assessment was barred since the notice was not remailed to the taxpayers until after the period of limitations had expired. Our decision that the remailing of the notice was determinative was based upon our conclusion that the first mailing was ineffective to toll the period of limitations pursuant to
Our decision is not altered by certain cases stating that, where "notice of a deficiency is not sent to the taxpayer's 'last known address,' subsequent actual notice of the determined*101 deficiency will commence the running of the 90 day period" for petitioning the Tax Court.
The taxpayers in
In all three cases, the taxpayer petitioned this Court within 90 days of receiving notification of the deficiency by methods other than in a notice of deficiency mailed to them. The Court in each case held that notification of a deficiency other than by a mailing to the taxpayer was*103 effective when it was actually received and that the petition was filed within 90 days of such receipt. 20 As a result, the Court in each case also held that the notice of deficiency originally mailed to the taxpayers but never received by them did not start the period for petitioning this Court under
*104 Finally, petitioners argue that since taxpayers are strictly required to use the proper address under section 7502 in order for a timely mailing to be treated as a timely filing of a document, the same standard should apply to the mailing of a notice of deficiency under
In summary, we hold that the notice of deficiency mailed to petitioners was valid even though it was not sent to their last known address. The notice complied with
Accordingly, petitioners' motion to dismiss will be denied. To reflect the foregoing,
Shields,
With respect to the jurisdictional question, I would deny the motion to dismiss solely upon the ground that this case falls squarely within our line of cases dealing with the following general facts: (1) The notice was not mailed to the last address known to the respondent; (2) in spite of the incorrect address used on the notice, it was actually delivered to the taxpayer; *62 and (3) a petition was filed within 90 days of the date of the notice. We have repeatedly held that under these facts we have jurisdiction.
Sterrett,
I find support for a "mandatory interpretation" in
While, as the majority makes clear, there are decisions which lend support to a contrary view, the approach advocated in this dissent finds judicial support in the following cases:
A rule that an improperly addressed statutory notice has in effect not been "mailed to the taxpayer" is simple, straightforward, and easy to administer. It leaves as the only evidentiary problem whether respondent was advised that the address used was the taxpayer's "last known address." The rule cuts both ways. For example, it benefits the taxpayer if the statute of limitations has run before a valid notice can be mailed; and it benefits the respondent because the first*110 mailing does not qualify as the sending of the notice and, therefore, he can send another one if the statute has not run.
I am fearful that the result of the majority's opinion will be increased uncertainty. According to the majority, the question of whether a valid statutory notice was sent in the case of an improper mailing will depend upon whether the taxpayer has a reasonable time for filing a petition upon actual receipt of the notice. Determining the amount of time that is reasonably necessary for filing a petition is a complex, nigh impossible, task. All cases are not the same. The time necessary for filing an adequate petition will change with the varying complexity of the case, the number of issues, and with the underlying circumstances of the taxpayer. Compare, for example, the petition required in
*64 Before a petition is filed, the taxpayer or his adviser must make a tactical decision with respect to whether he wishes to try the case in the Tax Court. Moreover, assuming the taxpayer otherwise*111 wishes to try the case before a District Court, where there is a large deficiency, the taxpayer must review his financial status to determine whether the deficiency can be paid. Will this Court have to resolve such factual disputes? We really do not need any more litigation.
Interestingly enough, we may even be creating more litigation for our fellow judges on the District Courts. If the taxpayer concludes that he does not have a reasonable time to file, he will be forced into a District Court, where, assuming that court follows our approach, it may have to determine whether the taxpayer had a reasonable time to file a hypothetical petition with the Tax Court in order to determine whether it, the District Court, has jurisdiction.
The majority rests its "permissive" conclusion on the presence of the word "sufficient" in subsection 6212(b) in providing for the use of the "last known address." This contention seems to be premised on the thought that the subsection implicitly authorizes the mailing of a statutory notice to the wrong address. I would not attribute such a notion to Congress. It seems clear to me that that word is intended to accord the respondent the protection previously*112 alluded to. Holding that subsection 6212(b)
The opinion of the majority is a trap for those unwary enough, in some circumstances, to leave a forwarding address and who allow themselves to "receive" the statutory notice. There is no duty requiring the taxpayer to accept receipt of a notice of deficiency and since, as far as I know, there is no rule of constructive receipt in this area, the unsophisticated will be the primary victims of this rule of law.
1. The deficiency is attributable to the disallowance of a deduction that petitioners claimed for their distributive share of a partnership loss.↩
2. Unless otherwise indicated, all section references are to the Internal Revenue Code of 1954 as amended and in effect on Apr. 15, 1980, the date on which the notice of deficiency was issued.↩
3. The Form 872 indicates that petitioners signed it on "8/11/80." However, the parties have stipulated that the consent form was signed and mailed by petitioners on or before Apr. 14, 1980, and the envelope in which petitioners mailed the Form 872 is postmarked Kalamazoo, Mich., on Apr. 14, 1980.↩
4. For any extension by agreement to be effective, respondent and the taxpayer must consent in writing
5.
(a) In General. -- If the Secretary determines that there is a deficiency in respect of any tax imposed by subtitle A or B or chapter 41, 42, 43, 44, or 45, he is authorized to send notice of such deficiency to the taxpayer by certified mail or registered mail.
(b) Address for Notice of Deficiency. -- (1) Income and gift taxes and certain excise taxes. -- In the absence of notice to the Secretary under section 6903 of the existence of a fiduciary relationship, notice of a deficiency in respect of a tax imposed by subtitle A, chapter 12, chapter 42, chapter 43, chapter 44, or chapter 45 if mailed to the taxpayer at his last known address, shall be sufficient for purposes of subtitle A, chapter 12, chapter 42, chapter 43, chapter 44, chapter 45, and this chapter even if such taxpayer is deceased, or is under a legal disability or, in the case of a corporation, has terminated its existence.↩
6.
(a) Issuance of Statutory Notice of Deficiency. -- (1) General rule. -- The running of the period of limitations provided in
7.
(a) Time for Filing Petition and Restriction on Assessment. -- Within 90 days, or 150 days if the notice is addressed to a person outside the United States, after the notice of deficiency authorized in
8.
Except as otherwise provided in section 6851 or section 6861 no assessment of a deficiency in respect of any tax imposed by subtitle A or B or chapter 41, 42, 43, 44, or 45 and no levy or proceeding in court for its collection shall be made, begun, or prosecuted until such notice has been mailed to the taxpayer, nor until the expiration of such 90-day or 150-day period, as the case may be, nor if a petition has been filed with the Tax Court, until the decision of the Tax Court has become final. * * *↩
9.
(a) General Rule. -- Except as otherwise provided in this section, the amount of any tax imposed by this title shall be assessed within 3 years after the return was filed (whether or not such return was filed on or after the date prescribed) or, if the tax is payable by stamp, at any time after such tax became due and before the expiration of 3 years after the date on which any part of such tax was paid, and no proceeding in court without assessment for the collection of such tax shall be begun after the expiration of such period.↩
10. There is no evidence in the record that petitioners indicated to respondent that their move to the Niles address was other than a permanent change of address. See
11. Cf.
12. Respondent does not take the position that petitioners should have notified any particular employee of the Office of the Returns Program Manager or the Office of the District Director at Philadelphia, and we do not think that he could so argue. See
13. Sec. 274(a) of the Revenue Act of 1924, ch. 234, 43 Stat. 297, provided for notice of a deficiency by registered mail in mandatory language: "the taxpayer * * *
Based on an interpretation of the word "authorized" as being permissive, rather than mandatory, in
14. Sec. 281(d) of the Revenue Act of 1926, ch. 27, 44 Stat. 62, in language very similar to
Sec. 272(k) of the Revenue Act of 1928, ch. 852, 45 Stat. 854, made sec. 281(d) applicable to the mailing of deficiency notices generally by adding it to the section containing the predecessor of
See also
15. See, e.g.,
16. Accord
17. See, e.g.,
18.
19. In
20. In
21. Presumably, such a notice also would be ineffective to toll the period of limitations on the date it was mailed pursuant to
Morrison v. Commissioner of Internal Revenue , 177 F.2d 351 ( 1949 )
Commissioner of Internal Revenue v. Rosser , 64 F.2d 631 ( 1933 )
Lewis E. Johnson and Jeanne K. Johnson v. Commissioner of ... , 611 F.2d 1015 ( 1980 )
Joseph Delman and Jeanette Delman v. Commissioner of ... , 384 F.2d 929 ( 1967 )
Lester L. Luhring and Betty W. Luhring v. Clifford W. ... , 304 F.2d 556 ( 1962 )
milton-berger-and-ruth-k-berger-deceased-v-commissioner-of-internal , 404 F.2d 668 ( 1968 )
Floyd R. Clodfelter and Enna L. Clodfelter v. Commissioner ... , 527 F.2d 754 ( 1975 )
Clifford O. Boren v. R. A. Riddell, District Director of ... , 241 F.2d 670 ( 1957 )
Roy W. Dewelles v. United States of America , 378 F.2d 37 ( 1967 )
Commissioner of Internal Revenue v. Stewart , 186 F.2d 239 ( 1951 )
Robert F. McPartlin and Geraldine McPartlin v. Commissioner ... , 653 F.2d 1185 ( 1981 )
William I. Tenzer v. Commissioner of Internal Revenue , 285 F.2d 956 ( 1960 )
Anne M. Evans v. Commissioner of Internal Revenue , 235 F.2d 586 ( 1956 )
Henry G. Pugsley v. Commissioner of Internal Revenue, ... , 749 F.2d 691 ( 1985 )
St. Joseph Lease Capital Corporation v. Commissioner of ... , 235 F.3d 886 ( 2000 )
St Joseph Lease v. Commissioner, IRS ( 2000 )
Bachynsky v. Commissioner , 73 T.C.M. 2340 ( 1997 )
Markham v. Commissioner , 73 T.C.M. 2530 ( 1997 )
Phillips v. Commissioner , 71 T.C.M. 2850 ( 1996 )
Hall v. Commissioner , 71 T.C.M. 1869 ( 1996 )
Lundy v. Commissioner , 73 T.C.M. 1693 ( 1997 )
Blocker v. Comm'r , 90 T.C.M. 555 ( 2005 )
Lewis v. Comm'r , 98 T.C.M. 174 ( 2009 )
Shockley v. Comm'r , 101 T.C.M. 1451 ( 2011 )
Pack v. Comm'r , 84 T.C.M. 551 ( 2002 )
KHOURI v. COMMISSIONER , 84 T.C.M. 44 ( 2002 )
Velazquez v. Comm'r , 2011 Tax Ct. Summary LEXIS 111 ( 2011 )
Estate of Rule v. Comm'r , 98 T.C.M. 674 ( 2009 )
Bach v. Comm'r , 96 T.C.M. 116 ( 2008 )
Williams v. Comm'r , 113 T.C.M. 1277 ( 2017 )
Guaba v. Commissioner , 80 T.C.M. 201 ( 2000 )