Campbell v. Comm'r of Internal Revenue, Tax Ct. Dkt. No. 26990-86
| Decision Date | 25 January 1988 |
| Docket Number | Tax Ct. Dkt. No. 26990-86 |
| Citation | 90 T.C. No. 9,90 T.C. 110 |
| Parties | WILLIAM R. CAMPBELL and LINDA E. CAMPBELL, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
OPINION TEXT STARTS HERE
R mailed a notice of deficiency to Ps, attached to which were computational sheets relating to another taxpayer. HELD, the notice of deficiency is valid. Darrell Rippy, for the petitioners.
Patrick McGinnis, for the respondent.
This matter is before the Court on petitioners' motion to dismiss for lack of jurisdiction and petitioners' motion to shift the burden of going forward with the evidence to respondent. 1 The issue is whether a notice of deficiency is rendered invalid where the computational pages attached to the notice of deficiency pertained to a taxpayer other than petitioners.
At all relevant times, petitioners resided in Barrington, Illinois.
On April 10, 1986, respondent mailed to petitioners a document containing nine pages. The first page is a letter designated as Form 5601 (Rev. 4-85) (hereinafter the ‘letter‘) addressed to petitioners. The first paragraph of the letter states:
We have determined that there is a deficiency (increase) in your income tax as shown above. This letter is a NOTICE OF DEFICIENCY sent to you as required by law. The enclosed statement shows how we figured the deficiency.
The letter indicated, for petitioners' tax year ended December 31, 1982, a Federal income tax deficiency in the amount of $100,922, a section 6651(a) 2 addition to tax in the amount of $5,046.10, a section 6653(a)(1) addition to tax in the amount of $5,160, and a section 6661 addition to tax in the amount of $10,092. 3
The second page of the nine-page document is entitled ‘Notice of Deficiency-Waiver‘ and is designated as form 5564 (Rev. 5-83) (hereinafter the ‘waiver ‘). The waiver contains petitioners' names and sets forth the amounts of deficiency and additions to tax as set forth in the letter.
The third through ninth pages of the nine-page document contain adjustments to income and explanations of adjustments for a taxpayer by the name of Dan Daigle (hereinafter the ‘Daigle papers‘). 4 The Daigle papers make no reference to petitioners and the amounts computed therein bear no relation to the amounts set forth in the letter and waiver. The Daigle papers were apparently attached to the letter and waiver through inadvertence. 5
Petitioners filed a petition alleging that the notice of deficiency was invalid. Respondent filed an answer, attached to which was a twelve-page document. The first and second pages of the twelve- page document are copies of the letter and the waiver.
The 3rd through 12th pages of the twelve-page document contain adjustments to income and explanations of adjustments for petitioners (hereinafter the ‘Campbell papers‘). The Campbell papers describe and make reference to the amounts of the following items reported on petitioners' 1982 return: taxable income, tax, investment tax credit, investment tax credit carryover to 1982, and losses from partnerships by the name of Jackson Hole, Ltd., C-99, Ltd., and Consolidated, Ltd. The Campbell papers fully explain how respondent determined a Federal income tax deficiency in the amount of $100,922, a section 6651(a) addition to tax in the amount of $5,046, a section 6653(a) addition to tax in the amount of $5,160, and a section 6661 addition to tax in the amount of $10,092.
Petitioners filed a motion to dismiss for lack of jurisdiction and a motion to shift the burden of going forward with the evidence to respondent. A hearing on these motions was held.
We will first consider petitioners' motion to dismiss for lack of jurisdiction. Petitioners contend that the notice of deficiency is invalid and therefore, this Court lacks jurisdiction. Petitioners cite only one case in the two memoranda they filed in this matter:
Scar v. Commissioner, 814 F.2d 1363 (9th Cir. 1987), revg. 81 T.C. 855 (1983).
In Scar v. Commissioner, supra, the taxpayers were sent a notice of deficiency which disallowed deductions from a partnership with which the taxpayers had no connection and computed a tax due using the then highest marginal rate. The notice of deficiency contained the following statement:
In order to protect the government's interest and since your original income tax return is unavailable at this time, t he income tax is being assessed at the maximum tax rate of 70%.
Scar v. Commissioner, supra at 1365.
The taxpayers, after petitioning this Court, filed in this Court a motion to dismiss for lack of jurisdiction and a motion for summary judgment, alleging that the notice of deficiency was invalid. This Court held that the notice of deficiency was valid, denied the taxpayers' motions, and, pursuant to a stipulation, entered a deficiency against the taxpayers. Scar v. Commissioners, supra at 1366.
On appeal, the Ninth Circuit interpreted section 6212(a) 6 to hold that the ‘determination‘ requirement of that section ‘has substantive content.‘ Scar v. Commissioner, supra at 1369. The Ninth Circuit concluded ‘that the Commissioner must consider information that relates to a particular taxpayer before it can be said that the Commissioner has 'determined’ a 'deficiency' in respect to that taxpayer.‘ Scar v. Commissioner, supra at 1368. The Ninth Circuit reversed this Court's ruling and held that the notice of deficiency was invalid because ‘the Commissioner's purported notice of deficiency revealed on its face that no determination of tax deficiency had been made ***. ‘ (Emphasis added.) Scar v. Commissioner, supra at 1370.
Scar v. Commissioner, supra, is clearly distinguishable. The letter and waiver, the first two pages of the nine-page document, clearly indicate that the taxpayers against whom the deficiency was determined were the petitioners. The Daigle papers, the remaining pages of the nine-page document, clearly indicate that the computation of deficiency was for the taxpayer Dan Daigle. There is absolutely no correlation between the amounts of the deficiency and the additions to tax set forth on the letter and waiver and the amounts of the deficiency and the additions to tax computed in the Daigle papers. There is no indication in the nine-page document that respondent failed to consider information that related to petitioners. Accordingly, we hold that the nine-page document does not reveal on its face that the Commissioner failed to make a determination.
Where the notice of deficiency does not reveal on its face that the Commissioner failed to make a determination, a presumption arises that there was a deficiency DETERMINATION. Scar v. Commissioner, supra at 1367 n.6 and 1369 n.9. The presumption that there was a determination is made conclusive by the twelve-page document attached to respondent's answer. The Campbell papers, the final 10 pages of the twelve-page document, considered several items reported on petitioners' 1982 return to arrive at a deficiency and several additions to tax in amounts which exactly equal the amounts of the deficiency and additions to tax set forth in the letter. 7 Mere coincidence does not adequately account for the correspondence of these amounts. Further, it is not conceivable that the Campbell papers could have been prepared subsequent to the date of the letter in such a manner that the amounts of the deficiency and additions to tax exactly corresponded to the deficiency and additions to tax set forth in the letter. We are left with the only logical conclusion:
respondent, after examining petitioners' tax return, DETERMINED a deficiency and additions to petitioners' tax and sent a notice of such deficiency determination to petitioners with the wrong computational sheets. We hold that respondent, as required by section 6212(a), DETERMINED a deficiency against petitioners.
Petitioners misstate the holding of Scar v. Commissioner, supra, by stating that such case ‘require[s] an affirmative showing by respondent] that a determination set forth in an alleged notice of deficiency has been made on the basis of the petitioners' return * * *.‘ The Ninth Circuit specifically addressed this issue and held that it imposed no such requirement under normal circumstances. Scar v. Commissioner, supra at...
To continue reading
Request your trial
-
Powers v. Comm'r of Internal Revenue
...v. Stewart, 186 F.2d 239, 242 (6th Cir.1951), revg. a Memorandum Opinion of this Court dated Dec. 19, 1949; Campbell v. Commissioner, 90 T.C. 110, 115 (1988). Respondent cites no authority and we are aware of none holding that a notice of deficiency must have a reasonable basis in both fact......
-
Dixon v. Commissioner
...relating to the taxpayer. Clapp v. Commissioner [89-1 USTC ¶ 9357], 875 F.2d 1396, 1402 (9th Cir. 1989); Campbell v. Commissioner [Dec. 44,534], 90 T.C. 110, 113-114 (1988). Unlike the notice of deficiency in Scar, the notices that petitioners have called into question here bear a discernib......
-
Dees v. Comm'r
...notice. Where the notice is ambiguous, it must be established that the Commissioner made a determination. In Campbell v. Commissioner, 90 T.C. 110, 110-111 (1988), the Commissioner sent the Campbells a nine-page notice of deficiency with a first page and a waiver page addressed to them show......
-
Estate of Ravetti v. Commissioner
...that the Commissioner failed to make a determination, a presumption arises that a determination was made. See Campbell v. Commissioner [Dec. 44,534], 90 T.C. 110, 113-114 (1988). In the instant cases, the notices contain specific information relating to the Ravettis. They include, inter ali......
-
Tax Court In Brief | Decrescenzo v. Comm'r | Challenge To Notice Of Deficiency And Penalties For Frivolous Arguments
...are met if the notice of deficiency sets forth the amount of the deficiency and the taxable year involved."; (2) Campbell v. Commissioner, 90 T.C. 110 (1988) ' "Where the notice of deficiency does not reveal on its face that the Commissioner failed to make a determination, a presumption ari......