Carbone v. Comm'r of Internal Revenue , Docket Nos. 10993

• Decision Date: 29 January 1947
• Docket Number: Docket Nos. 10993,11356.
• Citation: 8 T.C. 207
• Parties: GENNARO A. CARBONE, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE RESPONDENT.MAX SANDLER, PETITIONER, v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.
• Court: U.S. Tax Court

8 T.C. 207

GENNARO A. CARBONE, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE RESPONDENT.MAX SANDLER, PETITIONER,

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT.

Docket Nos. 10993

11356.

Tax Court of the United States.

Promulgated January 29, 1947.

JURISDICTION.— The petitions herein were filed more than 90 days after notice of transferee liability was sent by respondent by registered mail to an address other than each petitioner's ‘last known address‘ and such notices were undelivered and returned by the postal authorities to the respondent, who subsequently sent copies of such notices by ordinary mail to petitioners' attorney. Held, that the proceedings must be dismissed for want of jurisdiction, because of lack of required statutory notice; held, further, respondent's motions to dismiss are denied, and petitioners' motions to dismiss are granted. Harvey L. Rabbitt, Esq., for the petitioners.

R. C. Whitley, Esq., for the respondent.

These proceedings involve an alleged liability of each petitioner as a transferee of the assets of Villanova Officers' Club, Inc., for deficiencies in income and excess profits taxes, together with penalties and interest totaling $1,212.18 due from the alleged transferor for the period October 1, to December 31, 1943, and for deficiencies in income and excess profits taxes and declared value excess profits tax, together with penalties and interest totaling $47,270.04 due from the alleged transferor for the calendar year 1944.

Each petition alleges that ‘The notice of liability as transferee (a copy of which is attached and marked Exhibit A) was mailed to the petitioner's attorney on February 18, 1946,‘ and that respondent made a jeopardy assessment in the amount of $48,482.22 on the August 1945 list against the petitioner as transferee of the Villanova Officers' Club, Inc., Fayetteville, North Carolina. The questions raised by each petition are whether respondent: Failed to send the deficiency notice by registered mail to the last known address of petitioner; erred in determining that petitioner is liable as a transferee; and in his determination of the tax liability of the Villanova Officers' Club, Inc., including fraud and delinquency penalties.

These proceedings were heard on the respondent's and the petitioners' respective formal written motions to dismiss for lack of jurisdiction. The two questions presented are whether both proceedings should be dismissed for lack of jurisdiction on the grounds: (1) That each petition was filed more than 90 days after the mailing of the transferee liability notice, which question is presented by respondent's motion, or, (2) that respondent did not properly mail the required statutory notice of the asserted transferee liability to each petitioner at his last known address and as a result such notice was never received by him, this latter question being presented by petitioners' motions.

FINDINGS OF FACT.

The Villanova officers' Club, Inc., was incorporated in September 1943, and from about that time until August 4, 1945, it operated a cabaret in rented premises at 332 Franklin Street, Fayetteville, North Carolina. The petitioners were stockholders and officers of that corporation.

On August 4, 1945, the collector of internal revenue seized the premises of the Villanova Officers' Club, Inc., to secure payment for certain cabaret taxes imposed on August 2, 1945, and padlocked the doors, placing a United States Government seal on the lock. Thereafter, petitioners were denied right of entry for any purpose and were never able to receive any mail there. The collector also seized the corporation's bank account in Fayetteville and seized Max Sandler's personal automobile, which bore a North Carolina license and was registered in his name and address at 120 Lamon Street, Fayetteville. On September 28, 1945, the corporation's equipment and property located on the seized premises were sold at public auction.

On August 4, 1945, and since September 1943, Sandler resided at 120 Lamon Street, and on August 4, 1945, Carbone resided at 1414 Fort Bragg Road, Fayetteville. Sandler received all of his personal mail at his residence and his business mail at the club, and Carbone received all of his mail at the club. Neither man ever resided at the club. Sandler filed personal income tax returns for 1945 and 1946 and gave his address thereon as 120 Lamon Street, Fayetteville, North Carolina.

On August 4, 1945, following the seizure of the club's premises, internal revenue agents interviewed both petitioners and made request for their respective home addresses. Sandler gave his home address as 120 Lamon Street, Fayetteville, North Carolina, and Carbone gave his home address as 1414 Fort Bragg Road, Fayetteville, North Carolina, but in addition Carbone stated that he expected to go to New York within a few days and that his address would thereafter by 1213 79th Street, Brooklyn, New York, where his wife was living. The agents made written memoranda of such addresses. Sandler continued to reside at his Fayetteville home address during August, September, and October, 1945, and during that time had at least a dozen interviews with the revenue agents and deputy collector.

After the seizure of the club premises, Carbone went to the post office and received some mail addressed to the Villanova Officers' Club, Inc., and he directed that in the future such mail be held at the post office, where it would be called for. Thereafter, personal calls were made at the post office from time to time, but there was no further mail addressed either to the Villanova Officers' Club or to petitioners at 332 Franklin Street, Fayetteville.

About the middle of August 1945 Carbone left Fayetteville and went to the Brooklyn address he had given the revenue agents, where he still resides. On August 23, 1945, an internal revenue agent telephoned Carbone at his Brooklyn address, asking if he was the same Gennaro Carbone who had resided in Fayetteville and requesting information as to his bank accounts. On or about August 24, 1945, Carbone's three New York bank accounts were seized and his lock box sealed by internal revenue agents.

On September 12, 1945, the internal revenue agent in charge, Greensboro, North Carolina, division, sent a notice of transferee liability, by registered mail, addressed to each petitioner, respectively at 332 Franklin Street, Fayetteville, North Carolina. Those notices were never received by petitioners. On brief, respondent admits that the notices were returned to him and were never remailed to petitioners by either registered or ordinary mail. At no time during the period from August through December 1945, inclusive, were petitioners advised, nor in any manner did they acquire knowledge of, the proposed transferee liability asserted in the notices of September 12, 1945.

On January 17, 1946, petitioners received from the collector of internal revenue, Brooklyn, New York, a notice of demand for payment of $48,482.22, addressed to 1213 79th Street, Brooklyn, New York.

On February 18, 1946, the Deputy Commissioner of Internal Revenue at Washington, D.C., at the request of petitioners' attorney, mailed the latter a copy of each of the above mentioned transferee liability notices dated September 12, 1945. Such copies were attached to the petitions filed in these proceedings. Carbone's petition was filed on May 20, 1946, and Sandler's petition was filed on June 18, 1946.

The respondent did not mail the September 12, 1945, notices of transferee liability to the petitioners at their respective addresses as last known to respondent prior to and at the time of the mailing of such notices.

OPINION.

TYSON, Judge:

The applicable provisions of the Internal Revenue Code, effective during 1945, are set forth in the margin.¹ Respondent contends that in mailing the registered notice of transferee liability on September 12, 1945, addressed to each petitioner at 332 Franklin Street, Fayetteville, North Carolina, he complied with the statutory requirements, particularly with those in section 311(e), supra, providing that the notice shall be sufficient ‘if mailed to the person subject to the liability at his last known address. ‘ Respondent further contends that such Franklin Street address was the latest mailing address of the petitioners known to respondent on September 12, 1945, for the reasons that such address was the corporation's mailing address at the time of the seizure of its premises; that prior to the seizure respondent's representatives had contacted petitioners at such address and thereafter respondent continued to regard it as the corporation's address; that the corporation's books and records, kept at that address, disclosed petitioners as its stockholders and officers;...