DeWelles v. United States, 21071.

• Decision Date: 17 April 1967
• Docket Number: No. 21071.,21071.
• Citation: 378 F.2d 37
• Parties: Roy W. DeWELLES, Appellant, v. UNITED STATES of America et al., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

378 F.2d 37 (1967)

Roy W. DeWELLES, Appellant, v. UNITED STATES of America et al., Appellees.

No. 21071.

United States Court of Appeals Ninth Circuit.

April 17, 1967.

Robert H. Wyshak, Wyshak & Wyshak, Los Angeles, Cal., for appellant.

Edwin L. Miller, Jr., U. S. Atty., San Diego, Cal., Mitchell Rogovin, Asst. Atty. Gen., Lee A. Jackson, Joseph Kovner, Mark S. Rothman, Attys., Washington, D. C., Tax Div., Dept. of Justice, for appellees.

Before JONES, Senior Judge, United States Court of Claims^*, and BARNES and JERTBERG, Circuit Judges.

JONES, Senior Judge.

This is an appeal from the judgment of the United States District Court for the Southern District of California, Central Division (now the Central District), dismissing appellant taxpayer's suit to enjoin a deficiency assessment of federal income taxes for the years 1957 and 1958.

Jurisdiction was conferred on the district court by 28 U.S.C. § 1340 and 26 U.S.C. §§ 6213 and 7421(a). Jurisdiction is conferred on this court by 28 U.S.C. § 1291.

The question presented by this appeal is a simple one: did the Government meet the requirements of Internal Revenue Code of 1954, § 6212, in sending a notice of deficiency, commonly called a 90-day letter, to taxpayer. Taxpayer asserts that the notice was not sent to his last known address, as the section requires, and, in the alternative, that even if it were, it was not received in time for him to avail himself of his procedural rights. He argues, therefore, that the Government may not proceed to collect the deficiency. However, we agree with the district court that the Government acted in compliance with the section and we therefore affirm.

Section 6212 provides in part:

§ 6212. Notice of Deficiency.

(a) In general. — If the Secretary or his delegate determines that there is a deficiency in respect of any tax imposed by subtitles A or B, 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. — In the absence of notice to the Secretary or his delegate under section 6903 of the existence of a fiduciary relationship, notice of a deficiency in respect of a tax imposed by subtitle A or chapter 12, if mailed to the taxpayer at his last known address, shall be sufficient for purposes of subtitle A, chapter 12, and this chapter * * *.

Once the notice has been properly sent, Internal Revenue Code, § 6213, then affords the taxpayer certain procedural rights:

§ 6213. Restriction applicable to deficiencies; petition to Tax Court.

(a) Time for filing petition and restriction on assessment. — Within 90 days * * * after the notice of deficiency authorized in section 6212 is mailed * * * the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency. Except as otherwise provided in section 6861 no assessment of a deficiency in respect of any tax imposed by subtitle A or B and no levy or proceeding in court for its collection shall be made, begun or prosecuted until such notice has been mailed to taxpayer, nor until the expiration of such 90-day * * * period * * *.

The purpose of these sections is to give the taxpayer an opportunity to challenge in the Tax Court an alleged deficiency before he has to pay it. The alternative procedure available to a taxpayer is to pay the assessment in full and then sue for a refund in the United States Court of Claims or in a federal district court. Flora v. United States, 357 U.S. 63, 78 S.Ct. 1079, 2 L.Ed.2d 1165 (1958), rehearing, 362 U.S. 145, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960). In Flora the Supreme Court recognized that the procedures available to the taxpayer by petition to the Tax Court alleviated the burden which would result if the taxpayer had no method to challenge before payment. 362 U.S. at 158, 175, and 192, 80 S.Ct. at 637, 645 and 655 (dissenting opinion).

The obligations under §§ 6212 and 6213 are mutual. The Secretary's delegate must mail the notice of deficiency to the taxpayer's last known address; if he does not, the 90-day period does not run, and the Tax Court will not have jurisdiction to determine the assessment. J. W. Heaberlin, 34 T.C. 58 (1960). If, however, the notice is properly sent, the taxpayer is bound to petition the Tax Court within 90 days, and even a showing that he did not receive the notice at the last known address will not excuse the taxpayer. Luhring v. Glotzbach, 304 F.2d 556 (4th Cir. 1962). If the taxpayer does not act in time no court may entertain his suit to restrain the assessment. 26 U.S.C. § 7421(a).

The pertinent facts in this case are as follows: during 1959 and 1960 taxpayer filed his federal income tax returns for the years 1957 through 1959, including an amended return for 1959. On all but one of these he showed as his address: P. O. Box 157, Encino, California; on the first of his 1959 returns he showed as his address: 2177 Live Oak Drive, Los Angeles, California.

During 1962 taxpayer's file was undergoing review by the Internal Revenue Service (IRS). On April 25, 1962, taxpayer met with IRS agent Kosman to discuss taxpayer's 1957 and 1958 returns. Kosman testified before the district court that at that meeting taxpayer said he lived at 2177 Live Oak Drive, Los Angeles. Transcript, pp. 92 and 93. On June 28, 1962, Kosman sent a letter to taxpayer at Live Oak Drive, requesting extension of the statute of limitations for review of the 1957 and 1958 returns. Taxpayer received the letter within a day or two. Transcript, pp. 48-50. On August 13, 1962, Kosman sent another request for extensions to taxpayer at 2177 Live Oak Drive, Los Angeles. There is no evidence that taxpayer received this letter, but on the other hand, it was not returned to the IRS by the postal authorities.

On August 18, 1962, taxpayer moved from 2177 Live Oak Drive, Los Angeles, California, to Mississippi. Taxpayer testified that at a meeting with Kosman on August 17, 1962, he told him of the move. Transcript, pp. 15 and 16. But Kosman testified that he remembered no such statement. Transcript, p. 97. Under the rule enunciated by this court in Cohen v. United States, 297 F.2d 760, 773 (9th Cir.), cert. denied, 369 U.S. 865, 82 S.Ct. 1029, 8 L.Ed.2d 84 (1962),¹ verbal notification would have been sufficient to put the Government on notice and to require it to use the new address in sending the notice of deficiency.

However, we do not reach the Cohen rule on this point because the district court specifically chose not to...