Keeton v. Comm'r of Internal Revenue

• Citation: 74 T.C. 377
• Decision Date: 21 May 1980
• Docket Number: Docket No. 7955-77.
• Parties: ROY KEETON and SHIRLEY K. KEETON, PETITIONERS v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT
• Court: United States Tax Court

74 T.C. 377

ROY KEETON and SHIRLEY K. KEETON, PETITIONERS

v.COMMISSIONER of INTERNAL REVENUE, RESPONDENT

Docket No. 7955-77.

United States Tax Court

Filed May 21, 1980.

Petitioners were criminally convicted for Federal income tax evasion for the years 1970 to 1973. The criminal proceedings were initiated by respondent's audit procedures, prosecuted upon respondent's recommendation, and participated in by respondent's agents. After petitioners' appeals had been rejected, petitioner husband surrendered to the custody of Federal prison authorities and petitioner wife moved, subject to the jurisdiction of Federal probation authorities, near the Federal penitentiary in Leavenworth, Kans., where petitioner husband was imprisoned. After petitioner husband's surrender to Federal authorities, respondent mailed the notice of deficiency to petitioners' former address at Winona, Mo., an address not listed on any of the returns for the years involved, without making any inquiry as to petitioners' whereabouts. Held: Notice of deficiency mailed to petitioners was invalid because it was not mailed to their last known address as required by sec. 6212, I.R.C. 1954. Petitioners' motion to dismiss for lack of jurisdiction will be granted. Gerald W. Dykes, for the petitioners.

Bernard B. Kornmehl and Elizabeth DePriest, for the respondent.

OPINION

DAWSON, Judge:

This case was assigned to and heard by Special Trial Judge Francis J. Cantrel for the purpose of conducting the hearing and ruling on respondent's motion to dismiss for lack of jurisdiction and petitioners' cross-motion to dismiss for lack of jurisdiction. After a review of the record, we agree with and adopt his opinion which is set forth below.¹

OPINION OF THE SPECIAL TRIAL JUDGE

CANTREL, Special Trial Judge:

On August 25, 1977, respondent filed a “Motion to Dismiss for Lack of Jurisdiction” on the ground that the petition was not filed within the statutory period prescribed by section 6213(a)² or 7502. On March 1, 1978, petitioners filed an objection to respondent's motion and a motion to dismiss for lack of jurisdiction on the ground that the notice of deficiency was invalid as it was not mailed to their “last known address” as required by section 6212(b).³ Hearings were held on the respective motions of the parties at Washington, D.C. Petitioners' attorney was not present at the hearings, but he filed a statement in lieu of appearance.⁴ Both parties submitted briefs, exhibits, and affidavits in support of their respective positions. The pertinent facts, obtained from these submissions, are as follows.

Petitioners are husband and wife and filed joint returns for the periods involved with the Office of the Internal Revenue Service Center at Kansas City, Mo. At the time the petition herein was filed, petitioner Roy Keeton (Roy) was a prisoner in the Federal Penitentiary at Leavenworth, Kans. (address: Box 1000, Leavenworth, Kans. 66048), and petitioner Shirley K. Keeton (Shirley) resided at Route 3, Box 244, Atchison, Kans. 66002.

On April 15, 1977, respondent mailed the notice of deficiency upon which this case is based by certified mail to Mr. Roy Keeton and Mrs. Shirley K. Keeton, R.R. No. 1, Box 212A1, Winona, Mo. 65588. In this notice, respondent determined Federal income tax deficiencies and additions to tax as follows:

+-----------------------------------------+
                ¦Taxable  ¦            ¦Additions to tax  ¦
                +---------+------------+------------------¦
                ¦year     ¦Deficiency  ¦sec.6653(b)       ¦
                +---------+------------+------------------¦
                ¦         ¦            ¦                  ¦
                +---------+------------+------------------¦
                ¦1970     ¦$817.67     ¦$408.83           ¦
                +---------+------------+------------------¦
                ¦1971     ¦5,273.71    ¦2,636.85          ¦
                +---------+------------+------------------¦
                ¦1972     ¦330.24      ¦165.12            ¦
                +---------+------------+------------------¦
                ¦1973     ¦854.36      ¦427.18            ¦
                +-----------------------------------------+
                

 7,275.98 3,637.98
                

The 90-day period for filing a petition with this Court for redetermination of those deficiencies expired on Thursday, July 14, 1977, which was not a legal holiday in the District of Columbia. On July 19, 1977, 95 days after the mailing of the notice of deficiency, this Court received and filed the petition herein. The envelope in which the petition was enclosed was mailed from the Law Office of A. Glenn Sowders, Jr.,⁵ from Kansas City, Mo., on July 15, 1977, 91 days after the mailing of the notice of deficiency.

It is undisputed that the present petition was not mailed or received by this Court within the 90-day period prescribed in sections 6213(a) and 7502. Accordingly, if respondent issued a valid statutory notice of deficiency, the petition will have to be dismissed for lack of jurisdiction. See Estate of Cerrito v. Commissioner, 73 T.C. 896 (1980); Estate of Moffat v. Commissioner, 46 T.C. 499 (1966). However, if jurisdiction is also lacking for respondent's failure to issue a valid notice of deficiency, we will dismiss the case on that ground, rather than for lack of timely filing a petition. O'Brien v. Commissioner, 62 T.C. 543, 548 (1974); Shelton v. Commissioner, 63 T.C. 193 (1974); Lerer v. Commissioner, 52 T.C. 358 (1969); DeWelles v. United States, 378 F.2d 37, 39 (9th Cir. 1967). Thus, the central issue here is whether the notice was sent to the last known address of the petitioners.

The address listed on petitioners' Federal income tax return for 1973, the last year in issue, was Route 2, Port Byron, Ill. Sometime subsequent to filing their 1973 return, petitioners moved to R.R. No. 1, Box 212A1, Winona, Mo., the address to which respondent sent the notice of deficiency on April 15, 1977. During 1974, the Internal Revenue Service began investigating and auditing the Federal income tax returns of petitioners. Subsequently, the United States instituted criminal proceedings against petitioners for violation of the Federal income tax laws. As a result of these criminal proceedings, petitioners were both convicted for evasion of Federal income taxes for the calendar years 1970 to 1973. On September 9, 1976, Roy was sentenced to 3 years in prison and Shirley was placed on probation subject to the jurisdiction of the Federal probation authorities. After petitioners' appeals had been rejected and no further appeals were pending, Roy surrendered to the custody of the U.S. marshal on April 4, 1977, and remained in continuous custody of Federal prison authorities at all times up through the time of the hearings on the present motions.⁶ Prior to April 15, 1977 (the date respondent mailed the notice of deficiency), Shirley, having been convicted of Federal income tax evasion, also moved from the residence in Winona, Mo., to Atchison, Kans., subject to the jurisdiction of the Federal probation authorities, to be near her husband who was to be incarcerated at the Federal Penitentiary in Leavenworth, Kans. Thus, as a result of the criminal convictions, neither of the petitioners resided at the address to which respondent mailed the notice of deficiency on April 15, 1977.

The criminal tax proceedings against petitioners were initiated by respondent's audit procedures, and they were criminally prosecuted upon the recommendation of the Internal Revenue Service. Petitioners allege, and respondent does not refute, that respondent's agents participated in the criminal tax proceedings brought against petitioners and had notice of petitioners' convictions, Roy's resulting surrender and incarceration, and Shirley's resulting probationary status.

Petitioners contend that when a taxpayer is incarcerated or in the custody of probation authorities as a result of a conviction for violating Federal income tax laws (a judicial proceeding initiated by respondent's audit procedures, processed upon respondent's recommendation, and in which respondent participated), respondent should be held to have knowledge of the physical whereabouts and separate residences (in the case of joint-return taxpayers who have been so convicted) of such taxpayers. Accordingly, they urge that the notice of deficiency mailed to petitioners' former address, at which they resided prior to their criminal convictions and sentences for Federal income tax evasion, was invalid because it was not mailed to petitioners at their “last known address” as required by section 6212(b). On this record, we agree with petitioners.

Section 6212(a) provides that if the Secretary determines a deficiency in Federal income taxes, he is authorized to send a notice of deficiency to a taxpayer; section 6212(b) provides the address to which the notice of deficiency must be mailed is the taxpayer's “last known address.”⁷ In the case of a joint return, section 6212(b)(2) provides that the notice of deficiency may be a single joint notice unless the Secretary has been notified by either spouse that a separate residence has been established.⁸

For the purposes of section 6212(b), a taxpayer's last known address must be determined by a consideration of all relevant circumstances; it is the address which, in light of circumstances, the respondent reasonably believes the taxpayer wishes to have the respondent use in sending mail to him. O'Brien v. Commissioner, supra at 548; Lifter v. Commissioner, 59 T.C. 818, 821 (1973). Normally, a taxpayer's “last known address” is that shown on his tax returns filed with respondent. O'Brien v. Commissioner, supra at 549; Cohen v. United States, 297 F.2d 760, 773 (9th Cir. 1962), cert. denied 369 U.S. 865 (1962). Respondent is required, however, to use a different address if he learns or is advised by the taxpayers that the taxpayer has changed his address. DiViaio v. Commissioner, 539 F.2d 231 (D.C. Cir. 1976), revg. an order of dismissal of this Court; Cohen v. United States, supra at 773; O'Brien v. Commissioner, supra at 549; Alta Sierra Vista, Inc. v. Commissioner, 62 T.C. 367, 374-375 (1974),...