Lifter v. Comm'r of Internal Revenue

• Decision Date: 12 March 1973
• Docket Number: Docket No. 5765-72.
• Parties: DANIEL LIFTER AND HELENE LIFTER, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

59 T.C. 818

DANIEL LIFTER AND HELENE LIFTER, PETITIONERS

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 5765-72.

United States Tax Court

Filed March 12, 1973.

Richard B. Wallace and Harold Tannen, for the petitioners.

Vernon J. Owens and Marlene Gross, for the respondent.

A notice of deficiency for the year 1968 was sent to the petitioners by certified mail at the business address given on their Federal income tax return for such year. Since mail previously sent to such business address was returned undelivered, a copy of the deficiency notice was sent by ordinary mail to the petitioners' attorney, appointed to handle their Federal income tax matters for earlier years, and the petitioners actually learned of the notice before the running of the statute of limitations and in ample time to file a timely petition with this Court. Held, the notice of deficiency was valid and suspended the running of the statute of limitations.

SIMPSON, Judge:

The respondent determined a deficiency of $100,069.20 in the petitioners' Federal income tax for the year 1968. This proceeding arises from a motion by the petitioners to dismiss for lack of jurisdiction on the ground that no proper statutory notice of deficiency was issued. At trial, the petitioners' motion was amended to request a ruling that, because no proper statutory notice was given within the 3-year statute of limitation, assessment and collection of a deficiency for the year 1968 is barred.

FINDINGS OF FACT

On June 13, 1969, the petitioners, Daniel Lifter and Helene Lifter, timely filed their Federal income tax return for the year 1968 under an extension granted by the respondent. The address given on the return was 822 Northeast 125th Street, North Miami, Fla. (the 125th Street address), the location of an office of a corporation with which Mr. Lifter was connected. Since 1966, the petitioners have resided at 5151 Collins Avenue, Miami Beach, Fla. (the Collins Avenue address).

The office at the 125th Street address was rented by the corporation from September 1968 to September 1969. On the petitioners' return for 1969, they gave 17880 Northwest Second Avenue, Miami, as their address, the place to which the corporation moved, and indicated that on their return for the preceding year, they had given the 125th Street address.

Between 1967 and 1969, the petitioners' returns for the taxable years 1964 through 1967 were being audited by a revenue agent and a special agent. The petitioners gave different addresses on their returns for the years then under audit; therefore, the agents decided to use the petitioners' residence on Collins Avenue as their mailing address, and the agents' reports set forth such address as the address of the petitioners. The report of the revenue agent was completed prior to October 1969 and was submitted for inclusion in an administrative file of the respondent. The report of the special agent was completed in the early part of 1971.

On March 7, 1969, the petitioners executed a power of attorney designating Richard B. Wallace as their attorney in fact for purposes of Federal income tax matters covering the years 1964 through 1967. On this document, the petitioners gave their residence on Collins Avenue as their address.

The audit for 1968 was conducted by C. W. Charlesworth, another of the respondent's agents. He requested that the petitioners agree to extend until June 30, 1973, the period for assessing deficiencies in tax for the years 1965 and 1968. Such request was sent to the petitioners at the 125th Street address but was returned undelivered. On March 28, 1972, a letter containing a similar request was addressed to the petitioners in care of Mr. Wallace, their attorney for the years 1964 through 1967, at his address. The consent forms and the accompanying transmittal letter recited that the address of the petitioners was in care of Mr. Wallace. He responded on behalf of the petitioners and advised that he recommended against the execution of the consents. In his response, he made no reference to the fact that he was not at that time appointed as the attorney for the petitioners' 1968 Federal income tax matters and gave no address for the petitioners other than in care of his office.

A statutory notice of deficiency with respect to the taxable year 1968 was prepared by Agent Charlesworth and was sent on April 13, 1972, to the petitioners by certified mail at the 125th Street address. He sent the notice to such address because it was given by the petitioners on their return for 1968 and because the respondent had not been advised that he should use a different address to contact the petitioners with respect to their 1968 return. When he sent the notice, Agent Charlesworth was aware of the audit of the petitioners' returns for 1964 through 1967, and he knew that the petitioners then resided on Collins Avenue, and that the agents were using the Collins Avenue address as the petitioners' address for purposes of that audit.

To ensure that notice of the deficiency determined by the respondent was actually communicated to the petitioners, a copy of the notice of deficiency was sent to Mr. Wallace. Such copy was mailed approximately at the same time as the original and was received by Mr. Wallace prior to May 13, 1972. Upon receiving a copy of the notice, Mr. Wallace arranged to inform the petitioners of it, and on May 13, 1972, they appointed him to handle their Federal income tax matters for the year 1968. On July 11, 1972, a petition was filed with the Court requesting redetermination of the deficiency for 1968.

OPINION

The petitioners' motion to dismiss involves section 6212 of the Internal Revenue Code of 1954¹ and other related sections. Section 6212(a) provides that when the Secretary or his delegate determines there is a deficiency in income tax, he is ‘authorized’ to send notice of such deficiency by certified or registered mail. Section 6212(b)(1) provides that a notice of deficiency in respect of an income tax shall be sufficient ‘if mailed to the taxpayer at his last known address.’ Section 6213(a) provides that within 90 days after the mailing of the notice of deficiency the taxpayer may file with the Tax Court a petition for redetermination of the deficiency; it also provides that no assessment shall be made within the 90-day period nor, if a petition is filed with the Tax Court, until the decision of the Tax Court becomes final. Section 6501(a) provides that the amount of any tax imposed shall be assessed within 3 years after the return was filed; but section 6503(a)(1) provides that the running of the period of limitations provided in section 6501 for making assessments of income tax shall (after the mailing of a notice under section 6212(a)) be suspended for the period during which the respondent is prohibited from making an assessment and for 60 days thereafter.

We are asked by the petitioners to declare the notice of deficiency to be invalid and to hold that we therefore lack jurisdiction of the matter. In addition, the petitioners assert that since a proper notice of deficiency was not issued, the running of the statute of limitations on assessment of a deficiency has not been suspended, and accordingly, they asked us to hold that the statute of limitations on the assessment of any deficiency for 1968 has now run.

The petitioners contend that the notice of deficiency is invalid because it was sent to the wrong address. The purpose of sections 6212 and 6213 is to establish a procedure under which the respondent, if he determines that there is a deficiency in tax, notifies the taxpayer of such determination and under which the taxpayer is given an opportunity to litigate the issue before the Tax Court without first paying the claimed deficiency. Berger v. Commissioner, 404 F.2d 668 (C.A. 3, 1968), affirming 48 T.C. 848 (1967), certiorari denied 395 U.S. 905 (1969); De welles v. United States, 378 F.2d 37 (C.A. 9, 1967). The respondent is ‘authorized’ to notify the taxpayer of his determination by use of certified or registered mail. Berger v. Commissioner, supra. If he sends the notice of deficiency to the taxpayer's ‘last known address,‘ the notice is effective irrespective of whether it is in fact received by the taxpayer. De welles v. United States, supra. A taxpayer's last known address may be the address given on his return, if he has not clearly notified the respondent that he has moved and directs the respondent to use a different address. Floyd R. Clodfelter, 57 T.C. 102, 106 (1971); Harvey L. McCormick, 55 T.C. 138 (1970); Langdon P. Marvin, Jr., 40 T.C. 982 (1963). If the taxpayer directs the respondent to send a notice of deficiency to his attorney, then the attorney's address becomes the taxpayer's ‘last known address.’ Commissioner v. Stewart, 186 F.2d 239 (C.A. 6, 1951), reversing a Memorandum Opinion of this Court. A taxpayer's last known address may be his office rather than his residence. Welch v. Schweitzer, 106 F.2d 885 (C.A. 9, 1939); Abraham Goldstein, 22 T.C. 1233 (1954). In other words, for purposes of section 6212(b)(1), a taxpayer's last known address must be determined by a consideration of all relevant circumstances; it is the address which, in the light of such circumstances, the respondent reasonably believes the taxpayer wishes to have the respondent use in sending mail to him. Clark's Estate v. Commissioner, 173 F.2d 13 (C.A. 2, 1949); see also Sorrentino v. Ross, 425, F.2d 213, 215 (C.A. 5, 1970).

Because the petitioners used a variety of addresses, they created confusion as to what address should be used to reach them. Since they used the 125th Street address on their 1968 return, Mr. Charlesworth initially was certainly justified in understanding that they wished to have any correspondence with them regarding the 1968 return sent to that address. Although they were then residing on Collins Avenue, they did not set forth the address of their residence on their...