McKay v. Comm'r of Internal Revenue

• Decision Date: 25 November 1987
• Docket Number: Docket No. 40277-85.
• Citation: 89 T.C. No. 72,89 T.C. 1063
• Parties: GREGORY W. McKAY, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

89 T.C. 1063

89 T.C. No. 72

GREGORY W. McKAY, Petitioner

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 40277-85.

United States Tax Court

Filed November 25, 1987.

Respondent issued a notice of deficiency on April 7, 1977. In his petition filed November 4, 1985, petitioner alleged that he never received the notice of deficiency for the years in issue. Petitioner's attorney, however, pursuant to a power of attorney, received a copy of the notice of deficiency and delivered it to petitioner without prejudicial delay. HELD: Even if the notice of deficiency was not sent to petitioner at his last known address, the notice was nevertheless valid because petitioner received actual notice of the deficiencies determined against him within sufficient time to file a timely petition with this Court. Respondent's motion to dismiss for lack of jurisdiction will be granted. Gregory W. McKay, pro se.

Paul H. Weisman, for the respondent

WRIGHT, JUDGE:

This case is before the Court on the parties' cross-motions to dismiss for lack of jurisdiction. Respondent contends that we lack jurisdiction because petitioner failed to file a petition with this Court within the time prescribed by section 6213(a). ¹ Petitioner seeks to have this case dismissed on the grounds that the statutory notice of deficiency was not mailed, or if mailed that it was not sent to him at his ‘last known address,‘ as that term is used in section 6212(b)(1).

Argument on both motions was heard at a trial session of the Court at Los Angeles, California. The record consists of a stipulation of facts, testimony and exhibits received at the hearing. The stipulation of facts and exhibits attached thereto are incorporated herein by this reference. The parties have also submitted memoranda of law in support of their positions.

FINDINGS OF FACT

At the time of filing his petition herein, Gregory W. McKay (petitioner) was a resident of Beverly Hills, California. Petitioner timely filed individual Federal income tax returns for 1972 and 1973 with the Internal Revenue Service Center at Fresno, California (the Fresno Service Center). On his 1972 tax return, petitioner's address was shown as 360 North Camden Drive, Beverly Hills, California 90210. Petitioner's address as reflected on his 1973 tax return was 9665 Wilshire Boulevard, Beverly Hills, California 90212 (the Wilshire Boulevard address). As of April 20, 1975, however, petitioner was no longer a tenant at the Wilshire Boulevard address. ²

For the years 1974 and 1976, petitioner's returns were timely filed with the Fresno Service Center. ³ Petitioner's tax returns for these years bear a mailing address of P.O. Box 1081, Beverly Hills, California 90213 (P.O. Box 1081).

On September 26, 1975, petitioner filed Forms 843 (‘Claim‘), for taxable years 1972 and 1973 with the Fresno Service Center. Petitioner's mailing address was shown as P.O. Box 1081 on both refund claim forms.

On that same date, petitioner also filed a power of attorney (Form 2848) with the Fresno Service Center. This document, which was executed by petitioner, appointed Herbert D. Sturman as petitioner's attorney-in-fact in connection with ‘any and all federal tax matters pertaining to calendar years 1971-1974, including, but not limited to, the filing and processing of Internal Revenue Forms 843 for the calendar years 1971-1973.‘ The Form 2848 directed that copies of notices and other written communications addressed to petitioner should be sent to Mr. Sturman. Petitioner's address was listed on Form 2848 as P.O. Box 1081.

On October 7, 1975 and February 27, 1976, respondent wrote to petitioner with respect to his claims for refund. Both of these letters were addressed to petitioner at P.O. Box 1081. The second letter advised petitioner that his refund claims would be suspended, pending completion of the criminal investigation of his tax liabilities for the years in issue.

On April 7, 1977, respondent sent a copy of the statutory notice of deficiency for 1972 and 1973 to Mr. Sturman by ordinary mail. This copy of the statutory notice of deficiency set forth petitioner's mailing address as 9665 Wilshire Boulevard.

Mr. Sturman received the copy of petitioner's notice of deficiency within several days of mailing, but prior to April 13, 1977. It was Mr. Sturman's normal business practice to deliver copies of Government documents served upon him to his clients within three or four days of receipt of such documents. Specifically, with respect to notices of deficiency, Mr. Sturman's normal business practice was to promptly meet with the client and hand-deliver the copy to that client. In this case Mr. Sturman followed his normal business procedures and physically handed petitioner the copy of the notice of deficiency within several days of receiving such document.

Subsequently, on April 28, 1977, the Department of Justice filed with the United States District Court for the Central District of California a notice of mandatory stay of proceedings pursuant to Internal Revenue Code section 7422(e), wherein the district court was notified that the Internal Revenue Service had issued a statutory notice of deficiency to petitioner on April 7, 1977. Mr. Sturman also received this notice with the attached copy of the notice of deficiency and in accordance with his business practice, delivered it to petitioner.

The deficiencies and section 6653(b) additions to tax for 1972 and 1973 were assessed by respondent on September 12, 1977. The notices thereof were mailed to petitioner at his P.O. Box 1081 address. ⁴

Respondent no longer has a copy of Form 3877, Application for Registration or Certification (certified mailing list) which would show mailing of the notice dated April 7, 1977. These records are routinely destroyed after five years. Moreover, because respondent no longer has the administrative file, there is no record of whether the original notice of deficiency or duplicate originals were ever returned to respondent by the Postal Service.

Petitioner filed his petition with the Court on November 4, 1985, more than eight years beyond the 90-day period set forth in section 6213.

OPINION

The parties have each moved this Court to dismiss for lack of jurisdiction, but on different grounds. Petitioner argues that the statutory notice of deficiency, if in fact mailed, was not sent to his last known address, as required by section 6212(b), and is therefore not valid. Petitioner, relying on Mulvania v. Commissioner, 769 F.2d 1376 (9th Cir. 1985) (Mulvania II), affg. a Memorandum Opinion of this Court, claims that only an original notice of deficiency sent directly to a taxpayer constitutes a valid notice of deficiency. Respondent contends that this Court lacks jurisdiction because the petition was filed more than 90 days after the notice of deficiency was mailed. It is respondent's position that petitioner actually, physically received a copy of the notice of deficiency within sufficient time to timely petition this Court. Respondent asserts that as a result of petitioner's long delay in petitioning the Tax Court, he has been prejudiced. Accordingly, respondent alternatively argues that the Court should apply the doctrines of estoppel and laches to preclude petitioner from arguing that the notice of deficiency was not sent to his last known address.

It is well settled that to maintain an action in this Court, there must be a valid notice of deficiency and a timely petition. See Pyo v. Commissioner, 83 T.C. 626, 632 (1984); Mollet v. Commissioner, 82 T.C. 618, 623 (1984), affd. without published opinion 757 F.2d 286 (11th Cir. 1985); Keeton v. Commissioner, 74 T.C. 377, 379 (1980). Regardless of whether petitioner or respondent prevails, it is clear that we lack jurisdiction to entertain this case on its merits. We therefore must decide on what ground. See Shelton v. Commissioner, 63 T.C. 193 (1974); O'Brien v. Commissioner, 62 T.C. 543, 548 (1974).

On the facts in this case, we agree with respondent that the notice of deficiency is valid because petitioner received actual notice of the deficiencies determined against him without prejudicial delay. The fact that petitioner received a copy of the notice instead of the original is irrelevant. Because of this conclusion, we find it unnecessary to decide whether the notice of deficiency was sent to petitioner's last known address or to consider respondent's alternative arguments.

Section 6212(a) provides that, if the Commissioner determines a deficiency in income tax, ‘he is authorized to send notice of such deficiency to the taxpayer by certified mail or registered mail.‘ Such notice of deficiency ‘shall be sufficient‘ if mailed to the taxpayer at his last known address, unless the Commissioner has been properly notified that a fiduciary has been substituted for the taxpayer. Sec. 6212(b)(1). If the notice is mailed to a taxpayer in the United States, he has 90 days after the mailing of the notice to file his petition for redetermination of the deficiency with the Tax Court. Sec. 6213(a). These provisions were designed to afford a taxpayer notice of the Commissioner's determination and an opportunity to litigate the validity of such determination in this Court without first paying the deficiency. Mulvania v. Commissioner, 81 T.C. 65 (1983) (Mulvania I), and cases cited therein. Thus, the notice constitutes the taxpayer's ticket to the Tax Court, and without it, there could be no prepayment judicial review of the deficiency.

A properly mailed notice of deficiency is valid irrespective of whether such notice is in fact received by the taxpayer. United States v. Zolla, 724 F.2d 808, 810 (9th Cir. 1984), cert. denied 469 U.S. 830 (1984); ⁵ Life v. Commissioner, 59 T.C. 818 (1973). As we emphasized in our opinion in Mulvania I, the language of section 6212(b)(1) is clearly permissive for Congress did not create a mandatory address to which a notice of deficiency must be mailed, but rather provided...