Monge v. Comm'r of Internal Revenue

• Decision Date: 12 July 1989
• Docket Number: Docket No. 27865-87.
• Citation: 93 T.C. No. 4,93 T.C. 22
• Parties: ISIDRO P. MONGE AND LINDA M. MONGE, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
• Court: U.S. Tax Court

93 T.C. 22

93 T.C. No. 4

ISIDRO P. MONGE AND LINDA M. MONGE, Petitioners

v.COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 27865-87.

United States Tax Court

Filed July 12, 1989.

Petitioners, husband and wife, filed a joint 1982 tax return bearing address A. Husband filed his 1983 and 1984 returns using address A, and applied for extensions of time to file his 1985 return using address B. In accordance with his regular practice, respondent did not enter the address shown on husband's extension applications into his computer records. Wife filed her 1985 return reporting address C and electing single filing status. Respondent entered the address and other information shown on wife's return into his computer records, but sent only a single joint notice of deficiency for 1982 to petitioners at address A. The notice was returned stamped ‘insufficient address.‘ Respondent searched his computer records and concluded that address A was still the address of both husband and wife. Husband's subsequent 1985 return reflected address D. Respondent sent no other statutory notices to petitioners at addresses A, B, C, or D. Petition was filed 349 days after the notice of deficiency was mailed.

HELD: This Court lacks jurisdiction with respect to wife because the notice of deficiency was invalid as to her. Respondent was on notice of wife's new address and separate residence, but failed to mail a duplicate original of the joint notice of deficiency to her last known address as required by I.R.C. section 6212(b)(2). Abeles v. Commissioner, 91 T.C. 1019 (1988), followed.

HELD FURTHER: This Court lacks jurisdiction with respect to husband because the petition was untimely as to him. The notice of deficiency was valid as to husband because respondent exercised reasonable care in ascertaining, and mailing the notice to, husband's last known address as shown on his most recent return, and husband's applications for extensions to file his 1985 return did not constitute ‘clear and concise notification‘ of a change in address. George W. Connelly, Jr., for the petitioners.

David H. Peck, for the respondent.

WHALEN, JUDGE:

This case is before the Court to decide the cross motions of the parties to dismiss for lack of jurisdiction. The dispositive issue is whether respondent mailed the notice of deficiency to the ‘last known address‘ of both petitioners, as contemplated by section 6212. ¹

FINDINGS OF FACT

Some of the facts have been stipulated, and are so found. The Stipulation of Facts filed by the parties and the exhibits attached thereto are incorporated herein by this reference.

At the time the petition was filed in this case, Isidro P. Monge resided in Reading, Massachusetts and Linda M. Monge resided in Tucson, Arizona.

Petitioners filed their joint Federal income tax return for taxable year 1982 with the Austin Internal Revenue Service Center on October 15, 1983. The return reported petitioners' address as ‘13029 Champions Drive Houston, Texas 77069 ‘ (‘Houston address‘). Actually, this was not petitioners' home address; it was the address of Hendricks Management Company and Hendricks Sports Management (‘Hendricks Co.‘). Employees of Hendricks Co. prepared petitioners' 1982 tax return and advised petitioners on financial matters.

Petitioners had previously made application for an automatic extension of time to file their 1982 return on Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return). This form was filed on their behalf on April 13, 1983. It shows petitioners' address as ‘1214 Oak Street, Grand Prairie TX 75050.‘ Subsequently, petitioners made application for a further extension of time to file their 1982 return on Form 2688 (Application for Additional Extension of Time to File U.S. Individual Income Tax Return). That form was filed with respondent on their behalf on August 3, 1983, and also lists ‘1214 Oak Street, Grand Prairie TX 75050‘ as their address.

Mr. Monge's Federal income tax returns for taxable years 1983 and 1984 bore the Houston address, the same address reflected on petitioners' 1982 return.

On March 11, 1985, respondent mailed a letter to petitioners at the Houston address, proposing changes to their 1982 tax return. Mr. Monge received the letter and on March 19, 1985, consented to the proposed changes.

On April 11, 1986, an agent of Mr. Monge sent Form 4868 to the Internal Revenue Service Center at Fresno, California to obtain an extension of time to file Mr. Monge's 1985 income tax return. The agent listed Mr. Monge's address on the form as ‘9556 Vista Hills Place, Lakeside, California 92040‘ (‘Lakeside address‘). Nothing on the form stated that the Lakeside address is a new address or that Mr. Monge wanted correspondence directed to him there.

On or about August 11, 1986, the same agent sent Form 2688 to the Internal Revenue Service Center at Fresno, California to request a further extension of the due date for Mr. Monge's 1985 return. The Form 2688 again reflected the Lakeside address as Mr. Monge's but did not state that the Lakeside address was a new address or that Mr. Monge wanted correspondence directed to him there. After approving the extension, respondent returned the form to Mr. Monge at the Lakeside address.

Employees of the Fresno Service Center enter certain information shown on Forms 4868 and 2688 into respondent's computer records, but they do not normally enter the taxpayer's address as shown on either form into those records.

Mr. Monge did not notify either the Houston Examination Division or the Austin Service Center that he desired to change his address to the Lakeside address.

Ms. Monge filed her 1985 income tax return and elected single filing status. Respondent received Ms. Monge's 1985 return on or about May 12, 1986. Respondent updated Ms. Monge's address in his computer records during the 25th week of 1986 (approximately the third week of June, 1986). The updated address was 8966 Placeta del Perone, Tucson, Arizona 85746 (‘the Tucson address‘).

On May 16, 1986, respondent sent a letter by certified mail to petitioners at the Houston address requesting their consent to extend the period of limitations on assessments for the taxable year 1982. The letter was received at Hendricks Co. by Ms. Polly Duke, an employee who signed United States Postal Service Form 3811 (Domestic Return Receipt), evidencing receipt of the letter. Hendricks Co. forwarded the letter to Mr. Monge, but the consent was not executed or returned to respondent by either of the petitioners. On May 29, 1986, respondent sent another letter by regular mail to petitioners requesting their consent to extend the statute of limitations for the taxable year 1982. The letter was sent to the Houston address and was received by Hendricks Co. It was not returned to respondent by either of the petitioners.

On or about July 11, 1986, Hendricks Co. moved its offices from the Houston address to 400 Randall Way, Suite 106, Spring, Texas, 77388 (‘Spring, Texas address‘). Hendricks Co. filed a request with the Postal Service to have its mail forwarded to the Spring, Texas address and gave a list of many of its clients to its Postal Service letter carrier, Mr. Roger Cunningham, to assist in forwarding its mail. Many pieces of certified mail were forwarded by the Postal Service from the Houston address to the Spring, Texas address during the period in question.

The notice of deficiency at issue was mailed on September 3, 1986, by respondent's Houston Examination Division. Respondent thereby determined the following deficiency in and additions to petitioners' 1982 Federal income tax:

+-------------------------------------------------------------------------------------+
                ¦Taxable  ¦            ¦Additions to tax                                              ¦
                +---------+------------+--------------------------------------------------------------¦
                ¦year     ¦Deficiency  ¦Sec. 6653(a)(1)  ¦Sec. 6653(a)(2)  ¦Sec. 6621(c)  ¦Sec. 6661  ¦
                +---------+------------+-----------------+-----------------+--------------+-----------¦
                ¦1982     ¦$69,509.12  ¦$3,475.46        ¦1                ¦2             ¦$6,950.91  ¦
                +---------+------------+-----------------+-----------------+--------------+-----------¦
                ¦         ¦            ¦                 ¦                 ¦              ¦           ¦
                +-------------------------------------------------------------------------------------+
                

1 50% of the interest due on the underpayment.

2 120% of the interest due on the underpayment.

The notice of deficiency was issued jointly to both petitioners, and was mailed in a single mailing to the Houston address. On September 9, 1986, the notice was returned to respondent by the Postal Service. The envelope containing the notice had been stamped ‘insufficient address,‘ but no other information was provided thereon about petitioners' current address.

Normally, when a notice of deficiency is returned to the Houston Examination Division by the Postal Service, respondent searches his computer records for an additional address which may have been recorded after the notice was mailed. If his search reveals such an additional address and the statute of limitations is still open, then respondent remails the notice to the taxpayer at the additional address. If the notice is returned by the Postal Service with a forwarding address and the statute of limitations is still open, then respondent remails the notice to the taxpayer at the forwarding address. If the computer search reveals no other address for the taxpayer and there is no forwarding information on the envelope, then the taxpayer's file is put into respondent's suspense system to await default.

In this case, after the notice of deficiency was returned to respondent, a representative of the Houston Examination Division accessed respondent's computer system on September 30, 1986, to verify petitioners' address. Respondent's search was limited to Mr. Monge's...