Shelton v. Comm'r of Internal Revenue

• Decision Date: 14 November 1974
• Docket Number: Docket No. 1835-74.
• Citation: 63 T.C. 193
• Parties: EMMET N. SHELTON AND STELLA SHELTON, PETITIONERS v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

63 T.C. 193

EMMET N. SHELTON AND STELLA SHELTON, PETITIONERS

v.COMMISSIONER OF INTERNAL REVENUE, RESPONDENT

Docket No. 1835-74.

United States Tax Court

filed november 14, 1974.

Stanley E. Jennings, for the petitioners.

Richard H. Gannon, for the respondent.

The notice of deficiency was not mailed to petitioners at their last known address and petitioners did not receive the notice in time to file a timely petition in this Court. Upon receiving a notice of collection of the deficiency for the years involved, petitioners obtained a copy of the notice of deficiency and filed an untimely petition in this Court. Respondent moved to dismiss for lack of jurisdiction because the petition was not timely filed. Petitioners objected and moved to dismiss on the ground that a proper notice of deficiency had not been mailed to them. Held: Under the circumstances. this Court may, and should first determine the validity of the notice of deficiency, and if it is invalid, grant petitioners' motion to dismiss for lack of jurisdiction. Petitioners' motion to dismiss granted; respondent's motion to dismiss denied.

OPINION

DRENNEN, Judge:

Respondent determined a deficiency in petitioners' income tax and addition to tax under section 6653(b), I.R.C. 1954, for the year 1968 in the amounts of $4,089.10 and $2,044.55, respectively, and a deficiency in petitioners' income tax and addition to tax under section 6653(b), I.R.C. 1954, for the year 1969 in the amounts of $2,156.56 and $1,078.28, respectively.

Petitioners resided at 6646 Norman Lane, San Diego, Calif., at the time their joint income tax returns for the years 1968 and 1969 were filed at the Western Region Internal Revenue Service Center. Petitioner Emmet N. Shelton resided in El Cajon, Calif., and petitioner Stella Shelton resided in San Diego, Calif., at the time the petition herein was filed.

The statutory notice of deficiency for the years here involved was mailed on April 12, 1973, addressed to petitioners at 6646 Norman Lane, San Diego. Calif. The address used in the notice of deficiency was not the address of petitioners at the time the notice of deficiency was mailed, and it was not the last known address of the petitioners, within the import of section 6212, I.R.C. 1954, at the time the notice of deficiency was mailed, petitioners having advised agents of the Internal Revenue Service on several occasions prior thereto of changes in their addresses. Petitioners did not receive the envelope in which the notice of deficiency was mailed, and it was returned to respondent unopened.

On or about December 24, 1973, respondent mailed to petitioners, at 1071 Industrial Place, El Cajon, Calif., collection notices of the balances due on their income taxes, additions to tax, and interest for the years 1968 and 1969. Upon inquiry from petitioners' counsel by respondent with a letter of transmittal dated March 11, 1974.

The petition herein was filed March 14, 1974.

Respondent filed a motion to dismiss this case for lack of jurisdiction because the petition was not filed within the time prescribed in the applicable provisions of the Internal Revenue Code, section 6213(a), I.R.C. 1954.

Petitioners filed objections to respondent's motion to dismiss and also moved to dismiss this case for the reason that a valid notice of deficiency has not been mailed to petitioners, the notice of deficiency not having been mailed to their last known addresses as required by section 6212(b)(2), I.R.C. 19 . . .

Both motions to dismiss were set for hearing before the Court at San Diego, Calif., on June 17, 1974. Counsel for both parties agreed to submit the motions to the Court on a stipulation of facts. The stipulation of facts was filed with the Court, and the motions were taken under advisement. The stipulated facts are included in the recitals above.

The only question for decision is whether, when a petition is not filed in this Court within the time prescribed in the applicable sections of the Internal Revenue Code, this Court has jurisdiction to determine whether the notice of deficiency upon which the petition was based is valid. If this question is answered in the negative, then we must grant respondent's motion to dismiss for untimely filing of the petition and respondent will be free to assess and collect the tax unless petitioners take some action in another court to prevent such action. On the other hand, if the answer to the question is in the affirmative, then we will grant petitioners' motion to dismiss because the notice of deficiency mailed to petitioners was not valid, having not been mailed to petitioners at their last known addresses within the import of section 6212(b) of the Code. In such event; respondent may not assess a deficiency in tax, under normal circumstances, until he has issued a valid notice of deficiency to petitioners. See Pfeffer v. Commissioner, 272 F 2d 383 (C.A. 2, 1959), 1959), affirming an order of this Court; Estate of Francis P. McKaig, Jr., 51 T.C. 331 (1968).

This Court has in numerous cases dealt with questions concerning the validity of notices of deficiency which were claimed by the taxpayers not to have been mailed to their last known addresses. See Daniel Lifter, 59 T.C. 818 (1973), and cases cited therein. We have also dealt, in numerous cases, with the Court, under varying circumstances. See Angelo Vitale, 59 T.C. 246 (1972); Frances Lois Stewart, 55 T.C. 238 (1970), affirmed per curiam (C.A. 9, 1972); Estate of Frank Everest Moffat, 46 T.C. 499 (1966); Nathaniel A. Denman, 35 T.C. 1140 (1961); Sam Satovsky, 1 B.T.A. 22 (1924). However, we have not found too many cases wherein the Commissioner had filed a motion to dismiss for lack of jurisdiction because the petition was admittedly not timely filed but the Court nevertheless ruled on petitioner's motion to dismiss because the notice of deficiency was invalid.¹ there are a sufficient number of those cases, however, to make it clear that even though the petition was not timely filed, this Court may determine the validity of the notice of deficiency and dismiss for lack of jurisdiction on that ground if it concludes that the notice of deficiency was invalid, with the different effect on future proceedings mentioned above.

In Gennaro A. Carbone, 8 T.C. 207 (1947), a Court-reviewed opinion, respondent mailed notices of transferee liability to petitioners which were not received by them in time to file timely petitions. Upon receipt thereof, untimely petitions were filed, and both parties filed motions to dismiss for lack of jurisdiction, respondent because the petitions were not timely filed, and petitioners because the notices of deficiency had not been mailed to their last known address. The Court found that the notices were not mailed to the taxpayers' last known address, that petitioners did not waive this irregularity in mailing by filing untimely petitions, and granted petitioners' motion to dismiss also denying respondent's motion to dismiss.

Next, in John W. Heaberlin, 34 T.C. 58 (1960), the petition was filed on the 93d day after the notice of deficiency had been mailed to the taxpayer, and was thus untimely; respondent filed a motion to dismiss on that ground. Petitioner objected on the ground that the notice of deficiency was not mailed to his last known address. Finding that this was a fact, the Court held that the ‘proceeding must be dismissed for lack of jurisdiction because no proper statutory notice was ever sent to the taxpayer.’ The Court noted the Commissioner's citation of numerous cases in which it was held that inconsequential errors in the mailing address of a deficiency notice could be and were waived by the filing of a timely petition in the Tax Court, but pointed out that in all of those cases the petitions were timely filed and the taxpayers had suffered no damage as a result of the errors in address; but held that those cases did not justify holding that this taxpayer had waived anything by filing an untimely petition, ‘followed by a dismissal, as would be necessary, since the petition was not filed within the time allowed by law.’

In Harvey L. McCormick, 55 T.C. 138 (1970), the matter was before the Court on respondent's motion to dismiss for lack of jurisdiction on the ground that the petition was not timely filed, and petitioner's objection thereto on the ground that the notice of deficiency was not mailed to his last known address in compliance with section 6212(b)(1), I.R.C. 1954. The Court considered petitioner's argument but rejected it, concluding that respondent was justified in using the address he used in mailing the notice of deficiency, and granted respondent's motion to dismiss for lack of jurisdiction because the petition was not timely filed.

Finally, in Patrick Michael O'Brien, 62 T.C. 543 (1974), the Court said:

Because the petition before the Court was not timely filed, we must in any event dismiss for lack of...