U.S. v. Ahrens

• Decision Date: 17 February 1976
• Docket Number: No. 75--1411,75--1411
• Parties: 76-1 USTC P 9241, 2 Fed. R. Evid. Serv. 535 UNITED STATES of America, Appellant, v. Edward J. AHRENS, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 781

530 F.2d 781

76-1 USTC P 9241, 2 Fed. R. Evid. Serv. 535

UNITED STATES of America, Appellant, v. Edward J. AHRENS, Appellee.

No. 75--1411.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 10, 1975.

Decided Feb. 17, 1976.

Robert T. Duffy, Atty., Tax Div., Dept. of Justice, Washington, D.C., for appellant.

Robert E. Johnson, U.S. Atty., Sam Hugh Park, Asst. U.S. Atty., Ft. Smith, Ark., Scott P. Crampton, Asst. Atty. Gen., and Gilbert E. Andrews and Leonard J. Henzke, Jr., Washington, D.C., appeared on brief.

R. L. Wommack, Fayetteville, Ark., for appellee.

Before ROSS, STEPHENSON and WEBSTER, Circuit Judges.

ROSS, Circuit Judge.

This suit was brought by the United States against Edward Ahrens to reduce certain unpaid tax assessments to judgment. The amount of unpaid taxes claimed by the government was $152,151.55 plus interest, for the calendar year 1961. After discovery, the government moved for summary judgment and the taxpayer moved for judgment on the pleadings. The district court denied the government's motion for summary judgment, and granted summary judgment to Ahrens. ¹ The government appeals. We reverse and direct the district court to grant summary judgment in favor of the government.

Taxpayer did not contest the substantive merits of the assessment in the court below and does not do so on this appeal. Instead, he contends that the Internal Revenue Service did not comply with established procedures regarding the mailing of the statutory notice of deficiency. The case is made difficult by the fact that all copies of the statutory notice of deficiency have been lost by the parties and cannot be furnished to the court. The government concedes that if the statutory notice of deficiency was invalid for any reason, its claim is barred by the statute of limitations.

In 1961, Ahrens and his former wife resided at 4900 Forrest Ridge Lane, Columbia South Carolina. At that time, taxpayer was an insurance broker employed in the operation of a general insurance agency. Ahrens and his former wife filed a timely joint income tax return for the year 1961 which reflected a total tax due of $7,687.42. ².

In October, 1962, Ahrens separated from his wife. The marriage was formally dissolved in September, 1964.

In 1965, Ahrens joined the United States Army. He was stationed at Fort Bragg, North Carolina from June, 1965, until September, 1965, at which time he was transferred to Fort Gordon, Georgia. On February 11, 1966, he was transferred to Washington, D.C. for further training. On May 8, 1966, he was assigned to Vietnam, where, with the exception of two furloughs, he stayed until July 26, 1967, at which time he was medically evacuated to Holden Beach, North Carolina. In November, 1967, he was transferred to Washington, D.C. He returned to Vietnam on March 14, 1968, and did not come back to the United States until November 15, 1969.

In November, 1965, Ahrens executed a formal power of attorney to one E. L. McGowan, an attorney from Columbia, South Carolina. In district court, the government claimed that a proper statutory notice of deficiency was mailed to McGowan on June 22, 1966, while Ahrens was in Vietnam. The government also claimed that a copy of the notice was then mailed to Ahrens and his former wife at their Columbia, South Carolina residence, which was designated on their 1961 tax return.

In support of its motion for summary judgment, the government offered Post Office Form 3877, a postal form used routinely by the IRS, which stated that statutory notices of deficiency had been sent by certified mail to Ahrens and McGowan for the years 1959, 1960, 1961, and 1962. ³ The government also offered the deposition testimony of attorney McGowan who stated that he recalled having possession of a notice of deficiency with respect to Ahrens' taxes. McGowan's deposition also reflects the following colloquy:

Q. Do you recall receiving a notice of deficiency sometime around late June or early July concerning Edward Ahrens' tax liability for the year '61?

A. In what year, this year?

Q. No, I'm sorry, in the year 1966 regarding a notice of deficiency.

A. I don't recall it, but I'm sure I did.

The government produced a letter from McGowan to J. Howard McClean, the Acting Chief of the Appellate Branch Office, dated December 29, 1966, in which McGowan acknowledged receipt of a letter dated June 22, 1966, and requested that the case be held in abeyance until Ahrens returned from Vietnam. ⁴ McGowan admitted the authenticity of the letter in his deposition. The government also offered a 'Preliminary Statement', dated August 24, 1964, which indicated the deficiency for the taxpayer's 1961 taxes as well as certain overassessments for the years 1959, 1960 and 1962 not pertinent to our discussion. A formal certificate of assessment, reflecting Ahrens' proposed tax liability, was also offered by the government. It was dated June 7, 1972, and the figures thereon conform to the amount now claimed to be due in this action.

The district court granted summary judgment for the taxpayer on the grounds that the government had produced no admissible evidence tending to show that the notice of deficiency was transmitted and that the notice was valid. On this appeal the government contends that it proved that a valid notice was sent as a matter of law or, alternatively, that its proof created a genuine issue of material fact.

I. The Notice Requirement--The Statutory Scheme.

The notice requirement of the Internal Revenue Code is set out in 26 U.S.C. §§ 6212 and 6213. If the Secretary determines that there is a deficiency in respect of any income tax, he is authorized to send notice of such deficiency to the taxpayer by certified mail or registered mail. 26 U.S.C. § 6212(a). Section 6212(b)(1) provides that notice mailed to the taxpayer at his 'last known address' is sufficient notice for purposes of § 6212(a). After the statutory notice is mailed, the taxpayer has 90 days within which to petition the Tax Court for a redetermination. 26 U.S.C. § 6213(a). No collection action may be maintained against the taxpayer until notice has been mailed to the taxpayer and the 90 day period has run and, if a petition has been filed with the Tax Court, until the judgment of the Tax Court has become final. 26 U.S.C. § 6213(a). The issuance of a statutory notice of deficiency suspends the statute of limitations on assessment and collection of the taxes. 26 U.S.C. § 6503(a)(1). Section 6502(a)(1) allows the government six years after the notice of deficiency is mailed within which to file a collection proceeding to recover the tax assessed. ⁵

II. The Mailing of the Notice.

We are satisfied that the government's proof, unrebutted by the taxpayer, established as a matter of law that a notice of deficiency was mailed on June 22, 1966, to attorney McGowan and to Ahrens at his residence listed on the 1961 return. The district court erred in holding that the government failed to prove this fact.

The government offered a copy of Post Office Form 3877, which stated that statutory notices of deficiency for 1959, 1960, 1961 and 1962 had been sent to the taxpayer and his designated attorney McGowan. Use of Form 3877 is the recommended procedure for recording the certified mailing of statutory notices of deficiency by paragraph 4462.2 of the Internal Revenue Manual. The form is considered highly probative evidence that the notice of deficiency was sent to the addresses specified. See Anthony B. Cataldo, 60 T.C. 522, 524 (1973), aff'd per curiam, 499 F.2d 550 (2d Cir. 1974); Raymond S. August,54 T.C. 1535, 1537--1538 (1970). The government was not required to produce an affidavit of the IRS employee who completed the specific form in question. Anthony B. Cataldo, supra, 60 T.C. at 524. Taxpayer does not dispute the fact that the form was prepared in compliance with the Internal Revenue Manual. Thus the form was admissible into evidence as a record of a regularly conducted activity. See 28 U.S.C. § 1732(a); Fed.R.Evid. 803(6). ⁶

The government also produced a letter, written by attorney McGowan to the IRS, in which he specifically referred to the letter of June 22, 1966, and requested that the case be held in abeyance until Ahrens returned from Vietnam. This letter was authenticated by McGowan himself during his deposition and therefore was also an admissible record of a regularly conducted activity. Furthermore, McGowan stated in his deposition that he was certain that he had received a notice of deficiency respecting Ahrens' 1961 taxes. This evidence convincingly corroborates the information contained in Post Office Form 3877. In the absence of any rebuttal evidence in behalf of the taxpayer, we hold that the government proved as a matter of law that the notice of deficiency was mailed.

III. The Validity of the Notice.

We note initially that the notice was properly mailed to the taxpayer's last known address for purposes of § 6212(b)(1). Under that section, notice is sufficient if it is sent to the address where the Commissioner reasonably believed the taxpayer wished to be reached. Sorrentino v. Ross, 425 F.2d 213, 215 (5th Cir. 1970); Delman v. Commissioner, 384 F.2d 929, 932 (3d Cir. 1967), cert. denied, 390 U.S. 952, 88 S.Ct. 1044, 19 L.Ed.2d 1144 (1968).

The notice was sent to McGowan, who held a duly executed power of attorney to represent Ahrens before the IRS with respect to taxpayer's 1961 income taxes. Such notice has been consistently held sufficient. See Expanding Envelope & Folder Corp. v. Shotz, 385 F.2d 402, 404 (3d Cir. 1967); Delman v. Commissioner, supra, 384 F.2d at 932; Kisting v. Commissioner, 298 F.2d 264, 268--269 (8th Cir. 1962); Commissioner v. Steward, 186 F.2d 239, 242 (6th Cir. 1951). At the time the notice was mailed, the taxpayer was in Vietnam. Under the circumstances, the Commissioner was reasonable as a matter of law in concluding that the taxpayer should be notified through his duly...