Weinroth v. Comm'r of Internal Revenue

• Decision Date: 27 May 1980
• Docket Number: Docket No. 7531-79.
• Citation: 74 T.C. 430
• Parties: ABE WEINROTH and ELEANOR E. WEINROTH, PETITIONERS v. COMMISSIONER of INTERNAL REVENUE, RESPONDENT
• Court: U.S. Tax Court

74 T.C. 430

ABE WEINROTH and ELEANOR E. WEINROTH, PETITIONERS

v.COMMISSIONER of INTERNAL REVENUE, RESPONDENT

Docket No. 7531-79.

United States Tax Court

Filed May 27, 1980.

On Apr. 3, 1978, respondent mailed a notice of deficiency for petitioners' 1974 taxable year to the address given as petitioners' residence on their income tax return for that year. Prior to that time, petitioners had on several occasions notified employees of respondent that they had moved to a different address. These notifications were with regard to taxable years of petitioners other than 1974. Petitioners did not receive the 1974 notice until more than 1 year after its mailing and the petition herein was filed shortly thereafter. Held: While taxpayers are required to notify the Commissioner of a change of address, no requirement exists that such notice be given to the particular agent of the Commissioner responsible for gathering the facts for the determination of the deficiency. Respondent did not, in this case, exercise reasonable diligence in ascertaining petitioners' correct address and therefore the notice of deficiency was not mailed to petitioners' last known address. Mark Chazin, for the petitioners.

Francis J. Strapp and Bernard Mark, for the respondent.

OPINION

IRWIN, Judge:

This matter comes before us on respondent's motion to dismiss for lack of jurisdiction on the ground that the petition herein was filed after the 90-day period provided in section 6213.¹ During the hearing on respondent's motion, petitioners also moved to dismiss for lack of jurisdiction on the ground that respondent failed to mail the statutory notice of deficiency to petitioners' last known address.

The matter sub judice involves petitioners' 1974 taxable year. However, the resolution of the issue hinges to a large extent upon events and circumstances relating to prior taxable years of the petitioners. The notice of deficiency in the amount of $6,998.38 was mailed to petitioners on April 3, 1978, but was returned to respondent by the post office as unclaimed.

When petitioners filed their 1974 return, they resided at 415 Latona Avenue, Trenton, N.J. 08618. This address (hereafter referred to as the Latona Avenue address) was given as petitioners' residence on their 1974 return. “895 Parkway Avenue, Trenton, N.J.,” appeared as petitioner Abe Weinroth's (hereafter sometimes referred to as Abe) business address on Schedule C of petitioners' 1974 return.

In September of 1976, petitioners moved to 895 Parkway Avenue, Trenton, N.J. 08618 (hereafter referred to as the Parkway Avenue address) and have resided there since that time. Petitioners' income tax returns for 1976 and subsequent years used the Parkway Avenue address as their residence.

On June 13, 1977, the District Director of the Internal

Revenue Service in Newark, N.J., mailed a standard Form 872 (a consent form used to fix or extend the limitation period within which respondent may assess an income tax) to petitioners for their taxable years 1966, 1967, 1968, and 1969. The Form 872 and accompanying cover letter bore the Latona Avenue address as petitioners' residence. Petitioners received the letter and consent form in due course and on or about June 20, 1977, petitioners executed the Form 872. However, before petitioners returned the executed Form 872 they lined out “415 Latona Avenue,” and printed “895 Parkway Ave.” above the deletion. Petitioners then returned the altered Form 872.

Shortly thereafter, petitioners' altered Form 872 was received by Patrick J. Kelly (hereafter referred to as Kelly), a suspense file reviewer² with the Newark District Director. Sometime during 1977, Kelly had been assigned petitioners' case involving the years 1966, 1967, 1968, and 1969.

Under Internal Revenue Service procedural guidelines, Kelly was not allowed to accept any Form 872 upon which alterations had been made. Thus, upon receipt of the revised Form 872, Kelly marked the form “VOID” and prepared a new Form 872 which read in relevant part: “Abe & Eleanor Weinroth a/k/a Eleanor E. Weinroth Formerly of 415 Latona Avenue, Trenton, New Jersey 08618, taxpayer(s) of 895 Parkway Avenue, Trenton, New Jersey 08618.” The accompanying cover letter, dated June 27, 1977, bore the Parkway Avenue address. Kelly also updated petitioners' file with their new address.

Petitioners thereafter executed and returned the second Form 872. On September 16, 1977, the District Director in Newark mailed a copy of the completed Form 872 to petitioners at the Parkway Avenue address.³

On or about August 11, 1977, petitioners received an assessment of income taxes and interest due for 1973. The assessment, dated August 8, 1977, was sent from the Director of the Internal Revenue Service Center at Holtsville, N.Y., to the Latona Avenue address. Petitioners thought that they had already filed a Form 872 for 1973 so upon receipt of the assessment for that year, Abe telephoned Bernard Mark (an attorney employed by respondent) in Newark to discuss the matter. Abe informed Mark that the assessment and the Latona Avenue address were both erroneous. Petitioners thereafter received a statement of adjustment for 1973 from the Internal Revenue Service Center, Holtsville, which corrected the assessment. The adjustment was dated November 7, 1977, and mailed to petitioners at the Parkway Avenue address.

In early September of 1976, petitioners' case for 1972 through 1975 was assigned to Revenue Agent Geraldine Fowler (hereafter referred to as Fowler) as a portion of a larger ongoing case involving a partnership and four partners other than Abe. In April 1976, a notice of deficiency had been prepared for petitioners' 1972 taxable year and Fowler had received a request from respondent's Appellate Division to determine the accuracy of such notice. During the course of this investigation, Fowler contacted Abe at the Parkway Avenue address, at the request of Abe's brother, and picked up various partnership returns at that address. When a taxpayer notifies respondent of a change of address, a special handling sheet is attached to the tax return indicating the change. Fowler's files indicated no change of address for petitioners.

The notice of deficiency at issue herein was assigned to be written by James Davenport (hereafter referred to as Davenport). Davenport in turn assigned petitioners' 1974 notice of deficiency to Kenneth Manning (hereafter referred to as Manning).⁴ During 1978, Manning was a revenue agent assigned to a field audit group. From approximately February 15, 1978, to April 30, 1978, Manning was temporarily assigned to prepare notices of deficiency. Neither Davenport nor Manning saw any indication of a change of address in petitioners' 1974 file. On April 3, 1978, a notice of deficiency for 1974 was sent to petitioners at the Latona Avenue address. For some undisclosed reason, this notice was never delivered to petitioners, but was returned to respondent as being unclaimed. Davenport then reexamined petitioners' file for a suitable address to which to send the notice other than the Latona Avenue address. Upon discovering no other address, Davenport stapled the notice inside the file's jacket cover without further action.

On September 25, 1978, petitioners received a letter dated September 22, 1978, from Thomas J. Laycock (hereafter referred to as Laycock), Director of the Service Center in Holtsville, requesting payment of overdue tax, interest, and late payment penalty for 1974. This letter was addressed to the Parkway Avenue address and was petitioners' first notice regarding their 1974 tax. Abe immediately wrote a letter to Laycock requesting an explanation.

Petitioners subsequently received a letter dated October 13, 1978, from Laycock again requesting payment for 1974. This letter was also addressed to the Parkway Avenue address.

On March 7, 1979, pursuant to petitioners' request, the Holtsville Service Center mailed to petitioners, at the Parkway Avenue address, a letter of explanation and a copy of the notice of deficiency dated April 3, 1978. This was the first time that petitioners had seen such notice. The petition herein was mailed on June 5, 1979, and filed with this Court on June 7, 1979. These dates are more than 1 year later than the date upon which respondent mailed the 1974 deficiency notice to the Latona Avenue address.

Section 6212(a) authorizes the Secretary of the Treasury or his delegate ⁵ to send a notice of deficiency to a taxpayer when it has been determined that a deficiency exists in the taxpayer's taxes. Section 6212(b)(1) provides, with an exception not relevant herein, that the notice authorized by section 6212(a) shall be sufficient if mailed to the taxpayer at his “last known address.” Within 90 days after the notice of deficiency is mailed (unless the notice is addressed to a person outside the United States), the taxpayer may file a petition with this Court for a redetermination of the deficiency, section 6213(a).

We must decide whether the notice of deficiency was mailed to petitioners at their “last known address” as that phrase is used in section 6212(b)(1). If we find that the notice was mailed to petitioners' last known address, then we must grant respondent's motion to dismiss for lack of jurisdiction because of the untimeliness of the petition. Stewart v. Commissioner, 55 T.C. 238 (1970); Goldstein v. Commissioner, 22 T.C. 1233 (1954). If, however, we find that the notice was not mailed to petitioners' last known address then we must grant petitioners' motion to dismiss for lack of jurisdiction because a valid notice was not sent. Shelton v. Commissioner, 63 T.C. 193, 195 (1974).⁶

A taxpayer's last known address is the last known permanent address or legal residence of the taxpayer, or the last known temporary address of a definite duration or period to which all communications during such period should be sent. Gregory v. United States, 102 Ct. Cl. 642, 663, 97 F. Supp. 962,...