In Uncategorized on 05/31/2013 at 05:26

No, not a joke or a concept, but a SNOD or an 1153. Both are tickets to Tax Court, but the consequences of receipt or non-receipt can change what the taxpayer can do once they get there.

And 5/30 brought us two cases in point. Here’s the first; the second will get its own blogpost.

IRS claimed they mailed the SNOD in June, 2005 to Dominick Galluzzo and Angela Galluzzo, in 2013 T. C. Memo. 136, filed 5/30/13. And Dom and Angie sent in their petition.

Judge Vasquez: “Petitioners filed their petition with the Court on May 21, 2012, which was 2,545 days after the purported mailing of the notices of deficiency.” 2013 T. C. Memo. 136, at p. 3. A wee bit late, ya think?

Yes, says Judge Vasquez, and he’ll dismiss the petition for want of jurisdiction, but why he will do so matters a lot.

Dom and Angie claim there never was a SNOD. IRS claims there was.

Judge Vasquez explains in a footnote: “If respondent’s [IRS’] position is sustained, the petition is untimely, and the deficiencies and additions to tax may be assessed. Petitioners’ recourse then would be to pay the tax, file a claim for refund with the Internal Revenue Service (IRS) and, if the claim is denied, sue for a refund in the appropriate Federal District Court or the Court of Federal Claims. If petitioners’ position is sustained, the notice of deficiency is a nullity, and respondent may not assess the deficiencies or additions to tax, under normal circumstances, unless a valid notice of deficiency is issued.” 2013 T. C. Memo. 136, at p. 2, footnote 3. In the latter case, Dom and Angie get a do-over. See my blogpost “A Do-Over”, 1/11/13.

IRS proffers a USPS Form 3877 proof of mailing and nothing else, saying they lost the administrative file. Dom and Angie swear they don’t remember getting anything from IRS in June, 2005.

OK, “Section 6212(a) expressly authorizes the Commissioner, after determining a deficiency, to send a notice of deficiency to the taxpayer by certified mail or registered mail. It is sufficient for jurisdictional purposes if the Commissioner mails the notice of deficiency to the taxpayer’ ‘last known address’.” 2013 T. C. Memo. 136, at pp. 3-4. (Citations omitted).

Mailing is enough; receipt by taxpayer doesn’t matter. Mailing starts the 90-day in-country clock for filing with Tax Court.

But once Dom and Angie claim they never got the SNOD, IRS has the burden of proving both mailing (which they do) and the validity of the SNOD, which they can’t do.

Judge Vasquez cites a previous Tax Court case, affirmed by Third Circuit, where: “…the Commissioner (1) lost the administrative file, (2) had no copies of a notice of deficiency, (3) did not establish that a final notice of deficiency ever existed, (4) relied on a Form 3877, and (5) did not introduce evidence showing how the Commissioner’s personnel prepare and mail notices of deficiency.” 2013 T. C. Memo. 136, at p. 5 (Citation omitted, but look it up.).

Moreover, in the case cited, IRS “produced a draft copy of the notice of deficiency and supported the draft with affidavits from two IRS employees who stated that they worked on the notice of deficiency at issue. In our case, respondent presented no such evidence; he has not produced a draft copy of the notices of deficiency or any testimony from IRS employees who assisted in the preparation of the notice of deficiency. Thus, there is nothing in the case, apart from the Form 3877 itself, to support a presumption of regularity by the IRS.” 2013 T. C. Memo. 136, at p. 5.

I cannot here quote Mario Puzo’s immortal words to describe IRS’s situation, but fans of “The Godfather” will get it.

Dom and Angie didn’t get it. Case dismissed, but they get the do-over.

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