Attorney-at-Law

THE NUMBERS GAME

In Uncategorized on 10/17/2016 at 16:24

Robert Talbot, 2016 T. C. Memo. 191, filed 10/17/16, didn’t bother with tax returns for seven (count ‘em, seven) years. IRS helped Bob out with SFRs for all seven, and then gave him SNODs for the front four, and another batch for the back three.

Then came NITLs, first for the front four again, and later for the back three.

Bob petitions the lot, and loses on the front four. It’s the usual no-information-submitted for them.

The back three is another story, and Judge Kerrigan tells it.

“Petitioner resided at three different addresses within the same ZIP Code in Wasilla, Alaska.” 2016 T. C. Memo. 191, at p. 2.

IRS nailed the right address for the front four SNODs, and the NITLs that followed, so Bob is out on those. He had his chance to contest liability, had unfiled years and offered no collection alternative.

On the back three, IRS mailed the SNODs for those years to the right address, maybe, but inverted the street number on the USPS3877 Proof of Mailing. The same inversion shows up on the case activity report. The 3877 and the case activity report both show “425” when the right number is “452.” And thereby hangs the cliché.

None of the SNODs were returned. Bob, of course, claims he never got any of them, so never petitioned, and wants to fight about his liability.

Bob never put in any evidence at any time about his liabilities for any of the seven years at issue, even when he got the chance at Appeals. So liability is not at issue.

But IRS flunks the abuse-of-discretion test for the back three.

“Respondent [IRS] asserts that respondent may rely on a presumption of official regularity to verify that a notice of deficiency was duly mailed to petitioner’s last known address before assessment.  We have held that exact compliance with PS Form 3877 or equivalent mailing procedures raises a presumption of official regularity in favor of the Commissioner and is sufficient, absent evidence to the contrary, to establish that a notice of deficiency was properly mailed.” 2016 T. C. Memo. 191, at p. 15 (Citations omitted).

That doesn’t go for the back three.

“In the notice of determination the settlement officer noted that ‘Appeals has review[ed] the [IRS] [c]ertified mailing list to confirm’ that the notice of deficiency for tax years [back three] was sent by certified mail to petitioner’s last known address.  The IRS certified mailing list incorrectly lists petitioner’s address as 425…..  The defective IRS certified mailing list does not therefore entitle respondent to a presumption of mailing.” 2016 T. C. Memo. 191, at p. 20. (Citation omitted).

IRS goes down fighting. “Respondent argues that a typographical error should not invalidate the assessment.  Respondent contends that the IRS generally issues notices in windowed envelopes so that the address on a notice of deficiency is the address where the USPS would attempt to deliver the notice.  Specifically, an IRS field internal revenue agent group manager for Alaska and Tacoma, Washington, testified that ‘the window on the envelope is designed to fit where the address comes out on specific letters or on specific reports so that nobody has to retype an envelope.’” 2016 T. C. Memo. 191, at p. 20.

So the SNODs apparently got there despite the inverted numbers on the 3877 and the case activity report.

But that’s not good enough for Section 6330(c)(1) nor for Judge Kerrigan.

“At a CDP hearing, however, the settlement officer ‘shall’ verify that the requirements of all applicable law and administrative procedure have been followed.  Sec. 6330(c)(1).  One requirement of applicable law is the mandate of section 6213(a) that a notice of deficiency be duly mailed to the taxpayer’s last known address before a deficiency may be assessed.  If the Commissioner has not mailed a notice of deficiency, no collection of an assessment of the deficiency may proceed.” 2016 T. C. Memo. 191, at pp. 20-21.

“The settlement officer relied solely on the IRS certified mailing list to determine whether the notice was sent to petitioner’s last known address.  There is no evidence that the settlement officer reviewed any other documentation or information to verify the validity of the assessments.  The address on the certified mailing list is wrong.  It is therefore unclear whether a notice was sent to petitioner’s…address.  The incorrect address was also included in the IRS case activity report and several other places in the record, including the notices of determination.  If the settlement officer had reviewed a copy of the notice of deficiency, she might have noticed the address discrepancy.” 2106 T. C. Memo. 191, at p. 21.

No levy on Bob for the back three.

Anybody old enough to remember Justice Benjamin Nathan Cardozo’s remark that “the constable blundered”?

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