Even Someone Else’s SNOD

What’s in a SNOD? My battle-hardened readers will respond, “year and tax. Everything else is commentary.” Well, there’s more than that, as ex-Ch J L Paige (“Iron Fist”) Marvel tells U. S. Auto Sales, Inc., 153 T. C. 5, filed 10/28/19.

“Petitioner is a corporation whose principal place of business was in Georgia when it petitioned the Court.  Petitioner and U.S. Auto Finance, Inc. (U.S. Auto Finance), are related entities which share a mailing address and are represented by the same counsel.  Petitioner and U.S. Auto Finance filed separate income tax returns for taxable years ending (TYE) June 30, 2003, 2007, and 2008.” 153 T. C. 5, at p. 3.

IRS unloads eleven (count ’em, eleven) pages of SNOD on Sales. But only four pages pertained to Sales, and the remaining seven pertained to Finance. And the identical alleged deficiencies ascribed to Sales in the front four got ascribed to Finance on the back seven. Sales petitions.

Then two months later, IRS unloads a fresh SNOD on Sales, with widely different deficiencies ascribed to Sales only. Sales petitions this one.

IRS wants to toss Sales’ first petition, because IRS meant Finance only, so Sales is the wrong party and no jurisdiction. I think IRS meant “no standing to sue,” a subset of no jurisdiction. “No standing” means “not your pig, not your barbecue.”

IRS puts in the tax returns of Sales and Finance for the years at issue, showing all the numbers in the SNOD at issue relate to Finance, and have nothing to do with Sales.

The rule here is cited in a case I didn’t blog. Basically, if the recipient of a SNOD can tell it’s a SNOD, and is directed to said recipient, that’s it, the recipient can petition. “But if a notice is ambiguous, the party seeking to invoke our jurisdiction must establish both that: (1) ‘the Commissioner made a determination’ as to the taxpayer and (2) ‘the taxpayer was not misled by the ambiguous notice.’ Failure to meet either test results in a conclusion that the notice is invalid.” 153 T. C. 5, at p. 8. (Citations omitted).

And Tax Court can use extrinsic evidence to resolve an ambiguous SNOD. Thus, reading the first SNOD, one can tell the years and the taxes, but first it says Sales owes and then it says Finance owes. The key is the separate tax returns for Sales and Finance. Reading the first SNOD against its tax returns for the years at issue, Sales had to know that Finance was meant, not them.

Besides, Sales petitioned the second SNOD timely, so Sales wasn’t prejudiced.

Finally, it’s true that there’s no standard form for a SNOD, but besides the year and the tax, the SNOD has to tell the taxpayer that it is in fact their tax and their year. This SNOD is so ambiguous that it isn’t a SNOD, at least as to Sales. But it might be valid as to Finance, since Sales and Finance share last known addresses. And mistakes in addresses don’t necessarily invalidate SNODs; see my blogpost “Name and Number,” 6/9/11.

Takeaway- In this context, if you have any related entity whatsoever named in a SNOD sent to you, they should petition and you should petition. Finance may have missed the boat, since the SNOD sent to Sales was sent to the last known address of Finance. And because who knows what an unambiguous SNOD is, petition everything anyway (just hold off the $60 until you have to send it).