Carlisle v. Commissioner , 80 T.C.M. 458 ( 2000 )

T.C. Memo. 2000-310
UNITED STATES TAX COURT
AUDREY CARLISLE, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 12862-99. Filed September 28, 2000.
Audrey Carlisle, pro se.
Nguyen-Hong Hoang, for respondent.
MEMORANDUM OPINION
NAMEROFF, Special Trial Judge: By separate notices of
deficiency dated February 3, 1999, respondent determined
deficiencies in petitioner’s 1995 and 1996 Federal income tax of
$2,376 and $2,763, respectively. Unless otherwise indicated,
section references are to the Internal Revenue Code in effect for
the years in issue.
This matter is before the Court on the parties’ cross-
motions to dismiss for lack of jurisdiction. Petitioner’s motion
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is premised on the ground that respondent failed to send valid
notices of deficiency to her last known address. Respondent’s
motion is premised on the ground that petitioner failed to file a
timely petition in response to a valid notice. Because the
jurisdiction of this Court is limited by statute and attaches
only upon the issuance of a valid notice of deficiency and the
timely filing of a petition, this case must be dismissed for lack
of jurisdiction. The only question is on whose motion it will be
dismissed. Where jurisdiction is lacking because of the
Commissioner’s failure to issue a valid notice of deficiency, we
dismiss on that ground, rather than on the ground that the
taxpayer failed to file a timely petition. See Shelton v.
Commissioner, 63 T.C. 193 (1974); O’Brien v. Commissioner, 62
T.C. 543, 548 (1974); Heaberlin v. Commissioner, 34 T.C. 58, 59
(1960); see also Brannon’s of Shawnee, Inc. v. Commissioner, 69
T.C. 999 (1978) (the Court has jurisdiction to decide issues
regarding its jurisdiction).
Background
Petitioner’s tax returns for 1995 and 1996 were under
examination by the Internal Revenue Service (IRS) in 1998.
Petitioner’s case was assigned to Vicki Murdock, a tax-examining
assistant at the IRS Ogden, Utah, Service Center. Ms. Murdock
handled petitioner’s case from April 1998 to July 1999.
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Before September 1998, petitioner resided at 7500 Crescent
Avenue, Apartment 125, Buena Park, California (the Crescent
Avenue address), which was her brother’s residence. The Crescent
Avenue address was the address on petitioner’s 1997 Federal
income tax return filed in 1998. By letter dated September 19,
1998, petitioner informed the IRS that she had moved to 370 North
Oak Street, Orange, California (the Oak Street address).1
Respondent made this address change in the IRS taxpayer address
database.
On October 26, 1998, respondent received a letter from
petitioner dated October 16, 1998.2 The letterhead of this
letter reflects petitioner’s address as 130 West Adele Street,
Apartment F, Anaheim, California (the Adele Street address).
There is no statement in petitioner’s letter that there was a
change of address. Respondent did not make an address change in
the database for petitioner’s address. On November 12, 1998, Ms.
Murdock received another letter3 from petitioner dated
October 29, 1998, which also reflects the Adele Street address in
1
Petitioner sent this letter to the IRS Service Center in
Fresno, California, and it was transferred to Ms. Murdock.
2
This letter was also sent to the Service Center in
Fresno, California, and refers to petitioner’s disagreement with
the changes proposed by respondent.
3
In this letter, petitioner states her disagreement with
the examination report.
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the letterhead. There is no statement in the letter indicating a
change of address, and respondent did not make such a change.
According to notes taken by Ms. Murdock, she attempted to
call petitioner three times in December 1998 and twice in January
1999. The number she called was that of petitioner’s brother.
On January 8, 1999, Ms. Murdock left a message on the answering
machine4 for petitioner. In her notes Ms. Murdock wrote: “Left
message if she does not contact us by 1-12 we’ll send 90 day
letter.”
By letter dated January 20, 1999, the IRS sent petitioner a
form letter to the Crescent Avenue address thanking her for her
correspondence dated November 12, 1998. The letter stated that
the IRS had not yet reviewed the information she sent but would
contact her within 60 days to let her know what action would be
taken. The letter was signed by the Chief of the Fresno Service
Center Examination Branch.
In early January 1999,5 petitioner received her 1998 Form
1040A instructions booklet (tax booklet). This tax booklet was
mailed to the Adele Street address.
On February 3, 1999, respondent mailed 1995 and 1996 notices
of deficiency to the Oak Street address by certified mail. These
4
Ms. Murdock testified that petitioner identified herself
on the outgoing answering machine greeting.
5
Petitioner believes that she received her tax booklet
between Jan. 2 and 7, 1999.
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notices were returned to respondent in late February as
unclaimed.
On March 13, 1999, respondent received petitioner’s 1998
income tax return, which reflected the Adele Street address. At
that time, respondent updated his database to show the Adele
Street address for petitioner.
In April 1999, petitioner’s case was sent back to Ms.
Murdock. While looking through petitioner’s file, Ms. Murdock
noticed the Adele Street address on the letterhead of
petitioner’s prior letters. Ms. Murdock checked the database and
noticed that petitioner’s address had been updated. On April 23,
1999, Ms. Murdock caused a letter to be sent to petitioner at the
Adele Street address, transmitting copies of the notices of
deficiency and explaining that the 90-day statutory period for
filing a petition with the Tax Court was not extended. The 90-
day period within which to timely file a petition with this Court
expired May 4, 1999. Petitioner filed her petition on July 20,
1999.
Petitioner alleges that on January 11, 1999, she sent
another letter to respondent stating a change of address to the
Adele Street address. Respondent claims that letter was never
received. Petitioner’s copy of that purported letter appears to
have been written on stationery or notepaper which is different
from all her other correspondence in the file. Moreover, the
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formatting and style of the message contained therein is likewise
different from her previous letters.
Petitioner further alleges that she called Ms. Murdock’s
office in January 1999 and was told that Ms. Murdock was no
longer handling her case. Petitioner claims that when she spoke
to the secretary who answered the phone, she identified herself
with her Social Security number and the Adele Street address.
Lastly, petitioner contends that since she received her tax
booklet in early January at the Adele Street address, respondent
knew of this address before the notices of deficiency were issued
in February.
Respondent contends that the notices of deficiency were sent
to petitioner’s last known address, and petitioner failed to
petition the Court within the statutory period. Respondent
argues that petitioner’s October 1998 and November 1998 letters
did not provide “clear and concise” notice of an address change.
Testimony of Mitchell Farah
During the first hearing on this matter, the Court
questioned how respondent was able to send the tax booklet for
1998 to petitioner’s Adele Street address. Respondent
subsequently moved to reopen the record to answer this concern
(which motion was granted), and a second hearing was held.
Respondent called Mitchell Farah (Mr. Farah) as a witness. Mr.
Farah is the manager of the mailouts and composition section of
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the tax products branch of the IRS in Washington, D.C. As part
of his job, Mr. Farah supervises the employees who are
responsible for the administration of contracts with private
print vendors (vendors). The IRS contracts with the vendors to
mass produce and mail to taxpayers the tax forms and instructions
booklets such as the one received by petitioner. Pursuant to
these contracts, the taxpayers’ addresses are downloaded from the
IRS’s master file database at Martinsberg, W. Va. This
information is stored on cassettes and sent to the vendors. The
vendors contract with a National Change of Address (NCOA)
licensee which has access to the NCOA file that the U.S. Postal
Service maintains in Memphis, Tennessee. The NCOA licensee
matches the names and addresses from the IRS master file with the
NCOA database. Old addresses are replaced with new addresses
that were submitted to the post office, and they are stored on
the cassette.
Mr. Farah testified that neither the NCOA licensee nor the
vendor notifies the IRS about the changed addresses. The vendors
use the new addresses for the mailing of the tax booklets, and
the new addresses are printed on labels inside the booklets for
the taxpayers’ use in filing their returns. Each label is coded
to reflect that a change of address has occurred. When the IRS
receives a return with a preprinted label reflecting a new
address, it makes the address change in its master file.
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All of the tapes with the updated addresses used by the
vendor are returned to the IRS within 30 days of the last mailing
of the booklets. The IRS does not use the tapes to update its
taxpayer address database. Mr. Farah stated that the IRS deletes
the information and reuses the tapes. When this occurs is not
included in the record, but he further testified that on rare
occasions, the IRS may check its database to locate a taxpayer’s
address and ask the vendor to which address the vendor sent the
tax booklet if a taxpayer who did not receive a tax booklet
notifies a congressperson who in turn makes an inquiry to the
IRS. According to Mr. Farah this is the only time that the IRS
considers the information from the NCOA for a change of address.
The record includes a document entitled “Specifications for
Contract Printing and Binding of the 1998 Individual Income Tax
Packages 1040A-1 & 1040A-2” (the contract). Paragraph 5.1 of the
contract entitled “Furnished Cartridges” states:
IRS will furnish the contractor with address cartridges,
sorted by zip code. * * * Contractor is responsible for
taking the IRS raw data file and passing the file against
the National Change of Address (NCOA) file using standard
matching logic, providing the IRS with magnetic cartridges
containing the following: a separate listing of new move
addresses and incomplete addresses (nixies). Nixies are not
to be mailed. Each new move address must be referenced with
its corresponding old address, including the check digit,
social security number, service code number, and package
code, to allow comparison by the IRS. In addition,
contractor must provide all applicable NCOA reports, by IRS
service center, and provide a printout of 100 records, any
service center, for moves and nixies, for analysis.
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Paragraph 5.1.5 entitled “New Move Address Indicators”
states as follows: “Image, on the “Taxpayer’s Name and Address
label”, “#” symbols horizontally and vertically, to identify each
new move address.” Petitioner’s preprinted label attached to her
1998 income tax return was imaged with the “#” symbols to
indicate a new move address.
According to the schedule in the contract, delivery of the
tax booklets to the post office (called phase 1) was to occur
January 4, 1999, with phase 2 to occur January 14, 1999. Mr.
Farah testified that the tapes were returned to the IRS around
the end of February.
Discussion
Section 6212(a) expressly authorizes the Commissioner, after
determining a deficiency, to send a notice of deficiency to the
taxpayer by certified or registered mail. It is sufficient for
jurisdictional purposes if the Commissioner mails the notice of
deficiency to the taxpayer's “last known address”. Sec. 6212(b);
Frieling v. Commissioner, 81 T.C. 42, 52 (1983). If a notice of
deficiency is mailed to the taxpayer's last known address, actual
receipt of the notice is immaterial. See King v. Commissioner,
857 F.2d 676, 679 (9th Cir. 1988), affg. 88 T.C. 1042 (1987);
Yusko v. Commissioner, 89 T.C. 806, 810 (1987); Frieling v.
Commissioner, supra at 52. The taxpayer, in turn, has 90 days
from the date the notice of deficiency was mailed to file a
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petition in this Court for a redetermination of the deficiency.
See sec. 6213(a).
Neither the Internal Revenue Code nor the regulations
promulgated thereunder define the phrase “last known address”.
However, this Court has defined the phrase to mean “the
taxpayer’s last permanent address or legal residence known by the
Commissioner, or the last known temporary address of a definite
duration to which the taxpayer has directed the Commissioner to
send all communications during such period.” Brown v.
Commissioner, 78 T.C. 215, 218 (1982). In general, that address
will be the address reflected on the taxpayer’s most recently
filed Federal income tax return, absent clear and concise
notification of a different address. See Abeles v. Commissioner,
91 T.C. 1019, 1035 (1988); Weinroth v. Commissioner, 74 T.C. 430,
435 (1980); Alta Sierra Vista, Inc. v. Commissioner, 62 T.C. 367,
374 (1974), affd. without published opinion 538 F.2d 334 (9th
Cir. 1976). The taxpayer has the burden of proving that the
notice of deficiency was not sent to her last known address. See
Yusko v. Commissioner, supra at 808.
Once the Commissioner becomes aware of an address other than
the one on the taxpayer’s return, the Commissioner must exercise
reasonable care and due diligence in ascertaining the correct
address. See Pyo v. Commissioner, 83 T.C. 626 (1984). Whether
the Commissioner has done so is a question of fact. See Weinroth
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v. Commissioner, supra. Although the Commissioner must exercise
reasonable diligence in ascertaining the taxpayer’s correct
address, the burden necessarily falls upon the taxpayer to keep
the Commissioner informed of her correct address. See Ramirez v.
Commissioner, 87 T.C. 643 (1986); Alta Sierra Vista, Inc. v.
Commissioner, supra. As we have stated: “When a taxpayer
changes his address it is he who must notify the Commissioner of
such change or else accept the consequences”. Alta Sierra Vista,
Inc. v. Commissioner, supra at 374.
In this case, petitioner timely notified respondent of her
change of address from Crescent Avenue, the address on her 1997
tax return, to Oak Street, the address to which the notices of
deficiency were mailed. The first question to be resolved is
whether the October and November letters effected a change of
address because of the Adele Street address appearing in the
handwritten letterhead. This Court has held that an address
written in the letterhead of a taxpayer’s correspondence, without
more, will not constitute a clear and concise notification to the
IRS of a change of address. See id.; Sanderson v. Commissioner,
T.C. Memo. 1987-81. The taxpayer must advise the IRS that the
new address is to be used in the future. Therefore, respondent
properly mailed the notices of deficiency to petitioner’s last
known address.
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We have considered petitioner’s contentions that she advised
respondent of her Adele Street address in her January 1999 letter
and by telephone and conclude that she has not established those
facts by a preponderance of the evidence.
Finally, we are not persuaded that respondent knew or should
have known about the Adele Street address as a result of the
procedures pertaining to the mailing of the tax booklets for
1998, inasmuch as the undisputed evidence reflects that the
updated tapes were not returned to the IRS until the end of
February 1999. Similarly, petitioner’s filing of her 1998 return
reflecting her Adele Street address was too late to affect the
mailing of the notices of deficiency. Moreover, the fact that
respondent sent petitioner copies of the notices of deficiency in
April 1999 does not invalidate the February mailing, constitute a
new mailing, or enlarge the period for timely filing a petition
with this Court.
Although petitioner cannot pursue her case in this Court,
she is not without a remedy. In short, petitioner may pay the
tax, file a claim for refund with the Internal Revenue Service,
and if the claim is denied, sue for a refund in the U.S. District
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Court or the U.S. Court of Federal Claims. See McCormick v.
Commissioner, 55 T.C. 138, 142 (1970).
An order will be entered
granting respondent’s motion to
dismiss for lack of jurisdiction
and denying petitioner’s motion to
dismiss.