WHERRY, Judge.
This case is before the Court because of a petition filed on December 1, 2011, in response to a notice of deficiency dated July 29, 2011, determining a deficiency in income tax of $119,307 and a section 6662(a)
The stated ground for respondent's motion to dismiss is that petitioner failed to file the petition instituting this case within the time prescribed by section 6213(a) as amplified by section 7502. Petitioner would have us dismiss the case on the grounds that the notice of deficiency is invalid because it was neither sent to petitioner's last known address nor received by petitioner with ample time to timely petition this Court. Respondent has conceded that the notice of deficiency was not sent to petitioner's last known address. Our issue for decision is whether petitioner received notice of the determined deficiency with sufficient time remaining to file a timely petition.
Some of the facts have been stipulated. The stipulations, with accompanying exhibits, are incorporated herein by this reference. At the time the petition was filed, petitioner resided in California.
On July 29, 2011, respondent issued to petitioner, and to petitioner alone, two original notices of deficiency for the 2007 tax year determining the deficiency and penalty amounts stated
Respondent sent the notice to the Suite 610 address under the mistaken belief that it was petitioner's last known address. However, petitioner's tax returns filed for the years 2008, 2009, and 2010 all indicated that petitioner's new address was 9229 West Sunset Boulevard, Suite 319, West Hollywood, CA 90069 (Suite 319 address). Because of a clerical error, petitioner's new address was not updated in respondent's records with the correct "319" suite number until November 2011 when petitioner filed his Federal income tax return for 2010.
There is no record of the Suite 610 notice of deficiency's being delivered to petitioner or returned to respondent, and petitioner denies that he ever received or saw the notice within the 90-day timeframe for timely petitioning this Court.
The path the Suite 610 notice took to arrive in Mr. Ishihara's hands is mysterious. Mr. Mather received this notice on or about November 28, 2011, from Mr. Ishihara, who had prepared petitioner's 2007 tax return and assisted in the audit of petitioner's 2007 tax year. At some time during the period of July to November 2011, the notice found its way into Mr. Ishihara's files, but he and petitioner claim to have no knowledge as to how or when this happened. Petitioner did not rule out the possibility that his assistant signed for the notice and delivered it directly to Mr. Ishihara without notifying petitioner of its delivery. After the time for petitioning this Court had expired, Mr. Ishihara discovered the notice buried in his files and immediately forwarded a copy of it to Mr. Mather.
A second notice of deficiency was mailed to the Tianna Road address because the revenue agent performing petitioner's audit had been successful in corresponding with petitioner at that address. Petitioner's historic residence was the Tianna Road address; but at the time that notice of deficiency was sent petitioner and his wife were experiencing marital difficulties, and petitioner did not stay at the home every night or even most nights. However, he did maintain a room at the home, and there is no evidence that he had any other residence during the 90-day period after the notice of deficiency was mailed to the Tianna Road address.
Petitioner continued to receive mail at the home. Petitioner's wife would typically bring in all the mail received at the address, sort out her mail, and leave mail addressed to petitioner on a long narrow shelf-like bench next to the staircase near the front door. She indicated at the hearing that from time to time she would throw away his mail or dump it in storage in the garage if he had not picked it up for several days or sooner, out of frustration, if she was having a "bad day". But she does not remember specifically throwing out a notice of deficiency, and she was aware of what mail from the Internal Revenue Service (IRS) looked like, having recently received mail from the IRS as part of an audit.
The Tianna Road notice was delivered on August 2, 2011, and was signed for by a woman named Blanca, who was temporarily assisting in caring for petitioner's son and maintaining the Tianna Road home. According to petitioner's wife, Blanca would have put any mail she signed for on the shelf with all the other accumulated mail without sorting it or notifying the person to whom the mail was addressed. Petitioner's wife has no memory of seeing the notice of deficiency signed for by Blanca, and Blanca did not testify at the hearing. Petitioner insists that he never received the notice of deficiency sent to the Tianna Road address.
The petition in this case was filed on December 1, 2011, which is 125 days after the duplicate notices of deficiency were mailed.
It is well settled that this Court has jurisdiction to determine whether it has jurisdiction in a case at any time.
Section 6212(a) authorizes the Commissioner, after determining a deficiency, to send a notice of deficiency to the taxpayer by certified or registered mail. The taxpayer then generally has, pursuant to section 6213(a), 90 days (or 150 days if the notice is addressed to a person outside of the United States) to file a petition with the Court for redetermination of the deficiency. The petition in this case was not timely filed. It was filed 125 days after the notice of deficiency was mailed, which is 35 days after the last day for which a timely petition could be filed. Therefore, initially our review will focus on whether the notice of deficiency was validly issued.
This is important to the parties because it will matter to them, if the case is dismissed, why the case is dismissed. If the notice of deficiency was invalid, petitioner may avoid any need to defend his tax return against respondent's attack as the three-year period of limitations under section 6501(a) has presumably since expired.
Respondent's main argument is that we do not have jurisdiction to hear this case because petitioner filed the petition outside the 90-day window. Respondent also advances an alternative argument, that we have jurisdiction to reach the merits of this case because petitioner timely filed his petition. Respondent contends that where a notice of deficiency is mailed to the wrong address and the taxpayer nevertheless receives the notice but receives it outside the 90-day period, then actual receipt of the notice commences the running of the 90-day period.
If the notice in this case was mailed to petitioner's residence, we find this argument would be inconsistent with the Court's established precedent.
However, this case, absent stipulation to the contrary, is appealable to the Court of Appeals for the Ninth Circuit, whose precedent would therefore be controlling.
A notice of deficiency is valid if it notifies the taxpayer that a deficiency has been determined against him and gives the taxpayer the opportunity to petition this Court for redetermination of the proposed deficiency.
Respondent has conceded and we agree that neither notice of deficiency was sent to petitioner's last known address. Petitioner's most recently filed and processed Federal income tax return at the time the notice was issued indicated that petitioner's address was the Suite 319 address. Respondent negligently failed to update his records and erroneously sent the notice to the old Suite 610 address, which was not petitioner's last known address.
Nevertheless, all is not necessarily lost for respondent. A notice of deficiency not mailed to the taxpayer's last known address can still be valid. If the mailing results in the taxpayer's
It is well settled that if the taxpayer physically receives the notice, "actual receipt" has been satisfied.
However, personal, physical possession of the notice (or the envelope in which it is delivered) is not imperative. This Court has held that a taxpayer actually received a notice when it was made aware that a letter which contained a notice of deficiency had been issued to it, but "turn[ed] a blind eye to that information".
In another case where physical receipt of the notice was lacking,
In
The Tianna Road notice was delivered and received at that residence within a few days after respondent mailed it. We do not think that Blanca, the individual who signed the certified receipt, threw out this notice; and on a preponderance of the evidence, we find that Blanca placed the notice on the side table with the other mail. We also find it unlikely that petitioner's wife threw out this notice. She clearly was aware of what mail from the IRS looked like and presumably understood the importance of IRS certified mail, given her recent IRS audit. Petitioner's wife declared that she threw out petitioner's mail from time to time but had no memory of specifically throwing out a notice of deficiency. As was the case with petitioner, we did not find petitioner's wife to be a completely candid witness. Accordingly, her testimony does not diminish the fact that the notice was received into the home and "placed within the taxpayer's grasp".
We conclude that the notice of deficiency sent to the Tianna Road address was valid.
The Court has considered all of the parties' contentions, arguments, requests, and statements. To the extent not discussed herein, we conclude that they are meritless, moot, or irrelevant.
To reflect the foregoing,