T.C. Mem o. 2 01 3- 11 2

UNITED STAT ES TAX COURT

JAM ES STEVEN A RROYO, Pet it io ne r v. COMM ISSI ONER OF INTERNAL REVENUE, Resp on de nt

Doc ke t No . 93 16 -1 1L. Fil edApri l 1 8, 2 01 3.

Ja m es Ste ve n Arr oyo, pr o s e. Rac ha el J. Zep ed a, fo r res po nd en t.

MEMORANDUM FINDINGS OF FACT AND OPINION FOLEY, Jud ge : Th e is su e fo r de ci si on is whethe r to su st ai n re sp on de nt ’s de te rm in at io n t o p ro ceedwith the co ll ect io n o f pe ti ti on er’s t ax li ab il it ie s re la ti ng to 19 99 , 20 01 , and20 06 (y ears inis su e).- 2 -

[* 2] FINDINGS OF FACT In19 78 pe ti ti on er, wh il e se rv in g i n the m il it ary, be ga n t o u se hi s p aren ts ’ ho m e in W in ne tk a, Cal ifo rn ia(fi rs t Ca li fo rn iaad dr es s) , as h is m ai li ng ad dr es s. Whe n h is m il it ary se rv ic e co nc lu de d i n 1 98 3, h e m ov edto a ne arb y ap art m en t b ut di d n otfil e a ch an ge of a dd res s fo rm with the U.S. Pos ta l Se rv ic e (USPS ). Pet it io ne r, in19 88 , m ov edto anap art m en t i n C an og a Park, Ca li fo rn ia(se co nd Cal ifo rn iaad dr es s) ; i n J anua ry 20 01 , m ov edto a ho m e in Pres co tt , Arizo na (Ari zo naad dr es s) ; an d, i n 2 00 5, n ot ifi edres po nd en t tha t h e li ve d a t the Ariz on a ad dr es s. Pet it io ne r rec ei ve d: in19 99 , a tax refu ndfro m Cal ifo rn ia , com

pe ns at io n fro m Po ly-Tain er, an d d iv id en d p aym en ts fro m Mo rg anSta nl ey

DeanW it te r Trus t; in20 01 , com

pe ns at io n fr om

Po ly-Tain er an d p ro ceed s fr om th e sa le of r eal pr op erty ; an d i n 2 00 6, co m pe ns at io n fr om

Maz y , Inc ., andin te res t fr om St oc km an ’s Ban k. Pe ti ti on er d idno t re po rt i nc om e o r fi le Fed eral in co m e ta x returns rel at in g t o 1 99 8, 1 99 9, 2 00 0, 2 00 1, 2 00 5, an d 2 00 6. Re sp on de nt , onJu ly 20 , 20 04 , sen t n ot ic es of d efi ci en cy rel at in g t o 1 99 9 a nd20 01 to pe ti ti on er’s fi rs t Cal ifo rn iaad dr es s (i .e., th e m os t re cen t ad dr es s re fle ct edinres po nd en t’s re co rd s)
. Inth es e n ot ic es res po nd en t d et erm in edde fic ie nc ie s; ad di ti on s t o t ax forfai lu re t o ti m el y fil e ta x re tu rn s, p ur su an t t o s ect io n 6 65 1( a)(1 ); andad di ti on s t o t ax for- 3 -

[* 3] fai lu re t o p ay

est im at edtax , pu rs ua ntto sec ti on66 54 (a). On Dece m be r 13 , 1 20 04 , res po nd en t as se ss edde fic ie nc ie s an d a dd it io ns to tax , andsen t t o pe ti ti on er’s fi rs t Ca li fo rn iaad dr es s n ot ic es of b al an ce due , rel at in g t o 1 99 9 a nd 20 01 . On Feb ru ary 27 , 20 09 , res po nd en t s en t a n ot ic e o f de fic ie nc y rel at in g t o 20 06 to pe ti ti on er’s Ari zo naad dr es s (i .e., th e m os t re cen t ad dr es s re fle ct edin
res po nd en t’s re co rd s) . In the no ti ce re sp on de ntde te rm in eda de fic ie nc y ; an ad di ti on to tax forfai lu re t o t im el y fil e a t ax return, p ur su an t t o s ect io n 6 65 1( a)(1 );
anad di ti on to tax for

fai lure t o t im el y

pa y tax , pu rs ua ntto sec ti on 66 51 (a)( 2) ; an d
anad di ti on to tax for

fai lure t o p ay

est im at edtax , pu rs ua ntto sec ti on 66 54 (a). On Ju ly 13, 2 00 9, re sp on de ntass es se d ade fic ie nc y an d a dd it io ns to tax , andsen t t o pe ti ti on er’s Ari zo naad dr es s a n ot ic e o f ba lanc e due , rel at in g t o 2 00 6. On J un e 1 , 20 10 , res po nd en t s en t t o p et it io ne r’s Ariz on a ad dr es s a No ti ce o f In te ntto Levy andNot ic e o f You r Ri gh t t o aHeari ng rel at in g t o the y ears inis su e. Pet it io ne r ti m el y

fil eda Fo rm

12 15 3, Re qu es t fo r a Co ll ect io n Du e Pro ces s o r Equ iv al en t Hea rin g, i n wh ic h h e as se rte d tha t h e h adno t “ rece iv edth e requi red
no ti ce.” By tel ep ho ne on Janua ry 28 , 20 11 , he r eque st eda co rres po nd en ce co ll ect io n due pro ces s h eari ng . In a l ette r da te d J anua ry 31 , 20 11 , res po nd en t Unl es s o th erwi se in di cat ed , all sec ti on refe ren ces are t o the Int ern al 1 Rev enue Co de ineffe ctat a ll rel ev an t t im es , andall Ru le refe ren ces are t o the Tax Co urt Ru le s o f Prac ti ce an d P ro cedur e.- 4 -

[* 4] in fo rm edpe ti ti on er tha t “ y oucan no t ra is e th e und erl y in g t ax li ab il ity ina Co ll ect io n Du e Pro ces s Hea rin g i f y ourece iv edth e st atut ory no ti ce o f de fic ie nc y fo r th e ta x l iabi li ty and/o r y ouha d the op po rtu ni ty to d is pu te su chli ab il ity .” By facs im il e d at edMarc h 2 , 20 11 , pet it io ne r as se rte d tha t h e d idno t re cei ve no ti ces of de fic ie nc y

rel at in g t o the y ears inis su e an d tha t “ th e co rrec t am ou ntof ‘in co m e ta x’ owi ng forsai d years, i s $ 0.0 0.” On Ma rch 16 , 20 11 , res po nd en t s en t t o pe ti ti on er’s Ari zo naad dr es s a n ot ic e o f de te rm in at io n s us ta in in g the pro po se d
co ll ect io n a ct io n. OnApri l 2 1, 2 01 1, p et it io ne r, whi le res id in g i n Ari zo na , ti m el y fil eda pe ti ti on with the Co urt. OPINION Pet it io ne r cre di bl y

tes ti fie d a ndest ab li sh edth athe di d n otrece iv e n ot ic es of de fic ie nc y

an d d em an d fo r pa ym en t re lati ng to th e y ears inis su e. Becaus e h e d id
no t re cei ve no ti ces of d efi ci en cy or o th erwi se have anop po rtu ni ty to d is pu te hi s un de rlyin g t ax li ab il it ie s, we re vi ew hi s l iabi li ti es de no vo . See s ec. 63 30 (c)( 2) (B); Tho rnbe rry v. Co m m is si on er, 1 36 T.C. 35 6, 3 62 -3 63 (20 11 ). Pet it io ne r rea di ly adm it s tha t h e rec ei ve d the un rep orte d i nc om e atis su e bu t 2 Res po nd en t h as m ethi s b ur de n o f co nn ect in g p et it io ne r with thi s i nc om e. 2 See Wiem ers ki rch v. Co m m is si on er, 5 96 F.2d35 8, 3 60 -3 62 (9t h C ir. 1 97 9) (h ol di ng th atth e Co m

mis si on er’s d et erm in at io n re la ti ng to un rep orte d i nc om e is pr es um edco rrec t wh ere i t i s s up po rte d b y a “ m in im al ev id en ti ary fo un da ti on ”), (co nt in ue d...)- 5 -

[* 5] co nt en ds th athe ha s n o t ax li ab il it ie s b ecau se th e requi si te no ti ces of de fic ie nc y

an d d em an d fo r pa ym en t ar e in va li d. To be va li d, n ot ic es of d efi ci en cy an d d em an d fo r pa ym en t m us t b e se ntto a ta xp ay er’s l as t kno wn ad dr es s. Sec s. 62 12 (a) and(b) (1 ), 62 13 (a), 6 30 3( a). A tax pa y er’s actua l re cei ptof s uc h n ot ic es , ho wev er, i s n otrequi red . See s ecs . 62 12 (a) and(b) (1 ), 62 13 (a), 6 30 3( a); DeWelle s v . Uni te d S ta te s, 3 78 F.2d37 , 39 (9t h C ir. 1 96 7) ; Cr ai g v . Co m m is si on er, 1 19 T.C. 25 2, 2 62 (20 02 ). The 1 99 9 a nd20 01 no ti ces of de fic ie nc y

an d n ot ic es of b al an ce due were m ai le d t o the fir stCal ifo rn iaad dr es s, 3 whi chres po nd en t es tabl is he d was , in20 04 , pet it io ne r’s la stkn own ad dr es s. In ad di ti on , res po nd en t es tabl is he d tha t the 20 06 no ti ce o f de fic ie nc y an d n ot ic e o f ba lanc e due were s en t t o p et it io ne r’s Ariz on a ad dr es s, wh ic h re sp on de nt
es tabl is he d was , in20 09 , pet it io ne r’s la stkn own ad dr es s. Pet it io ne r co nt en ds th athe ch an ge d h is las t kno wn ad dr es s b y fil in g a n of fic ia l USPS ch an ge of a dd res s fo rm an d b y li st in g h is sec on d C al ifo rn iaad dr es s on cert ai n t ax returns . See Kin g v . Comm is si on er, 8 8 T.C. 1 04 2, 1 04 8 (1 98 7) (s ta ti ng th at“ Inth e Nin th Cir cu it , ‘ A tax pa y er’s l as t kno wn ad dr es s i s tha t o n h is (...co nt inue d) 2 rev ’g 67 T.C. 67 2 (1 97 7)
. A no ti ce o f ba lanc e due , pu rs ua ntto sec . 63 03 (a), co ns ti tu te s a n ot ic e an d 3 de m an d fo r pa y

m en t. Cra ig v. Co m

m is si on er, 1 19 T.C. 25 2, 2 62 -2 63 (20 02 ).- 6 -

[* 6] m os t re cen t re tu rn , un le ss th e ta xp ay er co m m un ic at es to th e IRS “ cl ear a nd
co nc is e” n ot ic e o f a ch an ge of a dd res s.’” (quo ti ng Uni te d S ta te s v . Zol la , 72 4 F .2d 80 8, 8 10 (9t h C ir. 1 98 4) )), aff ’d, 85 7 F .2d67 6 (9 th Cir . 19 88 ); s ec. 3 01 .62 12 -2 (a)
an d (b ), Pro ced . & Adm in . Reg s.; see als o Go ls env. Co m m is si on er, 5 4 T.C. 7 42 , 75 7 (1 97 0) , aff’d, 4 45 F.2d98 5 (1 0t h C ir. 1 97 1) . Peti ti on er, h owe ve r, pr oduc ed
no cred ib le ev id en ce i n s up po rt o f th es e co nt en ti on s. See Yu sk o v . 4 Co m m is si on er, 8 9 T.C. 8 06 , 80 8 (1 98 7) (st at in g tha t “ The bu rd enof p ro vi ng th at th e n ot ic e was no t s en t t o the las t kno wn ad dr es s i s o n p et it io ne r.”). In de ed , when
as ke d wh ethe r he us edhi s fi rs t Ca li fo rn iaad dr es s af te r 19 83 , pet it io ne r st at ed : “ I do n’t re cal l.” In sh ort, the st atut or il y requi redno ti ces were v al id
. Pet it io ne r di d n otfil e Fed eral in co m e ta x re tu rn s, h av e Fed eral in co m e ta x withh el d, o r pa y

est im at edtax rel at in g t o the y ears inis su e. Res po nd en t de te rm in edth atpe ti ti on er i s l iabl e, pu rs ua ntto sec ti on66 51 (a)( 1) an d (2 ), fo r ad di ti on s t o t ax for

fai lure t o t im el y

fil e a return a ndfai lu re t o t im el y pa y tax . Purs ua ntto sec ti on 74 91 (c), re sp on de ntbe ars th e b ur de n o f pr oduc ti on rel at in g t o th es e ad di ti on s t o t ax . See Hig be e v . Comm is si on er, 1 16 T.C. 43 8, 4 46 (20 01 ).
Sec. 7 49 1( a) p ro vi de s tha t the burd enof p ro of sh al l s hi ft t o the 4 Co m m is si on er i f th e ta xp ay er i nt ro du ces cred ib le ev id en ce re la ti ng to th e is su e. Thi s s ect io n i s i napp li cab le be cau se pe ti ti on er fa il edto in tro du ce cr ed ib le ev id en ce.- 7 -

[* 7] Res po nd en t h as m ethi s b ur de n re la ti ng to th e se ct io n 6 65 1( a)(1 ) ad di ti on s t o ta x a ndest ab li sh edth atpe ti ti on er’s fai lu re t o t im el y fil e ta x re tu rn s re la ti ng to each y ear i n i ss ue was the res ul t o f wil lfu l n eg le ctan d n otdu e to reas on ab le cau se . See s ecs . 66 51 (a)( 1) , 74 91 (c); Hig be e v . Comm is si on er, 1 16 T.C. at 4 46
. Res po nd en t h as no t, h owe ve r, m ethi s b ur de n o f pr oduc in g e vi de nc e th atitis ap pr op ria te to im

po se a se ct io n 6 65 1( a)(2 ) ad di ti on to tax rel at in g t o 2 00 6. Se e se cs . 66 51 (a)( 2) , 74 91 (c); Whe el er v . Comm is si on er, 1 27 T.C. 20 0, 2 09 -2 10 (2 00 6) , aff’d, 5 21 F.3d12 89 (10 th Cir . 20 08 ). Res po nd en t’s b rie f fai ls to ad dr es s th is is su e, an d the ran do m ly ass em bl ed , con fu si ng , andin co m pl et e ex hi bi ts he pr oduc edare i ns uf

fic ie ntto est ab li sh th athe fil eda subs ti tu te for return. See

5
se cs . 60 20 (a) and(b) , 66 51 (g )(2 ), 74 91 (c); Whe el er v . Comm is si on er, 1 27 T.C. at 20 9- 21 0; Cab ira c v . Comm is si on er, 1 20 T.C. 16 3, 1 70 -1 72 (20 03 ). Pet it io ne r is th eref or e li ab le for

a se ct io n 6 65 1( a)(1 ) ad di ti on to tax rel at in g t o e ach y ear i n is su e b utis no t l iabl e fo r a s ect io n 6 65 1( a)(2 ) ad di ti on to tax rel at in g t o 2 00 6. Res po nd en t fu rth er d et erm in edth atpe ti ti on er i s l iabl e, pu rs ua ntto sec ti on 66 54 (a), fo r ad di ti on s t o t ax forfai lu re t o p ay est im at edtax . In o rd er t o s at is fy hi s bu rd enof p ro du ct io n re lati ng to th es e ad di ti on s t o t ax , res po nd en t, ata m in im um ,
The cert ifi cat io n wh ic h a ss ert s tha t a s ub st itut e fo r return was fil eddo es no t 5 in cl ud e al l the li st edatt ach m en ts .- 8 -

[* 8] m us t es tabl is h tha t p et it io ne r ha d arequi redan nu al pa ym en t p ur su an t t o se ct io n 6 65 4( d) (1 )(B) . See s ecs . 66 54 (d )(1 )(B) , 74 91 (c); Whe el er v . Co m m is si on er, 1 27 T.C. at 2 11 . Peti ti on er d idno t fi le tax returns rel at in g t o the y ears inis su e o r th e p rece di ng y ears . There fo re, h is requi redannu al pa ym en t was 90 % of t he tax li ab il ity

rel at in g t o e ach y ear i n i ss ue . See s ecs . 66 54 (d )(1 )(B) , 74 91 (c); Whe el er v . Commis si on er, 1 27 T.C. at 2 11 . Peti ti on er fa il edto m ak e th e requi redpa ym en ts an d i s the refo re l iabl e fo r se ct io n 6 65 4( a) ad di ti on s t o t ax rel at in g t o e ach y ear i n i ss ue . Acco rd in gl y , res po nd en t m ay pro ceedwith c ol le ct io n re lati ng to th e y ears in is su e. Co nt en ti on s we h av e n otad dr es se d a re i rrel ev an t, m oo t, o r m eri tl es s. To re fle ctth e fo reg oi ng , Deci si on wil l b e en te red
un de r Ru le 15 5.