T.C. Memo. 1999-123

UNITED STATES TAX COURT

KEITH R. BASHAM, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 24676-96. Filed April 15, 1999.

Keith R. Basham, pro se.

Donald E. Edwards, for respondent.

MEMORANDUM OPINION

CARLUZZO, Special Trial Judge: This case was heard pursuant

to the provisions of section 7443A(b)(3) of the Internal Revenue

Code of 1986, as amended, and Rules 180, 181, and 182 of the Tax

Court Rules of Practice and Procedure. Unless otherwise

indicated, subsequent section references are to the Internal

Revenue Code of 1986, as amended and in effect for 1989. 
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Respondent determined a deficiency in petitioner's 1989

Federal income tax in the amount of $6,892, an addition to tax

under section 6651(a)(1) in the amount of $1,723, and an addition

to tax under section 6654 in the amount of $467. The issues for

decision are: (1) Whether the period of limitations prohibits

the assessment and collection of the deficiency here in dispute;

if not, (2) whether petitioner received and failed to report

certain income attributed to him in the notice of deficiency; (3)

whether petitioner is entitled to claim certain deductions; (4)

whether petitioner is liable for the section 6651(a)(1) addition

to tax for failure to file a return for 1989; and (5) whether

petitioner is subject to the addition to tax under section 6654

for failure to pay estimated income tax.

Background

Some of the facts have been stipulated and are so found. 

Petitioner resided in Little Rock, Arkansas, during all relevant

periods, including when the petition was filed in this case.

Except for a brief period during 1987 or 1988, from 1984

through at least some portion of 1989, petitioner was employed as

a salesperson for Swink and Company, Inc. (Swink), an investment

banking firm. Swink was forced into bankruptcy sometime in 1989

and went out of business by the end of that year.

While employed by Swink, petitioner was compensated on a

commission basis. For the year 1989, petitioner received at

least $38,304 in compensation from Swink, as reflected on a Form
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W-2 issued to petitioner by Swink. Apparently, petitioner was

required to reimburse Swink for certain trading losses and

customer bad debts. It is unclear whether the compensation

reported on the Form W-2 is net of reimbursements petitioner made

to Swink for trading losses and customer bad debts. Sometime in

1992 or 1993, petitioner discarded all records relating to 1989

that he might have kept.

Respondent's Information Returns Master File transcript

indicates that two payors issued information returns to

petitioner for 1989, one from Swink and the other from Worthen

Bank and Trust Co.

The notice of deficiency upon which this case is based was

issued and mailed to petitioner on September 18, 1996. In that

notice of deficiency, adjustments to petitioner's 1989 income

were made as though he did not file a Federal income tax return

for that year. Specifically, respondent (1) increased

petitioner's income by the amount of compensation reported on the

W-2 issued to petitioner by Swink; (2) increased petitioner's

income by $44 attributable to a distribution from Worthen Bank

and Trust Co.; (3) allowed petitioner a personal exemption

deduction; and (4) allowed petitioner the standard deduction

applicable to a single individual. Also in the notice of

deficiency, respondent determined that the additions to tax under

sections 6651(a)(1) and 6654 are applicable.
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Discussion

Petitioner agrees that in 1989 he received compensation from

Swink in at least the amount reported on the Form W-2 issued to

him by that company, as reflected in the notice of deficiency. 

He has no recollection of the $44 distribution; however, he

believes that it might have been from a section 401(k) plan. 

Regardless, petitioner contends that he filed a timely 1989

Federal income tax return and reported his compensation from

Swink and any other income he might have received that year. 

Respondent, on the other hand, denies that a 1989 return was

received from petitioner.

As a general rule, an income tax assessment must be made

within 3 years after the return was filed. See sec. 6501(a). If

a taxpayer fails to file a Federal income tax return for any

year, as respondent contends petitioner failed to do for 1989,

the period of limitations is, in effect, unlimited for that year. 

If petitioner filed his 1989 Federal income tax return as he

claims, the period of limitations for 1989 expired long before

the notice of deficiency for that year was issued to him. 

Generally, a document is considered filed with the Internal

Revenue Service when it is received by that agency. See United

States v. Lombardo, 241 U.S. 73, 76 (1916). "The 'filing' of a

return * * * by a taxpayer is completed when the return * * *

reaches the collector's office." Jones v. United States, 226

F.2d 24, 28 (9th Cir. 1955).
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Direct evidence of actual receipt of a document by the

Internal Revenue Service is not always necessary in order to

effectuate its filing. For example, section 7502(c)(1) provides

that if certain documents are sent by registered mail then such

registration shall be prima facie evidence that the document was

delivered to the agency, officer or office to which it was

addressed. Furthermore, except in situations where we are

constrained to do otherwise pursuant to Golsen v. Commissioner,

54 T.C. 742 (1970), affd. 445 F.2d 985 (10th Cir. 1971), this

Court considers proof that a document was properly mailed to give

rise to a presumption that the document was delivered to, and

received by, the person to whom it was addressed even though the

document was not sent by registered mail. See Estate of Wood v.

Commissioner, 92 T.C. 793, 798 (1989), affd. 909 F.2d 1155 (8th

Cir. 1990); accord Anderson v. United States, 966 F.2d 487 (9th

Cir. 1992). But see Carroll v. Commissioner, 71 F.3d 1228 (6th

Cir. 1995), affg. T.C. Memo. 1994-229; Surowka v. United States,

909 F.2d 148 (6th Cir. 1990); Miller v. United States, 784 F.2d

728 (6th Cir. 1986) (holding that the provisions of section 7502

supersede and extinguish the common law presumption of delivery). 

The presumption of delivery is subject to rebuttal by the

addressee. See Walden v. Commissioner, 90 T.C. 947, 951 (1988). 

Petitioner testified that in March 1990 he sent his 1989

return by regular mail to respondent's Memphis Service Center

(which was appropriate for an individual living where petitioner

did at that time). He attributed his specific recollection of
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the event to Swink's bankruptcy proceeding that occurred during

1989. According to petitioner, he reported no 1989 Federal

income tax liability because of the extent of deductions for

losses he incurred during that year, and he made no claim for

refund on the return.

Petitioner explained that he prepared his 1989 return with

the assistance of a friend. Petitioner further explained that he

was unsure of whether he properly accounted for certain items on

the return so he attached to the return a handwritten letter that

identified his concerns. Petitioner did not produce a copy of

his 1989 return at trial. He explained that he discarded any

copies of the return that might have existed along with all other

documents and information relating to 1989 several years before

he received the notice of deficiency in 1996. 

We are satisfied from petitioner's testimony that he mailed

his 1989 Federal income tax return as claimed. There were no

internal inconsistencies in his testimony, and nothing in the

record suggests that his description of the event is improbable. 

Petitioner did not specify the exact date in March that he

mailed the return, but even if mailed on the last day of that

month, it should have been delivered to respondent's Memphis

Service Center in due course of the mails. See Arkansas Motor

Coaches, Ltd. v. Commissioner, 198 F.2d 189, 190 (8th Cir. 1952). 

That being so, we presume that petitioner's 1989 return was

delivered to respondent prior to the date it was due to be filed. 

See sec. 6072(a).
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Respondent has offered no evidence to rebut the presumption

of delivery that results from petitioner's testimony. We find,

therefore, that petitioner timely filed his 1989 Federal income

tax return. It follows that the assessment and collection of the

deficiency here in dispute is barred because the notice of

deficiency was not issued within the period prescribed by section

6501(a). 

To reflect the foregoing and the provisions of section

7459(e),

Decision will be

entered for petitioner.