TAX COURT OPINION

Case: Estate of Paul Rule, Deceased, Betty Rule, Successor Administrator
Docket Number: 15717-08
Judge: Kroupa
Opinion Type: memo
Filed: 12/30/2009
Pages: 9

ESTATE OF PAUL RULE, DECEASED, BETTY-RULE, SUCCESSOR' ADMINISTRATOR, Petitioner v . . COMMISSIONER OF INTERNAL REVENUE, Responden t Filed ' Dec.ember -30, 2009 . A . LayarVTaylor and Robert S" Horwitz, for petitioner .-I Michael S Hensley , for respondent . 'MEMORANDUM OPINION- ; KROUPA, Judge : . This matter is before the Court on th e ,parties .' motions to dismiss for lack of jurisdiction . The estat e moves to dismiss on ,the ground that respondent issued an invali d deficiency notice to the estate . iRespondent'moves } to dismiss on the ground . that the petition was not timely .filed'. Thee issue we are asked to decide turns on whether respondent mailed th e SERVED DEC 3 0 2009 -2- deficiency notice to the estate's last known address if respondent-mailed the notice to the address shown on the estate tax return despite having notice that there was-a new address fo r the estate executor .' We find that respondent did not mail .the deficiency notice to the estate's last known address-and, accordingly, we grant the estate's motion to dismiss for lack of jurisdiction . The S . Coast Addres s Background Paul Rule (decedent), died intestate on December 1993 . The San Diego County Superior Court issued letters of administration to James Keenan (Mr . Keenan), the administrator o f the Estate of Paul Rule (the estate), on March 14, 1994 . Keenan filed an estate tax return (estate's return) on behalf of the estate on December 17., 1996 . The return lists Mr . Keenan as the executor of the estate and lists his office address as 123 1 S . Coast Highway,'Ste . G, Oceanside, . California 92054 (S .. Coast , address ) . Respondent mailed a letter' pertaining to the estate' s return to Mr . Keenan . at the S . Coast address shortly after th e return was filed . March 20, .1997, and sought information' from Mr . Keenan . 'Petitioner concedes that,'if the deficiency, notice was valid, then the petition was not timely filed . -3- informed 'respondent's'estate tax examine r (examiner), in- May 1997'that he could not access documents relating .,-to the estate, because 'th e Coas t was under the .temporar y control'of .a bankruptcy receiver . Keenan told"the .examine r in November 1997 that he had not had access to the'office for the . past six months . Mr .'Keenan provided the examiner with . a, pos t office box to which the examiner then began.-sending correspondence related to'the-'estate-s audit ., The Crown' Point Addres s A revenue agent assigned to . perform-a' limited 'audit of jM : Keenan regarding .his amended individual' income tax return fo r 1995 informed the estate's examiner on .or about May 20', 1999 , that respondent's computer'records indicated anew residential . address for Mr . Keenan . The revenue agent provided the-examine r with the address 3999 Crown Point Drive, . Villa 29,,San Diego,, California .92109-6112 (Crown Point ; address ) that was listed i n respondent's computer records . The examiner mailed a letter regarding the estate's audit to Mr . Keenan at .the Crown Poin t address on May 20 ;'1999 . The examiner also issued a"summon s to Mr Keenan at the Crown Point address on ma y 1999,_. to''obtain ,more informatio n !about the ; estate . The examiner noted in the case history tha t the summons was "served * at TP's new . address ." A copy o f .the summons was left at ,,the Crown 1Point address on May 27, 1999 . -4- Mr . Keenan called the examiner shortly thereafter to confirm hi s receipt of the summons and to ask why it had been sent . Mr .Keenan and the examiner had several phone conversations betwee n late May and September-of 1999 . , The Deficiency°Notice ~ Respondent issued a deficiency?notice to the estate on December 8, 1999 . . Respondent determined a $433,.793 deficiency in Federal estate tax, as well as a $108,448 . addition to tax for late filing and an $86,759 accuracy-related penalty . Responden t issued only one'deficiency notice, . and it was .addressed to "Estateof'Paul Rule/Paul W . .,Keenan, Executor"at the S . Coast address' . The deficiency notice was returned to respondent by the U .S ."Postal"Service marked "Attempted . Not Known ." . Respondent did not attempt to issue another deficiency-notice after the origina l deficiency notice was returned because respondent's deadline for issuing .,a deficiency notice to the estate .wa"s December 20, 1999 .2 Mr . Keenan was'removed .asx the executor of the estate after th e deficiency notice was, issued . The 90-day period for filing a petition inaresponse to th e deficiency notice expired_on ;March 7 ., 2000 . Thereafter . respondent assessed the,,deficiency,addition to tax, and,penalt y .2Respondent'calculated'the deadline to be Dec . 20, 19991, but noted in the case history that he would apply "a more conservative SOL which is 12-17-99 . " i Both parties move to dismiss for lack of jurisdiction . must determine whetherrespondent,mailed the,deficiency . notice t o the estate's last known 'address . If we find that the . deficienc y notice was mailed to the estate's last known address, . then w e must grant"respondent's motion because the petition was untimely . See Stewart w Commissioner , 55 T .C . 238 (1970) . If we find . instead that the deficiency notice~ :wasgnot mailed to . the estate' s last known'address then we 'must g ant the .estate's motion becauseithe deficiencynotice was invalid . See Shelton v . Commissioner ,~63 T .C . 193,195 (1974) We .. find , that respondent did not mail the deficiency noticej t the estate's last known address!' Accordingly, we will grant the, estate's motion t o dismiss ' for lack of, jurisdiction . We begin with the Court's jurisdiction . This Court' s jurisdiction to redetermine a deficiency depends on the issuanc e of a valid deficiency notice andra' imely,filed~petition . Se e Rule 13( a), "(c) ;3 Mongeov . Commissioner ., 93 T .C . 22, 27 (1989) . The tommis'sioner is-expressly authorized .to issue a . deficienc y notice by certified or regular mail to the taxpayer afte r 3 All, section references are to the Internal Revenue Code a s amended, and all ° Rule references are to"the Tax Court "Rules of Practice and Procedure, unless otherwise indicated . r -6- determining a'deficiency . See s e c . =Even if not received by the taxpayer, the deficiency notice, is still, valid if the notice is mailed to the taxpayer-at the taxpayer's last know n address See' King v . Commissioner ; 857 F .2d 676, 679 (9th Cir . 1988) ., affg . 88 T .C . (1987) . ; Clodfelter v . Commissioner , 527 F .2d 754, 756 (9th Cir . 1975), affgt .S7' T . :C . 102 (19,71) . . A deficiency notice snot mailed to the taxpayer' .s last, known addres s is nonetheless valid if the taxpayer receives it ;-without', prejudicial delay so as to permit the timely filing of a petition ., Lifter v . ' Commissioner , 59 T .. C . 818, 822-823, (197 3 The Commissioner must send the deficiency notice to th e fiduciary,of an estate once the Commissioner has been notified o f the existence of a f iduci'ary relationship . .. Sec 6212(b)(3)1 . Keenan became a fiduciary of the estate when , he was issued letters of administ r' ation'~ by the San Diego County Superior . Court . See sec . 7701(a) (6) . Mr . Keenan ' s filing of the estate ' s 'tax . return 'notified respondent of'the fiduciary relationship . See Huddleston V . Commissioner , 100 T .C .°17,,31 (1993) . :- Accordingly., respondent properly mailed the deficiency,notice to .the'"Estat e of Paul, Rule/Paul W . Keenan, Executor ." We must determine now whether the deficiency notice was properly :,mailed to Mr . Keenan' s last known address . ' An inquiry into a taxpayer's last known address .is based on the relevant facts and circumstances . See O' . Bri'en v . I .Commisstioner ''62 T, . C .° 543, 550 (1974) Lifter v . Commissioner , - su ra at 821 . The relevant inquiry is-what-the-Commissioner kne w (cid:127)at- the time th'deficiency notice . awas issued . ; Abeles(cid:127) v . Commissioner, 91 T .C .(cid:127)1019, 1035 4(1988) Pyo v . Commissioner , 83. T . C :' 62\6, 633 (1984) Buffano v . Commissioner ,- . .T :C . Memo . 2007-- '32 . The taxpayer's last known , address is' the address shown o n { the r"eturn .that"was most recently filed at the time that the deficiency notice was issued absent clear-and concise notice of a change of-address . Abeles .v . Commissioner ; supra at 1035 ;,, Kina a v . Commissioner ,' supra at 681 . =If the Commissioner knows of .one taddress for the , taxpayer and is then notified"of another addres s for'the' same °taxpayer, such other ~ddress . supersedes . the previou s address ; and becomes,that taxpayer'ls "iast . .known address " Abeles v Commissioner , su ra .'ati'1030 .=(cid:127) The Commissioner must use- reasonable care and diligence in ascertaining . ,.and mailing;,th e defi y been given cienc notice to the correct address once°°-he has , notice of the 'change : Frieling v ., ;,Commissioner °, 81 T .C . 42, 4 9 (1983) .'' The estate'arguesthat respondent knew at the . time the , def iciehcy notice was issued .that the estate's ; address had changed-, and that respondent therefore failed to,use reasonabl e kcare and diligence in 'mailing- thedeficiency . notice to the, estate' s last known address . Weagree . Information that .the Commi s s'ioner knows or-should know }through use-of-his computer system 4is attributable to the ..>Commissibner' .s agents . ; ': supra 'at'',-1030 ; Buffano_ y .' Commissioner, . sU ra . , Respondent ' s informed- the, estate' . s issued, : that= re'spondent ' s computer records ; . listed .,the the time-M , issued ;the deficiency +notice to the, estat e Moreoverre pondent°failed,to use-reasonable care 'and diligence > n ascertaining and mailing ..the deficiency the new address .,, .>Theexaminer mailed :correspondenc e the ',estate'%s audit -to Mr .- ',.Keenan 'at - .the , Crown . Point addres s before ewi Mr . Keenan several times before issuing the , deficiency notice and could i have conf irmed with him, that the estate' s , address ~ had changed . rN He .xdid,Rhot < The examiner,, also could havmailed . both' . the address on the estate's return and the new Crown, I Point' address, but he did not We hold that th e examiner failed to,use 'reasonabler care, and .-diligencei i n ascertaining and mailing the ; deficiency,; notice ,to the estat e last known address . find that . -'the' S return to which -respondent-~,_mailed the deficiency, notice wa s the estate' s :--last known, address ;Accordingly,,we ;shall grant to dismiss for lack of jurisdiction and shal l dismiss for lack of jurisdiction . An appropriate order will b e entered denying respondent's motion to dismiss for lack of jurisdiction and granting petitioner's motion to , for lack of jurisdiction .