Opinion ID: 70638
Heading Depth: 1
Heading Rank: 2

Heading: R.S. Form 872-T (Rev. 7-80) (emphasis supplied).

Text: 24 Despite the clear instructions, Coggin mailed the forms, on October 8, 1986, by certified mail, return receipt requested, to Ms. Toney at the following address: Ms. M. Toney Internal Revenue Service Revenue Agent Internal Revenue Service 500-22nd Street South Room 330 25 Birmingham, Alabama 35233. 26 The return receipt form and certified mail receipt, on the other hand, were addressed differently: Ms. M. Toney Attn: Chief Examination Division 500-22nd Street South 27 B'ham, Ala. 35233. 28 The mail clerk at the IRS signed the return receipt form, which was returned to Coggin. The clerk also signed a Postal Service form, acknowledging receipt of all certified mail items listed on that form. The clerk retained a photocopy of the certified mail list but did not retain a copy of the return receipt. In accordance with standard operating procedure, a mailroom employee annotated the certified mail list with the mail stop or room to which each mail item was directed. Notably, the Birmingham district office has fifty to sixty mail stops. The employee who annotated the certified mail list personally knew Ms. Toney and recognized that Ms. Toney's office was in Room 310, not Room 330, as addressed. Accordingly, the mailroom employee wrote 310 on the envelope and left a note in Box 310, advising that a certified letter had arrived for someone in Room 310. 29 Subsequently, a clerk for the revenue officers in Room 310 picked up the certified mail for Ms. Toney, and delivered the envelope to her. Upon opening the envelope, Toney found the two forms, which she did not recognize, and a cover letter, stating: 30 Enclosed please find the Forms 870-T [sic] for my file which you suggested I return to you some time ago. 31 Thank you for your assistance in connection with the conclusion of my case. 32 Toney was unfamiliar with Form 872-T because it was not a form used by the Collections Division. Because Toney was not aware of any active collection cases regarding Coggin, she placed the envelope and its contents in a To be associated file in anticipation that a case would be assigned to her. 2 33 Pursuant to Coggin's September 26, 1986 protest, Coggin's case was transferred to the Appeals Division. On November 21, 1986, Benjamin Whitten, an appeals officer, phoned Coggin and asked if Coggin wished to accept the IRS's settlement offer, which would allow Coggin to take deductions to the extent of his cash investment in the partnerships. Coggin stated that he intended to accept the offer and agreed to provide documentation of his cash payments to ERL and VPL. Coggin never mentioned his 872-T forms then or anytime in the next seven months during the course of the settlement negotiations. 34 On January 29, 1987, Whitten again extended the same settlement offer and requested a response within thirty days. Coggin requested and received several extensions to file the appropriate documents. 35 In April 1987, because Coggin's Form 872 for 1981 was due to expire on September 30, 1987, Whitten issued Coggin an ultimatum, offering him three options: (1) conclude a settlement; (2) extend the limitations period again; or (3) face a notice of deficiency. On June 29, 1987, Coggin's secretary informed Whitten that Coggin, in October 1986, had executed two Form 872-Ts purporting to terminate the extensions of the limitations period. 36 Whitten immediately investigated and eventually discovered, on July 1, 1987, Coggin's October 1986 letter in Toney's files. On August 14, 1987, the Commissioner issued a notice of deficiency to Coggin for approximately $150,000. 37 Coggin then filed a petition with the Tax Court, asserting that the notice of deficiency was time-barred; that the Commissioner had erroneously disallowed the ERL and VPL deductions; and that the Commissioner had erroneously assessed additions to tax. 38 The Tax Court rejected Coggin's statute of limitations defense. The court, among other findings of fact, found that Coggin had attempted to mislead the IRS by sending the Form 872-T's to Ms. Toney rather than the Chief of the Examination Division. The court, as noted (see note 2 supra ), rejected the testimony of Coggin and his secretary that Coggin had included a routing memo, directing Ms. Toney to forward the forms to the Chief of the Examination Division. Reasoning that Coggin was obliged to send the forms to either the Examination or Appeals Division of the Birmingham district office, the court held that the Form 872-Ts were not received until July 1, 1987 when Whitten recovered them from Toney. Therefore, under the Tax Court's reasoning, the notice of deficiency was timely, resulting in its decision in favor of the Commissioner. 39 On the merits, the court determined that the partnership deductions were not proper. 3 The Tax Court affirmed most of the penalties, including those at issue in this appeal. Coggin filed a timely notice of appeal to this court.