Opinion ID: 178488
Heading Depth: 2
Heading Rank: 2

Heading: Effective Start Date of the Petition Period

Text: Having determined that the Notice sent on April 6 was not sent to Terrell's last known address, we must now determine the date on which Terrell's ninety-day petition period began. The Commissioner urges this Court to adopt the no prejudice rule espoused by the First, Second, Third, Sixth, Ninth, and Eleventh Circuits. [3] This rule holds that despite failing to mail the notice to the taxpayer's last known address, the IRS satisfies the statutory notice requirement if the taxpayer actually receives the notice without delay prejudicial to her ability to petition the Tax Court. Under the no prejudice rule, the Commissioner asks us to apply the ninety days beginning from April 6, as Terrell still had ample time to respond after receiving the re-sent Notice. Terrell urges this Court to adopt the position of the Fourth, Seventh, and D.C. Circuits. [4] These courts have held that where the IRS fails to send the notice to the taxpayer's last known address, but the taxpayer receives subsequent actual notice, the limitations period begins to run on the date the taxpayer receives actual notice. Under this rule, the ninety days would begin when Terrell received the Notice the IRS re-sent on May 14. We decline, however, to weigh in on this circuit split. We hold that because the IRS not only failed to send the original Notice to Terrell's last known address, but also had the Notice returned as undeliverable, the Notice as originally sent is null and void. As the Notice was returned undelivered to the IRS, we need not decide whether we would apply the no prejudice rule if the original Notice had actually reached Terrell. Our decision is in line with the distinction adopted by the Ninth Circuit in Mulvania. In Mulvania, the IRS sent an erroneously addressed notice of deficiency to the taxpayer, which was eventually returned as [n]ot deliverable as addressed. Mulvania, 769 F.2d at 1377. While the mistake here was based on a typographical error, the notice was similarly not sent to the taxpayer's last known address. Despite its adherence to the no prejudice rule, the Ninth Circuit distinguished situations where the original notice of deficiency is returned to the IRS as undeliverable. The Ninth Circuit held that this notice became null and void when it was returned to the IRS. Id. at 1379; see also Holof v. Comm'r, 872 F.2d 50, 56 (3d Cir. 1989) (citing agreement with the Mulvania null and void principle). The Mulvania court further distinguished this situation from one where the notice was improperly addressed, but the postal authorities nonetheless delivered the letter to the taxpayer. [5] Mulvania, 769 F.2d at 1379. This null and void principle does not conflict with the decisions of the other Circuits that have adopted the no prejudice rule. The cases the Commissioner cites from these Circuits all concern situations where, despite the IRS's error, the original notice was actually delivered either to the taxpayer himself, the taxpayer's Post Office box, or the taxpayer care of his accounting firm. See Sicari, 136 F.3d at 927 (USPS informed taxpayers of notice waiting at Post Office); Patmon & Young Pro. Corp., 55 F.3d at 216 (notice sent to Post Office box returned as refused and unclaimed); Borgman, 888 F.2d at 917 (notice automatically forwarded to the taxpayer by USPS); Pugsley, 749 F.2d at 692 (notice automatically forwarded to the taxpayer by USPS); Delman, 384 F.2d at 930 (notice sent to the taxpayer care of his accounting firm and duplicate sent to his attorney by regular mail, who promptly informed the taxpayer). Here, unlike these cases and like the taxpayer in Mulvania, Terrell never received the original Notice sent by the IRS. Therefore, the no prejudice rule is not directly applicable to the facts at hand. We reach only our narrow holding today and leave for another day the question of whether this Court will adopt the no prejudice rule or instead the actual notice rule. The Commissioner expresses concern that failing to adopt the no prejudice rule creates a difficulty in determining the effective date of the Notice because of practical problems in discerning the date when the taxpayer received the Notice. Our decision does not, however, implicate this concern. After the original Notice was returned as undeliverable, the IRS subsequently mailed a second Notice on May 14 to the correct address. As the May 14 mailing was legally effective, we use the mailing date of this Notice as the beginning of the ninety day petition period rather than the day Terrell received the Notice. Because Terrell properly filed her petition within ninety days after May 14, the Tax Court was not without jurisdiction to hear the petition.