Opinion ID: 510051
Heading Depth: 1
Heading Rank: 6

Heading: R.C. Sec. 6212(a) provides:

Text: If the Secretary determines that there is a deficiency in respect of any [income] tax ... he is authorized to send notice of such deficiency to the taxpayer by certified mail or registered mail. ... [N]otice of a deficiency, if mailed to the taxpayer at his last known address, shall be sufficient.... 9 Tadros v. Commissioner, 763 F.2d 89, 91 (2d Cir.1985); Wallin v. Commissioner, 744 F.2d 674, 676 (9th Cir.1984); United States v. Zolla, 724 F.2d 808, 810 (9th Cir.), cert. denied, 469 U.S. 830, 105 S.Ct. 116, 83 L.Ed.2d 59 (1984); Cool Fuel, Inc. v. Connett, 685 F.2d 309, 312 (9th Cir.1982) (purpose of statute is to give taxpayer actual notice but notice of deficiency is sufficient if mailed to taxpayer's last known address); Berger v. Commissioner, 404 F.2d 668, 673 (3d Cir.1968), cert. denied, 395 U.S. 905, 89 S.Ct. 1744, 23 L.Ed.2d 218 (1969); Delman v. Commissioner, 384 F.2d 929, 932 (3d Cir.1967), cert. denied, 390 U.S. 952, 88 S.Ct. 1044, 19 L.Ed.2d 1144 (1968) (also discussing legislative history supporting this interpretation of the statute); Brown v. Lethert, 360 F.2d 560, 562 (8th Cir.1966) The Taxpayers argue, in essence, that receipt is required. They find support for their argument in language from a Tax Court opinion and a Seventh Circuit opinion. See McPartlin v. Commissioner, 653 F.2d 1185, 1188 (7th Cir.1981) (When evidence indicates that a notice of deficiency has not been received by the taxpayer due to the error of the Postal Service, the notice shall be found insufficient); Estate of McKaig v. Commissioner, 51 T.C. 331, 336 (1968) (The statute says the notice of deficiency must be mailed to the last known address. We do not think this mailing can be said to have been completed within the meaning of the statute because the Post Office Department diverted it. Petitioner cannot be held responsible for this.). In McPartlin, however, the Seventh Circuit found that the IRS did not mail the notice of deficiency to the taxpayers' last known address. This finding was sufficient to support the court's holding. The court's comments regarding the effect of the post office's error were dicta. In McKaig, the Tax Court noted doubt about whether the notice of deficiency was mailed to the taxpayer's last known address but did not make any specific holding on that issue. Instead the Tax Court found the taxpayer's petition timely because it was filed within ninety days of their actual receipt of a copy of the notice. If the Taxpayers had filed a Tax Court petition promptly after they learned of the notice of deficiency, McKaig and the dicta in McPartlin might provide some support for allowing the Tax Court to hear the merits of their case. The Taxpayers, however, did not do so. 10 The Tax Court is the only prepayment forum for litigation of tax cases. If the taxpayer fails to timely file a Tax Court Petition, but still desires to contest the merits of the deficiency, he must pay the deficiency in full and sue for a refund in a United States District Court or the United States Claims Court 11 The Taxpayers also produced a copy of Internal Revenue Manual-Audit Sec. 4463.4 which provided that the IRS should retain two copies of each notice of deficiency. The Taxpayers asserted that the IRS only had one copy of their notice. The number of copies retained, however, does not seem very significant, particularly since the current version of Sec. 4463.4 only provides that the IRS should retain one copy of each notice of deficiency 12 See American Farm Lines v. Black Ball Freight Service, 397 U.S. 532, 538-39, 90 S.Ct. 1288, 1292, 25 L.Ed.2d 547 (1970); see also United States v. Caceres, 440 U.S. 741, 99 S.Ct. 1465, 59 L.Ed.2d 733 (1979) 13 The Government asserts that, even if we had found that it failed to properly mail the August 10, 1984 deficiency notice, we still should not issue any injunction. The Government argues that to obtain an injunction the Taxpayers should also have to satisfy the traditional equitable prerequisites to an injunction. Since we find that the IRS mailed the August 10, 1984 notice of deficiency, we need not and do not reach this issue. See Clark v. Campbell, 501 F.2d 108 (5th Cir.1974), cert. denied sub nom., United States v. Clark, 423 U.S. 1091, 96 S.Ct. 887, 47 L.Ed.2d 103 (1976) (affirming injunction barring collection under jeopardy assessment provision without discussing equitable requirements); Phinney v. Briscoe, 297 F.2d 591, 592 (5th Cir.1962) (affirming grant of injunction without discussing equitable requirements); Maxwell v. Campbell, 205 F.2d 461, 462 (5th Cir.1953) (reversing denial of injunction without discussing equitable requirements). But see Lovell v. United States, 795 F.2d 976 (11th Cir.1986) (requiring showing of irreparable harm and inadequacy of alternative remedies); Flynn v. United States, 786 F.2d 586, 590-91 (3d Cir.1986) (same); Perlowin v. Sassi, 711 F.2d 910, 912 (9th Cir.1983); Cool Fuel, Inc. v. Connett, 685 F.2d 309, 313 (9th Cir.1982) (denying injunction, even though IRS failed to mail deficiency notice to taxpayer's last known address, because taxpayer failed to establish that it had no adequate remedy at law or that irreparable injury would result from denial of the injunction); Philadelphia & Reading Corp. v. Beck, 676 F.2d 1159, 1163 (7th Cir.1982) 14 On October 2, 1985, the Taxpayers sent the Government a Form 872-T which would have terminated the 1980 statute of limitations on December 31, 1985, if the 1980 statute of limitations had not been terminated earlier by some other event. See infra note 16 and accompanying text 15 I.R.C. Sec. 6501(a). For this purpose, an income tax return filed before the due date is considered filed on the due date. Id. Sec. 6501(b)(1) 16 The full termination provision was: [The Taxpayers] and the District Director of Internal Revenue or Regional Director of Appeals consent and agree as follows: (1) The amount(s) of any Federal income tax due on any return(s) made by or for the above taxpayer(s) for the period(s) ended December 31, 1980 may be assessed on or before the 90th (ninetieth) day after: (a) the Internal Revenue Service office considering the case receives Form 872-T, Notice of Termination of Special Consent to Extend the Time to Assess Tax, from the taxpayer(s); or (b) the Internal Revenue Service mails Form 872-T to the taxpayer(s); or (c) the Internal Revenue Service mails a notice of deficiency for such period(s); except that if a notice of deficiency is sent to the taxpayer(s), the time for assessing the tax for the period(s) stated in the notice of deficiency will end 60 days after the period during which the making of an assessment was prohibited. 17 I.R.C. Sec. 6213(a). Section 6503(a)(1) provides that running of the statute of limitations is suspended during the ninety days following the issuance of a notice of deficiency and while an action is pending in the Tax Court 18 We note that in Roszkos v. Commissioner, 850 F.2d 514 (9th Cir.1988), the court found that an improperly mailed notice of deficiency did not terminate a Form 872-A extension of the statute of limitations. Our case is, however, different because the notice of deficiency was properly mailed 19 Fed.R.Civ.P. 60(b) provides: (b) Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, etc. On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment.... 20 The Government requested a limited remand of the case to the District Court for supplemental proceedings as to the tax year 1980 saying that the case should be remanded to the District Court for a determination whether the first deficiency notice was valid and effective for 1980 and, if not, whether an injunction as to collection for that year will lie. On January 13, 1987, this court said: IT IS ORDERED that appellee's motion for a limited remand as to tax year 1980 is GRANTED. IT IS FURTHER ORDERED that appellee's motion to continue the stay of proceedings in this Court pending the district court's determinations on remand and the perfection of any appeal therefrom is GRANTED. IT IS FURTHER ORDERED that appellants' motion to continue generally the stay of proceedings in this Court is GRANTED to the extent indicated and otherwise DENIED. 21 The district court actually entered judgment as follows: IT IS ORDERED, ADJUDGED and DECREED by the Court that Plaintiffs Conrad L. Keado and Linda W. Keado take nothing by their suit, and that this suit be, and it is hereby, DISMISSED on the merits at Plaintiffs' cost. 22 At one point, at least, the Taxpayers withdrew their fraud allegations. See Plaintiffs' January 7, 1987 Memorandum in Opposition to Defendant's Cross-Motion for Relief Under Rule 60(b) at 1 n. 1 23 The Plaintiffs' January 7, 1987 Memorandum in Opposition to Defendant's Cross-Motion for Relief Under Rule 60(b) said the Justice Department acted unilaterally in (1) conceding the controversy over 1980, and (2) declaring that controversy moot. Id. at 11-12 2 Because of our finding that [plaintiff's] reliance was not reasonably based, we do not decide whether affirmative misconduct by an employee of the government is required to estop the government. See Portmann; cf. Heckler v. Community Health Services of Crawford County, Inc., 467 U.S. 51, 104 S.Ct. 2218, 81 L.Ed.2d 42 (1984). Nor do we decide whether the sovereign function/proprietary function distinction should be adopted. See Azar; FDIC v. Harrison, 735 F.2d 408 (11th Cir.1984) 24 The Taxpayers filed their Tax Court petition on March 10, 1986. Over a month earlier, in a memorandum supporting their January 31, 1986 motion for summary judgment in the original district court action, the Taxpayers noted that they had received a second 1980 deficiency notice and continued: Plaintiffs' 1981 taxable year is presently closed for assessment under the applicable statute of limitations. I.R.C. Sec. 6501(a). 1980 would be open by reason of a prior agreement entered into between Plaintiffs and the I.R.S. only if the notice of deficiency here involved were invalid, as Plaintiffs contend. 25 The Taxpayers' Tax Court petition was filed within ninety days after the IRS mailed the second 1980 notice of deficiency on December 13, 1985. As determined above, however, the second 1980 notice of deficiency is void and therefore is irrelevant to the issue of timeliness 26 The Taxpayers rely on McPartlin v. Commissioner, 653 F.2d 1185, 1188 (7th Cir.1981) and Estate of McKaig v. Commissioner, 51 T.C. 331, 336 (1968). Both cases are distinguishable because IRS error in addressing the deficiency notice caused or contributed to the nondelivery. In addition, the taxpayers in these cases filed their Tax Court petitions within ninety days of actual notice. See supra note 9