UNITED STATES TAX COURT

T.C. Memo. 1998-380

UNITED STATES TAX COURT

KEITH K. STROUPE, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 21614-97.

Filed October 22, 1998.

John L. Brennan and John C. King, for petitioner.

James E. Cannon and Richard Fultz, for respondent.

MEMORANDUM OPINION

DAWSON, Judge:

This case was assigned to Special Trial

Judge Robert N. Armen, Jr., pursuant to the provisions of section

7443A(b)(4) and Rules 180, 181, and 183.1

1

The Court agrees with

Unless otherwise indicated, all section references are to

the Internal Revenue Code as amended, and all Rule references are

to the Tax Court Rules of Practice and Procedure.

- 2 and adopts the Opinion of the Special Trial Judge, which is set

forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

ARMEN, Special Trial Judge:

This case is before the Court

on the parties' cross motions to dismiss for lack of

jurisdiction.

Petitioner's motion is premised on the ground that

respondent failed to send a valid notice of deficiency to

petitioner at his last known address.

Respondent's motion is

premised on the ground that petitioner failed to file a timely

petition in response to a valid notice.

Because the jurisdiction

of this Court is limited by statute and attaches only upon the

issuance of a valid notice of deficiency and the timely filing of

a petition, this case must be dismissed for lack of jurisdiction.

The only question is on whose motion it will be dismissed.

Where

jurisdiction is lacking because of the Commissioner's failure to

issue a valid notice of deficiency, we dismiss on that ground,

rather than on the ground that the taxpayer failed to file a

timely petition.

Shelton v. Commissioner, 63 T.C. 193 (1974);

O'Brien v. Commissioner, 62 T.C. 543, 548 (1974); Heaberlin v.

Commissioner, 34 T.C. 58, 59 (1960); see Brannon's of Shawnee,

Inc. v. Commissioner, 69 T.C. 999 (1978) (the Court has

jurisdiction to decide issues regarding its jurisdiction).

Background

Petitioner resided in Wichita, Kansas, at the time that his

petition was filed in this case.

- 3 Respondent initiated an examination of petitioner's taxable

years 1987 through 1992 in April 1993.

Respondent attempted to

contact petitioner in that regard by letter dated December 15,

1993.

This letter was mailed to petitioner at 2254 Ptarmigan

Lane, Colorado Springs, CO

Address).

80918-1410 (the Colorado Springs

The letter was returned to respondent by the Postal

Service on January 6, 1994, bearing the notation "forwarding

order expired".

At the time that respondent sent the letter dated December

15, 1993, the Federal income tax return most recently filed by

petitioner was for the taxable year 1986.

That return listed the

Colorado Springs Address.

On January 11, 1994, respondent made another attempt to

contact petitioner.

In this regard, respondent mailed a letter

to petitioner at 16185 N. County Road, Nathrop, CO

81236-9703

(the Nathrop Address).2

The Nathrop Address was the address of

petitioner's parents.

This letter was returned to respondent by

the Postal Service on January 14, 1994, bearing the notation

"returned to sender".

Apparently, petitioner's parents returned

all mail addressed to their son.

2

At the same time, respondent also mailed another copy of

this letter to an address that appears to be a variation of the

Nathrop Address; i.e., 16185 County 162 Rd, Nathrop, CO 81236.

This letter was returned to respondent by the Postal Service

bearing the notations "returned to sender" and "attempted, not

known".

- 4 Respondent mailed petitioner a 30-day letter on February 1,

1994.

CO

The 30-day letter was mailed to 5808 Franklin St., Denver,

80216 (the Denver Address).

obtained this address.

It is not clear where respondent

Regardless, the letter was returned to

respondent by the Postal Service bearing the notations "no

forward order on file", "unable to forward", and "returned to

sender".

In addition, respondent sent five different Forms 4759

(Address Information Request) to the postmasters in Denver,

Colorado, Nathrop, Colorado, and Colorado Springs, Colorado, to

verify five possible addresses of petitioner.

None of the

possible addresses were confirmed as petitioner's then current

address.

Respondent also contacted petitioner's parents to

ascertain petitioner's correct address.

Petitioner's parents

informed respondent that they did not have such information.

Apparently, petitioner moved to a new address, 2200 S. Rock

Road, Apt. 1016, Wichita, Kansas 67207 (the Kansas Address)

sometime in 1993 or 1994.

Petitioner did not file Form 8822

(Change of Address) to inform respondent of a new address.

Further, by August 1994, petitioner had not filed another tax

return, and the 1986 return remained as petitioner's most

recently filed return.

By notice dated August 24, 1994, respondent's district

office in Denver, Colorado, determined deficiencies in, and

- 5 additions to, petitioner's Federal income taxes for the taxable

years 1988 and 1989 as follows:

Year

Deficiency

1988

1989

$39,748

4,120

Additions to Tax

Sec. 6651(a)(1) Sec. 6654

$9,937

1,030

$2,543

277

Respondent mailed a copy of the notice of deficiency to

three addresses, namely, the Colorado Springs Address, the

Nathrop Address, and a third address, 4910 Granby Circle,

Colorado Springs, CO

Address).

80919 (the Second Colorado Springs

Respondent had not previously mailed any

correspondence to petitioner at the Second Colorado Springs

Address, but had obtained such address using Form 3242 (Request

for Information from Employer).

Respondent received this form

back from the employer in February 1994.

The Second Colorado

Springs Address was the address last used by petitioner with this

employer.

Each of the envelopes bearing a copy of the notice of

deficiency was returned to respondent by the Postal Service.

following notations appeared on the various envelopes:

The

For the

Colorado Springs Address, "addressee not known" and "does not

live here anymore"; for the Nathrop Address, "attempted, not

known; no such number; insufficient address"; and for the Second

Colorado Springs Address, "addressee not known".

For each of the years 1987 through 1994, petitioner filed

Forms 4868 (Application for Automatic Extension of Time to File

- 6 U.S. Individual Tax Return).

There is no evidence as to what

addresses, if any, were listed on the Forms 4868 so filed.

Further, no remittance accompanied any of the Forms 4868.

Petitioner filed his extension requests with respondent's

various service centers and district offices as follows:

Year

Location Where Form 4868 Was Filed

1987

1988

1989

1990

1991

1992

1993

1994

Ogden, Utah

Ogden, Utah

Omaha, Nebraska, district office

Helena, Montana, district office

Ogden, Utah, service center

Austin, Texas, service center

Austin, Texas, service center

Oklahoma City, Oklahoma, district office

Respondent's internal procedures regarding requests for

extensions mandate the following:

(1) At the time a service center receives a Form 4868, the

Social Security number is matched against the taxpayer's name;

(2) a computer entry is made noting receipt of the request

for extension;

(3) no other information is entered into the computer,

unless a remittance accompanies the request. Specifically, no

entry or change is made if the address on the request for

extension form is different from the taxpayer's address on file.

A taxpayer's signature need not accompany the request.

The

request may therefore be filed by a return preparer without the

taxpayer's knowledge.

Hence, as a matter of policy, respondent

- 7 does not enter any address information received in this manner on

any of his databases; and

(4) if no remittance accompanies the request, the request is

filed and subsequently destroyed by respondent 1 year after the

end of the processing year.

See Internal Revenue Manual sec. 512(12)(2)(g); Internal Revenue

Manual Handbook, sec. 1(15)59.26 at par. 68.

Except for the requests for extension, respondent did not

receive any correspondence from petitioner prior to the mailing

of the notice of deficiency.

Further, prior to the mailing of

the notice of deficiency, no division of the Internal Revenue

Service had ever corresponded with petitioner at the Kansas

address.

Respondent received two Forms 1099-MISC with respect to

petitioner from a third-party employer bearing the Kansas

Address.

Respondent's records reflect that these information

returns were received by respondent in 1995 and were issued in

respect of the taxable year 1994.

About 3 years after the notice of deficiency was mailed,

respondent mailed a copy of a notice of Federal tax lien to

petitioner in September 1997, at the Kansas Address.

Petitioner

mailed his petition for redetermination to the Court in an

envelope bearing a private postmeter postmark date of October 31,

1997.

The petition was filed by the Court on November 3, 1997.

- 8 Discussion

This Court's jurisdiction to redetermine a deficiency

depends on the issuance of a valid notice of deficiency and a

timely filed petition.

Rule 13(a), (c); Monge v. Commissioner,

93 T.C. 22, 27 (1989); Normac, Inc. v. Commissioner, 90 T.C. 142,

147 (1988).

Section 6212(a) expressly authorizes the

Commissioner, after determining a deficiency, to send a notice of

deficiency to a taxpayer by certified or registered mail.

It is

sufficient for jurisdictional purposes if the Commissioner mails

the notice of deficiency to the taxpayer at the taxpayer's "last

known address".

Sec. 6212(b); Frieling v. Commissioner, 81 T.C.

42, 52 (1983).

If a notice of deficiency is mailed to the

taxpayer at the taxpayer's last known address, actual receipt of

the notice is immaterial.

King v. Commissioner, 857 F.2d 676,

679 (9th Cir. 1988), affg. 88 T.C. 1042 (1987); Yusko v.

Commissioner, 89 T.C. 806, 810 (1987); Frieling v. Commissioner,

supra at 52.

Hence, a notice of deficiency that is returned to

the Commissioner by the Postal Service as "undeliverable" is

valid irrespective of its lack of receipt, as long as it is sent

to the taxpayer at the taxpayer's last known address.

United States, 33 F.3d 46, 48 (10th Cir. 1994).

Gille v.

The taxpayer, in

turn, has 90 days (or 150 days if the notice is addressed to the

taxpayer outside the United States) from the date that the notice

of deficiency is mailed to file a petition with this Court for a

redetermination of the deficiency.

Sec. 6213(a).

- 9 In the present case, respondent mailed the notice of

deficiency to petitioner in triplicate on August 24, 1994.

The

petition arrived at the Court in an envelope postmarked October

31, 1997, and was filed by the Court on November 3, 1997.

Given

that the petition was neither mailed nor filed before the

expiration of the 90-day statutory period for filing a timely

petition, it follows that we lack jurisdiction over the petition.

Secs. 6213(a), 7502; Rule 13(a), (c); see Normac, Inc. v.

Commissioner, supra.

The question presented is whether dismissal of this case

should be premised on petitioner's failure to file a timely

petition under section 6213(a) or on respondent's failure to

issue a valid notice of deficiency under section 6212.

Petitioner contends that he did not receive the notice of

deficiency and that the notice is invalid because it was not

mailed to him at his last known address.

Although the phrase "last known address" is not defined in

the Internal Revenue Code or in the regulations thereunder, we

have held that a taxpayer's last known address is the address

shown on the taxpayer's most recently filed return, absent clear

and concise notice of a change of address.

Abeles v.

Commissioner, 91 T.C. 1019, 1035 (1988); see King v.

Commissioner, supra at 681.

In deciding whether respondent

mailed a notice to a taxpayer at the taxpayer's "last known

address", the relevant inquiry "pertains to respondent's

- 10 knowledge rather than to what may in fact be the taxpayer's most

current address."

Frieling v. Commissioner, supra at 49.

The

burden of proving that a notice of deficiency was not sent to the

taxpayer's last known address is on the taxpayer.

Yusko v.

Commissioner, supra at 808.

Respondent mailed one copy of the notice of deficiency to

the address listed on petitioner's 1986 return--the last tax

return filed by petitioner prior to the mailing of the notice of

deficiency on August 24, 1994.

Consequently, the notice of

deficiency was mailed to petitioner's last known address unless

petitioner can demonstrate: (1) He provided respondent with clear

and concise notice of a change of address; or that (2) prior to

the mailing of the notice of deficiency, respondent knew of a

change in petitioner's address and did not exercise due diligence

in ascertaining petitioner's correct address.

See Abeles v.

Commissioner, supra.

A.

Clear and Concise Notice of Change of Address

Petitioner's contention that the notice of deficiency is

invalid rests partially on the contention that he gave clear and

concise notice of a change of address to respondent by filing

Forms 4868 for the years 1987 through 1994.

We disagree with

petitioner for several reasons.

First and foremost, petitioner has not established that he

listed the Kansas Address on any of the Forms 4868 that he filed

with respondent.

Second, we have repeatedly held that the mere

- 11 filing of a document, such as a Form 4868, indicating a different

address than the taxpayer's address on file, does not give the

Commissioner clear and concise notification of a change of

address.

See, e.g., Monge v. Commissioner, supra (Forms 4868 and

2688, extension forms); Mollet v. Commissioner, 82 T.C. 618

(1984), affd. without published opinion 757 F.2d 286 (11th Cir.

1985) (a Tax Court petition);

McCormick v. Commissioner, 55 T.C.

138 (1970) (an informal letter advising the IRS of an address

change); Cantu v. Commissioner, T.C. Memo. 1990-354 (Form 4868);

Pritchett v. Commissioner, T.C. Memo. 1986-559 (a letter with new

address at the bottom without any comment); Marlin v.

Commissioner, T.C. Memo. 1985-600 (Form 2848, power of attorney).

In this regard, we observed in Monge v. Commissioner, 93 T.C.at

32:

Perhaps the most significant objection to * * * [the

taxpayers'] position is that it would require * * *

[the Commissioner] to record the address shown on every

extension request filed with him. The adoption of

their position would clearly upset the balance between

the administrative burdens imposed on * * * [the

Commissioner] and the interest of taxpayers in

obtaining actual notice of * * * [the Commissioner's]

determination. If * * * [the taxpayer] had wanted * *

* [the Commissioner] to use the address shown on * * *

Form 4868 * * * as his last known address, it would

have been a simple matter for him to have so indicated

on the form itself. * * *[The taxpayer] chose not to

do so and thereby failed to clearly and concisely

notify * * * [the Commissioner] of the desired change.

Accordingly, we hold that the Forms 4868 * * * filed by

* * * [the taxpayer] * * * did not provide clear and

concise notification to * * * [the Commissioner] of * *

* [the taxpayer's] change of address. [Citations

omitted.]

- 12 If we were to hold that the Commissioner is obliged to

regard the address shown on a Form 4868 as a taxpayer's current

address, we would impose an unreasonable administrative burden on

the Commissioner to record every address appearing on every Form

4868 for every taxpayer.

Also, we would cause uncertainty by

requiring the Commissioner to use an address that the taxpayer

may not have communicated to him3 and that the taxpayer did not

clearly direct the Commissioner to use.

Cf. United States v.

Zolla, 724 F.2d 808, 811 (9th Cir. 1984); Farnham v.

Commissioner, T.C. Memo. 1991-642.

Therefore, we have held that

the taxpayer must clearly communicate that the new address should

be used by respondent.

E.g., King v. Commissioner, 857 F.2d at

681; Tadros v. Commissioner, 763 F.2d 89, 92 (2d Cir. 1985); Alta

Sierra Vista, Inc. v. Commissioner, 62 T.C. 367, 374, affd.

without published opinion 538 F.2d 334 (9th Cir. 1976); McCormick

v. Commissioner, supra at 141.

Petitioner relies on Sicari v. Commissioner, 136 F.3d 925

(2d Cir. 1998), vacating and remanding T.C. Memo. 1997-104, for

the proposition that by filing the Forms 4868, he gave clear and

concise notice to respondent of his change of address.

We think

that petitioner's reliance on Sicari v. Commissioner, supra, is

misplaced.

3

It should be recalled that the taxpayer's signature is

not required on a Form 4868 and that a preparer may file a Form

4868 without knowledge of the taxpayer.

- 13 In Sicari, the taxpayers never moved, but the Postal Service

refined the taxpayers' address twice within a period of 1 year.

Although the Court of Appeals noted that the taxpayers had used

the refined address on requests for extension filed with the

Commissioner prior to the mailing of the notice of deficiency,

this was not the primary basis of the Court of Appeals' holding

that the Commissioner had not acted with the requisite reasonable

diligence.

Rather, the Court of Appeals based its holding on the

following circumstances, all of which occurred before the mailing

of the notice of deficiency: The taxpayer used the refined

address on a petition filed in bankruptcy proceedings; the

collection division of the IRS received prompt notice of the

bankruptcy filing and entered the refined address in one of the

Commissioner's computer databases; and the collection division

proceeded to use the refined address in correspondence with the

taxpayers and on proof of claim forms filed against the taxpayer

in bankruptcy.

It was only in light of such "extraordinary

circumstances" and "on the precise facts of th[e] case" that the

Court of Appeals held that the deficiency notice had not been

mailed to the taxpayers' last known address.

Id. at 926.

Because such circumstances are not present in the instant case,

we are not persuaded by petitioner's contention that by filing

Forms 4868 he gave respondent clear and concise notice of a

change of address.

- 14 Petitioner further contends that respondent had clear and

concise notice of the change of his address by virtue of the two

Forms 1099-MISC reporting petitioner's income with respect to the

1994 taxable year.

Again, we disagree with petitioner.

First, neither of the Forms 1099-MISC on which petitioner

relies was available to respondent prior to August 24, 1994, the

date on which the notice of deficiency was mailed.

Therefore,

neither of those documents could have alerted respondent to any

change in petitioner's address.

See Abeles v. Commissioner, 91

T.C. 1019 (1988).

Even assuming arguendo that respondent was in possession of

such documents at the time the notice of deficiency was mailed, a

third-party information return does not constitute clear and

concise notice to respondent of an address change affecting the

payee.

See Guillen v. Barnes, 819 F.2d 975, 977 (10th Cir.

1987); Berg v. Commissioner, T.C. Memo. 1993-77; McCart v.

Commissioner, T.C. Memo. 1992-3, affd. without published opinion

981 F.2d 1247 (3d Cir. 1992).

In sum, petitioner failed to give respondent clear and

concise notice of his current address.

We must therefore decide

whether respondent knew of a change in petitioner's address prior

to the mailing of the notice of deficiency, and, if so, whether

respondent exercised due diligence in ascertaining petitioner's

new address.

- 15 B.

Respondent's Due Diligence

We have held that the Commissioner must exercise reasonable

diligence and care in ascertaining the taxpayer's current address

once the Commissioner becomes aware of a change in the taxpayer's

address.

Abeles v. Commissioner, supra; Keeton v. Commissioner,

74 T.C. 377, 382 (1980); Alta Sierra Vista, Inc. v. Commissioner,

supra at 374.

Thus, if previous correspondence mailed by the

Commissioner to a taxpayer is returned as undeliverable before

the notice of deficiency is mailed, the Commissioner could

reasonably be expected to conduct a further inquiry.

See Abeles

v. Commissioner, supra.

Clearly, in the present case, respondent was aware of a

change in petitioner's address due to the fact that prior

correspondence to petitioner had been returned as undeliverable.

At this point, we must consider the nature of respondent's duty

of due diligence and whether respondent discharged that duty.

The Court will consider all of the facts and circumstances

in deciding whether respondent exercised reasonable care in

ascertaining the taxpayer's current address.

Commissioner, 74 T.C. 430, 435 (1980).

Weinroth v.

In this context, our

inquiry requires an analysis of the efforts made by respondent to

determine the address for mailing the notice of deficiency.

Id.

Courts have typically held that the Commissioner has failed

to discharge the duty of reasonable diligence if a search in the

- 16 Commissioner's computer databases would reveal a taxpayer's

correct address.

E.g., Abeles v. Commissioner, supra; Taylor v.

Commissioner, T.C. Memo. 1988-152.

On the other hand, courts

have refused to impute knowledge to the Commissioner of all

address information listed on all the various forms (such as

Forms 4868) and correspondence received by the Commissioner.

See, e.g., Guillen v. Barnes, supra at 977; Monge v.

Commissioner, 93 T.C. 22 (1989); Mollet v. Commissioner, 82 T.C.

618 (1984), affd. without published opinion 757 F.2d 286 (11th

Cir. 1985); McCormick v. Commissioner, 55 T.C. 138 (1970);

Pritchett v. Commissioner, T.C. Memo. 1986-559; Marlin v.

Commissioner, T.C. Memo. 1985-600.

The objective is to strike a

balance between the administrative burden placed on the

Commissioner and the taxpayer's interest in timely receiving a

notice of deficiency.

In view of the foregoing and in the context of the specific

facts of the present case, we must decide whether respondent

satisfactorily discharged the duty of due diligence in mailing

the notice of deficiency to petitioner.

For the following

reasons, we hold that he did.

Because respondent does not retain any address information

that may be listed on a Form 4868, none of respondent's computer

databases reflected petitioner's Kansas Address when the notice

of deficiency was mailed.

Petitioner's most recently filed

- 17 return reflected the Colorado Springs Address, an address to

which respondent mailed a copy of the notice of deficiency.

In

addition, respondent mailed a copy of the notice of deficiency to

two other addresses, the Nathrop Address--that of petitioner's

parents--and the Second Colorado Springs Address.

Respondent

obtained the Second Colorado Springs Address as a result of a

request for information from one of petitioner's previous

employers.

Prior to the mailing of the notice of deficiency,

respondent had not attempted to correspond with petitioner at the

Second Colorado Springs Address and therefore had no

"undelivered" mail from this address.

Based on respondent's

inquiries, respondent may have concluded that the Second Colorado

Springs Address was petitioner's last known address.

Petitioner did not inform respondent of his address change

through written notice or otherwise.

for 1987 through 1994.

He did not file tax returns

As mentioned, if petitioner wanted

respondent to communicate with him at the Kansas Address, it

would have been a simple matter for him to inform respondent of

his change of address.

Monge v. Commissioner, supra.

Presumably

petitioner knew that he had failed to file tax returns for over 7

years and that respondent might attempt to contact him.

Petitioner contends that respondent could have ascertained

petitioner's current address by reviewing petitioner's transcript

of account, by observing that a Form 4868 had been filed for the

taxable year 1993, and by reviewing that form to determine

- 18 petitioner's new address.

However, petitioner has not

established that the Kansas Address was listed on any Form 4868

that he filed previous to the mailing of the notice of

deficiency.

If respondent had reviewed any of petitioner's Forms

4868, there is no evidence that respondent would have been able

to ascertain petitioner's Kansas Address.

Even assuming that the Forms 4868 listed the Kansas Address,

such forms were received by a different division of the IRS than

the one that issued the notice of deficiency.

In this regard,

the Court of Appeals, in Guillen v. Barnes, 819 F.2d 975, 977

(10th Cir. 1987), stated:

As to the address given on the W-4 form and * * * [the

taxpayer's] other correspondence, it ignores

administrative realities to impute knowledge of an

address change to the division of the IRS that issued

the deficiency notice, based on information received in

another IRS division that was not identified as new

permanent address information. [Emphasis added.]

Based on the circumstances in the present case, respondent's

efforts in mailing the notice of deficiency were reasonably

diligent.

Respondent sent five different address information

requests to the postmasters in Denver, Colorado, Nathrop,

Colorado, and Colorado Springs, Colorado, to verify five possible

addresses for petitioner.

Respondent also attempted to obtain

petitioner's correct address by contacting petitioner's parents

and a previous employer.

Finally, respondent mailed the notice

of deficiency to three different addresses, one of which

respondent may have concluded was petitioner's then current

address.

- 19 The burden of proof is on the taxpayer to prove that the

Commissioner did not exercise "reasonable diligence".

Cyclone

Drilling, Inc. v. Kelley, 769 F.2d 662, 664 (10th Cir. 1985).

Under similar circumstances, the Court of Appeals for the Tenth

Circuit, in holding that the taxpayer had failed to prove the

lack of due diligence by the Commissioner, stated that "[A]

taxpayer, who did not bother to file a tax return * * * [for a

number of years], will not now be heard to complain that the IRS

was not adequately diligent in its efforts to track him down."

Gille v. United States, 33 F.3d 46, 48 (10th Cir. 1994).

We

similarly hold that petitioner has failed to prove that

respondent did not exercise reasonable diligence in mailing the

notice of deficiency to petitioner's Kansas Address.

In view of the foregoing, we shall deny petitioner's motion

to dismiss and grant respondent's motion to dismiss.4

4

Although petitioner cannot pursue his case in this Court,

he is not without a legal remedy. In short, petitioner may pay

the tax, file a claim for refund with the Internal Revenue

Service, and if the claim is denied or not acted on within 6

months, sue for a refund in the appropriate Federal District

Court or the U.S. Court of Federal Claims. See McCormick v.

Commissioner, 55 T.C. 138, 142 (1970).

- 20 In order to reflect the foregoing,

An order will be entered

denying petitioner's motion,

granting respondent's motion, and

dismissing this case for lack of

jurisdiction on the ground that the

petition was not timely filed.