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Taxpayer who didn’t pick up his mail couldn’t challenge tax liability at CDP hearing

June 25, 2014

Onyango, (6/24/2014) 142 TC No. 24142 TC No. 24

The Tax Court has held that, where IRS sent a notice of deficiency to a taxpayer’s legal residence that was returned to IRS by the Postal Service when the taxpayer didn’t pick up the notice after many weeks, the taxpayer couldn’t argue that he didn’t receive the notice for purposes of Code Sec. 6330(c)(2)(B)’s rule allowing a taxpayer to challenge his underlying tax liability at a collection due process (CDP) hearing if he didn’t receive a notice of deficiency.

Facts. In early 2010, IRS audited the tax return of the taxpayer, Mr. Onyango. IRS proposed certain adjustments. An IRS representative contacted Onyango by properly-addressed letter and scheduled a meeting with him to discuss those proposed adjustments. Onyango did not appear at that scheduled meeting. Thereafter, in the spring or early summer of 2010, an IRS Appeals officer sent Onyango another properly-addressed letter advising him that if he did not contact the Appeals officer within 20 days, a notice of deficiency would be issued to him.

On Aug. 6, 2010, IRS issued to Onyango a notice of deficiency that was properly addressed and mailed by certified mail, return receipt requested.

On several occasions, the U.S. Postal Service attempted, albeit unsuccessfully, to deliver the notice of deficiency to Onyango at his address. On at least two occasions, the Postal Service left notices of attempted delivery of certified mail at that address. In those notices, the Postal Service informed Onyango that it had certified mail to deliver to him and that he had to sign a receipt for that mail before the Postal Service would deliver it to him.

In late October or early November 2010, Onyango checked his mailbox and found at least two notices of attempted delivery of certified mail from the Postal Service. In those notices, the Postal Service informed Onyango that it had certified mail from a sender, who was not identified on those notices, and that he should retrieve and sign for that certified mail at his local Postal Service office. At the time not established by the record when Onyango went to his local Postal Service office, the certified mail to which the notices from the Postal Service pertained had been returned to the sender as unclaimed.

Onyango spent around 30% to 40% of the period August to December 2010, including sleeping overnight, at his apartment and the remainder of that period staying with friends. He returned to and stayed at that apartment during each of the months August through October 2010.

At all relevant times, including during the period August to December 2010, Onyango received certain bills through the Postal Service mail system at his apartment. Onyango declined to check on a regular basis his mailbox at that apartment and to retrieve on a regular basis any Postal Service mail items delivered there. He usually disregarded and rarely opened the bills that he received through the Postal Service mail system.

Background. IRS must give a taxpayer written notice before IRS levies on the taxpayer’s property. The notice must inform him of the right to request a hearing in IRS’s Appeals Office (a CDP hearing). (Code Sec. 6330(a)(1))

At the hearing, the taxpayer may challenge the existence or amount of the underlying tax liability only if he did not receive a statutory notice of deficiency for the tax liability and did not otherwise have an opportunity to dispute the tax liability. (Code Sec. 6330(c)(2)(B))

Tax Court says that taxpayer can’t contest liability. Onyango argued that he was entitled under Code Sec. 6330(c)(2)(B) to contest the underlying tax liability. In support of that position, Onyango contended that, although IRS mailed the properly addressed notice of deficiency to him by certified mail, return receipt requested, he did not receive that notice within the 90-day period during which he could have filed a petition with the Court with respect to that notice. He denied that he had refused to pick up his mail.

IRS argued that Onyango’s testimony to the contrary was not credible and “should be given no weight.”

The Court agreed with IRS that Onyango’s testimony was not credible in certain material respects and thus was unreliable.

However, it said, even if it accepted Onyango’s testimony that he did not know until late October or early November 2010 about the notices from the Postal Service of attempted delivery of certified mail, and that when he went to his local Postal Service office with those notices, the Postal Service had already returned the certified mail to the sender, it nonetheless rejected his contention that he was entitled under section Code Sec. 6330(c)(2)(B) to dispute the underlying tax liability. That is because Onyango’s testimony established that, even though he spent at his apartment around 30% to 40% of the period August to December 2010, including staying and sleeping overnight there during each of the months August through October 2010, he declined to check on a regular basis his mailbox at that apartment and to retrieve on a regular basis any Postal Service mail items delivered there. And Onyango did so despite the fact that on Aug. 6, 2010, when IRS mailed to him the notice of deficiency that was addressed to his apartment, he knew that (1) IRS’s Appeals Office in Chicago was considering the adjustments that IRS’s examining agent had proposed ; (2) an Appeals officer in that office had contacted him by letter and scheduled a meeting with him to discuss those proposed adjustments; (3) he did not appear at that meeting; and (4) thereafter, in the spring or early summer of 2010, that Appeals officer sent him another letter advising him that if he did not contact the Appeals officer within 20 days, a notice of deficiency would be issued to him for his tax years 2006 and 2007.

The Court said that Onyango could not decline to retrieve his Postal Service mail when he was reasonably able and had multiple opportunities to do so, and thus could not successfully contend that he did not receive the notice of deficiency for purposes of Code Sec. 6330(c)(2)(B) .

References: For matters considered at a Collection Due Process hearing, see FTC 2d/FIN ¶ V-5267 ; United States Tax Reporter ¶ 63,304 ; TaxDesk ¶ 902,517 ; TG ¶ 71945 .

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