Opinion
5007-23S
06-25-2024
JAMES H. LATTA & DEETTA J. LATTA, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER OF DISMISSAL FOR LACK OF JURISDICTION
ADAM B. LANDY SPECIAL TRIAL JUDGE.
Pending before the Court is the Commissioner's Motion to Dismiss for Lack of Jurisdiction, filed May 25, 2023. The Commissioner seeks dismissal of this case on the ground that the Petition was filed 400 days after the notice of deficiency (Notice) was issued to the Lattas on February 7, 2022. For the reasons stated below, we agree with the Commissioner, and we will grant his Motion.
Background
From 2005 to 2021, the IRS records state that the Lattas' last known address was a P.O. Box in Frisco, Colorado (P.O. Box Address). In May 2021, the IRS processed the Lattas' 2020 Form 1040, U.S. Individual Income Tax Return (Form 1040), listing the Lattas' mailing address as Aspen Drive, Frisco, Colorado (Aspen Drive Address). In or around April 2022, the Lattas moved to Sorrento Lane, Cedaredge, Colorado (Sorrento Lane Address). On September 28, 2022, the Lattas filed their 2021 Form 1040 return listing their mailing address as the Sorrento Lane Address.
Although the Notice is dated February 7, 2022, the Commissioner mailed the Notice to the Lattas at their Aspen Drive Address on February 4, 2022. The Commissioner determined a deficiency of $11,212 and an accuracy-related penalty, pursuant to section 6662(a), of $2,242 for the Lattas' 2019 tax year. The Notice stated that the Lattas had until May 9, 2022, to file a timely petition with this Court. On March 14, 2023, the Court received and filed the Petition mailed by the Lattas, via FedEx Ground, challenging the Notice.
Unless otherwise indicated, statutory references are to the Internal Revenue Code, Title 26 U.S.C., in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure. All dollar amounts are rounded to the nearest dollar.
On May 25, 2023, the Commissioner moved to dismiss this case for lack of jurisdiction because the Petition was not filed within the time prescribed by sections 6213(a) or 7502. In support of his Motion, the Commissioner attached a Postal Servce Form 3877 (Certified Mail Listing) showing that he mailed the Notice to the Lattas at the Aspen Drive Address on February 4, 2022. The Commissioner further stated that his internal transcripts reflect that the Lattas' address of record was updated in May 2021, to the Aspen Drive Address. The Commissioner also maintains that the IRS's transcripts reflect that the Lattas' address was not updated again until October 2022, to the Sorrento Lane Address, which was after the issuance of the Notice.
On July 6, 2023, the Lattas filed an Objection to the Commissioner's Motion stating that they requested a change of address with the United States Postal Service (USPS) on December 31, 2021. The Lattas also stated that they were unaware of a deficiency for 2019 until they electronically filed their 2021 tax return on September 28, 2022. The Lattas acknowledged receiving a copy of the Notice on February 21, 2023, and they also acknowledged their Petition was filed late. In summary, the Lattas contend that the Commissioner failed to mail the Notice to their last known address. On September 12, 2023, the Commissioner filed a Response to the Lattas' Objection maintaining that he sent the Notice to the Lattas' last known address and that the Lattas failed to timely file a Petition in response to the Notice.
This case was assigned to the undersigned for disposition on October 2, 2023. The Court noticed and held a remote hearing on the Commissioner's Motion on November 14, 2023. During the hearing, the Lattas maintained that they notified the IRS of their address change from the P.O. Box Address to a Brookside Drive, Grand Junction, Colorado address (Brookside Drive Address) by filing a change of address form with the USPS. By Order served November 15, 2023, the Court ordered the Lattas to file a supplement to their Objection to the Commissioner's Motion attaching thereto any evidence supporting their factual position that they properly notified the USPS of their change of address from the Aspen Drive Address to their new address prior to February 7, 2022.
On November 29, 2023, the Lattas filed a Supplement to their Objection attaching a USPS Official Change-of-Address Confirmation Letter showing their change of address from the P.O. Box Address, not the Aspen Drive Address, to the Brookside Drive Address on January 4, 2022. On December 15, 2023, the Commissioner filed a Response to the Lattas' Supplement to their Objection arguing that no evidence existed that the Brookside Drive Address was the Lattas' last known address prior to the issuance of the Notice on February 7, 2022.
Discussion
This Court is a court of limited jurisdiction, and we may only exercise our jurisdiction to the extent authorized by Congress. See § 7442; Naftel v. Commissioner, 85 T.C. 527, 529 (1985). Where this Court's jurisdiction is duly challenged, as here, our jurisdiction must be affirmatively shown by the party seeking to invoke that jurisdiction. See David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff'd, 22 Fed.Appx. 837 (9th Cir. 2001); Fehrs v. Commissioner, 65 T.C. 346, 348 (1975). To meet this burden, the Lattas, as the party seeking to invoke our jurisdiction, "must establish affirmatively all facts giving rise to our jurisdiction." David Dung Le, M.D., Inc., 114 T.C. at 270.
In a case seeking redetermination of a deficiency, our jurisdiction depends upon the issuance of a valid notice of deficiency and the timely filing of a petition. See §§ 6212 and 6213; Rule 13(a) and (c); Sanders v. Commissioner, No. 25868-22, 160 T.C., slip op. at 5 (June 20, 2023). Section 6213(a) provides: "Within 90 days ... after the notice of deficiency authorized in section 6212 is mailed ..., the taxpayer may file a petition with the Tax Court for a redetermination of the deficiency." We have no authority to extend the time for filing beyond this 90-day period. See Hallmark Rsch. Collective v. Commissioner, 159 T.C. 126, 166-67 (2022).
The dispositive issue in this case is whether the Notice was mailed to the Lattas' last known address. A notice of deficiency mailed to the taxpayers' last known address, as required by section 6212, is valid even if the notice of deficiency is not received by the taxpayers. Guthrie v. Sawyer, 970 F.2d 733, 737 (10th Cir. 1992) (citing Guillen v. Barnes, 819 F.2d 975, 977 (1987)); Yusko v. Commissioner, 89 T.C. 806, 807 (1987). The taxpayers' last known address is generally the address appearing on their "most recently filed and properly processed Federal tax return, unless the [IRS] is given clear and concise notification of a different address." Treas. Reg. § 301.6212-2(a).
Section 301.6212-2(b)(2)(i) of the Treasury Regulations allows taxpayers to update their last known address through the USPS National Change of Address (NCOA) database under a specific set of circumstances. "[I]f the taxpayer's name and last known address in IRS records match the taxpayer's name and old mailing address contained in the NCOA database, the new address in the NCOA database is the taxpayer's last known address[.]" Treas. Reg. § 301.6212-2(b)(2)(i). Accordingly, if the taxpayer's name and address in IRS records do not match the taxpayer's name and old mailing address contained in the NCOA database, the taxpayer's new address is not the taxpayer's last known address. See id. Rather the address in the IRS's records is the taxpayer's last known address. See id. "Taxpayers are nonetheless advised to notify the Service directly of a change of address to ensure a timely and accurate update of the Service's address of record for the taxpayer." Rev. Proc. 2010-16, § 4.05, 2010-19 I.R.B. 664, 665.
It is undisputed that the Lattas filed their Petition late. Accordingly, we must dismiss this case for lack of jurisdiction unless we agree with the Lattas that the Notice was not mailed to their last known address. The burden is on the Lattas to show that the Notice was not sent to their last known address. Yusko, 89 T.C. at 808. Based on the motion papers and the statements made at the hearing, the Court determines that the Aspen Drive Address was the Lattas' last known address when the Notice was issued.
In the Lattas' Supplement to their Objection, they demonstrated that they changed their address from the P.O. Box Address to the Brookside Drive Address on January 4, 2022. However, the IRS's records show that the Lattas previously changed their address from the P.O. Box Address to the Aspen Drive Address in May 2021 when they filed their 2020 Form 1040 return. For the Lattas' new address to replace their old address in IRS records, their name and address in the IRS's records must match their name and old address in the NCOA database. See Treas. Reg. § 301.6212-2(b)(2)(i). In this case, the addresses did not match. The Lattas changed their last known address from the P.O. Box Address to the Aspen Drive Address when they filed, and the IRS properly processed their 2020 Form 1040 in May 2021. Thus, the Aspen Drive Address rather than the P.O. Box Address was the Lattas' old address when they notified the USPS of their change of address from the P.O. Box Address to the Brookside Drive Address on January 4, 2022. Accordingly, the Lattas' last known address is the Aspen Drive Address rather than the Brookside Drive Address. The Lattas did not show that an address other than the Aspen Drive Address was their last known address when the Notice was issued. Therefore, the Lattas' change of address through the USPS from the P.O. Box Address to the Brookside Drive Address was insufficient to update their last known address. Consequently, the Notice addressed and mailed to the Aspen Drive Address was a valid notice of deficiency.
The Court also determines that the Commissioner exercised reasonable diligence in determining the Lattas' last known address when the Notice was mailed. "In a last known address determination, the focus is on the information available to the IRS at the time it issued the notice of deficiency, rather than what may in fact be the taxpayer's correct address." Armstrong v. Commissioner, 15 F.3d 970, 974 (10th Cir. 1994) (citing Cyclone Drilling, Inc. v. Kelley, 769 F.2d 662, 664 (10th Cir. 1985)). While the Commissioner must exercise reasonable diligence in attempting to determine the taxpayer's last known address, "[i]t is the taxpayer's responsibility to notify the IRS of any changes in address[.]" Id. (citing Tadros v. Commissioner, 763 F.2d 89, 91 (2d Cir. 1985)). "[T]he burden rests with the taxpayer to show the IRS failed to exercise reasonable diligence in ascertaining the last known address[.]" Id. (citing Cyclone Drilling, Inc., 769 F.2d at 664).
Considering that the Commissioner may rely upon the information provided by the Lattas, and that the Lattas' did not give the IRS "clear and concise notification of a different address[,]" the Commissioner exercised reasonable diligence when he mailed the Notice to the Aspen Drive Address. See Treas. Reg. § 301.6212-2(a); Armstrong, 15 F.3d at 975. According to the Commissioner's internal transcripts, the Aspen Drive Address was the Lattas' address of record from May 2021 until October 2022. The Commissioner accordingly exercised reasonable diligence when he examined IRS's internal transcripts and mailed the Notice on February 4, 2022, to the Aspen Drive Address in keeping with those records. The Lattas failed to demonstrate that the Commissioner did not exercise reasonable diligence in issuing the Notice to their last known address.
We are quite sympathetic to the Lattas' circumstances. While the Lattas cannot pursue their case in this Court, they may pursue an administrative resolution of their tax liability for 2019 with the IRS. Alternatively, the Lattas, if feasible, may pay the proposed deficiency amount and then file a claim for refund with the IRS. If that claim is denied (or not acted upon after six months), the Lattas may file a suit for refund in the appropriate U.S. District Court or the U.S. Court of Federal Claims. See McCormick v. Commissioner, 55 T.C. 138, 142 n.5 (1970).
Upon due consideration of the Commissioner's Motion, the parties' subsequent filings, and for cause, it is
ORDERED that the Commissioner's Motion to Dismiss for Lack of Jurisdiction, filed May 25, 2023, is granted, and this case is dismissed for lack of jurisdiction.