TAX COURT HOLDS THAT 'LAST KNOWN ADDRESS' IS THAT INDICATED ON MOST RECENTLY FILED RETURN.

TAX COURT HOLDS THAT 'LAST KNOWN ADDRESS' IS THAT INDICATED ON MOST RECENTLY FILED RETURN.

Barbara and Harold Abeles filed joint Federal tax returns for the years 1975, 1976, and 1977. The Service determined deficiencies in the couple's 1976 return and, on October 15, 1980, sent a single joint deficiency to Harold Abeles' Beverly Hills business address. In May 1982, the Abeleses separated. On June 15, 1982, Barbara filed a return for 1981, claiming married, filing jointly status. This return indicated Barbara Abeles' name only and the return address on the form was that of her accountant. The Service determined deficiencies with respect to Barbara and Harold Abeles' 1975 and 1977 joint returns. Even though the Service's records indicated separate addresses for Barbara and Harold Abeles, the Service sent a single joint deficiency notice to Harold Abeles' business address on November 30, 1982. Harold Abeles, who had overseen his and his wife's tax and financial matters during their marriage, did not inform his estranged wife of either of the deficiency notices. Barbara Abeles did not learn of the notices until the Service levied on her bank account and placed a lien on her house in 1986. At that point, she filed an untimely Tax Court petition, seeking redetermination of the deficiencies relating to 1975, 1976, and 1977. In the same Tax Court petition, she sought a redetermination for 1978, a year for which no notice of deficiency notice has been issued. The Service and Barbara Abeles filed cross-motions to dismiss for lack of jurisdiction. Noting that the Service had not sent duplicate originals of the relevant deficiency notices to her last known address, Abeles contended the court lacked jurisdiction. She also asserted that the statute of limitations barred the 1976 deficiency notice. The Service argued that the Tax Court lacked jurisdiction for all three years, contending that Abeles' petition was not timely. Moreover, the Service maintained that no jurisdiction existed with respect to 1978 since no deficiency notice has been issued for that year. In a Reviewed Decision, Tax Court Judge Fay has granted Abeles' motion to dismiss with respect to 1975 and 1977, finding that the Service's deficiency notice relating to those two years was not valid. The majority rejected the Service's argument that a literal interpretation of section 6212(b)(2) supports the Service's decision not to conduct an independent search absent specific notice by either spouse that separate residences were established. In so ruling, the court explicitly held that, for purposes of properly mailing a deficiency notice, "a taxpayer's last known address is that address which appears on the taxpayer's most recently filed return, unless [the Service] has been given clear and concise notification of a different address." Judge Fay also held that "a taxpayer's 'most recently filed return' is that return which has been properly processed by an IRS service center such that the address appearing on such return was available to [the Service's] agent when that agent prepared to send a notice of deficiency in connection with an examination of a previously filed return." Finally, the majority held that "the address from the more recently filed return is AVAILABLE to the agent issuing a notice of deficiency with respect to a previously filed return, if such address could be obtained by a computer generation of an IRS computer transcript using the taxpayer's TIN in the case of a separately filed return, or BOTH taxpayers' TINs in the case of a previously filed joint return." The court granted the Service's motion to dismiss with respect to Abeles' 1976 taxable year, finding that her petition was not timely filed. It also dismissed the petition with respect to 1978, citing the absence of a deficiency notice for that year. In a dissent joined by three members of the court, Judge Ruwe wrote that the majority's position was not unreasonable, but that it should be applied exclusively on a prospective basis. Judge Ruwe argued that it was "inequitable and inconsistent" to implement the new rule retroactively and, thereby, invalidate a deficiency notice mailed six years ago.

Barbara and Harold Abeles filed joint Federal tax returns for the years 1975, 1976, and 1977. The Service determined deficiencies in the couple's 1976 return and, on October 15, 1980, sent a single joint deficiency to Harold Abeles' Beverly Hills business address. In May 1982, the Abeleses separated. On June 15, 1982, Barbara filed a return for 1981, claiming married, filing jointly status. This return indicated Barbara Abeles' name only and the return address on the form was that of her accountant. The Service determined deficiencies with respect to Barbara and Harold Abeles' 1975 and 1977 joint returns. Even though the Service's records indicated separate addresses for Barbara and Harold Abeles, the Service sent a single joint deficiency notice to Harold Abeles' business address on November 30, 1982. Harold Abeles, who had overseen his and his wife's tax and financial matters during their marriage, did not inform his estranged wife of either of the deficiency notices. Barbara Abeles did not learn of the notices until the Service levied on her bank account and placed a lien on her house in 1986. At that point, she filed an untimely Tax Court petition, seeking redetermination of the deficiencies relating to 1975, 1976, and 1977. In the same Tax Court petition, she sought a redetermination for 1978, a year for which no notice of deficiency notice has been issued. The Service and Barbara Abeles filed cross-motions to dismiss for lack of jurisdiction. Noting that the Service had not sent duplicate originals of the relevant deficiency notices to her last known address, Abeles contended the court lacked jurisdiction. She also asserted that the statute of limitations barred the 1976 deficiency notice. The Service argued that the Tax Court lacked jurisdiction for all three years, contending that Abeles' petition was not timely. Moreover, the Service maintained that no jurisdiction existed with respect to 1978 since no deficiency notice has been issued for that year. In a Reviewed Decision, Tax Court Judge Fay has granted Abeles' motion to dismiss with respect to 1975 and 1977, finding that the Service's deficiency notice relating to those two years was not valid. The majority rejected the Service's argument that a literal interpretation of section 6212(b)(2) supports the Service's decision not to conduct an independent search absent specific notice by either spouse that separate residences were established. In so ruling, the court explicitly held that, for purposes of properly mailing a deficiency notice, "a taxpayer's last known address is that address which appears on the taxpayer's most recently filed return, unless [the Service] has been given clear and concise notification of a different address." Judge Fay also held that "a taxpayer's 'most recently filed return' is that return which has been properly processed by an IRS service center such that the address appearing on such return was available to [the Service's] agent when that agent prepared to send a notice of deficiency in connection with an examination of a previously filed return." Finally, the majority held that "the address from the more recently filed return is AVAILABLE to the agent issuing a notice of deficiency with respect to a previously filed return, if such address could be obtained by a computer generation of an IRS computer transcript using the taxpayer's TIN in the case of a separately filed return, or BOTH taxpayers' TINs in the case of a previously filed joint return." The court granted the Service's motion to dismiss with respect to Abeles' 1976 taxable year, finding that her petition was not timely filed. It also dismissed the petition with respect to 1978, citing the absence of a deficiency notice for that year. In a dissent joined by three members of the court, Judge Ruwe wrote that the majority's position was not unreasonable, but that it should be applied exclusively on a prospective basis. Judge Ruwe argued that it was "inequitable and inconsistent" to implement the new rule retroactively and, thereby, invalidate a deficiency notice mailed six years ago.

Section 6212 -- Notice of Deficiency

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TAX COURT HOLDS THAT 'LAST KNOWN ADDRESS' IS THAT INDICATED ON MOST RECENTLY FILED RETURN.