90-Day Letter Does Not Start If Mail Is Undeliverable, Rules One Court

By John C. Slatten, J.D., CPA/PFS, Indianapolis, IN

Editor: Valrie Chambers, Ph.D., CPA

In Terrell, No. 09-60822 (5th Cir. 11/1/10), the Fifth Circuit held that a statutory notice that was mailed to an incorrect address and returned by the Postal Service was null and void. Accordingly, the issue on which the circuits are split—whether the limitation period for filing a petition for review with the Tax Court begins when an incorrectly addressed notice is mailed or when it is actually received—was not implicated. The 90-day period did not begin until the IRS re-mailed the notice to the correct address.


The IRS mailed the taxpayer a notice of the secretary’s final determination denying innocent spouse relief and stating that she had 90 days to file a petition for review with the Tax Court. The taxpayer had moved before the date the notice was mailed; as a result, the Postal Service returned the notice to the IRS as undeliverable. Subsequent to the mailing of the original notice, but prior to the date the notice was returned, the taxpayer filed her 2006 income tax return listing her current address.

After receiving the returned notice, the IRS searched its database again and found the taxpayer’s new address. The IRS then re-mailed the notice to her correct address, and the taxpayer received it. The re-mailed notice was identical to the original notice and listed the mailing date of the original notice as the determination date of the taxpayer’s claim.

The taxpayer appealed the final determination to the Tax Court within 90 days of the date on which the notice was re-mailed but more than 90 days after the date of mailing of the original notice. The Tax Court determined that it did not have jurisdiction to hear the taxpayer’s claim because she did not file her petition for review within 90 days of the mailing of the original notice. It found that the IRS had acted with reasonable diligence in determining her last known address for the purpose of the initial mailing and resending the notice to her correct address. Therefore, the 90-day period began on the date the IRS mailed the original notice.

Statutory Notice Requirement

Sec. 6015 requires that notice of the final determination be sent to the taxpayer’s “last known address” and provides that the taxpayer has 90 days from the date of mailing of the notice to petition the Tax Court for review. To fulfill the statutory notice requirement, the IRS must use reasonable diligence in light of all of the facts and circumstances to determine the last known address, but, absent clear and concise notification by a taxpayer of a change of address, the IRS may generally consider the address on the taxpayer’s most recently filed tax return as the taxpayer’s last known address.

In cases in which the IRS failed to mail the notice to the last known address but the taxpayer subsequently received the notice anyway, the federal circuits are split on the issue of when the 90-day period in which an appeal must be filed begins to run. In dealing with analogous statutory notice provisions in other Code sections, the First, Second, Third, Sixth, Ninth, and Eleventh Circuits have adopted the rule that if a taxpayer actually received the notice that was sent and the delay did not prejudice his or her ability to petition the Tax Court for review, the 90-day limitation period begins on the date of mailing of the notice. On similar facts, the Fourth, Seventh, and D.C. Circuits have held that the limitation period begins on the date the taxpayer actually received the notice.

Fifth Circuit’s Decision

The Fifth Circuit found that the Tax Court erred when it determined that the IRS had acted with reasonable diligence in mailing the original notice because the Postal Service had returned as undeliverable three prior mailings that the IRS had sent to the address to which it sent the original notice. The appeals court held that even though it had not yet received notification from the taxpayer that her address had changed, the IRS was on notice at the time it mailed the original notice that the address that it had on file was incorrect, and reasonable diligence required that it use the resources available to it to attempt to locate a valid address for the taxpayer.

The Fifth Circuit distinguished Terrell from the cases on which the other circuits have split on the issue of the commencement of the limitation period. In those cases, the taxpayer ultimately received the original notice that the IRS mailed. In Terrell, the Postal Service returned the original notice to the IRS. Accordingly, the court held that the original notice was null and void because the IRS did not mail it to the taxpayer’s last known address and the taxpayer never received it. The 90-day limitation period began when the IRS re-mailed the notice to the correct address.


Valrie Chambers is a professor of accounting at Texas A&M University–Corpus Christi in Corpus Christi, TX. John Slatten is with Slatten & Company, LLC, in Indianapolis, IN. They are both members of the AICPA Tax Division’s IRS Practice and Procedures Committee. For more information about this column, contact Prof. Chambers at valrie.chambers@tamucc.edu.

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