The Tax Court held that a notice of determination from a collection due process (CDP) hearing, like a deficiency notice, is valid for purposes of starting the period in which a taxpayer must file a petition with the Tax Court if the notice is actually received by the taxpayer.
Background
Isaiah Bongam owed civil penalties under Sec. 6672 for failing to collect or pay withholding taxes for various calendar quarters from 2005 through 2009. The IRS assessed a liability of $772,282, on April 9, 2009, and issued Bongam a Notice of Federal Tax Lien Filing and Your Right to a Hearing (NFTL) on Oct. 1, 2013. The IRS sent the NFTL by certified mail to Bongam at an address in Bowie, Md., which was his last known address as shown in IRS records at all relevant times.
Bongam timely filed Form 12153, Request for a Collection Due Process or Equivalent Hearing, which showed his address as an address in Washington, D.C. However, he never filed a change-of-address form with the IRS or indicated to the IRS that he wished to have his last known address changed to the Washington address. Bongam testified at trial that he generally used the Maryland address for his tax filings.
After the CDP hearing, the settlement officer determined that Bongam was not entitled to relief. On April 30, 2014, the IRS sent him a Notice of Determination Concerning Collection Action(s) denying relief to his Washington address by certified mail. On May 3, 2014, the U.S. Postal Service attempted to deliver the letter to Bongam's Washington address but was unable to do so, and on June 6, 2014, it returned the letter as undeliverable to the IRS.
On Aug. 4, 2014, the IRS remailed the April 30, 2014, Notice of Determination, including the envelope in which it had originally been posted, to Bongam at his Maryland address by regular mail. Bongam received the Notice of Determination a few days later and, on Aug. 22, 2014, mailed the Tax Court a petition seeking review of the notice. This petition was filed within 30 days of the date on which he actually received the notice and of the date on which the IRS remailed the notice. In Tax Court, the IRS moved to dismiss the case, arguing the court lacked jurisdiction because the notice originally sent to Bongam was invalid because it was not mailed to his "last known address" and thus could not serve as a basis for the court's jurisdiction.
The Tax Court's Decision
The Tax Court held that the remailed notice was valid and it had jurisdiction over the case. The court found that the notice was valid because it was actually received by Bongam without prejudicial delay.
The Tax Court's jurisdiction over the appeal of a decision in a CDP hearing is provided in Sec. 6330(d), but that subsection does not specify the means by which the IRS must notify the taxpayer of a "determination" made after a CDP hearing. As the Tax Court noted in its opinion, Sec. 6330(d) does not explicitly require that the taxpayer be notified at all; it simply states that there must be a "determination" and permits the taxpayer to appeal to the Tax Court within 30 days after the "determination" has been made. The court has held that a certified mailing to the taxpayer's last address for these purpose was sufficient; however, it has never addressed whether a notice delivered by some other method would be effective.
The Tax Court addressed the question by analogy to the rules for its deficiency jurisdiction. The court explained that while a notice of deficiency would be valid if sent to the taxpayer's last known address, whether the taxpayer actually received the notice or not, if the taxpayer actually received a notice "without prejudicial delay" (i.e., in time to file a timely petition with the Tax Court), the notice would still be valid, regardless of where or how it was sent.
Applying these same rules to Bongam's case, it concluded that the first notice sent to the Bongam, which was not sent to his last known address, was invalid because it was not actually received by him. Therefore, it did not start the 30-day period in which he was required to petition the Tax Court. However, when the IRS remailed the notice on Aug. 4, 2014, to his correct address, and he actually received it, the notice was valid. The running of the limitation period for petitioning the Tax Court began only on the date of the remailing of the notice.
The Tax Court further stated that the fact that the date on the notice did not match the mailing date did not affect this conclusion. The court found, as it had in analogous situations, that the critical date for these purposes was the date of mailing. The failure in Bongam's case by the IRS to retype the letter using the remailing date or to simply cross out and replace the original date on it did not deprive the court of jurisdiction, as long as the notice was received by Bongam in time for him to petition the Tax Court for review.
Reflections
Based on the Tax Court's description of his case, Bongam almost certainly will lose the case at trial. Nevertheless, the law says he is entitled to a review of the determination from his CDP hearing, and he followed the rules to get one as best as he could in light of the IRS's errors in sending him the notice of determination. Thus, it seems unreasonable for the IRS to try to have his case dismissed before trial on a technicality created by its failure to correctly follow its own procedures.
