IRS did not exercise due diligence to ascertain last known address.

• Author: Lerman, Jerry L.

To collect a deficiency in income tax, the IRS must mail a notice of deficiency to a taxpayer by certified or registered mail to the taxpayer's last known address. To challenge the assessment of a tax deficiency, the taxpayer must file a petition for redetermination in the Tax Court within 90 days of the mailing of the deficiency notice. The "last known address" to which the deficiency notice must be sent is the taxpayer's last permanent address or legal address known by the Service; it is the taxpayer's burden and responsibility to communicate any change of address. Yet, a notice sent to the wrong address will not satisfy the statutory requirement (and the 90-day period will not begin to run) if it is shown that the IRS failed to exercise reasonable care in determining a taxpayer's new address. This was the conclusion in a recent Second Circuit decision involving two address changes within one year, even though the taxpayer never moved.

In Sicari, 136 F3d 925 (2nd Cir. 1998), the taxpayer resided in the same house since 1976 with the official mailing address of "Route 208, Gardiner, New York 12525" (the "Route 208 address"). In 1991, the U.S. Postal Service changed the official mailing address to "Route 208, Box 1370, Gardiner, New York 12525" (the "Box 1370 address"), and in January 1992, the U.S. Postal Service again changed the official address, this time to "871 Route 208, Gardiner, New York 12525" (the "871 address"). In October 1992, the Service sent a statutory notice of deficiency by certified marl, return receipt requested, to the taxpayer at the Route 208 address. The U.S. Postal Service returned the envelope unopened and marked "Unclaimed" with the words "Return unclainled" handwritten on the envelope. The taxpayer claimed that he did not receive actual notice of the deficiency until 1995, when he met with an IRS agent in connection with an...