IRS faulted for failure to send notice to last known address.

• Author: Beavers, James A.

The Fifth Circuit held that for purposes of the starting date of the limitation period for filing a Tax Court petition, a notice of determination that is returned to the IRS as undeliverable is null and void if the IRS did not exercise reasonable diligence to determine the taxpayer's correct address.

Background

After receiving an assessment for over $660,000 in unpaid taxes, Pamela Terrell filed with the IRS Form 8857, Request for Innocent Spouse Relief, dated September 20, 2006, listing her then-current address (in North Richland Hills) on the form. Soon after filing the Form 8857, she moved to a new address (in Dallas). Terrell claimed that she mailed a change of address form to the IRS, but she provided no evidence that she did.

On December 13, 2006, the IRS mailed a confirmation of receipt of Form 8857 to the North Richland Hills address, but the Post Office returned the letter to the IRS as undeliverable on January 24, 2007. On February 7, 2007, the IRS mailed to the same address two preliminary notices of determination denying relief, informing Terrell that she had 30 days to request a review of the determination from IRS Appeals. On February 28, 2007, the Post Office returned the preliminary notices to the IRS as undeliverable.

Having not received a request for review from Terrell, the IRS mailed a Notice of Determination on April 6, 2007, to the North Richland Hills address, denying Sec. 6015 relief and stating that Terrell had 90 days to petition the Tax Court for review (the first notice). On April 11, 2007, Terrell filed her 2006 tax return, listing the Dallas address as her current address. On May 7, 2007, the Post Office returned the notice to the IRS as undeliverable. After receiving the returned notice, the IRS searched its database, found the Dallas address, and remailed the notice to that address on May 14, 2007. The notice the IRS sent to the Dallas address was identical to the one sent on April 6, 2007, and also listed April 6, 2007, as the date of determination of Terrell's claim. Terrell received the notice in mid-May and filed a petition with the Tax Court on July 13, 2007.

The IRS moved to dismiss the petition for lack of jurisdiction because Terrell had not filed it within 90 days after April 6, 2007. Terrell responded that the 90-day limit began to run only in mid-May when she actually received the notice or, in the alternative, that the Tax Court should exercise its equitable power to allow her petition. After a...