Argued September 17, 2014.
Appeal from the United States Tax Court. No. 19240-11L -- Elizabeth Crewson Paris, Judge.
For CHRISTOPHER GYORGY, Petitioner - Appellant: Lowell H. Becraft, Jr., Attorney, Huntsville, AL.
For COMMISSIONER OF INTERNAL REVENUE, Respondent - Appellee: Janet A. Bradley, Attorney, DEPARTMENT OF JUSTICE, Tax Division, Appellate Section, Washington, DC; Richard Farber, Attorney, DEPARTMENT OF JUSTICE, Civil Division, Immigration Litigation, Washington, DC.
Before FLAUM, KANNE, and ROVNER, Circuit Judges.
Kanne, Circuit Judge.
The Internal Revenue Service (" IRS" ) determined that Appellant Christopher Gyorgy owed approximately $100,000 in unpaid income taxes, penalties, and interest for tax years 2002 and 2003. The IRS mailed notices of his deficiencies in 2006 and 2007, including demands for payment, to the address on his most recently filed tax return. But Gyorgy no longer lived there and did not receive the notices. More than two years later, his debts were still outstanding, so the IRS filed notice of a federal tax lien on his property in an effort to collect what he owed. Gyorgy challenged the IRS's action in a collection due process (" CDP" ) hearing before the IRS Office of Appeals (the " Appeals Office" ).
The Appeals Office sustained the IRS's filing of the lien notice. Its decision rested, in part, on findings that the IRS (1) properly mailed Gyorgy's deficiency notices to his " last known address" under I.R.C. § 6212(b)(1) before filing the lien; and (2) correctly determined his underlying tax liabilities. Gyorgy appealed both determinations to the tax court, which affirmed in relevant part after a bench trial. He now appeals the tax court's judgment. We affirm.
A. The IRS's Collection Efforts
From 2001 through 2003, Gyorgy earned taxable income from various sources, including
wages from Goodby Silverstein & Partners (an advertising agency) and interest and dividends from his investments. But he filed no federal income tax returns for those years. In fact, he neglected to file any income tax returns from tax year 2001 through at least tax year 2007. During that same period, he moved frequently, living at eight different addresses in four cities and two states.
To determine Gyorgy's tax liability for 2001, 2002, and 2003--the years relevant to this appeal--the IRS had to rely on W-2 forms, 1099 forms, and other information submitted by third parties to create substitute returns. See I.R.C. § 6020(b). When the substitute returns revealed deficiencies for all three years, the IRS began the process of notifying Gyorgy and attempting to collect his debts.
The IRS's computer system shows that it sent notice of Gyorgy's 2001 deficiency on or shortly after March 9, 2004, to his apartment on Octavia Street in San Francisco. That was the address he had reported on his most recently filed tax return, for the 2000 tax year, and it was the most recent address in the IRS's computer system. It is unclear whether the notice was in fact mailed, but in any event Gyorgy no longer lived on Octavia Street and did not receive it. In August 2004, the IRS assessed his deficiency for tax year 2001.
The IRS had no record of any address update from Gyorgy. But the forms submitted to the IRS by third parties showed a few possible addresses. Gyorgy's 2002 W-2s listed Octavia Street as well as an address on Lee Street in Oakland, California. His W-2 and one of his 1099s for 2003 listed an address on Jean Street in Oakland. In addition, his 1099s and other forms for both years listed his business address at Goodby Silverstein in San Francisco.
On November 29, 2004, the IRS mailed a form 2797 " R-U-There" letter to Jean Street. The letter requested Gyorgy's assistance in updating IRS records. It asked him to check a box if Jean Street was his current address, or to write in another address if it was not, then sign and return the form. The IRS received no answer to its letter.
The IRS continued to use Octavia Street as Gyorgy's address. It sent a deficiency notice there for tax year 2003 on December 11, 2006, demanding payment of $68,954 in income taxes, penalties, and interest. Gyorgy did not receive the notice, and the postal service returned it to the IRS marked " not deliverable as addressed" and " unable to forward" with a date stamp of " 12/17/06." The IRS took no further steps (at least none reflected in the record) to locate Gyorgy or to re-issue the notice after it received the returned mail. In May 2007, it assessed his deficiency for tax year 2003.
On July 30, 2007, the IRS mailed another deficiency notice to Octavia Street, this time for tax year 2002. It demanded payment of $27,621 in taxes, penalties, and interest. Again, Gyorgy did not receive the notice, and the postal service returned it to the IRS marked " attempted -- not known" and " unable to forward" with a date stamp of " 08/03/07." The IRS again took no further steps to locate Gyorgy or re-issue the notice. In December 2007, it assessed his deficiency for tax year 2002.
Gyorgy did not pay his debts or petition the tax court for a redetermination of his deficiencies under I.R.C. § 6213(a) (a procedure for contesting one's tax liability after the IRS issues a deficiency notice). Two years later, his debts were still outstanding,
so the IRS proceeded with collection efforts. It filed a notice of federal tax lien in the recorder's office in Cook County, Illinois, in August 2009 with respect to Gyorgy's residence at 8900 Forestview Road in Evanston, where he had been living since 2008. By then, Gyorgy's tax liability had grown to $120,644 ($12,684 for 2001; $30,416 for 2002; and $77,544 for 2003). The IRS sent notification of the lien filing to the subject property on Forestview Road.
Gyorgy received the notice and timely requested a CDP hearing. He questioned whether the IRS had followed the necessary procedures and claimed he was not liable for the assessed taxes.
B. The Collection Due Process Hearing
The Appeals Office conducted its CDP review between 2009 and 2011. The appeals officer assigned to Gyorgy's case asked him to submit original tax returns and supporting documentation if he disagreed with the IRS's calculation of his liabilities. To aid the task, she enclosed copies of the third-party information reported to the IRS and summaries of his income for each year. But Gyorgy--who was proceeding pro se--provided no returns or other information to challenge his liability.
Nor did Gyorgy participate meaningfully in the CDP process. The appeals officer initially scheduled a telephone conference to discuss his objections, but he did not participate or timely request an alternative date. Instead, he sent a letter the day before the hearing insisting on meeting face-to-face. The appeals officer agreed to do so, but only if Gyorgy filed his overdue tax returns from 2001 through 2010 (his non-filing appears to have been habitual). He refused, so the Appeals Office based its review on the information in the administrative file.
The Appeals Office issued a notice of determination sustaining the IRS's lien notice on July 15, 2011. It concluded that the IRS " follow[ed] all legal and procedural requirements in the assessment and collection process." In particular, it found that the IRS properly issued Gyorgy's deficiency notices to Octavia Street because that was the address on his most recently filed tax return, and because he had not " clearly and concisely notified the IRS of a change of address." The Appeals Office also upheld the IRS's determination of Gyorgy's tax liabilities because, although he claimed he was not liable, he never actually challenged the agency's calculations.
Gyorgy filed a timely petition in tax court on August 15, 2011, challenging the Appeals Office's determination. See I.R.C. § 6330(d)(1); Tax Ct. R. 331(a).
C. Proceedings before the Tax Court
The tax court granted a de novo review of Gyorgy's underlying tax liability and held a bench trial on January 28, 2013. At trial, the IRS presented the deficiency notices, evidence, and testimony in support of its calculations, but Gyorgy--who was again proceeding pro se--presented no evidence and no argument on the issue of liability.
The tax court also heard testimony concerning Gyorgy's whereabouts between 2000 and 2008. He testified that he lived on Octavia Street until the spring of 2002; on Lee Street in Oakland until the spring of 2003; on Jean Street ...