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Edwards v. Commissioner of Internal Revenue Service

United States Court of Appeals, District of Columbia Circuit

June 19, 2015

LISA A. EDWARDS AND JOSEPH P. THOMAS, APPELLANTS
v.
COMMISSIONER OF INTERNAL REVENUE SERVICE, APPELLEE

Argued: March 19, 2015.

Page 2

On Appeal from the Order of the United States Tax Court.

Bruce E. Gardner argued the cause and filed the briefs for appellants.

Janet A. Bradley, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief were Tamara W. Ashford, Acting Assistant Attorney General at the time the brief was filed, Bruce R. Ellisen, Attorney. Bridget M. Rowan, Attorney, entered an appearance.

Before: GARLAND, Chief Judge, and ROGERS and PILLARD, Circuit Judges. OPINION filed by Circuit Judge PILLARD.

OPINION

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Pillard, Circuit Judge :

Both parties to this appeal agree that the tax court lacked jurisdiction to consider the petition filed by taxpayers Lisa Edwards and Joseph Thomas challenging the seizure of their funds by the Internal Revenue Service. What they disagree about is why, and the reason turns out to make a great deal of difference. According to the taxpayers, the tax court lacked jurisdiction because the IRS never sent them notices of deficiency, which are the documents the Service is required to send before it initiates proceedings to assess a tax deficiency, and which serve as taxpayers' " tickets" to tax court. Prevailing on that ground could mean the taxpayers do not owe the taxes the IRS claims, and could entitle them to recover the costs they incurred to challenge the IRS's seizure of their property. The IRS counters that it sent the taxpayers the notices of deficiency, and the tax court lacked jurisdiction because the taxpayers waited too long to file their petition. Prevailing on that ground would leave the tax assessment undisturbed. The IRS sought in the tax court to dispute the taxpayers' allegation that notices were never successfully sent to the taxpayers in the first place. The IRS asserts that it could not provide the best evidence of that mailing because, when it sought to retrieve its own copies of the notices from storage, the package containing the notices was lost or misplaced. Without that evidence, the tax court initially agreed with the taxpayers and dismissed their petition for lack of jurisdiction for want of notices of deficiency. When the prevailing taxpayers moved for costs, however, the tax court vacated its decision and, in a second order, dismissed the case for lack of jurisdiction and denied costs. Unlike the initial order, however, the second order did not state its grounds. Because the tax court was required to articulate the basis for its jurisdictional dismissal, we vacate the tax court's order and remand for the court to do so.

I.

In 2009, the IRS selected the taxpayers' recent returns for examination and concluded that the taxpayers had a tax deficiency of more than $9,000 for tax year 2007 and that Thomas individually had a deficiency of more than $15,000 for 2008.[1] The IRS contends that on March 11, 2010, it mailed both of the taxpayers a notice of deficiency for 2007 and Thomas a notice of deficiency for 2008. The taxpayers contend, however, that they never received notices of deficiency for either year.

The Internal Revenue Code requires the IRS to follow specific procedures before it assesses and collects an income tax deficiency. The IRS must " send a notice of deficiency to a taxpayer prior to initiating proceedings to assess [a] deficiency." Gardner v. United States, 211 F.3d 1305, 1311, 341 U.S.App.D.C. 247 (D.C. Cir. 2000); see also I.R.C. § § 6212(a), 6213(a).[2] The Code

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provides that the IRS may satisfy its obligation by mailing a notice to the taxpayer's last known address via certified or registered mail; there is no requirement that the IRS prove that the taxpayer actually received the notice. I.R.C. § 6212(a)-(b); see also Keado v. United States, 853 F.2d 1209, 1211-12 (5th Cir. 1988). After the IRS issues a notice of deficiency, a taxpayer typically has ninety days to file a Section 6213 petition in tax court challenging the deficiency. See I.R.C. § 6213(a); Gardner, 211 F.3d at 1311. The IRS cannot assess a tax deficiency or bring a collection action against the taxpayer unless it has sent a notice of deficiency to the taxpayer and either the ninety-day period for filing a tax court petition has run or, if the taxpayer has filed a petition, the tax court has rendered a final decision.[3]Keado, 853 F.2d at 1212; see also I.R.C. § 6213(a). The tax court does not have jurisdiction to consider a taxpayer's Section 6213 petition unless the IRS has first issued the taxpayer a notice of deficiency. See, e.g., Shepherd v. Commissioner, 147 F.3d 633, 634 (7th Cir. 1998). The tax court also lacks jurisdiction if the taxpayer's petition is not timely filed. See, e.g., Correia v. Commissioner, 58 F.3d 468, 469 (9th Cir. 1995); Zigmont v. Commissioner, T.C. Memo 2009-48, 97 ...


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