Before ROBINSON and ROBB, Circuit Judges, and DAVIS,* Judge, United States Court of Claims.
UNITED STATES COURT OF APPEALS, DISTRICT OF COLUMBIA CIRCUIT
Appeal from a Decision of the Tax Court of the United States.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE ROBB
The question in this case is whether a notice of tax deficiency was mailed by the Internal Revenue Service to the taxpayer's "last known address" so as to commence the statutory time period for filing a petition for redetermination of that deficiency. The United States Tax Court held that the notice was properly mailed and consequently dismissed the taxpayer's petition for redetermination on the jurisdictional ground that it was not timely filed. We reverse.
In 1971 and 1972 the Internal Revenue Service's Office of International Operations conducted an audit of William Crum's 1966, 1967, 1968 and 1969 income tax returns. During the course of that audit Revenue Agent John Kristianson received from Hans Nathan, Esquire, a power of attorney executed by Crum in Nathan's favor covering the years 1966, 1967 and 1968. Nathan informed Agent Kristianson that he represented Crum as to all four taxable years under review, but the power of attorney pertained only to the first three years. On May 1, 1972 Agent Kristianson completed his audit report, a copy of which was mailed to Crum at 293 Prince Edward Road, 5th Floor, Kowloon, Hong Kong (Prince Edward Road address) because that address appeared on his tax return for 1969, the last year under examination. In addition, a copy of the audit report was hand delivered to Nathan during the summer of 1972.
On August 2, 1972, the Director of OIO sent two notices of tax deficiency by registered mail to Crum at the Prince Edward Road address. One such notice concerned the taxable years 1966, 1967, and 1968 and the other covered the taxable year 1969. Crum did not receive either of these deficiency notices however, because in 1970 he had adopted as his mailing address the address of his new employer, c/o Hong Kong Marina, Ltd., Hebe-Haven-Sai Kung, New Territories, Hong Kong, B.C.C., or the downtown office at B6, 8th Floor, Ho Tung House, Kowloon, Hong Kong, B.C.C. (Hong Kong Marina address). A copy of the deficiency notice covering 1966-1968 was also sent to Nathan pursuant to the power of attorney on file with the Internal Revenue Service, but no copy of the deficiency for 1969 was mailed to him because no power of attorney had been submitted with respect to that year. Thereafter, Nathan, on Crum's behalf, timely filed in the United States Tax Court a petition for redetermination of the deficiencies in income tax asserted by the Commissioner of Internal Revenue (Commissioner) for the taxable years 1966, 1967, and 1968.
Meanwhile, and before the mailing of the August 2, 1972 deficiency notice addressed to Crum at Prince Edward Road, there had been communication between Crum and the Internal Revenue Service using his new Hong Kong Marina address: (1) in October 1971 Crum had filed his 1970 tax return, showing the Hong Kong Marina address; (2) on December 21, 1971 the IRS had mailed to Crum at the Hong Kong Marina address a request for payment of tax due for 1967; (3) on June 16, 1972 the IRS had received from Crum a request, bearing the Hong Kong Marina address, for an extension of time within which to file his 1971 tax return, and that request was granted by the Commissioner and returned to Crum at the Hong Kong Marina address; and (4) on August 1, 1972 the IRS had received Crum's 1971 tax return, on which appeared the Hong Kong Marina address.
On October 4, 1973 an OIO revenue officer mailed a collection letter requesting payment of the deficiency determined for 1969 to Crum at the Hong Kong Marina address. This collection letter was received by Crum and was his first actual knowledge that a deficiency notice for the taxable year 1969 had been issued. Thereafter Crum filed a power of attorney covering 1969 with the IRS and a copy of the deficiency notice for that year was sent to Nathan on January 3, 1974. On April 10, 1974 which date was within 150 days of Crum's actual receipt of the deficiency notice but 616 days after its issuance, a petition for redetermination of the deficiency alleged for 1969 was filed in the United States Tax Court. On May 24, 1974 the Commissioner moved to dismiss Crum's petition on the jurisdictional ground that it was not filed within the 150-day time limit prescribed by section 6213(a) of the Internal Revenue Code of 1954. By order dated July 31, 1975 the Tax Court granted the Commissioner's motion to dismiss, reasoning that Crum's correspondence and subsequent tax returns did not provide sufficient notification that the Prince Edward Road address was incorrect and, therefore, the deficiency notice for 1969 had been properly mailed on August 2, 1972 to Crum's "last known address" pursuant to section 6212(b)(1) of the Internal Revenue Code of 1954. This appeal from the order of dismissal followed, but Crum's death and lengthy delays in the Hong Kong probate proceedings that followed caused oral argument of the case to be postponed.
Section 6212(a) of the Internal Revenue Code of 1954 authorizes the use of certified or registered mail to notify a taxpayer that a deficiency in respect of income tax has been determined against him. IRC § 6212(b)(1) provides that a notice of deficiency "shall be sufficient" if it is "mailed to the taxpayer at his last known address." However, neither the IRC nor the Treasury Regulations specifically define the term "last known address". Section 6213(a) of the IRC states that if a deficiency notice is addressed to a person outside the United States, no assessment and levy of the deficiency may be made for a period of 150 days after the notice is mailed and that within that 150-day period the taxpayer may petition the United States Tax Court for a redetermination of the deficiency. If the taxpayer does not file a petition for redetermination during the allotted 150-day period, IRC § 6213(c) provides that "the deficiency, notice of which has been mailed to the taxpayer, shall be assessed, and shall be paid upon notice and demand ...." *fn1
In Stebbins' Estate v. Helvering, 74 App. D.C. 21, 22-23, 121 F.2d 892, 893-94 (1941), this court said "it has been decided time and again that the statutory period is jurisdictional, and the duty to dismiss on failure to comply is mandatory." IRC § 6212(a) & (b) specifies that a notice of deficiency be sent to the taxpayer by certified or registered mail at his last known address, and it is clear that the statute requires "a proper giving of notice" before a deficiency is assessed. See Cohen v. United States, 297 F.2d 760, 772 (9th Cir.), cert. denied, 369 U.S. 865, 82 S. Ct. 1029, 8 L. Ed. 2d 84 (1962). In Delman v. Commissioner, 384 F.2d 929, 932 (3d Cir. 1967), cert. denied, 390 U.S. 952, 88 S. Ct. 1044, 19 L. Ed. 2d 1144 (1968), the United States Court of Appeals for the Third Circuit declared that "by using the phrase "last known address' Congress must have intended that notice be sent to that address where the Secretary (or his delegate) reasonably believed the taxpayer wished notice to be sent." The United States Tax Court in Alta Sierra Vista, Inc. v. Commissioner, 62 T.C. 367, 374 (1974), aff'd mem., 538 F.2d 334 (9th Cir. 1976), defined "last known address" as "the taxpayer's last permanent address or legal residence known by the Commissioner or the last known temporary address of a definite duration to which the taxpayer has directed the Commissioner to send all communications." Further, the Tax Court held that "while the Commissioner is bound to exercise reasonable diligence in ascertaining the taxpayer's correct address ..., he is entitled to treat the address appearing on a taxpayer's return as the last known in the absence of clear and concise notification from the taxpayer directing the Commissioner to use a different address." Id. Thus, the critical issue in this case is whether the communication between Crum and the Internal Revenue Service prior to the issuance of the deficiency notice for 1969 constituted sufficient notification that the Prince Edward Road address shown on his 1969 tax return was no longer correct.
Numerous cases have held that a subsequently filed tax return does not, by itself, afford adequate notice of a change in address. See, e. g., Luhring v. Glotzbach, 304 F.2d 556, 558 (4th Cir. 1962); Alta Sierra Vista, Inc. v. Commissioner, supra at 376-77; Lifter v. Commissioner, 59 T.C. 818, 822 (1973). In Budlong v. Commissioner, 58 T.C. 850, 852-53 (1972), the United States Tax Court said:
Petitioners' filing of their 1969 return with the North-Atlantic Service Center is not sufficient notification to (the Commissioner). The service center does not have any responsibility with respect to the auditing of returns or the issuing of statutory notices of deficiency. The service center provides the means for handling in an effective, administrative fashion the millions of returns to be filed with the district directors within its realm. The Code does not require a check with a service center for verification of the "last known address" of a taxpayer prior to the issuance of a statutory notice. At best, petitioners' filing of their 1969 return would, upon final processing, indicate to (the Commissioner) that for the 1969 taxable year correspondence to petitioners should be directed to the address thereon.
However, some cases have attached significance to subsequently filed tax returns listing a new address. In concluding that a deficiency notice had not been effectively mailed, the United States Court of Appeals for the Ninth ...