Lewis v. Comm'r of Internal Revenue

GINA C. LEWIS, Petitioner v. COMMISSIONER OF INTERNAL REVENUE, Respondent

No. 12930-18

United States Tax Court

June 24, 2022

ORDER

Cary Douglas Pugh, Judge

On March 3, 2022, the Court issued an Opinion in this case. Lewis v. Commissioner, 158 T.C. No. 3 (2022). On March 8, 2022, pursuant to that Opinion, we entered our order and decision denying petitioner's motion for litigation costs and granting respondent's earlier filed motion for entry of decision. ^[1] Our decision stated that, after application of section 6015(c),^[2] there are no deficiencies in income tax or penalties due from petitioner for the years in issue, consistent with respondent's proposed decision. On April 1, 2022, petitioner timely filed a Motion to Vacate or Revise Pursuant to Rule 162, asserting that the March 8 2022, order and decision "does not resolve all of the issues in this case." Respondent responded that "all issues in this case were properly resolved by the Court's order and decision entered on March 8, 2022" and requested that we deny petitioner's motion to vacate or revise that decision. Petitioner filed a motion for leave to reply on May 19, 2022, which motion we granted on May 25 2022, and filed petitioner's reply that same date.

Rule 162 authorizes a party to file a motion to vacate or revise a decision, with or without a new or further trial, within 30 days after the decision has been entered, unless the Court shall otherwise permit. The disposition of a motion to vacate or revise a decision rests within this Court's discretion. Vaughn v. Commissioner, 87 T.C. 164 166-167 (1986). We often look to rule 60 of the Federal Rules of Civil Procedure as a guidepost by which to resolve Rule 162 motions. See Kun v. Commissioner, T.C. Memo. 2004-273, 2004 WL 2712202, at *2 (citing Cinema '84 v. Commissioner, 122 T.C. 264, 267-268 (2004); Estate of Miller v. Commissioner, T.C. Memo. 1994-25; and Pietanza v. Commissioner, T.C. Memo. 1990-524, aff'd without published opinion, 935 F.2d 1282 (3d Cir. 1991)), aff'd without published opinion, 157 F. App'x. 971 (9th Cir. 2005). Under that rule, motions to vacate generally are not granted without a showing of unusual circumstances or substantial error, such as mistake, inadvertence, surprise, excusable neglect, newly discovered evidence, fraud, or other reason justifying relief. See, e.g., Intermountain Ins. Serv. of Vail, LLC v. Commissioner, 134 T.C. 211, 216 (2010), rev'd, 650 F.3d 691 (D.C. Cir. 2011), vacated and remanded, 566 U.S. 972 (2012); Mitchell v. Commissioner, T.C. Memo. 2013-204, at *8, aff'd, 775 F.3d 1243 (10th Cir. 2015). Nonetheless, "[r]econsideration is not the appropriate forum for rehashing previously rejected legal arguments or tendering new legal theories to reach the end result desired by the moving party." Estate of Quick v. Commissioner, 110 T.C. 440, 441-442 (1998).

Petitioner's Rule 162 motion raises two categories of allegedly unresolved issues.

I. Jurisdiction

The first concerns this Court's jurisdiction. We can proceed in a case only if we have jurisdiction, and either party, or the Court sua sponte, can question jurisdiction at any time. Stewart v. Commissioner, 127 T.C. 109, 112 (2006). The notice of deficiency in this case was issued to petitioner and her former spouse on March 28, 2018, and petitioner timely filed a petition challenging it. In her motion to vacate, petitioner argues that we lack jurisdiction because respondent did not mail the notice of deficiency to her last known address, or alternatively because the statute of limitations had expired before she filed her petition and before she "actually received a copy of the [n]otice of [d]eficiency."

The period of limitations for the Commissioner to assess federal tax is generally three years after the taxpayer files a return for a year. § 6501(a). This three-year period begins on the due date of the return if it is timely filed or on the actual filing date if the return is filed late. See § 6501(a) and (b)(1). The period of limitations for assessment can be extended beyond three years, provided the Commissioner and the taxpayer consent in writing before the period of limitations expires. § 6501(c)(4). In the case of a consent under section 6501(c)(4), the Commissioner may assess federal tax up until the date agreed upon, which can be extended further. See Treas. Reg. § 301.6501(c)-1(d).

Answering petitioner's amended petition, respondent stated that petitioner executed a Form 872, Consent to Extend Time to Assess Tax, extending the statute of limitations for the years in issue to May 11, 2018. Petitioner acknowledges that she extended the statute of limitation to this date, but averred in her petition that it was under duress. It is the taxpayer's burden to affirmatively show the written consent is not valid. Mecom v. Commissioner, 101 T.C. 374, 382-383 (1993), aff'd without published opinion, 40 F.3d 385 (5th Cir. 1994). Petitioner has not carried this burden, and does not appear to dispute that the statute of limitations expired on May 11, 2018, in her motion to vacate. Respondent mailed the notice of deficiency on March 28, 2018, before the period of limitations for assessment of tax for the years is issue expired.

Nonetheless, petitioner alleges that the notice of deficiency is invalid for having not been mailed to her last known address, or actually received by her, before the limitations period expired.

A. Timely petition: acquisition of jurisdiction

A notice of deficiency is valid if it notifies the taxpayer that a deficiency has been determined against her and gives the taxpayer the opportunity to petition this Court for redetermination of the proposed deficiency. Scar v. Commissioner, 814 F.2d 1363, 1370 (9th Cir.1987), rev'g 81 T.C. 855 (1983); see Frieling v. Commissioner, 81 T.C. 42, 53 (1983).

Section 6212(b) provides that a notice of deficiency is sufficient if sent to the taxpayer's last known address. But sending a notice of deficiency to the last known address is not the only means for giving a taxpayer notice of a deficiency. Clodfelter v. Commissioner, 527 F.2d 754, 757 (9th Cir.1975), aff'g 57 T.C. 102 (1971). Rather, sending the notice to the last known address is merely a safe harbor whereby the notice will be deemed valid even if it never is received by the taxpayer. Frieling v. Commissioner, 81 T.C. at 52-53.

The parties dispute whether the notice of deficiency was mailed to petitioner at her last known address. Petitioner and her former spouse filed joint returns for the years in issue. Respondent mailed the notice of deficiency to three addresses-one petitioner's and the other two petitioner's former spouse's. Petitioner asserts that she changed her address in late 2016, and that respondent did not send the notice to this new address of petitioner's separate residence. Respondent admits as much, but claims that petitioner's December 2016 change of address was not her most recent one (that is, it does not reflect her last known address), and that respondent sent the notice to her last known address.

A notice of deficiency not mailed to the taxpayer's last known address can still be valid. If the mailing results in the taxpayer actually receiving notice with ample time remaining to timely file a petition, it meets the conditions of section 6212(a) "no matter to what address the notice successfully was sent." Clodfelter v. Commissioner, 527 F.2d at 757; Brzezinski v. Commissioner, 23 T.C. 192, 195 (1954). In a limited but established line of cases, incorrectly addressed notices have resulted in our jurisdiction where the taxpayer receives "actual notice [of the contents of the deficiency notice] without prejudicial delay." Clodfelter v. Commissioner, 527 F.2d at 757; see also McKay v. Commissioner, 886 F.2d 1237 (9th Cir. 1989), aff'g 89 T.C. 1063 (1987); Frieling v. Commissioner, 81 T.C. at 51-53; Goodman v. Commissioner, 71 T.C. 974, 977-978 (1979); Zaun v. Commissioner, 62 T.C. 278 (1974); Brzezinski, 23 T.C. at 195. By providing the safe harbor of section 6212(b), Congress did not intend to invalidate actual rather than constructive methods of communicating respondent's determination. McKay v. Commissioner, 89 T.C. at 1068 n.6. Frieling v. Commissioner, discusses the "actual notice" principle:

The deficiency notices in those cases were held to be valid because they served the two functions of section 6212: (1) They notified the taxpayer that a deficiency had been determined against him; and (2) they gave the taxpayer the opportunity to petition this Court for redetermination of the proposed deficiency.

81 T.C. at 53.

Both elements are satisfied here. Petitioner was notified that deficiencies had been determined against her and timely petitioned for redetermination of the proposed deficiencies. By timely invoking this Court's jurisdiction, she thereby "effectively waived any objection to the notice of deficiency." Mulvania v. Commissioner, 769 F.2d 1376, 1379-80 (9th Cir. 1985), aff'g T.C. Memo. 1984-98; see also Mulvania v. Commissioner, 81 T.C. 65, 69 (1983) ("We agree with the Ninth Circuit that, 'if mailing results in actual notice without prejudicial delay (as clearly was the case here), it meets the conditions of § 6212(a) no matter to what address the notice successfully was sent.'") (quoting Clodfelter v. Commissioner, 527 F.2d at 757); Brzezinski, 23 T.C. at 195 ("Congress was primarily concerned with giving the taxpayer notice within ample time to file a timely petition. When, as here, a timely petition was filed, it is obvious that sufficient notice was received. The problem is different if the wrong address results in a delay in the receipt of the notice, and a timely petition is not filed.").

Petitioner attempts to distinguish these cases on the...