Tax Court Denies IRS on Notice it Issued in Error, Dodson 2024

Tax Court Denies IRS on Notice it Issued in Error

Tax Court Retains Jurisdiction for Incorrect IRS Notice 

Just because the Internal Revenue Service is a large government organization, does not mean that every notice they send is accurate, timely, or properly issued. It is similar to the concept of when a Bank incorrectly charges their customers certain ATM and other fees. In other words,  just because an organization is big and government-regulated does not mean everything that they do is correct. In the recent case of Dodson, the IRS made a mistake on a Notice of Deficiency it issued to the U.S. Taxpayer. Then, the IRS issued a new notice, but the Taxpayer responded by the original notice date. If the original notice date was proper, then the Taxpayer’s response would have been timely. Here, the IRS claimed the response was untimely since it claimed the Taxpayer’s response to the ‘correct’ notice was passed the deadline  – but the Tax Court disagreed. Let’s look at what the court held:

Purpose of the Case

• • • This case is before us for disposition of respondent’s Motion to Dismiss for Lack of Jurisdiction (Motion to Dismiss), filed June 29, 2023.

    • Respondent contends that we lack jurisdiction under section 6213(a)  because petitioners filed their Petition more than 90 days after respondent mailed petitioners a notice of deficiency (first notice) on October 7, 2021, and a corrected notice of deficiency (second notice) on October 8, 2021. Petitioners argue that we nonetheless have jurisdiction pursuant to the last sentence of section 6213(a), which provides: “Any petition filed with the Tax Court on or before the last date specified for filing such petition by the Secretary in the notice of deficiency shall be treated as timely filed.” Resolution of the parties’ contentions requires us to decide, as a matter of first impression, whether the last sentence of section 6213(a) requires us to treat a taxpayer’s petition as timely filed when it is filed (1) before the petition filing date specified in the notice of deficiency that forms the basis for the taxpayer’s petition but (2) after the date specified for filing in a later-issued corrected notice of deficiency and (3) after the 90-day period for filing a petition provided by the first sentence of section 6213(a).

    • For the reasons stated herein, we decide this issue in favor of petitioners and treat their Petition as timely filed under the last sentence of section 6213(a).

What Happened?

• • • On October 7, 2021, respondent mailed the first notice to petitioners for their 2017 taxable year. Tracking information for two copies of the first notice reflects the delivery of both copies in Alamogordo, New Mexico, on October 12, 2021, by the U.S. Postal Service (USPS). The first notice bears a stamped date specifying December 5, 2022, as the last day to file a petition. Petitioners filed their Petition on March 3, 2022. The Petition attached a copy of the first notice and no other notice of deficiency. Petitioners resided in New Mexico when they filed their Petition. Unless otherwise agreed by the parties in writing, venue for an appeal is the U.S. Court of Appeals for the Tenth Circuit. See § 7482(b)(1)(A), (2).

    • Respondent has also produced the second notice, which he mailed to petitioners on October 8, 2021, and which purports to be a corrected  version of the first notice. The second notice bears a stamped date specifying January 6, 2022, as the last day to file a petition. The second notice is accompanied by a cover sheet stating: “PREVIOUS NOTICE SENT WITH INCORRECT DATE. CORRECTED NOTICE WITH CORRECT DATES.” The second notice does not differ from the first notice in any other material respect. Petitioners state that they did not receive the second notice. Petitioners have produced tracking information for two copies of the second notice reflecting the departure of the notice copies from USPS’s El Paso, Texas, distribution center on October 13, 2021, without any indication that USPS ever delivered them to petitioners. Petitioners filed their Petition in this case on March 3, 2022, which is 147 days after respondent mailed the first notice and 146 days after respondent mailed the second notice.

What The Court Ruled?

• • • Petitioners timely filed their Petition in accordance with section 6213(a). Accordingly, we have jurisdiction over this case, and we will deny respondent’s Motion to Dismiss.

    • We have considered all of the parties’ arguments and, to the extent they are not discussed herein, find them to be irrelevant, moot, or without merit.

      • To reflect the foregoing, An appropriate order will be issued.

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