                     T.C. Memo. 1996-256



                UNITED STATES TAX COURT



  ST. JOSEPH LEASE CAPITAL CORPORATION, Petitioner v.
      COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 249-95.                         Filed June 3, 1996.


     The parties have made opposing motions for summary
judgment with respect to the period of limitations.
Petitioner argues that a notice of deficiency returned
to respondent by the U.S. Postal Service was not
addressed to petitioner’s last known address and was a
nullity and that a copy subsequently sent to petitioner
by facsimile was a new notice that was received after
the period of limitations had expired. Respondent
argues that petitioner’s last known address presents a
genuine issue as to a material fact but that we should
deny petitioner’s motion and grant respondent’s on the
grounds that petitioner received actual notice of a
timely mailed notice without prejudicial delay. We
agree with respondent.

     1. Held: Petitioner’s motion for summary
judgment will be denied.

     2. Held, further, respondent's motion for partial
summary judgment will be granted.
                               - 2 -

     Steven S. Brown and Robert M. Levin, for petitioner.

     Gary D. Kallevang, for respondent.



                        MEMORANDUM OPINION


     HALPERN, Judge:   This matter is before the Court on two

opposing motions for summary judgment, petitioner’s motion for

summary judgment (petitioner’s motion) and respondent’s motion

for partial summary judgment (respondent’s motion).   The motions

are in opposition on the question of whether the period of

limitations on assessment and collection has run.   Petitioner

asks that we summarily decide that the assessment or collection

of any tax for the years in issue is barred by the statute of

limitations and that we enter a decision that there is no

deficiency in respect of any such tax.    Respondent opposes that

request and asks that we summarily decide that petitioner’s

affirmative defense of the statute of limitations has no merit.

Petitioner opposes respondent’s motion.

     Unless otherwise noted, all section references are to the

Internal Revenue Code of 1986, as amended, and all Rule

references are to the Tax Court Rules of Practice and Procedure.

                           Introduction

Motion For Summary Judgment

     A summary judgment is appropriate "if the pleadings, answers

to interrogatories, depositions, admissions, and any other
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acceptable materials, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law."   Rule 121(b).

Grounds

     The principal grounds for petitioner’s motion are that

respondent failed to suspend the period of limitations on

assessment and collection by timely sending notice of deficiency

and that the notice of deficiency upon which the petition is

based was sent after that period expired.   Respondent objects on

alternative grounds:   First, the period of limitations on

assessment and collection was suspended by respondent’s sending

notice of deficiency by mail to petitioner at petitioner’s last

known address before such period expired; second, even if

respondent failed to address such notice to petitioner at

petitioner’s last known address, respondent did timely mail such

notice to petitioner, who received actual notice of the contents

of that notice without prejudicial delay.   Although respondent

argues that petitioner’s last known address presents a genuine

issue of fact, respondent also argues that petitioner’s last

known address is immaterial if we deny petitioner’s motion on

the basis that the period of limitations was suspended by

petitioner’s receipt of actual notice without prejudicial delay.

Respondent relies on such actual notice argument as grounds for

her motion.   Petitioner does not argue that there is a genuine

issue as to any material fact that would preclude us from
                                - 4 -

granting respondent’s motion (although petitioner would have us

deny respondent’s motion for other reasons).    We agree with

respondent that petitioner’s last known address is immaterial if

we adopt her “actual notice” argument.   We believe that

respondent’s motion presents no genuine issue as to any material

fact and that we can decide both petitioner’s and respondent’s

motions as matters of law.   For the reasons stated, respondent’s

motion will be granted and petitioner’s motion will be denied.

Facts On Which We Rely

     The parties have attached to their motions various

affidavits, on which we rely to the extent that they are

undisputed.   We also rely on certain uncontested or

inconsequential averments in the pleadings.    The facts that we

rely on to decide the motions are as follows.

     Petitioner; Its Returns

     Petitioner, an Indiana corporation, is a calendar-year

taxpayer.

     Petitioner’s Federal income tax returns for 1985 through

1990 (the years in issue) were received at the Internal Revenue

Service Center, Philadelphia Pennsylvania, on October 15, 1991.

     Petitioner and respondent entered into no agreement to

extend the time to assess tax for any of the years in issue.

     Respondent’s Examination

     Respondent, by one of her revenue agents, Anne M. Price

(Price), began an examination of petitioner’s 1991 tax year on or
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about September 28, 1993.   Later, Price attempted to expand that

examination to include the years in issue.     On several occasions

during the course of Price’s examination, she visited offices of

petitioner at 6019 Tower Court, Alexandria, Virginia.     Price’s

examination of petitioner was closed on or about August 1, 1994,

with respect to the years in issue.     Thereafter, a notice of

deficiency with respect to the years in issue was prepared by or

under the supervision of John Henry, Senior Reviewer, Quality

Assurance Branch, Richmond District, Internal Revenue Service,

Richmond, Virginia.   On October 6, 1994, three copies of that

notice of deficiency (the October 6 notice) were sent by

certified mail, addressed as follows:

               (1)    St. Joseph Lease Capital Corporation
                      Post Office Box 19307
                      Alexandria, Virginia 22320

               (2)    St. Joseph Lease Capital Corporation
                      6019 Tower Court
                      Alexandria, Virginia 22320

               (3)    Roger A. Pies, Esquire
                      Suite 800 South
                      601 Thirteenth Street, N.W.
                      Washington D.C. 20005

The first address resulted from a query to the main Internal

Revenue Service computer.   The second address was found in the

case file and is the address at which Price carried out a portion

of her examination.   Roger A. Pies (Pies) is an attorney who

represented petitioner during the course of Price’s examination,

and the third address is that of Pies.
                               - 6 -

     All three copies of the October 6 notice were returned to

respondent.   The first carried a U.S. Postal Service (Postal

Service) stamp:   “Box Closed, No Forwarding Order”; the second

carried a Postal Service stamp:   “Return to Sender, Unclaimed”.

The third was returned unopened, under cover of a letter from

Pies that stated that he did not represent petitioner.

     Petitioner’s Counsel

     Initially, Pies represented petitioner in connection with

Price’s examination of petitioner’s 1991 tax year; later, that

representation was extended to include Price’s examination of the

years in issue.   A Form 2848, Power of Attorney and Declaration

of Representative, appointing Pies petitioner’s attorney in fact

for purposes of income tax matters for 1985 through 1990 was

executed on behalf of petitioner by petitioner’s president,

Michael V. Jennings (Jennings), on March 21, 1994.

     On August 23, 1994, Jennings hired another attorney,

Robert M. Levin (Levin), to represent petitioner before the

Internal Revenue Service in connection with income tax matters

for 1985 through 1991.   On September 1, 1994, Levin wrote to the

Richmond, Virginia, District Office of the Internal Revenue

Service, and requested the release of certain documents pursuant

to the Freedom of Information Act, 5 U.S.C. sec. 552 (1994),

including documents relating to Price’s examination of

petitioner’s 1985 through 1991 tax years.   Included with Levin’s

request was a Form 2848, Power of Attorney and Declaration of
                                - 7 -

Representative, appointing Levin petitioner’s attorney in fact

for purposes of income tax matters for 1985 through 1991.    By its

terms, that power revoked all prior powers for the same matters

and years.

     On November 2, 1994, Levin learned from a disclosure

specialist in the Richmond District Director’s office that the

October 6 notice had been sent.   He asked if he could obtain a

copy, and he was referred to John Henry (Henry), the senior

reviewer in the Richmond District Quality Assurance Branch.

Levin contacted Henry, who agreed to send Levin a copy of that

notice.   Henry did so by facsimile transmission, received in

Levin’s office on November 10, 1994.    In so acting, Henry acted

to protect the interests of petitioner.

     1993 Consolidated Return

     On August 31, 1994, petitioner's parent corporation,

Financial Analytics Corp., sent its 1993 consolidated income tax

return to respondent's Philadelphia Service Center on Form 1120,

U.S. Corporation Income Tax Return.     Attached to that Form 1120

was a Form 851, Affiliations Schedule.    That Form 851 states that

petitioner's address is 218 North Lee Street, Suite 300,

Alexandria, Virginia, 22314 (the North Lee Street address).

     Form 8822

     On September 21, 1994, petitioner sent a Form 8822, Change

of Address, by overnight courier to respondent's Philadelphia
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Service Center.    That Form 8822 stated that petitioner's new

address was the North Lee Street Address.

     Petition

     The petition was hand delivered to the Court on January 3,

1995.

                             Discussion

     With exceptions not here relevant, section 6501 provides a

3-year period from the time a return is filed for the assessment

or collection (without assessment) of any tax, including income

taxes (the period of limitations).      The running of the period of

limitations, however, is suspended under section 6503(a)(1) by

“the mailing of a notice under section 6212(a)”.     Section 6212(a)

authorizes the Secretary, upon determining that there is a

deficiency in income tax, to send a notice of deficiency “to the

taxpayer by certified or registered mail.”     Section 6212(b)(1)

provides that a notice of deficiency in respect of an income tax

“shall be sufficient” if it is “mailed to the taxpayer at his

last known address”.

     Petitioner’s income tax returns for the years in question

were filed on October 15, 1991, and the October 6 notice was sent

to petitioner by certified mail well within the period of

limitations.    If any of the three addresses to which the

October 6 notice was addressed was petitioner’s last known

address, then the October 6 notice is presumptively sufficient

and petitioner’s motion must be denied.     We need not decide
                              - 9 -

petitioner’s last known address to dispose of the motions before

us, however, because that fact is immaterial to respondent’s

principal argument that petitioner received actual notice of the

October 6 notice and timely filed the petition.   Respondent

argues that we can assume that the October 6 notice was not

addressed to petitioner’s last known address and decide whether,

notwithstanding that assumption, the October 6 notice was

sufficient to suspend the running of the period of limitations.

     Petitioner argues that the October 6 notice was insufficient

to suspend the running of the period of limitations because

(assuming that it was not sent to petitioner’s last known

address) respondent abandoned or withdrew the October 6 notice

when all three copies were returned undelivered by the Postal

Service and respondent communicated a copy to petitioner’s agent,

Levin, by facsimile transmission on November 10, 1994.   That

facsimile transmission (the November 10 communication), argues

petitioner, constituted a new notice of deficiency, which was

effective (once the petition was filed) to give this Court

jurisdiction but which was ineffective, because untimely, to

suspend the running of the period of limitations.

     In support of its argument, petitioner cites Reddock v.

Commissioner, 72 T.C. 21 (1979).   In the Reddock case, respondent

mailed a notice of deficiency to the taxpayers 3 days before the

expiration of the period of limitations (the initial notice) but

did not mail the initial notice to the taxpayers' last known
                              - 10 -

address.   The initial notice was returned to respondent

undelivered.   Eleven days after the period of limitations

expired, respondent remailed the initial notice to the taxpayers

at their residence, where it was received.   The taxpayers then

filed a petition in this Court, raising as an affirmative defense

the period of limitations.   We upheld that defense, finding that

assessment was barred since the initial notice was not remailed

to the taxpayers until after the period of limitations had

expired.   We reasoned that the initial notice was a "nullity"

because the initial notice was erroneously addressed and was

returned to respondent undelivered.

     The Reddock case exemplifies the rule that, if respondent

acts so as to indicate that a notice of deficiency is null, she

will be bound by the consequences of such action.   See, e.g.,

Eppler v. Commissioner, 188 F.2d 95, 98 (7th Cir. 1951) (petition

to redetermine a deficiency timely when mailed within 90 days of

second notice of deficiency but without 90 days of first notice

of deficiency; by sending second notice, Commissioner in effect

“withdrew or abandoned” the first notice and, when second notice

was mailed, "started a new 90 day period of appeal").   In the

Reddock case, respondent's remailing of the misaddressed notice

of deficiency was convincing evidence that she considered the

prior notice a nullity.   We reach a contrary conclusion here,

because respondent took no actions that evidence an abandonment,

withdrawal, or nullification of the October 6 notice.   It was
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petitioner’s agent, Levin, who asked to obtain a copy of the

October 6 notice; respondent’s agent, Henry, did not resort to

certified or registered mail or, indeed, any form of mail to

satisfy that request; he transmitted a copy of the October 6

notice by facsimile transmission.    Henry stated that he was

acting to protect petitioner’s interests.    Those are not indicia

that respondent had come to realize that the October 6 notice was

faulty and that she was seeking to start things anew.

Accordingly, we conclude that the November 10 communication

constituted merely a copy of the October 6 notice, not a new

notice.

     We still must decide, however, what consequence we are to

attach to our assumption that the October 6 notice was not

addressed to petitioner’s last known address.

     In Frieling v. Commissioner, 81 T.C. 42 (1983), we dealt

with a situation analogous to that which we face today.    There,

respondent mailed a notice of deficiency to the taxpayers before

the period of limitations expired.    That notice was not mailed to

the taxpayers’ last known address, but it was forwarded by the

Postal Service to the taxpayers, who actually received it,

although after the period of limitations had expired.    The

taxpayers argued that the statute of limitations had expired with

respect to the taxable years in issue there.    We set forth the

following two rules:
                               - 12 -

     Where the safe harbor in section 6212(b)(1) does not
     apply, the taxpayer's failure to receive the
     incorrectly addressed notice of deficiency becomes
     relevant and invalidates that notice for all purposes.
     However, so long as the notice of deficiency is timely
     mailed by the Commissioner and is received without
     prejudicial delay by the taxpayer in compliance with
     section 6212(a), the notice is effective for all
     purposes from the time of its mailing. [Id. at 57.]

With respect to the specific purpose of suspending the period of

limitations pursuant to section 6503(a)(1), we held:

     the mailing of the notice of deficiency, which complied
     with section 6212(a), which was received by
     petitioners, and in regard to which a timely petition
     was filed in this Court, tolled the period of
     limitations on the date the notice was mailed even
     though the notice was not sent to their last known
     address. [Id.]

     This case falls squarely within the rule of Frieling v.

Commissioner:   The October 6 notice was timely sent, although it

may not have been mailed to petitioner’s last known address.

Thereafter, a copy of that notice was received by petitioner, who

timely petitioned this Court on January 3, 1995.   See sec.

6213(a).   Petitioner cannot complain that the delay it suffered

in receipt of the notice, until November 10, 1994, prejudiced it

by disabling it from timely petitioning this Court.    Therefore,

the October 6 notice suspended the running of the period of

limitations.    Frieling v. Commissioner, supra at 57 ("so long as

the notice is received within the period for petitioning this

Court and a timely petition is filed, the notice will be valid

under section 6212(a)").
                               - 13 -

     On the grounds stated, petitioner’s motion will be denied.

Although respondent has asked for summary adjudication that, on

those grounds, the Court has jurisdiction, there is no question

of jurisdiction, in the technical sense, in this case; it is

clear from respondent’s motion, her memorandum in support of that

motion, and petitioner’s objection that respondent is asking for

(and petitioner understands that she is asking for) summary

adjudication that petitioner’s affirmative defense of the statute

of limitations has no merit.   On the grounds stated, she deserves

such summary adjudication, and we shall grant respondent’s

motion.


                                              An appropriate order

                                         will be issued.
