                        T.C. Memo. 1995-532



                      UNITED STATES TAX COURT



                 ROBERT G. HONTS, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 19636-93.               Filed November 9, 1995.



     Michael L. Cook, for petitioner.

     Gerald Brantley, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     DAWSON, Judge:   This case was assigned to Special Trial

Judge Stanley J. Goldberg, pursuant to the provisions of section
                                 2

7443A(b)(4) and Rules 180, 181, and 183.1    The Court agrees with

and adopts the opinion of the Special Trial Judge, which is set

forth below.

               OPINION OF THE SPECIAL TRIAL JUDGE

     GOLDBERG, Special Trial Judge:     This matter is before the

Court on cross-motions to dismiss for lack of jurisdiction.

Petitioner moved for dismissal in his favor on the ground that

the notice of deficiency is invalid because it was not mailed to

his last known address.   Respondent moved for dismissal in her

favor on the grounds that: (1) The notice of deficiency was

mailed to petitioner's last known address; and (2) the petition

was untimely filed.   A hearing was held with respect to these

motions in Houston, Texas.   At the time his petition was filed,

petitioner resided in Austin, Texas.2

                          FINDINGS OF FACT

     On April 15, 1988, petitioner filed a Form 4868 (Application

For Automatic Extension Of Time To File U.S. Individual Income

Tax Return) for tax year 1987.   On August 16, 1988, respondent

received a Form 2688 (Application For Additional Extension Of


1
    All section references are to the Internal Revenue Code as
amended. All Rule references are to the Tax Court Rules of
Practice and Procedure.
2
   For taxable years 1984, 1986, and 1987, petitioner filed joint
Federal income tax returns with his former wife Carol B. Honts.
All Internal Revenue Service forms (e.g., Forms 2848 and 872)
pertaining to those years were signed by both petitioner and his
former wife.
                                   3

Time To File U.S. Individual Income Tax Return) from petitioner

for tax year 1987.   Respondent granted the request, extending the

filing date to October 15, 1988.       Petitioner filed his 1987 joint

Federal income tax return on March 28, 1989, on which he claimed

a net operating loss (NOL) deduction in the amount of $105,332.

On October 10, 1990, petitioner filed amended returns (Forms

1040X) for years 1984 and 1986 to carry back the unused portion

of the 1987 NOL.

     In November 1991, revenue agent Eduardo Lizcano (Agent

Lizcano) commenced an examination of petitioner's 1987 return.

On December 18, 1991, pursuant to his request, Agent Lizcano

received a Form 2848 (Power of Attorney and Declaration of

Representative) from petitioner appointing his accountants David

E. Erickson, Jr. (Mr. Erickson), and Robin C. Demel (Mr. Demel),

located at 1201 W. 24th St., Suite 200, Austin, Texas 78705, as

his attorneys-in-fact for taxable year 1987.      Line 7 of the Form

2848 provides:

     Notices and Communications.--Notices and other written
     communications will be sent to the first representative
     listed in line 2.

Petitioner listed his home address on the Form 2848 as 13302

Mansfield Drive, Austin, Texas 78732 (the Mansfield address).

     At respondent's request, petitioner also executed and filed

Forms 2848 for taxable years 1988 through 1991 for himself, in

addition to Forms 2848 for Bandera Properties, Inc., Bob Honts

Properties, Inc., and Masa Menos, Inc.
                                        4

       On the same day he filed the Form 2848 for taxable year

1987, petitioner filed a Form 872 (Consent to Extend the Time to

Assess Tax) extending the time for assessment for his 1987 tax

year until April 15, 1993.         On the Form 872, petitioner listed

his residence as the Mansfield address.             On January 15, 1993,

petitioner filed his 1989 and 1990 Federal income tax returns,

listing his residence as the Mansfield address on the 1989 return

and as 2300 Lohman's Crossing, Suite 190, Austin, Texas 78734

(the Lohman address) on the 1990 return.              The Lohman address is

the location of petitioner's business office.

       On April 9, 1993, respondent mailed a notice of deficiency

determining the following deficiencies in, and additions to,

petitioner's Federal income taxes for years 1984, 1986, and 1987:

                                        Additions to Tax
                          Sec.             Sec.        Sec.               Sec.
Year    Deficiency     6651(a)(1)       6653(a)(1) 6653(a)(2)           6661(a)

1984     $64,118            --               $3,206         1           $16,030

                                     Additions to Tax
                          Sec.         Sec.         Sec.        Sec.
Year    Deficiency     6651(a)(1) 6653(a)(1)(A) 6653(a)(1)(B) 6661(a)

1986      $5,973            --               $299           1            $1,493
1987      55,867         $12,061            2,793           1            13,967
1
   50 percent of the interest computed on the portion of the underpayment which
is attributable to negligence or intentional disregard of rules and regulations.

Respondent's adjustments to petitioner's 1984 and 1986 taxable

years are entirely the result of respondent's disallowance of

petitioner's NOL for 1987.         The notice of deficiency was mailed

by certified mail to petitioner at the following addresses: (1)
                                  5

The Mansfield address; (2) the Lohman address; and (3) 6805

Commanche Trail, Austin, Texas 78732.      No notice of deficiency

was sent to either Mr. Erickson or Mr. Demel.

     The U.S. Postal Form 3877 (Certified Mail List) indicates

that the notices were mailed by the United States Postal Service

(Postal Service) on April 9, 1993, to the three addresses listed

above.3   Each of the notices sent to petitioner was returned to

respondent stamped "unclaimed".       With regard to the notice sent

to the Lohman address, the notation on the envelope indicates

that the Postal Service made a first attempt to deliver the

notice to petitioner on Saturday, April 10, 1993, and a second

attempt on Saturday, April 17, 1993.      Because petitioner's place

of business is closed on Saturdays, no one would have been

present to accept delivery of a certified item.4      At no time did

petitioner or his agents claim the notices from the post office.

     It is the procedure of the Postal Service for a postal

service employee, upon an unsuccessful attempt to deliver

certified mail, to leave a Postal Service Form 3849 notifying the

customer that a piece of certified mail was delivered in his or

3
     Form 3877 is completed by respondent and sent, with the
envelopes containing the notices of deficiency, to the Postal
Service. After checking to make sure the envelopes match the
information on Form 3877, the Postal Service initials and stamps
the form with a postmark date.
4
     Beyond the fact that each of the notices was returned to
respondent unclaimed, the record in this case contains no further
evidence regarding the notices sent to the Mansfield address or
6805 Comanche Trail.
                                  6

her name, and that the item should be claimed at the local post

office.   The Form 3849 does not indicate the content of the item

delivered, nor does it reveal the identity of the sender.

     If the customer does not claim the item, the postal service

employee will deliver a second Form 3849 to the customer's

address with the same information.      Upon the customer's failure

to claim the item after the second notice, the Postal Service

returns the item to the sender.       The returned item is generally

stamped with one of three notations informing the sender that the

item was either: (1) "Undeliverable" if the customer did not

reside at the given address; (2) "unclaimed" if the customer did

not claim the item; or (3) "refused" if the customer was actually

handed the item and then refused to accept certified delivery.

     Assuming, arguendo, that the notice of deficiency is valid,

the 90-day period for filing a petition with this Court expired

on Thursday, July 8, 1993, which date was not a legal holiday in

the District of Columbia.    On August 31, 1993, Agent Lizcano was

present in Mr. Demel's office for a closing conference concerning

later taxable years of petitioner.      During the conference Agent

Lizcano inquired as to petitioner's intent regarding the notice

issued on April 9, 1993.    This was the first time petitioner's

accountants learned of the outstanding notice of deficiency.      Mr.

Demel requested a copy of the notice, and received the same on

September 1, 1993.   Petitioner mailed his petition in this case

on September 8, 1993, and it was filed on September 13, 1993.
                                 7

                              OPINION

     Section 6501(a) provides that the amount of any deficiency

in income tax shall be assessed within 3 years after the return

was filed.   Section 6503(a) provides, however, that the running

of the 3-year period of limitations is suspended by "the mailing

of a notice under section 6212(a)."     Section 6212(a) authorizes

the Secretary or his delegate, upon determining that there is a

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

taxpayer by certified mail 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".    Generally, the Commissioner

has no duty to effectuate delivery of the notice after it is

mailed.   Monge v. Commissioner, 93 T.C. 22, 33 (1989).

     Neither section 6212 nor the regulation promulgated

thereunder, section 301.6212-1, Proced. & Admin. Regs., defines

what constitutes a taxpayer's "last known address".    We have

defined it 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 during such period.

Weinroth v. Commissioner, 74 T.C. 430, 435 (1980); Alta Sierra

Vista, Inc. v. Commissioner, 62 T.C. 367, 374 (1974), affd.

without published opinion 538 F.2d 334 (9th Cir. 1976).      Stated

otherwise, it is the address to which, in light of all the
                                  8

surrounding facts and circumstances, the Commissioner reasonably

believed the taxpayer wished the notice to be sent.    Weinroth v.

Commissioner, supra; Looper v. Commissioner, 73 T.C. 690, 696

(1980).    The relevant focus is thus on the Commissioner's

knowledge, rather than on what in fact may have been the

taxpayer's actual address in use.     Brown v. Commissioner, 78 T.C.

215, 219 (1982) (citing Alta Sierra Vista, Inc. v. Commissioner,

supra).

     In Frieling v. Commissioner, 81 T.C. 42, 49 (1983), we

stated:

          Absent "clear and concise notification" from the
     taxpayer directing respondent to use a different address,
     respondent is entitled to treat the address shown on the
     return for which the notice of deficiency is being issued as
     the taxpayer's "last known address." However, once
     respondent becomes aware of a change in address, he must
     exercise reasonable care and diligence in ascertaining and
     mailing the notice of deficiency to the correct address.
     Whether respondent has properly discharged this obligation
     is a question of fact. McPartlin v. Commissioner, 653 F.2d
     1185, 1189 (7th Cir. 1981), revg. an unpublished order of
     this Court; Weinroth v. Commissioner, supra at 435-436; Alta
     Sierra Vista, Inc. v. Commissioner, supra at 374.

See also Pyo v. Commissioner, 83 T.C. 626, 633 (1984); Stroud v.

Commissioner, T.C. Memo. 1992-666.

     In Abeles v. Commissioner, 91 T.C. 1019 (1988), we held that

a taxpayer's last known address is the address shown on his most

recent return, absent clear and concise notice of a different

address.    However, the mailing of the deficiency notice will meet

the conditions of section 6212(a) no matter what address was used
                                  9

if a taxpayer receives actual notice without prejudicial delay.

Frieling v. Commissioner, supra.

     Petitioner contends that the notice of deficiency is invalid

because it was not mailed to his "last known address".      He argues

that the power of attorney filed on December 18, 1991, notified

respondent that his last known address was that of his

accountants.    To the contrary, respondent argues that

petitioner's "last known address" was the Mansfield address based

on his 1989 return, his most recent return filed prior to the

issuance of the notice of deficiency.

     Where a taxpayer files a power of attorney with the Internal

Revenue Service (IRS) that directs the IRS to send originals of

all communications to the address of the named representative,

such address constitutes the taxpayer's "last known address" for

purposes of section 6212(b)(1).       Reddock v. Commissioner, 72 T.C.

21 (1979)(citing D'Andrea v. Commissioner, 263 F.2d 904 (D.C.

Cir. 1959)); Lifter v. Commissioner, 59 T.C. 818, 821 (1973).5

We have further held that if the power of attorney directs only

copies of notices and communications be sent to the taxpayer's

representative, then to do so is a mere courtesy extended by the

Commissioner.    Triangle Investors Ltd. Partnership v.

Commissioner, 95 T.C. 610, 616 (1990); Houghton v. Commissioner,


5
     See also Hwang v. Commissioner, T.C. Memo. 1992-403; Payne
v. Commissioner, T.C. Memo. 1992-22; Smith v. Commissioner, T.C.
Memo. 1989-508; Rev. Proc. 61-18, 1961-2 C.B. 550.
                                 10

48 T.C. 656, 661 (1967).    Johnson v. Commissioner, 611 F.2d 1015

(5th Cir. 1980), revg. and remanding T.C. Memo. 1977-382.     Of

course, as noted above, a notice of deficiency will be valid

regardless of whether it was mailed to a taxpayer's "last known

address" if the taxpayer receives actual notice of the deficiency

and is not unduly prejudiced in timely filing his or her

petition.    Mulvania v. Commissioner, 81 T.C. 65, 68 (1983);

Frieling v. Commissioner, supra.

       The Forms 2848 executed by the parties in the cases cited

above directed the taxpayers to choose between having originals

or copies of all notices and written communications sent to their

representatives.    The Commissioner revised Form 2848 in March

1991.    The new Form 2848, at issue in the instant case, provides

simply that "notices and other written communications will be

sent" to the taxpayer's designee.     We are thus faced with the

question whether the language in the revised Form 2848 changes a

taxpayer's "last known address" to that of his or her

representative.

       It is not unreasonable for a taxpayer who files a power of

attorney containing the language at issue to rely on the

assumption that the Commissioner will send notices to his or her

representative.    The Commissioner was cognizant of the

outstanding caselaw addressing the prior language of the power of

attorney, as evidenced by Revenue Procedure 61-18, 1961-2 C.B.

550.    Had the Commissioner intended that the act of sending
                                 11

notices to representatives be a mere courtesy, it would have been

a simple matter to express this intent in clear language on the

Form 2848.    The language of the power of attorney at issue is

altogether too plain to give it a meaning contrary to its

unambiguous terms.   We think it is clear that the power of

attorney directing that "notices and all other communications

will be sent" to petitioner at the address of his accountants was

sufficient to render that address petitioner's "last known

address" for the purpose of his 1987 income tax liability.

     In light of all of the surrounding facts and circumstances,

we find it unreasonable for respondent not to have informed

petitioner's representatives of the issuance of the notice of

deficiency.   It would have been a simple task to notify the

representatives in light of Agent Lizcano's continued presence

at, and communication with, their office.    Based on the reasoning

of Ward v. Commissioner, 907 F.2d 517 (5th Cir. 1990), revg. 92

T.C. 949 (1989), the Commissioner is under an obligation to

verify an address with a representative in situations where the

Commissioner has a working relationship with the representative.

This is true regardless of whether notices and communications are

required to be sent to the representative.   See Pomeroy v. United

States, 864 F.2d 1191, 1194-1195 (5th Cir. 1989).    As such,

respondent was aware that the address of petitioner's

representatives was the address to which petitioner intended all

notices and communications to be sent with respect to not only
                                 12

the year 1987, for which a power of attorney was filed, but also

for 1984 and 1986.

       Respondent argues that she was not permitted to mail the

notice to petitioner's accountants because, in doing so, she

would have committed an unauthorized disclosure of taxable years

1984 and 1986.    Agent Lizcano testified that he requested that

petitioner execute powers of attorney for 1984 and 1986, but that

petitioner would not do so.    Revenue agent John Robert Rossmiller

testified that it was not IRS policy to prepare separate notices

for separate tax years in order to prevent unauthorized

disclosures.

       During the course of respondent's examination, Agent Lizcano

requested, and petitioner provided, powers of attorney for tax

years 1987 through 1991, in addition to powers of attorney for

three related corporations.    We find it difficult to accept that

petitioner would have provided all of these powers of attorney,

yet refused to provide the same for tax years 1984 and 1986.

Furthermore, the only adjustments made to petitioner's 1984 and

1986 returns were due to the disallowance of petitioner's 1987

NOL.    During his examination of the 1987 tax year, Agent Lizcano

gave the accountants copies of petitioner's 1984 and 1986 amended

returns after receiving permission to do so from petitioner.      To

now argue, as respondent does, that the notice of deficiency was

not mailed to the accountants to avoid disclosure of this

information is, at the very least, self-serving.    Moreover, upon
                                13

the return of the unclaimed notice, Agent Lizcano could have

simply notified the accountants that a notice for tax year 1987

had been mailed on April 9, 1993, just as he did on August 31,

1993.   In the end, if respondent wanted to avoid improper

disclosure, she could have issued two separate notices of

deficiency.

     Agent Lizcano maintains that he was unaware of the exact

date that respondent sent the notice and was not informed that it

had been returned unclaimed.   Even assuming, arguendo, that this

was the case, "An innocent taxpayer should not be penalized

because the tax collector neglects to tell his right hand what

his left hand is doing."   Pyo v. Commissioner, 83 T.C. at 637;

see also Keeton v. Commissioner, 74 T.C. 377, 383 (1980) (stating

"We will not allow respondent to come into this Court wearing

blinders").

     Respondent further argues that it is irrelevant whether the

notice of deficiency was sent to petitioner's last known address

because petitioner received actual notice of the deficiency.    In

support of her argument, respondent points to the two delivery

attempts at the Lohman address and the notices sent to the

Mansfield address and 6805 Comanche Trail, and cites Patmon and

Young Professional Corp. v. Commissioner, 55 F.3d 216 (6th Cir.

1995), affg. T.C. Memo. 1993-143.

     We have been presented with no evidence to establish that

petitioner actually received the notices of deficiency at the
                                 14

aforementioned addresses, or that petitioner had actual notice of

the mailings.   In addition, the Patmon case is distinguishable in

that the notice of deficiency was returned to the Commissioner

stamped "unclaimed and refused".      In other words, the taxpayer

actually reviewed the envelope containing the notice and refused

receipt of the item.   In the instant case the notice was returned

"unclaimed".    This Court has been presented with no evidence, and

there exists no basis upon which we could make a finding, that

petitioner had actual notice of the issuance of the notice of

deficiency or intentionally avoided delivery thereof.

     Respondent also cites Shuford v. Commissioner, T.C. Memo.

1990-422, affd. without published opinion 937 F.2d 609 (6th Cir.

1991) and Erhard v. Commissioner, T.C. Memo. 1994-344, in support

of her motion to dismiss.   Like the taxpayer in Patmon v.

Commissioner, supra, the taxpayers in the cases cited by

respondent received actual notice of issuance of the notice of

deficiency.    Here petitioner was not informed of the issuance of

the notice of deficiency until Agent Lizcano raised the issue on

August 31, 1993.

     Respondent argues, alternatively, that if we find the notice

of deficiency to be invalid, then it should only be invalid with

respect to 1987, the year for which the power of attorney

applied.   We find this argument to be without merit.     It was

respondent who chose to send a single deficiency notice rather
                                 15

than two separate notices in these circumstances where the tax

years were intertwined.

     Based on the foregoing, we will grant petitioner's motion to

dismiss for lack of jurisdiction and deny respondent's motion to

dismiss for lack of jurisdiction.6

                               An appropriate order and order of

                          dismissal for lack of jurisdiction

                          will be entered.




6
     Petitioner has requested leave to file a motion for an award
of attorneys' fees, costs, and other expenses, pursuant to sec.
7430. Should petitioner desire to pursue this matter, he must
comply with Rules 230 and 231.
