                        T.C. Memo. 2011-116



                      UNITED STATES TAX COURT



                MARTIN R. DINGMAN, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 17453-09L.              Filed June 1, 2011.



     Martin R. Dingman, pro se.

     Ann L. Darnold, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     MARVEL, Judge:   Respondent issued a Notice of Determination

Concerning Collection Action(s) Under Section 6320 and/or 63301

(notice of determination) to collect by levy additions to tax


     1
      Unless otherwise indicated, all section references are to
the Internal Revenue Code (Code), as amended, and all Rule
references are to the Tax Court Rules of Practice and Procedure.
Monetary amounts have been rounded to the nearest dollar.
                                - 2 -

under section 6651(f) for fraudulent failure to file Federal

income tax returns for 1996-2000.    Pursuant to section 6330(d),

petitioner timely filed a petition seeking review of respondent’s

determination to proceed with the proposed levy.   The issue for

decision is whether respondent may proceed with the proposed

levy.   However, because petitioner contends that respondent did

not timely assess the section 6651(f) addition to tax for any of

the years at issue, we must examine whether and when petitioner

filed his delinquent returns for 1996-2000.

                           FINDINGS OF FACT

     Some of the facts have been stipulated.   We incorporate the

stipulated facts into our findings by this reference.   Petitioner

resided in Missouri when he filed his petition.

     Petitioner failed to timely file his 1996-2000 Federal

income tax returns.   At some point before 2003, the Criminal

Investigation Division (CID) of the Internal Revenue Service

(IRS) initiated a criminal tax investigation against petitioner.

Petitioner retained attorneys Gerald M. Handley (Mr. Handley) and

Mark A. Thornhill (Mr. Thornhill) to represent him in connection

with the investigation, which apparently focused on petitioner’s

failure to file returns.

     During the criminal investigation a paid return preparer,

Connie Henderson of RSM McGladrey, Inc., prepared Federal income

tax returns for petitioner using a filing status of “Married
                               - 3 -

filing separate” for each of the years 1996-2000, which she

signed on October 29, 2002.   Petitioner signed the returns and on

November 8, 2002, mailed the returns and checks to pay the

Federal income tax liabilities reported on the 1996 and 1997

returns to Mr. Handley, who received the package on November 13,

2002.

     Petitioner’s counsel had regular meetings with the CID

during the criminal investigation.     Sometime before February 19,

2003, petitioner’s counsel delivered a package containing

petitioner’s 1996-2000 Federal income tax returns and checks to

pay petitioner’s 1996 and 1997 tax liabilities as shown on the

1996 and 1997 returns to the office of the CID, the IRS office

that was handling the investigation of petitioner.

     On February 19, 2003, respondent posted payments of $31,878

and $86,617 to petitioner’s tax accounts for 1996 and 1997,

respectively.   The posted amounts equaled the amounts of the

checks delivered to the CID to pay the tax reported due on

petitioner’s 1996 and 1997 returns.    The February 19, 2003,

entries on the transcripts of petitioner’s 1996 and 1997 tax

accounts show code 640, “Advance Payment of Deficiency”, and

confirm that the IRS had received and deposited petitioner’s

checks and credited petitioner’s accounts for the payments.2


     2
      The transcripts of petitioner’s 1996-2000 tax accounts also
show entries with code 977, “Amended Return Filed”, that are
                                                   (continued...)
                                - 4 -

     On June 9, 2003, respondent posted payments of $94,456,

$31,795, and $61,795 to petitioner’s tax accounts for 1998, 1999,

and 2000, respectively.   The payments for 1998-2000, which

petitioner delivered to the IRS sometime between February 19 and

June 9, 2003, are identified with code 640, “Advance Payment of

Deficiency Cash Bond Credit”.   These payments equal the amounts

of tax due that petitioner reported on his 1998-2000 returns.3

     On February 28, 2006, respondent assessed additions to tax

under section 6651(f) for fraudulent failure to file returns for




     2
      (...continued)
dated Mar. 17, 2003. Lastly, the transcripts show an entry for
each year with code 560, “Assessment Statute Expir. Date Extended
to 03-12-2006”.
     3
      The certified transcripts of petitioner’s tax accounts for
1996-2000 that were introduced by respondent and admitted into
evidence contain no entries reflecting that the delinquent
returns were filed, that the tax liabilities shown on the
delinquent returns were assessed, or that the payments reflected
above were credited against any assessments. The certified
transcripts also do not contain any entries showing that notices
of deficiency were mailed to petitioner for 1996-2000. The
uncertified internal transcripts of petitioner’s tax accounts for
1996-2000 that were introduced by petitioner and admitted into
evidence appear to contain more information, but respondent does
not explain which codes in those transcripts reflect the filing
of the returns, the assessments, or the crediting of the payments
against assessments.
                               - 5 -

1996-2000.4   Respondent concedes that he failed to provide

petitioner with notice and demand of the assessments of additions

to tax as required by section 6303(a).5

     On a date that does not appear in the record but which was

not later than July 12, 2007, petitioner was charged in a

criminal information with two counts of willfully failing to file

tax returns for 2000 and 2001 under section 7203.    On July 12,

2007, petitioner executed a plea agreement pursuant to rule 11 of

the Federal Rules of Criminal Procedure.    The plea agreement


     4
      Respondent assessed the additions to tax as follows:

               Year                       Amount

               1996                    $22,400
               1997                     60,901
               1998                     65,436
               1999                     21,995
               2000                     43,374
     5
      Each certified transcript of petitioner’s tax accounts for
1996-2000 bears the following notation: “NO NOTICES TO THE
TAXPAYER CI IS WORKING THIS FRAUD CASE IRC 6651 F”. We infer
from the entries in the certified transcripts that the CID had
assumed control over the processing of petitioner’s case during
the pendency of the criminal investigation. We also infer that
the CID instructed IRS personnel not to issue otherwise required
notices that would have informed petitioner that the sec. 6651(f)
addition to tax had been assessed for 1996-2000. See infra pp.
33-36. No one from respondent’s CID testified at trial or
provided information during the sec. 6330 hearing. In
petitioner’s words: “When my most recent attorney, Mr.
Thornhill, tried to work with the criminal investigation
division, he was told very abruptly that they were very sorry but
they could not get involved” with the Appeals case. The parties
stipulated that because respondent failed to send petitioner
notice and demand of the assessments of additions to tax under
sec. 6651(f), statutory interest had not begun to accrue.
                                - 6 -

recited that petitioner would plead guilty to the two-count

information and that by entering into the plea agreement,

petitioner admitted that he knowingly committed the offenses and

was, in fact, guilty of the offenses.     The plea agreement also

stated in pertinent part as follows:

     The parties agree that the defendant has paid federal
     taxes and [sic] totaling $343,983 for tax years 1996
     through 2001, and the defendant will receive proper
     credit for these payments. The parties further agree
     to the assessment of tax in the amounts not to exceed
     those reported on the tax returns filed by the
     defendant for tax years 1996 through 2001. [Emphasis
     added.]

Petitioner entered a guilty plea in accordance with the plea

agreement, which was accepted by the U.S. District Court for the

Western District of Missouri, Southern Division, and he was

sentenced in January 2008.

     On December 10, 2008, respondent sent petitioner a Final

Notice of Intent to Levy and Notice of Your Right to a Hearing

(final notice) for 1996-2000.   On or about January 2, 2009,

petitioner timely mailed a Form 12153, Request for a Collection

Due Process or Equivalent Hearing.      On the Form 12153 petitioner

stated that he disagreed with the proposed levy because he owed

no tax or penalty.   Attached to the Form 12153 was a letter

explaining petitioner’s disagreement with the proposed levy.6

Petitioner denied receiving any notices regarding taxes due.



     6
      Mr. Thornhill wrote the letter on petitioner’s behalf.
                               - 7 -

Petitioner also stated in the letter that he had paid all income

taxes due for 1996-2000 and that any claim for additional taxes,

penalties, and interest was barred by the statute of limitations.

Petitioner also stated that respondent had used an incorrect

address for him even though he had provided his new address to

respondent in various documents, including the Federal income tax

returns he had filed in 2003 and in later years.7

     Petitioner’s case was assigned to Settlement Officer Sheila

D. Jenkins (Ms. Jenkins).   On February 3, 2009, Ms. Jenkins wrote

in her activity record that the case had been assigned for the

assistance of an Appeals officer.   Appeals Officer Maria A.

Frazier (Ms. Frazier) reviewed the case and prepared a case

memorandum.   Ms. Frazier wrote in the memorandum that it was not

clear whether petitioner had been notified of the assessments.

She also stated that it was not clear whether any returns had

been processed.   On the basis of the entries with code 560,

“Assessment Statute Expir. Date Extended to 03-12-2006”, on

petitioner’s accounts, Ms. Frazier determined that petitioner had

signed an extension agreement8 extending the period of


     7
      Although respondent sent the final notice to petitioner’s
old address, the postman handed it to petitioner.
     8
      Throughout the administrative proceeding, at trial, and in
filings with this Court, the parties have referred to the form
that petitioner allegedly signed as a period of limitations
extension, an extension, or a waiver. The forms generally used
to obtain an individual taxpayer’s consent to extend the period
                                                   (continued...)
                                 - 8 -

limitations to March 12, 2006.    She stated that “Since an

extension was signed there had to be a statute of limitation that

was triggered with either a filing of the return or an agreement

of some kind” and concluded that the assessments were timely.

     On March 30, 2009, Ms. Jenkins sent petitioner a letter

scheduling a telephone hearing for April 17, 2009.    Ms. Jenkins

advised petitioner that if he wanted to propose alternative

collection methods, he should submit a completed Form 433-A,

Collection Information Statement for Wage Earners and Self-

Employed Individuals, and/or Form 433-B, Collection Information

Statement for Businesses, and supporting documents, including

proof of 2008 estimated tax payments, and he should file all

Federal income tax returns due.    Ms. Jenkins also stated that

respondent had investigated the assessments of the additions to

tax9 and determined that they were timely.   Ms. Jenkins commented

as follows:   “The IRS does in fact, usually give persons notice

of an assessment being made; however, the assessment can be made




     8
      (...continued)
of limitations on assessment are Form 872, Consent to Extend the
Time to Assess Tax, and Form 872-A, Special Consent to Extend the
Time to Assess Tax. We refer to the form as an extension
agreement in this opinion in accordance with the term used by
respondent’s employees in processing petitioner’s case.
     9
      During the sec. 6330 proceeding and in filings with this
Court, the parties have referred to the sec. 6651(f) addition to
tax as a penalty.
                                - 9 -

without notification as long as it is within the statute of

limitations.”

     On April 1, 2009, Mr. Thornhill and Ms. Jenkins spoke on the

telephone.   Mr. Thornhill reiterated that petitioner did not

recall executing an extension agreement.    Mr. Thornhill requested

a copy of all extension agreement documents that respondent

believed petitioner had executed and a copy of any letter that

respondent had allegedly sent petitioner regarding the

assessments.    Mr. Thornhill and Ms. Jenkins agreed to postpone

the section 6330 telephone hearing until May 1, 2009.

     The telephone hearing scheduled for May 1, 2009, was held as

scheduled.   During the hearing Mr. Thornhill reiterated

petitioner’s position that the assessments of the additions to

tax under section 6651(f) were time barred and that petitioner

had not received any notices from respondent regarding the unpaid

additions to tax.    Ms. Jenkins advised Mr. Thornhill that

petitioner’s accounts had been referred to the Examination

Division to determine the correctness of the assessments.     She

stated that in the process of that investigation respondent had

determined that the assessments were timely because petitioner

had extended the period of limitations on collection and

assessment to March 12, 2006.    Ms. Jenkins informed Mr. Thornhill

that respondent had attempted without success to find the

extension agreement that she maintained petitioner had signed.
                                   - 10 -

Ms. Jenkins advised Mr. Thornhill that the case would be reviewed

further before a final determination.

        On May 13, 2009, Mr. Thornhill and Ms. Jenkins held a

followup telephone conversation regarding the existence of any

extension agreement.        On May 20, 2009, Ms. Jenkins and Mr.

Thornhill held another telephone conference.        Ms. Jenkins stated

that the case had been reviewed by an Appeals officer and the

assessed additions to tax would not be abated.        Mr. Thornhill

asked to speak with the Appeals team manager, Jean Fuentes (Ms.

Fuentes).

        On June 1, 2009, Ms. Fuentes conducted a conference with Mr.

Thornhill.        Ms. Fuentes explained that the assessments dated

March 12, 2006, were timely because petitioner had filed his

returns on March 17, 2003.10       She also stated that because

petitioner had failed to provide documents requested in the March

30, 2009, letter, no collection alternatives could be considered.

     On June 23, 2009, respondent sent petitioner the notice of

determination.       In the notice of determination respondent stated

that “Based upon the best available information, the requirements

of various applicable law and administrative procedures have been

met.”        Respondent stated that petitioner had failed to present a


        10
      Certified transcripts in the record reflect that the sec.
6651(f) additions to tax for the years at issue were assessed on
Feb. 28, 2006, not Mar. 12, 2006, as stated by Ms. Fuentes and as
later stated in the notice of determination. We find that the
assessment date was Feb. 28, 2006.
                              - 11 -

viable collection alternative and that the decision to proceed

with collection by levy was appropriate.   In the attachment to

the notice of determination respondent concluded that petitioner

had extended the period of limitations to March 12, 2006.     The

Appeals Office also determined that the February 28, 2006,

assessments were timely because petitioner had filed his returns

on March 17, 2003.

     Petitioner did not execute an extension agreement or any

other document that extended the applicable period of

limitations.   Petitioner filed his returns for 1996-2000 no later

than February 19, 2003, when the checks that were delivered with

the 1996-2000 returns to the CID were credited to petitioner’s

1996 and 1997 accounts.

                              OPINION

I.   Statutory Framework

     Section 6331(a) authorizes the Secretary to levy upon

property and property rights of a taxpayer liable for taxes who

fails to pay those taxes within 10 days after notice and demand

for payment is made.   Section 6330(a) provides that no levy may

be made on any property or rights to property of any person

unless the Secretary has notified such person in writing of the

right to a hearing before the levy is made.   If the person

requests a hearing, a hearing shall be held before an impartial

officer or employee of the IRS Office of Appeals.   Sec.
                               - 12 -

6330(b)(1), (3).   At the hearing the person may raise any

relevant issue, including appropriate spousal defenses,

challenges to the appropriateness of the collection action, and

collection alternatives.    Sec. 6330(c)(2)(A).    A taxpayer may

also contest the existence or amount of the underlying tax

liability if he did not receive a notice of deficiency or did not

otherwise have an opportunity to dispute the tax liability.        Sec.

6330(c)(2)(B); see also Sego v. Commissioner, 114 T.C. 604, 609

(2000).

     Following the hearing, the Appeals Office must determine

whether the proposed levy action may proceed.      The Appeals Office

is required to take into consideration:    (1) Verification

presented by the Secretary that the requirements of applicable

law and administrative procedure have been met, (2) relevant

issues raised by the taxpayer, and (3) whether the proposed levy

action appropriately balances the need for efficient collection

of taxes with the taxpayer’s concerns regarding the intrusiveness

of the proposed levy action.    Sec. 6330(c)(3).

     Section 6330(d)(1) grants this Court jurisdiction to review

the determination made by the Appeals Office in connection with

the section 6330 hearing.    Where the underlying liability is

properly at issue, we review the taxpayer’s liability de novo.

See Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).       We

review all other determinations for abuse of discretion.
                                - 13 -

Lunsford v. Commissioner, 117 T.C. 183, 185 (2001); Sego v.

Commissioner, supra at 610; Goza v. Commissioner, supra at 182.

An abuse of discretion occurs if the Appeals Office exercises its

discretion “arbitrarily, capriciously, or without sound basis in

fact or law.”    Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

     In his Form 12153 and during the hearing, petitioner

questioned whether respondent had made the assessments within the

applicable limitations period.    The assertion by a taxpayer that

the period of limitations has expired constitutes a challenge to

the underlying tax liability.    Hoffman v. Commissioner, 119 T.C.

140, 145 (2002).    The underlying liabilities are properly at

issue because respondent did not issue notices of deficiency11

and petitioner had no opportunity to dispute the underlying tax

liabilities.    See sec. 6330(c)(2)(B).   Accordingly, we review de

novo the question of whether respondent made the assessments


     11
      Sec. 6665(b) provides, inter alia, that an addition to tax
under sec. 6651 is treated as a tax for purposes of the
deficiency procedures only to the extent that the addition to tax
is attributable to a deficiency as defined in sec. 6211.
Petitioner does not suggest that the additions to tax under sec.
6651(f) in this case are attributable to a deficiency, and on the
basis of our finding that petitioner filed delinquent returns for
1996-2000 and made the described tax payments, we agree they are
not. Respondent concedes that petitioner filed delinquent
returns for 1996-2000 and disputes only the date when the returns
were filed. The amounts shown as taxes by a taxpayer on filed
returns do not constitute deficiencies within the meaning of sec.
6211(a). See Wilson v. Commissioner, 118 T.C. 537, 540 (2002)
(holding that under sec. 6665(b) the additions to tax under sec.
6651(f) were not attributable to deficiencies when those
additions to tax were computed by reference to taxes shown by the
taxpayer on his delinquently filed returns).
                               - 14 -

within the applicable period of limitations.   See Sego v.

Commissioner, supra at 609-610.

     Generally, any reference in the Code to tax includes

additions to tax, additional amounts, and penalties.    See sec.

6665(b).   Accordingly, we shall apply the limitations provisions

of section 6501 to decide whether the section 6651(f) additions

to tax were timely assessed.   Section 6501(a) generally provides

that the amount of any tax imposed by the Code shall be assessed

within 3 years after the return was filed.   In Bennett v.

Commissioner, 30 T.C. 114, 123-124 (1958), we held that the

limitations period begins to run when the taxpayer files a

delinquent nonfraudulent return after fraudulently failing to

file a timely return.

     The bar of the period of limitations is an affirmative

defense, and the party raising the defense must specifically

plead it and prove it.   Rules 39, 142(a); Hoffman v.

Commissioner, supra at 146.    Petitioner pleaded the defense by

claiming that the limitations period had expired before

respondent assessed the additions to tax.    To prove the defense

successfully, the taxpayer must establish (1) the filing date of

the returns and (2) that the Commissioner assessed the relevant

amounts after the expiration of the 3-year period for assessment.

See Hoffman v. Commissioner, supra at 146; Mecom v. Commissioner,

101 T.C. 374, 382 (1993), affd. without published opinion 40 F.3d
                                - 15 -

385 (5th Cir. 1994).    If the taxpayer establishes a prima facie

case that the applicable period of limitations has expired and

that the Commissioner’s assessment is barred, the burden of going

forward with evidence shifts to the Commissioner.    See Hoffman v.

Commissioner, supra at 146; Mecom v. Commissioner, supra at 382.

The Commissioner then must show that the assessment is not barred

by the period of limitations under section 6501(a).       Hoffman v.

Commissioner, supra at 146; Mecom v. Commissioner, supra at 382.

If the Commissioner makes such a showing, the burden of going

forward with the evidence shifts back to the taxpayer.      Hoffman

v. Commissioner, supra at 146; Mecom v. Commissioner, supra at

383.    Notwithstanding the shifting of the burden of going

forward, the burden of ultimate persuasion remains with the party

who pleads the bar of the period of limitations.     Hoffman v.

Commissioner, supra at 146-147.

II.    The Parties’ Arguments

       The parties do not disagree about the assessment date,

February 28, 2006.     Instead, they disagree about the filing date

of petitioner’s delinquent 1996-2000 returns.    Petitioner asserts

that he filed his 1996-2000 returns no later than February 19,

2003, when the checks that were delivered with the returns were

credited to his 1996 and 1997 accounts.    He points to

respondent’s records; namely, uncertified transcripts of his

income tax accounts that were admitted into evidence without
                                   - 16 -

objection, which confirm that respondent posted petitioner’s

payments of his reported 1996-97 liabilities on February 19,

2003.        Petitioner testified at trial that his counsel delivered

the checks to pay petitioner’s Federal income tax liabilities for

1996 and 199712 with original signed returns for each of the

years 1996-2000 to the CID.       Petitioner contends that this means

that by February 19, 2003, at the latest, respondent had received

the payments for 1996 and 1997 and the 1996-2000 returns and had

processed the payments.        Petitioner denies signing any extension

agreements extending the period of limitations on assessment or

any other documents that would have kept the 3-year limitations

period open beyond February 19, 2006, and we accept his testimony

on this point as credible.13

        Respondent’s position during the section 6330 hearing was

different from that asserted during trial and on brief.        During

the section 6330 hearing, respondent contended that the

assessments were timely because petitioner executed an extension

agreement extending the applicable period of limitations on

assessment before the limitations period had expired as shown on



        12
      Respondent’s records show that petitioner paid his 1998-
2000 Federal income tax liabilities in June 2003. Petitioner
testified that he submitted the payments for 1998-2000 later in
the spring because he did not have the money available to make
the payments until then.
        13
      Respondent’s counsel agrees that petitioner did not
execute an extension agreement.
                               - 17 -

IRS transcripts and because petitioner had filed the returns on

March 17, 2003.    At trial and on brief, however, respondent

abandoned his argument that petitioner had executed an extension

agreement extending the period of limitations on assessment and

relied only on his contention that petitioner filed his returns

on March 17, 2003, thereby making the assessment timely.

Respondent relies on the transcripts of petitioner’s 1996-2000

tax accounts showing entries with code 977, “Amended Return

Filed”, that are dated March 17, 2003, to support his

contention.14   Respondent also relies on transcript entries

showing that the February 19, 2003, payments were posted as

“Advance Payment of Deficiency” rather than payments accompanying

filed returns.15   Respondent therefore claims that the Appeals

Office correctly determined the assessments were timely.

     After reviewing the record, including petitioner’s

testimony, which we find credible, and respondent’s transcript

entries regarding the characterization and filing date of the


     14
      Petitioner responds in part by contending that the entries
showing that amended returns were filed were in error.
Petitioner contends that he filed original returns, not amended
returns.
     15
      Respondent also points to the so-called TXMODA transcripts
showing that the receipt of payments for 1996 and 1997 was posted
in cycle 20031508, whereas the entries documenting the submission
of the 1996-2000 returns were posted in cycle 20031708. We
interpret respondent’s argument to be that because the TXMODA
transcripts show the returns were processed later than the
payments, we should find that the returns and the payments were
submitted on different dates. We decline to make such a finding.
                               - 18 -

returns, which we do not find credible, we find that petitioner’s

counsel delivered a package containing petitioner’s fully

executed original returns for 1996-2000 and checks to pay the

1996 and 1997 liabilities shown on the 1996 and 1997 returns to

the CID no later than February 19, 2003.   That finding, however,

is not sufficient, standing alone, to permit us to conclude that

the returns were properly filed.   We must delve deeper.

     Respondent contends that simply delivering returns to an IRS

office is not sufficient to constitute proper filing.   Respondent

relies upon section 6091 and related regulations to support his

argument.   In anticipation that we might find that petitioner’s

counsel delivered the returns and checks to the CID office

handling petitioner’s criminal investigation, respondent also

relies on a line of cases holding that the delivery of a return

to the wrong IRS representative or office is not a return filing

and does not cause the applicable period of limitations on

assessment to begin to run.   Respondent explains that if the

returns were not delivered to the correct IRS office and to an

IRS employee with authority to accept returns for filing on or

before February 19, 2003, the 3-year limitations period did not

start to run on that date.    Respondent also argues that delivery

of returns to the CID was not a proper filing because special

agents of the CID were not specifically authorized to accept

returns for filing.
                               - 19 -

III. Applicable Law Governing Return Filing in 2003

     As discussed above, section 6501(a) provides that the amount

of any tax imposed by the Code shall be assessed within 3 years

after the return was filed.    Section 6501 does not define the

word “filed”, but under pertinent caselaw the general rule is

that a return is filed when it is received.16    United States v.

Lombardo, 241 U.S. 73, 76 (1916); Trout v. Commissioner, 131 T.C.

239, 246 (2008).    Generally, a limitations period “runs against

the United States only when they assent and upon the conditions

prescribed.”    Lucas v. Pilliod Lumber Co., 281 U.S. 245, 249

(1930).    For a taxpayer to secure the benefit of a limitations

period bar, there must be “‘meticulous compliance by the taxpayer

with all named conditions.’”    Winnett v. Commissioner, 96 T.C.

802, 807-808 (1991) (quoting Lucas v. Pilliod Lumber Co., supra

at 249).    One such requirement is that a return be filed at the

designated place of filing returns.     See id. at 808.

     Section 6091(a) provides that “When not otherwise provided

for by this title, the Secretary shall by regulations prescribe

the place for the filing of any return”.    Section 6091(b)(1)(A)

provides generally that a person other than a corporation must




     16
      Exceptions to the general rule do not apply here.    See,
e.g., sec. 7502(e)(1).
                               - 20 -

make a return to the Secretary17 (i) in the internal revenue

district of the taxpayer’s place of residence or (ii) at a

service center serving such internal revenue district, as the

Secretary may prescribe by regulations.   Section 6091(b)(4)

provides that, notwithstanding the above, a return to which

section 6091(b)(1) would apply but for subsection (b)(4) that is

made to the Secretary by hand carrying shall, under regulations

prescribed by the Secretary, be made to the internal revenue

district referred to in section 6091(b)(1)(A)(i).

     As in effect for 2003, section 1.6091-1, Income Tax Regs.,

provides that with an exception not applicable here, an income

tax return required under the Code or regulations shall be filed

at the place for filing specified in the Code or, if no place is

specified, the return shall be filed at the place prescribed by

regulations.   Section 1.6091-2(a)(1), Income Tax Regs., provides

that income tax returns of individuals shall be filed with the

district director for the internal revenue district of the

taxpayer’s residence.18   Section 1.6091-2(d)(1), Income Tax


     17
      The term “Secretary” means the Secretary of the Treasury
or his delegate. Sec. 7701(a)(11)(B). The term “delegate” means
any officer, employee, or agency of the Department of the
Treasury duly authorized by the Secretary of the Treasury,
directly or indirectly, by one or more redelegations of
authority, to perform the relevant function. Sec.
7701(a)(12)(A).
     18
      However, notwithstanding sec. 6091(b)(1), if instructions
applicable to income tax returns provide that the returns be
                                                   (continued...)
                               - 21 -

Regs., provides that returns of individual taxpayers that are

filed by hand carrying “shall be filed with the district director

(or with any person assigned the administrative supervision of an

area, zone or local office constituting a permanent post of duty

within the internal revenue district of such director) as

provided in * * * [section 1.6091-2(a), Income Tax Regs.].”   See

also sec. 301.6091-1(b)(1), Proced. & Admin. Regs.   A return is

considered to be hand carried if it is brought to the district

director by the person required to file the return or other

document, or by his agent, such as the taxpayer’s attorney or a

member of the taxpayer’s family.   See sec. 301.6091-1(c), Proced.

& Admin. Regs.

     Although section 6091 and the regulations thereunder as in

effect for 2003 authorized returns to be filed with the district

director or his delegate, that direction had been rendered

obsolete with the restructuring of the IRS pursuant to the

Internal Revenue Service Restructuring and Reform Act of 1998,

Pub. L. 105-206, sec. 1001(a), 112 Stat. 689.   That act required

the Commissioner to develop and implement a plan to reorganize

the IRS.   Id.   The new organizational structure became effective

on October 1, 2000.   See I.R.S. News Release IR-2000-67 (Sept.



     18
      (...continued)
filed with a service center, the returns must be filed in
accordance with those instructions. See sec. 1.6091-2(c), Income
Tax Regs.
                                - 22 -

27, 2000).   As a result of the reorganization, the IRS replaced

the national, regional, and district structure with

organizational units serving particular industries and groups of

taxpayers with similar needs.    See id.   Despite these

comprehensive organizational changes, in 2003 regulations under

section 6091 continued to refer to officials whose positions had

been eliminated and to offices that had been eliminated as a

result of the reorganization, leaving taxpayers with little or no

effective regulatory guidance regarding important requirements

affecting their return filing obligations.19

     In early 2003 the Commissioner issued Notice 2003-19, 2003-1

C.B. 703 (2003 notice), advising taxpayers of the proper

addresses for filing documents with the IRS, including “with

respect to offices or officials that no longer exist as part of

the reorganization.”   In the 2003 notice the Commissioner

acknowledged that the Office of District Director was an outdated

place of filing.

     According to the 2003 notice, to file returns under section

6091, “Returns should be mailed to the address specified in the



     19
      IRS Deleg. Order 1-23 (formerly IRS Deleg. Order 193, Rev.
6), Internal Revenue Manual (IRM) pt. 1.2.40.22 (Nov. 8, 2000),
titled “Authorization to Perform Functions of the Commissioner”
provides that the authority to take actions previously delegated
to district directors is delegated to Assistant Deputy
Commissioners, Division Commissioners, Chiefs, and Directors,
Submission Processing Field, Compliance Services Field, and
Accounts Management Field.
                               - 23 -

form or instructions.”20   Notice 2003-19, 2003-1 C.B. 707.   The

2003 notice also stated that “Hand-carried returns should be

filed with the local Service office.”    Id.   Section 6 of the 2003

notice titled “Obtaining Information for Location of Service

Offices Where Elections, Statements, Returns, and Other Documents

Can Be Filed By Personal Delivery” provides that “Taxpayers

required to file elections, statements, returns, and other

documents who are permitted to file by personal delivery with a

Service office may obtain information regarding the location of

the nearest Service office by calling the Service’s toll-free

number”.   Id. at 711.   The 2003 notice was effective for

documents filed on or after April 7, 2003.     See id.

     It was not until September 16, 2004, that the Department of

the Treasury amended section 1.6091-2, Income Tax Regs., to

reflect the changes in the IRS organizational structure and to

explain how they affected the filing of returns.    See T.D. 9156,

2004-2 C.B. 669.   According to the preamble, “these final

regulations replace obsolete references to IRS organizations and


     20
      As part of the overall reorganization, starting in 2000
the IRS reorganized its service center operations. I.R.S. News
Release IR-2000-61 (Sept. 1, 2000). In the light of these
changes in the service center operations that spanned more than 2
years, in January 2003 the IRS issued a news release reminding
taxpayers that they would be sending their 2002 returns to
service centers different from those used the previous year.
I.R.S. News Release IR-2003-10 (Jan. 27, 2003). The news release
explained where the returns should be mailed, depending on the
taxpayer’s residence, see id., but it contained no instructions
for taxpayers who preferred to file returns by hand delivery.
                              - 24 -

titles with updated references that are sufficiently flexible to

take into account future changes to IRS structure or operations.”

Id. at 670.   The preamble provided that the amended regulations

specify the place of filing hand-carried21 returns in a manner

consistent with the 2003 notice.   See id. at 669.   Section

1.6091-2(a)(1), Income Tax Regs., as amended by T.D. 9156, 2004-2

C.B. at 670, provides that individual income tax returns must be

filed with “any person assigned the responsibility to receive

returns at the local Internal Revenue Service office that serves

the legal residence * * * of the person required to make the

return.”   Section 1.6091-2(d)(1), Income Tax Regs., as amended by

T.D. 9156, 2004-2 C.B. at 670, addresses returns filed by hand

carrying and provides that “Returns of persons other than

corporations which are filed by hand carrying shall be filed with

any person assigned the responsibility to receive hand-carried

returns in the local Internal Revenue Service office”.

     Respondent contends that because the 2004 amendments to

section 1.6091-2(d)(1), Income Tax Regs., made no substantive



     21
      Although the preamble states that the amendment concerns
the filing of hand-carried returns, see T.D. 9156, 2004-2 C.B.
669, the amendment also affected sec. 1.6091-2(a)(1), Income Tax
Regs., which contains general provisions on return filing.
Compare sec. 1.6091-2(a)(1), Income Tax Regs. (stating that the
returns shall be filed with a district director), with sec.
1.6091-2(a)(1), Income Tax Regs., as amended by T.D. 9156, 2004-2
C.B. 669 (stating that the returns shall be filed with any person
assigned responsibility to receive returns at the local IRS
office).
                              - 25 -

changes to the taxpayer’s ability to file a return by hand

carrying it to a local IRS office as stated in the preamble, see

T.D. 9156, 2004-2 C.B. at 669, it is appropriate to treat amended

section 1.6091-2, Income Tax Regs., as the relevant authority

with respect to the issue of whether petitioner’s counsel

delivered the returns to the appropriate IRS employee.    We

disagree.   There is no provision in T.D. 9156, 2004-2 C.B. at

669, that gives amended section 1.6091-2, Income Tax Regs.,

retroactive effect, and respondent has cited no authority for the

proposition that amended section 1.6091-2, Income Tax Regs.,

controls or should control the filing of an individual income tax

return in 2003.

     To summarize, in the first 3 months of 2003, the only

relevant guidance to a taxpayer regarding the filing of his

return was the guidance provided by section 6091, obsolete

regulations, and any instructions for specific returns.    The 2003

notice, which the IRS issued in early 2003 to temporarily fill

the information gap created by the reorganization, was effective

for documents filed after April 7, 2003, and did not apply to

returns delivered to the IRS before the effective date.    The

amended regulations under section 6091 were not promulgated until

2004 and did not apply to returns filed in 2003.
                                 - 26 -

IV.   Analysis

      The record does not establish exactly how or when

petitioner’s counsel delivered the package of returns and checks

to the CID.      In the normal case, such a gap in the record would

dictate that the taxpayer, who has the burden of proof on the

limitations issue, must lose.     This is not the normal case,

however.

      Although the record is not clear regarding the details of

the delivery of the tax return package to the IRS, the record

clearly establishes two important facts:       (1) The tax return

package was delivered to the IRS no later than February 19, 2003,

and (2) the package was received by an IRS office that had the

authority to process its contents.        We know these facts because

the income tax transcripts in the record confirm that the checks

to pay petitioner’s 1996 and 1997 tax liabilities as reported on

petitioner’s 1996 and 1997 returns were processed, deposited, and

ultimately credited to petitioner’s 1996 and 1997 accounts on

February 19, 2003.     Although the transcripts are less clear about

the processing of the returns, the transcripts also show that

returns of some kind were processed on March 17, 2003, as

“Amended Return Filed”.     Because the only returns petitioner

submitted to the IRS were his original delinquent returns, we

assume for purposes of this analysis that the returns processed

as amended returns were really petitioner’s original returns.
                              - 27 -

Respondent did not introduce any evidence to explain the “Amended

Return Filed” entries on the transcripts or the lack of any entry

with respect to the original returns.

     As stated earlier, petitioner has the burden of proof

regarding the limitations issue and the initial burden of

production.   Petitioner carried his initial burden of production

by introducing credible evidence that his attorney delivered a

package containing his 1996-2000 original returns and checks to

pay his 1996 and 1997 tax liabilities to the IRS and by

introducing IRS transcripts confirming that the IRS had received

the package and actually processed at least some of its contents.

The earliest processing date, February 19, 2003, appearing on the

transcripts gives rise to an inference that an IRS office with

authority to receive and process the documents had received the

returns and checks by that date.   Consequently, the burden of

producing evidence shifted to respondent.

     Respondent called no witnesses and introduced no exhibits

other than a few stipulated exhibits and certified transcripts

with respect to the allegedly unpaid liabilities for each of the

years 1996-2000 that are the subject of this proceeding.     The

transcripts contain substantially the same entries.   One entry on

each of the transcripts reflects that a fraud penalty was

assessed on February 28, 2006.   The rest of the entries are

largely uninformative and require us to guess at their meanings,
                              - 28 -

e.g., “Claim Pend”, “470 In Error”, and “Litigation”.    The

certified transcripts, which do not purport to be the type of

income tax transcripts that would show the history of

petitioner’s income tax accounts for 1996-2000, contain no

indication that petitioner filed original returns for 1996-2000,

that the tax reported on the returns was assessed, or that

payments of the reported tax were credited to petitioner’s

accounts.   However, each of the transcripts contains the

following entry:   “NO NOTICES TO THE TAXPAYER CI IS WORKING THIS

FRAUD CASE IRC 6651 F”.

     Respondent had the obligation to produce evidence that

demonstrated petitioner did not effectively file his 1996-2000

return until March 2003.   Respondent did not do so.   The only

evidence in the record regarding the receipt and processing of

the package that petitioner’s counsel delivered to the IRS is the

evidence gleaned from IRS transcripts.   Those transcripts

establish that the package was received no later than February

19, 2003, when the payments of petitioner’s 1996 and 1997 tax

liabilities as reported on petitioner’s original returns for

those years by checks included in the package were posted to

petitioner’s accounts.

     Ordinarily, the Commissioner’s failure to counter taxpayer’s

credible evidence would be fatal to the Commissioner’s position.

Respondent seeks to avoid such a result by contending that
                              - 29 -

petitioner failed to meticulously comply with the filing

requirements.   Respondent relies on a line of cases to support

his argument.   See Helvering v. Campbell, 139 F.2d 865 (4th Cir.

1944), affg. a Memorandum Opinion of this Court; O’Bryan Bros. v.

Commissioner, 127 F.2d 645 (6th Cir. 1942), affg. 42 B.T.A. 18

(1940); W.H. Hill Co. v. Commissioner, 64 F.2d 506 (6th Cir.

1933), affg. 23 B.T.A. 605 (1931); Winnett v. Commissioner, 96

T.C. at 807-808; Espinoza v. Commissioner, 78 T.C. 412, 413-414

(1982); Allnutt v. Commissioner, T.C. Memo. 2002-311, affd. 523

F.3d 406 (4th Cir. 2008); Friedmann v. Commissioner, T.C. Memo.

2001-207, affd. 80 Fed. Appx. 285 (3d Cir. 2003); Green v.

Commissioner, T.C. Memo. 1993-152, affd. without published

opinion 33 F.3d 1378 (5th Cir. 1994); Metals Refining Ltd. v.

Commissioner, T.C. Memo. 1993-115; Harrod v. Commissioner, T.C.

Memo. 1961-300; Kotovic v. Commissioner, T.C. Memo. 1959-177;

Kraus v. United States, 55 AFTR 2d 85-1116, at 85-1119, 85-1 USTC

par. 9310, at 87,752-87,753 (E.D.N.Y. 1985); United States v.

Dolmage, 166 F. Supp. 202 (D. Md. 1958); Levert v. United States,

No. 94-1035 (Bankr. N.D. Ohio 1994).

     Most of the cases on which respondent relies involved a

situation where the taxpayer submitted returns to an IRS office

and/or to an IRS employee contrary to the specific guidance set

forth in section 6091 and related regulations.   See, e.g.,

Winnett v. Commissioner, supra; Espinoza v. Commissioner, supra
                              - 30 -

at 422; Allnutt v. Commissioner, supra; Friedmann v.

Commissioner, supra; Metals Refining Ltd. v. Commissioner, supra.

Each of the cases involved an attempted return filing that

occurred when IRS districts headed by district directors were

still in place.   Consequently, the regulations under section 6091

in effect before 2004 offered effective guidance regarding the

filing of returns.   See, e.g., Espinoza v. Commissioner, supra at

422; Allnutt v. Commissioner, supra; Metals Refining Ltd. v.

Commissioner, supra; Levert v. United States, supra.     Some of the

cases involved attempts by taxpayers to file returns with revenue

agents who were handling their cases at a time when the courts

concluded that delivering returns to a revenue agent did not

constitute filing of a return.   See, e.g., O’Bryan Bros., Inc. v.

Commissioner, supra at 647; Friedmann v. Commissioner, supra;

Metals Refining Ltd. v. Commissioner, supra; Harrod v.

Commissioner, supra; Kraus v. United States, 55 AFTR 2d at 85-

1119, 85-1 USTC at 87,752-87,753.   None of the cases respondent

cites involved an attempt by the taxpayer to file executed

original returns with payments, and none of the cases involved

evidence that the payments made with the returns were actually

processed by the IRS and credited to the taxpayer’s account.

     Some of the cases respondent cites address the taxpayer’s

intent to file a return.   See, e.g., Espinoza v. Commissioner,

supra at 422; Allnutt v. Commissioner, supra; Friedmann v.
                              - 31 -

Commissioner, supra.   The record supports a conclusion that

petitioner clearly intended to file the returns when his counsel

submitted them to the CID.   The returns were accompanied by

payment of petitioner’s 1996 and 1997 Federal income tax

liabilities and were filed at a time when the returns could have

been used against petitioner in the criminal investigation.22    We

believe that an inference that petitioner intended to file the

returns by submitting them to the CID is warranted on the record

before us.

     Respondent also attempts to convince us that the CID had no

authority in 2003 to accept returns for filing.   Respondent,

relying on some of the cases cited above, contends that special

agents of the CID, like revenue agents, had not been specifically

delegated authority to accept returns for filing and that

therefore the delivery of the package of the returns and the

checks to the CID was not a proper filing.




     22
      Submitting returns while a criminal investigation is
ongoing can have very serious and adverse consequences for the
taxpayer and is not undertaken lightly. See, e.g., Smith v.
United States, 348 U.S. 147, 157-158 (1954) (prior tax returns
sufficiently corroborated the taxpayer’s statements as to his
financial history and the opening net worth); United States v.
Karsky, 610 F.2d 548 (8th Cir. 1979) (prior returns relevant to a
determination of the taxpayer’s state of mind for establishing
willfulness which is an essential element of the crime of failure
to file an income tax return under sec. 7203); Malnik v.
Commissioner, T.C. Memo. 1985-467 (a criminal investigation
expanded to 1963 after the taxpayer filed his 1963 return during
a criminal investigation).
                                 - 32 -

     We cannot and need not draw such a conclusion on the facts

of this case for several reasons.      First, respondent did not

prove that special agents had not been delegated authority to

accept returns for filing in 2003.        In fact, respondent did not

introduce any evidence regarding the IRS employees who were

authorized in 2003 to receive returns on behalf of the IRS.

Second, the Commissioner has recognized in at least one instance

that a specific delegation of authority to receive returns for

filing is not necessary as long as a de facto delegation of

authority exists.      In 1999 the Commissioner’s Office of Chief

Counsel issued Chief Counsel Advice (CCA) 199933039 (Aug. 20,

1999).    The CCA recognized a revenue officer’s authority to

receive delinquent returns for filing even though there was no

specific delegation order permitting revenue officers to do so.

See CCA 199933039 (Aug. 20, 1999).        In the CCA the Office of

Chief Counsel concluded that a delegation of authority may take

many forms including functional statements in position

descriptions.    Id.    Respondent did not introduce the position

description of a special agent23 or any other evidence to support

his arguments.

     The third reason for rejecting respondent’s argument is

really a corollary of the second reason and relates to the


     23
      Respondent cites individual occupational requirements for
the position of a criminal investigator for the Department of the
Treasury but refers to it as a position description.
                               - 33 -

general authority of the CID over criminal investigations of

taxpayers and related civil matters.    As noted previously, each

of the plain-English transcripts in the record contains the

following notation:   “NO NOTICES TO THE TAXPAYER CI IS WORKING

THIS FRAUD CASE IRC 6651 F”.    Respondent did not introduce any

evidence to explain the entries.    However, the IRM as in effect

in 2003 contemplated that the CID could receive delinquent

returns and was entitled to instruct IRS employees regarding the

processing of delinquent returns and payments.    Part 9.8 of the

IRM described the control function of the Fraud Detection Center

(FDC), whose primary responsibilities were to identify refund

fraud and provide support for the Criminal Investigation field

offices.   See 5 Administration, IRM (CCH), pt. 9.8.1.2.2 (Jan.

29, 2002).   The IRM stated that the FDC was to notify the CID

field office when an IRS campus received amended or delinquent

returns for accounts under the control of the CID.    See id. pt.

9.8.2.6(1) (July 29, 2002).    The IRM also stated:   “The FDC will

process amended returns, delinquent returns, and advance payments

submitted to the FDC from the CI field office for accounts under
                               - 34 -

CI control based on instructions”.24    See id. pt. 9.8.2.6.1(1)

(emphasis supplied).

     We have found nothing in the Code or the regulations that

would authorize the CID to prevent or delay the processing of

delinquent original returns filed by a taxpayer during the

pendency of a criminal tax investigation within its jurisdiction.

The above-described IRM provisions, however, appear to

acknowledge the ability of the CID to “control” cases under

investigation and to provide “instructions” regarding the

processing of delinquent returns and payments.    See, e.g., id.;

id. pt. 9.8.2.6(2).    Set against this background is evidence that

original returns petitioner filed were not timely processed and

that the processing of the returns was inexplicably characterized

in the IRS’ records as the processing of amended returns.    These

anomalies deserved an explanation, but none was forthcoming.

Although respondent could have called a representative of the CID

office that was responsible for the investigation of petitioner

or other IRS employees to testify regarding the receipt and

processing of petitioner’s delinquent returns, respondent chose



     24
      The general instructions for processing original
delinquent returns stated that before processing those returns,
the IRS’ statute function had to determine whether the CID had
requested the service center to control the taxpayer’s account.
See 6 Administration, IRM (CCH), pt. 25.6.4.4.2(6) (Oct. 1,
2001). If so, in certain circumstances the IRS’ statute function
should have referred cases to CID for the processing
instructions. Id. pt. 25.6.4.4.1(7).
                              - 35 -

not to do so.   Respondent’s failure to introduce evidence within

his control gives rise to an inference that the evidence would

have been unfavorable.   See Wichita Terminal Elevator Co. v.

Commissioner, 6 T.C. 1158, 1165 (1946), affd. 162 F.2d 513 (10th

Cir. 1947).

     Moreover, we have held that if a taxpayer submits a return

to a person who is not authorized to accept the return for filing

and the return is then forwarded to the correct IRS office, the

period of limitations commences when the office designated to

receive the return actually receives it.    See Winnett v.

Commissioner, 96 T.C. at 808 (holding that for purposes of

determining the beginning of the period of limitations a return

is deemed filed when it is received by the “revenue office

designated to receive such return”); Allnutt v. Commissioner,

T.C. Memo. 2002-311 (returns deemed filed when the District

Director’s office stamped them received).   We have found that

petitioner’s counsel delivered the checks along with five returns

to the CID of the IRS.   The certified transcripts of petitioner’s

tax accounts show that the checks were processed as of February

19, 2003, and we therefore infer that the checks and returns were

transmitted for processing through internal IRS channels.

Accordingly, we also conclude that even if the returns were

considered filed only when they were received for processing (as
                              - 36 -

opposed to when they were delivered to the CID), such filing

occurred on or before February 19, 2003.

     For the foregoing reasons, we find that the package of tax

returns and checks was received by an IRS office with authority

to receive and process the contents of the package no later than

February 19, 2003.   We hold therefore that petitioner effectively

filed his 1996-2000 returns no later than February 19, 2003.   It

follows then that respondent’s assessments of the section 6651(f)

additions to tax on February 28, 2006, were not made within the

applicable 3-year period of limitations, and we so find.

     Because respondent did not timely assess the section 6651(f)

additions to tax for 1996-2000, respondent is barred from

collecting the underlying tax liabilities at issue here.    We hold

therefore that petitioner does not owe the underlying tax

liabilities at issue, and we do not sustain respondent’s proposed

collection action.   In the light of this holding, we do not need

to address whether the Appeals Office abused its discretion in

determining to proceed with the levy.
                               - 37 -

     We have considered all of the arguments raised by either

party, and to the extent not discussed above, we find them to be

irrelevant or without merit.

     To reflect the foregoing,


                                      Decision will be entered for

                                 petitioner.
