                        T.C. Memo. 2008-186



                      UNITED STATES TAX COURT



                 MICHAEL L. CONN, Petitioner v.
         COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 4422-07L.              Filed August 5, 2008.



     Eric Johnson, for petitioner.

     Emile L. Hebert III, for respondent.



                         MEMORANDUM OPINION


     HAINES, Judge:   Pursuant to section 6330(d),1 petitioner

seeks review of respondent’s determination to proceed with the

collection of petitioner’s unpaid 1993 Federal income tax



     1
      Unless otherwise indicated, section references are to the
Internal Revenue Code, as amended. Rule references are to the
Tax Court Rules of Practice and Procedure.
                                  -2-

liability.   The issue is whether petitioner received a notice of

deficiency for 1993, thus precluding him from challenging the

1993 liability during his section 6330 hearing.

                             Background

     The parties submitted this case fully stipulated pursuant to

Rule 122.    The stipulation of facts, along with the attached

exhibits, is incorporated herein by this reference.    Petitioner

resided in Louisiana at the time his petition was filed.

     Petitioner and his wife, Patricia A. Conn, timely filed a

joint Federal income tax return for 1993.    Petitioner was

subsequently convicted of embezzlement and sentenced to 21 months

in Federal prison.    He began serving his sentence in December

1996 in a Federal penitentiary in El Paso, Texas.

     On March 6, 1997, respondent’s Chief Counsel Office in New

Orleans, Louisiana, received a proposed joint notice of

deficiency for petitioner and Ms. Conn for 1993 through 1995 from

the Internal Revenue Service auditor who prepared the notice.

Included with the proposed notice were two pages which showed the

notice should be sent to the couple’s Slidell, Louisiana,

address2 as well as to a post office box at the Federal

penitentiary in El Paso, Texas.




     2
      Ms. Conn has resided at the Slidell address at all relevant
times. Petitioner has also resided at the Slidell address at all
relevant times other than the period he spent in prison.
                                -3-

     Respondent mailed petitioner and Ms. Conn a joint notice of

deficiency dated April 8, 1997, at their Slidell address.

Respondent determined that petitioner and Ms. Conn received

unreported embezzlement income in 1993 and that petitioner, but

not Ms. Conn, was liable for a fraud penalty under section 6663.

Petitioner does not recall receiving a notice of deficiency for

1993.   Ms. Conn does not recall providing petitioner a copy of

the 1993 notice of deficiency at any time between April 8 and

July 10, 1997.

     In response to the notice of deficiency Ms. Conn, but not

petitioner, timely filed a petition with this Court on July 10,

1997.   Before trial respondent conceded that under the provisions

of section 6015 Ms. Conn was not liable for the deficiency, and

the Court entered a decision based on the parties’ settlement.

     On September 9, 1997, respondent assessed the 1993 income

tax deficiency and section 6663 penalty against petitioner.

Petitioner was released from prison in February 1998.   On January

16, 2003, respondent issued petitioner two Notices of Federal Tax

Lien Filing and Your Right to a Hearing Under IRC 6320 for 1993.

On February 7, 2003, respondent issued petitioner a Final Notice

of Intent to Levy and Notice of Your Right to a Hearing for 1993.

     On February 15, 2003, petitioner timely requested an Appeals

hearing pursuant to sections 6320 and 6330.   During his hearing

petitioner sought to challenge the 1993 liability.   Petitioner
                                -4-

took the position that although he was convicted of embezzlement,

he did not direct the embezzled funds to himself or use those

funds for personal purposes.   On January 18, 2007, respondent’s

Appeals officer issued petitioner a Notice of Determination

Concerning Collection Actions Under Section 6320 and 6330.    The

Appeals officer determined that petitioner was precluded from

challenging the 1993 liability because he failed to file a

petition with this Court in response to the notice of deficiency

dated April 8, 1997.

                            Discussion

     Before the Commissioner may levy on any property or property

right of a taxpayer, the taxpayer must be provided written notice

of the right to request a hearing, and such notice must be

provided no less than 30 days before the levy is made.    Sec.

6330(a).   Section 6320(a) requires that the Commissioner furnish

the taxpayer with written notice of the filing of a Federal tax

lien within 5 business days after the lien is filed.    Section

6320 further provides that the taxpayer may request an Appeals

hearing within 30 days beginning on the day after the 5-day

period described above.   Sec. 6320(a)(3)(B), (b)(1).   If the

taxpayer requests a hearing under either section 6320 or 6330, an

Appeals officer of the Commissioner must hold the hearing.    Secs.

6320(b)(1), 6330(b)(1).   Within 30 days of the issuance of the
                                 -5-

Appeals officer’s determination, the taxpayer may seek judicial

review of the determination.    Sec. 6330(d)(1).

      At the hearing the taxpayer may raise any relevant issue

relating to the unpaid tax or the proposed levy, including

appropriate spousal defenses, challenges to the appropriateness

of collection actions, and offers of collection alternatives.

Sec. 6330(c)(2)(A).    Section 6330(c)(2)(B) limits the taxpayer’s

ability to challenge the underlying tax liability during the

hearing.    Specifically, the taxpayer may “raise at the hearing

challenges to the existence or amount of the underlying tax

liability for any tax period if the person did not receive any

statutory notice of deficiency for such tax liability or did not

otherwise have an opportunity to dispute such tax liability.”

Id.

      Respondent argues that for purposes of section

6330(c)(2)(B), the mailing of a notice of deficiency to the

taxpayer’s last known address is sufficient.    Respondent is

mistaken.    Under section 6330(c)(2)(B), the receipt of a notice

of deficiency, not its mailing, is the relevant event.3   A

taxpayer is precluded from challenging the liability if the


      3
      For the purpose of asserting a deficiency in tax,
respondent is authorized to send a notice of deficiency to the
taxpayer. Sec. 6212(a). For that purpose, mailing a notice of
deficiency to the taxpayer’s last known address is sufficient
regardless of receipt or nonreceipt. Sec. 6212(b); Pietanza v.
Commissioner, 92 T.C. 729, 735-736 (1989), affd. without
published opinion 935 F.2d 1282 (3d Cir. 1991).
                                 -6-

taxpayer actually received a notice of deficiency in time to

petition this Court for a redetermination of the deficiency.4

Sec. 6330(c)(2)(B); Kuykendall v. Commissioner, 129 T.C. 77, 80

(2007); sec. 301.6330-1(e)(3), Q&A-E2, Proced. & Admin. Regs.         If

the taxpayer did not actually receive the notice in time to

petition this Court, the taxpayer is entitled to challenge the

underlying liability.     Kuykendall v. Commissioner, supra at 81-

82.

      A properly completed U.S. Postal Service Form 3877

reflecting the timely mailing of a notice of deficiency to a

taxpayer at the taxpayer’s correct address by certified mail,

absent evidence to the contrary, establishes that the notice was

properly mailed to the taxpayer.       United States v. Zolla, 724

F.2d 808, 810 (9th Cir. 1984); Coleman v. Commissioner, 94 T.C.

82, 90-91 (1990).   Furthermore, compliance with certified mail

procedures raises a presumption of official regularity with

respect to notices sent by the Commissioner.      See United States

v. Zolla, supra at 810.    If the presumption is raised and the

taxpayer does not rebut the presumption, the Court may find that

the taxpayer received the notice of deficiency, thus precluding

challenges to the underlying liability under section


      4
      If, however, the notice of deficiency was not received
because the taxpayer deliberately refused delivery, the taxpayer
may not seek to challenge the underlying tax liability at a sec.
6330 hearing or before this Court. Sego v. Commissioner, 114
T.C. 604, 611 (2000).
                                  -7-

6330(c)(2)(B).   See, e.g., Sego v. Commissioner, 114 T.C. 604,

611 (2000); Clark v. Commissioner, T.C. Memo. 2008-155.

     However, respondent has not produced any evidence, such as

U.S. Postal Service Form 3877, which shows that the notice of

deficiency was sent to petitioner at his address in prison, where

he resided at the time the notice was sent and during the period

in which to petition this Court.    Cf. Sego v. Commissioner, supra

at 610 (the Commissioner introduced into evidence Form 3877

indicating that the notice was sent to the taxpayers at their

correct address); Clark v. Commissioner, supra (same).

     Respondent’s argument that petitioner actually received the

notice of deficiency is based on the fact that Ms. Conn

petitioned this Court in response to the notice.    That Ms. Conn

petitioned this Court shows that she received the notice and that

it was mailed to the Slidell address.5   It does not show that

petitioner received the notice.

     The parties stipulated that petitioner does not recall

receiving a copy of the notice and that Ms. Conn does not recall

giving her husband a copy of the notice during the 90-day period

in which to petition this Court.    Respondent has failed to

     5
      That the notice of deficiency was sent to petitioner’s last
known address is not sufficient to establish that petitioner
actually received the notice. See Kuykendall v. Commissioner,
129 T.C. 77 (2007) (taxpayers were entitled to challenge the
underlying tax liability during their sec. 6330 hearing when the
notice of deficiency was mailed to their last known address, but
because petitioners had moved they did not receive the notice in
time to petition this Court).
                                 -8-

introduce any evidence indicating that petitioner received the

notice.   Therefore, on the preponderance of the evidence, we find

that petitioner did not actually receive the 1993 notice of

deficiency in time to petition this Court.    Accordingly,

petitioner was entitled to dispute the 1993 liability during his

section 6330 hearing.

     In cases where the taxpayer did not receive a notice of

deficiency for a particular year and did not have an opportunity

to challenge the underlying tax liability, we have remanded the

matter to the Commissioner’s Office of Appeals for a hearing

during which the taxpayer may dispute the liability.    See, e.g.,

Kuykendall v. Commissioner, supra at 82.     We shall do that in

this case as well.

     To reflect the foregoing,


                                       An appropriate order will be

                                 issued.
