                       T.C. Memo. 2008-82



                     UNITED STATES TAX COURT



                   THOMAS BUTTI, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 11084-02L.              Filed April 3, 2008.



     Thomas Butti, pro se.

     Kevin M. Murphy, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COLVIN, Chief Judge:    Respondent sent a Notice of

Determination Concerning Collection Action(s) Under Section 63201

and/or 6330 to petitioner with respect to a proposed levy to

collect petitioner’s unpaid income taxes for tax years 1989,


     1
        Section references are to the Internal Revenue Code as
amended.
                                -2-

1990, and 1999.2   Petitioner timely filed a petition seeking our

review of respondent’s determination.

     The issue for decision is whether respondent’s determination

to collect tax from petitioner for tax years 1989 and 1990 was an

abuse of discretion.   We conclude that it was because, as

discussed below, the record does not show that a notice of

deficiency had been issued to petitioner with respect to those

years.

                         FINDINGS OF FACT3

A.   Petitioner

     Petitioner was incarcerated in the Wyoming Correctional

Facility, Attica, New York, when the petition was filed.     He

lived in the State of New York before and after he was

incarcerated.

     Before he was incarcerated, petitioner was a licensed

chiropractor practicing in Yonkers, New York.   On August 18,

1994, he pleaded guilty to offering a false instrument for filing

in the first degree, insurance fraud in the second degree, grand

larceny in the second degree, and attempted grand larceny in the

third degree.




     2
         Petitioner’s tax liability for 1999 is no longer at
issue.
     3
       For convenience, some of the findings of fact which
appeared in Butti v. Commissioner, T.C. Memo. 2006-66, are
repeated here.
                                 -3-

B.   The Notice of Deficiency for 1989 and 1990

     Respondent sent article No. Z 009 132 166 by certified mail

to petitioner at the Gowanda Correctional Facility, P.O. Box 311,

Gowanda, NY 14070 (Gowanda) and article No. Z 009 132 167 by

certified mail to petitioner at 47 Malverne Road, Scarsdale, NY

10583, on December 30, 1998.    Respondent recorded the mailing on

a U.S. Postal Service Form 3877, Acceptance of Registered,

Insured, C.O.D. and Certified Mail, or its equivalent, a

certified mail list, which stated at the top:   “Statutory Notice

of Deficiency for the years indicated have been sent to the

following taxpayers”.   Gowanda received that item on January 4,

1999.   Petitioner was not housed at Gowanda from October 22,

1998, to January 20, 1999.

     Gowanda maintained a log for mail pertaining to inmates’

legal proceedings.   Petitioner signed that log in order to

receive two items of certified mail on January 21, 1999.    The log

does not state the certified mail numbers of the items he

received.   Petitioner received various articles of certified mail

from respondent while he was incarcerated at Gowanda.

C.   The Section 6330 Hearing

     Respondent issued a Final Notice, Notice of Intent to Levy

and Notice of Your Right to a Hearing, on November 8, 2000.     In

the final notice, respondent stated that petitioner owed
                                 -4-

$270,087.60 for 1989, $108,044.26 for 1990, and $5,507.84 for

1999.

     On December 1, 2000, petitioner sent to respondent a Form

12153, Request for a Collection Due Process Hearing.   Petitioner

was incarcerated at the Wyoming Correctional Facility at that

time.   He attached an explanation in which he said he had not

received the notice of deficiency and that he was not liable for

tax in the amounts stated in the notice.

     One of respondent’s Appeals officers was assigned to

petitioner’s case on February 12, 2002.    The Appeals officer kept

an activity log for the case in which he said:   (1) The case is

very complex; (2) petitioner claims that he had no prior

opportunity to contest the underlying liability and he did not

receive the notice of deficiency; and (3) the “administrative

file indicates that a defaulted * * * [notice of deficiency] is

in [the administrative] file”.

     On May 1, 2002, the Appeals officer sent a letter to

petitioner at the Wyoming Correctional Facility stating in part:

          We scheduled the conference you requested on this
     case for * * * [9:30 a.m., May 21, 2002, at room 1137,
     290 Broadway, New York, New York]. Please let me know
     within 10 days from the date of this letter whether
     this is convenient. If it is not, I will be glad to
     arrange another time.

          Our meeting will be informal and you may present
     facts, arguments, and legal authority to support your
     position. If you plan to discuss new material, please
     send me copies at least five days before our meeting.
                                  -5-

     You should prepare statements of fact as affidavits, or
     sign them under penalties of perjury. * * *.

The Appeals officer knew that petitioner was incarcerated when he

sent that letter.   On May 15, 2002, petitioner wrote the

following to the Appeals officer:

          I received your May 1, 2002, correspondence
     affixed hereto, and I respond accordingly. I was
     transferred to the facility listed below and * * *
     Wyoming did not forward your correspondence
     expeditiously. Therefore, I apologize for the delayed
     response, but it is with just cause.

          I commence by thanking you for scheduling a
     conference on this case. Unfortunately, I am faced
     with two challenges: (1) I am confined to solitary
     until July 16, 2002 and I do not have access to a
     telephone, legal documents, and/or transportation to
     even meet with you at this time. Furthermore and due
     to my indigency status as granted by both Federal and
     State courts, I am unable to retain an attorney,
     certified public accountant or person enrolled to
     practice before the Internal Revenue Service. I am
     currently petitioning a professional willing to assist
     pro bono.

       *      *        *      *         *   *      *        *

     I humbly request a moratorium until I can either (1)
     access my complete file post July 16, 2002, (2) obtain
     a pro bono accountant or attorney or, (3) complete my
     due process right to a full and fair opportunity to
     appeal my criminal case. * * *.

     Petitioner did not meet with the Appeals officer in New York

on May 21, 2002.    On that day, the Appeals officer wrote in his

activity log that he had reviewed respondent’s transcripts of

account for petitioner’s tax years 1989 and 1990, including Forms

4340, Certificate of Assessments, Payments, and Other Specified
                                  -6-

Matters, and concluded that respondent had followed

administrative and procedural requirements.

     The Appeals officer received and read petitioner’s May 15,

2002, letter on May 22, 2002.    Even though he told petitioner he

would reschedule the hearing at petitioner’s request, the Appeals

officer did not do so.   On June 4, 2002, respondent issued a

Notice of Determination Concerning Collection Action(s) Under

Section 6320 and/or 6330.    In it, respondent determined that

respondent’s collection action with respect to petitioner’s tax

years 1989, 1990, and 1999 was proper.

                                OPINION

1.   Procedural Background

     In Butti v. Commissioner, T.C. Memo. 2006-66, we held that

respondent had not provided petitioner an opportunity for a

hearing as required by section 6330(b) and that petitioner had

not received a notice of deficiency and had no prior opportunity

to dispute the underlying tax liability.

     On April 10, 2006, we remanded this case to respondent to

provide petitioner an opportunity for a hearing as required by

section 6330(b).   We also ordered the parties to provide status

reports by July 7, 2006.    By order dated October 18, 2006, the

Court also required respondent to provide to petitioner so that

petitioner would receive by October 20, 2006, copies of the

notice of deficiency for 1989 and 1990 and Forms 4340 for those
                                 -7-

years.   Respondent subsequently reported that (1) Respondent was

unable to provide copies of the notices of deficiency issued to

petitioner for 1989 and 1990 because the administrative files for

those tax years are no longer available; and (2) respondent had

provided petitioner with copies of Forms 4340 for 1989 and 1990

in September 2005, as part of the stipulation process before

trial.

2.   Requirement of Issuance of a Notice of Deficiency

     The Secretary generally may not assess a deficiency in tax

unless the Secretary has first mailed a notice of deficiency to

the taxpayer.4   Sec. 6213(a).

     Respondent does not contend that any of the statutory

exceptions to issuing a notice of deficiency applies here.   Thus,

respondent may not proceed with collection unless respondent

issued a notice of deficiency.   See Manko v. Commissioner, 126

T.C. 195, 200-201 (2006); Freije v. Commissioner, 125 T.C. 14,

34-37 (2005).




     4
        A deficiency notice is not required to assess taxes where
there is no deficiency. For example, the Secretary may assess
without a deficiency notice the amount of tax shown due on a
return. Sec. 6201(a)(1).
                                 -8-

3.   Whether Respondent Issued a Notice of Deficiency to
     Petitioner

     Respondent contends that a notice of deficiency was issued

to petitioner.   We disagree.

     Respondent bears the burden of proving by competent and

persuasive evidence that the notice of deficiency was properly

mailed.   Coleman v. Commissioner, 94 T.C. 82, 90 (1990); August

v. Commissioner, 54 T.C. 1535, 1536-1537 (1970).   The act of

mailing may be proven by documentary evidence of mailing or by

evidence of respondent’s mailing practices corroborated by direct

testimony.   Coleman v. Commissioner, supra.

     Where the existence of the notice of deficiency is not in

dispute, a properly completed Form 3877 by itself is sufficient,

absent evidence to the contrary, to establish that the notice was

properly mailed to a taxpayer.    United States v. Zolla, 724 F.2d

808, 810 (9th Cir. 1984); Coleman v. Commissioner, supra at 91.

However, where, as here, the existence of the notice of

deficiency is in dispute, we have previously rejected the

Commissioner’s reliance on the presumption of regularity based

solely on the Form 3877 under circumstances similar to those

present here.    Pietanza v. Commissioner, 92 T.C. 729 (1989),

affd. without published opinion 935 F.2d 1282 (3d Cir. 1991);

see also Koerner v. Commissioner, T.C. Memo. 1997-144 (a Form

3877 does not by itself establish that the Commissioner mailed a

notice of deficiency); cf. Spivey v. Commissioner, T.C. Memo.
                                 -9-

2001-29 (the Commissioner produced a copy of the notice of

deficiency and witnesses described how notices of deficiency are

produced and mailed), affd. 29 Fed. Appx. 575 (11th Cir. 2001).

     Respondent contends that Pietanza is distinguishable;

however, respondent has not shown that the facts present in this

case differ in any material way from those in Pietanza.

In Pietanza, as here, the Commissioner (1) lost the

administrative file, (2) had no copies of a notice of deficiency,

(3) did not establish that a final notice of deficiency ever

existed, (4) relied on a Postal Service Form 3877, and (5) did

not introduce evidence showing how the Commissioner’s personnel

prepare and mail notices of deficiency.

     The Commissioner in Pietanza produced a draft copy of the

notice of deficiency but did not establish that a final notice

ever existed.   Here, the Appeals officer testified that he saw a

copy of the notice of deficiency, but he did not say whether it

was a final version.   Further, his testimony is curious in the

light of the contemporaneous entry in his log, which states only

that the administrative file indicates that a defaulted notice of

deficiency is in the administrative file.   We do not understand

why the Appeals officer would have chosen that language if he had

seen the notice of deficiency.   Thus, as in Pietanza, the record

does not show that respondent issued a final notice of
                               -10-

deficiency.   Respondent has provided no reason that this case is

not bound by our holding in Pietanza.

4.   Conclusion

     We conclude that respondent’s determination to proceed with

collection of petitioner’s tax liabilities for 1989 and 1990 was

in error and thus an abuse of discretion because respondent

failed to show that respondent issued a notice of deficiency

before assessing petitioner’s taxes.


                                           Decision will be

                                      entered for petitioner.
