                          T.C. Memo. 1998-108



                       UNITED STATES TAX COURT



         GREGORY POWELL & ARAMINTA D. MORTON, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent


     Docket No. 16476-97.               Filed March 17, 1998.


     Gregory Powell, pro se.

     Ruth Perez, for respondent.


                          MEMORANDUM OPINION


     PANUTHOS, Chief Special Trial Judge:       This case was heard

pursuant to the provisions of section 7443A(b)(3) and Rules 180,

181, and 182.1




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


     This case is before the Court on respondent's motion to

dismiss for lack of jurisdiction, filed pursuant to Rule 53.

Respondent contends that dismissal is warranted on the ground

that the petition was not filed within the time prescribed by

sections 6213(a) and 7502.   In contrast, petitioners contend

respondent's motion to dismiss should be denied on the theory

that the original notice of deficiency was rescinded and

supplanted with an "amended" notice of deficiency which is the

subject of their timely filed petition.

Background

     At the time the petition was filed with the Court,

petitioners resided in Upper Marlboro, Maryland.

     On April 28, 1997, respondent mailed a joint notice of

deficiency to petitioners determining a deficiency in their

Federal income tax for 1994 in the amount of $2,392.    Included

with the notice of deficiency was a Form 4549 (also known as an

examination report) dated March 13, 1997.   The examination report

reveals that the deficiency is attributable primarily to the

disallowance of Schedule C deductions.

     At the time the notice of deficiency was issued in this

case, petitioners were advised that respondent's agent would

continue to review materials submitted by petitioners for the

purpose of substantiating their claimed deductions.    In this

regard, on June 4, 1997, respondent's agent issued a revised
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examination report to petitioners proposing to reduce the amount

of the previously determined deficiency to $2,227.

     Upon receiving the revised examination report, petitioners

believed that the notice of deficiency dated April 28, 1997, had

been rescinded, that the revised examination report was intended

to serve as an "amended" notice of deficiency, and that the 90-

day period for filing a timely petition for redetermination with

the Court would run from June 4, 1997.

     On August 4, 1997, petitioners filed a joint petition for

redetermination with the Court.   Attached to the petition is a

copy of the examination report dated June 4, 1997.   The petition

was delivered to the Court in an envelope bearing a U.S. Postal

Service postmark date of July 31, 1997.

     In response to the petition, respondent filed a motion to

dismiss for lack of jurisdiction on the ground that the petition

was not timely filed.   Petitioners filed an objection to

respondent's motion to dismiss alleging that "a New and amended

Deficiency Notice dated June 4, 1997 was mailed to Petitioner,

but, a NEW Certified Letter which was to be mailed along with the

NEW Deficiency Notice was never issued".   Respondent filed a

response to petitioners' objection denying that the revised

examination report issued to petitioners on June 4, 1997,

constituted a "new and amended" notice of deficiency or served to

rescind the notice of deficiency dated April 28, 1997.
                                - 4 -


Petitioners filed a response to respondent's response which

states in pertinent part as follows:

     Petitioners were informed by I.R.S. Auditor that
     additional information received late was being
     considered and processed. This action by the I.R.S.
     Auditor constitutes an implied extension on the part of
     the Respondent. Petitioners would not have any way of
     knowing what if any deduction had to be petitioned to
     the Court until a final decision was rendered by the
     Auditor. * * *

     A hearing was conducted at the Court's motions session in

Washington, D.C.   Petitioner Gregory Powell and counsel for

respondent appeared at the hearing and presented argument

respecting respondent's motion to dismiss.   During the hearing,

Mr. Powell conceded that the revised examination report was

mailed to him without a cover letter and that he did not

otherwise discuss the continuing validity of the April 28, 1997,

notice of deficiency with respondent's agent.   There is no

evidence in the record that petitioners ever requested Form 8626

(Agreement to Rescind Notice of Deficiency) from respondent or

that respondent's agents ever proffered Form 8626 to petitioners.

Discussion

     The Court's jurisdiction to redetermine a deficiency depends

upon the issuance of a valid notice of deficiency and a timely

filed petition.    Rule 13(a), (c); Monge v. Commissioner, 93 T.C.

22, 27 (1989); Normac, Inc. & Normac Intl. v. Commissioner, 90

T.C. 142, 147 (1988).   Section 6212(a) expressly authorizes the

Commissioner, after determining a deficiency, to send a notice of
                                 - 5 -


deficiency to the taxpayer by certified or registered mail.      A

notice of deficiency is sufficient if it is mailed to the

taxpayer at the taxpayer's last known address.     Sec. 6212(b)(1).

Pursuant to section 6213(a), the taxpayer has 90 days (or 150

days if the notice is addressed to a person outside of the United

States) from the date that the notice of deficiency is mailed to

file a petition with the Court for a redetermination of the

deficiency.

         Section 6212(d) authorizes the Commissioner, with the

consent of the taxpayer, to rescind any notice of deficiency

mailed to the taxpayer.     If a notice of deficiency is rescinded,

the taxpayer has no right to file a petition with the Court based

on such a notice.     Moreover, a notice that is rescinded is not

treated as a notice of deficiency for purposes of section

6212(c)(1), which restricts the issuance of further notices of

deficiency.     Sec. 6212(d).

     The parties do not dispute that the notice of deficiency was

mailed to petitioners at petitioners' last known address, nor do

the parties dispute that the petition was mailed and filed more

than 90 days after the issuance of such notice.2    Respondent

contends that this case should be dismissed for lack of


     2
        The 90-day period for filing a timely petition for
redetermination with respect to the notice of deficiency dated
Apr. 28, 1997, expired on July 28, 1997. However, the petition
was not mailed to the Court until July 31, 1997.
                              - 6 -


jurisdiction because the petition was not filed within the time

provided by sections 6213(a) and 7502.   In contrast, petitioners

contend that the notice of deficiency was rescinded and

supplanted by the revised examination report dated June 4, 1997,

and that their petition was timely filed when measured from the

date of mailing of such report.

     Petitioners' contention that the notice of deficiency was

rescinded is similar to an argument that the Court considered and

rejected in Slattery v. Commissioner, T.C. Memo. 1995-274.     In

Slattery, we declined to find that the notice of deficiency had

been rescinded as follows:

          We now turn to the question of whether the notice
     of deficiency was rescinded. Section 6212(d) provides
     that the Secretary may, with the consent of the
     taxpayer, rescind any notice of deficiency mailed to
     the taxpayer. Clearly, the statute requires mutual
     consent by the Secretary and the taxpayer to effect a
     rescission of a notice of deficiency.4 We know of no
     authority deeming a notice of deficiency rescinded in
     absence of a formal rescission. While the facts
     presented herein may suggest that respondent considered
     a rescission, she did not consent to a rescission.
     Returning a case file from the 90-day section of
     respondent's office to the examination division for
     purposes of a conference is not tantamount to a
     rescission, even though the conference, due to
     miscommunication, was eventually scheduled for a date
     subsequent to the running of the 90-day period.
     Accordingly, we conclude that the notice of deficiency
     involved herein was not rescinded pursuant to section
     6212(d).
     _________________
          4
            The Internal Revenue Service has provided
     guidance to taxpayers wishing to consent to the
     rescission of a notice of deficiency. See Rev. Proc.
     88-17, 1988-1 C.B. 692. This revenue procedure
     requires the taxpayer to request Form 8626, Agreement
                               - 7 -


     to Rescind Notice of Deficiency, which becomes
     effective when executed on behalf of the Commissioner.

     Although petitioners in the present case may have believed

that the notice of deficiency had been rescinded, the rescission

of a notice of deficiency is not a function of the taxpayer's

subjective belief.   Rather, the rescission of a notice of

deficiency requires mutual consent by the Commissioner and the

taxpayer, and such mutual consent must be objectively apparent.

     In the present case, there is no objective manifestation of

mutual consent by respondent and petitioners to rescind the

notice of deficiency.   In fact, there is no evidence that

respondent ever contemplated the rescission of such notice.

     Further consideration of a taxpayer's case after the mailing

of the notice of deficiency, coupled with respondent's concession

of a portion of the previously determined deficiency, does not

result in the rescission of the notice of deficiency.3   Hesse v.

Commissioner, T.C. Memo. 1997-333; Mullings v. Commissioner, T.C.

Memo. 1997-114; Slattery v. Commissioner, supra.   Accordingly, we

hold that the notice of deficiency was not rescinded pursuant to

section 6212(d).


     3
        Although Rev. Proc. 88-17, sec. 3.04(2), 1988-1 C.B. 692,
693, states that the Commissioner may (with the taxpayer's
consent) agree to rescind a notice of deficiency "If the taxpayer
submits information establishing the actual tax due to be less
than the amount shown in the notice", the revenue procedure is
permissive rather than mandatory and does not alter our holding
in this case.
                                - 8 -


       We now turn to petitioners' alternative contention that the

revised examination report dated June 4, 1997, constitutes a

second notice of deficiency.    In this regard, petitioners point

out that their petition was timely filed if measured from the

date of mailing of such letter.

       It is well established that the Court lacks jurisdiction

over a petition that is filed with respect to a letter from the

Commissioner to the taxpayer that was not intended to constitute

a notice of deficiency.    See Lerer v. Commissioner, 52 T.C. 358,

362-366 (1969); Schoenfeld v. Commissioner, T.C. Memo. 1993-303,

n.2.    In applying this principle in the present case, we are

satisfied that respondent did not intend for the revised

examination report to be considered a notice of deficiency.

Rather, the report merely served to advise petitioners that

respondent had considered the information that petitioners had

furnished and had concluded that such information provided

adequate substantiation for a small reduction in the amount of

the determination previously made.      The notice of deficiency

dated April 28, 1997 states in clear language that "This letter

is a NOTICE OF DEFICIENCY * * *.    * * * you have 90 days from the

above mailing date of this letter * * * to file a petition with

the United States Tax Court".    We note that there is no record of

a transmittal letter having been sent with the revised

examination report dated June 4, 1997.      Thus, there is nothing in
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this record indicating that petitioners were advised that the

revised examination report constituted a notice of deficiency or

that petitioners had additional time to file a petition.

Consequently, we hold that the revised examination report does

not constitute a second notice of deficiency.

Conclusion

     Because petitioners did not file their petition with the

Court within the time prescribed by sections 6213(a) and 7502, we

lack jurisdiction to redetermine petitioners' tax liability for

the year in issue.   Accordingly, we must grant respondent's

motion to dismiss for lack of jurisdiction.4

     To reflect the foregoing,

                                 An order granting respondent's

                          motion to dismiss for lack of

                          jurisdiction will be entered.




     4
        Although petitioners cannot pursue their case in this
Court, they are not without a judicial remedy. Specifically,
they may pay the tax, file a claim for refund with the Internal
Revenue Service, and, if their claim is denied, sue for a refund
in the appropriate Federal District Court or the United States
Court of Federal Claims. McCormick v. Commissioner, 55 T.C. 138,
142 (1970).
