                       T.C. Memo. 2004-240



                     UNITED STATES TAX COURT



            GEOFFREY K. CALDERONE, SR., Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 3563-03L.            Filed October 19, 2004.


     John T. Mulhall III and Thomas E. Redding, for petitioner.

     John T. Lortie and Kenneth A. Hochman, for respondent.



                       MEMORANDUM OPINION


     GERBER, Chief Judge:   Petitioner, pursuant to section

6330(d),1 seeks review of respondent’s determination to proceed

with collection (by means of levy) of petitioner’s unpaid 1995

Federal income tax liability.   The issue for our consideration is


     1
       Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect at all relevant times.
                               - 2 -

whether, in the context of a section 6330 proceeding, petitioner

is entitled to challenge the underlying tax liability for 1995.

The resolution of this issue depends upon whether petitioner

received a statutory notice of deficiency for his 1995 tax year

or otherwise had an opportunity to dispute such tax liability.

The parties agree that if we conclude that petitioner is entitled

to challenge the underlying tax liability, we should remand this

case to respondent’s Appeals Office to conduct a hearing under

the provisions of section 6330.

Background

     The parties’ stipulation of facts is incorporated by this

reference.   At the time of the filing of the petition in this

case, petitioner resided in Fort Lauderdale, Florida.    Beginning

in the mid-1980s, petitioner employed Arthur F. Jacob (Mr.

Jacob), a certified public accountant and attorney, to handle his

tax and certain financial matters.     Mr. Jacob, through 2002, had

a power of attorney from petitioner.    Petitioner trusted Mr.

Jacob and relied on him exclusively with respect to all tax

matters.   For the tax years 1993, 1994, and 1996 specifically,

Mr. Jacob represented petitioner before the Internal Revenue

Service on many occasions.   Any time petitioner received any

document from respondent, he would immediately contact Mr. Jacob

to find out what needed to be done.    In addition, petitioner and

Mr. Jacob often socialized together and had common friends.
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     Respondent, by means of a September 17, 1998, certified

letter, sent a statutory notice (the notice) to petitioner and

his former wife, Mary Elizabeth Connor (Ms. Connor), determining

a 1995 income tax deficiency and additions to tax.   Respondent

produced a copy of the notice addressed to petitioner, but no

further proof of delivery.   Mr. Jacob received a copy of the

notice.   At the time the notice was mailed, petitioner and Ms.

Connor did not reside at the same address.   Although respondent

contends that the notice was mailed to petitioner’s home,

petitioner claims to have never received it.   Petitioner claims

to have seen it only years later in his attorney’s office.    Thus,

he did not petition this Court for a redetermination of the

deficiency.

      Ms. Connor received the notice of deficiency in or around

September 1998.   Her affidavit states that she immediately spoke

about the matter with petitioner and that petitioner indicated

Mr. Jacob “had things under control”, though petitioner and Mr.

Jacob claim they did not speak about the notice during this

period.

     On September 22, 1998, however, Mr. Jacob did protect

himself with respect to Ms. Connor by sending her a letter

advising that his office had received a certified letter from the

Internal Revenue Service (IRS).   Mr. Jacob’s letter informed Ms.

Connor that the certified letter contained “a proposed Notice of
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Deficiency for tax year 1995” for petitioner and Ms. Connor, but

that he would not be representing her.   Mr. Jacob also sent a

copy of his letter to petitioner.   Petitioner, however, has no

recollection of receiving the letter, and both petitioner and Mr.

Jacob deny discussing it.   On her own, Ms. Connor petitioned this

Court seeking a redetermination of the 1995 deficiency

determination.

     With respect to petitioner, Mr. Jacob did not file a

petition on his behalf or take any other action to advise him of

his available options with respect to the 1995 notice of

deficiency.   Mr. Jacob attempted to convince the Court that it

was not his normal practice to file petitions without being asked

by the client, and the receipt of a copy of a notice of

deficiency regarding a client for whom he held a power of

attorney did not “obligate [him] to do anything”.

     Thus, the 1995 tax liability was never challenged by

petitioner, and on February 4, 1999, respondent assessed the

amount of income tax due for 1995 against petitioner.

Respondent’s internal documents show several unsuccessful

attempts in 1999 and 2000 to try to reach Mr. Jacob regarding

collection actions.   On June 27, 2001, respondent issued a Final

Notice of Intent to Levy (which petitioner did receive), advising

petitioner of the proposed collection of his outstanding 1995

income tax liability.   On July 9, 2001, respondent received a
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Form 12153, Request for a Collection Due Process Hearing, which

was submitted by Mr. Jacob, for petitioner’s 1995 tax year.

     In early 2002, Mr. Jacob told petitioner that he had been

successful in resolving petitioner’s income tax matters before

respondent and that he owed no tax liability.   Mr. Jacob had not

in fact achieved such success, and, in or around May or June

2002, petitioner and petitioner’s current wife began questioning

the notices they were still receiving pertaining to the

collection hearings.   On September 9, 2002, petitioner contacted

an Appeals officer at the IRS claiming this was the first time he

knew the case was in Appeals.   Petitioner discontinued Mr.

Jacob’s representation and retained Rutherford Mulhall, P.A., to

represent him in further proceedings.   In addition, petitioner

filed suit against Mr. Jacob asserting various theories of

negligence and malpractice.

Discussion

     The parties agree that this case should be remanded for

further consideration of the underlying merits of petitioner’s

1995 tax liability if we hold that petitioner did not receive a

1995 notice of deficiency or otherwise have the opportunity to

dispute the 1995 tax liability.   This case presents a curious

factual situation, because it appears that petitioner’s

representative (who held a power of attorney and upon whom

petitioner relied for financial and tax matters) failed to
                               - 6 -

contest the notice or advise petitioner of the notice or his

rights in regard thereto.   The effect of this, according to

petitioner, was that he did not receive a notice of deficiency or

have the opportunity to dispute his 1995 income tax liability.

I.   Legal Background

      Section 6331(a) authorizes the Commissioner to levy on

property and property rights of a taxpayer liable for taxes who

fails to pay them within 10 days after notice and demand for

payment. Sections 6331(d) and 6330(a), however, require the

Secretary to send written notice to the taxpayer of the intent to

levy and of the taxpayer’s right to a hearing prior to the

collection activity.

      Section 6330(c)(1) requires that the Appeals officer obtain

verification that the requirements of any applicable law or

administrative procedure have been met.    Section 6330(c)(2)(A)

provides that the taxpayer may raise at the hearing “any relevant

issue relating to the unpaid tax or the proposed levy” including

spousal defenses, challenges to the appropriateness of collection

actions, and alternatives to collection.

      The underlying tax liability may be questioned if the

taxpayer “did not receive any statutory notice of deficiency for

such tax liability or did not otherwise have an opportunity to

dispute such tax liability.”   Sec. 6330(c)(2)(B).   For purposes

of section 6330(c)(2)(B), receipt of a statutory notice of
                                - 7 -

deficiency means receipt in time to petition this Court for

redetermination of the deficiency asserted in such notice.    Sec.

301.6330-1(e)(3), Q&A-E2, Proced. & Admin. Regs.   Section

6330(c)(2)(B) contemplates actual receipt of the notice of

deficiency by the taxpayer.    See Tatum v. Commissioner, T.C.

Memo. 2003-115.

  The parties agree that respondent has the burden of showing

that petitioner either received the notice of deficiency or

otherwise had an opportunity to dispute the tax liability.

II.   Analysis

      A.   Receipt of the Notice of Deficiency

      Respondent argues that the notice of deficiency was sent to

petitioner’s last known address and that petitioner failed to

produce any evidence showing that he did not receive the notice

of deficiency in a timely manner.    However, petitioner points out

that respondent has failed to produce any evidence that the U.S.

Postal Service (USPS) attempted to deliver the notice of

deficiency or that petitioner refused delivery.

      Respondent also argues that petitioner’s allegations are

insufficient to override the “presumption of receipt” or delivery

as described in Sego v. Commissioner, 114 T.C. 604, 611 (2000).

Absent clear evidence to the contrary, USPS employees are

presumed to properly discharge their official duties, justifying

the conclusion that the statutory notice was sent and that
                                  - 8 -

attempts to deliver were made in the manner contended by

respondent.    Id.   Further, in the context of a section 6330

proceeding, taxpayers cannot defeat “actual receipt” by

deliberately refusing delivery of a notice of deficiency.        Id.;

see also Hochschild v. Commissioner, T.C. Memo. 2002-195 (raising

presumption of delivery when several attempts at delivery were

made, and the notice went unclaimed).

       However, the facts we consider here are more analogous to

those in Tatum v. Commissioner, T.C. Memo. 2003-115.     In that

case, this Court found it significant that the USPS made only one

attempt at delivery and that the taxpayer did not intentionally

refuse delivery, distinguishing the case from Sego where there

were multiple attempts to deliver and the taxpayer intentionally

refused delivery.     Id.   Moreover, the taxpayers in Tatum credibly

testified that they did not receive a notice or know the USPS was

attempting to deliver one.      Id.

       In this case, even though it was shown that the notice was

addressed to petitioner, respondent has not introduced evidence

showing that the notice was submitted to the USPS for delivery at

all.    Unlike Sego, where it was shown that delivery was attempted

several times, respondent has not shown a single attempt at

delivery.    If Postal Service employees properly discharged their

official duties, respondent would have received a signed

certified mail receipt or a returned notice of deficiency.
                                - 9 -

Respondent has not offered evidence of certified mail or of an

attempt to deliver the notice of deficiency.    Moreover,

respondent has produced no evidence that petitioner intentionally

refused delivery.   Finally, petitioner’s uncontroverted testimony

states that he did not receive a notice of deficiency or know

that the USPS was attempting to deliver one to him.

     In light of (1) the absence of evidence of any attempted

delivery by the USPS, a certified mail receipt, or an unclaimed

or refused notice of deficiency, or (2) the uncontradicted

testimony that petitioner did not receive the notice of

deficiency, respondent has not shown that petitioner actually

received the notice, despite the presumption of regularity in

delivery.

     B.   Otherwise Had an Opportunity To Dispute

     Respondent contends that petitioner had the opportunity to

dispute the liability because Mr. Jacob timely received the

notice of deficiency and could have filed a Tax Court petition on

petitioner’s behalf.    Respondent also contends that petitioner

was sent a copy of correspondence from Mr. Jacob to Ms. Connor

regarding the notice.    Further, respondent claims petitioner

communicated with Ms. Connor after she timely received the

notice.
                               - 10 -

     Petitioner contends that Mr. Jacob’s receipt of a copy of

the notice of deficiency cannot be imputed to petitioner because

Mr. Jacob did not forward it to petitioner, discuss it with

petitioner, or file a petition with this Court.   Petitioner also

contends that there is no evidence showing that Ms. Connor

specifically informed petitioner that she had received the notice

of deficiency.

     Regardless of whether petitioner was sent a copy of the

letter that Mr. Jacob wrote to Ms. Connor, the evidence does not

support a finding that petitioner actually received notification

of the deficiency notice.   Ms. Connor’s claim that petitioner

told her Mr. Jacob was taking care of the matter was presented in

an affidavit, and respondent did not call her as a witness to

provide petitioner the opportunity to cross-examine her

testimony.   Therefore, respondent has not adequately shown that

petitioner knew about the notice.

     The cases respondent relies upon in support of the position

that a taxpayer can be held liable for an agent’s act or failure

to act are situations in which the principal claimed that the

agent acted without authority or approval, but where the court

ultimately found that the agent acted with such authority or

approval.    See Adams v. Commissioner, 85 T.C. 359 (1985); Kraasch

v. Commissioner, 70 T.C. 623 (1978).    However, these cases do not

focus on the question of whether the taxpayer has the opportunity
                                - 11 -

to dispute an underlying tax liability when the agent fails to

act or acts in a manner contrary to what is appropriate in the

principal-agent relationship.

     We find it curious that Mr. Jacob would notify the client’s

ex-wife stating he was not representing her and then never

discuss the notice with the client.      It would also be odd for the

client, whose established practice was to contact his trusted

adviser after receiving tax correspondence (and who socializes

with that adviser), not to discuss the deficiency notice

mentioned in a letter to his ex-wife.

     Although Mr. Jacob testified that it was not his normal

practice to file a petition in the Tax Court on behalf of a

client without being asked by the client, we find his testimony

to be inconsistent with facts indicating that Mr. Jacob

exclusively represented petitioner before the IRS before the 1995

tax year.   Moreover, Mr. Jacob’s statement is self-serving and

entitled to less weight, considering that at the time of the

trial in this case, Mr. Jacob continued to be embroiled in

litigation with petitioner.   We also find incredible Mr. Jacob’s

contention that even though he had a power of attorney on file

with the IRS, he was not obligated to act on behalf of his client

when he received correspondence from the IRS, particularly when

he knew that petitioner relied on him exclusively to resolve all

tax matters.
                               - 12 -

       Moreover, in 2002, Mr. Jacob advised petitioner that his

1995 tax liability had been resolved when in fact he had done

nothing to resolve the underlying tax liability and knew that the

matter was set for a collection due process hearing.    While this

deception in 2002 does not directly show that petitioner was

prejudiced by Mr. Jacob’s conduct (or lack thereof) in the period

during which petitioner had the opportunity to dispute the

underlying liability, it does demonstrate that Mr. Jacob was not

forthright in handling petitioner’s affairs and confirms that Mr.

Jacob realized that he had an obligation to act on the matter

sooner.

        Under all of these circumstances, respondent’s argument

relying on petitioner’s knowledge imputed from others is

insufficient to show that petitioner had an opportunity to

dispute the 1995 liability.    Petitioner trusted and relied

exclusively on Mr. Jacob to handle matters before the IRS while

Mr. Jacob kept information from petitioner and was intentionally

not representing petitioner’s interest.    Accordingly, petitioner

did not otherwise have an opportunity to dispute the 1995

liability.

III.    Conclusion

       Respondent has not met his burden of showing that petitioner

received the notice of deficiency or otherwise had the

opportunity to dispute the tax liability.    Thus, petitioner is
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entitled to challenge the underlying tax liability.    As such, it

is unnecessary to decide the remaining issue of whether

respondent abused his discretion by denying petitioner’s request

to consider the underlying merits of the 1995 tax liability.      In

accordance with the parties’ agreement, this case will be

remanded to respondent’s Appeals Office to conduct a hearing in

accordance with section 6330.

     To reflect the foregoing,


                                      An appropriate order will

                                 be issued.
