                           T.C. Memo. 2002-209



                         UNITED STATES TAX COURT



              MICHAEL T. & LEONE CAREY, Petitioners v.
            COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9014-01L.                 Filed August 20, 2002.



     Michael T. Carey, pro se.

     Jeremy L. McPherson, for respondent.



                MEMORANDUM FINDINGS OF FACT AND OPINION


        LARO, Judge:   Petitioners petitioned the Court under section

6330(d) to review respondent’s determination as to a proposed

levy.    Respondent proposed the levy to collect Federal income tax

(including an accuracy-related penalty and interest) that he

determined petitioners owe for 1996.     Respondent issued a
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duplicate notice of deficiency to each petitioner for 1996, and

neither petitioner petitioned the Court with respect thereto.

     We must decide whether respondent may proceed with the

proposed levy.    We hold he may.   Section references are to the

applicable versions of the Internal Revenue Code.     Rule

references are to the Tax Court Rules of Practice and Procedure.

                          FINDINGS OF FACT

     Most facts were stipulated.     We incorporate by this

reference the parties’ stipulations of fact and the accompanying

exhibits.    We find those facts accordingly.   Petitioners resided

in California when the petition commencing this proceeding was

filed.

     On August 4, 1997, respondent received petitioners’ joint

1996 Federal income tax return.     Petitioners reported on that

return that their home address was 2205 Hilltop Drive #147,

Redding, California 96002 (Hilltop address).     The Hilltop address

was a private mailbox at which petitioners sometimes received

mail.    Since 1996, petitioners have also used a mailing address

at 1137 B Hartnell Avenue in Bella Vista, California (Hartnell

address).

     Respondent received petitioners’ 1998 Federal income tax

return on October 20, 1999, petitioners’ amended 1998 Federal

income tax return on February 4, 2000, and petitioners’ 1999

Federal income tax return on October 12, 2000.     Petitioners
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reported on each of those returns that their mailing address was

3041 Lawrence Road, Redding, California 96002 (Lawrence address).

Petitioners lived at the Lawrence address before 1996 with Ms.

Carey’s mother but did not live there in 1996 or in any

subsequent year.   In 1996, petitioners had converted the house at

the Lawrence address into a care home for disabled adults.   Mr.

Carey was the administrator of the care home, which was named

Sunshine Residential (Sunshine).

     Respondent’s revenue agent, Gil Akers, was assigned to audit

petitioners’ 1995 and 1996 taxable years.   He started auditing

those years together but subsequently bifurcated the audit into

its separate years.   As to 1996, respondent issued a duplicate

notice of deficiency to each petitioner on June 2, 2000.   The

notice determined that petitioners were liable for a $442,993

deficiency in income tax and a $88,598.60 accuracy-related

penalty under section 6662(a).    The basis of that determination

was respondent’s disallowance of $455,224 in business deductions,

his $648,443 increase in income stemming from four claimed

trusts, and his $1,066 increase in interest income.1   The claimed

trusts were named Home Health Services (Home Health), Residential

Management Services (Residential), Rancho Residential Program



     1
       Respondent conceded in his brief that petitioners’
understatement of interest income was $1,065 rather than $1,066.
We consider this concession to be immaterial to our decision.
Accordingly, we do not require a Rule 155 computation to reflect
this concession.
                                - 4 -

(Rancho), and Sunshine.    In 1996, Mr. Carey had sole signatory

authority on the bank accounts maintained for Home Health,

Residential, Rancho, and Sunshine.

     Respondent mailed the subject notices of deficiency to

petitioners at the Lawrence address by way of certified mail.

The United States Postal Service (USPS) attempted unsuccessfully

to deliver the notices to that address on Monday, June 5, 2000,

and Tuesday, June 13, 2000, and returned the notices to

respondent on July 20, 2000.    The USPS noted on the certified

envelopes that they were “unclaimed”.     On October 30, 2000,

respondent assessed the amount of the deficiency and accuracy-

related penalty against petitioners.

     On January 8, 2001, respondent mailed to petitioners as to

1996 a Letter 1058, Final Notice, Notice of Intent to Levy and

Notice of Your Right to a Hearing.      Respondent mailed the letter

to the Lawrence address.    One week later, respondent mailed to

petitioners as to 1996 a related Letter 3172, Notice of Federal

Tax Lien Filing and Your Right to a Hearing under IRC 6320.      That

letter was also mailed to the Lawrence address.

     On or about January 16, 2001, petitioners responded to

Letter 1058 by filing with the Commissioner a Form 12153, Request

for a Collection Due Process Hearing.     Petitioners listed on this

form that their address was the Lawrence address and stated that

they planned to challenge the amount of the unpaid taxes which
                                - 5 -

respondent alleged were owed.    On or about February 20, 2001,

petitioners responded to Letter 3172 by filing another Form

12153.   Petitioners listed in that form that their address was

the Hartnell address.    Petitioners requested from respondent in

both forms that he provide them with:    (1) A copy of the record

of assessment, (2) a copy of any record of any proceeding as to

the notice of assessment, and (3) a copy of any record of any

proceeding or administrative act, upon which respondent had

relied to determine that petitioners were liable taxpayers.

Before the instant judicial proceeding was commenced, respondent

did not provide petitioners with any of the requested

information.   During this proceeding, respondent provided

petitioners with the relevant Form 4340, Certificate of

Assessments, Payments, and Other Specified Matter.

     On May 22, 2001, the Internal Revenue Service Office of

Appeals held the requisite hearing with Mr. Carey under sections

6320 and 6330.   During the hearing, Mr. Carey requested a copy of

the notice of deficiency.    The Appeals officer did not give Mr.

Carey a copy of the notice of deficiency and did not allow Mr.

Carey to discuss either the notice of deficiency or the

deficiency itself.

     On June 8, 2001, respondent issued to petitioners a Notice

of Determination Concerning Collection Action(s) under Section

6320 and/or 6330.    Subsequently, in August 2001, petitioners
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filed with the Commissioner a Form 8822, Change of Address,

changing their address from the Lawrence address to the Hilltop

address.

                               OPINION

     In a proceeding commenced under section 6330(d), the Court

applies a de novo standard to redetermine a taxpayer’s underlying

tax liability, when and if at issue, and an abuse of discretion

standard to review certain other administrative determinations of

the Commissioner.    Sego v. Commissioner, 114 T.C. 604, 610

(2000).    Section 6330(c)(2)(B) provides that a taxpayer’s

underlying tax liability may be at issue only if he or she “did

not receive any statutory notice of deficiency for such tax

liability or did not otherwise have an opportunity to dispute

such tax liability.”

     Here, petitioners argue that they did not receive a notice

of deficiency for 1996 and that respondent never mailed a notice

of deficiency to them for 1996 at their last known address.

Petitioners allege that their last known address for purposes of

the notice of deficiency at hand was the address of an enrolled

agent named Tim Riley (Riley).    Petitioners allege that they had

filed with the Commissioner a writing designating Riley as their

authorized representative to receive all of their correspondence

from the Commissioner for 1995, 1996, and 1997.
                               - 7 -

     We disagree with petitioners’ arguments and are unpersuaded

by their allegations.   The record establishes that petitioners’

last known address for purposes of the notice of deficiency was

the Lawrence address.   See United States v. Zolla, 724 F.2d 808,

810 (9th Cir. 1984) (taxpayer’s last known address is the address

that appears on the taxpayer’s most recently filed Federal tax

return, unless the Commissioner is given clear and concise

notification of a different address); Abeles v. Commissioner,

91 T.C. 1019 (1988) (same); see also Lifter v. Commissioner,

59 T.C. 818, 821 (1973) (“taxpayer’s last known address may be

his office rather than his residence”).   See generally sec.

301.6212-1(a), Proced. & Admin. Regs. (Commissioner adopts the

rule of Zolla and Abeles, effective Jan. 29, 2001).     Given our

finding that petitioners’ most recent Federal tax return before

the issuance of the notice of deficiency listed their mailing

address as the Lawrence address, we conclude that the

Commissioner’s mailing of the notice of deficiency to that

address was appropriate.

     As to petitioners’ allegations as to Riley, we find them

unsubstantiated.   The record includes neither a copy of Form

2848, Power of Attorney and Declaration of Representative,

designating Mr. Riley as petitioners’ authorized representative

for 1996, nor any other credible evidence establishing a clear

and concise notification to the Commissioner that the Lawrence
                               - 8 -

address was not their mailing address for purposes of the notices

of deficiency.2

     In an attempt to establish that Riley was their authorized

representative for purposes of receiving all of their

correspondence from the Commissioner for 1996, petitioners rely

upon a piece of evidence that includes an undated letter.    In the

letter, respondent acknowledges that Riley is an authorized

representative for petitioners.   The letter, however, does not

indicate the year or years for which Riley is petitioners’

authorized representative or the time that any such

representation began.   Nor does the letter indicate that Riley is

petitioners’ authorized representative for purposes of receiving

all notices and other correspondence.

     Nor have petitioners persuaded us that they should not be

treated for purposes of section 6330 as receiving the notices of

deficiency.   Contrary to petitioners’ suggestion, the mere fact

that they never actually received a notice of deficiency for 1996

does not preclude the Court from concluding that the receipt

requirement of section 6330 was met.

     In Sego v. Commissioner, supra, we held that the petitioning

wife was precluded from challenging her underlying tax liability


     2
       Whereas petitioners did file a Form 8822 with respondent
on or about August 2, 2001, changing their address from the
Lawrence address to the Hilltop address, the notices of
deficiency were mailed to them on June 2, 2000.
                               - 9 -

under section 6330 although she did not actually receive a notice

of deficiency.   On the basis of Erhard v. Commissioner, 87 F.3d

273 (9th Cir. 1996), affg. T.C. Memo. 1994-344, and Patmon &

Young Profl. Corp. v. Commissioner, 55 F.3d 216, 218 (6th Cir.

1995), affg. T.C. Memo. 1993-143, we held that the conduct of the

wife and her husband “constituted deliberate refusal of delivery

and repudiation of their opportunity to contest the notices of

deficiency in this Court”.   Sego v. Commissioner, supra at 611;

accord Baxter v. Commissioner, T.C. Memo. 2001-300.   We believe

that the same principle applies here.   Although Mr. Carey

testified that he did not know that the Commissioner was

attempting to deliver a notice of deficiency to him and his wife,

the facts and circumstances of this case, coupled with our

observation of Mr. Carey during his testimony, lead us to

conclude that petitioners deliberately refused delivery of the

notice.   First, absent clear evidence to the contrary, employees

of the USPS are presumed to properly discharge their official

duties.   United States v. Chem. Found., Inc., 272 U.S. 1, 14-15

(1926) (“The presumption of regularity supports the official acts

of public officers and, in the absence of clear evidence to the

contrary, courts presume that they have properly discharged their

official duties.”).   Petitioners have not rebutted this

presumption as to the USPS’s attempted delivery of the notices of

deficiency.   Second, the Lawrence address housed a small business
                              - 10 -

for which Mr. Carey was the administrator.   The USPS had

attempted to deliver the notices of deficiency to that address on

two separate business days, and Mr. Carey had received previous

correspondence that the Commissioner had mailed to him at that

address.3

     Petitioners also argue that the proposed levy is invalid

because the Commissioner failed to give them at the hearing the

requested documents concerning the validity of the assessment.

We disagree that any such failure by the Commissioner invalidates

the proposed levy.   As we recently observed in Nestor v.

Commissioner, 118 T.C. 162, 166 (2002):    “Section 6330(c)(1) does

not require the Appeals officer to give the taxpayer a copy of

the verification that the requirements of any applicable law or

administrative procedure have been met.”   Moreover, although

petitioners did not receive the Form 4340 at the hearing, they

did receive it contemporaneously with their trial in this Court

and have not established in this proceeding any irregularity in

the assessment procedure that would raise a question about the

     3
       Even if petitioners’ underlying tax liability for 1996 was
at issue, petitioners have failed to prove that respondent’s
determination of their income tax liability was in error. In
addition, respondent has introduced enough evidence to support
his determination as to the accuracy-related penalty under sec.
6662(a), and petitioners have failed to disprove that
determination. See also Residential Mgmt. Servs. Trust v.
Commissioner, T.C. Memo. 2001-297, wherein the Court held:
(1) Income that petitioners reported and argued for 1995 was
attributable to Residential was assignable to them, and (2)
petitioners were liable for an accuracy-related penalty.
                                - 11 -

validity of the assessment.   We conclude, as we did in Nestor v.

Commissioner, supra at 167, that petitioners have suffered no

prejudice by their receipt of the Form 4340 after the hearing.

     Accordingly, for the reasons stated above, we sustain the

Commissioner’s proposed levy.    We have considered all arguments

made by petitioners, and those not discussed herein have been

rejected as without merit.

                                          Decision will be entered

                                     for respondent.
