                 T.C. Summary Opinion 2009-136



                      UNITED STATES TAX COURT



              TIMOTHY P. SZULCZEWSKI, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 20264-06S.                Filed September 2, 2009.



     Timothy P. Szulczewski, pro se.

     Laura L. Buckley, for respondent.



     GOLDBERG, Special Trial Judge:    This case was heard pursuant

to the provisions of section 7463 of the Internal Revenue Code in

effect at the time the petition was filed.   Pursuant to section

7463(b), the decision to be entered is not reviewable by any

other court, and this opinion shall not be treated as precedent

for any other case.   Unless otherwise indicated, subsequent
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section references are to the Internal Revenue Code, and all Rule

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

     The issue for decision is whether respondent abused his

discretion in sustaining the filing of a notice of Federal tax

lien for collection of petitioner’s unpaid 2002 tax liability.

                            Background

     Some of the facts have been stipulated and are so found.

The stipulation of facts and the attached exhibits are

incorporated herein by this reference.   Petitioner resided at

Birch Hill Drive in California when he filed his petition.

     Petitioner worked and as of the date of trial continued to

work as a union dockworker for Roadway Express, Inc. (Roadway),

loading and unloading ships at the Port of Long Beach and driving

trucks to several of the corporation’s facilities.   Petitioner’s

job required him to travel periodically away from home.    He

married and had two children, one born in 1992 and the other in

1994.   In 1997 petitioner “blew out” his shoulder on the job and

was unable to work for the next 5 years.   He began receiving

Social Security disability benefits of approximately $1,300 per

month and continued to receive the Social Security benefit at

least through 2005.

     The physical and financial strains took their toll.    On

August 21, 2000, petitioner and his wife divorced.   She left the

children in petitioner’s primary physical custody and moved to
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Rhode Island.   Petitioner also underwent a chapter 13 bankruptcy.

Petitioner owned a house on Birch Hill Drive until December 2,

2002, when the bankruptcy trustee sold petitioner’s house to

petitioner’s brother, who allowed petitioner to continue to

reside there as a tenant.

     Petitioner returned to work at Roadway in 2002 earning gross

wages of $34,606.   Meanwhile, his union representative researched

petitioner’s out-of-work circumstances and determined that

petitioner was entitled to union disability benefits of

approximately $700 per month from the date of injury in 1997.    As

a result petitioner received from Prudential Insurance Co. of

America (Prudential), the carrier for the union’s disability and

pension fund, a distribution of $40,884 in 2002 compensating him

for the past 5 years of unpaid disability benefits.   Petitioner

continued to receive the monthly benefit from Prudential at least

through 2005.

     The Court received in evidence a copy of petitioner’s self-

prepared 2002 tax return.   On the return petitioner listed Birch

Hill Drive as his address and dated his signature August 14,

2003.   Petitioner filed as a head of household, claiming his two

children as dependents.   Petitioner reported adjusted gross

income of $56,034, consisting of wages of $34,606, interest

income of $12, taxable Social Security benefits of $13,148, and

$8,268 of disability benefits, the latter amount representing 1
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year of disability benefits.   Petitioner claimed total itemized

deductions of $29,325 comprising $5,358 in State and local, real

estate, and personal property taxes; $23,480 in mortgage

interest; and $487 in charitable contributions.   Petitioner also

claimed dependency exemption deductions for his two children, a

child tax credit of $1,200, and a dependent care credit of $960.

With respect to the attached Form 2441, Child and Dependent Care

Expenses, petitioner listed Rachel Ortega at a Flintlock Road

address as the provider of the child care.   The 2002 return shows

no income tax due and an overpayment of $14 resulting from

withholding for 2002.

     According to a Form 4340, Certificate of Assessments,

Payments, and Other Specified Matters (certificate of

assessments) for 2002 received into evidence, the Internal

Revenue Service (IRS) timely received an automatic extension

request from petitioner to file his 2002 Federal income tax

return, but has no record of receiving petitioner’s 2002 Federal

income tax return.

     Because the IRS had no record that petitioner filed a 2002

Federal income tax return, on May 27, 2004, the IRS prepared a

substitute for return (SFR) for 2002.   The SFR shows adjusted

gross income for 2002 of $88,648, consisting of wages of $34,605,

interest of $12, taxable Social Security disability benefits of

$13,147, and the distribution from Prudential of $40,884.    The
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IRS allowed a single exemption and a standard deduction,

resulting in a tax due of $18,599, and showing $14 in Federal

income tax withholdings.

     According to petitioner, in or about July 2004 he moved

about 5 miles away from Birch Hill Drive to live with his

girlfriend on Flintlock Road.   At the time of his move petitioner

did not notify the IRS of his change of address; however,

petitioner stated that he notified the U.S. Postal Service

(Postal Service or PS) of his address change.

     About a month earlier petitioner had received a letter dated

June 6, 2004, addressed to him at Birch Hill Drive, from the IRS

Service Center in Holtsville, New York, requesting that he

provide his 2002 Federal income tax return to Holtsville with the

top portion of the letter attached.

     The Court received into evidence a copy of a completed PS

Form 3800, Certified Mail Receipt, and a completed PS Form 3811,

Domestic Return Receipt.   The identifying 20-digit certified mail

numbers on the two Postal Service forms are identical, confirming

that petitioner sent an envelope to the IRS Service Center in

Fresno, California, on August 15, 2004, and that the IRS Fresno

Service Center received the same envelope on August 23, 2004.

According to petitioner the envelope contained the copy of his

2002 Federal income tax return that Holtsville had requested, and

that on or about the same date, August 15, 2004, he timely mailed
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his 2003 Federal income tax return to Fresno reporting his

address as Flintlock Road.   Respondent has no record of receiving

petitioner’s 2003 Federal income tax return, and at trial

petitioner did not offer a copy of his 2003 return into evidence.

     The 2002 certificate of assessments has an entry that the

IRS issued a notice of deficiency for 2002 on August 31, 2004, to

petitioner.   Because petitioner did not file a petition with this

Court seeking a redetermination of his 2002 Federal income tax

deficiency, on February 21, 2005, the IRS assessed the following

amounts for 2002:   (1) $18,599 in Federal income tax, (2) $1,950

in interest, (3) $4,182 for failure to file a tax return, (4)

$2,137 for failure to pay tax, and (5) $621 for failure to pay

estimated tax.

     Attempting to collect petitioner’s unpaid Federal income tax

liability for 2002, the IRS sent a notice of intent to levy dated

June 11, 2005, by certified mail to petitioner at the Birch Hill

Drive address.   The Postal Service could not complete the

delivery, and on or about August 23, 2005, returned the unclaimed

envelope to the IRS.

     On November 14, 2005, the IRS mailed a final notice of levy

to petitioner at the Birch Hill Drive address.   On February 3,

2006, the IRS received the first of three levy payments of

$206.55 from Roadway.   The IRS posted the second and third

payments on March 3 and April 3, 2006, respectively.   The IRS
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also attempted to levy on petitioner’s Social Security disability

benefits.

     On or before February 17, 2006, after the first IRS levy,

petitioner called the IRS telephone number that Roadway’s payroll

department had given him, talked to an IRS representative about

the levy action, and informed the IRS representative that

Flintlock Road, not Birch Hill Drive, was his correct address.

     Nonetheless, the IRS prepared two separate Notices of

Federal Tax Lien Filing and Your Right to a Hearing Under IRC

6320, both addressed to petitioner at his former Birch Hill Drive

address and both noting they were being sent by certified mail.

One notice was dated February 17, 2006, and the other notice was

dated February 23, 2006, but otherwise both notices contained

nearly identical information.   The certificate of assessments

shows that the IRS sent only one notice, the one dated February

23, 2006, to petitioner.   The notices state in relevant part that

the IRS had filed on February 14, 2006, at the County Recorder

for Los Angeles County, California, a Federal tax lien for

$27,268, which was the current unpaid balance of petitioner’s

assessed 2002 tax liability.

     The residents living at Birch Hill Drive forwarded the

notice of Federal tax lien filing to petitioner, who in turn

timely sent Form 12153, Request for a Collection Due Process

Hearing, dated March 23, 2006, to the IRS explaining that he
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disagreed with the lien filing because his “tax return for 2002

was sent to and received by the IRS”.   On the Form 12153

petitioner listed Flintlock Road as his address.

     In response the IRS Appeals Office mailed three letters

dated April 26, May 30, and June 22, 2006, to petitioner at his

Flintlock Road address, which were apparently the first instances

where the IRS used petitioner’s Flintlock Road address.     In the

letters respondent offered petitioner an “opportunity for a

conference by personal interview” and noted that for Appeals to

consider collection alternatives petitioner had to submit his

delinquent Federal income tax returns and a completed Form 433-A,

Collection Information Statement for Wage Earners and

Self-Employed Individuals.   Petitioner did not respond to the

letters from Appeals, and he did not provide the information

Appeals requested.

     In a notice of determination dated September 1, 2006,

addressed to petitioner at Flintlock Road, sent by certified mail

from the IRS Fresno, California, Appeals Team Manager, Appeals

sustained the filing of the notice of Federal tax lien because

Appeals found that:   (1) The IRS had met all the legal and

administrative requirements for the collection action, (2) the

collection action properly balanced the need for the efficient

collection of taxes with the legitimate concern that the

collection action be no more intrusive than necessary, and (3)
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petitioner had not established grounds for a withdrawal of the

lien.   Petitioner received the notice of determination from his

girlfriend, who was still residing at the Flintlock Road address

and who signed for the certified mail delivery.

     Petitioner, listing Birch Hill Drive as his address, timely

petitioned the Court with respect to respondent’s notice of

determination.   At trial, petitioner did not call any witnesses.

Respondent called Maria Vargas, a paralegal in respondent’s

Office of Chief Counsel in California.    Respondent called no

other witnesses and could not produce a copy of the notice of

deficiency for 2002 or a PS Form 3877.    The Court concluded the

trial and closed the record.

                            Discussion

     Petitioner’s sole challenge, in his petition, to

respondent’s notice of determination is that he never received a

hearing in response to the lien filing where he could discuss his

underlying Federal income tax liability for 2002.    Petitioner

argues that if he had a hearing, he would show respondent that he

did not have a balance due for 2002, and therefore, respondent

should cease all collection actions related to 2002.

     Respondent counters that the Court should sustain the notice

of determination for 2002 because:     (1) The IRS Appeals office in

Fresno, California, offered petitioner multiple opportunities to

meet with an Appeals officer to discuss the circumstances
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surrounding the filing of a notice of Federal tax lien for 2002

and to discuss collection alternatives; (2) petitioner never

responded to the offers from the Appeals Office; (3) petitioner

failed to provide the missing tax returns and the financial

information that the Appeals office had requested; and (4) the

Appeals officer did not find and petitioner did not provide any

valid reason why respondent should withdraw the notice of Federal

tax lien.

     Respondent argues additionally that petitioner had two prior

opportunities to challenge the underlying liability for 2002, in

each instance petitioner failed to take advantage of the

opportunity, and therefore petitioner’s underlying liability for

2002 was not properly at issue when the Appeals officer offered a

collection hearing.   According to respondent, petitioner’s first

opportunity arose when the IRS properly mailed the 2002 notice of

deficiency dated August 31, 2004, by certified mail to petitioner

at his last known address--Birch Hill Drive.   Petitioner failed

to petition the Tax Court seeking a redetermination.   Respondent

contends the second opportunity occurred when the IRS sent by

certified mail to petitioner at his Birch Hill Drive address the

notice of intent to levy dated June 11, 2005, seeking to collect

petitioner’s unpaid 2002 Federal income tax liability.   The

Postal Service returned the levy notice unclaimed to the IRS, and
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petitioner failed to request a hearing with respondent’s Appeals

office.

       Regardless of the parties’ contentions the threshold issue

is whether respondent’s assessment of the 2002 Federal income tax

liability is valid.    Respondent’s arguments presuppose that the

Secretary mailed a valid notice of deficiency and that petitioner

failed to timely petition this Court seeking a redetermination,

thereby permitting the IRS to assess the deficiency.    Petitioner

did not file a petition with this Court for redetermination

within 90 days of the purported mailing date of the notice of

deficiency.    In fact petitioner emphasizes that he never received

a notice of deficiency.

       Respondent may collect the unpaid Federal income tax

deficiency only if respondent properly assessed the income tax

deficiency.    Generally, except as otherwise provided, the

Secretary may not assess a deficiency in tax unless the Secretary

has first mailed a notice of deficiency to the taxpayer.      Sec.

6213(a); Butti v. Commissioner, T.C. Memo. 2008-82.    None of the

statutory exceptions set forth in section 6213(a) applies here.

       When the Secretary determines that a deficiency in tax

exists, he is authorized to send a notice of deficiency to the

taxpayer by certified or registered mail addressed to the

taxpayer at the taxpayer’s last known address.    Sec. 6212(a) and

(b).    However, where a taxpayer maintains that he did not receive
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a notice of deficiency and the Commissioner is unable to produce

a copy of the notice, then the Commissioner “[bears] the burden

of establishing both the existence of a notice of deficiency

[mailed] to petitioners for * * * [the] year as well as the date

of its mailing.”     Pietanza v. Commissioner, 92 T.C. 729, 736

(1989), affd. without published opinion 935 F.2d 1282 (3d Cir.

1991).    The Commissioner must “introduce evidence showing that

the notice of deficiency was properly delivered to the Postal

Service for mailing.”     Coleman v. Commissioner, 94 T.C. 82, 90

(1990).

     We examine respondent’s evidence, noting that we decide the

issue on the basis of the preponderance of the evidence.      See

Sego v. Commissioner, 114 T.C. 604, 611 (2000); Casey v.

Commissioner, T.C. Memo. 2009-131.       Respondent did not produce at

trial a copy of the notice of deficiency or a PS Form 3877.

Instead, to meet his burden respondent relies on paragraph 13 of

the stipulation of facts, the certificate of assessments, and the

testimony of Ms. Vargas.

     With respect to the stipulation of facts, the parties

stipulated that on August 31, 2004, the IRS mailed the notice of

deficiency to petitioner by certified mail to petitioner’s last

known address.     However, in the very next sentence the parties

stipulated further that “Petitioner claims he did not receive the

Statutory Notice dated August 31, 2004.”      We relieve petitioner
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of his stipulation regarding respondent’s mailing of the notice.

Since the fundamental basis of petitioner’s argument is that he

did not receive the notice of deficiency, he would have no

knowledge as to when, how, where, or if respondent sent a notice.

See Rule 91(e); Jasionowski v. Commissioner, 66 T.C. 312, 318

(1976) (“We do not lightly disregard facts to which the parties

have stipulated; however, where such facts are clearly contrary

to facts disclosed by the record, we refuse to be bound by the

stipulation.”).

     Next we address the certificate of assessments, which shows

an entry, without elaboration, that the IRS sent a notice of

deficiency on August 31, 2004.   Ordinarily, a certified

certificate of assessments is a self-authenticating document

providing sufficient evidence that the Commissioner mailed a

notice of deficiency.   See United States v. Ryan, 969 F.2d 238,

239-240 (7th Cir. 1992); Craig v. Commissioner, 119 T.C. 252, 262

(2002).   However, in instances as here where the taxpayer

challenges the existence of the notice of deficiency and the

Commissioner fails to produce a copy of the notice, the

Commissioner must produce additional corroborating evidence.

     Typically the Commissioner produces a PS Form 3877.     Among

other information PS Form 3877 shows a taxpayer’s name and

address included among the list of mail recipients for a

particular day’s batch of mailed notices of deficiency, the type
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of delivery method used, e.g., certified mail, and the signature

of a Postal Service employee.    Where the taxpayer does not

dispute the existence of the notice of deficiency, the

Commissioner’s production of a properly completed PS Form 3877 is

sufficient evidence by itself, absent evidence to the contrary,

that the Commissioner properly mailed the notice of deficiency to

the taxpayer.   United States v. Zolla, 724 F.2d 808, 810 (9th

Cir. 1984);1 Coleman v. Commissioner, supra at 91.   The

Secretary’s strict compliance with PS Form 3877 mailing

procedures raises a presumption of official regularity in favor

of the Commissioner.   United States v. Zolla, supra; Coleman v.

Commissioner, supra.

     However, as here where the taxpayer disputes the existence

of the notice of deficiency, PS Form 3877 by itself is no longer

sufficient to establish the presumption of regularity that the

Secretary mailed the notice of deficiency to the taxpayer.      Butti

v. Commissioner, supra.   Instead the Commissioner must come

forward with additional evidence, such as testimonial habit

evidence of mailing procedures.    Coleman v. Commissioner, supra

at 92.   We note again that in this case respondent failed to

produce a PS Form 3877.




     1
      If this case were appealable, which it is not because
petitioner elected sec. 7463(b) small tax case procedures, the
appeal would lie in the Court of Appeals for the Ninth Circuit.
                              - 15 -

     With respect to testimonial evidence, respondent called Ms.

Vargas, a paralegal in respondent’s Office of Chief Counsel.     Ms.

Vargas testified that according to her review of an IRS computer

database entitled “IMF Entity Module”, three pages of which she

printed out on the morning of trial and which the Court received

into evidence, petitioner’s last known address was Birch Hill

Drive when respondent issued the notice of deficiency on August

31, 2004.   Ms. Vargas explained that according to the module,

Birch Hill Drive continued to be petitioner’s last known address

until the final week of February 2006 when the IRS changed

petitioner’s last known address to Flintlock Road, presumably in

response to petitioner’s telephone instruction.

     Respondent failed to establish that Ms. Vargas had any

knowledge with respect to the preparation or mailing of notices

of deficiency.   Consequently, respondent may not properly rely on

the testimony of Ms. Vargas to establish a presumption of

regularity with respect to his mailing practices, and accordingly

her testimony is not helpful to respondent in meeting his burden

of proving the existence of a notice of deficiency for 2004 or

its proper mailing.   A 90-day letter clerk or mailroom official

would have been more appropriate for establishing respondent’s

customary preparation and mailing practices.   Coleman v.

Commissioner, supra at 92-94 (testimony from a district statutory

notice coordinator and a 90-day clerk was probative habit
                              - 16 -

evidence); August v. Commissioner, 54 T.C. 1535, 1537-1538 (1970)

(testimony by a chief mail room clerk was persuasive); Clough v.

Commissioner, 119 T.C. 183 (2002) (declarations by an IRS Service

Center custodian of records and a Postal Service mail processing

clerk were corroborating evidence).    When the existence of a

notice of deficiency is at issue, proper testimonial evidence of

customary mailing practices is critical to defeat a taxpayer’s

denial of receipt.   Pietanza v. Commissioner, 92 T.C. 729 (1989);

Butti v. Commissioner, T.C. Memo. 2008-82.

     Therefore, weighing the totality of the evidence in the

record we find that respondent has failed to meet his burden of

proving that he properly mailed a notice of deficiency to

petitioner at petitioner’s last known address using certified or

registered mail.   Consequently the assessment here is invalid and

respondent is prohibited from conducting collection activity.    It

follows that we are unable to sustain respondent’s determination

to proceed with collection by the filing of a notice of Federal

tax lien.   Because the assessment is invalid, we need not address

any other of the parties’ contentions.

     To reflect our disposition of the issue,


                                           Decision will be entered

                                       for petitioner.
