A Pair of Collection Due Process Cases Address Tax Court Jurisdiction

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Two recent Collection Due Process (CDP) cases tackle the Court’s jurisdiction.  Even though the two cases lack jurisdiction for different reasons, I thought it useful to pair them for discussion because of their similarities in the narrow focus of the Court’s jurisdiction over these cases.  The first case, Zonies v. Commissioner, Docket No. 18744-15L Chief Judge Thornton finds that the Court lacks jurisdiction because the taxpayer did not timely send the request for a CDP determination to the correct office of the IRS. The taxpayer mailed the request for a CDP hearing before the expiration of the 30 day period but mailed it to the wrong IRS office. The request was received by that office after the 30 day period and the Court would not treat the request as meeting the timely mailed rule of IRC 7502 since it was mailed to the wrong place. I thank Carl Smith for bringing this case to my attention.

The second case, LG Kendrick, LLC v. Commissioner, 146 T.C. No. 2 involved the failure of the IRS to include a period for which the taxpayer owed tax on the notice of determination. Judge Marvel remanded the case to Appeals to address all periods. In its supplemental notice of determination, the Appeals employee addressed all relevant years and the IRS sought a decision from the Court sustaining the proposed collection action. Relying on Ginsberg v. Commissioner, 130 T.C. 88 (2008), the Court held that a liability addressed in a supplemental notice of determination cannot form the basis for the Tax Court’s jurisdiction where the liability was not addressed in the original notice of determination. As I will discuss below, the Ginsberg case involved a different situation and may not have been the perfect foundation for this opinion. Perhaps the IRS can fix the problem by starting again but it must go through the appropriate steps and there are some questions about what happens as the IRS seeks to restart the process.


The Zonies case presents troubling facts for many pro se taxpayers who do not carefully read the notice of intent to levy or notice of filing of federal tax lien upon which their CDP case is based. These individuals will do exactly what the Zonies did in this case and mail the CDP request to the address on the top of the notice of intent letter and not the address embedded in the letter. In this case, the IRS sent the taxpayer a CDP notice based on IRC 6320 after it filed a Notice of Federal Tax Lien. Mr. Zonies mailed the Form 12153 back to the IRS on the 27th day after the CDP notice; however, it arrived the day after the 30-day period.  The IRS treated the CDP request as untimely and only gave him an equivalent hearing because he mailed the Form 12153 to the address shown at the upper corner of the letter, not the address to which the letter told him to file.  This is a regular problem and the CDP notice does not do a stellar job of making it clear to taxpayers where to send this letter and when. We have posted before about other problems with this notice.

The taxpayer (represented by counsel) petitioned the Tax Court apparently in response to an equivalent hearing decision letter instead of a determination letter. I have written before, here and here, about cases in which the wrong letter was sent. The Tax Court in Craig v. Commissioner allowed taxpayers to petition based on a decision letter sent when the IRS should have sent a notice of determination.  The taxpayer argues in Zonies that he substantially complied with the requirements to timely file for a CDP hearing, so his case should not be dismissed.  He essentially asks the Court to treat the decision letter as the wrong letter and take jurisdiction to hear the matter as it did in Craig. The Tax Court says it has no equitable powers to fix his problem. Because mailing the CDP request, or any request or petition, to the proper address is a predicate to relief under 7502, the Court properly turned away his effort to use the timely mailing rule. If his request had made it to the proper place by the 30th day the result here would have been different. The chances of mail moving quickly from one IRS office to another are not high which puts a premium on sending the CDP request to the appropriate office. It also highlights the need for the IRS notice of intent to levy to provide a clear description of the proper address (as well as the proper time frame.)

The Kendrick case presents a different jurisdictional issue and here the IRS loses the case though it may have the opportunity to correct the defect. The notice of determination issued by Appeals omitted one of the periods for which the taxpayer had a liability. The issue in Kendrick was whether the remand of the case to Appeals for it to consider the unlisted period as well as the listed period can allow the Court jurisdiction over the missing period when the determination following the remand clearly does include that period. The Court finds that “An invalid notice cannot form the basis for our jurisdiction, and the Commissioner may proceed with the collection action only if he subsequently issues a valid notice with attendant appeal rights.’

The Tax Court had not previously addressed this issue which is why the case was published as a regular opinion. The Court finds that it does not have jurisdiction when a Notice of Determination fails to identify taxable period or collection action to which it relates, unless there is other information that alerts taxpayer to both the collection action and the taxable period.  The Court holds that it cannot look behind the notice of determination to ascertain if Appeals included a period in its hearing and simply left it off by mistake. The result of the decision is that the periods in the determination letter bind or limit the Court’s jurisdiction and a supplemental notice cannot create jurisdiction that did not exist in the first place. The supplemental hearing on remand of the case could have resulted in a resolution by the parties including the missing period.

The Ginsberg case on which the Court relied presented a somewhat unique factual situation because the case started in the district court because of the split jurisdiction over CDP cases before the changes in 2006. The district court remanded the case and the taxpayer sought to come to the Tax Court in response to the determination of the IRS stemming from the remand. The Tax Court held that supplemental determination could not create jurisdiction where the original notice of determination did not address the liability. The Court seemed to suggest, but did not make clear, that the IRS would need to issue a new notice of determination in order to levy on the new period.

In alerting me to the Kendrick case, an alert reader provided the following insight:

In my view, the reliance on Ginsberg seems misplaced because there the taxpayer had already received a notice of determination and docketed the case in a district court before the supplemental notice was issued.  (The statute was amended in the meantime to give the Tax Court jurisdiction over the liability, which is why the original notice could not grant the Tax Court jurisdiction.)  In LG Kendrick, by contrast, the first time that the liability was addressed was in the supplemental notice.  The opinion reasons that the supplemental notice does not amend the original notice but rather relates back to it and is considered with it for purposes of review, but there is no discussion as to why the supplemental notice should not be an independent basis for the court’s jurisdiction.  Unlike the taxpayer in Ginsberg, LG Kendrick, LLC, had not already received a notice of determination for the liability at issue at the time that it received the supplemental notice.  I would have thought that the supplemental notice could serve as the jurisdictional notice and its filing with the Tax Court in a status report or the like would be sufficient to give the court jurisdiction over the liability.  The opinion does not say when the supplemental notice was sent to the taxpayer or when the report to the Tax Court was made.  It is possible that the report to the Tax Court was too late to confer jurisdiction, but that is not discussed.

If you have the situation in which the IRS addresses periods in the supplemental determination issued as a result of a remand by the Tax Court for periods not included in the original notice of determination because you were unable to reach agreement on the appropriate collection alternative during the remand, seeking a ruling from the Court concerning the ability of the IRS to collect on those periods might best protect the taxpayer in establishing the boundaries of the ability of the IRS to take collection action following conclusion of the CDP case.  In Kendrick, the opinion seems to send the IRS back to issue a second notice of intent to levy even though its regulation says only one 6330 notice is issued for each period.  If it does issue a new notice (presumably considered the first notice for the previously omitted period), the taxpayer will have the opportunity to request a hearing before Appeals and presumably receive another determination letter with the opportunity to go back to Tax Court.  If the IRS decides that the consideration of the period during the remand is considered taxpayer’s opportunity to have a CDP hearing and it cannot issue a second 6330 notice for the period, is it precluded from levying for that period or is the taxpayer precluded from getting back to Tax Court for that period because of its prior hearing at Appeals?




  1. I can’t see what all the CDP fuss is about: the Tax Court correctly decided Ginsberg, Kendrick, and Zonies.

    As for Kendrick, how does it even “seem to send the IRS back to issue a second notice of intent to levy”? The jurisdictional issue centered on a Form 941 related tax liability for the 2010 fourth quarter—as shown on a filed Notice of Federal Tax Lien. A Final Notice of Intent to Levy was properly at issue for that tax and tax period; Keith seems to have conflated the two statutory notices.

    Because the Kendrick jurisdictional issue involved a filed Notice of Federal Tax Lien, the Tax Court’s opinion in that case cannot “seem to send the IRS back to issue a second” NFTL. But even if the Kendrick jurisdictional issue involved a Final Notice of Intent to Levy, I would say the same thing.

    As the Tax Court concluded, the IRS Office of Appeals never made a [§ 6330] determination for Kendrick’s Form 941 related tax liability for the 2010 fourth quarter. The IRS therefore would not need to issue a second Final Notice. Instead, Appeals would need to conclude the CDP hearing with a Notice of Determination that addresses that tax, tax period, and intended levy action.

    The answers to Keith’s questions, then, are:

    (1) the IRS would be precluded from levy action because the taxpayer timely requested a CDP hearing that Appeals has yet to conclude with a Notice of Determination. So any remand and “supplemental” determination would be irrelevant; therefore,

    (2) the taxpayer would not “get back” to Tax Court because he has never really there. If he chose, the taxpayer could petition the Tax Court to review Appeals’ actual Notice of Determination.

    If a taxpayer must “turn square corners” with the government, then the government must do the same with the law.

  2. Norman Diamond says

    7502(a): “If any return, claim, statement, or other document required to be filed, or any payment required to be made, within a prescribed period or on or before a prescribed date under authority of any provision of the internal revenue laws is, after such period or such date, DELIVERED by United States mail to the AGENCY, officer, or office with which such return, claim, statement, or other document is required to be filed, or to which such payment is required to be made, the date of the UNITED STATES postmark stamped on the cover in which such return, claim, statement, or other document, or payment, is mailed shall be deemed to be the date of delivery or the date of payment, as the case may be.”

    AGENCY: Zonies did it. I guess Tax Court picks on the word office instead of agency, but I find it doubtful. 7502 doesn’t even say which office should be the correct one. For example in 2015 I learned that the IRS appeals office for around eight million US citizens (and unknown number of former holders of expired green cards, and maybe unknown number snowbirds unless unintended substantial presence deems them Florida residents) is in Washington DC. So when the IRS’s notice of lien or intent to levy gives an address of a different appeals office instead of Washington DC, which appeals office is really the correct one?

    DELIVERED: A USPS trace showed that one request for CDP Hearing disappeared after reaching the US. On that occasion USPS answered a postal request for investigation and told Japan Post that the registered letter had disappeared with no trace. But oddly the IRS proceeded with a series of letters and eventually four Notices of Determination, all responding to apparent CDP Hearing requests that differed from each other and differed from the one we mailed. Tax Court took jurisdiction, and after calendar call the IRS finally settled for penalties totalling $0.00, but it looks like delivery could be a problem.

    UNITED STATES postmark: If I understand correctly, USPS is supposed to add a US postmark to registered mail at some point after it enters the US. But what if they don’t? It seems to be random whether USPS will or won’t obey USPS’s IMM section 753.1 which directs completion and return of Advice of Receipt cards (return receipts). It seems to be random whether USPS will or won’t respond to postal requests for investigation. Since the registered letter itself usually gets delivered to the addressee rather than being returned to the sender or disappeared without a trace, the sender doesn’t know if USPS actually added a US postmark to the registered letter. USPS’s web site should provide a trace except when USPS removes records of mishandling of a registered letter, but 7502(a) only honours a US postmark not trace.

    7502(c) also only applies to “UNITED STATES registered mail”.

    By the way I also posted a comment on your linked posting at http://procedurallytaxing.com/collection-due-process-determination-and-decision-letters-redux/

    In Kendrick the Court really said this? “An invalid notice cannot form the basis for our jurisdiction, and the Commissioner may proceed with the collection action only if he subsequently issues a valid notice with attendant appeal rights.”

    The Court should have said that in one of my cases. Even when the IRS wrote a statement that an IRS letter was a Notice of Determination and I was stupid enough to believe them and sign the statement, the Court should have observed that the IRS’s letter was an invalid notice.

    “If it does issue a new notice (presumably considered the first notice for the previously omitted period), the taxpayer will have the opportunity to request a hearing before Appeals and presumably receive another DETERMINATION LETTER with the opportunity to go back to Tax Court.”

    Please say Notice of Determination, because the difference from determination letter is so crucial and has already been the subject of many mistakes.

  3. Carl Smith says

    One minor comment on Zonies. I don’t think the 30-day period in which to file a Form 12153 is jurisdictional in the current sense of the word as used by the Supreme Court. That period is a nonjurisdictional period that should be subject to equitable tolling in the right case. One common ground for equitable tolling is timely filing in the wrong forum. It is well-settled that the 120-day period in which to file in the Court of Appeals for Veterans Claims is not jurisdictional and is subject to equitable tolling. In the Fed. Cir., which reviews decisions by the Court of Appeals for Veterans Claims, veterans have occasionally failed to file their petition with the latter court, and instead have timely sent it back to the VA office that denied the claim or another VA office, yet the Fed. Cir. has held that filing was valid under equitable tolling. See, e.g., Bailey v. Principi, 351 F.3d 1381, 1382 (Fed. Cir. 2003) (“We hold that the filing with the regional office of a document that expresses the veteran’s intention to appeal to the Veterans Court equitably tolls the running of the 120–day notice of appeal period, and we therefore reverse and remand.”); Santana-Venegas v. Principi, 314 F.3d 1293, 1298 (Fed. Cir. 2002) (“We hold as a matter of law that a veteran who misfiles his or her notice of appeal at the same VARO from which the claim originated within the 120–day judicial appeal period of 38 U.S.C. § 7266, thereby actively pursues his or her judicial remedies, despite the defective filing, so as to toll the statute of limitations.”).

    If Zonies’ Form 12153 had arrived at the wrong office before the 30 days had expired, I would argue that his filing should be timely under equitable tolling. Zonies’ problem is that his Form 12153 arrived at the wrong office after the 30-day period expired. 7502 provides a timely mailing is timely filing rule for envelopes arriving after the time period ended. But, for 7502 to apply, the statute explicitly says that the envelope must be addressed to the correct office. So, I agree that Zonies should lose.

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