Third Circuit Weighs Individual Facts and Circumstances in Ruling that Taxpayers Had Given the IRS Clear and Concise Notice of a Change of Address

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We welcome as a first time blogger my colleague in the tax clinic at the Legal Services Center of Harvard Law School, Audrey Patten.  Audrey was the principle drafter of the brief in the Gregory case.  See my brief prior post on the case here.  Audrey is in her fourth year of working in the tax clinic after previously working in the Predatory Lending Clinic at the Legal Services Center.  She is currently working with Christine to write the third edition of A Practitioner’s Guide to Innocent Spouse Relief.  Look for their book in the coming year.  Keith

On December 30, 2020, the United States Court of Appeals for the Third Circuit ruled in favor of the taxpayers in the case Gregory vs Commissioner (Docket No. 19-2229).  The issue before the Third Circuit was whether the taxpayers’ use of Forms 2848 Power of Attorney and 4868 Request for Extension of Time constituted “clear and concise notice” of a change of address to the IRS pursuant to Treasury Regulation §301.6212-2.  Although filed as a non precedential opinion, the outcome is a clear example of how the IRS cannot simply ignore the actual knowledge it has of a taxpayer’s address when issuing a Statutory Notice of Deficiency pursuant to I.R.C.§6212(b)(1), even if that taxpayer failed to follow the IRS’ prescribed procedures for changing their address.  It also stands for the concept that analysis of what constitutes “clear and concise notice” of a last known address remains a fact specific inquiry in line with prior tax court and circuit court case law on the issue.  From a practitioner’s point of view, the case also serves as a lesson in carefully examining the lower court record for facts that may turn a case, even if those facts were not fleshed out in the lower court opinion.


The facts of the case are as follow.  Mr. and Mrs. Gregory filed their 2013 income tax return using an address in Jersey City, NJ.   In June 2015, the Gregorys moved to an address in Rutherford, NJ.  They did not fill out a Form 8822 Change of Address nor did they otherwise inform the IRS of their move at that time.  On October 15, 2015, their CPA filed their 2014 return.  The CPA mistakenly put the Jersey City address on the return, even though the couple had moved to Rutherford in June. 

Meanwhile, the IRS began an audit of the 2013 return and in November 2015 the CPA faxed two Forms 2848 Power of Attorney, one for each spouse, to a revenue agent assigned to the Gregorys’ case.  The Forms 2848 both had the correct Rutherford address listed for each taxpayer.  The forms were presumably processed because the revenue agent began communicating about the account with the CPA.   The CPA also testified in the Tax Court that he had verbally communicated to the revenue agent that his clients’ address had changed. Furthermore, in April 2016, the CPA filed a Form 4868 Request for Extension of Time for the Gregorys’ 2015 income tax return.  That form also had the correct Rutherford address and was also presumably processed because the Gregorys were granted their request.  The CPA continued to correspond with the revenue agent about the 2013, and later 2014, audits throughout the spring of 2016.  However, in October 2016, the IRS mailed a Statutory Notice of Deficiency for 2013 and for 2014 to the Gregorys’ old, invalid address in Jersey City. The post office marked the notice “undeliverable” and returned it to the IRS.  The CPA learned of the notice in January 2017 through a call to the Practitioners’ Priority Line and immediately filed a Tax Court petition, which turned out to be several days past the 90 day deadline in the notice of deficiency.

Both the Gregorys and the IRS filed cross motions to dismiss in the Tax Court.  The Gregorys argued that they had never received a valid notice of deficiency to their last known address, as required by I.R.C. §6212.  Meanwhile the IRS claimed that the last known address was in fact the Jersey City address that was written on their 2014 return, making the notice, and its deadline, valid and thus time-barring the Gregorys’ petition.  Under the statute, a notice of deficiency must be sent to the last known address. The term is not further elaborated in the statute, but Treasury Regulation §301.6212(a) defines last known address as the address on the last filed income tax return unless the taxpayer has provided “clear and concise” notice of a change of address. The regulation directs to an open ended line of procedures “subsequently prescribed by the Commissioner” to learn the meaning of clear and concise notice.  The most recent of these revenue procedures, and the one in effect when the Gregorys sent in their Forms 2848 and 4868, was Rev. Proc. 2010-16, which explicitly excludes Forms 2848 and 4868 from acceptable methods of “clear and concise” notice. 

The IRS, in its trial briefing, argued that the treasury regulation, and by extension Rev. Proc. 2010-16, should be given judicial deference and disqualify the Gregorys’ use of these forms to give clear and concise notice.  While declining to state that it was bound by Rev. Proc. 2010-16, the Tax Court found that the instructions to Forms 2848 and 4868, which state that those forms shall not be used for change of address purposes, made it reasonable for the IRS to assume that the Gregorys’ last known address was the one present on their last filed tax return.  The Court made no mention of the CPA’s testimony that he had also directly told the revenue agent by phone that the Gregorys had moved.

In their appeal, the Gregorys first argued that, because Forms 2848 and 4868 ask for a taxpayer’s address, it is reasonable to assume the IRS will process that information, especially given the government’s integrated computing systems.  However, even if the Court were to find that those forms were not clear and concise notice as a matter of law, the Gregorys argued that it should analyze the specific facts and circumstances of their case to evaluate whether the IRS actually had notice of the Gregorys’ address and not give any deference to the strict rules of either the form instructions or the revenue procedure.  Their briefs argued that the clear trajectory of both tax court and circuit court case law favored an expansive reading of last known address. This is because of the serious consequences to the taxpayer should they not receive their notice of deficiency and thus lose their chance to enter the Tax Court.

The Third Circuit has followed this expansive reading.  While declining to rule that Forms 2848 and 4868 are clear and concise notice of a change of address as a matter of law, it did find that the proper inquiry into clear and concise notice was what the IRS knew, or should have known, at the time it sent out the notice of deficiency.  Per the opinion:

“…courts have required the IRS to use “reasonable diligence” to determine a taxpayer’s last known address.  This reasonable diligence requirement “is rooted in equity.”   Reasonable diligence is measured by what “the IRS knew or should have known at the time it sent the [n]otice” of deficiency, including information it should know “through the use of its computer system.””

In the case of the Gregorys, not only had they sent in the new address on Forms 2848 and 4868, but their CPA was in direct contact with an individual revenue agent once the two Forms 2848 were successfully processed.  The Third Circuit also found it relevant that the CPA told the revenue agent about the new address, a fact omitted by the Tax Court.  By weighing these circumstances, the Third Circuit affirmed the principle that the IRS cannot simply ignore what it knows.  Actual knowledge counts and while taxpayers would be wise to follow IRS procedures for a change of address, practitioners should not shy away from pushing forward cases where circumstances may present a valid argument that the IRS failed to act on a known change of address. 


  1. Gregory is also a case that illustrates something I have seen many times in my career: When direct testimony does not provide all of the facts to prove a case, the IRS attorney often gets up to do a cross-examination in which he or she accidentally elicits the one or two missing facts that complete a prima facie case for the taxpayer. That is, if the IRS attorney had just not done cross-examination, the IRS would have won the case.

    In the Gregory case, the only person who testified was the accountant. His direct testimony did not include any statement that he had orally informed the IRS agent that the taxpayers had moved. Cross-examination took only a few pages of the transcript. Apparently, the IRS attorney had read the following passage from the Rev. Proc. about how to do permissible oral notification of a change of address:

    Sec. 5.04(3): Clear and Concise Oral Notification.

    Clear and concise oral notification is a statement made by a taxpayer in person
    or directly via telephone to a Service employee who has access to the Service Master
    File informing the Service employee of the address change. In addition to the new
    address, the taxpayer must provide the taxpayer’s full name and old address as well as
    the taxpayer’s social security number, individual taxpayer identification number, or
    employer identification number. The Service employee must follow established
    procedures to verify the taxpayer’s identity. The Service employee also will inform the
    taxpayer that the new address, and not the former address, will be used by the Service
    for all purposes.

    The attorney asked if the accountant had asked to taxpayers to speak to someone at the IRS and provide all of the information listed in the above paragraph. The accountant responded that he had not asked the taxpayers to do this in the following dialog that ended cross-examination:

    [The accountant] A. Did I ask the clients to do that?

    BY[the IRS attorney] MS. CLARK:

    Q Yes.

    A No , I told the revenue agent that they had moved, but I did not tell — I did not —

    Q Did you give the revenue agent the written statement that included their —

    A No.

    Q — old address and their new address?

    A No, I told her orally over the phone.

    Q Thank you.

    MS. CLARK: I have no further questions, Your Honor.

    On redirect, the taxpayer’s lawyer nailed down the rough date of the alleged phone conversation. On re-cross, the IRS attorney asked if the accountant had any notes of the alleged oral conversation, and the accountant said he did not.

    Under the Rev. Proc., oral notification by the accountant would also not be clear and concise notification of a change of address — even if he were to be believed. Yet, the court of appeals, in part, hangs its rulings on the accountant’s testimony of oral notification, without noting that this notification, if true, did not comply with the Rev. Proc.

    In the brief for the appellant, the taxpayers’ new attorney (the Harvard clinic) did not even mention the alleged, unsubstantiated oral communication of an address change by the accountant, relying instead on the written Forms 2848 and 4868, which the Rev. Proc. said were not “returns” (at sec. 5.01(4)) — and, implicitly, could not constitute clear and concise notification, either. We argued that the Rev. Proc. was wrong about the two forms and was not entitled to any deference. As one of the co-counsel, I, at least, did not think that, if the Tax Court had not found the accountant’s phone call to have happened, it was worth pointing it out to the court of appeals. I thought: How would one get a reversal of a lack of a finding of fact on the scant record of the unsubstantiated call. I worked with a student on the fact section of our appellate brief, and the student also did not think to mention the alleged phone call.

    In retrospect, I confess I was too pessimistic about mentioning the alleged call in our briefs. But, I bet the IRS attorney is now ruing the fact that she accidentally killed her case by doing cross-examination.

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