Zenco Engineering Corporation v. Commissioner, 75 T. C. 318 (1980)

A notice of deficiency is considered properly mailed if it is sent to the taxpayer’s last known address, even if it is refused or mishandled by the postal service.

Summary

In Zenco Engineering Corporation v. Commissioner, the IRS sent a notice of deficiency by certified mail to Zenco’s last known address. The notice was returned unopened, marked “refused,” but Zenco claimed it was never received or refused by its employees. The Tax Court held that the notice was properly mailed to Zenco’s last known address, dismissing Zenco’s petition as untimely filed. This ruling underscores that the IRS’s obligation is satisfied by mailing the notice correctly, not ensuring its receipt, unless postal mishandling is proven.

Facts

Zenco Engineering Corporation, now known as Xenex Corp. , received a notice of deficiency from the IRS on June 26 or 27, 1979, for the taxable year ended January 31, 1975. The notice was sent by certified mail to Zenco’s address at 2940 North Halsted Street, Chicago, Illinois, which had been its address since 1962. Zenco’s mail was held for pickup at the Lincoln Park Branch of the Chicago Post Office. The notice was returned to the IRS on July 5, 1979, marked “refused” on July 3, 1979. Zenco’s president and employees testified that they did not refuse any certified mail during the relevant period and were unaware of any delivery attempts on Zenco’s premises.

Procedural History

The IRS moved to dismiss Zenco’s petition for lack of jurisdiction, claiming it was not filed within the statutory 90-day period after the notice of deficiency was mailed. Zenco countered with a motion to dismiss for lack of jurisdiction, asserting that the notice of deficiency was not properly mailed and delivered. The Tax Court heard the case on these motions and ruled on the issue of proper mailing and jurisdiction.

Issue(s)

1. Whether the IRS’s notice of deficiency was properly mailed to Zenco’s last known address under Section 6212(b)(1) of the Internal Revenue Code.

Holding

1. Yes, because the notice was mailed to Zenco’s correct and last known address, and there was no evidence of postal mishandling beyond Zenco’s claim of non-receipt.

Court’s Reasoning

The Tax Court relied on Section 6212(b)(1), which states that a notice of deficiency is sufficient if mailed to the taxpayer’s last known address. The court emphasized that the statute’s language does not require receipt by the taxpayer, only proper mailing. The court rejected Zenco’s argument of postal mishandling, citing a strong presumption that properly addressed mail is delivered or offered for delivery. The court noted that Zenco’s evidence of non-receipt and non-refusal by its employees was insufficient to overcome the presumption of proper mailing. The court distinguished this case from Estate of McKaig v. Commissioner, where postal mishandling was evident from the face of the notice. The court concluded that without clear evidence of postal mishandling, the notice was properly mailed, and Zenco’s petition was untimely filed.

Practical Implications

This decision reinforces the principle that the IRS’s duty is fulfilled by mailing a notice of deficiency to the taxpayer’s last known address, regardless of whether it is received. Taxpayers must ensure their address is current with the IRS to avoid issues with notices of deficiency. This ruling may affect how taxpayers handle certified mail and underscores the importance of diligent mail pickup practices. It also implies that taxpayers challenging the timeliness of petitions based on non-receipt face a high burden to prove postal mishandling. Subsequent cases have continued to uphold this interpretation, emphasizing the statutory focus on mailing rather than receipt.