Stanley D. and Rosemary A. Clough v. Commissioner

119 T.C. No. 10

• Court: United States Tax Court
• Decided: October 18, 2002
• Docket: 6836-02
• Status: Unknown

Opinion

119 T.C. No. 10

UNITED STATES TAX COURT

STANLEY D. CLOUGH AND ROSEMARY A. CLOUGH, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 6836-02. Filed October 18, 2002.

R filed a motion to dismiss for lack of jurisdiction on the ground that Ps’ petition was not timely filed. R attached a copy of the certified mail list showing that the notice of deficiency was mailed on Dec. 4, 2001. The U.S. Postal Service postmark on the envelope in which the petition was mailed was dated Mar. 21, 2002, a date more than 90 days after the mailing of the notice of deficiency. R filed sworn declarations of the manager of the office that maintained the certified mail list stating that the list was obtained from records of that office. R also filed a declaration of a processing clerk of the U.S. Postal Service outlining the procedure that he follows in processing certified mail and stating that on Dec. 4, 2001, he placed a postal stamp on the certified mail list attached to R’s motion. Ps object to the introduction into evidence of the certified mail list and the declarations on the grounds that these documents constitute inadmissible hearsay. - 2 -

Held: The certified mail list is a record of regularly conducted activity under Fed. R. Evid. 802(6) and is self-authenticated by the accompanying declarations under Fed. R. Evid. 902(11).

Stanley D. Clough and Rosemary A. Clough, pro se.

Karen N. Sommers, Melinda G. Williams, and Donna F. Herbert,

for respondent.

OPINION

DAWSON, Judge: This case was assigned to Special Trial

Judge Carleton D. Powell pursuant to the provisions of section

7443A(b)(5) and Rules 180, 181, and 183.1 The Court agrees with

and adopts the opinion of the Special Trial Judge, which is set

forth below.

OPINION OF THE SPECIAL TRIAL JUDGE

POWELL, Special Trial Judge: This matter is before the

Court on respondent’s motion to dismiss for lack of jurisdiction,

as supplemented. Respondent contends that the Court lacks

jurisdiction in this case on the ground that the petition was not

filed within the time prescribed in sections 6213(a) and 7502(a).

Petitioners resided in Sylmar, California, at the time the

petition was filed.

1 Unless otherwise indicated, section references are to the Internal Revenue Code, as amended, and Rule references are to the Tax Court Rules of Practice and Procedure. - 3 -

Background

On or about December 28, 2001, petitioners received a notice

of deficiency that respondent sent by certified mail. In the

notice, respondent determined a deficiency of $51,440 in

petitioners’ 1999 Federal income tax and an accuracy-related

penalty under section 6662(a) of $10,288. The notice of

deficiency was addressed to petitioners at 13550 Foothill Blvd.

Unit, Sylmar, California. Petitioners do not dispute that the

Sylmar address was their correct address.

The cover page of the notice of deficiency contained the

following information: (1) The date of the notice of deficiency

(December 4, 2001); (2) petitioners’ primary taxpayer

identification number; (3) the type of tax, the taxable year, and

the amount of the deficiency and penalty; (4) the name of an

Internal Revenue Service contact person, as well as a phone

number, fax number, and hours to call; and (5) the last date to

file a petition with the Court (March 4, 2002).2 The notice of

deficiency was issued by the Internal Revenue Service Center in

Ogden, Utah (the Ogden Service Center).

On April 1, 2002, the Court received and filed a joint

2 Sec. 3463 of the Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, 112 Stat. 685, 767, directs the Secretary to include on each notice of deficiency issued under sec. 6212 the date of the last day on which the taxpayer may file a petition with the Tax Court. See Rochelle v. Commissioner, 116 T.C. 356, 359 (2001), affd. 293 F.3d 740 (5th Cir. 2002). - 4 -

petition for redetermination challenging the above-described

notice of deficiency. The petition arrived at the Court in an

envelope bearing a U.S. Postal Service postmark dated March 21,

2002.

Respondent filed a motion to dismiss for lack of

jurisdiction on the ground that the petition was not timely

filed. Attached to respondent’s motion to dismiss is a copy of a

certified mail list.3 The certified mail list indicates that on

December 4, 2001, duplicate original notices of deficiency for

the taxable year 1999 were mailed to petitioners. Petitioners

are identified on the certified mail list by name, address, and

primary taxpayer identification number. A U.S. Postal Service

postmark dated December 4, 2001, appears in the lower right-hand

corner of the certified mail list. The postmark, which is

rectangular, identifies the U.S. Post Office as “IRS OGDEN UT

USPS-84201" and includes the facsimile signature of Greg L. Holt.

Petitioners object to respondent’s reliance on the certified mail

list on the ground the document constitutes inadmissable hearsay.

The matter was called for hearing at the Court’s motions

session in Washington, D.C., on June 19, 2002. Counsel for

respondent appeared. Respondent submitted a declaration executed

3 The Court has recognized that a certified mail list is the equivalent of a Postal Service Form 3877, Acceptance of Registered, Insured, C.O.D. and Certified Mail. See Stein v. Commissioner, T.C. Memo. 1990-378. - 5 -

by Susan D. Petersen (Ms. Petersen), the manager of the

Correspondence/Processing Examination Department at the Ogden

Service Center. Ms. Petersen’s declaration states that she is a

custodian of various records, including certified mail lists.

Ms. Petersen’s declaration describes in general terms the

procedures that are used in mailing notices of deficiency,

including the transfer of notices of deficiency to the U.S.

Postal Service and the Ogden Service Center’s practice of

retaining certified mail lists. Ms. Petersen’s declaration

states that the copy of the certified mail list attached to

respondent’s motion to dismiss was obtained from records

maintained at the Ogden Service Center.

Petitioners did not appear, but they filed a request to

change the place of hearing. The Court continued the matter for

further hearing to the Court’s trial calendar in San Diego,

California, on June 28, 2002. Petitioner Stanley D. Clough and

counsel for respondent appeared at the second hearing and were

heard.

During the second hearing, respondent filed with the Court a

supplement to the motion to dismiss and submitted a declaration

executed by Greg L. Holt (Mr. Holt), a U.S. Postal Service mail

processing clerk assigned to the Ogden Service Center.

Mr. Holt’s declaration states that his duties as a mail

processing clerk include processing certified mail items - 6 -

delivered to him by Ogden Service Center personnel. Mr. Holt’s

declaration outlines the procedures that he follows in processing

certified mail, including his practice of verifying the

information contained in the Commissioner’s certified mail lists,

and, thereafter, placing a postmark stamp on each such list. Mr.

Holt’s declaration states that, on December 4, 2001, he placed a

postmark stamp on the certified mail list that was attached as an

exhibit to respondent’s motion to dismiss. Petitioners also

object to the admission of Mr. Holt’s declaration on the ground

that the document constitutes inadmissible hearsay.

Discussion

The Tax Court is a court of limited jurisdiction, and we may

exercise our jurisdiction only to the extent authorized by

Congress. Sec. 7442; Judge v. Commissioner, 88 T.C. 1175, 1180-

1181 (1987); Naftel v. Commissioner, 85 T.C. 527, 529 (1985).

The Court's jurisdiction to redetermine a deficiency depends upon

the issuance of a valid notice of deficiency and a timely filed

petition. Rule 13(a), (c); Monge v. Commissioner, 93 T.C. 22, 27

(1989); Normac, Inc. v. Commissioner, 90 T.C. 142, 147 (1988).

Section 6212(a) expressly authorizes the Commissioner, after

determining a deficiency, to send a notice of deficiency to a

taxpayer by certified or registered mail. Pursuant to section

6213(a), a taxpayer has 90 days (or 150 days if the notice is

addressed to a person outside of the United States) from the date - 7 -

the notice of deficiency is mailed to file a petition with the

Court for a redetermination of the deficiency.

The Commissioner bears the burden of proving by competent

and persuasive evidence that a notice of deficiency was properly

mailed to a taxpayer. Cataldo v. Commissioner, 60 T.C. 522, 524

(1973), affd. per curiam 499 F.2d 550 (2d Cir. 1974). We require

the Commissioner to introduce evidence showing that the notice of

deficiency was properly delivered to the U.S. Postal Service for

mailing. Coleman v. Commissioner, 94 T.C. 82, 90 (1990). The

act of mailing may be proven by evidence of the Commissioner’s

mailing practices corroborated by direct testimony or documentary

evidence. Id. The Commissioner is not required to produce

employees who personally recall each of the many notices of

deficiency which are mailed annually. Cataldo v. Commissioner,

supra at 524.

There is no dispute in this case regarding the existence of

the notice of deficiency dated December 4, 2001. Petitioners

acknowledge receiving the notice of deficiency in late December

2001.

Respondent asserts that the notice of deficiency was mailed

to petitioners on December 4, 2001, and, therefore, the 90-day

period for filing a timely petition with the Court expired on

March 4, 2002-–more than 2 weeks before petitioners mailed their

petition to the Court. Petitioners concede that, if the notice - 8 -

of deficiency was mailed to them on December 4, 2001, their

petition was not filed within the 90-day period prescribed in

section 6213(a). The only dispute, therefore, is the date the

notice of deficiency was mailed.

Where the existence of a notice of deficiency is not

disputed, a Postal Service Form 3877, Acceptance of Registered,

Insured, C.O.D. and Certified Mail, or its equivalent–-a

certified mail list-–represents direct documentary evidence of

the date and the fact of mailing. Coleman v. Commissioner, supra

at 90-91; see Magazine v. Commissioner, 89 T.C. 321, 324, 327

(1987). A properly completed certified mail list reflects

compliance with Internal Revenue Service procedures for mailing

deficiency notices. Coleman v. Commissioner, supra at 90.

Exact compliance with certified mail list procedures raises

a presumption of official regularity in favor of the

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

Cir. 1984). A failure to comply precisely with the certified

mailing list procedures may not be fatal if the evidence adduced

is otherwise sufficient to prove mailing. Coleman v.

Commissioner, supra at 91.

Petitioners contend, however, that both the certified mail

list and the declaration executed by Mr. Holt constitute

inadmissible hearsay, and respondent has otherwise failed to

prove the date that the notice of deficiency was mailed. - 9 -

In general, section 7453 and Rule 143(a) provide that Tax

Court proceedings are to be conducted in accordance with the

rules of evidence applicable in trials without a jury in the U.S.

District Court for the District of Columbia. Consistent with this

directive, we observe the Federal Rules of Evidence.4

Rule 801(c) of the Federal Rules of Evidence defines

“hearsay” as “a statement, other than one made by the declarant

while testifying at the trial or hearing, offered in evidence to

prove the truth of the matter asserted.” Rule 802 of the Federal

Rules of Evidence provides that hearsay generally is not

admissible except as otherwise provided. Rule 803(6) of the

Federal Rules of Evidence provides an exception to the hearsay

rule as follows:

Rule 803. Hearsay Exceptions; Availability of Declarant Immaterial

The following are not excluded by the hearsay rule, even though the declarant is available as a witness:

* * * * * * *

(6) Records of Regularly Conducted Activity.--A memorandum, report, record, or data compilation, in any form, of acts, events, conditions, opinions, or diagnoses, made at or near the time by, or from information transmitted by, a person with knowledge, if kept in the course of a regularly conducted business activity, and if it was the regular practice of that business activity to make the memorandum, report, record or data compilation, all as shown by the testimony of the custodian or other qualified witness, or by certification that complies with Rule

4 Petitioners’ exegesis on California law is beside the point. - 10 -

902(11), Rule 902(12), or a statute permitting certification, unless the source of information or the method or circumstances of preparation indicate lack of trustworthiness. The term "business" as used in this paragraph includes business, institution, association, profession, occupation, and calling of every kind, whether or not conducted for profit.

Rule 902 of the Federal Rules of Evidence, inter alia, provides:

Rule 902. Self-authentication

Extrinsic evidence of authenticity as a condition precedent to admissibility is not required with respect to the following:

(11) Certified Domestic Records of Regularly Conducted Activity.–-The original or a duplicate of a domestic record of regularly conducted activity that would be admissible under Rule 803(6) if accompanied by a written declaration of its custodian or other qualified person, in a manner complying with any Act of Congress or rule prescribed by the Supreme Court pursuant to statutory authority, certifying that the record--

(A) was made at or near the time of the occurrence of the matters set forth by, or from information transmitted by, a person with knowledge of those matters; (B) was kept in the course of the regularly conducted activity; and (C) was made by the regularly conducted activity as a regular practice.

A party intending to offer a record into evidence under this paragraph must provide written notice of that intention to all adverse parties, and must make the record and declaration available for inspection sufficiently in advance of their offer into evidence to provide an adverse party with a fair opportunity to challenge them.[5]

5 The Advisory Committee Notes pertaining to Fed. R. Evid. 902(11) state in pertinent part:

(continued...) - 11 -

Respondent argues that the copy of the certified mail list

attached to the motion to dismiss should be admitted as evidence

of the date of mailing of the notice of deficiency under the

exception to the hearsay rule set forth in rule 803(6) of the

Federal Rules of Evidence. Respondent further argues that the

declarations executed by Ms. Petersen (Ogden Service Center

custodian of records) and Mr. Holt (U.S. Postal Service mail

processing clerk) are sufficient to self-authenticate the

certified mail list for purposes of admission into the record in

this case under rule 902(11) of the Federal Rules of Evidence.

Petitioners argue, however, that the certified mail list and

5 (...continued) 2000 Amendments

The amendment adds two new paragraphs to the rule on self-authentication. It sets forth a procedure by which parties can authenticate certain records of regularly conducted activity, other than through the testimony of a foundation witness. See the amendment to Rule 803(6). * * *

A declaration that satisfies 28 U.S.C. § 1746 would satisfy the declaration requirement of Rule 902(11), as would any comparable certification under oath.

The notice requirement in Rules 902(11) and (12) is intended to give the opponent of the evidence a full opportunity to test the adequacy of the foundation set forth in the declaration.

28 U.S.C. sec. 1746 (1994) provides in pertinent part that any matter that is permitted to be proved by sworn declaration may be proved by an unsworn declaration in writing which is dated and states that the declaration is made under the penalty of perjury and is true and correct. - 12 -

the declaration executed by Mr. Holt6 do not qualify under an

exception to the hearsay rule because those documents were

prepared in anticipation of litigation and, therefore, they are

inherently unreliable. See Palmer v. Hoffman, 318 U.S. 109, 113-

114 (1943).

As previously noted, the Commissioner is authorized to send

notices of deficiency to taxpayers by certified or registered

mail. Sec. 6212(a). Consistent with the mandate of section

6212(a), and in order to provide a means for determining the

dates regarding the issuance of notices of deficiency, it is

necessary and proper for the Commissioner to prepare and retain

certified mail lists in the normal course of operations. It is,

therefore, incorrect to state that the certified mail list was

prepared in anticipation of litigation. Rather, it is a record

of regularly conducted activities addressed by rule 803(6) of the

Federal Rules of Evidence.

The declarations executed by Ms. Petersen and Mr. Holt were

prepared in the course of litigation in order to satisfy the

requirements of rule 902(11) of the Federal Rules of Evidence.

The purpose of the declarations is to authenticate the certified

mail list. In short, the declarations show that: (1) The

certified mail list was prepared and retained by respondent in

6 Although petitioners do not challenge the declaration executed by Ms. Petersen, our analysis is equally applicable to her declaration. - 13 -

the normal course of operations; and (2) the postmark stamp was

placed on the certified mail list by Mr. Holt, a U.S. Postal

Service mail processing clerk, consistent with normal practices.7

Petitioners have offered no evidence that the disputed

documents are somehow unreliable. In the absence of any such

evidence, we shall admit the certified mail list and the

declarations into evidence.

In sum, respondent has produced competent and persuasive

evidence that duplicate original notices of deficiency were

mailed to petitioners on December 4, 2001. See Cataldo v.

Commissioner, 60 T.C. at 524. Petitioners have not presented any

evidence that the notices of deficiency were mailed on any date

other than December 4, 2001. Because we conclude that the

notices of deficiency were mailed to petitioners on December 4,

2001, it follows that the petition was not filed within the

statutory 90-day period. Consequently, we shall grant

respondent’s motion and dismiss this case for lack of

jurisdiction.8

7 Petitioners have not argued that respondent failed to comply with the final sentence of Fed. R. Evid. 902. 8 Although we lack jurisdiction in this case, petitioners are not without a remedy. In short, petitioners may pay the tax, file a claim for refund with the Internal Revenue Service, and if the claim is denied, sue for a refund in the Federal District Court or the Court of Federal Claims. See McCormick v. Commissioner, 55 T.C. 138, 142 n.5 (1970). - 14 -

To reflect the foregoing,

An order of dismissal for lack of

jurisdiction will be entered granting

respondent’s motion to dismiss for lack

of jurisdiction, as supplemented.