The IRS mailed its notice of determination to an incorrect address. On October 17, 2016, U.S. Tax Court held in favor of the taxpayer who claimed that he was deprived of the statutory notice. Section 6213(a) of the Internal Revenue code states a notice of deficiency should be duly mailed to the taxpayer’s last known address before a deficiency may be assessed. If the IRS hasn’t mailed a notice of deficiency, no collection of an assessment of the deficiency may proceed. Tax Court Memo 2016-191.
Under the threat of a tax levy, the taxpayer decided to liquidate her retirement account in order to pay her back taxes. However, instead of sending her check to her tax attorney, she decided to send her payment directly to the IRS revenue officer with an accompanying letter which read as follows: “Enclosed, please find our firm IOTA trust check account number 2512 in the amount of $61,669, to be applied to our delinquent taxes. If you have any questions, please let Wally Anderson or me know.” The memo section of the check read: “Back Taxes”.
The IRS revenue officer followed his own discretion as to how to apply the payment to various tax periods with liabilities.