The IRS has a form just to inform them that you moved.
Many, many years ago I was asked why this form
existed, as the IRS would automatically update its files when you filed your
next tax return.
After decades of practice, I have a very good idea why
this form exists.
Let’s talk about Duane Chapman, whom you may know as
Dog the Bounty Hunter. You may also remember that his wife – Beth – recently passed
away from throat cancer.
The series Dog the Bounty Hunter aired from
2003 to 2012; the show took Duane and Beth to Hawaii and Colorado.
In 2012 the IRS was looking at their 2006 and 2007 tax
returns.
COMMENT: You may be wondering why the statute did not close on the tax returns after 3 years. The IRS will – especially if there is complexity to the return – usually ask one to extend the statute period. I tend to accept such requests, as the alternative is for the IRS to disallow everything and issue a Notice of Deficiency before the statute expires.
Let’s highlight several dates.
Duane and Beth used their CPA’s address for their 2010
tax return.
Their favorite accountant left that CPA firm to start
his own. Duane and Beth followed.
Duane and Beth then used this CPA’s new address for
their 2011 return.
We therefore have two addresses in Los Angeles.
Mind you, the television show was in Honolulu.
And they also had a home in Colorado.
It was 2012 and the IRS was preparing a Notice of
Deficiency, also known as the 90-day letter. One has 90 days to appeal to the Tax Court.
The IRS was required to send the Notice to their “last
known address.”
That presents a problem.
What address do you use?
The Appeals Officer had an IRS employee search for addresses,
but eventually he sent copies of the Notice to both CPAs in Los Angeles.
The story now goes wonky.
The old CPA received the Notice but did not see fit to
forward it to Duane and Beth, or at least to place a call or send an e-mail to
either – you know, for old time’s sake.
I am thinking he may want to contact his insurance
carrier, just in case.
The new CPA said he never received the Notice, but
Post Office records show that it had been delivered. What makes this doubly
peculiar is that the CPA had previously contacted the Appeals Officer explaining
that he would soon be filing a power of attorney. And he did – but after delay
and after the Officer had closed the file.
I am thinking he may want to contact his insurance
carrier also.
The IRS assessed taxes, interest and penalties.
Duane and Beth challenged whether the IRS used their
last known address. If the IRS did not, then the Notice of Deficiency was not properly
served and any tax or penalty could not be reduced to assessment. Both parties
would be back to square one.
Duane and Beth argued that any IRS notice should have
gone to their address in Hawaii, as that is where they were. The IRS knew that the
Los Angeles addresses were for their CPAs and not for them personally.
The Court had to address the meaning of “last known
address.”
And it means pretty much what you would think.
The last known address was for their old CPA. The IRS
had extended a courtesy by sending a copy to the new CPA, especially considering
his delay in sending a power of attorney. Granted, the IRS knew – or should
have known – that they were in Hawaii, but that is not what “last known address”
means.
The taxpayer decides that address. By filing a return.
Or by filing that change-of-address form noted at the beginning of this post.
Duane and Beth had decided it would be their CPA’s
address.
They had filed with the Tax Court long after 90 days had
expired.
So their filing was dismissed as untimely.
Our case this time was Chapman v Commissioner,
TC Memo 2019-110.
