The U.S. Tax Court today in a “reviewed opinion” found that a notice of deficiency was invalid because it did not reflect that the IRS made a deficiency determination as to the taxpayer (petitioner) in this case pursuant to the requirements of section 6212(a).
The case is: U.S. Auto Sales, Inc. v. Commissioner, 153 T.C. No. 5 (October 28, 2019). Read the Tax Court’s opinion [PDF 157 KB] that includes concurring and dissenting opinions.
The IRS in May 2012 issued to the taxpayer (petitioner) an 11-page document purporting to be a notice of deficiency for tax years ending June 30, 2003, and June 30, 2007. The IRS determined deficiencies of $24,480 and $30,668, respectively.
The first four pages of the May 2012 notice identified the taxpayer, but the last seven pages identify a separate, related corporation as the taxpayer. The taxpayer timely petitioned the Tax Court with respect to the May 2012 notice.
The IRS then issued a second notice of deficiency in August 2012 for the tax years ending June 30, 2007, and June 30, 2008. The IRS determined income tax deficiencies of about $3.37 million and $3 million, respectively, and penalties under section 6662. The taxpayer timely petitioned the Tax Court with respect to the August 2012 notice.
The IRS moved to dismiss for lack of jurisdiction, contending that the May 2012 notice failed to identify a particular taxpayer as being responsible for the deficiencies. The taxpayer opposed the motion to dismiss, asserting that the May 2012 notice made a deficiency determination and identified years and amounts at issue and thus was valid to confer jurisdiction on the Tax Court.
The majority opinion of the Tax Court concludes that the May 2012 notice was “ambiguous on its face” because it identified two taxpayers as potentially liable for the deficiencies and further that:
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.