Generally, the IRS is required to send its notices to the taxpayer’s “last known address.” Treasury Regulation 301.6216-2 defines “last known address” as:
[T]he address that appears on the taxpayer’s most recently filed and properly processed Federal tax return, unless the IRS is given clear and concise notification of a different address.
On August 5th, 2008 the Tax Court, in Conn v. Commissioner, T.C. Memo. 2008-186, held that the last known address rule does not apply to prevent a taxpayer who never received a notice of deficiency from challenging the liability in a Section 6330 appeals hearing.
Section 6330(c)(2)(B) limits the taxpayer’s ability to challenge the underlying tax liability during the [Appeals] hearing. Specifically, the taxpayer may ‘raise at the hearing challenges to the existence or amount of the underlying tax liability for any tax period if the person did not receive any statutory notice for such tax liablity or did not otherwise have an opportunity to dispute such tax liability.’
Many tax professionals wrongly assume that the “last known address” rule applies to all notices or correspondence sent by the IRS. Conn makes it clear that this is not true in the case of a Statutory Notice of Deficiency.
Word to the Wise: If your client did not actually receive a Notice of Deficiency and disagrees with the underlying assessment, you should challenge that assessment in an appeals hearing. If you don’t, you have probably committed malpractice.
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1 Taxpayers Beware of IRS “Last Known Address” Rule // Feb 5, 2009 at 10:45 am
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