Taxpayers Could Not Update Last Known Address on Forms 2848 or 4868

(Parker Tax Publishing March 2019)

The Tax Court held that Form 2848, Power of Attorney and Declaration of Representative, and Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, do not constitute either a return for purposes of updating a taxpayer's last known address or clear and concise notification of a different address. The court found that the IRS clearly stated in Rev. Proc. 2010-16 that Forms 2848 and 4868 are not returns and will not be used by the IRS to update a taxpayer's address of record. Gregory v. Comm'r, 152 T.C. No. 7 (2019).

Background

Damian and Shayla Gregory moved from Jersey City, New Jersey to Rutherford, New Jersey in June 2015. However, when they filed their 2014 federal income tax return in October 2015, they incorrectly used their old Jersey City address.

The Gregorys first used the Rutherford address in correspondence with the IRS when they submitted Forms 2848, Power of Attorney and Declaration of Representative, in November 2015. In April 2016, the Gregorys used the Rutherford address again when they submitted a Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return.

In October 2016, the IRS sent by certified mail a notice of deficiency to the Gregorys' Jersey City address. At that time, the Gregorys had not yet filed their 2015 federal income tax return. The U.S. Postal Service marked the notice "Return to Sender/Unclaimed/Unable to Forward" and returned it to the IRS. The Gregorys became aware of the notice of deficiency in January 2017 and immediately filed a Tax Court petition to challenge the notice. The IRS moved to dismiss for lack of jurisdiction, arguing that the Gregorys filed an untimely petition. The Gregorys moved to dismiss for lack of jurisdiction, contending that the IRS failed to send the notice to their last known address.

Analysis

The Tax Court has deficiency jurisdiction only if the IRS mails a valid notice of deficiency to the taxpayer and the taxpayer timely files a petition disputing the deficiency. If the notice is not validly sent or the petition is not timely filed, the Tax Court does not have jurisdiction to redetermine the deficiency. In this case, there was no dispute that the Gregorys' petition was not filed within the required 90 days of the date the notice of deficiency was mailed to them.

Under Code Sec. 6212, the IRS must send a notice of deficiency to a taxpayer's last known address, regardless of whether the taxpayer actually receives the notice. Reg. Sec. 301.6212-2(a) provides that a taxpayer's last known address is the address that appears on the taxpayer's most recently filed tax return, unless the IRS is given clear and concise notification of a different address. Rev. Proc. 2010-16 provides a list of IRS forms that are and are not returns, specifically for establishing whether a document is a return for purposes of updating a taxpayer's last known address. Rev. Proc. 2010-16 explicitly states that Form 1040 is a return but that Forms 2848 and 4868 are not.

Under Beard v. Comm'r, 82 T.C. 766 (1984), aff'd, 793 F.2d. 139 (6th Cir. 1986), a document must meet four criteria to be a return: (1) there must be sufficient data to calculate tax liability; (2) the document must purport to be a return; (3) there must be an honest and reasonable attempt to satisfy the requirements of the tax law; and (4) the taxpayer must execute the return under penalties of perjury.

The Tax Court held that the IRS's notice of deficiency was sufficient because it went to the Gregorys' last known address. The court concluded that a taxpayer does not provide the IRS with clear and concise notification of a different address by submitting Form 2848 or Form 4868. Therefore, because the Gregorys did not provide the IRS with clear and concise notification of a different address, the Jersey City address on their most recently filed and processed return was their last known address. The court found that the IRS sent a valid notice of deficiency to that address and, because the Gregorys' petition was not timely, the court granted the IRS's motion to dismiss for lack of jurisdiction.

The court found that neither the Form 2848 or Form 4868 were returns because neither met the Beard criteria; they did not provide any data necessary to calculate the Gregorys' tax liability, did not purport to be returns, and could not reasonably be considered attempts at making a return. The Tax Court further found that Reg. Sec. 301.6212-2(a) states that what constitutes a properly processed federal tax return is set forth in procedures prescribed by the IRS, and the procedures in place at the relevant time are found in Rev. Proc. 2010-16. The court pointed out that Rev. Proc. 2010-16 explicitly states that Form 1040 is a return but that Forms 2848 and 4868 are not.

The Tax Court also concluded that the Gregorys' Forms 2848 and 4868 were not clear and concise notices of their new address. The court pointed out that the Form 2848 instructions explicitly state that the address provided on the form will not change the taxpayer's last known address, and the 2014 form itself cautions that it will not be honored for any purpose other than representation before the IRS. Similarly, the court found that the instructions to 2015 Form 4868 warn taxpayers that filing the form will not update their address. The instructions state that if the taxpayer's address changed since filing his or her last return, the taxpayer should use Form 8822, Change of Address; showing a new address on Form 4868 will not update the taxpayer's record.

For a discussion the Tax Court's jurisdiction over a notice of deficiency, see Parker Tax ¶263,510.

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

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