Terrell v. Comm’r: IRS Failed to Exercise Reasonable Diligence

At Chamberlain, we are very proud of our colleagues’ efforts on behalf of pro bono clients.  Two of our attorneys, Juan Vasquez, Jr. and Jaime Vasquez of the firm’s Houston office, along with Peter Lowy of Shell Oil Company, recently argued a pro bono case in front of the Fifth Circuit Court of Appeals in Terrell v. Comm’r.

The Fifth Circuit reversed and remanded a U.S. Tax Court ruling which dismissed the taxpayer’s petition for lack of jurisdiction because she filed her petition more than 90 days after the IRS sent her a Notice of Final Determination.  Noting that the IRS was on notice that its address on file for the taxpayer was incorrect, because three prior mailings had been returned as undeliverable, the Fifth Circuit held that the original Notice was not mailed to Terrell’s last known address.

The Fifth Circuit concluded that the IRS failed to exercise “reasonable diligence” in locating the taxpayer’s correct address before mailing the Notice where the IRS was on notice that its address on file for the taxpayer was incorrect.  Accordingly, the Notice became null and void when it was returned as undeliverable.  The court further held that the 90-day period for the taxpayer to file her Petition began when the Notice was subsequently re-sent.  Because she filed her Tax Court petition within 90 days of this date, her Petition was held to be timely.

The Fifth Circuit’s ruling can be found here.

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