Taxpayer received deficiency notices mailed to her office address

Finding that a taxpayer had received notices of deficiency the IRS had sent to her at her office and that the IRS Office of Appeals had met the requirements of Sec. 6330(c)(3) in reviewing a notice of levy issued to her, the Tax Court affirmed the Office of Appeals’ determination to sustain the IRS’s proposed levy.

Facts: For tax years 2013 through 2019, Carol Rae Foulds, a doctor, failed to file federal income tax returns. As a result, the IRS prepared substitute returns for 2014 and 2016 under Sec. 6020(b) and issued her notices of deficiency assessing liabilities of $729,910 for the two years. The IRS sent the deficiency notices by certified mail to her office address in Leawood, Kan., an address she commonly used to receive mail deliveries.

The IRS issued a levy notice, prompting Foulds to request a Collection Due Process (CDP) hearing. The case was then assigned to a settlement officer (SO), who requested that Foulds provide signed federal income tax returns for certain tax years; proof of estimated tax payments; a completed Form 433-A, Collection Information Statement for Wage Earners and Self-Employed Individuals; a completed Form 433-B, Collection Information Statement for Businesses; and assorted financial documents. However, Foulds failed to provide any of the requested information to the SO before the scheduled hearing. The Office of Appeals issued an initial notice of determination sustaining the proposed levy.

Foulds then petitioned the Tax Court, challenging the IRS’s notice of determination, focusing exclusively on the accuracy of her underlying liabilities. The court, at the IRS’s request, remanded the case to the Office of Appeals to verify whether the deficiency notices had been properly issued and mailed.

On remand, another SO from the Office of Appeals issued a letter to Foulds scheduling a face-to-face supplemental hearing about the IRS’s mailing of the 2014 and 2016 deficiency notices. Before the hearing, the SO reviewed copies of the notices and the certified mailing lists (U.S. Postal Service Form 3877, Firm Mailing Book for Accountable Mail). These documents indicated that the IRS had sent the deficiency notices to Foulds’s office address. 

At Foulds’s supplemental CDP hearing, she admitted that the address on the deficiency notices was her office address and that she had all her mail delivered there. She did not deny that she had received the notices. The SO also inquired whether Foulds had submitted tax returns as suggested in the original hearing. Foulds confirmed that she had not done so (and raised no further issues). The Office of Appeals issued a supplemental notice of determination, again sustaining the proposed levy.

In Tax Court, the IRS filed a motion for summary judgment, but Foulds did not respond to the motion or attend the motion hearing. The court gave her an additional opportunity after the hearing to file a response to the motion, but she again failed to do so. 

Issues: The court faced two issues, the first being whether Foulds was entitled to challenge the amount of her underlying tax liabilities for 2014 and 2016 in the CDP proceeding. Under Sec. 6330(c)(2)(B), a taxpayer may challenge an underlying tax liability during a CDP hearing if they did not receive a valid deficiency notice or have an opportunity to dispute the liability.

The Tax Court found that the IRS had provided sufficient evidence to establish that it mailed the deficiency notices to Foulds at her office address. Furthermore, Foulds acknowledged that she used the address for her mail deliveries and did not deny that she received the notices. As the undisputed facts established that Foulds received the 2014 and 2016 deficiency notices but did not petition the Tax Court to redetermine them, the court held that she could not contest her 2014 and 2016 tax liabilities in the CDP hearing and similarly could not contest them in Tax Court.

The second issue before the Tax Court was whether the Office of Appeals abused its discretion in sustaining the levy. To make its decision, the court reviewed the record to see if the Office of Appeals had met the requirements of Sec. 6330(c)(3). To meet them, the Office of Appeals was required to (1) properly verify that the requirements of applicable law or administrative procedure had been met; (2) consider any relevant issues Foulds raised; and (3) weigh whether any proposed collection action balanced the need for the efficient collection of taxes with Foulds’s legitimate concern that any collection action be no more intrusive than necessary. After reviewing the record, the court found that the Office of Appeals had met the three Sec. 6330(c)(3) requirements and therefore had not committed an abuse of discretion in determining to sustain the proposed levy against Foulds.

Holding: The Tax Court found that the IRS had properly issued and mailed the deficiency notices for 2014 and 2016 to Foulds and that she had received them. Thus, she could not contest her underlying tax liabilities during the CDP proceeding or in Tax Court. The court further held that the Office of Appeals had met the requirements under Sec. 6330(c)(3) for reviewing a levy and did not abuse its discretion in sustaining the proposed levy against Foulds. Therefore, the court granted the IRS’s motion for summary judgment and upheld the Office of Appeals’ determination to proceed with the proposed levy.

• Foulds, T.C. Memo. 2025-111

— Thomas Godwin, CPA, CGMA, Ph.D., and John McKinley, CPA, CGMA, J.D., LL.M., are both professors of the practice in accounting and taxation in the SC Johnson College of Business at Cornell University. Matthew Tardif is a student in the Dyson School of Applied Economics and Management in the SC Johnson College of Business at Cornell University. To comment on this column, contact Paul Bonner, the JofA‘s tax editor.