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Jewish World Review Jan. 22, 2001 / 27 Teves, 5761

Tax Tales by A. J. Cook

A.J. Cook
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Getting the address right

http://www.jewishworldreview.com -- THE INTERNAL REVENUE SERVICE wanted to bill Manuel Fernandez, but didn't know where he lived. So the agent dunned him where he was shot.

The IRS bills for taxes by sending a notice by certified or registered mail. It isn't necessary that taxpayers receive the notice, but it is necessary that it be sent in a timely manner to their last known address.

Otherwise, the tax obligation is often waived by default. Understandably, the last known address is a frequently litigated issue, as it was in the Fernandez case.

Fernandez had flown from Newark, N.J., to Miami with a round-trip ticket and an open return date. He stayed at a house on 93rd Street with a sophisticated lock system, an eight-foot solid wood fence and other security measures.

Despite all that, at three one morning, while he slept, unknown assailants fired bullets into the house, wounding him in the stomach and hip. He was taken to the hospital, where he listed his New Jersey address when admitted. That same day his wife flew to Miami to take him home to New Jersey.

Police officers investigating the shooting entered the Miami house and discovered cocaine, marijuana, weapons, $147,500 in cash and drug transaction records.

Their report said Fernandez lived at the Miami house, but listed a New Jersey address as well. It also said he had a New Jersey driver's license.

Being good citizens, the police snitched to the IRS. An examining agent went to the Miami home, but learned from the neighbors - and the old newspapers scattered on the lawn - that no one had been there for some time.

In trying to locate Manuel Fernandez, the agent found there were 700 people with that name living in Miami but none living at the Miami address.

Using drug records found at the home and based on the retail value of the narcotics sold minus their cost, the IRS determined how much income taxes they assumed Fernandez owed. The agency mailed an official notice of taxes due to him at the Miami house, even though no one was living there at the time.

When there was no response, the IRS assigned the case to their Collection Division. Its officers are known for finding citizens and their assets by using astute methods.

The assigned officer called the hospital and got the New Jersey address. He then sent a notice to Fernandez demanding $13 million.

Shocked, Fernandez said this was the first he'd learned of any tax trouble. In court he questioned why the IRS didn't send the official notice to a New Jersey address shown on his tax returns for the previous 18 years.

The judge reviewed the examining agent's process in looking for the taxpayer's address. He then said the IRS didn't exercise reasonable diligence and ruled the official notice was invalid.

Now, six years after the agent determined the amount due, it was too late to send another one. The moral: The right address is important for social status and tax assessments.


A.J. Cook, lawyer and accountant, is counsel with the law firm of Pietrangelo Cook PLC. Comment by clicking here.


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