Christopher Gyorgy v. CIR
2015 U.S. App. LEXIS 3100
7th Cir.2015Background
- Christopher Gyorgy failed to file federal income tax returns from 2001 through at least 2007, moved frequently, and did not update the IRS with a verifiable address.
- The IRS prepared substitute returns and issued deficiency notices for tax years 2002 and 2003, mailing both to the address on Gyorgy’s most recently filed return (Octavia Street); both mailings were returned as undeliverable.
- No timely petitions to redetermine deficiencies were filed; the IRS assessed the deficiencies and later filed a federal tax lien on Gyorgy’s Evanston property in August 2009. Gyorgy requested a CDP hearing.
- At the CDP hearing and at tax-court trial Gyorgy (pro se) produced no tax returns or documentary evidence challenging liability or proving he had given the IRS clear and concise change-of-address notice.
- The Appeals Office sustained the lien notice, finding the IRS mailed notices to Gyorgy’s last known address and correctly calculated liabilities; the Tax Court vacated the 2001 notice for lack of proof of mailing but sustained 2002 and 2003. This appeal concerns those rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IRS mailed deficiency notices to taxpayer’s "last known address" under I.R.C. § 6212(b)(1) | Gyorgy: Notices mailed to Octavia were invalid because he no longer lived there and had provided address updates by mail/phone | IRS: Last known address is the address on the most recent filed return unless given clear and concise notification of a change; no such notification existed | Court: Affirmed Appeals Office — Octavia was last known address; IRS did not abuse discretion |
| Whether the IRS had an obligation to investigate further after returned mail before mailing a second notice | Gyorgy: Returned first notice put IRS on notice to investigate and find new address before mailing again | IRS: No record of a new address; reasonable diligence does not require tracking an itinerant nonfiling taxpayer beyond regulations and available records | Court: Even if additional diligence were required in some cases, Gyorgy’s conduct (nonfiling, frequent moves, no documentation) precludes relief; mailing was proper |
| Whether Gyorgy may contest underlying tax liabilities in tax court de novo | Gyorgy: He challenges liability because he did not receive deficiency notices | IRS: Provided evidence supporting liabilities; taxpayer failed to present evidence in CDP or at trial | Held: Gyorgy waived any challenge by failing to present evidence or develop arguments; liabilities sustained |
| Whether administrative-record limitations preclude consideration of trial evidence | Gyorgy: N/A on appeal | IRS/Tax Court: Considered trial testimony beyond CDP record; parties did not object | Held: Court declined to decide rule; proceeded on combined record since no party objected |
Key Cases Cited
- Eschweiler v. United States, 946 F.2d 45 (7th Cir. 1991) (defines last known address and requires IRS to exercise reasonable diligence)
- Goulding v. United States, 929 F.2d 329 (7th Cir. 1991) (taxpayer bears responsibility to notify IRS of address changes)
- Gille v. United States, 33 F.3d 46 (10th Cir. 1994) (upholds deficiency notice validity where taxpayer failed to file returns and could not now fault IRS diligence)
- Rappaport v. United States, 583 F.2d 298 (7th Cir. 1978) (actual receipt not required; mailing to last known address suffices)
- Mulder v. Commissioner, 855 F.2d 208 (5th Cir. 1988) (in some circumstances returned mail may trigger further investigation)
- Terrell v. Commissioner, 625 F.3d 254 (5th Cir. 2010) (returned letters can obligate IRS to investigate and locate taxpayer)
- Goza v. Commissioner, 114 T.C. 176 (Tax Ct. 2000) (tax court reviews underlying tax liability de novo in CDP appeals)