Cropper v. Commissioner
2016 U.S. App. LEXIS 11313
10th Cir.2016Background
- James Cropper failed to file federal income tax returns for 2006–2008; the IRS prepared substitute returns, mailed deficiency notices to his Norwood, CO PO box, and assessed tax liabilities after no response.
- The IRS later sent a lien notice (Oct 6, 2011) and a levy notice (May 7, 2012); Cropper timely requested a Collection Due Process (CDP) hearing.
- The Office of Appeals reviewed IRS records, PS Forms 3877, Forms 4340, and account transcripts, concluded mailing procedures were followed, and determined the proposed levy could proceed.
- Cropper did not participate in the scheduled telephone hearing, submitted only unsworn denials that he never received the deficiency notices, and did not produce documentary evidence disputing the assessments.
- The Tax Court sustained the Office of Appeals’ determination; on appeal, the Tenth Circuit reviewed the administrative determinations for abuse of discretion and affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether IRS properly mailed deficiency notices under 26 U.S.C. § 6212 | Cropper: IRS failed to prove mailing; thus notices were not validly issued | IRS: Produced deficiency notices, PS Forms 3877 (though defective), Forms 4340, and account transcripts corroborating mailing | Court: IRS provided competent, persuasive evidence; Office of Appeals did not abuse discretion in finding proper mailing |
| Whether Cropper may rebut presumption of receipt | Cropper: His unsworn statements that he did not receive notices rebut mailing | IRS: Presumption of delivery applies where properly mailed; plaintiff must provide clear and convincing evidence to rebut | Court: Unsigned, self-serving denials insufficient; presumption of receipt stands |
| Remedy if taxpayer did not receive deficiency notice — whether assessments must be set aside | Cropper: If he didn’t receive notices, § 6330 requires notices/assessments be set aside | IRS: § 6330 allows taxpayer to challenge liability at CDP hearing but does not automatically vacate assessments | Court: § 6330(c)(2)(B) gives right to challenge liability at CDP hearing but does not mandate vacatur; Cropper was not entitled to have assessments set aside |
| Whether Office of Appeals abused discretion by denying face-to-face hearing or by precluding challenge to liability | Cropper: Should have had face-to-face hearing and been allowed to contest liabilities | IRS: CDP hearings may be informal; Appeals reviewed records and offered opportunity to submit corrected returns | Court: No abuse of discretion; face-to-face not required; Cropper had opportunity to challenge but failed to present evidence |
Key Cases Cited
- Guthrie v. Sawyer, 970 F.2d 733 (10th Cir. 1992) (mailing to last known address satisfies notice requirement even if taxpayer does not actually receive notice)
- Welch v. United States, 678 F.3d 1371 (Fed. Cir. 2012) (PS Form 3877 defects can preclude presumption of mailing but other evidence may suffice)
- O’Rourke v. United States, 587 F.3d 537 (2d Cir. 2009) (identifies defects in PS Form 3877 that undermine mailing presumption and discusses corroborating evidence)
- Gyorgy v. Comm’r, 779 F.3d 466 (7th Cir. 2015) (distinguishes de novo review of underlying liability from abuse-of-discretion review of administrative determinations in CDP cases)
- Jones v. Comm’r, 338 F.3d 463 (5th Cir. 2003) (statutory notice of deficiency is presumed correct; taxpayer bears burden to show error)