Welch v. United States
2012 U.S. App. LEXIS 10099
Fed. Cir.2012Background
- Welch and de Losada paid deficiencies for 1992 and 1995 totaling $867,482.83, with a Tax Court mootness ruling in 2009 after payment.
- The IRS extended the statute of limitations to December 31, 2000 and mailed letters denying the losses, triggering notices of deficiency.
- A 1998 Letter 950 and a 1998 Letter 569 were mailed to the couple; appellants do not dispute mailing nor receipt but raise proof issues.
- The IRS relied on Manhattan procedures, ACMs, and supporting documents to show timely mailing, including date-stamped notices and return-receipt evidence.
- The Court of Federal Claims held both 1992 and 1995 notices were timely mailed; appellants appealed alleging lack of proper PS Form 3877 evidence for 1995.
- On appeal, the Federal Circuit affirmed in part (1992) and reversed in part (1995) due to lack of corroborating evidence tying a 1995 notice to a mailed deficiency.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the government proved timely mailing of 1992 notice | Welch & de Losada contends proof insufficient | United States asserts corroborating mailing evidence suffices | Timely mailing for 1992 proven; presumption of regularity supported |
| Whether the government proved timely mailing of 1995 notice | No copy of 1995 notice or PS Form 3877; insufficient corroboration | Evidence of procedures and receipts could establish mailing | Not proven; 1995 mailing not established |
| Role of PS Form 3877 and alternative evidence in proving mailing | Presumed failure without a proper Form 3877 | Other corroborating evidence acceptable if properly tied to mailing | Form 3877 not mandatory; however, evidence must directly corroborate mailing; failure to tie 1995 evidence defeats it |
Key Cases Cited
- Zolla v. United States, 724 F.2d 808 (9th Cir. 1984) (presumption of mailing when Form 3877 and tax assessment docs exist)
- Ahrens v. United States, 530 F.2d 781 (8th Cir. 1976) (presumption of regularity applies to contents, not existence; probative when Form 3877 used)
- O'Rourke v. United States, 587 F.3d 537 (2d Cir. 2009) (two-prong test; existence of notice and proper Form 3877 or corroborating evidence)
- Keado v. United States, 853 F.2d 1209 (5th Cir. 1988) (proof of mailing may rely on non-3877 evidence; requires connection to actual mailed notice)
- Coleman v. Commissioner, 94 T.C. 82 (1990) (Tax Court uses corroborative evidence framework when Form 3877 is imperfect)
- Pietanza v. Commissioner, 92 T.C. 729 (1989) (incomplete Form 3877 cannot prove mailing without additional proof)
- Butti v. Commissioner, 95 T.C.M. 1321 (2008) (affirmative requirement for evidence corroborating mailing when 3877 is unavailable)
- Magazine v. Commissioner, 89 T.C. 321 (1987) (tax court requires corroborating evidence beyond habit evidence when no notice is produced)