Anthony Sicari and Esther Sicari v. Commissioner of Internal Revenue
136 F.3d 925
2d Cir.
1998
Check Treatment

*1 required Guidelines. the factors the. the seriousness

Judge Keenan noted reha- need for deterrence and

crime and the (§ 3553(a)(2)(A),(B) (D))., The

bilitation counsel with defense

judge also discussed evi- discharged,

how the sentences would (b) (c) of of factors

dencing consideration

Application 3. Note rules, previous version of the

Under the ad- illustrate court’s statements district fac-

equate the relevant consideration See, Lagatta, v. e.g., United States

tors. (2d Cir.1995) (consecutive 125, 127 “free imposed prevent ride”

sentence crime);

another serious United States (5th

Richardson, Cir. (district curiam)

1996)(per court’s statement objectives sentencing it considered the implied punishment deterrence general consideration of

the court made factors). 3553(a) § Since the

all of to afford ad-

current version was intended judges, flexibility district court

ditional Keenan’s statements likewise show

Judge of the relevant factors. Ve-

consideration to show that the district

lasquez failed

court abused its discretion. judgment of is affirmed. conviction Sicari, and Esther SICARI

Petitioners-Appellants, OF INTERNAL

COMMISSIONER

REVENUE, Respondent

-Appellee . 97-4186.

Docket No. Appeals,

United States Court of Circuit.

Second

Argued Dec. 27, 1998.

Decided Feb. *2 of

tion. The Sicaris contend that notice deficiency was insufficient Com- because the not- wrong missioner sent withstanding knowledge his actual new, assigned a Sicaris’ home had been conclude, precise designation. We case, precise facts of this that the Tax finding in Court erred the Commissioner requisite diligence, acted and we remand for determination as to deficiency, regardless whether the notice of improper addressing, fact of was in delivered Sicaris. Eisenberger, City, Sheldon New York for appellants. Background O’Connor, B. Washington,

Michelle DC (Loretta Gen., Argrett, Atty. Asst. David C. 1976, Since the Sicaris have lived in the Carmack, Div., Justice, English Dept, Tax upstate community in same house the small DC, brief), Washington, appellee. Gardiner, York, County. New in Ulster 208, along Their home is located WINTER, Judge, Before: Chief highway. 1991, two-lane state Before WALLACE,* NEWMAN and Circuit mailing simply official Sicaris’ address was Judges. (the Gardiner, “Route New York 12525” address”). January “Route 208 In NEWMAN, Judge: JON O. Circuit assigned United States Post Office the Sicar- appeal duty This concerns the of the Com- number, is’ residence rural route box (the missioner of Internal Revenue “Commis- mailing Sicaris’ address became “Route sioner”) diligence, to use reasonable when 1370, Gardiner, York New 12525” sending deficiency taxpayer, a notice of to a (the address”). “Box January In ascertaining “last known again changed the Post Office the Sicaris’ address.” A notice to such is a sent assigning this time their home a prerequisite to collection of an tax income implementa- street number facilitate the deficiency, proper and the of a notice emergency sys- tion a “911” notification 90-day period starts a time time, tem. At this the Sicaris’ official ad- taxpayer may challenge the assessment 208, Gardiner, dress became “871 Route New Usually, Tax Court. (the address”). York 12525” “871 disputes required as to whether the notice In the fall of the Internal Revenue properly was addressed concern (“IRS” Service”) Service or “the determined who has moved to a location different from deficiencies in the Sicaris’ federal income tax- the one Commissioner. This years through for the tax es 1986. On however, appeal, extraordinary involves the 9, 1992, Albany, October the Service’s New taxpayers circumstances of whose address York District statutorily Office issued a re- changed year within twice one even quired concerning these though they have never moved at all. underpayments. tax The notice was sent to appeal Sicari and his wife from by mail, receipt certified return 4, 1997, the March order of Court requested, envelope bearing in an the Route (Howard Dawson, Judge), holding A. 208 address. petition their for a redetermination of income 10, 1992, untimely, dismissing deficiencies was envelope On November subject returned, jurisdic- unopened, the action for lack Sup- matter to the Examination * Wallace, sitting designation. J. Honorable Clifford of the United Circuit, Appeals States Court for the Ninth 1992, just over September In proceedings. the IRS District Processing Unit port and the notice a “Re- two weeks before envelope bore Albany. The Office ink, sent, filed in the Procedures Unit stampmark in red to Sender” turn form, Bankruptcy a Proof Claim for the return “REASON CHECKED” addition, words Box 1370 which also listed the Address. was “Unclaimed.” *3 been handwritten had “Return unclaimed” Manico, a Agent James Internal Revenue envelope also envelope. The the face of the Quality Measurement Staff member the postal Siearis’ on which the two dates listed Office, responsi- Albany District IRS the notices had delivered purportedly carrier ascertaining the address for ble for Siearis’ they needed informing them that the Siearis deficiency. To the the notice of determine claim the envel- Post come to the Office reviewed last known Manico Siearis’ envelope was on which the ope, date file instructed Siearis’ administrative Curiously, the date to the Service. returned computer The clerk to run a search. a clerk “9-24”— was listed as the “1st Notice” not IRS databases but did searched two -24, September a reference to presumably Siearis’ database in which the search the AIS of the enclosed preceded the date search of was stored. The Box 1370 address deficiency by than two weeks. notice of file and the two IRS data- the administrative as Notice” was listed The date the “2d not alert Mani- that were searched did bases “10-16”; listed as of “Return” was date of) (or change in co a refinement no further effort made “10-19.” The Service Nothing in record ex- address.1 Siearis’ the tax concerning the Siearis to contact AIS why clerk did not search the plains deficiencies. database. deficiency was At the time the notice they claim that receive The Siearis did was aware that prepared, the Service deficiency until alleged of the actual notice 1370 ad- begun to use the Box had Siearis they met with an Internal when June items of corre- filings and in numerous dress agent mat- to discuss an unrelated Revenue example, the Siearis spondence. For ac- present The Siearis commenced the ter. requests in for Box 1370 address used the later, 27, 1995, by weeks June tion two the 1990 (pertaining to returns for extensions filing petition redetermination of a for in filed with the Service years) and 1991 tax The Service in the Tax Court. deficiencies addition, An- April 1992. April 1991 and subject lack of matter to dismiss for moved the Box thony had used Sicari petition was arguing that jurisdiction, bankruptcy pro- personal in connection untimely. Bankruptcy for the in Court ceedings Judge Trial Nor hearing, Special a After York that were of New Southern District man concluded Wolfe Unit of by Special Procedures monitored petition ruled that sufficient and Albany District Division at the the Collection Judge Judge adopted untimely. Dawson listed the Sicari IRS Office. the action. opinion and dismissed Wolfe’s filed com- petition he Rev Internal v. Commissioner See Sicari 1992; proceedings June mencing those (CCH) 2136, 1997 enue, WL 87252 73 T.C.M. no- prompt Unit received Procedures (1997). Box 1370 filing recorded the tice of this Automated Insolven- the Service’s Discussion (“AIS”) System computer database. cy income collect “In order to Special Procedures Unit In June tax, must have mailed letters, using the Commissioner both Anthony Sicari two sent registered by or address; certified notice of letters ex- these the Box address.” taxpayer at his last re- mail to his to file federal tax plained Internal v. Commissioner bankruptcy Fol lum during pendency turns years, listed the of which both were and 1989 databases that information in the two 1. The had been drawn from Siearis’ Address. searched returns, fully the 1988 processed tax for recent Revenue, (2d 118,119 Cir.1997); see residence known the Commissioner or the (b)(1) (1994). 6212(a), §§ 26 U.S.C. temporary General- last known address of a definite ly, to challenge the assessment a tax defi- duration to which the has directed ciency, petition must file the commissioner to all send communica- ” redetermination in within 90 tions.’ Tadros v. days (2d Cir.1985) (cita- of the notice of deficien- 6213(a). cy. However, omitted). § id. See when the explained tion As we in Tadros: was mailed Although the mailing of notice tax- 1992,Anthony bankruptcy October Sieari’s payer’s may last known always proceeding was still pending, and the auto- provide taxpayer, actual notice to the stay imposed by matic Bankruptcy Code protects allowance for constructive notice prevented commencing the Sicaris from from IRS the overwhelming adminis- *4 action in Court. See 11 U.S.C. trative of ascertaining burden taxpay- each 362(a)(8) (1994). § any given er’s exact address at time. To further purpose, becomes re- bar, To account for this the Internal Reve- sponsibility of to communi- provides nue Code a that where notice of to cate the commissioner a “clear and con- deficiency is issued to debtor who is the any change cise notification” of in address. subject of pending bankruptcy proceedings, however, This say, is not to that the IRS 90-day period begin does to run until has no attempt to to ascertain days following 60 bankrupt- the conclusion of address; taxpayer’s new where it is cy 6213(f)(1). proceedings. § See 26 U.S.C. shown that the IRS has to exercise Because the failed Bankruptcy Court did not dis- reasonable care in determining an ad- miss bankruptcy Sicari’s proceeding dress, a notice sent to uyrong 14, 1994,' September until the Sicaris had satisfy statutory will not requirement, 13, 1995, February until petition to file 90-day and the period begin will not of redetermination the deficiencies described run. 9, 1992, in the October notice. The Sicaris added) (citations Id. (emphasis missed this at 91-92 deadline. omit- ted). In determining whether the IRS used Ordinarily, petition a late diligence reasonable in ascertaining taxpay- Tax Court will be dismissed for lack of sub er’s last we consider ject jurisdiction, matter taxpayer’s and the information Service the time it the. only remedy pay will be deficiency and mailed the notice deficiency. Folium, of See bring a refund suit in the District Court. 128 F.3d at 119. We review de novo the Tax See v. Hoffenberg Commissioner Internal of legal Court’s conclusion as to the satisfaction (2d Revenue, 665,. Cir.1990). 905 F.2d 666 of requirement. diligence reasonable See The Sicaris seek to avoid this result con id. tending that the notice of deficiency was The Commissioner relies on the fact that insufficient because it was mailed to the out the notice was mailed to the Route 208 ad dated Route 208 Address. aWhen notice of dress because this was the address the Sicar- deficiency defective, 90-day is clock does is had on listed what was then their most run, begin the Tax Court lacks recently return, filed a return for the 1986 jurisdiction petition over a for redetermina year 15,1991. May that had been filed on tion directed to the deficiencies described in Several courts have held that the address the defective notice. See v.Ward Commis listed recently filed Revenue, sioner Internal 517, 907 F.2d of return is presumptively the “last known ad (5th Cir.1990).2 521 purposes dress” for deficiency. a notice of See, “last known address” to which e.g., Armstrong v. Commissioner In Revenue, must 970, (10th be sent is “the ternal 15 F.3d 973-74 taxpayer’s ‘last permanent Cir.1994); legal address or Marks v. Commissioner of Inter- Thus, contending both sides are entirely the Tax their contentions lead to different ulti- subject jurisdiction, lacked matter consequences. but mate

929 (D.C.Cir. Revenue, 983, living the Service that the Sicaris were still nal 1991); place in the v. Inter same Williams (9th Revenue, merely Cir. refinement of the 935 F.2d nal 1991); v. Internal 208 address. The Commissioner’s Ponchik Commissioner of (8th Cir.1988); Revenue, agents contention that the Internal Revenue 854 F.2d responsible preparation Rev for the v. Internal of the notice McPartlin Commissioner of (7th Cir.1981). enue, were unaware the informa 653 F.2d tion in the files Procedures that, Nevertheless, we think under is unavailing. Unit As the District of Colum here, it presented was un the circumstances out, pointed bia Circuit has “An innocent rely for the Commissioner reasonable penalized taxpayer should not be because the taxpayers’ most address listed on the neglects right tax collector to tell his hand recently explained we filed return. As doing.” what his left hand Crum Com Folium, obli Commissioner has an “The missioner diligence gation to exercise (D.C.Cir.1980); Fuel, Inc. see also Cool taxpayer’s correct address ascertain (9th Connett, 312-13 Cir. be prior she has (“The 1982) application ordinary business known to come aware that the last principles govern to the tax business Follum, agency may be incorrect.” *5 require ment would seem to the Commission added). Here, (emphasis at 119-20 F.3d er to himself of facilities his avail of knowledge, the time it had actual Service organization performance in business notice, begun that the Sicaris had issued the duty deficiency.”) to mail his address, precise a to use the (citation quotation marks omit and internal prior of their address. refinement ted). the Box 1370 The Service itself had used distinguish this The unusual facts of case it pri- correspondence in to address result we in In from the reached Tadros. 1992, and had recorded the or to October Tadros, upheld sufficiency wé of notice computer in one of its Box 1370 address mailed to the former New York diligence Normally, reasonable databases. taxpayer of a had New who moved to to consult its own require will the Service Jersey. taxpayer his New had used files, computer those maintained in at least recently in filed re- York address his initiating in the same databases district notice, issuing Prior to the Service turn. See, e.g., disputed States v. notice. United taxpayer, writ- a letter from the (S.D.Fla.1995) (“While had received Bell, B.R. Jersey displaying ten on the New letterhead taxpayer bear the burden of noti should address, copies previous requesting of certain fication of the new the IRS cannot declining permit correspondence. In simply ignore obviously which it that taxpayer rely letter- Note, knows.”); Kutell, The Cur Russell J. head, not indi- we noted that letter did Interpreting in the Internal Rev rent Trend his new ad- cate whether that address was enue Service’s Standard Reasonable Dili at 92. dress. See gence Mailing Deficiency Notices to a in Taxpayer’s “Last Known Address” and the First, distinguish Tadros. Several facts Implications, 44 Tax Law. Due Process actually there had not recorded the Service (“If (1991) computer Service has files, had never new in its requires time effort feature that minimal new communications used the implement, then the be Service should taxpayer, unit whereas here a of the feature.”). required to exercise a Proof of Claim form the Service filed Court, conducted, using ad- diligent Bankruptcy Had a more current search been Second, have discover- dress. Tadros had Box 1370 address would been ed, only single in a informal and the have been alerted used the address Service would Third, impor- and most inquiry.” “routine possibility that the Route 208 address Folium, tant, IRS was faced with two addresses “may 128 F.3d at be incorrect.” corresponding to different locations. Under apparent 120. It would then have been circumstances, those the Service could not be That matter remains to be determined using faulted for cir the old address under remand. particular

cumstances it where had no reason Conclusion to know at which the two different loca living. tions the See Arm vacated, The order of the Tax Court is (“[R]easonable strong, 15 F.3d at 974 dili the cause remanded to the Tax Court for gence require does IRS send proceedings opin- further consistent with this duplicate every notices address of ion. knowledge.”). WALLACE, Judge, dissenting: Circuit Because we conclude the Com dissent, respectfully I must as I conclude missioner did not act with dili majority opinion that the is inconsistent with gence preparing deficiency, the notice of the Second Circuit’s decisions in Follum v. , we vacate the order Court dis (2nd Commissioner missing petition. However, the Sicaris’ the Cir.l997)(Follum), and Tadros Commis diligence necessarily lack does not mean (2nd sioner, Cir.1985)(Taciros). 763 F.2d 89 that the notice Even was ineffective. if the addition, overlooks the dis- addressed, inadequately the re positive fact that the Sicaris used the Route quirement of effective notice would satis interchangeably 208 and Box 1370 addresses prove,-by prepon the Service fied could in their court and Internal Revenue Service evidence, envelope derance (IRS) filings during 1991 and 1992. containing the notice was in fact delivered to I get aspects Before to these critical Pugsley Sicaris’ residence. See Com point appeal, I opinion out that the missioner question also fails to address the of the stan- (11th Cir.1985) (“We 692-93 do not deter dard of It review. assumes comment *6 without mine Pugs- whether the notice was sent to proper that the is standard de novo. Neither ley’s address,’ ‘last known if since even it was Folium, cites, which the nor Tad- not, Pugsley prejudiced was not because he ros, however, proper address the standard of ‘received actual notice of the with involving review in eases known “last ad- ”) ample remaining time a petition.’ to file inquiries. only dress” ge- Folium states a (footnote omitted); Bonty and citation accord findings neric “The standard: factual of the v. Commissioner tax upheld appeal court be on must unless (CCH) 322, 323, T.C.M. 1997 WL 461910 they clearly are erroneous. The tax court’s (1997) (“[A] taxpayer’s receipt actual of a rulings novo,” of law de are reviewed deficiency, prejudicial delay, without 119, specifically at- addressing F.3d without obviates the need to decide whether the no appropriate the standard this case. address.”). tice was mailed to the last known All other question, circuits consider the evidence,

In conflicting however, the face of the Tax have determined that a review specifically finding declined to make a appropriate. clear error is Armstrong v. envelope (10th as to Commissioner, 970, whether the was delivered.3 15 F.3d 973-74 3. The evidence on presumption delivery this issue was somewhat con- applies prop- that where hand, flicting. erly placed custody On the one there was evidence addressed mail is in the (when January Hoffenberg, that the even after Postal Service. See F.2d at street num- assigned along bers were to residences located 208), the Gardiner Post Office continued hand, stamp envelope theOn other the proper to deliver to recipients intended mail indicating delivery attempted Sep- that bearing either of the two outmoded- forms of tember 1992—over two weeks before possible actually address. It is that the Sicaris suggests may that there have issued — slip notifying received them of a certified mail irregularity been some Post Office's han- Service, delivery yet from the chose not to claim dling envelope. may It be that the envel- envelope. We note that if Post Office ope was never delivered Sicaris as a result n treated mail addressed to the Route 208 Address of a Post Office mistake. properly as addressed in October then appropriate even We no intimate view as to the may the Service be entitled to the benefit of the resolution of this factual issue. majority supports its standard v. Thé novel Cir.1994)(Armstrong); King Commission (9th Cir.1988); er, by advising us that the Procedures 678-79 857 F.2d Commissioner, 653 F.2d has chosen to include the Box 1370 Unit McPartlin (7th Cir.1981); v. Commission The Johnson address its database. existence Cir.1980). (5th database, however, The er, in its Box 1370 address why explain it chooses majority does not The does not save Sicaris. IRS searched cre norm and diverge sending from established two national databases before providing notice; less conflict ate an intercircuit no the Sicaris have made findings fact. court’s deference showing that the additional search of the I review for clear error. would insolvency system automated database computer requires “a feature that minimal rule and Tadros establish basic Follum to-implement,” majori- time and effort as taxpayer’s shown “[t]he that ty seems to assume. last known recently return is his filed a notice unless the has sent disagree majority’s quot- I do Follum, 128 F.3d change address.” at ed statement: “While the should 119; 91. None was see new bear the burden of notification of the exception this rule is only The sent here. address, ignore that simply the IRS cannot [the “prior to obviously it knows.” United States which, become aware that (S.D.Fla.1995). has Commissioner] Bell, 650, 653 183 B.R. may agency be address last known ease, however, say it is a stretch to that incorrect,” case “[t]he in which Commissioner obviously the IRS knew that the Routé 208 dili an to exercise reasonable be One address could division of incorrect. address.” gence correct to ascertain may the IRS have been “aware” lum, at 119-20. Fol Sicaris used both the Route 208 address and the Box 1370 but Sicaris’ contin- majority opinion with the My first concern any- suggests, if ued use of both addresses awareness, “actual assumes some or equally thing, that both addresses were effec- part knowledge,” on the tive, “may the Route 208 be clarity of thorough without a discussion or incorrect.” Follum, required Unlike standards. may awareness that the last majority attempts paint picture incorrect, is satisfied with pointless taxpayer caught bureau of a amid *7 knowledge” that the Commissioner’s “actual “penalized the tax collector cracy, because begun to use the Box 1370 “the Sicaris neglects right tell his hand what his left is to same, These standards are not the address.” Commissioner, 635 doing.” F.2d Crum as this case demonstrates. (D.C.Cir.1980)(Crum). Despite this 900 majority cases the language, evocative the Although majority the is correct that the only point impute support of this cites Box 1370 in bank Sicaris did use the address knowledge of recent addresses on to IRS correspon filings court items of ruptcy Fuel, Connett, Inc. v. tax returns. See Cool with the IRS in 1991 and dence (9th Cir.1982); Crum, 309, 312 635 majority fails to mention that the Sicaris did Indeed, at the Ninth Circuit has F.2d exclusively. In not use this address 1991 and [by “knowledge acquired directly that held an feder also filed amended Sicaris investigations is not IRS] unrelated with al tax return for 1986 and Form 872 imputed to an necessarily from one division IRS, bankrupt schedules in the and two Commissioner, King F.2d other.” court, cy using all Route 208 address. (9th Cir.1988). King explains: Thus, may although have the IRS received address, required agents mailing notices bearing Box 1370 it is If we items deficiency to account address in- that in take into unreasonable assume the Sicaris’ acquired agents in different terchangeable gave formation use both address ' investi- course of unrelated that “the known to divisions IRS notice address last incorrect,” that notices ensure may gations, the IRS could agency be standard systemat- only [by] validly addressed were required by Follum. ically recording primarily distinguish in a file all central address Tadros because there acquired in any information fashion. We “the IRS was faced with two addresses cor- require decline to the IRS do that. responding different locations.” The ma- opinion why jority explain does not Id., IRS Zolla, quoting States v. United (9th Cir.1984). here should have realized that the Box 1370 808, 810-11 address Route 208 address were in fact majority The further states that “[h]ad addresses to the same their location —on conducted, diligent search been the Box 1370 face, they simply were different addresses. discovered, been address would have Even were IRS aware the Box possibili IRS would have been alerted to the 1370 address was a refinement of the Route address, ty ‘may be the Route incor ” why it is not clear this should op. Follum, Maj. citing rect.’ at give the IRS responsibility to do addi- Here, at 120. F.3d has the case tional directly applica- searches. Tadros is precisely law backwards: ble: not they did indicate that “has an to exercise reasonable dili moved, permanently “had nor [the whether gence taxpayer’s to ascertain the correct ad place second address] [their] new if. dress ..she has become aware that [they] residence. Nor did mention the old may address last known to the agency be longer address or indicate that it was no Follum, Ei incorrect.” 128 F.3d at 119-20. be used.” at 92. ther was aware that the Route 208 the IRS incorrect, might be which case it attempts distinguish also duty diligence, had a to exercise reasonable Tadros because of the “circumstances [in case, it or was not aware. particular Tadros] where had no [the IRS] required to search all its records and files reason to know which of the two different diligently in order to become aware that the locations the taxpayer living.” cir- Such might last known incorrect. cumstances, however, compel- are even more Even if the IRS were aware that the Route ling present During in the case. 1991 and may incorrect, have been 1992, the Sicaris used the Box 1370 and majority further in concluding errs that the interchangeably, Route 208 provid- addresses IRS failed to exercise reasonable care in ing even less clear to the IRS than the determining the correct ma- address. As the taxpayer in Tadros. Even jority acknowledges, itself “[Reasonable dili- diligence, there is no reason the IRS should gence require does not the IRS send prescient enough recognize have been duplicate every notices to address of which it Box 1370 as the “correct” address. knowledge.” Armstrong, 15 F.3d at 974. prior knowledge Its was from returns: As this court stated in Tadros: impute Route 208 address. If we all IRS Although of notice to the sender, information to the may last taxpayers’ sender would be aware *8 always provide taxpay- actual notice to the interchanging use of the Route 208 and tbe er,'this allowance for constructive notice 1370 addresses. The does protects the IRS from the overwhelming grips come to with the obvious result: administrative burden of each ascertaining reasonably sent to the tax return given exact address at time. an taxpay- address still used purpose, To further it becomes the during er all time in question. responsibility to communi- The opinion unpersuasively also attempts cate to the commissioner a “clear con- to distinguish Tadros. Tadros held that a any change cise notification” of in address. letter, used new address on (citations Tadros, omitted). previous its letterhead and stated IRS correspondence misplaced to.provide or “lost the The Sicaris failed “clear and process moving,” address; put change was insufficient to concise notification” of change diligence sending address. the IRS exercised IRS. 763 F.2d at 92. The notice to the Route 208 address. would reasons, affirm I would foregoing For the tax court.

the decision MATCZAK,

Joseph R. AND

FRANKFORD CANDY COMPANY,

CHOCOLATE Matczak, Appellant.

Joseph

No. 97-1057. Appeals, Court of

United States Circuit.

Third Sept.

Argued 1997. Nov. 1997.

Decided Published

Ordered Dec.