Opinion
16277-16L
06-22-2023
KEVIN J. MIRCH AND MARIE C. MIRCH, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent
ORDER
Patrick J. Urda, Judge
The trial in this case is scheduled to begin on June 22, 2023, during the Court's San Diego trial session. On June 16, 2023, the Court granted in part the Commissioner's motion for partial summary judgment, concluding that the doctrine of collateral estoppel precludes relitigation of the validity of the 2006 notice of deficiency sent to the Mirches. [Doc. 168. The Mirches have filed a motion for reconsideration. [Doc. 169.] We will deny the Mirches' motion.
All Rule references are to the Tax Court Rules of Practice and Procedure, and "Doc." references are to the documents contained in the record in this case, using .pdf page numbering.
To review, the Mirches have contended since the institution of this case in 2016 that the notice of deficiency sent to them for their 2006 tax year was invalid and that the assessment of tax for that year was untimely. [Doc. 1 at 2; see, e.g., Doc. 71 at 3.] The Commissioner filed for partial summary judgment, contending inter alia that this Court had previously resolved the notice's validity as a necessary part of its dismissal of the Mirches' 2006 deficiency case, Docket No. 15305-11, and that collateral estoppel bars relitigation of this issue. [Docs. 125-26.]
In their opposition to the Commissioner's motion for partial summary judgment [Doc. 141], the Mirches pointed to certain evidence that they suggested was not available to the Court when it previously ruled on the validity of the notice. The Mirches drew the Court's attention to an entry on the Form 4340, Certificate of Assessments, Payment, and Other Specified Matters, for the Mirches' 2006 tax year and a 2015 email from the settlement officer assigned to the Mirches' collection due process case, which suggested that the notice was sent to Las Vegas, rather than San Diego, where the Mirches lived. [Id. at 17-19.]
We granted partial summary judgment (in part), concluding that the doctrine of collateral estoppel precluded relitigation of the validity of the notice. [Doc. 168.] As part of our analysis, we considered the two pieces of evidence that the Mirches relied upon. [Id. at 6.] We explained that the entry on the Form 4340 related to the propriety of the assessment and did not bear on the validity of the notice. [Id.] As to the settlement officer's email, we explained that an incorrect reference to the Mirches' last known address did not cast doubt on the mailing in light of the evidence we relied upon during the deficiency proceeding: (1) the address on the notice itself; (2) the address on the envelopes enclosing the notices, which also bore certified mailing numbers; and (3) the Postal Service Form 3877, Firm Mailing Book for Accountable Mail, which reflected the same certified mailing numbers as on the envelopes and the correct addresses. [Id.; see also Doc. 127 at 159-60, 276.]
In their motion for reconsideration, the Mirches again contend that certain evidence not before the Court in the previous deficiency case precludes the application of the doctrine of collateral estoppel. [Doc. 169.] The Mirches rely on the Form 4340, as well as the case file of the settlement officer in this CDP proceeding, which contains several incorrect references to the Mirches' address during the years after the deficiency proceeding concluded. [Id. at 3, 6-8.] They also fault the IRS for failing to secure the original envelopes, which were apparently destroyed by this Court after the conclusion of appellate proceedings in the U.S. Court of Appeals for the Ninth Circuit. [Id. at 8.] The Mirches finally point to perceived discrepancies between the United States Postal Service (USPS) online tracking system and envelope markings that reflect USPS' attempted delivery to the Mirches. [Id. at 8-10.]
"Generally, reconsideration under Rule 161 is intended to correct substantial errors of fact or law and allow the introduction of newly discovered evidence that the moving party could not have introduced, by the exercise of due diligence, in the prior proceeding." Turner v. Commissioner, 138 T.C. 306, 307 (2012). The Court has discretion to grant a motion for reconsideration, but, as a general matter we will not do so absent a showing of "unusual circumstances or substantial error." Id.; Estate of Quick v. Commissioner, 110 T.C. 440, 441. "Reconsideration is not the appropriate forum for rehashing previously rejected legal arguments or tendering new legal theories to reach the end result desired by the moving party." Estate of Quick, 110 T.C. at 441-42. "The Court tries all issues raised in a case in one proceeding to promote orderly litigation and to further judicial economy by discouraging piecemeal and protracted litigation." Estate of Scanlan v. Commissioner, T.C. Memo. 1996-414, 1996 WL 523123, at *l.
The Mirches have not cleared the high bar for reconsideration, offering a jumble of reheated arguments and new theories that could have been introduced previously. As an initial matter, it is important to note that all the evidence that the Mirches seek to introduce as part of their motion for reconsideration has been available to them for years and that they had ample opportunity to brief these points in their opposition. The Mirches' failure to raise these arguments earlier is fatal to their motion.
Even if we were to entertain the Mirches' arguments, none is persuasive. The Mirches previously relied on a 2015 email from the settlement officer, in which she referred to mailing the notice of deficiency to an address in Las Vegas, to cast doubt on the proper mailing of the notice of deficiency. The Mirches expand their argument on this front, showing several other incorrect references to their address by the settlement officer during the CDP proceedings. As we explained in our Order, however, the settlement officer's after-the-fact errors in referring to the Mirches' addresses for the Mirches are of no moment when determining whether the 2006 notices were properly mailed to their last known address. The actual certified mail envelopes, notice of deficiency, and Form 3877 conclusively demonstrate that they were, as we found during the deficiency proceedings. [See Docket No. 15305-11, Doc. 6 at 10, 54, 56-57.]
The Mirches' attempt to make hay of the destruction of the original envelopes by this Court (after the Ninth Circuit affirmed our dismissal for lack of jurisdiction) is similarly unavailing. In the deficiency proceeding, this Court and the Ninth Circuit both had access to the original envelopes and determined that they reflected proper mailing of the 2006 notice of deficiency. See Mirch v. Commissioner, 604 Fed.Appx. 564 (9th Cir. 2015), aff'g No. 15305-11 (Jan. 7, 2013); see also Doc. 127 at 276. This Court's inadvertent destruction of the original envelopes (which of course were scanned and are accessible through this Court's e-filing system, Docket No. 15305-11, Doc. 6 at 56-57) does not affect the Court's previous ruling for purposes of applying the doctrine of collateral estoppel.
Finally, we are unimpressed by the Mirches' argument as to the potential discrepancies between attempted-delivery markings on the original envelopes and the USPS online tracking system. The validity of a notice of deficiency ordinarily does not hinge on the actions of the USPS in attempting to deliver a certified mail envelope enclosing the notice of deficiency. See, e.g., Zenco Eng'g Corp. v. Commissioner, 75 T.C. 318, 323 (1980) aff'd without published opinion, 673 F.2d 1332 (7th Cir. 1981); Trimble v. Commissioner, T.C. Memo. 1989-419, 1989 WL 90204 ("In effect, if the notice is properly mailed, the statute places the risk of nondelivery on the taxpayer."). To the contrary, validity depends on the IRS's proper mailing of the notice of deficiency to the taxpayer's last known address. See, e.g., Moukhitdinov v. Commissioner, T.C. Memo. 2020-86, at *5-6; see also Williams v. Commissioner, 935 F.2d 1066, 1067-68 (9th Cir. 1991), aff'g T.C. Memo. 1989-439. Proper mailing was established in the deficiency proceeding and will not be relitigated.
It is accordingly
ORDERED that the Mirches' motion for reconsideration of order, filed June 20, 2023, is denied.