§7522 — Content of tax due, deficiency, and other notices

We hold that the notice satisfies the requirements ofsection 7522.

We hold that the notice satisfies the requirements ofsection 7522.

We hold that the notice satisfies the requirements ofsection 7522.

We hold that the notice satisfies the requirements ofsection 7522.

We hold that the notice satisfies the requirements ofsection 7522.

We hold that the notice satisfies the requirements ofsection 7522.

We hold that the notice satisfies the requirements ofsection 7522.

We hold that the deficiency notice comports with the requirements ofsection 7522.

Section 7522 provides further elaboration regarding the required / content of the notice of deficiency.

Petitioner also does not dispute that the notice of deficiency described the income adjustments as unreported income, listed the specific items of unreported income, and identified the additions to tax, pursuant to section 7522(a) .

Respondent further contends that the notice, pursuant to section 7522(a), is not invalid.

Section 7522(a) .requires that the notice "describe the basis for, and identify the amounts ( if any) of, the tax due , interest , additional amounts, additions to the tax, and assessable penalties included in such notice ." The final sentence of section 7522 (a) provides : -"An inadequate description under the preceding [quoted] sentence shall not invalidate such notice ." Respondent ' s explanation of his deficiency determination informed petitioner that it was required to recognize gain becau

Section 7522 Section 7522 requires a notice of deficiency to “describe the basis” for the tax deficiency. In some situations, this Court has held that failure to describe the basis for the tax deficiency in the notice of deficiency is analogous to the raising of a new matter under Rule 142(a). Shea v. Commissioner, 112 T.C. 183, 197 (1999); Wayne B

nation for respondent's position which respondent had previously stated in the 30-day letter. Petitioner contends that respondent should bear the burden of proof because the notice of deficiency did not state the basis for the tax due as required by section 7522. Respondent concedes that shifting the burden of proof is appropriate if section 7522 is violated, but contends that it was not violated here. The procedural issues for decision are: 1. Whether respondent should bear the burden of proof

Additionally, ifsection 6212 inherently required notices ofdeficiency to include the amount and year ofa deficiency, presumably Congress would have felt no need to include such notices in section 7522, which it added to the Code in 1988.

the prior assessment was invalid and hence contends that a proposed "deficiency" exists within the meaning ofsection 6211(a).I However, petitioner asserts that respondent's notice of deficiency is insufficiently detailed and is thus invalid under section 7522. Because the statute oflimitations would now bar the issuance ofa revised notice ofdeficiency, petitioner moves for summaryjudgment. We agree with petitionerthat the prior assessment was invalid and hence will in a separate order deny resp

She argues that, in contravention ofsection 7522, which requires that a notice ofdeficiency "describe the basis for, and identify the amounts (ifany) of, the tax due, interest" and other items included in the notice, respondent changed the basis for the disallowance ofthe 2008 child care credit from a section 152 violation in the second notice to a section 21(e) violation in his post

As to whether the notice of deficiency is invalid because it insufficiently sets forth respondent’s position, section 7522(a) requires that the notice “describe the basis for, and identify the amounts (if any) of, the tax due, interest, additional amounts, additions to the tax, and assessable penalties included in such notice.” The purpose of section 7522 is to provide the taxpayer with notice of the Commissioner’s basis for determining a deficiency.

liable for a deficiency in income tax. Ordinarily, a notice of deficiency involving income tax is sufficient if it is mailed to a taxpayer’s last known address. Sec. 6212(b)(1). A notice of deficiency described in section 6212 must also comply with section 7522. Sec. 7522(b)(1). Section 7522(a) provides that “Any notice to which this section applies shall describe the basis for, and identify the amounts (if any) of, the tax due, interest, additional amounts, additions to the tax, and assessable

However, section 7522 requires that a notice of deficiency "describe the basis" for the tax deficiency.

However, section 7522 requires that a notice of deficiency “describe the basis” for the tax deficiency.

7522 applies to notices of deficiency issued after Jan. 1, 1990. - 31 - The notice also described respondent’s basis for disallowing the NOL carryforward as follows: It is determined that the net operating loss carryforward from the taxable year 1992 is $0 rather than $57,518 for the taxable year 1993. It has not been established that any ded

Section 7522 provides, however, that “An inadequate description * * * shall not invalidate * * * [a] notice.” In addition, as we pointed out in Shea v. Commissioner, 112 T.C. 183, 195 (1999): “Congress enacted section 7522 with the expectation that the IRS would ‘make every effort to improve the clarity of all notices * * * that are sent to taxpaye

In support of that position, petitioner asserts: Section 7522 requires the notice of deficiency to contain a description of the basis for the commis- sioner’s tax determinations.

Section 7522 sets forth requirements as to the contents of notices, including a statutory notice of deficiency under section 6212. Section 7522(a) provides that the notice “shall describe the basis for, and identify the amounts (if any) of, the tax due, interest, - 4 - additional amounts, additions to tax, and assessable penalties included in such

In 1988, section 7522 was enacted by the Technical and Miscellaneous Revenue Act of 1988, Pub.

Section 7522 applies to notices of deficiency described in section 6212, and provides: Any notice to which this section applies shall describe the basis for, and identify the amounts (if any) of, the tax due, interest, additional amounts, additions to the tax, and assessable penalties included in such notice. An inadequate description under the pre

ation of different evidence than that necessary to decide the matters described in the notice of deficiency. Held: R's determinations of additional gross receipts and disallowance of deductions are, with certain modifications, upheld. Held, further: Sec. 7522, I.R.C., requires that a notice of deficiency contain a description of the basis for the Commissioner's tax determination. Where R relies on a basis that was not described in the notice of deficiency that requires the presentation of differ

pra; Hitachi Sales Corp. of Am. v. Commissioner, supra. Accordingly, we hold that a section 481 adjustment is a proper matter for Rule 155 consideration. To reflect the foregoing, An appropriate order will be issued. 4(...continued) describe the basis on which the Commissioner relied to support the Commissioner's deficiency determination. See also sec. 7522. In the case at bar, however, sec. 481 is more than implicit in the notice; it is patent.

At trial, petitioners questioned whether section 7522 has any bearing on these cases.

As a preliminary matter, we must address petitioners' contention that respondent failed to comply with section 7522, and that this alleged failure justifies a shift of the burden of proof to respondent in this case pursuant to Rule 142(a).

At trial, petitioners questioned whether section 7522 has any bearing on these cases.

Since 1990 this “new matter” rule has been “supported by the statutory requirements of section 7522.” Shea v.

Section 7522 The basis for tax due in a notice ofdeficiency must be stated in the notice. Sec. 7522(a) and (b)(1). Failure to state the basis does not invalidate the notice, sec. 7522(a), but the burden ofproofshifts to the Commissioner, Shea v. Commissioner, 112 T.C. 183, 197 (1999). In Shea we said that the assertion ofa new basis after issuance

2014-257, at *23. Second, petitioner contends that the notice ofdeficiency does not describe the basis for respondent's determination ofher tax liabilities for her commuting and cell phone expenses and thus is invalid because it does not comply with section 7522. Section 7522(a) provides in pertinent part: - 7 - Any notice to which this section applies shall describe the basis for, and identify the amounts (ifany) of, the tax due, interest, additional amounts, additions to the tax, and assessabl

he dissent seems to assume that an assessable penalty would never be the subject ofa "notice". That is incorrect. See, e.g., sec. 6672(b) (requiring a preliminary "notice" for the assessable penalty for failure to collect and pay over tax); see also sec. 7522 (describing required content ofany "notice" relating to, among other things, "assessable penalties"). In any event, nothing in the statutory effective-date provision supports the notion that "notices issued, and penalties assessed"--ifthat

Under section 7522, a notice ofdeficiency must "describe the basis for" any tax deficiency included in the notice. Consequently, we have held that where a notice ofdeficiency fails to describe the basis on which the Commissioner relies to support a deficiency determination and that basis requires the presentation ofevidence that is different than that wh

was not aware ofthe specific Code section, it was aware ofthe return involved, the nature ofthe error charged, and the amount ofthe assessment. See Wheeler v. Commissioner, 127 T.C. 200, 205 (2006), aff'd, 521 F.3d 1289 - 12 - (10th Cir. 2008); cf sec. 7522. Finally, given Mr. Austin's educational background and profession, it strains credulity that he was somehow unable to fathom what was at issue and proceed accordingly. In short, the Court rejects as unfounded the suggestion that petitioner

called on to determine the tax consequences ofexpenses incurred in these prior years even though the computations do not reveal the exact prior years. - 11 - [*11] 142(a)(1) and the IRS did not adequately describe the basis for the deficiency under section 7522. HFM observes that the notice ofdeficiency wrongly attributed the section 446 and 481 adjustments to changing HFM's method ofaccounting from the cash method to the accrual method. The adjustments were actually premised on the determinatio

ng the subject years and instead oftimely reporting that income on Federal income tax Petitioners also assert that the burden ofproofas to the taxability ofthe bank deposits is on respondent for other reasons which include claimed noncompliance with sec. 7522, the raising ofnew matter under Rule 142(a), and the principle ofUnited States v. Janis, 428 U.S. 433, 440 (1976), and Helvering v. Taylor, 293 U.S. 507 (1935). We reject these assertions for reasons similar to those previously stated. - 54

ng the subject years and instead oftimely reporting that income on Federal income tax Petitioners also assert that the burden ofproofas to the taxability ofthe bank deposits is on respondent for other reasons which include claimed noncompliance with sec. 7522, the raising ofnew matter under Rule 142(a), and the principle ofUnited States v. Janis, 428 U.S. 433, 440 (1976), and Helvering v. Taylor, 293 U.S. 507 (1935). We reject these assertions for reasons similar to those previously stated. - 54

She argues that, in contravention of section 7522, which requires that a notice of deficiency “describe the basis for, and identify the amounts (if any) of, the tax due, interest” and other items included in the notice, respondent changed the basis for the disallowance of the 2008 child care credit from a section 152 violation in the second notice to a section 21(e) violation in his p

Section 7522 (a) arequirés a ,deficiency notice to - "describe the ibasis fòfgandwidentifyr thè amounts (if any)/offtheatax due iriterest addi-tional Ambuntà, sadditionsato the tax, and,assessable penalties included in such nòtice . An inadequate- description a understhe piecedingesentencécshall not invalidatessuch notice." InaBurnside vdComàission

ciency but that either increases the original deficiency or requires the taxpayer to present different evidence. See Rule 142(a); Shea v. Commissioner, 112 T.C. 183, 197 (1999); Wayne Bolt & Nut Co. v. Commissioner, 93 T.C. 500, 507 (1989); see also sec. 7522. - 7 - Petitioners árgue that the -burden of proving the fair market values of the facade easements shifts to respondent under section 491(a) because they presented credible evidence of the fair arket values. As described below, however, pe

Section 7522(a) provides that a notice of- deficiency "shall describe the basis for, and identify the amounts (if any) of, the tax due, interest, additional amounts, additions td the tax, and assessable penalties included in such notice .

1( - 38 - amounts (if any) of, the tax due, interest, additional amounts, additions to the tax, and .as.sessable penalties included in such notice ." The statute goes onto provide, however, that a n "inadequate description * * * .shall not invalidate such>-notice ." The, purpose of section 7522 is to give the taxpayer .

reported wage income of approximately $23,000 and that he did not file a Federal income tax return for 2000. Petitioner argued in his petition that the notice of deficiency did not sufficiently describe the basis of the tax deficiency as required by sec. 7522. However, he did not raise this argument on brief, and, therefore, we deem it conceded. See Rule 151(e)(4) and (5); Petzoldt v. Commissioner, 92 T.C. 661, 683 (1989). Petitioner also argued in his petition that he is not liable for self-emp

not prescribe the form the notice of deficiency must take, but it must “describe the basis for, and identify the amounts (if any) of, the tax due, interest, additional amounts, additions to the tax, and assessable penalties included in such notice.” Sec. 7522. An inadequate description does not invalidate the notice. Id. We have stated: “‘the notice is only to advise the person who is to pay the deficiency that the Commissioner means to assess him; anything that does this unequivocally is good e

In some situations, failure to describe the basis for the tax deficiency in the notice of deficiency results in a new matter being raised under Rule 142(a). Shea v. Commissioner, 112 T.C. 183, 197 (1999); Wayne Bolt & Nut Co. v. Commissioner, 93 T.C. 500, 507 (1989); Estate of Ballantyne v. Commissioner, T.C. Memo. 2002-160. A new matter

Our Consideration of Asset Acquisition Issue Would Not Prejudice Petitioner Although respondent’s actions don’t limit our ability to consider the relationship between fees paid and assets acquired, the majority suggest we should close our eyes to that relationship “in order to avoid prejudicing petitioner”. Majority op. p. 11. According

rden of proof regarding this fact issue. See Barton v. Commissioner, 993 F.2d 233 (11th Cir. 1993), affg. without published opinion T.C. Memo. 1992-118; Abatti v. Commissioner, 644 F.2d 1385, 1390 (9th Cir. 1981), revg. T.C. Memo. 1978-392; see also sec. 7522; Shea v. Commissioner, 112 T.C. 183 (1999). The period for depreciation of property begins when property is placed in service. See sec. 1.167(a)-10(b), Income Tax Regs. Accordingly, VRI’s construction costs relating to the Clubhouse are pro

and are disallowed in 1996 and 1997. Notice of Deficiency Petitioners argue in their reply brief that the notice of deficiency failed to set forth the reasons for respondent’s determinations with sufficient specificity to satisfy the requirements of section 7522. Section 7522(a) requires that a notice of deficiency “describe the basis” for the tax deficiency. However, an “inadequate description under the preceding sentence shall not invalidate such notice.” Sec. 7522(a). Here, the notice of defi

rden of proof regarding this fact issue. See Barton v. Commissioner, 993 F.2d 233 (11th Cir. 1993), affg. without published opinion T.C. Memo. 1992-118; Abatti v. Commissioner, 644 F.2d 1385, 1390 (9th Cir. 1981), revg. T.C. Memo. 1978-392; see also sec. 7522; Shea v. Commissioner, 112 T.C. 183 (1999). The period for depreciation of property begins when property is placed in service. See sec. 1.167(a)-10(b), Income Tax Regs. Accordingly, VRI’s construction costs relating to the Clubhouse are pro

- 17 - Finally, petitioner invokes section 7522, which, among other things, states that deficiency notices in income tax cases “shall describe the basis for, and identify the amounts (if any) of, the tax due”.

rden of proof regarding this fact issue. See Barton v. Commissioner, 993 F.2d 233 (11th Cir. 1993), affg. without published opinion T.C. Memo. 1992-118; Abatti v. Commissioner, 644 F.2d 1385, 1390 (9th Cir. 1981), revg. T.C. Memo. 1978-392; see also sec. 7522; Shea v. Commissioner, 112 T.C. 183 (1999). The period for depreciation of property begins when property is placed in service. See sec. 1.167(a)-10(b), Income Tax Regs. Accordingly, VRi’s construction costs relating to the clubhouse are pro

Our Consideration of Asset Acquisition Issue Would Not Prejudice Petitioner Although respondent’s actions don’t limit our ability to consider the relationship between fees paid and assets acquired, the majority suggest we should close our eyes to that relationship “In order to avoid prejudicing petitioner”. Majority op. p. 217. According

Petitioners argue that the notice of deficiency failed to set forth the reasons for respondent’s determinations with sufficient specificity to satisfy the requirements of section 7522 and that respondent should therefore bear the burden of proof.

Respondent notes that section 7522, effective for notices sent on or after January 1, 1990, provides certain requirements for the statutory notice but also provides that "inadequate description" of the amount "shall not invalidate such notice." Section 6212 is not among those sections referred to in section 7436(d), which provides that the principles of certain other sections shall apply to cases arising under section 7436.

unt for a particular taxable year and that respondent intends to assess the tax in due course. See Olsen v. Helvering, 88 F.2d 650, 651 (2d Cir. 1937); Perlmutter v. Commissioner, 44 T.C. 382, 400 (1965), affd. 373 F.2d 45 (10th Cir. 1967); see also sec. 7522. Petitioner, in his Motion to Dismiss for Lack of Jurisdiction, contends that respondent failed to make a "determination" because respondent: (1) Failed to examine petitioner's 1994 income tax return in determining a deficiency; (2) failed

Respondent notes that section 7522, effective for notices sent on or after January 1, 1990, provides certain requirements for the statutory notice but also provides that “inadequate description” of the amount “shall not invalidate such notice.” Section 6212 is not among those sections referred to in section 7436(d), which provides that the principles of certain other se

This is a sufficient explanation to apprise petitioner with regard to the NOL deductions, and the burden of proof has not shifted to respondent on that issue. Petitioner has failed to present sufficient evidence to substantiate the claimed carryover losses that it deducted in taxable years 1991 or 1993. In addition, petitioner's expert r

see Scar v. Commissioner, 814 F.2d 1363, 1367 (9th Cir. 1987), revg. on another issue 81 T.C. 855 (1983); Foster v. Commissioner, 80 T.C. 34, 229-230 (1983), affd. in part and vacated in part on another issue 756 F.2d 1430 (9th Cir. 1985); see also sec. 7522. In the present case, we do not think that the IRS letter dated November 21, 1996, constituted a notice of deficiency. Such letter did not purport to determine any deficiency; moreover, such letter was clearly not intended by respondent to

ooks and records of A.T.O. and found no reference to the £570,000; and that petitioner had told a successor to A.T.O. that the £570,000 settlement had been disbursed, but petitioner provided no further information to A.T.O.'s successor. 2 We discuss sec. 7522 below at par. A-5. - 11 - 2. Case Law Upon Which Petitioner Relies Petitioner contends that the facts here are similar to those in Scar v. Commissioner, 814 F.2d 1363 (9th Cir. 1987), revg. 81 T.C. 855 (1983). We disagree. In Scar, the Comm

d 411 (3d Cir. 1989); Vallone v. Commissioner, 88 T.C. 794, 806 (1987). Exceptions to this general rule have been recognized where there has been substantial evidence of unconstitutional conduct by 3 Each notice contains a description that satisfies sec. 7522, which provides for the general content of tax due, deficiency, and other notices. We note that this provision was originally enacted as sec. 7521(2) by sec. 6233(a) of the Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 1