The Tax Court sided with a taxpayer after the IRS Appeals Office sustained the filing of a notice of federal tax lien against the property of the taxpayer, Antonio Lepore, to collect assessed trust fund recovery penalties for unpaid unemployment taxes.

Lepore argued that the Appeals Office erred because it did not permit him to contest his liability for the trust fund recovery penalties on which the assessments were based. A person who has received a Letter 1153 from the IRS has already had an opportunity to contest trust fund recovery penalties, and is barred from contesting the liabilities before the Appeals Office in the context of its determination to sustain the filing of a notice of federal tax lien.

Although a Letter 1153 was sent by certified mail to Lepore’s address and signed for by his 23-year-old son, Lepore said that he never received the letter and was not aware that it had been mailed to him. His son testified that he had thrown the letter “somewhere” in the basement. The Appeals Office concluded that the receipt of the Letter 1153 by Lepore’s son constituted receipt by Lepore.

The Tax Court, in Lepore v. Commissioner of Internal Revenue , T.C. Memo 2013-135, agreed with Lepore, however. The issue was whether Lepore otherwise had the opportunity to dispute the trust fund recovery penalty assessments. Actual receipt of the Letter 1153, which advises the taxpayer of the right to appeal the proposed assessment and request an appeals conference, is generally required.

The court believed Lepore’s testimony for a number of reasons. He credibly testified that he always responded to correspondence from the IRS and that he would have responded to the Letter 1153 had he known about it. His son also credibly testified that he did not give the letter to his father personally. The son did not live at the house but came there only occasionally, perhaps once or twice a week, to mow the lawn, and did not speak to his father frequently. Therefore, there was no casual opportunity for Lepore’s son to mention that a letter from the IRS had arrived, according to the court.

The court remanded the case to the Appeals Office to consider whether Lepore is liable for the trust fund recovery penalties.

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