## Facts

- The IRS determined that Christopher Gyorgy owed unpaid federal income taxes, penalties, and interest for tax years 2001 through 2003.
- Gyorgy did not file returns for those years, so the IRS prepared substitute returns using third-party information (including Forms W-2 and 1099).
- In 2006 and 2007, the IRS mailed notices of deficiency for the years at issue to Gyorgy at an Octavia Street address in San Francisco—the address shown on his most recently filed tax return (tax year 2000).
- Gyorgy moved frequently during the relevant period and did not receive the mailed notices. Some mailings were returned by the Postal Service as undeliverable (including “attempted—not known” and “unable to forward”).
- Gyorgy asserted that he had provided updated addresses to the post office and the IRS, but he supplied few details and no documentation showing a clear notice of an address change to the IRS.
- Third-party information in the IRS’s files showed other possible addresses for Gyorgy. The IRS attempted to confirm one such address by sending an “R-U-There” letter, but received no response.
- Gyorgy did not file a Tax Court petition in response to the deficiency notices and did not pay the assessed amounts.
- In August 2009, the IRS filed a notice of federal tax lien in Cook County, Illinois, against Gyorgy’s Evanston property, based on assessed liabilities for 2001–2003 that had grown to over $120,000.
- Gyorgy requested a Collection Due Process (CDP) hearing. The IRS Office of Appeals sustained the lien, concluding that the IRS had properly mailed the deficiency notices to Gyorgy’s last known address and that the liabilities were correctly computed.
- Gyorgy petitioned the U.S. Tax Court. After trial, the Tax Court ruled the lien was invalid for 2001 because the IRS failed to prove it sent a deficiency notice for that year, but sustained the lien for 2002 and 2003.
- Gyorgy appealed to the Seventh Circuit, challenging (among other things) the validity of the 2002 and 2003 deficiency notices and the determinations of liability.

## Issues

1. Whether the IRS satisfied I.R.C. § 6212(b)(1) by mailing the 2002 and 2003 notices of deficiency to Gyorgy’s “last known address” (the Octavia Street address from his last filed return), even though he did not receive them and other addresses appeared in third-party records.
2. Whether the Tax Court properly sustained the IRS’s determinations of Gyorgy’s underlying tax liabilities for 2002 and 2003 in the CDP case when Gyorgy did not produce returns or evidence to rebut the IRS’s computations.

## Decision

- The Seventh Circuit affirmed the Tax Court’s judgment sustaining the lien for 2002 and 2003 (the 2001 ruling was not disturbed).
- The IRS validly mailed the 2002 and 2003 deficiency notices to Gyorgy’s last known address because the Octavia Street address was on his most recently filed and processed return, and Gyorgy did not give the IRS a documented, clear notice of a new address.
- The presence of other possible addresses in third-party information did not, by itself, require the IRS to treat those addresses as a change of address, especially where Gyorgy did not respond to the IRS’s attempt to confirm an alternate address.
- The return of some notices as undeliverable did not make the deficiency notices invalid where the IRS had already mailed them to the last known address as the statute permits.
- The court upheld the Tax Court’s finding that the IRS’s liability computations for 2002 and 2003 stood, because Gyorgy did not submit tax returns or other evidence to challenge the IRS’s figures.

## Legal Principles

- A notice of deficiency is sufficient under I.R.C. § 6212(b)(1) if the IRS mails it to the taxpayer’s “last known address”; actual receipt is not required.
- In general, the IRS may treat the address on the taxpayer’s most recently filed and properly processed return as the last known address unless the taxpayer provides clear and concise notice of an address change.
- Addresses appearing on third-party information returns do not automatically change a taxpayer’s last known address without a qualifying notice from the taxpayer.
- Returned or undeliverable mail does not invalidate a properly mailed notice of deficiency; the key question is whether the IRS used the last known address when it sent the notice.
- In a CDP case where the underlying liability is considered, the taxpayer must come forward with evidence (such as filed returns or supporting documents) to rebut the IRS’s determinations; unsupported assertions are not enough.

## Conclusion

The Seventh Circuit affirmed the Tax Court’s decision sustaining the IRS’s federal tax lien for 2002 and 2003, holding that the IRS complied with I.R.C. § 6212(b)(1) by mailing deficiency notices to Gyorgy’s last known address shown on his last filed return, and that Gyorgy failed to rebut the IRS’s liability calculations because he did not provide returns or other proof challenging the assessments.


Gyorgy v. Commissioner, 779 F.3d 466 (2015)