In the appropriately styled Conn v. Commissioner, T.C. Memo. 2008-186 (8/5/08), the taxpayer was convicted of embezzlement.  While he was serving his 21-month sentence, the IRS issued a notice of deficiency to taxpayer and his wife, alleging that they had failed to report the embezzled income on their joint return.  The IRS mailed the notice to the taxpayer’s home address.  In response to the notice, the taxpayer’s wife timely filed a Tax Court petition.  The IRS conceded that the wife was an innocent spouse and thus was not liable for the deficiency under § 6015, and the Tax Court dismissed the petition.  The IRS then brought enforcement action against the husband to collect on the deficiency because he had not filed a Tax Court petition within 90 days.  The Tax Court held that the had not received adequate notice under § 6330(c)(2)(B) because it was mailed to his home and not to the prison:

Respondent argues that for purposes of § 6330(c)(2)(B), the mailing of a notice of deficiency to the taxpayer’s last known address is sufficient. Respondent is mistaken. Under § 6330(c)(2)(B), the receipt of a notice of deficiency, not its mailing, is the relevant event. … If the taxpayer did not actually receive the notice in time to petition this Court, the taxpayer is entitled to challenge the underlying liability. …

A properly completed U.S. Postal Service Form 3877 reflecting the timely mailing of a notice of deficiency to a taxpayer at the taxpayer’s correct address by certified mail, absent evidence to the contrary, establishes that the notice was properly mailed to the taxpayer. … However, respondent has not produced any evidence, such as U.S. Postal Service Form 3877, which shows that the notice of deficiency was sent to petitioner at his address in prison, where he resided at the time the notice was sent and during the period in which to petition this Court. …

Respondent’s argument that petitioner actually received the notice of deficiency is based on the fact that Ms. Conn petitioned this Court in response to the notice. That Ms. Conn petitioned this Court shows that she received the notice and that it was mailed to the Slidell address. It does not show that petitioner received the notice.

The parties stipulated that petitioner does not recall receiving a copy of the notice and that Ms. Conn does not recall giving her husband a copy of the notice during the 90-day period in which to petition this Court. Respondent has failed to introduce any evidence indicating that petitioner received the notice. Therefore, on the preponderance of the evidence, we find that petitioner did not actually receive the 1993 notice of deficiency in time to petition this Court. Accordingly, petitioner was entitled to dispute the 1993 liability during his § 6330 hearing.