- 29 -
answer, it shall be upon the respondent.” Because the statutory
notice did not mention the assignment of income, sham, or grantor
trust theories, petitioner asserts that those theories are “new
matter” on which respondent has the burden of proof.
For many years, a deficiency notice was not required to
contain an explanation. A notice that simply informed the
taxpayer that there was a deficiency and the amount thereof was
sufficient to raise the presumption of correctness and place the
burden of proof on the taxpayer. See Abatti v. Commissioner, 644
F.2d 1385, 1389 (9th Cir. 1981), revg. T.C. Memo. 1978-392; Olsen
v. Helvering, 88 F.2d 650, 651 (2d Cir. 1937). Consistent with
this approach, some courts held that where a deficiency notice
was broadly worded, a theory raised by the Commissioner after the
notice was issued was not “new matter”, unless the new theory was
inconsistent with some position necessarily implicit in the
determination itself. Abatti v. Commissioner, supra at 1390;
Sorin v. Commissioner, 29 T.C. 959, 969-971 (1958), affd. per
curiam 271 F.2d 741 (2d Cir. 1959).
In 1988, section 7522 was enacted by the Technical and
Miscellaneous Revenue Act of 1988, Pub. L. 100-647, 102 Stat.
3735. Section 7522 provides that any deficiency notice mailed
after 1989 “shall describe the basis for * * * the tax due * * *
included in such notice.”
Page: Previous 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 NextLast modified: May 25, 2011