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(2) Assessment of Tax
The Careys also argue that they cannot be liable for a
deficiency in tax because there has been no assessment of tax
against them.
The Careys fail to understand that, generally, the
determination of a deficiency in tax precedes assessment of the
tax. In pertinent part, section 6212(a) provides that, if the
Secretary determines that there is a deficiency in income tax,
“he is authorized to send notice of such deficiency to the
taxpayer by certified mail or registered mail.” In pertinent
part, section 6213(a) then allows the taxpayer 90 days (150 days
if the notice is addressed to a person outside the United States)
to file a petition in the Tax Court for review of the deficiency.
Generally, section 6213(a) prohibits any assessment from being
made until either the 90 (or 150) days expires or the decision of
the Tax Court becomes final. That procedure provides an
opportunity for a taxpayer to have his or her tax liability
redetermined by the Tax Court before an assessment is made. The
Careys’ argument is without merit.
c. Applicable Law
(1) Fundamental Principles
A fundamental principle of tax law is that income is taxed
to the person who earns it. See Commissioner v. Culbertson, 337
U.S. 733, 739-740 (1949); Lucas v. Earl, 281 U.S. 111 (1930).
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