The opinion of the court was delivered by: KNAPP
This motion for summary judgment by defendant, pursuant to Rule 56(b) of the Federal Rules of Civil Procedure, raises the question of whether assessments for federal income tax deficiencies for the years 1958 and 1959 made against the defendant while an adjudged incompetent, are null and void by reason of lack of service upon the defendant's judicially appointed Committee.
In October, 1959, defendant Burton N. Pugach ("Pugach") was arrested and charged with burglary and maiming. In July of 1961, Pugach was tried, convicted, and sentenced to a prison term of thirty years. On April 26, 1962, Matthew H. Brandenburg was appointed Trustee of the real and personal property of Pugach, pursuant to Article 14 of the New York Correction Law. Subsequently, Pugach was transferred from Clinton Prison to Dannemora State Hospital, Dannemora, New York, a mental institution. On February 28, 1963, Pugach was adjudicated an incompetent by order of the Supreme Court of the State of New York, County of Westchester, and the defendants Paul B. Pugach (Pugach's father) and Matthew H. Brandenburg were appointed the Committee ("Committee") of his person and property. New York Mental Hygiene Law §§ 100, 101 (McKinneys 1965). No notice was ever given by the Committee of its appointment to the Internal Revenue Service ("IRS").
On June 27, 1963, Notice of Deficiency (Form L-21) for its 1958 and 1959 taxable years was mailed to Pugach, in care of his father, Mr. Paul Pugach. A duplicate was also mailed to Pugach in care of the Warden, Dannemora State Hospital, Dannemora, New York. Subsequently, on October 25, 1963, assessments for unpaid taxes including penalties and interest, as well as notice and demand for payment of these assessments, were made against Pugach by a duly authorized delegate of the Secretary of the Treasury of the United States. Pugach has so far failed to satisfy these assessments.
Defendant Matthew H. Brandenburg died on July 8, 1968, and his wife, defendant Florence Brandenburg, was appointed Administratrix of his estate. Defendant Paul B. Pugach died on May 7, 1970, leaving no members on the Committee for Pugach; since then, no substitute Committee has ever been appointed.
On March 21, 1974, Pugach was released on parole and on July 16, 1974, the Supreme Court of the State of New York declared him to be competent and able to conduct his own affairs.
Pugach, in moving for summary judgment, asserts that the assessments made against him for federal income tax deficiencies are null and void because the District Director of the Internal Revenue Service failed to serve Pugach's Committee, as required by Rule 4(d) of the Federal Rules of Civil Procedure and § 309(b) of the New York Civil Practice Law and Rules. He argues further that the government, by merely mailing copies of the Notice of Deficiency to him at his Dannemora address and at his father's address, failed to comply with the notice requirements of the Due Process Clause of the Fourteenth Amendment to the United States Constitution.
The government counters with the argument that the method of service employed by it was in accord with 26 U.S.C. §§ 6212 and 6903, which statutory provisions supercede the requirements set forth in Fed. R. of Civ. Proc. 4(d) and CPLR § 309(b) and satisfy the requirements of due process.
Under Title 26 U.S.C. § 6903 and accompanying Regulations, every person who is acting for another person in a fiduciary capacity is required to give notice thereof to the District Director of the Internal Revenue Service. The Regulations promulgated by the IRS require such notice to be in writing. 26 C.F.R. § 301.6903-1(a). When such notice is given, the fiduciary assumes the powers, rights, duties and privileges of the taxpayer with respect to the taxes imposed by the Internal Revenue Code. See 26 C.F.R. § 301.6903-1. However, 26 C.F.R. § 301.6903-1(c) provides that if the notice of the fiduciary capacity referred to above is not filed with the District Director before the sending of a Notice of Deficiency, it is sufficient compliance with the requirements of the Internal Revenue Code to send the notice to the "last known address" of the taxpayer, even though the taxpayer is under a legal disability. Title 26 U.S.C. § 6212 confirms that, in the absence of notice to the IRS under § 6903 of the existence of a fiduciary relationship, notice by mail to the taxpayer, even if under a legal disability, at his last known address is sufficient for purposes of the Internal Revenue Code.
There is no doubt but that the Committee appointed to represent Pugach stood in a fiduciary relationship to its ward. While the Internal Revenue Code (26 U.S.C. § 7701) defines "fiduciary" as ". . . a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in any fiduciary capacity for any person", New York law is more specific. The New York Estates, Powers and Trusts Law, § 1-2.7, defines "fiduciary" as, inter alia, "a committee", and the official Comments to that section state that
". . . whenever the term is encountered in the law, it should be understood as referring to and including any person who . . . has been charged with the responsibility of overseeing the needs of infants, incompetents and the like . . ."
In the instant case, Pugach and the Government agree that neither member of the Committee for Pugach ever furnished the District Director with the statutorily required notice of the existence of a fiduciary relationship. Consequently, pursuant to the applicable provisions of the Internal Revenue Code and accompanying Regulations, the appropriate address to which any notice by the District Director should be made was the last known address of Pugach. Thus, in accordance with Pugach's specific request that all correspondence from the Internal Revenue Service be mailed to him at his father's address,
the Notices of Deficiency were mailed to Pugach at his last known address.
The purpose of the Notice of Deficiency is, as its name implies, to give the taxpayer notice of the government's claim against him or her. By using the phrase "last known address", Congress presumably intended that notice be sent to that address where the Secretary reasonably believed the taxpayer wished notice to be sent. Since Pugach expressly provided that any communications from the Internal Revenue Service be sent to him in care of his father at his father's address, he cannot now complain that the address for which he expressly provided is not in fact his last known address. The legislative history of § 6212(b) (1) in § 281(d) of the Revenue Act of 1926 and § 272(k) of the Revenue Act of 1928 indicates that the section was enacted to protect the Commissioner from a taxpayer's changing fiduciaries without notifying the Internal Revenue Service, S. Rep. No. 52, 69th Cong. 1st Sess. (1926), 1939-1 Cum. Bull. (part 2) 332, 355; H.R. Rep. No. 356, 69th Cong. 1st Sess. (1926), 1939 Cum. Bull. (part 2) 361, 372-373; and from a taxpayer's changing his address without notifying the Commissioner, H.R. Rep. No. 2, 70th Cong. 1st Sess. (1927), 1939-1 Cum. Bull. (part 2) 384, 399; S. Rep. ...