Identity-theft assessments may be abated before the petition period ends

Plain-English summary

Chief Counsel advised that rescinding a statutory notice of deficiency requires the consent of both the Service and the taxpayer to whom the notice was issued under IRC § 6212(d). If the Service cannot locate that taxpayer, rescission is not available, and no statute or other legal authority permits the Service to unilaterally withdraw the notice. The Service may nevertheless make necessary adjustments to an identity-theft victim's account before the period to petition the Tax Court expires, including abating assessments based on the identity-theft return. An additional assessment is different because it requires a written waiver of the restriction on assessment, which the Service cannot rely on if it cannot locate the taxpayer.

Ruling snapshot

• Question: May the Service rescind a statutory notice of deficiency issued to an identity-theft victim, or make account adjustments when the taxpayer cannot be located?
• Outcome: Advice given
• Key authorities: IRC §§ 6212(d) and 6213(a); Nichols v. Commissioner, T.C. Memo. 2002-269

Full text (IRS public release)

ID: CCA_2012071210234303 Number: 201246033
Release Date: 11/16/2012
Office: -------------
UILC: 6212.06-00

From: --------------------
Sent: Thursday, July 12, 2012 10:23:49 AM
To: ----------------
Cc: ----------------------------------------------
Subject: RE: Rescinding a SNOD issued to victim of ID theft

The rescission of a statutory notice of deficiency requires the consent of both the
Service and the taxpayer to whom the Service issued the notice. I.R.C.
§ 6212(d). If the Service cannot locate the taxpayer to whom the Service issued
the notice, then rescission would not be an option. No statute or other legal
authority gives the Service the ability to unilaterally abandon or withdraw a
notice of deficiency. See Nichols v. Commissioner, T.C. Memo. 2002-269.
Regardless, the Service has the legal authority to make necessary adjustments
to an identity theft victim’s account prior to the expiration of the period to
petition the Tax Court under section 6213(a). Such adjustments can include the
abatement of any assessments on the victim’s account that were based on the
identity theft return. ---------------------------------------------------------------------------------------

Let me know if you have any questions.

The only exception would be if a necessary adjustment requires an additional
assessment on the victim’s account. While a taxpayer may, by a signed notice
in writing, waive section 6213(a)’s restriction on assessment at any time, if the
Service cannot locate the taxpayer, then the Service cannot rely on the
taxpayer’s wavier of section 6213’s restrictions to make an assessment.