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Millions of Americans move each year and notify their friends, relatives, creditors and neighbors of their new address. But most of them forget that most diligent of all pen pals, the Internal Revenue Service.

If the IRS wants to contact a taxpayer, say, to tell him about taxes he owes, a freeze on his bank account or the lien on all his possessions, it sends the notice to the person's last known address.The problem is that the IRS feels it needs only to mail notice. The taxpayer need not receive it.

Clayton and Darlene Powell moved from Adelphi, Md., to Mitchellville, Md. Not only did the Powells fill out the U.S. Post Office official change of address card, but they put the new address on their tax return, which they filed early.

A comedy of government errors followed. On Feb. 29, or 18 days after the IRS received the Powells' return, it sent a tax deficiency notice to the old address. Improperly, the Post Office returned it to the IRS as unclaimed. Ten months later the IRS mailed a final notice of levy to the new address. And, for the first time, the Powells discovered they had 10 days to come up with $6,864. They challenged this in tax court.

The IRS asked the court to dismiss the case because the Powells hadn't filed the court petition within the required 90 days after the IRS sent the deficiency notice. And the IRS wasn't to blame for the incorrect address because 18 days was insufficient time to update the address on its computer.

"The IRS argues that the computer is less efficient at keeping track of addresses than the old way of simply looking in a file," the court said. The judge refused to dismiss the case, saying the evidence showed both the IRS and the Post Office dropped the ball.

Taxpayer victory in cases such as the Powells' are, however, unusual.

Consider Cindy Rose from New York City. She filed her return showing 450 Sixth Ave. as her address. Forty-six days later the IRS mailed a deficiency notice to her previous address. A year later her former husband, who still lived at the old address, told her she might have received something from the IRS and she might need a lawyer ... the first she had heard of any problem.

Rose told the tax court she filed her petition late because she hadn't received the notice in a timely fashion. The IRS explained that, because of the crunch from millions of returns received during the filing season, it had adopted priority procedures. The agency processes returns due refunds first because the law requires it to pay interest on late refunds. When its agent wrote the notice, the IRS had not yet processed the return with the new address.

The court accepted that the IRS processed Rose's return as quickly as could be expected. And it excused the agency for using the wrong address.

The tax court, however, told Harold and Sylvia Harrison that not even death, much less a fire, excuses taxpayers for responding late to an IRS notice.

The agency mailed a deficiency notice to the correct address, but they never received it. It could have been burned in a fire at the Post Office, the Harrisons said. Still, the judge ruled for the IRS. The agency did its job by mailing the notice to the taxpayers' last known address. He said it isn't necessary for the taxpayer to receive the notice.

The IRS generally loses only when it fails to prove it is diligent. The taxpayer's diligence is meaningless.