DocketNumber: Docket No. 36140-86
Citation Numbers: 1996 T.C. Memo. 306, 72 T.C.M. 39, 1996 Tax Ct. Memo LEXIS 310
Judges: RAUM
Filed Date: 7/8/1996
Status: Non-Precedential
Modified Date: 4/17/2021
*310 An order will be entered granting the Commissioner's motion for summary judgment and denying petitioners' motion for leave to file amendment to petition.
In 1980, P became a limited partner in a tax shelter limited partnership. In 1986, the Commissioner issued a notice of deficiency for 1982 relating to deductions claimed in connection with the limited partnership, and Ps filed a petition in this Court. In 1988, 2 years after the case was docketed in this Court, Ps signed a Form 906, "Closing Agreement on Final Determination Covering Specific Matters."
MEMORANDUM OPINION
RAUM,
Sec. 6653(a)(1) 1 | Sec. 6653(a)(2) | Sec. 6661 | Sec. 6621 |
$ 384.30 | 50% of the interest | $ 768.60 | 120% of the |
due on $ 7,686 | adjusted rate | ||
This matter is before us on the Commissioner's Motion for Summary Judgment and/or Entry of Decision and Petitioners' Motion for Leave to File Amendment to Petition.
Petitioners, Mayer and Ninette Stiskin, are husband and wife. They resided in New York, New York, at the time their petition in this case was filed. Use of the word petitioner in the singular will refer to petitioner husband. In 1980, petitioner became a limited partner in Opal Leasing Associates ("Opal Leasing" or "the partnership"), a limited partnership. His interest *312 in Opal Leasing continued at least into 1982.
On June 13, 1986, the Commissioner issued a notice of the foregoing deficiency to petitioners for the taxable year 1982. The notice of deficiency disallowed losses claimed by petitioners from Opal Leasing on the ground that petitioner was not "at risk" within the meaning of section 465 with respect to his investment in the partnership.
Petitioners filed their petition with this Court on September 8, 1986. Subsequently, on March 4, 1988, they signed a Form 906, "Closing Agreement on Final Determination Covering Specific Matters". The form was signed by the IRS representative, Associate Chief, NYC Appeals, on March 24, 1988.
Under the closing agreement, petitioners were entitled to an ordinary deduction from taxable income for 1980 in the amount of $ 6,027, "being equal to 100% of taxpayer's investment in the partnership". The agreement further provided that petitioners were not entitled to any deductions of losses or credits in connection with Opal Leasing for any other taxable year. Also, petitioners would not be liable for additional interest under section 6621(c) or for any additions to tax on any portion of any deficiency arising *313 under the closing agreement.
The IRS did not immediately implement the closing agreement. Meanwhile, there was pending in this Court a tax shelter case involving facts similar to those present here,
Subsequent to the decision in
On March 24, 1994, the IRS sent petitioners proposed decision documents, based on the decision in
Petitioners filed a response to the motion for summary judgment as well as their own motion for leave to amend their petition. In each, they contend, in reliance upon
Petitioners challenge only the enforcement of the closing agreement by this Court. They do not respond to the Government's position that their case is factually indistinguishable from
First, the jurisdictional point may be dealt with summarily. Once the Court, as here, has jurisdiction, it may not thereafter be divested of jurisdiction. See, e.g.,
Second, petitioners' position is based upon the untenable assumption that there was a valid closing agreement to begin with. In our judgment, no valid closing agreement was even entered into. The closing agreement here involved was signed by the Associate Chief, NYC Appeals, who had no authority to do so on behalf of the Commissioner.
Delegation Order No. 97 provides that "Chiefs and Associate Chiefs of Appeals Offices * * * are hereby authorized in cases under their jurisdiction (
*320 An agreement entered into by an unauthorized act of an agent of the United States is null and void. "The United States is not bound by the unauthorized acts of its agents, nor is it estopped to assert lack of authority as a defense."
Both Petitioners' Response to Respondent's Motion for Summary Judgment and petitioners' motion for leave to amend are based on the closing agreement. Both raise the same point: That because of the closing agreement, the Court lacks jurisdiction pursuant to
Petitioners do not now dispute the substance of the transaction, nor do they now appear to challenge their liability for the deficiency, additions to tax, and increased interest determined in the notice of deficiency. 5 We note that although the closing agreement is void, granting the motion for summary*322 judgment or entering a decision in favor of the Commissioner in fact ironically implements the terms of the closinng agreement upon which petitioners rely in their attempt to prevent the Court from entering a decision against them.
To reflect the foregoing,
1. Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the year in issue. All Rule references are to the Tax Court Rules of Practice and Procedure.↩
2. In substance, by preventing this Court from entering a decision against them, petitioners obviously seek to prevent the Commissioner from assessing a deficiency against them based upon the closing agreement, because a closing agreement standing alone arguably may not give the Commissioner the right to make an assessment absent a waiver by petitioners. Cf. sec. 6213(a).↩
3. Delegation Order No. 225 provides as follows: 1. The Associate Commissioner (Operations), Assistant Commissioners (Examination) and (International), Regional Commissioners, Assistant Regional Commissioners (Examination), District Directors, Service Center Directors, and Compliance Center Director, Chiefs, Examination Division, and Examination Managers and Supervisors GM-13 and GM-14 in Districts, Service Centers and Compliance Center are hereby authorized in cases under their jurisdiction to enter into and approve a written agreement with any person relating to the Internal Revenue liability, of such person (or of the person or estate for whom he/she acts) to close pre-ERTA tax shelter commodity issues * * * and other tax shelter initiative issues based on settlement positions reached by Chief Counsel or Appeals on the specific shelter where the initial investment was made prior to January 1, 1983. These agreements will be executed on * * * Form 906, Closing Agreement on Final Disposition Covering Specific Matters. The authority delegated herein extends only to tax shelter issues, including penalties or related statutory issues that must be adjusted due to settlement of the tax shelter issues. * * * 2. The authorities contained in this order * * * amends and supplements Delegation Order No. 97 (as revised). * * *↩
4. Even if the response and the motion for leave to amend are considered separately, petitioners' motion for leave to amend should be denied in any event. Rule 41(a) allows a party to amend its petition within 30 days after it is served or by leave of the Court if "justice so requires". We note that 10 years have passed since the original petition was filed, and 8 years have passed since petitioners signed the closing agreement admitting their liability for the taxes involved here. Granting petitioners' motion might have the anomalous result of relieving them of liability for taxes they have admitted they owe. See
5. Although the closing agreement is void and the notice of deficiency would appear to control, we will not order that petitioners be liable for the additions to tax or increased interest. The IRS in its Memorandum of Law in support of its motion for summary judgment concedes the issue. It states "Based upon the foregoing, it is prayed that the Court enter a decision reflecting a deficiency in the amount of $ 7,686.00 for the taxable year 1982, with no additions to tax pursuant to
John J. Waters and Jeanne M. Waters v. Commissioner of ... , 978 F.3d 1310 ( 1992 )
Emma R. Dorl v. Commissioner of Internal Revenue , 507 F.2d 406 ( 1974 )
Fed. Sec. L. Rep. P 99,038 , 68 F.3d 482 ( 1995 )
Main-Hammond Land Trust v. Commissioner of Internal Revenue , 200 F.2d 308 ( 1952 )