Professional Documents
Culture Documents
2010-113
MEMORANDUM OPINION
1
Unless otherwise indicated, all section references are to
the Internal Revenue Code, as amended.
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Background
Some of the facts and exhibits have been stipulated and are
this reference.
Mr. Marlow has a third grade education, and Mrs. Marlow has
a seventh grade education. For many years Mr. Marlow was in the
returns for 2004 and 2005. The returns were prepared by their
did not attend the meeting. Although the audit notice was
2005 returns.
inter alia, that petitioners had not used Form 2848, Power of
2848. Mr. Marlow took the completed Form 2848 to Mrs. Marlow for
and business practices during 2005 and stated that he was not
of the adjustments to items for 2005 to the items for 2004. She
returned to her office following the meeting with Mr. Marlow, she
payment options. RA Jackson told Mrs. Marlow that she would send
Form 9984 for March 13, 2007, the date Forms 4549 signed by
Jackson’s Form 9984 after the March 6 entry is the last entry
dated March 14, 2007, which reads “Closed to GM” without any
Marlow signed Forms 4549 agreeing that additional taxes were owed
for 2004 and 2005; or (3) that Mr. Marlow or Mrs. Marlow agreed
Form 4549 on the Form 9984 because she believes that the signed
second, RA Jackson prepared the Forms 4549 for 2004 and 2005 and
gave them to Mr. Marlow on March 5, 2007, when she concluded her
examination, but the workpaper Forms 4549 are dated March 13,
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2007; and third (and most telling), the workpaper Forms 4549
could not have been prepared on March 5 or 13, 2007, because the
workpaper Forms 4549 are labeled “Form 4549 (Rev. 3-2008)” and,
in the record reveals any action he may have taken regarding the
sends the file forward for further processing using a Form 3210,
ERCS will also show when the tax examiner returns the case file
such an action.
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signed Form 4549 in the case file and check the figures on the
not properly executed, CCP returns the case file to the revenue
that the Forms 4549 in the case file were signed by petitioners.
went into Status 90, which is closed. The record does not
for 2004 or 2005. On April 16, 2007, the IRS assessed additional
taxes of $18,913 for 2004 and $16,720 for 2005. The assessed
to Levy and Notice of Your Right to a Hearing for 2004 and 2005.
hearing.
petitioners had paid all taxes owed for 2004 and 2005 but that he
the audit because his records had been destroyed in the fire. He
hoped that Ms. Gillum could help them compromise the liabilities
discuss the tax liabilities with Appeals and asserted that they
any notices of deficiency and that the examiner had made errors
2004 and 2005 “by signing Form 870 on March 13, 2007.”
and 2005 tax returns but at that time did not request the
Before she held the CDP hearing, SO Magee reviewed the computer
their documents in the fire. She said that petitioners did not
the forms but had requested them. She explained that the
computer indicated that the petitioners had signed Forms 870 for
2004 and 2005. She said that if she received copies of the
petitioners’ counsel.
that she had verified that the IRS followed all requirements of
She stated that she had verified through transcript analysis that
that she had “verified posting of TC 520 for the correct date on
barred from raising the tax liabilities issue in the CDP hearing.
2004 and 2005 in late April 2009 or about 3 weeks before the
trial; the files, including the Forms 4549, were never found.
Petitioners’ administrative files for 2004 and 2005 are not old
they were unable to find them. However, she did review the
assigned to the ERCS unit who testified during the trial. She
2004 and 2005 2 weeks before trial but did not receive them. Ms.
Discussion
6330(c)(3).
See sec. 301.6330-1(f)(1), Proced. & Admin. Regs. This Court has
II. Verification
2
A notice of deficiency provides taxpayers with important
procedural safeguards by allowing them 90 days, or 150 days if
the notice is addressed to a person outside the United States, to
petition this Court for a redetermination of the deficiency as a
prerequisite to assessment. Commissioner v. Shapiro, 424 U.S.
614, 616-617 (1976).
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spouse does not apply to the other spouse, and a valid assessment
cannot be made against the spouse who did not sign the waiver.
notice and demand was issued, that the liability was not paid,
and that the Final Notice of Intent to Levy and Notice of Your
the tax reported on joint returns, the Appeals officer also must
3
Federal taxes are assessed when they are formally recorded
on a record of assessment. Sec. 6203. The summary record of
assessment must “provide identification of the taxpayer, the
character of the liability assessed, the taxable period, if
applicable, and the amount of the assessment.” Sec. 301.6203-1,
Proced. & Admin. Regs.
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Memo. 2007-181.
Although computerized records may show that the tax was assessed
IRS waiver form has been received, such records do not verify
known address or that the waiver form was not modified and signed
4
Chief Counsel Notice CC-2006-019, at 18 (Aug. 18, 2006),
states that an Appeals Officer “may rely on a Form 4340 to verify
the validity of an assessment, unless the taxpayer can identify
an irregularity in the assessment procedure” and acknowledges
that, where it is alleged that a notice of deficiency was not
mailed, the Appeals officer may be required “to examine
underlying documents in addition to the tax transcripts, such as
the taxpayer’s return, a copy of the notice of deficiency, and
the certified mailing list”.
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petitioners signed a valid waiver for each year, the IRS could
obtain verification that Mr. Marlow and Mrs. Marlow had each
years. She did order petitioners’ 2004 and 2005 income tax
Forms 870 and agreed to provide copies of the signed forms when
procedure, but it did not explain the basis for the 2004 and 2005
6213(d).
records because the waiver may not have been signed by either
spouse or may have been signed by only one spouse filing a joint
return; the waiver may have been signed after the statutory
period for assessing the tax expired; the waiver may have
included only one year when more than one year is at issue; or
the additional taxes for 2004 and 2005 and, thus, did not obtain
additional taxes for 2004 and 2005. However, SO McGee was unable
it unlikely that the Forms 4549 (or Forms 870) would be found
(2001).
of income tax liability may not be made more than 3 years after
the later of the date the tax return was filed or the due date of
before April 15, 2005, and filed their 2005 return on or before
2004 and 2005 on April 16, 2007, within the 3-year period.
assessment of the additional taxes for 2004 and 2005 but concedes
that the IRS has been unable to find the administrative files
5
Respondent argues that pursuant to the Court of Appeals for
the Eighth Circuit’s decision in Robinette v. Commissioner, 439
F.3d 455 (8th Cir. 2006), revg. 123 T.C. 85 (2004), this Court
may not consider evidence beyond the administrative record.
Because sec. 6330 requires a de novo standard of review when
the underlying liability is properly in issue, the administrative
record rule is not applicable to the validity of the assessment
of that liability. Moreover, the administrative record does not
include petitioners’ administrative files. The computerized
records that make up the administrative record in this case are
insufficient to establish that petitioners waived the
restrictions on assessment of the taxes. Thus, were we limited
to the administrative record, we would conclude that respondent
has not met his burden of proving that petitioners had signed
(continued...)
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v. United States, 149 F.3d 1190 (10th Cir. 1998); United States
v. McGaughey, 977 F.2d 1067, 1071 (7th Cir. 1992); United States
v. Conry, 631 F.2d 599, 600 (9th Cir. 1980). Original Forms 4549
5
(...continued)
valid waivers and further that the period for assessing the taxes
has expired. Finally, we think this case falls within the
following exception to the administrative record rule recognized
by the Court of Appeals in Robinette v. Commissioner, supra at
461 (citing Citizens to Pres. Overton Park v. Volpe, 401 U.S.
402, 420 (1971)): “Of course, where a record created in informal
proceedings does not adequately disclose the basis for the
agency’s decision, then it may be appropriate for the reviewing
court to receive evidence concerning what happened during the
agency proceedings.”
6
Respondent cites the unpublished opinion of the Court of
Appeals for the Tenth Circuit in Cross v. United States listed in
the table at 149 F.3d 1190 (10th Cir. 1998), affirming the
District Court.
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special search request just 2 weeks before trial. The IRS still
had not found the administrative files the day before trial, and
respondent has not notified the Court that the files were ever
are lost, and respondent may use secondary evidence to prove the
Forms 4549.7
RA Jackson met with Mr. Marlow but never with Mrs. Marlow.
returns, Mr. Marlow never agreed that he owed the additional 2004
7
Again, respondent points to the unpublished opinion in
Cross v. United States, supra (see supra note 6), wherein the
Court of Appeals for the Tenth Circuit upheld the District
Court’s finding that the Commissioner’s computerized records
established that waivers had been signed by the taxpayer. The
Cross case is distinguishable from this case. In Cross, the
taxpayers contested the validity of assessments 9 years after the
alleged assessment date and testified that they could not recall
whether they had signed a waiver form. The Court of Appeals
indicated that it would have been a much closer case if the
taxpayers had testified that they believed they had not signed
the waiver form. By contrast, in the instant case both
petitioners testified under oath that they never agreed they owed
additional taxes for 2004 and 2005 or signed any forms consenting
to the assessments. They immediately protested the assessments
when they received a final notice of intent to levy, which was
within 5 months of the examination.
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notice to bring his bank records for the 2005 audit. During the
expanded the scope of the audit to 2004. She made her proposed
2005 return. Mr. Marlow did not have his bank records with him
for 2004. Even if RA Jackson could have assumed that Mr. Marlow
any event, it does not mean that petitioners agreed to waive the
waiver form but gave Mr. Marlow Forms 4549 on March 5, 2007, to
return on March 13. Mrs. Marlow testified that she did not sign
Form 4549--when she issues it and that she issued the Forms 4549,
on the Form 9984 confirm that the forms were issued on March 5,
2007. However, the workpaper Forms 4549 are dated March 13,
2007.8
judgment that never reached the merits of the case. The second,
8
RA Jackson explained that the date on the workpapers Forms
4549 reflects the last date she ran the program to doublecheck
the figures.
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Also, section 6501(c)(4) does not require that the written waiver
affirmations under oath that they did not agree with the
Jackson acknowledged that she did not meet with Mrs. Marlow and
was not sure whether Mr. Marlow agreed or disagreed with the
agreed.
revenue agent’s group manager review the audit files and enter a
stating that Mr. Marlow would show Mrs. Marlow the report and
consistent with their affirmations that they did not agree to the
March 14, 2007, just 9 days later. RA Jackson expanded the 2005
given notice only of a 2005 audit, and Mr. Marlow’s bank records
their request for a CDP hearing just 5 months later. Unlike the
audit, it was the power of attorney form for Vicki Mayes. Their
for 2004 and 2005. Mr. Marlow believed that petitioners had
property. For that reason and because SO Magee had informed them
copies of the Forms 870 because SO McGee had stated that the
records destroyed in the fire and they were worried about their
owed the additional taxes. Moreover, respondent has not met his
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however:
assessments.
they did not underreport their taxes because they could not
IV. Conclusion
2004 and 2005 income taxes and agreeing that they owe such taxes,
submitted.
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An appropriate decision
will be entered.