harvey flooding my offices developing back and leg problems and the repealing care for this year i think it's time to go taxpayers to an amount of liability in any year month the government asserts that there is the court below seemed to assume that there was that's not the way it works in what you have is an agreement to the adjustments were to the treatment of certain partnership items and in this case the agreement was there would be no change to the way they were treated on the tax return at that point the make a final determination as to the taxpayers ultimate liability so as is your best argument here that you think the statue of limitations had expired or that there had to be an assessment there is no agreement as to an amount of liability there's no fixed dollar amount that was ever agreed to and even the united states supreme court acknowledges that the proper procedure in tougher is once that assessment is made the quote computation will just move assessment the taxpayer the remedy is to file a claim for refund if he has over paid his taxes even for any other reason he can't go back and reach challenge the partnership item adjustments but he can raise any new claim for example of a method deductions on that return in this case we argue that had it been assessed and paid for nine hundred eighty five the tax payers had in fact a credible argument for they could have raised any other claim and we've never investigated whether there might have been unclaimed auctions or something because the case didn't go in that direction but by making it a nine hundred eighty six assessment the government deprive the back player of the opportunity to follow up his remedies to get to the correct liability for one nine hundred eighty five that's that makes that statement that there was an agreement to an amount of liability important is not controlling in that case but it is  there has to be an assessment before there can ever be a collection no because there are circumstances where there doesn't have to be ok for example if the taxpayer if if  contemplated that there could be adjustments in any of those years there could be a resulting to actually ability had it been that operating had been lost and cured forward the later years and then the last produced a tax benefit in that later years  document the the document can be construed to be corrected but there's so much as we have here we have a typographical error somewhere in the government records that maybe started all of this but then we have an actual acting on that which they rate rate which they waived hedley pursued that then we would have had the right and the opportunity to come in and say wait no we haven't defense to that proposed additional nine hundred eighty five liability you want to happens from the later years were my clients probably should have gotten refunds with technicalities on how you carry the suspended losses for were extremely complex and then lost many of their deductions here the government has made a mistake the taxpayer has been harmed released theoretically harmed and it's the law that should be followed it's not an equitable issue here and in fact the court doesn't have the equitable powers to simply deem it to have happened for some other year class and it can't restore both parties to their original position it can't put us back in a position to be able to pursue that reform plan the government simply made a mistake yes there's no question we don't we don't dispute that but it's a mistake that that has caused difficulties it's a mistake that if we follow the law they are simply stuck with that the amount mistakenly assessed for eighty six was the increase in their liability for eighty five and that the parties understood this at the time they made the payment in two thousand and the court also found that they weren't misled that if you get it wrong if you make an error then you don't get out from under and you're stuck with that why isn't the i r s stuck with its own error well here was in the assessment and related documents and there isn't really any dispute that it was a clerical typographical error and as we stated in our brief there are cases we haven't been able to find any case that involved  assessment but there are cases where there's an error in the notice of assessment and demand for payment which is actually which was the notice sent to the taxpayer and there was one here the site but iris internal documents even still reflect this as a one nine hundred eighty six payment right well that's because when the error was made then the documents created after that including the notice that assessment all reflected that that year and when they paid the tax it was applied there so not because all that happened before hundred but it was the amount which they were well aware because it was exactly the same amount which cyrus had already informed them on the form forty five forty nine before the assessment that they were going to over nine hundred eighty five  time we're not correct because when the actual assessment came out they were different well the first four the one that they got all it had was a number of the first why i'm actually laid out the computation and made it quite clear and they were also they were aware of that they claimed deductions in all its release years that under the under their closing agreement their deductions were going to be limited by their amount at risk and they were aware that the amount risk all got use of a nine hundred eighty three and that's where they were going to have an income tax liability in eighty eighty four eighty four i mean what's your response to the fact that the court should not have resolved the question of whether there might have been income averaging or other kinds of  hundred eighty five had they known they were paying something for one thousand a day will go up it they may have even if you even if you thought that at the time they paid an amount which they were well aware that they owe them that they didn't know which we assume that that because that because there was no assessment for eighty five and you can't deem it even if there was no assessment for eighty five they paid an amount which was a liability for eighty five so now we can look and see what's  liability for eighty five if the amount they paid is no more is is no more than the correct liability then they don't get a refund but had but that's what i'm trying to understand how do we know that that was a correct li it was the amount that term and by the i r s under the parties closing agreement once it was put at once there was an issue is that correct liability it was up to the test and taxpayer could argue that there was a problem with the only the only thought that's what they were arguing to the to the lower own well they argued it might be wrong they never pointed any particular error and said here is the right amount in fact the only see the only specific error that they raised was a we were entitled to income averaging but as the court said in what no three of its opinion can do income averaging you need to know the three prior years there's no evidence in the record about what they're what their income was in eighty two so they can't show that they're they're entitled to a refund so their their burden would be to show what the correct amount of the tax liability would be and the and and the summary judgment was less concerning response to your summary judgment yes why wouldn't they have to well know they have to show that they have to first show that there is a genuine issue material fact for trial and how do you say that's what i'm trying to decide so you're saying to show there's a genuine issue of material fact i have to put all their proof then and that material for no they have no they would maybe do they know the eighty two number well they apparently as i understand it they no longer have their nine hundred eighty two tax return which which is where you would start from determining put in some evidence they would have to put in evidence to show that income averaging would make a difference which means they have to show the amounts of those prior years correctable in summary judgment well the critical point here is is has the court found and as the cases i've cited say is if there's a if there's a notice that has a technical error and they can't just say they've misled they've got to say what they were misled about and all they've really said is this is this notion of income averaging or that it might be incorrect let me just say that that it seems to us that there isn't a genuine issue of fact that they weren't misled but if the if there was a genuine issue of fact that they were misestimated on the forty five already you know that's exactly right which is what the the the court below relied on but if you thought that was a factual issue that should have been decided on summary judgment we can still go to the court second ground for decision which is you can't get a refund of a tax you paid even if there was an assessment as long as you paid it before the statue of limitations expired then the court found that under the get to that second argument you're making you have to have second agreement first i'd like to phrase it a little differently because our position is the first one doesn't affect our position is that the first one is the one you look at i mean the second one i'm sorry i'm the individual closing agreement for several different reasons first is that the first closing agreement didn't purport to it to to convert the habit next partnership items into non partnership items all  right well no because because you have to look at what the terms of the first one was because we're not just talking about what's flowing through we're talking about the specific the specific notion in the statute that says where  partner makes a settlement agreement with the commissioner that's when the non partnership by the partnership items of the partner are converted on partnership items so what you need is a settlement room between the partner meaning the meaning of marla haven't it because actually why don't you just argue that even if we have to show that the second one trumps the first it does i mean isn't that the better argument i'm sorry that's exact that is what it says i'll read it just so we're rich and says this agreement supersedes any prior agreement entered into between the taxpayers and the internal revenue service and they didn't have a brewery well our position is that is that the t state exactly what the tax liabilities are for the hebron act well the prior agreement doesn't all it does is it says what it says the taxpayer meaning wilderness village is and i don't claim  the controlling one that converted the partnership items then the payment would be the key here is was the payment before the assessment we agree that if it's the controlling agreement in the second one is it doesn't matter the payment was made more than one year after that if it's the second one the individual agreement entered into by the taxpayers in this case then the payment was made within one year after that what's the consequences of being met with a one year well that the as opposed to not that when when a taxpayer makes a payment of a tax even where there's been no assessment if the payment is made before the time for making the assessment the n he's not  second agreement is the one that the boss well that would mean that their payment in two thousand i can't remember what month but that their payment was made within this time the time for making the assessment right so even if then we'd also have to conclude that you don't need an assessment to keep it and but because that well this is the case there's plenty of case law that says that as long as the payment is before the time for assessment and you say second group is then the payment was made before the time person as well yes of that cuts in your favor no let me let me get the dates on here just so instead of talking in the abstract minor maybe i'm just wrong in my that i don't think there's any dispute that if the second agreement controls the payment was made within that one yes correct on it and that but the taxpayer does dispute whether an assessment has to occur right even though you say there's case i don't we've never said that but oh i think in the now i can't remember exactly how it came up i think that probably in some of these cases at least the court recognised that it did now we haven't expressed except that well i think you have an existing site as any cases i didn't find any cases we haven't expressing sat so ok it's not a frivolous argument for him to break because there are there are some that when a partner in the government enter into a closing agreement that agreement converts partnership items to none partnership items as of that time the first agreement did that for all partners in  it's not a doesn't matter what the contents of the agreement were even an agreement there is no change of the partnership adams like there was here that conversion to non partnership items starts the one year the second degree meant incidentally but the second agreement says that overrides all other things right it does but it can't reconvert partnership items to non partnership minors there's nothing that in the law that allows that once they are converted their convert you're in a completely different signed the closing agreement on behalf of wilderness there's converse and it becomes a non partnership item there still has to be a capital s an amount right yes ma'am no question about that no doubt but what it does is it gives the government one year to make th agreement that extends the statute the second year remit could have included an agreement that were extending the statute of limitations does all prior country converted partnership items or had there been partnership items under the first weren't adjusted and were adjusted in the second degree and that agreement would be the one that converts the partnership items if there had been partnership items that were addressed by the first year and here you can't go backwards on whether it's a partnership item or not so what is the purpose of the second agreement the second the question though even beyond that is why is this relevant we talk about whether or not the payment was made before the statute of limitations expired but now we are again throwing out the concept of discrete taxable years which is not what we have here there are no cases the do that where we are talking about a tax liability in one year in a refund claim in another if that were the case it would open up every prior taxable year of the taxpayer to be very few exceptions it is established i need to street taxable your basis we've discussed that in the brief we go to where the authority is in the code through that we've shown that not a single case that the government sites do that cross taxable years on those principles it just doesn't happen the issue arises from the concept that for there to be an overpayment he wants to paid more than your tax liability whether or not it had been a general concept of the offset is all within that same discrete taxable year if there are there are cases where they have penalties that could have been applied to the taxpayer for the same year there were huge th becomes in later with a big with a million dollar plus as i recall or refund claim for that year the government comes and says look we have these payments we have these these these huge penalties should have been asserted back and if that goes to court it's going to be ten years later how can you oppose a tax liability on somebody who had nothing to do the right now you're getting the stuff that might come before us it is going  but not by me