Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-87-02684/USCOURTS-ca10-87-02684-0/pdf.json

Parties Involved:
Commissioner of Internal Revenue
Appellee
Douglas E. Wall
Appellant

Document Text:

PUBLISH 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

DOUGLAS Eo WALL, ) 

) 

Petitioner-Appellant, ) 

) 

v. ) 

) 

COMMISSIONER OF INTERNAL REVENUE, ) 

) 

Respondent-Appellee. ) 

MAY 301989 

ROBERT L. HOECKER 

Clerk 

No. 87-2684 

Appeal from the United States Tax Court 

(No. 4946-86) 

David M. Berrett, Denver, Colorado, for Petitioner-Appellant. 

David E. Brunori, Attorney, Tax Division, Department of Justice 

(William S. Rose, Jr., Assistant Attorney General, Gary R. Allen 

and David English Carmack, Attorneys, Tax Division, with him on 

the brief), Department of Justice, Washington, D.C., for 

Respondent-Appellee. 

Before LOGAN, MOORE and EBEL, Circuit Judges. 

LOGAN, Circuit Judge. 

Appellate Case: 87-2684 Document: 01019957930 Date Filed: 05/30/1989 Page: 1 
Petitioner Douglas E. Wall appeals from a decision of the 

United States Tax Court holding that the Commissioner of Internal 

Revenue was not barred from issuing Wall a notice of deficiency 

almost six years after Wall had executed Form 872-A, an indefinite 

waiver of the three-year limitations period on income tax 

assessments. See I.R.C. § 650l(a). The sole issue on appeal is 

whether the Commissioner should be estopped to assess the 

deficiency in this case for making it within an allegedly 

unreasonable period of time after Wall executed Form 872-A. 

The facts are not in dispute. In 1975, the Internal Revenue 

Service (IRS) notified Wall that it needed additional time to 

complete its examination of Wall's 1972 tax return and requested 

an eighteen-month waiver of the three-year limitations period. 

Wall agreed and executed Form 872, which effected the waiver for 

the requested time. Subsequently, the IRS requested and received 

additional waivers for successive limited periods on the 1972 

return and returns for certain other years. In 1980, however, the 

IRS requested an indefinite waiver that Wall executed on Form 872-

A, which is designed specifically for that purpose. Three years 

later, the IRS requested certain information from Wall. After a 

series of intermittent settlement negotiations failed, the IRS 

issued Wall a deficiency notice in late 1985. 

In the Tax Court, Wall did not contest the amount of the 

assessed deficiency and he does not challenge it here. Rather, 

Wall argues that the indefinite waiver terminated upon the 

expiration of a reasonable time, which he claims elapsed prior to 

the IRS's assessment in this case. The Tax Court upheld the 

-2-

Appellate Case: 87-2684 Document: 01019957930 Date Filed: 05/30/1989 Page: 2 
validity of the Form 872-A waiver, refusing to apply a "reasonable 

time" standard to such agreements. We agree with that holding. 

The issue before us was recently presented to the full Tax 

Court, which unanimously held that Form 872-A waivers do not 

expire by operation of law after a reasonable time. Estate of 

Prudencio B. Camara, 91 T.C. No. 60 (1988) 1 ; see also Richard R. 

Stenclik, 56 T.C.M. (CCH) 1059 (1989). In Camara, the court 

discussed seemingly inconsistent statements from prior cases 

regarding the validity of unlimited waivers and concluded that 

sound policy reasons militated against applying a reasonableness 

test to Form 872-A extensions. 

We are in substantial agreement with the Camara court's 

analysis, and briefly note the most salient reasons why a 

reasonableness analysis should not be applied in the instant case. 

First, most of the decisions relied on by Wall and the taxpayer in 

Camara were decided either under indefinite extension agreements 

that contained no provisions for termination, or old Form 872-A, 

which provided for termination of the agreement ninety days after 

''written notification" to the IRS of an election to terminate, 

without specifying any particular form of that notice. See,~, 

McManus v. Commissioner, 583 F.2d 443, 446 & n.4 (9th Cir. 1978). 

In contrast, current Form 872-A, executed by Wall, provides a 

simple and effective method of terminating the waiver by requiring 

1 Neither party brought Camara, a decision squarely supporting 

the government's position, to the attention of this court. We 

should not have to remind practitioners before our bar that it is 

the practice in the Tenth Circuit to notify the court of all 

pertinent and significant authorities bearing on contested issues 

decided during the post-briefing period before a final decision is 

rendered. Cf. Fed. R. App. P. 28(j). 

-3-

Appellate Case: 87-2684 Document: 01019957930 Date Filed: 05/30/1989 Page: 3 
the use of Form 872-T, thereby eliminating any disputes about 

"whether various written communications constitute[] termination 

letters." Camara, 91 T.C. No. 60 at It is undisputed that 

Wall never executed a Form 872-T termination. 

Second, allowing a reasonableness defense to a Form 872-A 

waiver would embroil already overburdened courts in disputes 

between the Commissioner and taxpayers regarding what constitutes 

a reasonable assessment period. The need for such an inquiry is 

obviated by requiring the taxpayer to utilize the 872-T 

termination form or be held to the agreement he made. Third, the 

Form 872-A indefinite waiver relieves the IRS of the great 

administrative burden of tracking the limitations period and 

obtaining successive waivers on each individual case. Imposing a 

reasonableness standard would substantially undermine this 

objective. Finally, the Form 872-A waiver does not unilaterally 

benefit the government--the taxpayer obtains a quid pro quo in the 

form of more time to produce evidence to negate a deficiency or to 

negotiate a compromise and settlement before facing a deficiency 

notice that would require him to go to court to contest the 

assessment. 

Having said all of this, we do not exclude the possibility of 

finding the government may be barred in an egregious case in which 

a Form 872-A has been executed--for instance, when the IRS has 

made no contact with a taxpayer for twenty years after a Form 872-

A was executed. The facts of the present case, however, do not 

approach an extreme case in which the justification for a reasonableness analysis might outweigh the strong policy considerations 

-4-

Appellate Case: 87-2684 Document: 01019957930 Date Filed: 05/30/1989 Page: 4 
discussed above for avoiding such an inquiry. Thus, the validity 

of Wall's waiver must be upheld. 

AFFIRMED. 

-5= 

Appellate Case: 87-2684 Document: 01019957930 Date Filed: 05/30/1989 Page: 5