IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 13-60007

HARRY E. CANTRELL, JR.

Petitioner-Appellant

v.

COMMISSIONER OF INTERNAL REVENUE,

Respondent-Appellee

Appeal from a Decision of the 

United States Tax Court

No. 7095-05

Before DAVIS, SMITH, and BENAVIDES, Circuit Judges.

PER CURIAM:* 

Appellant challenges the Tax Court’s determination of his tax liability 

for tax year 2001, as well as its finding that the IRS did not abuse its discretion 

in sustaining the proposed collection efforts. We find no error and affirm. 

I.

In 2001, Petitioner-Appellant Harry Cantrell (“Cantrell”) operated the 

Law Offices of Harry E. Cantrell while also teaching criminal law at the 

Southern University Law Center in Baton Rouge, La. On October 18, 2002, 

Cantrell and his former spouse filed a joint Federal income tax return for the 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

United States Court of Appeals

Fifth Circuit

FILED

August 4, 2014

Lyle W. Cayce

Clerk

 

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2001 tax year reporting adjusted gross income of $1,535,679, but failed to pay 

any of the $608,846 in tax liability reported on the return.1

On October 21, 2003, the IRS sent Cantrell and his former spouse a 

Notice of Intent to Levy related to his 2001 tax liability. On October 30, 2003, 

the IRS sent Cantrell and his former spouse a Letter 3172, Notice of Federal 

Tax Lien Filing and Your Right to a Hearing Under Internal Revenue Code § 

6320, related to his 2001 tax liability. Cantrell then timely requested a 

collection due process (“CDP”) hearing relating to the two notices and filed an 

Amended Tax Return via Form 1040X for the 2001 tax year. In his amended 

return, Cantrell reported $12,190 in Itemized Deductions on Schedule A, and 

$879,234 Business Expenses on Schedule C. Cantrell’s total tax liability on his 

proposed 2001 amended return was $243,561. 

On June 28, 2004, IRS Appeals Officer Catherine Smith (“AO Smith”) 

contacted Cantrell to discuss his amended return and to schedule a CDP 

hearing, as he requested. The next day, AO Smith sent a fax to Cantrell, 

scheduling the CDP hearing and also providing Cantrell with a payoff amount 

which matched the tax liability reported on Cantrell’s amended return. On 

July 15, 2004, Cantrell wrote a check for the amount stated in the fax: 

$312,624.2 After meeting with Cantrell, AO Smith forwarded his amended 

return for examination by Revenue Agent Earline Brown (“RA Brown”).

In a letter dated December 8, 2004, RA Brown informed Cantrell that 

his amended return was under examination. RA Brown requested a meeting 

1 During the course of the proceedings, Cantrell’s wife received innocent-spouse relief from 

joint and several liability under § 6015 of the Internal Revenue Code with respect to the 2001 

tax liability. Therefore, this case concerns liability only with respect to Cantrell.

2 This amount included the tax liability reported in the amended return ($243,561), in 

addition to an estimated tax addition ($1,005), a failure to timely pay addition ($34,099) and 

interest ($33,960).

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with Cantrell to discuss three preliminary items on his amended return: repair 

expenses, vehicle expenses, and charitable contribution deductions. That same 

day, Cantrell and his representative left phone messages with RA Brown 

requesting that she return their calls.

From December 13, 2004, through January 14, 2005, RA Brown, 

Cantrell, and Cantrell’s representative exchanged a number of phone 

messages in unsuccessful attempts to schedule a meeting. On January 19, 

2005, RA Brown called Cantrell to notify him that she planned to recommend 

rejection of his amended 2001 tax return because Cantrell had failed to 

schedule a meeting. Soon after, Cantrell’s secretary contacted RA Brown to tell 

her that Cantrell would call her on January 24, 2005. At that time, RA Brown 

advised Cantrell’s secretary that if he did not call on January 24, the case 

would be returned to AO Smith, and RA Brown would recommend rejection of 

his amended return. Cantrell failed to call and, on January 25, 2005, RA Brown 

returned the case to AO Smith and recommended rejection of the amended 

return. During this time, Cantrell never provided any documentation to 

support the deductions claimed on his amended return.

On March 30, 2005, the IRS issued a notice of determination sustaining 

the rejection of the amended return, and seeking payment of the full amount 

of taxes reported due on Cantrell’s original 2001 tax return. In April 2005, 

Cantrell filed a petition in the United States Tax Court alleging that he was 

denied a reasonable opportunity to defend his amended return. Trial was held 

before the Tax Court on December 5, 2011, at which Cantrell and his tax 

preparer for the 2001 tax year testified. After trial and submission of post-trial

briefs, the Tax Court issued its “Memorandum Finding of Facts and Opinion” 

affirming the IRS’s rejection of Cantrell’s 2001 amended return, the amount of 

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Cantrell’s tax liability as reported in his initial return, and the decision by the 

IRS to proceed with collection of his 2001 tax liability. Cantrell appeals.

II.

We review decisions of the Tax Court “in the same manner and to the 

same extent as decisions of the district courts in civil actions tried without a 

jury.”3 “Findings of fact are reviewed for clear error and conclusions of law are 

reviewed de novo.”4

III.

Cantrell challenges the decision of the Tax Court on two grounds. First, 

he argues that the Tax Court erred in refusing to find that his payment of 

$312,624 on July 15, 2004, which was the amount due pursuant to his amended 

return, constituted the acceptance of an offer to settle his federal income tax 

liability for the year of 2001. Therefore, according to Cantrell, no subsequent 

investigation or collection of liability should have taken place as the case was 

concluded. Relatedly, Cantrell argues that the Tax Court abused its discretion 

in agreeing with the IRS decision to continue processing, and eventually reject, 

his amended return.

Relying exclusively upon the general contractual principles of offer and 

acceptance, Cantrell claims that the letter he received from AO Smith on June 

29, 2004, demanding payment of the amount Cantrell declared he owed in his 

amended return constituted an offer to settle his tax liability. He contends that 

the IRS’s acceptance of this check constituted an agreement to settle his 2001 

tax liability. These contentions are baseless. Consideration of an offer-incompromise submitted by a taxpayer in the context of a CDP hearing is 

3 26 U.S.C. § 7482(a)(1); Green v. Comm’r, 507 F.3d 857, 866 (5th Cir. 2007).

4 Green, 507 F.3d at 866.

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governed by § 7122 of the Internal Revenue Code (“IRC”).5 Section 7122 of the 

Internal Revenue Code “sets out the exclusive method of compromising tax 

liabilities.”6 Cantrell does not argue that he complied with § 7122 in executing 

the purported settlement agreement. In addition, the applicable regulations do 

not authorize Appeals Officers like AO Smith to make a bona fide settlement 

agreement on behalf of the IRS.7 It is well established that “the Government 

is not bound by the unauthorized acts of its agents,”8 and Cantrell offers no 

support for the position that AO Smith had the authority to settle his tax 

liability. Thus, we find no error and decline to disturb the Tax Court’s decision 

based upon any purported settlement agreement between Cantrell and AO 

Smith as representative of the IRS.

Second, Cantrell argues that the Tax Court erred in finding the IRS did 

not abuse its discretion when it proceeded with its collection action on 

Cantrell’s tax liability pursuant to his original 2001 tax return. We review this 

finding for an abuse of discretion, and Cantrell has failed to carry this burden.

The IRS has the discretion to accept an amended return; it is not required to 

do so.9 Cantrell bears the burden of clearly establishing his entitlement to 

5 See 26 U.S.C. § 7122.

6 Christopher Cross, Inc. v. United States, 461 F.3d 610, 612 (5th Cir. 2006) (citing Olsen v. 

United States, 414 F.3d 144, 153 (1st Cir. 2005)). See also Bowling v. United States, 510 F.2d 

112, 113 (5th Cir. 1975). Because § 7122 is the exclusive method of entering into an offer-incompromise, arguments, like Cantrell’s, which are based upon the general contractual 

principles of accord and satisfaction cannot be used to impute a compromise settlement. See 

Bowling, 510 F.2d at 113.

7 See Treas. Reg. § 601.106(a); IRS Deleg. Order No. 66, Rev. 15, 1992 WL 12007248 (Jan. 

23, 1992) (Authority of Appeals in Protested Tax Court Cases). Pursuant to these regulations, 

only a handful of IRS Appeals Officers can make bona fide settlement agreements, including 

Chiefs, Assistant Chiefs, and Appeals Team Case Leaders. Settlement officers (aka Appeals 

Officers) can only recommend a binding settlement to their superiors.

8 Ferguson v. F.D.I.C., 164 F.3d 894, 899 (5th Cir. 1999) (citations omitted).

9 Jones v. Comm’r, 338 F.3d 463, 466 (5th Cir. 2003) (citing Evans Cooperage Co. v. United 

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each deduction he claims in his amended return.10 Cantrell failed to provide

any documents or records in support of the deductions he claimed on his 

amended return, despite multiple opportunities to do so. Cantrell offered the 

testimony of the individual who prepared his amended return, who stated that 

Cantrell’s bookkeeper had documents which supported the deductions. The 

bookkeeper never testified, and the documents were never produced. In 

addition, Cantrell failed to schedule a meeting with RA Brown despite repeated 

telephone calls and attempts to contact him. When given a final deadline to 

contact RA Brown regarding his amended return, Cantrell ignored it. Under 

these circumstances, the Tax Court did not abuse its discretion in agreeing 

that the IRS properly rejected Cantrell’s amended return and proceeded with 

the collection of his tax liability in the principal amount of $608,846 as reported 

on his original 2001 return (subject to a credit for the amount already paid by 

Cantrell). We therefore affirm the judgment of the Tax Court.

AFFIRMED.

States, 712 F.2d 199, 204 (5th Cir. 1983)). See also Hillsboro Nat’l Bank v. Comm’r, 460 U.S. 

370, 380 n.10 (1983) (stating that acceptance of amended returns is “within the discretion of 

the Commissioner”); Dover Corp. & Subsidiaries v. Commissioner, 148 F.3d 70, 72–73 (2d 

Cir. 1998) (“There is simply no statutory provision authorizing the filing of amended tax 

returns, and while the IRS has, as a matter of internal administration, recognized and 

accepted such returns for limited purposes, their treatment has not been elevated beyond a 

matter of internal discretion.”) (citations omitted).

10 See INDOPCO, Inc. v. Comm’r, 503 U.S. 79, 84 (1992) (quoting Interstate Transit Lines v. 

Comm’r, 319 U.S. 590, 593 (1943)).

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