Opinion ID: 2995283
Heading Depth: 2
Heading Rank: 1

Heading: Genuineness of Signature

Text: Section 6501(a) of the Internal Revenue Code (the Code) provides that the IRS has three years from the date a return is filed to assess deficiencies. This period can be extended, however, if both the Secretary and the taxpayer have consented in writing to its assessment after such time. I.R.C. sec. 6501(c)(4). In asserting a statute of limitations defense, a taxpayer makes a prima facie case by showing that the notice of deficiency was not mailed within the three-year time period. See Adler v. Commissioner, 85 T.C. 535, 540 (1985). If the IRS produces a consent to extend the limitations period that is valid on its face,/3 the burden then shifts back to the taxpayer to show that the consent is invalid. See id. at 540-41. The ultimate burden of proof on the limitations defense always rests on the taxpayer. See id. at 540; see also Feldman v. Commissioner, 20 F.3d 1128, 1132 (11th Cir. 1994). In this case, Dr. Malachinski filed his tax return for the year 1980 on April 15, 1981. On June 8, 1983, prior to the expiration of the three-year statute of limitations, a representative of the Commissioner executed a consent form, purportedly signed by Dr. Malachinski and Superson, that agreed to extend indefinitely the statute of limitations on assessment for 1980. The IRS, relying on that consent, issued the notice of deficiency at issue here in May 1994. Dr. Malachinski argues that the agreement to extend the statute of limitations is invalid because he never signed the consent form. He speculates, instead, that his ex-wife forged his signature. To overcome the presumption that a signature on a document is authentic, see I.R.C. sec. 6064, Dr. Malachinski presented at trial the expert report and testimony of Diane Marsh, a board-certified forensic document examiner. He now maintains on appeal that the tax court abused its discretion in curtailing Marsh’s testimony. Tax Court Rule 143(f)(1) requires that an expert’s written opinion be submitted at least 30 days in advance of trial. The report must not only set forth the witness’ opinions but also include the facts or data on which that opinion is based and reasons for the conclusion. Testimony is excluded altogether for: failure to comply with the provisions of this paragraph, unless the failure is shown to be due to good cause and unless the failure does not unduly prejudice the opposing party, such as by significantly impairing the opposing party’s ability to cross-examine the expert witness or by denying the opposing party the reasonable opportunity to obtain evidence in rebuttal to the expert witness’ testimony. Tax Court Rule 143(f)(1). We agree with the tax court that Marsh’s written report does not satisfy Rule 143(f)(1). The report is terse and conclusory, indicating only Marsh’s opinion that Dr. Malachinski had not signed his name to the consent form and that the same individual had written the date on both signature lines. Marsh does not explain her conclusions nor does she denote the facts supporting it. Moreover, Dr. Malachinski has not shown that the failure to include this information was due to good cause. In our view, the tax court was on solid ground in concluding that permitting the additional testimony would have unduly prejudiced the IRS’ ability to cross-examine Marsh. See Diego Investors IV v. Commissioner, 58 T.C.M. (CCH) 753, 763 (1989) (noting that [o]ne purpose of exchanging expert reports is to facilitate effective cross-examination by the other party); see also Estate of Friedberg v. Commissioner, 63 T.C.M. (CCH) 3080, 3081-23 (1992) ([W]hen one party seeks to introduce expert testimony, which may be exceedingly complex and difficult for the layperson to readily understand, the other party must be given sufficient time to overcome those obstacles.). The use of expert testimony is within the discretion of the trial judge, see Diego Investors, 58 T.C.M. at 764, and we see no evidence that the tax court abused its discretion in curtailing Dr. Malachinski’s direct examination of Marsh. In rebuttal to Marsh’s report, the Commissioner presented the report and testimony of James Davidson, also a certified document examiner. Davidson examined various exemplars of Dr. Malachinski’s signature and concluded that the samples were not representative enough for him to find that the signature was a forgery. Taking into account the conclusions of the two experts, the tax court examined the exemplars itself to reach its own conclusion that the signature was genuine. Dr. Malachinski now argues that the court committed clear error in making this determination. As an initial matter, we note that Dr. Malachinski faces a difficult burden in contesting the tax court’s factual findings. Under the clearly erroneous standard of review, a finding of fact is reversed only when the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. Coleman v. Commissioner, 16 F.3d 821, 825 (7th Cir. 1994) (internal quotation marks omitted). We must view the evidence in the entire record in the light which is most favorable to the finding. Pittman v. Commissioner, 100 F.3d 1308, 1313 (7th Cir. 1996) (quoting Tripp v. Commissioner, 337 F.2d 432, 434 (7th Cir. 1964)). Although Dr. Malachinski objects to the court’s substitution of its own judgment for that of his expert, the tax court is permitted to do just that. The court has broad discretion to evaluate the overall cogency of each expert’s analysis. Estate of Davis v. Commissioner, 110 T.C. 530, 538 (1998) (citation and quotation marks omitted). It can reject, in whole or in part, reports and testimony of expert witnesses in favor of its own independent evaluation of the evidence in the record. See Helvering v. National Grocery Co., 304 U.S. 282, 294-95 (1938); see also Shepherd v. Commissioner, 115 T.C. 376, 390 (2000) (We may be selective in our use of any part of an expert’s opinion.). Thus, the tax court apparently undertook an independent assessment of the signature. See, e.g., Bybee v. Commissioner, 72 T.C.M. (CCH) 607, 608 (1996) (after studying handwriting exemplars, tax court concluded that the handwriting reflected by petitioners’ signatures on their 1982, 1983, and 1984 joint Federal income tax returns appears to be identical to the handwriting reflected by petitioners’ signatures on the Form 872, and no credible evidence indicates to the contrary). Dr. Malachinski also maintains that the inferences the court drew from the circumstantial evidence were not reasonable. For example, the tax court in part based its determination on the failure of Dr. Malachinski and his tax professionals to raise the issue of consent until 12 years after the form was signed./4 Dr. Malachinski argues that he received a letter from the IRS in 1990 advising him that the 1980 tax dispute had been resolved; he had no reason, therefore, to pursue the issue of consent. He also asserts that he relied on his lawyers to defend the tax return and did not even know that the forged waiver existed. Again, however, we are not persuaded that the court clearly erred in making its factual findings. As we have noted previously, the existence of evidence to support an inference contrary to that drawn by the trier of fact does not mean that the findings were clearly erroneous. See Harper v. City of Chicago Heights, 223 F.3d 593, 600 (7th Cir. 2000), cert. denied, 121 S. Ct. 883 (2001); see also Malkin v. United States, 243 F.3d 120, 123-24 (2d Cir. 2001) (rejecting petitioner’s contention that the evidence was insufficient to support the district court’s finding that he signed an agreement to extend the statute of limitations on assessment). A fact finder’s choice between two permissible inferences from the evidence cannot be clearly erroneous. See Anderson v. Bessemer City, 470 U.S. 564, 574 (1985). Dr. Malachinski also takes issue with the tax court’s determination that his ex-wife did not forge his signature. We conclude, however, that the court was well within its province when it found that Superson’s hostility toward Dr. Malachinski--as manifested in her attempt to hire someone to kill him--was too far removed in time (six years after the execution of the consent form) to support the forgery theory. Although Dr. Malachinski marshals evidence to the contrary (Superson secretly had filed for divorce; the two had been embroiled in a heated custody battle; Mellerke testified that Superson had made several suspicious statements; Superson was convicted of attempting to hire someone to kill Dr. Malachinski; and, in a deposition related to this case, Superson refused to answer, on self-incrimination grounds, questions relating to whether she forged Dr. Malachinski’s signature), we review the record in the light most favorable to the tax court’s findings and, as indicated previously, defer to those findings when there are two permissible views of the evidence. See United States v. Hardamon, 188 F.3d 843, 848 (7th Cir. 1999).