Opinion ID: 1070
Heading Depth: 2
Heading Rank: 2

Heading: olson v. united states

Text: An independent, though equally compelling, reason why I concur only in the result is the conflict the majority creates with this court's decision in Olson v. United States, 172 F.3d 1311 (Fed.Cir.1999). Though the majority says otherwise, Olson already considered and decided what constitutes a computational adjustment under I.R.C. §§ 6230 and 6231. See Maj. Op. at 1360-61; Olson, 172 F.3d at 1317-18. Olson holds that assessments are computational adjustments when they require no individualized factual determinations as to the correctness of the original partnership items or any other factual matters such as the state of mind of the taxpayer upon filing. 172 F.3d at 1318. Under Olson, when the critical questions of fact ha[ve] already been resolved, then application of that stipulated fact to the tax returns in question requires only computational action. Id. Facts can be resolved, for example, by a taxpayer's settlement agreement with the IRS, which concede[s] that they ha[ve] no entitlement to certain tax credits. Id. Under Olson, the correct result in this case is exactly the opposite of what the majority reaches. As in Olson, Bush and Shelton entered into settlement agreements with the IRS. These agreements provided that Bush and Shelton could not claim losses from certain investments. The IRS subsequently recomputed the taxes owed by Bush and Shelton. These adjustments to their tax liability were based on the settlement agreements, entail[ing] nothing more than reviewing the taxpayers' returns for the years in question, striking out the tax credits that had been improperly claimed, and re-summing the remaining figures. Id. Olson holds that applying stipulated facts in this fashion is a prototypical computational adjustment under §§ 6230 and 6231. Giving Olson the controlling weight it is due, we should be affirming the Court of Federal Claims' conclusion that the assessments here were computational adjustments, exempt from the general notice of deficiency requirement. Instead, the majority claims Olson does not apply because the settlement agreement in Olson concerned partnership items, whereas the settlement agreements in this case do not. Maj. Op. at 1360-61. This is a distinction that makes no difference, because the relevant reasoning in Olson is not so limited. Olson set out the analytical framework for deciding what constitutes a computational adjustment whenever there is a settlement agreement, not only when that agreement pertains to particular items. 172 F.3d at 1317-18. The majority's rule undercuts the purpose of TEFRA in exactly the way Olson feared. See id. at 1318. By requiring a notice of deficiency, the majority does the opposite of streamlining partnership proceedings, instead giving the taxpayer an unnecessary, unwise opportunity to attack the taxes assessed. The opportunity is unnecessary because any assessments are based on a settlement the taxpayer signed, which the taxpayer acknowledges may give rise to future tax liabilities. The opportunity is unwise because it allows the taxpayer to selectively attack settlement provisions he dislikes by challenging the resulting assessments. Such attacks are possible because a notice of deficiency allows the taxpayer to go to Tax Court, where he can relitigate the amount of tax owed and the reason he owes it, even when the settlement fully resolves the issue. See I.R.C. §§ 6211-6213. The decisions of other courts agree with Olson and conflict with the majority. None read § 6231(a)(6) as the majority does, instead defining computational adjustment as tax assessments that require no additional factual determinations to determine the individual's tax liability. See, e.g., Desmet, 581 F.3d at 303-04; Callaway v. Comm'r, 231 F.3d 106, 109-10 & n. 4 (2d Cir.2000) (holding that where no further factual determinations are necessary at the partner level, an assessment attributable to an `affected item' may also be made by computational adjustment because determining the change in tax liability is a mathematical calculation and requires no further factfinding); see also Bob Hamric Chevrolet, Inc. v. United States, 849 F.Supp. 500, 510 (W.D.Tex. 1994) (holding that a settlement is usually applied to a partner by means of a computational adjustment and not under the ordinary deficiency and refund procedures); Harris v. Comm'r, 99 T.C. 121, 126, 1992 WL 176438 (1992); Powell v. Comm'r, 96 T.C. 707, 712, 1991 WL 80646 (1991); N.C.F. Energy Partners v. Comm'r, 89 T.C. 741, 1987 WL 45298 (1987) (superseded on other grounds by the Taxpayer Relief Act of 1997, Pub.L. No. 105-34, § 1238(a), 11 Stat. 126). These decisions reaffirm my conviction that the interpretation of computational adjustment in Olson is correct. The majority errs by failing to follow Olson and by creating a distinction with no basis in the statute.