Court Opinion

ID: 9475084
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:17:13.084687+00
Date Added: 2024-06-11T17:44:30.403542
License: Public Domain

NATHANIEL R. JONES, Circuit Judge,
concurring in part and dissenting in part.
The majority holds in Part I of this opinion that the Commissioner is not bound by the settlement at issue here either under the Internal Revenue Service’s Statement of Procedural Rules or by more common rules regarding settlements in litigation. Because I believe this holding carves out an exception for the Commissioner unsupported by the law, I dissent from Part I of this opinion.
At the outset, I must clarify my understanding of the first issue as presented to us. The majority concludes that the Statement of Procedural Rules is merely directory, and as such, the Commissioner cannot be bound to a settlement pursuant to those rules. With this conclusion, I am in agreement. Indeed, these rules were adopted exclusively for the internal use of the IRS, and do not confer any cognizable rights upon the taxpayer. Cf. United States v. Will, 671 F.2d 963, 967 (6th Cir.1982). I want to emphasize, however, the inconsistent application of this rule implied in the majority opinion. Through its interpretation of Gardner v. Commissioner, 75 T.C. 475, 478-80 (1980), the majority opinion may be understood as implying that the result may have been different if there had been evidence that a properly authorized reviewing officer had approved the settlement, rather than the proposed settlement being submitted via form letters. This case is not predicated on the procedural rules. We cannot hold that the procedural rules are only for the internal administration of the IRS, then rely on a case interpreting these procedures to require that a reviewing officer approve the settlement before it can be rendered binding upon the IRS. In other words, we cannot say the rules do not bind the Commissioner, and then charge the taxpayer with the knowledge that the Appeals Officer does not have the apparent authority, under these rules, to enter a binding settlement. I recognize that the majority may have been simply responding to the arguments raised by the taxpayer with respect to the rules, but the potential for a later misconstruing of the majority’s rationale compelled me to offer this caveat.
Thus, I would place the focus of the majority’s analysis on the last four paragraphs in Part I. A resolution of this issue could arise under the normal rules regarding settlements in litigation matters. Contrary to the majority’s opinion, I am aware of no statutory or case law that gives the Commissioner refuge from these norms, or that labels disputes filed in the Tax Court as anything other than ordinary litigation. As the Tax Court recognized, the government has, in fact, relied on the litigation process in binding a taxpayer to a settlement agreement. See Kehoe v. United States, (unreported decision) 44 AFTR 2d 79-5549 (P-H) (S.D.N.Y.1979) (settlement agreed to in writing by both parties). Therefore, once it is determined that no *576special exemptions from the litigation rules are bestowed upon the Commissioner, this issue should now be reviewed in a decidedly different posture.1
It appears that a taxpayer would be placed with far too heavy a burden if we were to hold that he must recognize that an Appeals Officer does not have the apparent authority to enter a binding settlement agreement. In tax matters of this sort, the taxpayer’s only contact with the Commissioner is through the Appeals Officer. In the eyes of the taxpayer, the Appeals Officer is the authorized representative of the Commissioner and it is only through his representations and direction that the taxpayer knows how to proceed. There is absolutely no evidence that Appeals Officer Best informed the taxpayer that the settlement was also subject to the approval of the District Counsel or the Tax Court. Nor does the form letter submitted to the taxpayer give such notification. All the letter states is that “the settlement we reached ... has been approved,” and “after approval, the stipulation is forwarded to District Counsel for filing with the Tax Court.” I do not believe these statements can be read as informing the taxpayer that the District Court or Tax Court had discretion to reject the settlement. If the Commissioner wanted to make the settlement subject to further approval, he could just as easily have provided a form letter stating so.
Even if I were to agree with the majority’s interpretation of the letter, I remain convinced that the facts occurring after the alleged settlement was reached support the position that the Commission should be bound to the settlement. The taxpayer paid the sum agreed upon, and the IRS negotiated the check. As the majority admits, in the course of ordinary litigation, acceptance of the money after an otherwise fully agreed to settlement would have been binding on the acceptor absent a simultaneous disclaimer or condition. No such disclaimer or condition was made when the check was accepted in this case.
I, too, recognize that the Commissioner’s task is a monumental one and formality in the resolution of tax disputes is needed. But as I indicated earlier, it is a relatively simple matter for the IRS to provide in its letters that all settlements are subject to the approval of the District Counsel and the Tax Court, and to stipulate that no payment should be sent until those formalities are met.

. The majority has already cited numerous cases where a settlement has been enforced absent any suggestion of settlement in a formal or informal court hearing, thus I do not restate them here.