Court Opinion

ID: 6338868
Source: CourtListenerOpinion
Date Created: 2022-05-09 19:01:22.644802+00
Date Added: 2024-06-11T15:49:09.173004
License: Public Domain

United States Tax Court

                                T.C. Memo. 2022-48

                          CHRISTIAN RENEE EVERT,
                                 Petitioner

                                             v.

               COMMISSIONER OF INTERNAL REVENUE,
                           Respondent

                                      —————

Docket No. 12901-19.                                               Filed May 9, 2022.

                                      —————

Robert G. Nassau and Meredith Wallen (student), for petitioner.

Frederick C. Mutter and Mimi M. Wong, for respondent.

         MEMORANDUM FINDINGS OF FACT AND OPINION

       MARSHALL, Judge: Respondent determined the following tax
deficiencies and accuracy-related penalties in the statutory notice of
deficiency (notice of deficiency) issued to petitioner on April 17, 2019: 1

                                                    Accuracy-related penalty
                 Year             Deficiency               § 6662(a)

                 2015               $9,615                    $1,923

                 2016                9,895                     1,979

      After concessions, the sole issue remaining for decision is whether
the period of limitations for assessment of tax for tax year 2015 expired

        1 Unless otherwise indicated, all statutory references are to the Internal

Revenue Code, Title 26 U.S.C., in effect at all relevant times, and all regulation
references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all
relevant times. All monetary amounts are rounded to the nearest dollar.

                                  Served 05/09/22
                                            2

[*2] before the mailing of the notice of deficiency. 2 Respondent argues
that he obtained a valid consent to extend the statutory period of
limitations for assessment for tax year 2015; petitioner alleges that she
signed the consent under duress, rendering it invalid.

                               FINDINGS OF FACT

       Some of the facts have been stipulated, and the stipulated facts
are incorporated in our findings by this reference. Petitioner lived in
New York when she timely filed her petition. She holds a college degree
and is a licensed nurse in New York.

       Petitioner timely filed Forms 1040, U.S. Individual Income Tax
Return, for tax years 2015 and 2016. Those returns were selected for
audit. After the appropriate Internal Revenue Service (IRS) operating
division (IRS Exam) completed the examination of those returns,
petitioner sought to challenge the proposed adjustments determined by
IRS Exam with the IRS Office of Appeals (IRS Appeals). 3

       On April 23, 2018, petitioner’s IRS Appeals case was assigned to
Appeals Officer Gary Mack (AO Mack). AO Mack served in the U.S.
Navy for six years and in the U.S. Navy Reserve for another 20 years,
retiring as a captain in 2008. After leaving active duty, AO Mack earned
a law degree and subsequently worked at the Office of Hearings and
Appeals within the Social Security Administration for 12 years. AO
Mack also worked as an attorney in private practice and later joined the
Federal Bureau of Investigation. In June 2010 AO Mack joined the IRS
as an IRS Appeals Officer and eventually was promoted to policy
analyst.

      On April 23, 2018, AO Mack mailed petitioner Letter 5157, Non-
docketed Acknowledgement & Conference, and requested that she call
him by May 5, 2018. After AO Mack did not hear from petitioner, he
attempted to reach her by phone on May 10, 2018. On May 21, 2018,

        2  The parties filed a joint stipulation of settled issues on October 28, 2020.
Subject to the question of whether the period of limitations for assessment of tax for
tax year 2015 expired before the mailing of the notice of deficiency, petitioner conceded
that all of the adjustments set forth in the notice of deficiency are correct. Respondent
conceded that petitioner is not liable for any penalties.
         3 On July 1, 2019, IRS Appeals was renamed the “Internal Revenue Service

Independent Office of Appeals.” See Taxpayer First Act, Pub. L. No. 116-25, § 1001(a),
(c), 133 Stat. 981, 983, 985 (2019). As the events in this case predate that change, we
use the name in effect at the times relevant to this case, i.e., the IRS Office of Appeals.
                                    3

[*3] AO Mack reached petitioner and scheduled a telephone conference
for June 4, 2018. Petitioner later requested that the IRS Appeals
conference be rescheduled to June 11, 2018, and AO Mack agreed.

      During the June 11, 2018, conference, AO Mack told petitioner
that he needed additional information in order to consider her positions.
AO Mack agreed to leave the file open so that petitioner had time to
gather the additional information to support her arguments and did not
give petitioner a firm deadline. On July 9, 2018, petitioner contacted
AO Mack by phone, telling him that she had gathered some additional
information and would get more information later that week. Petitioner
did not send any additional information in July 2018.

       In early August 2018 AO Mack prepared two reports that were
due to his manager at the beginning of each month: a list of his oldest
cases and a list and status summary of his cases where the period of
limitations for assessment would expire in the subsequent nine months
(period expiration report). AO Mack’s August 2018 period expiration
report included petitioner’s case because he calculated that the period of
limitations for assessment of tax for tax year 2015 would expire within
nine months. AO Mack was required to report his actions taken to
protect the period of limitations for each case. After evaluating the
status of petitioner’s case, AO Mack decided to seek her consent to
extend the period of limitations because he had not received any
information from petitioner since her followup call on July 9, 2018.

       On August 2, 2018, AO Mack mailed to petitioner: (1) Letter 967
(Rev. 12-2016), Consent Extending Period of Limitation Transmittal,
(2) Form 872 (Rev. 7-2014), Consent to Extend the Time to Assess Tax,
for tax year 2015, and (3) IRS Publication 1035 (Rev. 9-2017), Extending
the Tax Assessment Period. The Letter 967 included the following
statement: “The law limits the amount of time we can assess additional
tax on your federal return. This limitation period will expire before
Appeals can complete the consideration of your case. Therefore, we
request that you agree to extend the period.” The Form 872 mailed to
petitioner included the following statement, titled “Your Rights as a
Taxpayer”:

      You have the right to refuse to extend the period of
      limitations or limit this extension to a mutually agreed-
      upon issue(s) or mutually agreed-upon period of time.
      Publication 1035, Extending the Tax Assessment
      Period, provides a more detailed explanation of your
                                      4

[*4]   rights and the consequences of the choices you may make.
       If you have not already received a Publication 1035, the
       publication can be obtained, free of charge, from the IRS
       official who requested that you sign this consent or from
       the IRS’ web site at www.irs.gov or by calling toll free at
       1-800-TAX-FORM (1-800-829-3676). Signing this consent
       will not deprive you of any appeal rights to which you
       would otherwise be entitled.

       The Publication 1035 mailed to petitioner was a four-page
document explaining: (1) the statute of limitations for assessment of tax;
(2) why the Commissioner may request that a taxpayer consent to
extend the period of limitations for assessment; (3) the taxpayer’s
options and rights when the Commissioner requests such a consent; and
(4) what actions the Commissioner may take in response to the
taxpayer’s choices. Publication 1035 explained that the Commissioner
will request an extension of the period of limitations if it will soon expire
because “additional time allows [the taxpayer] to provide further
documentation to support [his or her] position [or] request an appeal if
[he or she does] not agree with the examiner’s findings.” Publication
1035 further explained that a taxpayer has three options when the
Commissioner requests a consent: (1) sign an unconditional consent;
(2) negotiate consent terms; or (3) refuse to sign the consent. Publication
1035 included a detailed explanation of what happens if a taxpayer
refuses to sign the consent, including the following:

       If [the taxpayer] choose[s] not to sign the consent, [the
       Commissioner] will take steps that will allow [the
       Commissioner] to assess any tax [the Commissioner]
       determine[s] to be due. These steps begin with the
       issuance of a formal notice [of deficiency] . . . [that] neither
       requires that [the taxpayer] make an immediate payment,
       nor that [the taxpayer] immediately take [his or her] case
       to the Tax Court.

       Petitioner received the Letter 967, Form 872, and Publication
1035 that AO Mack mailed. On August 12, 2018, petitioner signed and
returned the Form 872, agreeing to extend the period of limitations for
assessment of tax for tax year 2015 to April 15, 2020. AO Mack received
the signed Form 872 and, on August 16, 2018, signed the Form 872 on
behalf of the IRS.
                                       5

[*5] After the Form 872 was signed, AO Mack continued to provide
petitioner with the opportunity to present her positions and supporting
documents in IRS Appeals for several months. Ultimately, respondent
mailed the notice of deficiency for tax years 2015 and 2016 on April 17,
2019.

       Petitioner timely petitioned this Court to challenge the
determinations in the notice of deficiency. After the case was docketed,
petitioner moved to amend her Petition to argue that she had signed the
Form 872 under duress, that the Form 872 is accordingly invalid, and
that respondent failed to timely mail the notice of deficiency before the
period of limitations for assessment of tax for tax year 2015 expired. The
Court granted petitioner’s Motion.

                                  OPINION

        The period of limitations for the Commissioner to assess federal
tax is generally three years after the taxpayer files a return for a year.
§ 6501(a). This three-year period begins on the due date of the return if
it is timely filed or on the actual filing date if the return is filed late. See
§ 6501(a) and (b)(1). The period of limitations for assessment can be
extended beyond three years, provided the Commissioner and the
taxpayer consent in writing before the period of limitations expires.
§ 6501(c)(4). In the case of a consent under section 6501(c)(4), the
Commissioner may assess federal tax up until the date agreed upon,
which can be extended further. See Treas. Reg. § 301.6501(c)-1(d).

       “[T]he statute of limitations is a defense in bar and not a plea to
the jurisdiction of this Court.” Badger Materials, Inc. v. Commissioner,
40 T.C. 1061, 1063 (1963), supplementing 40 T.C. 725 (1963). To
establish this defense, a taxpayer must make a prima facie case, which
ordinarily requires proof of the date of the return and expiration of the
statutory period of limitations. Robinson v. Commissioner, 57 T.C. 735,
737 (1972). When the taxpayer makes a prima facie case by alleging
that assessment is barred by the statute of limitations and proving the
filing date of the return, the Commissioner must go forward with
countervailing evidence pointing to the fact that for some reason the
statutory period of limitations had not expired when the notice of
deficiency was issued. Id. “Thus, if the [taxpayers] plead and prove that
they have not received a notice of deficiency before the running of the
period of limitations, it is clear that they have met their burden of proof
and that the [Commissioner] must then show that the running of the
period was in some way suspended.” Id. (citing Rogers v. Commissioner,
                                   6

[*6] 57 T.C. 711 (1972)). The Commissioner’s burden of going forward
with proof may be discharged by the introduction of a consent, valid on
its face, which extended the period of limitations such that the mailing
of the notice of deficiency was timely. Mecom v. Commissioner, 101 T.C.
374, 382–83 (1993), aff’d without published opinion, 40 F.3d 385 (5th
Cir. 1994); Concrete Eng’g Co. v. Commissioner, 19 B.T.A. 212, 221–22
(1930), aff’d, 58 F.2d 566 (8th Cir. 1932); see also Jarvis v.
Commissioner, T.C. Memo. 1980-381, 1980 Tax Ct. Memo LEXIS 207,
at *8.

       The parties agree that petitioner timely filed her return for tax
year 2015 and that the three-year limitations period provided for under
section 6501(a), without extension, would have expired before the date
on which respondent mailed the notice of deficiency for tax year 2015.
Thus, petitioner has made the requisite prima facie showing.
Respondent has introduced a Form 872 signed by petitioner on August
12, 2018, valid on its face, which extended the period of limitations
through April 15, 2020. Therefore, respondent has discharged his
burden of going forward. See Ballard v. Commissioner, T.C. Memo.
1987-471, 1987 Tax Ct. Memo LEXIS 467, at *6–7 (holding that the
Commissioner met his burden of going forward when he introduced a
Form 872, signed by the taxpayers on a date six months before the date
the period of limitations was due to expire), aff’d without published
opinion, 851 F.2d 359 (5th Cir. 1988).

       Where the Commissioner has introduced an apparently valid
consent and the taxpayer asserts that the consent was ineffective, it is
then the taxpayer’s burden to affirmatively show the written consent is
not valid. Mecom, 101 T.C. at 382–83; Concrete Eng’g Co., 19 B.T.A.
at 221–22; Ballard, 1987 Tax Ct. Memo LEXIS 467, at *6–7. Therefore,
petitioner bears the burden of proving her contention that she signed
Form 872 under duress.

    The Board of Tax Appeals defined duress in Diescher v.
Commissioner, 18 B.T.A. 353, 358 (1929), as follows:

             In modern jurisprudence the definition of duress has
      been enlarged much beyond the narrow limits recognized
      in the common law. It is now well settled that if an act of
      one party deprives another of his freedom of will to do or
      not to do a specific act the party so coerced becomes subject
      to the will of the other, there is duress, and in such a
      situation no act of the coerced person is voluntary and
                                   7

[*7]   contracts made in such circumstances are void because
       there has been no voluntary meeting of the minds of the
       parties thereto.

The Board of Tax Appeals held that the taxpayer signed a waiver of the
period of limitations under duress when the Commissioner threatened
to impose a 100% fraud penalty should the taxpayer fail to sign the
waiver. Id. at 357–59. In invalidating the waiver, the Board of Tax
Appeals explained that the parties “were not dealing with each other at
arm’s length” and that the taxpayer “was not acting with a free will, but
was coerced by the will of the [Commissioner].” Id. at 358–59.

       We have also held that “actions that deprive another of her
freedom of will are distinguishable from legally authorized actions that
merely limit another to choose between options that are not desirable.”
Hall v. Commissioner, T.C. Memo. 2013-93, at *12. Hence, it is not
duress when the Commissioner makes statements informing a taxpayer
that lawful means to assess and collect the tax will be used. Burnet v.
Chi. Ry. Equip. Co., 282 U.S. 295, 303 (1931); Mulford v. Commissioner,
25 B.T.A. 238, 242–43 (1932), aff’d, 66 F.2d 296 (3d Cir. 1933).
Accordingly, we have held that a taxpayer did not sign a consent under
duress when the Commissioner told the taxpayer that an opportunity
for an IRS Appeals conference would not be allowed if the taxpayer
failed to sign a consent. Ballard, 1987 Tax Ct. Memo LEXIS 467, at *8
(reasoning that it was not duress for the revenue agent to inform the
taxpayer that a notice of deficiency would be issued without an
opportunity for administrative appeal because such statements were
nothing more than notice that the Commissioner intended to use lawful
means at his disposal to assess the tax); Jarvis, 1980 Tax Ct. Memo
LEXIS 207, at *9–10 (explaining that the Commissioner’s refusal to
conduct an IRS Appeals conference without the taxpayers’ execution of
Form 872 was a necessary step in the Commissioner’s pursuit of the
lawful means provided for income tax assessment because holding an
IRS Appeals conference without extending the period of limitations
would have caused the Commissioner to issue an untimely notice of
deficiency).

      We conclude that petitioner has not met her burden of showing
that she signed Form 872 under duress. AO Mack’s testimony, his
contemporaneous case notes, and the documentary evidence in the
record support respondent’s assertion that AO Mack requested by mail
that petitioner consent to extend the period of limitations for tax year
2015 and advised petitioner that her failure to consent would cause AO
                                            8

[*8] Mack to close her IRS Appeals conference without giving her much
additional time to provide documents. AO Mack’s communications were
statements about how respondent would act to assess and collect the tax
he believed petitioner owed.

       Petitioner testified that AO Mack had a conversation about the
consent form with her before he mailed it to her on August 2, 2018,
where he allegedly made statements about what would happen if she
refused to consent to extend the period of limitations. AO Mack flatly
denied that any conversation took place and testified that he “cold”
mailed Form 872, along with Letter 967, and Publication 1035. 4 Faced
with directly contradictory testimony, we are left to weigh the credibility
of the witnesses.

       We found AO Mack to be credible. He was an experienced IRS
Appeals officer, and his testimony demonstrated significant competence
in IRS procedures and administration. Moreover, his testimony was
supported by, and made sense in the light of, other evidence in the
record. His testimony was consistent with his written case notes and
the documents mailed to petitioner on August 2, 2018. We find that AO
Mack was not scrambling to get petitioner’s consent; he had plenty of
time to allow her to receive the documents in the mail, review them, and
consider his request.

       Apart from petitioner’s testimony, there is no evidence that AO
Mack had any conversation with petitioner about the consent form.
Faced with AO Mack’s credible testimony and the other evidence in the
record, we did not find petitioner’s testimony sufficient to meet her
burden. Petitioner’s testimony was uncorroborated and vague, lacked
critical detail, and was not believable in the light of other evidence in
the record. 5 For instance, petitioner could not recall the date on which

        4 AO Mack directly contradicted petitioner’s testimony on several points,
including whether they discussed the consent form before AO Mack’s sending it on
August 2, 2018. AO Mack’s testimony and case notes also directly contradicted
petitioner’s testimony that she had already sent AO Mack additional documents
substantiating some of her tax positions, he had agreed to accept her documents as
sufficient to substantiate her positions, and he had threatened to go back on his
agreements if she did not sign the consent. AO Mack testified that petitioner had not
provided additional documentation before he mailed the consent forms on August 2,
2018.
        5 For example, petitioner testified: “[AO Mack] told me that I had just a few

days left on the statue [sic] or he’s going to close my case and assess me the tax for this
                                            9

[*9] she allegedly spoke to AO Mack about the period of limitations
before he sent the consent documents. We find that AO Mack “cold”
mailed the Letter 967, Form 872, and Publication 1035 to petitioner, and
that petitioner was not under duress when she signed and mailed back
the Form 872.

       Petitioner cites Diescher and Robertson v. Commissioner, T.C.
Memo. 1973-205, 1973 Tax Ct. Memo LEXIS 81, in support of her
argument that she signed the Form 872 under duress. Diescher is
distinguishable because we find that AO Mack never threatened to
impose penalties (let alone 100% fraud penalties) if petitioner did not
agree to sign the Form 872. See Diescher, 18 B.T.A. at 357.

       In Robertson, we held that the taxpayers signed a consent under
duress when the revenue agent “harassed” them to sign a consent with
less than two weeks left before the period of limitations expired. 6 We
accepted as true the taxpayers’ testimony of the events leading up to the
consent because the revenue agent failed to testify. Here, on the other

tax year. That’s pretty much what he said.” Petitioner’s testimony is difficult to
reconcile with the undisputed fact that the parties signed the consent approximately
nine months before the period of limitations for assessment would have expired, not
“just a few days” before. Additionally, it is difficult to conclude that AO Mack made
these alleged statements because the Publication 1035 that he furnished to petitioner
would have readily exposed the statements as empty threats. For instance, AO Mack’s
alleged statement that there were “just a few days left” on the period of limitations
would conflict with Publication 1035’s detail regarding how the period of limitations
for assessment expires three years after the return is filed (i.e., April 2019, not August
2018). Similarly, AO Mack’s alleged threat to close petitioner’s case and “assess” the
tax if she failed to sign the Form 872 would conflict with the explanation in Publication
1035 about how the Commissioner must first issue a notice of deficiency and give the
taxpayer an opportunity to petition this Court before the Commissioner can assess and
collect the tax he believes is owed.
        6   The Court explained:
                We recognize that the Commissioner feels obligated to examine
        as many returns as possible in order to enforce the law and that is
        understandable. Nevertheless, when he attempts to secure a consent
        extending the period of limitations on assessment some three years
        after the return was filed and within only two weeks of the expiration
        of the period of limitation, from a taxpayer whose attorney prepared
        and signed the return and is unavailable for advice, we feel he proceeds
        at his own risk and, in circumstances such as these, owes more to the
        taxpayer than vague statements of alternatives of executing the
        consent or subjecting all of the taxpayer’s property to seizure by the
        government for some unknown amount of tax.
Robertson, 1973 Tax Ct. Memo LEXIS 81, at *18.
                                  10

[*10] hand, AO Mack did testify, and we found his testimony credible.
We have not accepted as true all of petitioner’s testimony.

       We also conclude that Robertson is otherwise distinguishable. In
Robertson the taxpayers’ return was still being examined by IRS Exam,
so the amount of additional tax at issue was unknown by the taxpayers.
Robertson, 1973 Tax Ct. Memo LEXIS 81, at *16–17. The revenue agent
in Robertson requested a consent so that he could finish his examination
of the taxpayers’ return, not to afford the taxpayers an opportunity to
present their position. After obtaining the consent, the revenue agent
never afforded the taxpayers any opportunity to present their position;
he instead used the extension merely to finish his own work. Id.
at *17–18.

       In contrast, IRS Exam completed its examination of petitioner’s
returns, and petitioner then availed herself of an IRS Appeals
conference, where AO Mack was taking a fresh look at petitioner’s tax
positions. After petitioner signed Form 872, AO Mack gave petitioner
several months to present her positions and supporting documentation
before issuing the notice of deficiency. In sum, respondent did not
hurriedly seek a consent in this case so that he could complete an audit
as in Robertson but rather requested one for petitioner’s own benefit—
so that there was sufficient time for her to present her views and
documents before IRS Appeals.

       Also, there is no credible evidence that AO Mack “harassed”
petitioner in any way to sign a consent to extend the period of
limitations, as the revenue agent did in Robertson. There, the revenue
agent called the taxpayers repeatedly, including at their place of work,
and showed up at their residence without advance notice. In the instant
case AO Mack mailed the Letter 967, Form 872, and Publication 1035 to
petitioner for her to review at her convenience after he was prompted to
protect the period of limitations while preparing his period expiration
report.

      We find that petitioner did not act under duress when she signed
Form 872, extending the period of limitations for assessment of tax for
tax year 2015. Therefore, we hold that the period of limitations for
assessment of tax for tax year 2015 had not yet expired when respondent
mailed the notice of deficiency on April 17, 2019, and assessment of
federal tax for tax year 2015 is not barred. See § 6501(a), (c)(4).
                                   11

[*11] We have considered all of the arguments made by the parties and,
to the extent they are not addressed herein, we find them to be moot,
irrelevant, or without merit.

      To reflect the foregoing,

       Decision will be entered for respondent as to the deficiencies and
for petitioner as to the accuracy-related penalties under section 6662(a).