UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT
No. 95-2062
DAVID R. SILVERMAN, ET AL.,
Petitioners, Appellants,
v.
COMMISSIONER OF INTERNAL REVENUE,
Respondent, Appellee.
ON APPEAL FROM DECISION OF THE
UNITED STATES TAX COURT
[Hon. Arnold Raum, U.S. Tax Court Judge]
Before
Cyr, Circuit Judge,
Aldrich, Senior Circuit Judge,
and Gertner,* U.S. District Judge.
James P. Redding, with whom Gail E. Pergine and James P. Redding
& Associates were on brief for petitioners, appellants.
Kenneth W. Rosenberg, Attorney, Tax Division, Department of
Justice, with whom Loretta C. Argrett, Assistant Attorney General, and
Gary R. Allen, Kenneth L. Greene, and Patricia M. Bowman, Attorneys,
Tax Division, Department of Justice, were on brief for respondent,
appellee.
June 20, 1996
*Of the District of Massachusetts, sitting by designation.
CYR, Circuit Judge. Petitioners David and Meredith
CYR Circuit Judge
Silverman appeal a United States Tax Court ruling rejecting their
claim that the statute of limitations barred further tax assess-
ments by the Internal Revenue Service ("IRS"). We affirm the tax
court decision.
I
I
BACKGROUND
BACKGROUND
The Silvermans jointly reported losses from a limited
partnership interest in a motion picture production company for
tax years 1975, 1976, and 1977. Petitioner David Silverman,
individually, reported another such loss on his 1980 tax return.
Later, the company and its investors were audited by IRS. Within
three years after filing their returns, see 26 U.S.C. 6501(a),
the Silvermans agreed to extend the limitation periods applicable
to these four reporting years, by executing IRS Form 872-A,
entitled Special Consent to Extend the Time to Assess Tax. See
id. 6501(c)(4) (authorizing extensions by agreement).1
1In relevant part, the Form 872-A provided that the tax due
for the specified years
may be assessed on or before the 90th (nine-
tieth) day after: (a) the Internal Revenue
Service office considering the case receives
Form 872-T, Notice of Termination of Special
Consent to Extend the Time to Assess Tax,
from the taxpayer(s); or (b) the Internal
Revenue Service mails Form 872-T to the tax-
payer(s); or (c) the Internal Revenue Service
mails a notice of deficiency for such peri-
ods. . . .
(Emphasis added.)
2
Thereafter, the Silvermans and IRS signed a Form 906
"Closing Agreement," which bound them to the outcome in a so-
called "controlling case" before the tax court, relating to a
similar tax shelter. The Form 906 closing agreement authorized
IRS to assess a tax deficiency within one year after the decision
in the controlling case became final, notwithstanding the expira-
tion of any period of limitation prescribed by the Internal
Revenue Code. The closing agreement made no reference to the
Form 872-A extensions.
The tax court ruling in the controlling case became
final on July 18, 1991. Almost two years later, IRS received
from the Silvermans separate Forms 872-T, Notice of Termination
of Special Consent to Extend the Time to Assess Tax, relating to
all four tax years. Within ninety days from its receipt of these
Forms 872-T, IRS sent notices of income tax deficiencies for the
tax years in question, calculated in conformity with the final
outcome in the controlling case.
The Silvermans promptly initiated a tax court proceed-
ing, claiming that the Form 906 closing agreement effectively
terminated their earlier consent to extend indefinitely the
limitation periods as previously indicated in their Form 872-A
filings, with the result that IRS was required to make its
supplemental tax assessments within one year after the final
decision in the controlling case. IRS responded that the Form
906 closing agreement had no effect upon the earlier Form 872-A
extensions.
3
The tax court rejected the taxpayers' argument that
their Form 872-A extensions were superseded by the Form 906
closing agreement, holding that the tax assessments were not
time-barred since IRS had issued its tax deficiency notices
within ninety days of its receipt of the Forms 872-T. This
appeal followed.
II
II
DISCUSSION
DISCUSSION
A tax court decision is reviewed in the same manner as
a civil judgment in a case tried to the district court without a
jury. See 26 U.S.C. 7482(a); Alexander v. IRS, 72 F.3d 938,
941 (1st Cir. 1995). As the instant matter was submitted to the
tax court on a stipulated record, the proper interpretation of
the Forms 872-A and the Form 906 closing agreement presents a
pure question of law subject to plenary review. Id. at 941;
Hempel v. United States, 14 F.3d 572, 575-76 (11th Cir. 1994).
The first argument raised by IRS on appeal, but by-
passed in the tax court, maintains that the Forms 872-A submitted
by the Silvermans extended the limitation periods indefinitely
and constituted their agreement to use only Form 872-T to termi-
nate their Form 872-A extensions. Several circuits, in various
contexts, have declined to enforce attempted terminations of Form
872-A extensions unless correctly implemented in a manner pre-
scribed within Form 872-A itself.2 See, e.g., Coggin v. Commis-
2Form 872-A plainly states, on its face, that its indefinite
extension of a statute of limitations terminates on the ninetieth
day following one of three events: (1) the receipt by IRS of
4
sioner, 71 F.3d 855, 861-62 (11th Cir. 1996) (sending Form 872-T
to wrong IRS division); Stenclik v. Commissioner, 907 F.2d 25, 27
(2d Cir.) (passage of reasonable time), cert. denied, 498 U.S.
984 (1990); Kernen v. Commissioner, 902 F.2d 17, 18 (9th Cir.
1990) (executing Form 872 containing specific consent-termination
date); Wall v. Commissioner, 875 F.2d 812, 813 (10th Cir. 1989).
The Silvermans note that no court of appeals has yet
decided whether a Form 906 closing agreement constitutes an
exception to this exclusivity rule. Nonetheless, a district
court has rejected the contention that a Form 906 closing agree-
ment effectively terminates a Form 872-A extension. See DeSantis
v. United States, 783 F.Supp. 165, 169 (S.D.N.Y. 1992). Nor are
we persuaded by the bald assertion that DeSantis was wrongly
decided. Furthermore, as it appears entirely appropriate that
Form 872-A extensions be literally construed, cf. Badaracco v.
Commissioner, 464 U.S. 386, 391-92 (1984) (statutes of limita-
tions on tax collections are to be strictly construed in favor of
IRS), and we are presented with no principled basis for not doing
so, there is every reason to conclude that the Form 906 closing
agreement did not constitute a valid termination device in the
instant case.
Form 872-A was designed to eliminate the repetitive
task of renewing extensions of limitation periods, and to mini-
mize the daunting administrative burden of preventing their
Form 872-T from the taxpayer; (2) the mailing of Form 872-T by
IRS to the taxpayer; or (3) the mailing by IRS of a deficiency
notice to the taxpayer. See supra note 1.
5
inadvertent expiration before a reliable tax assessment can be
made. Rev. Proc. 79-22, 2.03, 1979-1 C.B. 563; see also
Stenclik, 907 F.2d at 27 (noting that Form 872-T reduces litiga-
tion); Kernen, 902 F.2d at 18 (standardized form required to cope
with millions of taxpayer communications). A plain need for
certainty prompted IRS to devise Form 872-T as the exclusive
means, apart from mailing a deficiency notice, for either the IRS
or taxpayers to terminate a Form 872-A consent to extend a
limitation period.3 Given the unmistakable language employed in
Revenue Procedure 79-22 and in Form 872-A itself, as well as the
evident importance of the policy considerations at work in the
tax collection context, we adhere to the plain language of Forms
3The applicable Revenue Procedure provides:
.02 With the exception of the mailing of a
notice of deficiency, written notification by
the Service to the taxpayer(s) of termination
of Service consideration can only be made
using Form 872-T.
.03 Written notification to the Internal
Revenue Service from the taxpayer(s) of an
election to terminate Form 872-A is to be
made using Form 872-T. Taxpayer(s) should
sign and mail Form 872-T in accordance with
instructions contained on the form.
.04 Steps taken to terminate Forms 872-A by
the Service or the taxpayer(s) other than by
using Forms 872-T (e.g., by letter or orally)
will not terminate Form 872-A.
Rev. Proc. 79-22, 4.02-4.04, 1979-1 C.B. 563 (emphasis added).
Although lacking the force of law attendant to a formal regula-
tion, the applicable Revenue Procedure provides guidance for our
interpretation of Form 872-A, especially since it was readily
available to petitioners. See Xerox Corp. v. United States, 41
F.3d 647, 657 (Fed. Cir. 1994), cert. denied, 116 S. Ct. 72
(1995); Clark v. Modern Group Ltd., 9 F.3d 321, 335 (3d Cir.
1993).
6
872-A and 872-T, as informed by the applicable Revenue Procedure,
see supra note 3, in holding that the Form 906 closing agreement
did not terminate these Form 872-A extensions.
Finally, we note that a contrary ruling is not neces-
sary to protect legitimate taxpayer interests in closing out past
tax years. First, taxpayers need never agree to extend the
prescribed three-year limitation period. See Stange v. United
States, 282 U.S. 270, 276 (1931) (consenting to extension is a
"voluntary, unilateral waiver of a defense by the taxpayer").
Moreover, taxpayers may execute waivers for prescribed periods by
using Form 872, see Coggin, 71 F.3d at 861, and in all events
Form 872-T is available as a simple and effective means to
terminate indefinite Form 872-A extensions. Finally, if peti-
tioners had intended to limit IRS to the time specified in the
Form 906 closing agreement, they need simply have filed Forms
872-T, as they eventually did. Accordingly, we can discern no
sound reason to adopt a strained interpretation of Form 872-A to
excuse their failure to submit Form 872-T at an earlier time.
III
III
CONCLUSION
CONCLUSION
As the Form 906 closing agreement did not supersede the
Form 872-A extensions, and petitioners' remaining arguments are
without merit, the tax court judgment must be affirmed.
SO ORDERED.
SO ORDERED.
7