T.C. Memo. 1996-94
UNITED STATES TAX COURT
ARTHUR TAKAMOTO AND LOUISE TAKAMOTO, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 36819-84. Filed March 4, 1996.
David M. Kirsch, for petitioner Louise Takamoto.
Kathey I. Shaw, for respondent.
MEMORANDUM OPINION
POWELL, Special Trial Judge: This case was assigned
pursuant to the provisions of section 7443A(b)(3) and Rules 180,
181, and 182.1
This case is before the Court on petitioner Louise
Takamoto's (petitioner) Motion for Leave to File a Motion to
1
All section references are to the Internal Revenue Code
in effect for the year in issue, and Rule references are to the
Tax Court Rules of Practice and Procedure.
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Vacate Decision.2 The gravamen of this motion is that this Court
should vacate a stipulated decision entered on September 18,
1990.
The facts are taken from petitioner's declaration attached
to the motion to vacate. In 1957, when she was a medical
student, petitioner married Arthur Takamoto (Mr. Takamoto). Mr.
Takamoto, a dentist, is of Japanese ancestry. Mr. Takamoto's
parents moved from Japan to Hawaii, where they raised Mr.
Takamoto in the traditional Japanese manner. During their
marriage, petitioner and Mr. Takamoto divided familial
responsibilities in accordance with Japanese values. Petitioner
tended to domestic responsibilities, such as child rearing, while
Mr. Takamoto handled financial matters including the preparation
and filing of all tax returns. Petitioner typically allowed Mr.
Takamoto to open mail that was jointly addressed.
Petitioner graduated from medical school in 1960 and, upon
completing her residency in 1969, opened her own medical
practice. Petitioner recorded the cash receipts and
disbursements from her business, but relied on Mr. Takamoto and
2
Accompanying petitioner's motion for leave and lodged
with the Court are petitioner's Motion to Vacate, Motion to
Dismiss for Lack of Jurisdiction, Motion to Calendar, and
Memorandum in Support of petitioner's Motion to Vacate and Motion
to Dismiss for Lack of Jurisdiction. Both the motion filed and
the above lodged documents are dependent on whether this Court
had jurisdiction over petitioner when the stipulated decision was
entered.
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an accountant to prepare the tax returns, including the Schedule
C for her medical practice. Petitioner did not review the
returns when she signed them.
Petitioner and Mr. Takamoto filed a joint Federal income tax
return for the taxable year 1979. On that return they claimed a
deduction in excess of $400,000 relating to an investment in
First Western Government Securities. Respondent disallowed the
deduction. See Freytag v. Commissioner, 89 T.C. 849 (1987),
affd. 904 F.2d 1011 (5th Cir. 1990), affd. 501 U.S. 868 (1991).
During 1984, respondent sent a notice of deficiency to petitioner
and Mr. Takamoto. Petitioner recalls receiving a certified
letter from the Internal Revenue Service, but never read, or was
otherwise informed of, its contents. Rather, she turned the
letter over to Mr. Takamoto. Mr. Takamoto hired Alan Farber (Mr.
Farber), an attorney, to represent petitioner and Mr. Takamoto
with regard to the dispute with the Internal Revenue Service. On
October 24, 1984, Mr. Farber filed a petition with this Court on
behalf of petitioner and Mr. Takamoto challenging respondent's
notice of deficiency. Petitioner and Mr. Takamoto separated in
1987. In 1989, Mr. Takamoto obtained an ex-parte Mexican
divorce.
On September 18, 1990, this Court entered a stipulated
decision that a deficiency in the amount of $68,756 in Federal
income tax and additions to tax under sections 6653(a) and
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6651(a)(1) in the amounts of $3,586 and $6,797, respectively,
were due from Mr. Takamoto and petitioner for the taxable year
1979. The decision was signed by Mr. Farber on behalf of both
petitioner and Mr. Takamoto. Petitioner first became aware of
the deficiency when respondent commenced collection efforts in
early 1991. The motion currently before the Court was filed
approximately 4 years later on March 31, 1995.
In support of her motion petitioner asserts that she had no
knowledge of the deficiency, did not sign the petition, did not
know Mr. Farber, did not authorize Mr. Farber to file a petition
on her behalf, and did not authorize Mr. Farber to enter into a
settlement agreement on her behalf. For the purpose of
discussing this motion, we take these allegations as true.
In deciding whether to grant a motion for leave to file a
motion to vacate, this Court may consider the merits of the
underlying motion to vacate. Levitt v. Commissioner, T.C. Memo.
1993-294. Prior to discussing the merits of the motion, however,
we note that Rule 162 provides that a motion to vacate shall be
filed within 30 days after a decision has been entered, unless
the Court shall otherwise permit. Sections 7481 and 7483 provide
that a decision of this Court becomes final, in the absence of a
timely filed notice of appeal, 90 days from the date the decision
is entered. If a motion to vacate is filed outside of the 90-day
period, this Court generally is without jurisdiction to entertain
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the motion. Toscano v. Commissioner, 441 F.2d 930, 932 (9th Cir.
1971), vacating 52 T.C. 295 (1969). On the other hand, a
"decision" entered in a case where this Court never acquired
jurisdiction over a taxpayer is a legal nullity, and, therefore,
not a "decision", as to that taxpayer. Billingsley v.
Commissioner, 868 F.2d 1081, 1085 (9th Cir. 1989). Accordingly,
a judgment void for lack of jurisdiction may be vacated at any
time. Billingsley v. Commissioner, supra at 1084; Brannon's of
Shawnee, Inc. v. Commissioner, 71 T.C. 108, 111-112 (1978). The
motion filed in this case is directed to the latter situation.
Our jurisdiction depends on a timely filed petition. Levitt
v. Commissioner, 97 T.C. 437, 441 (1991). When a taxpayer files
a timely petition, this Court's jurisdiction is invoked and
remains unimpaired until we decide the controversy. Dorl v.
Commissioner, 57 T.C. 720, 722 (1972); Main-Hammond Land Trust v.
Commissioner, 17 T.C. 942, 956 (1951). However, when an
individual fails to sign the petition or to ratify a petition and
does not intend to become a party to the litigation, this Court
acquires no jurisdiction over that individual. Levitt v.
Commissioner, 97 T.C. at 441. Ratification requires a showing of
proper authorization by the signing party to act on behalf of the
non-signing party. Id.
When a petition is filed by an attorney on behalf of a
taxpayer the issue is whether that individual authorized the
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attorney to act on behalf of that person.3 This is a factual
question to be decided according to common law principles of
agency. Adams v. Commissioner, 85 T.C. 359, 369-372 (1985);
Casey v. Commissioner, T.C. Memo. 1992-672. Under common law
rules of agency, authority may be granted by express statements
or may be derived by implication from the principal's words or
deeds. John Arnold Executrak Sys., Inc. v. Commissioner, T.C.
Memo. 1990-6 (citing 1 Restatement, Agency 2d, sec. 26 (1957)).
In Casey v. Commissioner, supra, we held that the taxpayer's
practice of routinely allowing her spouse to handle income tax
matters and to open correspondence received from the Commissioner
constituted an implied grant of authority to her spouse that
allowed him to represent her with respect to their joint income
tax matters. Furthermore, that grant of authority was sufficient
to allow the taxpayer's spouse to hire an attorney to file a
joint petition with this Court. We concluded that this Court had
jurisdiction over the taxpayer even though she never signed the
petition, because she impliedly authorized it.
Petitioner is a well educated individual. She habitually
had turned over the responsibility of dealing with her Federal
3
The appearance of an attorney on behalf of an individual
creates a presumption that the attorney has the authority to
represent that individual. Osborn v. United States Bank, 22 U.S.
(9 Wheat.) 738, 830 (1824); Gray v. Commissioner, 73 T.C. 639,
646 (1980).
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income tax matters to Mr. Takamoto. Petitioner trusted Mr.
Takamoto completely, and she did not even review the tax returns.
Petitioner knew that she received correspondence from the
Internal Revenue Service and allowed Mr. Takamoto to deal with
that matter as he would without question. This conduct impliedly
authorized Mr. Takamoto to represent petitioner with respect to
her Federal income tax matters. Mr. Takamoto acted within the
scope of this authority when he retained Mr. Farber to file a
petition with this Court. Mr. Farber acted pursuant to the
authority granted to him by Mr. Takamoto on Mr. Takamoto's and
petitioner's behalf when he filed the joint petition and
ultimately settled the case. "Even if [petitioner] was not aware
of the dispute with the IRS, her own admitted delegation of
authority to her husband cannot now be revoked because she is
unhappy with the outcome of her case. 'Deficiencies ex post do
not detract from authority ex ante.'" DiSanza v. Commissioner,
T.C. Memo. 1993-142, affd. without published opinion 9 F.3d 1538
(2d Cir. 1993).
Accordingly, based upon petitioner's version of the facts,
we conclude that this Court had jurisdiction over petitioner when
the stipulated decision was entered, and, therefore, petitioner's
motion will be denied.
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An appropriate order denying
petitioner's Motion for Leave to File
Motion to Vacate will be issued.