Behren v. United States

United States Court of Appeals,

Eleventh Circuit.

No. 94-5022.

Richard BEHREN, Leta Behren, Plaintiffs-Counter-Defendants-
Appellants-Cross-Appellees,

v.

UNITED STATES of America, Defendant-Counterclaimant-Appellee-
Cross-Appellant.

May 9, 1996.

Appeals from the United States District Court for the Southern
District of Florida. (No. 94-270-CIV-FAM) Federico A. Moreno,
Judge.

Before ANDERSON and BARKETT, Circuit Judges, and YOUNG*, Senior
District Judge.

ANDERSON, Circuit Judge:

Taxpayers Richard and Leta Behren appeal from a judgment of

the district court holding them liable to the government for taxes

in the amount of $82,392.90. The sole issue addressed in this

opinion is whether the 1990 amendment to the statute of

limitations, Internal Revenue Code (26 U.S.C.) § 6502, extended the

period for collection of the assessment in this case. We conclude

that it did.

On November 28, 1984, the I.R.S. made a timely assessment of
1
a deficiency for the taxpayers' 1974 federal income taxes. The

I.R.S. did not send the taxpayers a notice of the assessment and

*
Honorable George C. Young, Senior U.S. District Judge,
United States District Court for the Middle District of Florida,
sitting by designation.
1
An "assessment" is a procedure in which the I.R.S. records
the liability of the taxpayer in I.R.S. files. See I.R.C. §
6203; Treas.Reg. (26 C.F.R.) § 301.6203-1.
demand for payment until 1989. At that time, the taxpayers

disputed the assessment and refused to pay their taxes. The

then-applicable statute of limitations, I.R.C. § 6502, required the

I.R.S. to file suit to collect the taxes within six years from the

date of assessment (in this case by November 28, 1990), unless the

taxpayer signed a written extension agreement. I.R.C. § 6502 then

provided as follows:

§ 6502. Collection after assessment

(a) Length of period.—Where the assessment of any tax
imposed by this title has been made within the period of
limitation properly applicable thereto, such tax may be
collected by levy or by a proceeding in court, but only if the
levy is made or the proceeding begun—

(1) within 6 years after the assessment of the tax,
or

(2) prior to the expiration of any period for
collection agreed upon in writing by the Secretary and
the taxpayer before the expiration of such 6-year period.

In April 1990, pursuant to § 6502(a)(2), the taxpayers and the

I.R.S. signed a Form 900 Tax Collection Waiver, which extended the

collection period until June 30, 1991.

On November 5, 1990, Congress amended § 6502 to substitute a

ten-year limitations period in place of the previous six-year

period.2 The I.R.S. contends that this statutory amendment

extended the collection period to November 28, 1994, i.e., ten

years after the assessment. The taxpayers argue, as they argued in

the district court, that the statutory amendment did not alter the

collection period specified in the Tax Collection Waiver, i.e.,

June 30, 1991. The I.R.S. filed its counterclaim on March 29,

2
See Omnibus Budget Reconciliation Act of 1990 § 11317(a),
Pub.L. No. 101-508, 104 Stat. 1388-458 (1990).
1994, after the June 30, 1991, date as extended by the waiver, but

before the November 28, 1994, date if the 1990 amendment is

applicable. Thus, the applicability of the November 5, 1990,

statutory amendment is dispositive.

Congress provided that the amendment to I.R.C. § 6502 applies

to "taxes assessed on or before [November 5, 1990] if the period

specified in section 6502 of the Internal Revenue Code of 1986 ...

for collection of such taxes has not expired as of that date."

Pub.L. No. 101-508 § 11317(c), 104 Stat. 1388-458 (1990). In this
case, the six-year period specified by I.R.C. § 6502(a)(1) would

not have expired until November 28, 1990.3 Accordingly, the

amendment to § 6502 applies by its terms.

The taxpayers' sole argument against the application of the

new ten-year limitations period in this case is that the Tax

Collection Waiver binds the I.R.S. to the June 30, 1991, collection

date. The taxpayers' argument fails, because the case law clearly

establishes that a Tax Collection Waiver executed pursuant to

3
We note in passing that the statutory amendment refers to
the "period specified in section 6502." and not simply to section
6502(a)(1). Pub.L. No. 101-508, 104 Stat. 1388, § 11317(c)
(1990). This seemingly technical point, while not relevant to
the facts presented here, has been significant in the decisions
of two other federal appellate courts. See Foutz v. United
States, 72 F.3d 802, 804-05 (10th Cir.1995) (holding that the
1990 amendment extending the statute of limitations to ten years
was applicable where the amendment passed after the original
six-year period in § 6502(a)(1), but before the expiration date
as extended by waiver pursuant to § 6502(a)(2)). Accord Kaggen
v. United States, 57 F.3d 163, 164-65 (2d Cir.), on reh'g, 71
F.3d 1018 (2d Cir.1995). In this case, however, the November 5,
1990, date on which the amendment was passed came before
expiration of the original six-year period of § 6502(a)(1);
thus, we need not address whether it would also be applicable in
a case where the November 5, 1990, date of the amendment's
passage came after the original six-year period but within the
extended period pursuant to § 6502(a)(2).
I.R.C. § 6502(a)(2) is not a contract. Foutz v. United States, 72

F.3d 802, 805-06 (10th Cir.1995) (holding that a Form 900 "Tax

Collection Waiver" is a waiver, not a contract, and applying the

new ten-year statute of limitations after expiration of waiver

period); Kaggen v. United States, 57 F.3d 163, 165 (2d Cir.)

(same), on reh'g, 71 F.3d 1018 (2d Cir.1995); see also Stange v.

United States, 282 U.S. 270, 276, 51 S.Ct. 145, 147, 75 L.Ed. 335

(1931) (concluding that "a waiver [executed pursuant to a tax

statute similar to § 6502] is not a contract, and the provision

requiring the Commissioner's signature was inserted for purely

administrative purposes and not to convert into a contract what is

essentially a voluntary, unilateral waiver of a defense by the

taxpayer"); Feldman v. Commissioner of Internal Revenue, 20 F.3d

1128, 1132 (11th Cir.1994) (explaining that "[a] consent to extend

the statute of limitations under section 6501 ... [is] not a

contract").

More importantly, in Florsheim Bros. Drygoods Co. v. United

States, 280 U.S. 453, 50 S.Ct. 215, 74 L.Ed. 542 (1930), the

Supreme Court rejected the same argument advanced by the taxpayers

here. The taxpayers in Florsheim argued that their waivers "were

not merely waivers extending the statutory period, but were binding

contracts which limited the time in which the Commissioner could

assess and collect the taxes." Id. at 465, 50 S.Ct. at 219. The

Commissioner instituted collection proceedings beyond the time

specified by the waivers, but within the time specified by an

intervening amendment to the statute of limitations. Id. The

Court ruled in favor of the government, holding that "[t]he waivers
executed by the parties were not contracts binding the Commissioner

not to make the assessments and collections after the periods

specified." Id. at 466, 50 S.Ct. at 219. Accordingly, because the

waivers could have no effect on Congress's power to amend the

statute of limitations, "[t]he timeliness of the collection is

based, not upon the waivers, but upon the statutes." Id. at 468,

50 S.Ct. at 220.

For the foregoing reasons, the judgment of the district court

is AFFIRMED.4

4
The rest of the taxpayers' arguments on appeal, as well as
the government's arguments on its cross-appeal, are addressed in
a separate, unpublished appendix, which affirms the judgment of
the district court in all respects.