Reifler v. Comm'r
| Decision Date | 13 November 2013 |
| Docket Number | Docket No. 18082-10,T.C. Memo. 2013-258 |
| Parties | BRADLEY C. REIFLER AND NANCY REIFLER, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent |
| Court | U.S. Tax Court |
On or about Oct. 15, 2001, the extended due date for Ps' 2000 Federal income tax return, Ps submitted to R's Andover, Massachusetts, Service Center a joint Federal income tax return for 2000, signed under penalties of perjury by P-H, but not by P-W. Upon receipt, the service center date-stamped the return, made handwritten markings indicating a missing signature, and mailed the return back to Ps with a form requesting that P-W sign it and that Ps return it to the service center within 20 days. Ps did not mail back the 2000 return with P-W's signature to the service center as requested. On July 29, 2002, respondent issued a "Taxpayer Delinquency Notice" to Ps. In response, Ps submitted a second joint Federal income tax return for 2000. The second 2000 return was identical to the first except that it was signed by both Ps opposite a date of Aug. 25, 2002, and bore neither the Oct. 15, 2001, date stamp nor the service center's markings on the original return. It was received by the service center on Sept. 2, 2002. Beginning on July 1, 2005, R obtained from Ps a series of consents extending the period oflimitations on assessment and collection for 2000 until June 30, 2010, a date after the May 17, 2010, issuance of the notice of deficiency covering Ps' 2000 tax year. Ps allege that those consents are invalid because the I.R.C. sec. 6501(a) period of limitations on assessment and collection with respect to Ps' 2000 Federal income tax expired on Oct. 15, 2004, three years after they filed the initial 2000 return.
Held: Ps are estopped from raising the affirmative defense of the period of limitations with regard to any 2000 deficiencies; 2000 remains open for assessment and collection of Federal income tax.
Kevin M. Flynn, for petitioners.
Carina J. Campobasso, Janet F. Appel, and Erika B. Cormier, for respondent.
HALPERN, Judge: Both parties have moved for partial summary judgment (petitioners' motion, respondent's motion, or, together, motions). Each party objects to the other's motion. The issue common to the motions is whether the section 6501(a)1 three-year period of limitations on assessment and collection(period of limitations) with respect to petitioners' 2000 Federal income tax expired before respondent issued the statutory notice of deficiency (notice), covering petitioners' 2000-2005 taxable years, upon which this case is based. Petitioners ask that we grant their motion to declare 2000 a closed year on the ground that the period of limitations expired before respondent issued the notice. Respondent asks that we grant his motion to declare 2000 still open for assessment on the ground that the period of limitations did not expire before his issuance of the notice.2
The parties base their motions on material facts that, for purposes of the motions, are not in dispute, so that the period of limitations issue involves only questions of law. Therefore, that issue is ripe for disposition by summary judgment. See Rule 121(b).
The undisputed material facts are derived from the motions and various affidavits, declarations, and exhibits either attached to the motions or incorporated therein by reference.
In 2000 and for many years prior thereto, Bradley C. Reifler (petitioner) had as his certified public accountant David Meyrowitz, whose firm at the time, Levine, Levine & Meyrowitz, prepared petitioners' Federal and State income tax returns. That firm prepared petitioners' 2000 joint Federal income tax return (2000 return or original 2000 return).
Mr. Meyrowitz, on petitioners' behalf, requested and obtained from respondent extensions of the time in which to file the 2000 return until October 15, 2001.
Consistent with their practice since their marriage in 1988, petitioners desired and intended to file a joint return for 2000, and, indeed, the 2000 return was prepared as a joint return (e.g., they selected a filing status of "married filing joint return", and the return reported income from activities in which both petitioners participated). Also, consistent with her prior years' practice, Mrs. Reifler authorized petitioner to file the 2000 return on her behalf. Nonetheless, apparently in his rush to meet the October 15, 2001, filing deadline for the 2000 return, petitioner, having added his signature to that of Mr. Meyrowitz (as preparer), inadvertently failed to have Mrs. Reifler sign the return before mailing it to respondent's Andover, Massachusetts, Service Center (service center orAndover Service Center). The 2000 return bore no date next to petitioner's signature or next to the space for Mrs. Reifler's signature, and it bore a date of October 9, 2001, next to Mr. Meyrowitz's signature.
Sometime after its receipt of the 2000 return, the service center returned it to petitioners. Although there is no direct evidence explaining why the service center returned the 2000 return to petitioners, the standard Andover Service Center operating procedures in effect at the time indicate that, as a return received after the unextended due date of April 15, 2001, it would have been date-stamped as of the date of receipt, and, if accepted for filing, it would have received a 13-digit "document locator number" (DLN) stamped on the top right-hand corner of the first page. If the return was deemed defective and, therefore, not acceptable for filing, the service center would not have stamped a DLN on page 1, and, if it showed a refund due (as did the 2000 return), the service center would have returned the original return to petitioners with a Form 3531, Request for Missing Information or Papers to Complete Return, explaining why the return could not beaccepted as a valid Federal income tax return.3 The service center would not have retained a copy of the Form 3531 checklist sent to petitioners.
Included in the Form 3531 checklist of potential return defects is the failure by one or both taxpayers submitting a joint return to sign the return under penalties of perjury; i.e., below the jurat statement. Because the 2000 return's sole defect was that it had not been signed by both taxpayers, the service center also would have sent to petitioners a Notice 649, You Forgot to Sign Your Return, which states, in pertinent part:
Service center operating procedures also required that, upon receipt of an unsigned income tax return (with no other defects), service center personnel place an "S" in red ink at the top left-hand corner of page 1 of the return. The purpose of the red "S" was to indicate that the return's only defect was that it was missing one or two signatures and that it was necessary to send a Notice 649 to the taxpayer(s) along with the return. The red "S" was not removed or covered by service center personnel when the return was sent back to the taxpayer(s) for signature.
During the Internal Revenue Service (IRS) examination of petitioners' 2000-2005 returns, petitioners' counsel furnished to the revenue agent conducting the examination (revenue agent) a copy of what both the revenue agent (according to counsel's representations) and petitioners' counsel believed to be the 2000 return. Consistent with service center policy applicable to unsigned returns, page 1 of the 2000 return presented to the revenue agent bore an original (raised) date stamp displaying an October 15, 2001, date of receipt, and there was no 13-digit DLN in the top right-hand corner. Inconsistent with service center policy of returning to taxpayers only defective returns, the 2000 return that petitioners' counselpresented to the revenue agent contained both petitioners' signatures along with Mr. Meyrowitz's signature as preparer.
An expert report (report) prepared by an IRS "Physical Scientist/Ink Chemist" establishes that page 1 of the 2000 return was altered by applying opaquing fluid to hide a red "S" in the top left-hand corner, and Mrs. Reifler's original signature was added to photocopy signatures of petitioner and Mr. Meyrowitz on a photocopy of page 2 of the return. The report also establishes that there were indentations on page 3 of the return indicating that (1) check marks had been made on the line on page 2 where Mrs. Reifler should have signed and dated it and (2) both petitioner and Mr. Meyrowitz had signed the return in the appropriate places on page 2. Finally, the report establishes that, on the basis of the pattern of the staple holes in the return, pages 3 to the end had been stapled together more times than pages 1 and 2.
The report, thus, establishes that (1) someone used opaquing fluid to hide the red "S" on page 1 and the check marks on page 2 of the 2000 return, (2) only petitioner and Mr. Meyrowitz signed the return (a fact that was confirmed by petitioners' counsel's discovery, after a search of his files, of the original page 2, with petitioner's and Mr. Meyrowitz's, but not Mrs. Reifler's, original signatures), and (3) someone had removed the original page 2 from the return and substituted aphotocopy of that page with the checkmarks on the original page 2 signature line for Mrs. Reifler hidden from view, there appearing instead Mrs. Reifler's original signature.
Petitioner acknowledged, in an affidavit dated November 2, 2011, his responsibility for the foregoing return alterations as follows:
I believe that shortly after the original 2000 tax return was returned to me, I needed a completely signed return, i.e., a return that...
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