1992 Tax Ct. Memo LEXIS 611 | Tax Ct. | 1992
1992 Tax Ct. Memo LEXIS 611">*611 Orders denying movants' motions for partial summary judgment will be issued.
MEMORANDUM OPINION
BEGHE,
These disputes turn on whether the person who signed consent forms used to extend the period of limitations for assessment of tax on partnership items with respect to all partners was authorized to do so.
GIA and GIA3 are New York limited partnerships, formed in December 1981. They adopted the calendar year as their annual accounting period. They are part of a group of computer equipment1992 Tax Ct. Memo LEXIS 611">*613 leasing partnerships known as Madison Equipment, which were promoted by Barry Trupin. Trupin was the original sole general partner of both partnerships. In June and September 1983, Trupin assigned his general partnership interests in GIA and GIA3, respectively, to RRI XX Management Corp (RRI). RRI is the tax matters partner (TMP) for the partnerships' 1983 taxable years.
On the dates relevant to this case, RRI was a wholly owned subsidiary of Paragon Leasing Corp., a Delaware corporation. Paragon was a wholly owned subsidiary of Rothchild Reserve International, Inc., another Delaware corporation. Rothchild was wholly owned by Trupin as trustee of a trust for the benefit of certain members of his family.
Trupin, Rothchild, RRI, GIA, and GIA3 all maintained offices at 888 Seventh Avenue, New York City. Trupin was chairman of the board and chief executive officer of Paragon and Rothchild.
Resondent alleges Trupin was president of RRI; movants dispute that allegation. 2
1992 Tax Ct. Memo LEXIS 611">*614 A Form 872-O, Special Consent to Extend the Time to Assess Tax Attributable to Items of a Partnership, extends, until 90 days after its termination by either party, the time for respondent to issue an FPAA. In December 1986, Trupin signed two Forms 872-O covering taxable year 1983, one naming GIA and the other naming GIA3 as the partnership that agreed to the extension of the period of limitations. The forms were mailed back to respondent, but respondent did not countersign and return the forms until 2 months thereafter.
The preprinted instructions following the signature lines on the Forms 872-O state:
The partnership may restrict the authority of any partner(s) to sign this consent by notifying the Service in writing. In this event, please attach a copy of the notification.
No such restriction appears on the record. The Form 872-O instructions also say:
The Tax Matters Partner of the partnership in which the item arose (
If the person signing this consent is not the Tax Matters Partner, sign in the space entitled "Authorized Representative Sign1992 Tax Ct. Memo LEXIS 611">*615 Here" and attach a copy of the written authorization from the partnership.
Trupin signed the forms on the line provided for the signature of the TMP, not on the line for the signature of an "Authorized Representative". Trupin's signatures were not accompanied by a description of title or any other indication that he was signing as an agent for the corporate TMP. No written authorization from the partnership, authorizing Trupin to sign the forms, was attached to either form. RRI's name does not appear on either form.
In January 1987, the month after Trupin signed the GIA and GIA3 Forms 872-O, Trupin signed a Form 872-O for the 1983 taxable year naming General Data Associates as the partnership for which the period of limitations was to be extended. General Data Associates is, like GIA and GIA3, part of the Madison Equipment group of partnerships. Below Trupin's signature on the General Data Associates Form 872-O appears in handwritten block letters, "By Barry Trupin, President RRI XX Management Corp". The Commissioner's authorized designee countersigned the form on the same day Trupin signed it. 3
1992 Tax Ct. Memo LEXIS 611">*616 In February 1987, prior to expiration of the period of limitations specified by section 6229(a) with respect to the 1983 taxable year, the Secretary's authorized designee countersigned the GIA and GIA3 Forms 872-O. The record does not indicate to whom respondent returned executed copies of the forms. Respondent has submitted the affidavits of respondent's revenue agent, Peter Contard. Contard's affidavits state that Trupin told him by telephone, prior to execution of the GIA and GIA3 forms on behalf of the Secretary, that Trupin was authorized to sign the forms on behalf of RRI. Respondent contends that Trupin was authorized to sign the forms; movants disagree.
In April 1990, via certified mail, respondent sent RRI, as tax matters partner for the partnerships, FPAAs relating to the GIA and GIA3 partnerships' 1983 taxable years. RRI has not contested the FPAAs. Neither respondent nor RRI has ever terminated the consents to extend the period for assessment. RRI has never challenged the validity of the Forms 872-O.
A party is entitled to summary judgment when there are no genuine issues of material fact and a decision may be rendered as a matter of law.
A taxpayer raising a statute of limitations defense has the burden of producing evidence that respondent acted after the expiration of the normal 3-year period of limitations.
If an FPAA is issued after the normal period of limitations, respondent has the burden of producing evidence that the period of limitations had not expired prior to the issuance of the FPAA.
Movants argue that neither Form 872-O signed by Trupin is valid on its face because Trupin's signatures were not accompanied by a statement of his authority to sign on behalf of the TMP, and in fact the name of the TMP does not appear anywhere on either form. Movants therefore argue that respondent cannot discharge the burden of production, and that they are entitled to judgment as a matter of law.
We agree with movants that the absence of even the name of the TMP (let alone an accompanying statement or other evidence of Trupin's authority to sign the forms) from both forms calls into question whether each form is valid on its face. That, however, is a question we need not resolve. We have never held that the only way respondent can discharge the burden of production is by introducing a Form 872 that is valid "on its face". The "valid on its face" test describes the minimum amount1992 Tax Ct. Memo LEXIS 611">*619 of evidence that respondent must submit to discharge the burden of production in the usual case. See, e.g.,
Movants argue that, in any event, respondent cannot show the validity of the Forms 872-O executed by Trupin for GIA and GIA3, either because Trupin was not president of RRI or because his signature failed to state his representative capacity. We first deal with the question of Trupin's authority.
Respondent has submitted affidavits of the revenue agent responsible for preparing the Forms 872-O. The agent states that Trupin told him he was executing the Forms 872-O on behalf of, and as an authorized agent for, the TMP. It appears that the TMP is a corporation controlled by Trupin, and that before Trupin transferred1992 Tax Ct. Memo LEXIS 611">*620 his general partnership interests to RRI, he was the TMP, by default if not by designation. Sec. 6231(a)(7). In the month preceding respondent's acceptance and execution of the Forms 872-O in issue here, Trupin had executed and respondent had countersigned another Form 872-O also affecting the 1983 taxable year of another Madison Equipment partnership; Trupin apparently signed that form on behalf of RRI as its president. Thus, on the date respondent accepted the Forms 872-O for GIA and GIA3, respondent had reason to believe Trupin was the president of RRI. Notwithstanding movants' contrary evidence, respondent has presented enough evidence to put in dispute the factual issue of whether Trupin was president of RRI.
If Trupin was president, it is likely that he had authority to sign. A Form 872 is not a contract, but principles of contract law are instructive.
The president [of a corporation], as managing agent, may, in the absence of restrictions, make such ordinary contracts as custom and the necessities of business would justify or require. The authority of the president, his apparent power to make or ratify1992 Tax Ct. Memo LEXIS 611">*621 the contract in question, may be presumed. * * * [
See also
1992 Tax Ct. Memo LEXIS 611">*623 We now reach movants' final argument, that Trupin's signature, which did not state that he was signing as president of RRI, was ineffective to extend the period of limitations with respect to all the partners on behalf of RRI. As we stated in
Drawing all reasonable inferences in favor of respondent, there are at least three open questions: (1) Was Trupin president of RRI when he signed the forms; (2) was Trupin authorized, actually or by implication, to sign the forms; and (3) did Trupin sign in his representative capacity? If the preponderance of the evidence introduced at trial requires a "no" answer to each1992 Tax Ct. Memo LEXIS 611">*624 of these questions, there will be the further question of whether Trupin had apparent authority to sign the forms on behalf of RRI with respect to all the partners.
Movants in docket No. 18405-90 assert that respondent will need "divine intervention" to prevail. All respondent needs is credible evidence and, although the record at this point in the proceedings is somewhat spotty, there is evidence in the record that would support a finding in respondent's favor on each of these questions. We therefore do not conclude that the consents were ineffective. Because movants have failed to establish that there is no material issue of fact, they are not entitled to partial summary judgment.
Footnotes
1. All Rule references are to the Tax Court Rules of Practice & Procedure. All section references are to the Internal Revenue Code as in effect for the taxable year in issue.↩
2. Movants in docket No. 18405-90 have submitted the "admissions" of Edwyn H. Schrier, the corporate records custodian of RRI, which state that Frederick S. Gnesin was elected president of RRI on February 4, 1985, and that Gnesin has never been replaced. Schrier did not state whether Trupin had ever been president of RRI. Respondent has submitted affidavits contradicting Schrier's assertions. On this record, Schrier's assertions have not eliminated all genuine issues of material fact.↩
3. Petitioners in docket No. 18405-90 object to respondent's reliance on the Form 872-O for General Data Associates on the ground that the form is inadmissible as evidence. Petitioners argue that the form has not been authenticated, but a document may be authenticated by "Comparison by the trier of fact or by expert witnesses with specimens which have been authenticated",
Fed. R. Evid. 901(b)(3)↩ . We believe that the trier of fact could reasonably conclude that Trupin's signature on the General Data Associates form was genuine by comparing it with the GIA and GIA3 forms. Petitioners also question whether Trupin's alleged title was added to the General Data Associates form after Trupin signed it, but that is clearly a question of fact that we should answer only after a trial and testimony. Petitioners also assert that disclosure of the form violates sec. 6103, which requires that "Returns and return information" be kept confidential, with certain exceptions. Petitioners argue that respondent will deny them discovery of the origin of the form based on sec. 6103, and that it would be more fair to exclude the form entirely. As respondent has not, so far as we know, denied petitioners discovery of any matter, this argument is not ripe for our consideration.4. It is not entirely clear that New York law controls, but it may not matter. The law of the state of incorporation is controlling in deciding questions of actual authority, while the law of a state where a contract is made is controlling in deciding questions of apparent authority.
Lee v. Jenkins Bros. , 268 F.2d 357">268 F.2d 357Colt Lanes of Dover, Inc. v. Brunswick Corp. , 281 A.2d 596">281 A.2d 596Guyer v. Haveg Corp. , 205 A.2d 176">205 A.2d 176211 A.2d 910">211 A.2d 910↩ (Del. 1965). Thus, the same result probably would obtain.5.
Cambridge Research & Development Group v. Commissioner , 97 T.C. 287">97 T.C. 287Since Lawrence was not tax matters partner, the consent signed by him is effective
only if he was authorized in writing by the partnership to enter such an agreement on behalf of all the partners. [97 T.C. 287"> ; emphasis added.]Cambridge Research & Development Group v. Commissioner ,supra at 294There was no evidence in that case that the TMP had authorized Lawrence to sign on his behalf. The word "only" may be taken to mean that under the facts of that case, the only remaining possibility was the one described in the quotation. In addition, the case is distinguishable because the TMP was a natural person who could act on his own behalf, while in this case the TMP is a corporation, which can act only through its authorized agents. ↩
6. Trupin also might have had apparent authority to sign, even if he was not the president. See
Eversole v. Commissioner , 46 T.C. 56">46 T.C. 56Griffith v. Commissioner , T.C. Memo. 1988-445Collision Plan Unlimited, Inc. v. Bankers Trust Co. , 469 N.Y.S.2d 105↩ (App.Div. 1983)