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Судебные дела / Зарубежная практика  / Morris A. WEINER, Plaintiff, v. UNITED STATES of America, Defendant., United States District Court, S.D. Texas, Houston Division., 255 F.Supp.2d 663, No. CIV.A.H-00-1297., November 20, 2002

Morris A. WEINER, Plaintiff, v. UNITED STATES of America, Defendant., United States District Court, S.D. Texas, Houston Division., 255 F.Supp.2d 663, No. CIV.A.H-00-1297., November 20, 2002

24.06.2008  

Morris A. WEINER, Plaintiff, v. UNITED STATES of America, Defendant.

United States District Court, S.D. Texas, Houston Division.

255 F.Supp.2d 663

No. CIV.A.H-00-1297.

November 20, 2002.

Thomas E Redding, Redding & Associ╜ates, Houston, TX, for Morris A Weiner, plaintiff.

Michael D Powell, Dept of Justice, Tax Division, David B Coffin, Dept of Justice, Tax Division, Dallas, TX, for United States of America, defendant.

MEMORANDUM AND ORDER

ATLAS, District Judge.

This tax case raises novel issues relating to limited partners' tax obligations and the Tax Equity and Fiscal Responsibility Act of 1982 ("TEFRA"). The case is again before the Court on Plaintiff Morris Wein╜er's Motion for Reconsideration of Sum╜mary Judgment [Doc. # 65] and Weiner's Supplement to Motion for Reconsideration of Summary Judgment [Doc. # 71], to which the United States has responded [Docs. # 68, 74, respectively]. Also before the Court is the United States' Motion to Reconsider Memorandum Opinion, and Brief in Support [Doc. # 73]. Weiner has filed a Response [Doc. # 77], and the Unit╜ed States has replied [Doc. # 78].

Both parties seek reconsideration of cer╜tain rulings contained in this Court's Mem╜orandum Opinion issued March 31, 2002 and entered April 2, 2002 ("Memorandum Opinion") [Doc. # 63]. 1

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1. On this day, the Court is issuing an Amend╜ed Memorandum Opinion to correct typo╜graphical errors contained in the March 31, 2002 Memorandum Opinion, and to incorpo╜rate the corrections contained in the Court's April 8, 2002 Order Denying IRS's ╖ 6621 Motion [Doc. # 64]. The Amended Memoran╜dum Opinion contains no substantive changes to the March 31, 2002 Memorandum Opinion, and thus no further motions for reconsidera╜tion may be filed by the parties. The page numbering of the Amended Memorandum Opinion is substantially the same as the origi╜nal. Therefore, citations herein will be to the Amended Memorandum Opinion.

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Having considered the parties' briefs, all matters of record, and applicable legal au╜thorities, the Court concludes that Wein╜er's Motion For Reconsideration, as Sup╜plemented, and the United States' Motion for Reconsideration should be denied .

I. INTRODUCTION

In his original Motion for Reconsidera╜tion, Weiner asked the Court to reconsider its ruling that the 1984 tax return of the partnership Travertine Flame Associates ("TFA") was not signed by a partner be╜cause AMCOR had power of attorney to sign the return and because discovery was necessary to determine whether AMCOR or Joseph Voyer were partners in TFA at the time Voyer signed the 1984 tax return. Weiner previously raised these issues in his summary judgment motion and in re╜sponse to the Government's summary judgment motion. Weiner incorrectly as╜serts that the Court did not consider these arguments. The Court in fact considered and rejected them, as discussed below. 2

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2. Weiner has presented no new law or evi╜dence to support his power of attorney argu╜ment, and the Court stands by its ruling that there is no authority for allowing a partner╜ship return to be signed by an agent. See Amended Memorandum Opinion, 255 F.Supp.2d 624, 648-49.

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At a conference on May 17, 2002, the Court agreed to withhold ruling on Wein╜er's Motion for Reconsideration pending production by the United States of the 1984 and 1985 Schedule K-Is for the gen╜eral partners of TFA. 3 At that conference, the Court further permitted both parties to file additional Motions for Reconsidera╜tion. Thereafter, Weiner filed his Supple╜ment to Motion for Reconsideration, and the United States filed its Motion for Re╜consideration. The United States' Motion asks the Court to revisit its ruling that collateral estoppel does not apply to the issue of whether the 1984 TFA tax return was signed by a partner, and its ruling that Weiner did not agree in settlement to pay ╖ 6621(c) interest.

Neither party has sought reconsidera╜tion of the Court's ruling that it has juris╜diction to determine the statute of limita╜tions issue. In a parallel proceeding, Kraemer v. United States, Civil Action No. H-00-2948, in which the taxpayers made a refund claim based on the same statute of limitations arguments Weiner raises here, Magistrate Judge Nancy Johnson dis╜missed the taxpayers' limitations claims on the ground that the district court lacks subject matter jurisdiction. It is undisput╜ed that a district court has subject matter jurisdiction over refund actions to the ex╜tent that the claimed refund is attributable to "nonpartnership" items. 26 U.S.C. ╖ 7422(h). Magistrate Judge Johnson ruled that the statute of limitations for issuance of a Final Partnership Adminis╜trative Adjustment ("FPAA") must be de╜termined at the partnership level. On re╜consideration, Magistrate Judge Johnson explained that the statute of limitations defense is a procedural challenge to the "partnership item" of the IRS's proposed adjustments to the partnership return called for by the FPAA. Thus, although the statute of limitations is found in subti╜tle F of the Internal Revenue Code, plain╜tiff sought a refund based on adjustments called for by the FPAA. Thus, Magistrate Judge Johnson concluded that the taxpay╜ers' limitations claim was an action was for a refund attributable to a partnership item and was outside the district court's juris╜diction. See Order dated June 7, 2002 [Doc. # 49 in Civil Action No. H-00-2948]. The Court recognizes the jurisdictional is╜sue is a threshold one. Magistrate Judge Johnson's opinion is well-reasoned, al╜though unprecedented in its approach. Neither party in the case at bar has as╜serted the arguments Magistrate Judge Johnson adopted in Kraemer, and neither has sought reconsideration of the this Court's ruling that jurisdiction exists over the limitations-based refund claim. Be╜cause Magistrate Judge Johnson's ap╜proach relies on analysis of TEFRA and the Internal Revenue Code not yet square╜ly adopted by any appellate court, because the Fifth Circuit's TEFRA precedent does not address the issue, because this case raises numerous legal questions about tax obligations at least 16 years old, and be╜cause resolution of these issues affects many related pending and potential cases, the Court will not revisit its jurisdictional ruling. The Court accordingly exercises jurisdiction over the statute of limitations issue based on the analysis in its Amended Memorandum Opinion, at 632-39.

II. ANALYSIS OF WEINER'S MOTION

This Court held in its Memorandum Opinion that the IRS's assessment for the 1984 tax year was not time-barred because the time period for issuance of an FPAA did not begin to run upon the filing of the TFA 1984 tax return because that return had not been signed by a partner as re╜quired by Internal Revenue Code ╖ 6063. 4 See Amended Memorandum Opinion, at 645-52.

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4. The statutory framework under TEFRA re╜quires notification by the IRS to individual partners of any adjustments to partnership items reported in the partnership return. See Amended Memorandum Opinion, at 630-32.

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In his original Motion for Reconsidera╜tion, Weiner cited Fred Behrens's testimo╜ny that "in many cases" AMCOR acquired partnership interests within the year after the partnership was formed. However, Behrens offered no testimony as to when AMCOR actually acquired a partnership interest in TFA. Nor did he identify any specific documents that would answer the question. Behrens testimony offers no as╜sistance in determining when AMCOR be╜came a TFA partner.

In his Supplement, Weiner relies on the recently produced 1984 and 1985 Schedule K-is for TFA general partners Behrens, Wright, and Schreiber, and the 1985 Schedule K-1 for AMCOR. The 1985 Schedule K-1 for AMCOR 5 reports that AMCOR's partnership percentage was .500000% both "before decrease or termi╜nation" (Column D(1)), and at the end of the year (Column D(ii)). On the 1984 Schedule K-is for general partners Beh╜rens, Wright, and Schreiber, 6 Column D(i) is blank, and Column D(ii) specifies that each had a partnership interest at the end of the year of .333300%. The 1985 Schedule K-is for Behrens, Wright, and Schreiber, 7 reflect in that each had a .166600% inter╜est "before decrease or termination" (Col╜umn DG)) and that each had a .166600% interest at the end of the year (Column D(ii)). Weiner argues that the combina╜tion of these documents indicates that AM╜COR was a partner at all times during 1985. The Court finds Weiner's argument unpersuasive.

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5. Exhibit A to Weiner's Supplement.

6. Exhibits B-D to Weiner's Supplement.

7. Exhibits E-G to Weiner's Supplement.

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It is undisputed that AMCOR was not a partner in 1984. Therefore, it is evident that AMCOR became a partner in 1985. Weiner contends that the entry in the AMCOR 1985 Schedule K-1 in Column D(i), showing AMCOR's partnership per╜centage at .500000%, proves that it was a partner as of January 1, 1985. The Court disagrees. This entry does not comport with the 1985 Instructions for Schedule K-1 (Form 1065). 8 Column D(i) does not ask for the partnership percentage at the be╜ginning of the year; it asks for the part╜nership percentage prior to any decrease or termination during the year. Under Weiner's theory, Column D(i) should have been zero or left blank, as it was in the 1984 Schedule K-is for Behrens, Wright, and Schreiber. The listing of a partner╜ship percentage for AMCOR in Column D(i) of its 1985 Schedule K-1 is not evi╜dence that AMCOR was a TFA partner on January 1, 1985. 9 See Ehrensperger v. Commissioner, 67 T.C.M. (CCH) 3106, 3108 (1994) (finding Schedule K-is insuffi╜cient to meet taxpayers burden to estab╜lish his share of liabilities in partnerships).

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8. See Exhibit 2 to United States' Response, at 10.

9. The unreliability of the K-is is further illustrated by the 1985 Schedule K-is of Behrens, Wright, and Schreiber. Even under Weiner's theory, those Schedules should have listed .333300% in Column D(i) and .166600% in Column D(ii) to indicate the change in their partnership percentages. To adopt Weiner's conclusion, the Court would have to place total reliance on the Schedules K-1s and con╜clude that a change effective as of January 1, 1985 did not take place during 1985.

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Weiner next argues that his position that AMCOR became a partner as of Janu╜ary 1, 1985, is supported by the items of income reported on the Schedule K-1s. Each general partner reported income on his individual Schedule K-1 in accordance with his partnership percentage. The in╜come allocation in these Schedules is not pro-rated however, to reflect that AM╜COR did not obtain its partnership inter╜est until December 1985. Because TFA was prohibited by the Internal Revenue Code from retroactively allocating income or loss to AMCOR, Weiner argues, AM╜COR must have purchased its interest on January 1, 1985. 10 The Court finds that the AMCOR Schedule K-1 may be some evidence as to how, long after the fact, the general partners decided to allocate part╜ners' income, but is not proof of the legal accuracy of that post hoc allocation. 11

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10. See Ogden v. Commissioner, 788 F.2d 252 (5th Cir.1986); Katz v. Commissioner, 116 T.C. 5, 2001 WL 30538 (2001); Johnsen v. Commissioner, 84 T.C. 344, 1985 WL 15302 (1985).

11. The partnership's tax records are evidence of what was actually reported to the IRS. However, the Court does not consider them meaningful evidence on the ultimate question of whether, and when, the legal prerequisites for partnership of AMCOR were met. Weiner contends that the United States acknowledged the 1985 allocations were proper by agreeing in the Tax Court case that there should be no change in TFA's partnership items for 1985. The Court is unpersuaded. The fact that the IRS did not contest the allocation in the Tax Court case is not the equivalent of an admis╜sion as to the date AMCOR became a partner in TFA.

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Finally, Weiner extrapolates that be╜cause AMCOR was the general partner with the largest profit percentage interest at the close of the 1985 taxable year, it was, the 1985 tax matters partner for TFA. Even if that is true as to the 1985 taxable year, it is not true as to the 1984 taxable year at issue. AMCOR's status as of the end of 1985 does not answer the question as to whether AMCOR was authorized to sign the 1984 tax return in January 1985.

Reliance on AMCOR's Schedule K-1 for 1985, which was prepared some time in 1986 long after the events and calendar years at issue, ignores the parties' partner╜ship documentation, as well as the parties' December 5, 1985 letter agreement, and the amended Certificate of Limited Part╜nership filed in December 1985. Weiner had complete access to the general part╜ners of TFA during discovery in this case and should have known that the status of AMCOR as a partner in TFA would be an important issue in his case. Yet, he has presented no evidence that establishes that AMCOR became a partner of TFA on January 1, 1985. The assumptions and reasoning Weiner suggests regarding the Schedule K-1s and AMCOR's partnership status, even if amounting to a scintilla of evidence, simply are too attenuated to sup╜port a verdict in his favor. Weiner has failed to establish a genuine fact issue that AMCOR was partner in TFA on January 30, 1985, the date Voyer signed the 1984 tax return, in light of the substantial evi╜dence supporting the Court's conclusion that AMCOR became a partner in Decem╜ber, 1985. See Amended Memorandum Opinion, at 632-33, 649-51. Weiner has presented no probative evidence or argu╜ment in his Motion for Reconsideration or Supplement to Motion for Reconsideration that warrants any change in that decision.

III. ANALYSIS OF UNITED STATES' MOTION

In its Memorandum Opinion, this Court declined to apply collateral estoppel to bar Weiner from litigating whether the FPAAs for TFA for tax years 1984 and 1985 were time-barred because the issues in the Tax Court and the current case are not identi╜cal in all respects. Amended Memoran╜dum Opinion, at 640-45. This Court fur╜ther held that Weiner did not agree to pay ╖ 6621(c) interest in his settlement agree╜ment. Id . at 654-56. In its Motion to Reconsider, the United States first argues that the Court erred in relying on the restrictive approach of Commisioner of In╜ternal Revenue v. Sunnen, 333 U.S. 591, 68 S.Ct. 715, 92 L.Ed. 898 (1948), in declin╜ing to apply collateral estoppel in this case. Second, the United States argues that the Court mistakenly concluded that the Sum╜mary of the AMCOR Appeals Settlement Offer ("SAASO") was not part of the set╜tlement, and thus erred in denying sum╜mary judgment on the United States' claim for ╖ 6621(c) interest.

A. Sunnen is Still Binding Precedent for This Court

The United States argues that the col╜lateral estoppel doctrine expressed in Sun╜nen has been supplanted by Montana v. United States, 440 U.S. 147, 99 S.Ct. 970, 59 L.Ed.2d 210 (1979), in which the Su╜preme Court determined that Sunnen's "doctrine of separable facts" did not bar collateral estoppel where the factual differ╜ences in issue were "too inconsequential to warrant relitigation" and were not capable of "altering facts essential to the judg╜ment." Montana, 440 U.S. at 160-61, 99 S.Ct. 970.

The Court first notes that the United States did not raise this issue in its sum╜mary judgment briefing. To the contrary, the United States represented to the Court that Sunnen governed the collateral estoppel analysis:

Indeed, plaintiff is correct when assert╜ing that collateral estoppel is narrowly applied in tax cases. The limitation was set out by the Supreme Court in Com missioner of Internal Revenue v. Sun╜nen: '[Collateral estoppel] must be con╜fined to situations where the matter raised in the second suit is identical in all respects with that decided in the first proceeding and where the controlling facts and applicable legal rules remain unchanged.'

Reply on United States' Cross-Motion for Partial Summary Judgment Based on Statute of Limitations for 1985 [Doc. # 47], 12 at 2 ( citing Sunnen, 333 U.S. at 599-600, 68 S.Ct. 715). Moreover, the United States did not cite Montana at all in support of its collateral estoppel argu╜ment. Obviously, Montana is n ot new law of which the United States could only have become aware since filing its summary judgment briefing. Therefore, the United States waived its argument that Sunnen does not apply. Nevertheless, the Court has considered the United States' position and finds it unpersuasive on the merits.

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12. Because the arguments the United States wished to present were identical, the Reply as to the 1985 statute of limitations issue was incorporated into the Reply on United States' Cross-Motion for Partial Summary Judgment Based on Statute of Limitations for 1984 [Doc. # 46].

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The United States' argument overlooks a critical distinction between Sunnen and Montana and its progeny: Montana is not a traditional tax case. In Montana, a contractor on a public works project brought suit in Montana state court chal╜lenging the constitutionality of a Montana state gross receipts tax imposed upon con╜tractors of public, but not private, con╜struction projects. Montana, 440 U.S. at 150,51, 99 S.Ct. 970. The litigation was directed and financed by the United States. Id . at 151, 99 S.Ct. 970. While the state case was pending, the United States initiated a challenge to the same statute in the United States District Court for the District of Montana. Id By agree╜ment, the federal case was stayed pending resolution of the state-court litigation. Id. The Montana Supreme Court found the tax constitutional. Id . The contractor then filed a second state-court case seeking a tax refund. The Montana Supreme Court ruled that the contractor's second state court suit was in all material respects iden╜tical to his first state court action, and dismissed the second case. Id . After the second Montana Supreme Court decision, the United States District Court heard the United States' case and, finding it was not bound by the Montana Supreme Court decision, struck down the tax as violative of the Supremacy Clause. Id . at 152, 99 S.Ct. 970. On appeal by the State of Montana, the United States Supreme Court found "that the constitutional ques╜tion presented by this appeal was deter╜mined adversely to the United States in a prior state proceeding" and reversed the district court's ruling on grounds of collat╜eral estoppel without reaching the merits. Id . at 152,53, 99 S.Ct. 970. The Supreme Court stated "[a] review of the record in [the first Montana case] dispels any doubt that the plaintiff there raised and the Mon╜tana Supreme Court there decided the precise constitutional claim that the United States advances here." Id. at 156, 99 S.Ct. 970 (emphasis added). In fact, the United States' amended complaint tracked almost verbatim the language of the plaintiff's complaint in the state court action. Id.

The United States argued, citing Sun╜nen, that collateral estoppel applies only when "the controlling facts and applicable legal rules remain unchanged." Id. at 158, 99 S.Ct. 970. The United States also as╜serted that the facts in the federal case varied from the prior state court case be╜cause an allegedly critical provision con╜tained in the construction contract at issue in the state court case was not present in the contract at issue in the federal litiga╜tion. Id. at 158, 99 S.Ct. 970. The Su╜preme Court agreed with the United States "that changes in facts essential to a judgment will render collateral estoppel inapplicable in a subsequent action raising the same issues," but concluded that the Montana Supreme Court's decision was not predicated on the facts that distin╜guished the federal and state cases. Id . at 159. In other words, the distinct contract provision cited by the United States was irrelevant to the Montana Court's decision. Having found no material difference in the controlling facts, the Supreme Court held that "unless there have been major changes in the law governing intergovern╜mental tax immunity since [the first Mon╜tana suit], the Government's reliance on [Sunnen ] is misplaced." Id . at 161, 99 S.Ct. 970. The Court went on to say that underlying the Sunnen decision was a con╜cern, absent from the instant case before it, that modifications in controlling legal principles could render a previous determi╜nation inconsistent with prevailing doctrine and result in "inequalities in the adminis╜tration of the revenue laws, discriminatory distinctions in tax liability, and a fertile basis for litigious confusion." Id at 161, 99 S.Ct. 970 (citing Sunnen, 333 U.S. at 599, 68 S.Ct. 715). A close reading of Montana thus reveals that the United States' contention that Montana overruled Sunnen's "separable facts" doctrine vastly overstates the scope of the Montana. rul╜ing.

Since deciding Montana, the Su╜preme Court held that Sunnen is " perti╜nent and indeed is controlling" precedent in a tax case. Limbach v. Hooven & Alli╜ son Co. , 466 U.S. 353, 104 S.Ct. 1837, 80 L.Ed.2d 356 (1984) (refusing to apply col╜lateral estoppel in a case involving differ╜ent tax years, noting "the reason for not applying the collateral-estoppel doctrine in the present case is even stronger than that in Sunnen, for here the constitutional anal╜ysis of the earlier case is repudiated by this Court's intervening pronouncement"); cf . United States v. Stauffer Chemical Co. , 464 U.S. 165, 172 n. 5, 104 S.Ct. 575, 78 L.Ed.2d 388 (1984) (noting that whatev╜er the applicability of Sunnen's strict sepa╜rable facts test in a tax case, it would not be applied generally in a non-tax case).

In a non-tax case, Hicks v. Quaker Oats Co. , 662 F.2d 1158, 1167 (5th Cir.1981), the Fifth Circuit questioned whether the Sun╜ nen separable facts doctrine was still con╜trolling law following Montana, The Fifth Circuit in Hicks did not wholly reject Sun╜nen in light of Montana, but did find that Montana limited the applicability of Sun╜nen to situations in which there have been major changes in the law. Hicks, 662 F.2d at 1167. In dicta, the Hicks court opined that "it is likely that the 'separable facts' doctrine of Sunnen is a dead letter, since Montana involved separate documents with slightly differing language."'3 Id. However, it is significant that Hicks was not a tax case. In a subsequent tax case that presented collateral estoppel issues, Hibernia Nat'l Bank v. United States, 740 F .2d 382, 387 (5th Cir.1984), the Fifth Circuit did not cite Hicks. Instead, the Court of Appeals relied on Sunnen in hold╜ing that collateral estoppel must be applied very narrowly in tax cases, and that in order for collateral estoppel to apply, the issues must be "identical in all respects." Hibernia, 740 F.2d at 387.

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13. Although Hicks focused on the language of the contracts at issue in Montana. the United States Supreme Court was clear that the lan╜guage of the contracts at issue was not the basis for the determination of the constitu╜tional question. Montana, 440 U.S. at 159, 99 S.Ct. 970.

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This Court has been presented with no Supreme Court or Fifth Circuit authority rejecting the Sunnen separable facts doc╜trine in tax cases. 14 Thus, the Court agrees with Weiner's conclusion in his Re╜sponse to the United States' Motion to Reconsider that, "[i]n the area of tax law the Sunnen separable facts doctrine is very much alive." 15 The United States' Motion to Reconsider the Court's collateral estoppel ruling is denied.

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14. Other circuits analyzing collateral estoppel issues in tax cases have cited Sunnen general╜ly on collateral estoppel issues in the years following Montana. See, e.g., Greene v. United States, 79 F.3d 1348, 1352-53 (2d Cir.1996) (relying primarily on Montana but citing Sun╜nen for the proposition that "each [tax] year is the origin of a new liability and of a sepa╜rate cause of action"); Coleman v. Comm'r of Internal Revenue, 16 F.3d 821, 830 (7th Cir. 1994) (citing Sunnen for the elements of col╜lateral estoppel, including that the issues must be "identical in all respects"); Carter v. United States, 973 F.2d 1479, 1483 n. 1 (9th Cir.1992) (noting that although the Supreme Court has repudiated the separable facts doc╜trine in general, it has suggested that the doctrine may remain applicable in tax cases).

15. If the Fifth Circuit were to determine that Sunnen is no longer controlling law, the Court, as stated in its Amended Memorandum Opinion, footnote 23, likely would find that the issues are sufficiently identical to warrant application of collateral estoppel. Weiner makes extensive argument in his Response to the United States' Motion to Reconsider that, even assuming a less restrictive approach to the identity of issues question, collateral es╜toppel does not apply because he was not a party, or in privity with a party, to the Tax Court cases, and the Tax Court did not have jurisdiction to decide the limitations question. Weiner made these arguments against collat╜eral estoppel in his summary judgment brief╜ing and the Court addressed them extensively in its decision. See Amended Memorandum Opinion, at 634 n. 12, 640-41, 644-45. In reaching its decision, the Court addressed the many reasons that support a ruling that Wein╜er was in privity with the TMP of TFA, but did not decide the question because denial of col╜lateral estoppel was required based on Sun╜nen. Were it necessary to decide the issue, the Court would likely find privity for the reasons discussed in the Amended Memoran╜dum Opinion. Therefore, the ruling of the Court granting the United States summary judgment on the 1984 statute of limitations issue would remain unchanged.

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B. The Parties Did Not Settle the Issue of ╖ 6621(c) Interest

The United States contends that the Court erred in finding that the large, obvious disclaimer at the bottom of the SAASO was meant to apply to the entire SAASO instead of only to the paragraph that followed the disclaimer. 16 The Court stands by its ruling that the SAASO was not a part of the Appeals Settlement Offer. See Amended Memorandum Opinion, at 655. However, it is not necessary to rely on the disclaimer to reach the Court's conclusion. In pursuing its settlement with Weiner, the IRS did not make a settlement offer to Weiner. Instead, the IRS sent a settlement package to Weiner that included a Form 870-P(AD), which, if signed and returned by Weiner, would con╜stitute Weiner's settlement offer to the IRS. The IRS then had to accept Weiner's settlement offer in order to consummate the compromise agreement. The SAASO, assuming it was mailed to Weiner as part of the settlement package, which Weiner denies, was not incorporated by Weiner in his settlement offer to the IRS, which the IRS accepted. As stated in the cover let╜ter to the IRS from Weiner's accountant that accompanied Weiner's executed Form 870-P(AD), "the settlement agreements do not apply to penalties." United States' Reply, at 11. The Court therefore rejects the United States' argument that the set╜tlement included the SAASO. The Court next addresses Weiner's argument, made in response to the United States' Motion to Reconsider, that the United States waived its right to collect the ╖ 6621(c) interest.

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16. In this regard, the United States has sub╜mitted the Second Supplemental Declaration of Jerry Gossett. Exhibit 2 to United States' Motion. Weiner objects to Gossett's Second Supplemental Declaration as not based on personal knowledge because Gossett swears it is true only "to the best of his knowledge and belief." The Court overrules Weiner's eviden╜tiary objection, but notes that at best the Declaration creates an ambiguity in the SAA╜SO, which would lead the Court to interpret the document against its drafter, the United States. As stated in the text, the disclaimer is not necessary to the Court's ruling.

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Although the Form 870-P(AD) did not settle ╖ 6621(c) interest, Weiner clearly was aware that the IRS intended to assess such interest. Again, as stated in the cov╜er letter to the IRS from his accountant, Weiner understood that "the I.R.C. ╖ 6621(c) interest penalty will be as╜sessed." Id. The Form 870-P(AD) con╜tained a notice that, if accepted by the IRS, the settlement agreement "may re╜sult in an additional tax liability to you plus interest as provided by law." None╜theless, Weiner argues, as he did in his summary judgment briefing, that the Unit╜ed States should not be allowed to assess ╖ 6621(c) interest because the settlement agreement did not specify any grounds for the deficiency that support such interest. The Court distinguished the primary cases relied upon by Weiner in support of this argument, Todd v. Comm'r of Internal Revenue, 862 F.2d 540 (5th Cir.1988), and McCrary v. Comm'r of Internal Revenue, 92 T.C. 827, 1989 WL 35568 (1989), in its Memorandum Opinion. See Amended Memorandum Opinion, at 656. Like those cases, the additional cases cited by Weiner are inapposite. See Copeland v. Comm'r of Internal Revenue, 290 F.3d 326 (5th Cir.2002); Law v. Comm'r of Internal Revenue, 84 T.C. 985, 993, 1985 WL 15356 (1985); Schachter v. Comm'r of Internal Revenue, 67 T.C.M.(CCH) 3092 (1994); Rogers v. Comm'r of Internal Revenue, 60 T.C.M. (CCH) 1386 (1990). Each of Wein╜er's cited cases involves a decision by the Tax Court to resolve the deficiency on a basis that did not support imposition of ╖ 6621(c) interest, or in which consider╜ations of justice and equity weighed strongly against imposition of the penalty. In Schachter, the case cited by Weiner that is most similar to the case at bar, the taxpayer entered a concession wherein he agreed to a partial disallowance of his disputed loss deduction. Based on that concession, which did not state that the disallowance was due to a tax motivated transaction, the court declined to force the taxpayer to meet his burden of proof to show that the transaction was not tax mo╜tivated, all or in part, for the purpose of defeating the IRS's ╖ 6621(c) interest claim because:

The objectives of administrative efficien╜cy and judicial economy have been well served by the closing agreement and petitioner's concession. Those objec╜tives would not be served by requiring trial on the substantive issues for the sole purpose of determining whether pe╜titioner is liable for 20 percent more interest on the deficiency under section 6621(c).

Schachter, 67 T.C.M. at 3094, 1994 WL 263329. The Schachter court did not de╜termine that Todd or McCrary, or any other applicable law, prevented it from allowing the IRS to attempt to prove ╖ 6621(c) interest. The administrative ef╜ficiency and judicial economy concerns ex╜pressed in Schachter are not of paramount importance in the circumstances of the case at bar. 17 At least one other claim survived summary judgment and remains for trial in this case. In addition, unlike in Schachter in which the understatement at╜tributable to the taxpayer's deduction was less than $1,000, there is a significant amount of ╖ 6621 (c) interest at stake here.

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17. The Court is unmoved by Weiner's argu╜ment that judicial efficiency concerns pre╜clude the United States from litigating the ╖ 6621(c) interest issue post-settlement, when it is Weiner who initiated this litigation to contest his deficiency assessment that ap╜peared to have been determined by the settle╜ment.

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Here, the parties agreed to resolve the deficiency issue without stating a specific grounds for the assessment, and with full knowledge that the IRS intended to assess ╖ 6621(c) interest. There is no authority for precluding the IRS from attempting to prove the applicability of such interest in this case. 18

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18. Weiner has not sought reconsideration of this Court's determination that it has jurisdic╜tion to determine the ╖ 6621(c) claim. See Amended Memorandum Opinion, at 656-57.

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IV. CONCLUSION AND ORDER

The parties have not persuaded the Court that its March 31, 2002 Memoran╜dum Opinion (as amended), was factually or legally erroneous. The Court has at╜tempted to address thoroughly each and every issue raised by the parties, whether or not resolution of the issue was neces╜sary to the Court's ultimate ruling. It is in the interests of justice and judicial econ╜omy that the parties be able upon appeal to obtain a definitive resolution of this stale case, which has been pending in this Court since early 2000 and involves tax years ending at least sixteen years ago. The Court supplements the rulings con╜tained in the Amended Memorandum Opinion with this Memorandum and Order. It is therefore

ORDERED that Weiner's Motion for Reconsideration of Summary Judgment [Doc. # 65] and Supplement to Motion for Reconsideration [Doc. # 71 ] are DENIED. It is further

ORDERED that the United States' Mo╜tion for Reconsideration [Doc. # 73 ] is DE╜NIED . It is further

ORDERED that the Court's Amended Memorandum Opinion is supplemented by this Memorandum and Order. It is fur╜ther

ORDERED that the Court will con╜duct a telephone conference at 3:00 p.m. on November 26, 2002 to discuss the procedure and schedule for trial of the remaining claims in this case. Plaintiff is instructed to initiate the telephone con╜ference.

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