Roberson v. Commissioner

Herman Roberson and Doris B. Roberson, Petitioners, v. Commissioner of Internal Revenue, Respondent; Roberson Motor Co., Inc., Petitioner, v. Commissioner of Internal Revenue, Respondent Roberson v. Commissioner Docket Nos. 45406, 70107, 45407 United States Tax Court 41 T.C. 577; 1964 U.S. Tax Ct. LEXIS 159; January 27, 1964, Filed *159 Respondent's motions will be granted and decisions will be entered in accordance therewith. In collateral proceedings in the United States District Court, brought by the United States of America against the taxpayers herein to protect the lien of its jeopardy assessment for deficiencies in taxes for the same taxable years here involved, the taxpayers submitted an offer in settlement of all their tax liabilities for those years. The offer was accepted by the Attorney General of the United States and, pursuant to stipulation of the parties, the District Court entered judgment in accordance therewith, the amount of which taxpayers have paid in full. Held, the settlement agreement is conclusive of the amount of the deficiencies owed by taxpayers for the years here involved and, taxpayers having paid that amount, respondent's motions to enter decisions of no deficiencies in these proceedings are granted. Herman Roberson, pro se. Frederick T. Carney, for the respondent. Drennen, Judge. DRENNEN *577 In these consolidated proceedings respondent determined deficiencies and additions to tax as follows: Additions to tax, I.R.C. Docket Taxpayer Year Deficiency 1939, secs. No. 293(b), 294(d)(1)(A), and 294(d)(2) 45406 Herman and Doris Roberson [1948] $ 1,446.02 $ 1,124.15 [1949] 13,549.88 9,074.78 [1950] 6,345.00 5,182.02 70107 Herman and Doris Roberson [1951] 41,014.14 26,913.82 FYE 10/31 45407 Roberson Motor Co., Inc [1948] 7,634.91 4,411.93 [1949] 20,919.55 10,459.77 [1950] 567.39 1,372.97 *161 Petitioners Herman and Doris B. Roberson, hereinafter referred to collectively as Roberson, were residents of Montgomery County, Ala., during the years 1948-51, and filed joint income tax returns for those years with the collector of internal revenue for the district of Alabama. Petitioner Roberson Motor Co., Inc., hereinafter referred to as Motor Co., was an Alabama corporation with its principal place of business in Montgomery, Ala., during the years here involved. It filed corporate income tax returns for its fiscal years ending October 31, 1948, 1949, and 1950, with the collector of internal revenue for the district of Alabama. *578 These cases were called for trial in Birmingham, Ala., on October 7, 1963, at which time respondent filed a motion to enter decision in each of the docket numbers requesting the Court to enter decisions of no deficiencies. The basis for these motions was that the deficiencies in tax and additions to tax had been discharged by the acceptance by the Attorney General of the United States of a sum offered by petitioners in settlement thereof in connection with a proceeding in the United States District Court for the Middle District of Alabama involving*162 petitioners' tax liabilities for the same taxable years here involved, and by the entry of a judgment by the District Court in accordance therewith on March 4, 1963, which judgment has been paid by petitioners; by reason of which there are now no deficiencies in income tax or additions to tax due from petitioners for the years here involved. Respondent also asserts that by reason of the judgment order of the District Court the issues in these cases are res judicata. Petitioners were not represented by counsel at the hearing but Herman Roberson appeared in person and orally objected to respondent's motions on the ground that the settlement offer had been submitted and the judgment of the District Court had been agreed to under duress, and asked that this Court redetermine petitioners' tax liability for the years here involved and determine overpayments of tax for those years. Respondent offered evidence, consisting of certified copies of pertinent pleadings and orders of the court in the District Court proceeding heretofore referred to, including the correspondence submitting the offers in settlement and the acceptance thereof, and filed a written memorandum in support of his motions. *163 Petitioners offered no evidence, except certain statements made by Roberson not under oath, and have filed no written memorandum in support of their opposition to respondent's motions. The Court took respondent's motions under advisement and this opinion reflects our conclusions with respect thereto. Some background of the prior administrative and judicial proceedings is necessary to understand the issue here involved. Jeopardy assessments of the amounts set forth in the notices of deficiency in docket Nos. 45406 and 45407 were made against petitioners by respondent or his delegate in Alabama on June 23, 1952, under authority of section 273, I.R.C. 1939. The notices of deficiency covering the calendar years 1948, 1949, and 1950 for the individuals and for the fiscal years ending October 31, 1948, 1949, and 1950, of the corporation were thereafter issued on August 22, 1952. The notice of deficiency for the calendar year 1951 for the individuals was issued June 24, 1957. Subsequent thereto a jeopardy assessment for the taxes, additions to tax, and interest for the year 1951 was made by respondent. *579 The Robersons and Motor Co. each filed in this Court petitions for redetermination*164 of the deficiencies determined against them for the years 1948-50 on or about November 17, 1952, and the Robersons filed a petition for redetermination of the deficiency determined against them for 1951 on or about September 20, 1957. Petitioner Roberson, who was the principal officer and stockholder of Motor Co., was subsequently sentenced to the Federal penitentiary in Atlanta and was incarcerated there for a number of years, during which time the proceedings in this Court were not calendared for trial. The cases were calendared for trial by this Court at its next trial calendar set for Birmingham, Ala., after the Court was advised that Roberson had been released from prison, which was the above-mentioned trial calendar in October 1963. On June 20, 1958, 3 days prior to the expiration of 6 years after the first jeopardy assessments had been made, the United States of America, not having been able to obtain extension agreements from petitioners, see sec. 6502, I.R.C. 1954, and no bond to stay collection having been filed by petitioners, see sec. 6863, I.R.C. 1954, filed civil action No. 1445-N in the United States District Court for the Middle District of Alabama against Herman *165 and Doris Roberson for a judgment for unpaid income taxes and additions to tax due from the defendants for the calendar years 1949 and 1950 in the total amount of $ 35,733.17. On the same day a similar civil action No. 1446-N was filed against Roberson Motor Co., Inc., and Herman, Doris, and Walter H. Roberson, in their individual capacities, and as officers, directors, stockholders, and trustees of Roberson Motor Co., Inc., seeking judgment for taxes and additions to tax owing from "defendant" (apparently Motor Co.) for its fiscal years 1948, 1949, and 1950 in the amount of $ 50,051.72. An amended complaint was later filed in civil action No. 1446-N alleging transferee liability against the individuals. By letter dated March 30, 1962, written on a letterhead of Wampole and Capouano, a firm of attorneys in Montgomery, Ala. (who, incidentally, were not counsel of record in the Tax Court proceedings, which counsel of record withdrew in 1961 and has not been replaced), and signed by Herman Roberson, Doris Roberson, and Walter H. Roberson, individually, addressed to the United States Attorney General and an individual in the appellate division, Internal Revenue Service, Birmingham, Ala., *166 and referring to civil action Nos. 1445-N and 1446-N, Tax Court docket Nos. 45406, 45407, and 70107, an offer of settlement was made which read in part as follows: We do hereby offer the government the total of $ 62,500.00 in payment, for purposes of settlement, of all assessments and notices of deficiency which have been received by us for the years 1948, 1949, 1950 and 1951. By letter dated August 7, 1962, addressed to Leon M. Capouano, Montgomery, Ala., signed by John B. Jones, Jr., Acting Assistant Attorney *580 General, Tax Division, and referring to all the proceedings in the District Court and the Tax Court above mentioned, petitioners were advised that their offer dated March 30, 1962, to settle those cases for the years 1948, 1949, 1950, and 1951 by payment to the Government of $ 62,500 had been accepted, and the terms of payment were specified. On September 5, 1962, a stipulation was filed with the District Court in civil action Nos. 1445-N and 1446-N, signed by an assistant United States attorney as attorney for the plaintiff, and by Leon M. Capouano, as attorney for defendants, in which it was stipulated that "The amount of indebtedness in these matters is $ 62,500," *167 and defendants were given 120 days within which to pay the full amount of the agreed upon indebtedness. If the amount was not paid in full within the 120 days, plaintiff was given the right of immediate reinstatement of the causes on the docket of the court for trial. The defendants not having paid the full amount of the stipulated indebtedness within 120 days, on March 4, 1963, the United States moved to reinstate the cases on the docket for trial, and for judgment against defendants for the unpaid balance in the amount of $ 35,294.29. Also on March 4, 1963, stipulations were filed, signed by attorneys for both parties, that a judgment order may be entered by the court for the amount due plaintiff by the defendants under the terms of the "offer in compromise" agreed to by the parties, and giving defendants 120 days within which to pay the balance of the amount due. By judgment order entered March 4, 1963, in both civil actions, the District Court, having been advised that the parties had entered into a settlement agreement which had been incorporated in a stipulation filed in the causes and that there was presently due plaintiff the sum of $ 35,294.29 under the agreement, entered*168 "judgment against the Defendants, Herman Roberson, Doris Roberson, and Walter Herman Roberson, jointly and severally, in the sum of $ 35,294.29, plus interest as provided by law." This Court was advised by both parties at the calendar call that the above judgment had been paid in full at that time. OPINION Respondent's argument in support of his motions to enter decisions of no deficiencies in these proceedings is primarily that the parties intended to settle petitioners' tax liabilities for the years here involved in the District Court proceedings, that petitioners' offer in settlement was accepted by the Attorney General in behalf of the United States pursuant to section 7122(a), I.R.C. 1954, and when it was filed with the District Court and that court entered judgment in accordance therewith, the judgment of the District Court is res judicata of the *581 amount of the tax liability of petitioners for the years here involved. The agreed upon amount and the judgment of the District Court having been paid in full, there are now no deficiencies in tax or additions to tax due from petitioners. Petitioners are apparently attempting to repudiate their settlement agreement and*169 collaterally attack the judgment of the District Court in the hope that this Court, upon trial of the cases, would determine that there is a lesser amount of tax due from them than they paid under the settlement agreement and thus entitle them to a refund of the overpayment. Were it not for the fact that petitioners claim to have been deprived of their right to have their tax liabilities redetermined by this Court by the proceedings filed by the Government in the District Court to reduce its assessments to judgment, we would have had no hesitancy in granting respondent's motions. However, inasmuch as had the parties gone to trial in the District Court and the District Court had determined the correct amount of petitioners' tax liabilities for those years on the merits, this would have resulted in permitting the Government to choose the forum for redetermination of petitioner's tax liabilities, we took the matter under advisement to assure ourselves that the taxpayers' statutory right to come into this Court for that purpose was not being thwarted without their consent. Upon consideration of the matter, we find such not to be the case. What happened here was that the parties voluntarily*170 entered into an agreement settling the amount of the taxpayers' tax liability for all of the years here involved, and submitted that agreement to the District Court for approval, in a matter then pending between the parties in that court. We think this settlement agreement is conclusive of the amount of petitioners' tax liabilities for the years here involved, see Walker v. Alamo Foods Co., 16 F. 2d 694 (C.A. 5, 1927), certiorari denied 274 U.S. 741 (1927); Shaw & Truesdell Co. v. United States, 1 F. Supp. 834 (E.D.N.Y. 1932); Lone Star Brewing Association v. United States, 61 Ct. Cl. 118 (1925); Seattle-First Nat. Bank v. United States, 44 F. Supp. 603 (E.D. Wash. 1942), affd. 136 F. 2d 676 (C.A. 9, 1943), affd. 321 U.S. 583 (1944), and that nothing could be gained by calendaring these cases for trial on the merits in this Court. If petitioners claim duress caused them to enter into the settlement agreement they should not have asked the District Court to approve*171 it; or at least should have raised this claim in the District Court. If they claim duress in agreeing to the judgment entered by the District Court, this should have been raised on appeal from that judgment. We will not entertain a collateral attack on the proceedings of the District Court in these proceedings. *582 The full amount of the agreed upon deficiencies having been paid, there is nothing left for this Court to decide. There may be some question as to whether this Court should now enter decisions of no deficiencies or simply dismiss the cases. We think that under the circumstances we could do either. This Court acquired jurisdiction of the cases when the petitions were filed herein. There was no bankruptcy proceeding as in Comas, Inc., 23 T.C. 8 (1954); nor was a receiver appointed by the District Court, as in Leon I. Ross, 38 T.C. 309 (1962); in both of which cases this Court dismissed the proceedings. We know of nothing that would deprive this Court of jurisdiction in the matter. The fact that the amount of the deficiencies has been conclusively determined would not oust this Court of jurisdiction*172 although it would limit the scope of its authority. We have no motion to dismiss before us. The motions pending before us request that we enter decisions determining that the deficiencies in income tax and additions to tax due from petitioners have been discharged by the acceptance by the Attorney General of the United States of a sum offered in settlement thereof and by reason thereof there are now no deficiencies in income tax or additions to tax due from petitioners for those years. We continue to have jurisdiction to enter such decisions and such decisions would appear to be proper under the circumstances. Respondent's motions will be granted and decisions will be entered in accordance therewith.