Davis v. United States

This case arose from a complaint filed in 2011, by the late Al Davis and his wife, against the United States, seeking a refund of income taxes. Davis, a Pro Football Hall of Famer and the principal owner of the Oakland Raiders, argued that the IRS assessed the taxes outside the statue of limitations and in breach of a Closing Agreement between the IRS and the partnership that formally owned the Raiders. The district court entered judgment for Davis. In this case, the court held that, although the IRS admits that it breached Paragraph Q of the Closing Agreement by making the September 2007 assessments without giving Davis a second opportunity to review its calculations, the IRS's breach did not invalidate the assessments. Even though the breach denied Davis an opportunity to comment on the amounts of the assessments before they were made, it did not prevent him from challenging the assessed amounts by seeking an administrative refund claim or a refund action. Under the plain language of I.R.C. 6231(b)(1)(C), the court concluded that the IRS does not “enter into a settlement agreement with the partner” when it enters into a settlement agreement with the tax matters partner (TMP) and the individual partner is bound merely by operation of the tax court’s decision to which the partner is a party. Because the Closing Agreement and stipulations were not a “settlement agreement with” Davis within the scope of I.R.C. 6231(b), the assessments made on September 4, 2007 were timely, as they occurred within one year after the Tax Court decision became final. Accordingly, the court reversed and remanded for further proceedings. View "Davis v. United States" on Justia Law