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for an agreement. The court found that attributable to Smith. The IRS merely agreement should be set aside because it
the blank form was not one of the first received the document from Raytheon, was signed under duress. He employed
two because the unsigned form was not which had received it from Smith. a lookthrough approach for this claim,
an agreement adopted by either Smith Fully executed closing agree- asserting he signed the 2016–2018
or the IRS. Smith argued that the ment: Regarding the IRS’s transmitting closing agreement (which was the third
blank form was a request for an agree- the fully executed closing agreement closing agreement he signed during his
ment or background information for a to Smith through Raytheon, the court Raytheon employment at Pine Gap)
request, but the court found that this reasoned that the argument that mal- under duress because Raytheon had
argument failed because, by providing feasance occurred due to this action given him the first closing agreement
a form Smith could use, the IRS was was preempted by the execution of the he signed on his first day of work and
not requesting Smith enter into a clos- agreement itself. The court observed said his employment was contingent on
ing agreement. that Smith logically could not have been his signing the agreement. However, in
Second, the blank form was not induced into executing the 2016–2018 Smith’s response to the IRS’s motion
return information because it was not closing agreement by an action the IRS for partial summary judgment and his
data that could be associated with or took after the agreement had become own cross-motion for partial summary
otherwise identify, directly or indirectly, “final and conclusive” under Sec. 7121. judgment, Smith did not fully brief the
a particular taxpayer. The court found Any malfeasance occurring after the argument. As a result, the court held
that the form contained no identify- validity (and finality) of a closing agree- that he forfeited the arguments, and it
ing data or other sensitive information ment is established, the court stated, is did not decide the issue.
and merely contained interpretive legal no ground for setting it aside. Nonetheless, the Tax Court discussed
statements regarding the generalized the issue in its opinion. Under the stan-
application of tax treaties, international Misrepresentation of dard for duress in the context of signing
agreements, and domestic tax laws. material fact returns, the Tax Court stated a person
Furthermore, the IRS did not require Smith further argued that the closing must show that he or she was unable
Raytheon employees to sign the agree- agreement contained two recitals that to resist the demands to sign the return
ments, and there was no guarantee that were misrepresentations of material fact. and would not have done so except for
the IRS would countersign even if an Consequently, under Sec. 7121(b), the the constraint applied to his or her will.
employee did sign. closing agreement should be set aside. Legally authorized actions by one per-
Finally, the court determined the The Tax Court, however, concluded son or party that limit another person or
blank form was not return informa- they were not material misrepresenta- party from choosing between undesir-
tion because it was not information tions of fact that would justify setting able options do not constitute duress.
obtained from the IRS. The court aside the closing agreement. It found The Tax Court opined that it did
explained that the form was just a that one of the recitals was a legal not see how Smith had been put under
document created by IRS officials in conclusion regarding the application of duress by either the IRS or Raytheon.
the ordinary course of their duties and U.S. treaty obligations and Australian Smith conceded that he had no interac-
did not include, nor was it premised domestic law to U.S. employees at Pine tion with anyone from the IRS prior
upon, any particularized underlying Gap, while the second was an accurate to executing the 2016–2018 closing
information obtained from any specific statement of the express terms of the agreement, which seemingly precluded
taxpayer. Therefore, the court found Pine Gap agreements. Thus, in the the application of duress by the IRS.
that Sec. 6103 was not implicated by court’s view, neither recital was a mate- With regard to Raytheon, it was the
the provision of the blank form by Ray- rial misrepresentation of fact. While company’s prerogative to require that
theon to Smith. Smith argued that the recitals could be Smith sign the closing agreement as
Partially executed closing both a legal conclusion and a factual as- a condition of employment, and its
agreement: Regarding whether sertion, the court rejected this argument request that he choose between the con-
Smith’s provision of the half-executed in the face of the long-standing distinc- sequences of signing or not signing the
closing agreement form to Raytheon tion between the two in law generally 2016–2018 closing agreement — i.e.,
was a disclosure by the IRS of return and contract law specifically. between maintaining or losing his job at
information (to Raytheon), the court Raytheon — at most required a choice
determined that the IRS had not made Reflections between two undesirable options that
a disclosure of anything. The disclosure Smith also argued in his Tax Court would not constitute duress.
that resulted from that action was petition that the 2016–2018 closing Smith, 159 T.C. No. 3 (2022)

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