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The second unsettled issue addressed by the Tax Court was the
question of what constitutes the ‘filing’ of a tax return.

custom” of enforcing partial settlements on factual differences and noting that was still waiting for motions for entry of
and whether a stipulation of settled is- perhaps the Seventh Circuit had misap- decision from the IRS and Dollarhide.
sues in the absence of a stipulation of prehended the Tax Court’s precedents The court noted for the record that it
decision is enforceable. In past cases that treat a stipulation of settled issues “very specifically” asked Dollarhide if
(e.g., Stamm International Corp., 90 T.C. as itself a settlement and thus a bind- he wanted to reopen his 2006 case for
315 (1988)) the court had held that the ing contract. retrial on this issue and that Dollarhide
answers to these questions was yes, find- The second unsettled issue addressed “very specifically declined” the court’s
ing that, as in Dollarhide’s case, where by the Tax Court was the question of offer. Nonetheless, the court found that
the IRS and the taxpayer had settled a what constitutes the “filing” of a tax there appeared to be no distinction in
case on an issue-by-issue basis, a settle- return. It brought the issue up because the Code or regulations between part-
ment was binding, even if the parties Dollarhide had argued that his refund nerships, individuals, and other entities
could not agree on the bottom-line request for the 2006 credits (his 2006 re- that have obligations to “file” returns;
amount due as a result of the settlement. turn) would have been filed on time if he therefore, it speculated that the Seaview
This position was endorsed by the had mailed the return to the IRS instead Trading decision may be a “fruitful
Fourth Circuit in Korangy, 893 F.2d 69 of sending it to the revenue agent who source of litigation in the near future.”
(4th Cir. 1990). However, in 2015, the was conducting the audit. In the end, the court vacated its prior
Seventh Circuit went in the other direc- The Tax Court explained that the decision and decided that there was no
tion, holding in Shah, 790 F.3d 767 law in this area until recently had been deficiency of income tax due from nor
(7th Cir. 2015), that the Tax Court erred settled, with a return being treated as overpayment due to Dollarhide and no
in granting the IRS’s motion for entry “filed” only if it was delivered to the spe- penalties to impose for the 2006 tax year.
of decision when the parties had settled cific individuals identified by the Code
all the individual issues but disagreed or regulations. Consequently, a taxpayer Reflections
about the bottom-line number for the who sent his or her return to the wrong In the opening of its order, the Tax
deficiency amount. IRS service center would not have “filed” Court stated that the parties, particularly
The Tax Court noted that the Sev- the return until it showed up at the cor- Dollarhide, had suffered enough from
enth Circuit in Shah did not mention rect service center. the prolonged litigation, which has been
the Fourth Circuit’s opinion in However, the Ninth Circuit in a going on since 2012. Therefore, despite
Korangy or the numerous decisions of recent case held that, based on the the importance of the issues regarding
the Tax Court in accord with that opin- ordinary meaning of the term “filing,” a the enforcement of partial settlements
ion. According to the court, the import late-filed partnership return is “filed” for and the filing of returns, the court stated
of Shah was not clear, and the decision purposes of Sec. 6229(a) “when an IRS that it discussed them “in a nonprec-
might mean that the circuit court split official authorized to obtain and process edential order that outlines these prob-
was unintentional, that partial settle- a delinquent return asks a partnership lems, doesn’t definitively answer them,
ments that do not include a final defi- for such a return, the partnership deliv- but will bring these cases to a close.”
ciency amount are now unenforceable ers the return to the IRS official in the Dollarhide Enterprises, Inc.,
in the Seventh and Ninth Circuits, or manner requested, and the IRS official No. 23139-12 (Tax Ct. 9/28/22) ■
that, under the general rules of contract receives the return” (Seaview Trading,
law, stipulations of settled issues that do LLC, 34 F.4th 666, 673 (9th Cir. 2022), Contributor
not include a deficiency amount may rev’g T.C. Memo. 2019-122) (see Tax
be unenforceable against unrepresented Trends, “Meaning of ‘Filed’ Defined for James A. Beavers, CPA, CGMA, J.D.,
parties as inherently “unjust” or “oppres- Purposes of Delinquent Partnership LL.M., is The Tax Adviser’s tax technical
sive.” The Tax Court after Shah again Returns,” 53-8 The Tax Adviser 50 content manager. For more information
followed its practice of enforcing partial (August 2022)). about this column, contact
settlements in McMullen, T.C. Memo. The Seaview Trading decision came thetaxadviser@aicpa.org.
2015-219, distinguishing the cases out in May 2022 while the Tax Court

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