and Submitted May 18, 2017 San Francisco, California
from the United States District Court, No. 3:05-cv-02835-RS
for the Northern District of California Richard Seeborg,
District Judge, Presiding
Wray (argued), Law Offices of Mark Wray, Reno, Nevada, for
M. Weiner (argued) and Thomas J. Clark, Attorneys; Tax
Division, United States Department of Justice, Washington,
D.C.; for Respondent-Appellee.
Before: Sidney R. Thomas, Chief Judge, Kim McLane Wardlaw,
Circuit Judge, and Cathy Ann Bencivengo, [*] District Judge.
panel affirmed the district court's judgment in an action
raising a statute of limitations challenge to the Internal
Revenue Service's determination of tax liabilities in a
partnership level proceeding under the Tax Equity and Fiscal
2002, the IRS began investigating what it later determined to
be a tax sheltering scheme and issued Final Partnership
Administration Adjustments (FPAAs) to many of the limited
liability companies (LLCs) that participated in that scheme.
The adjustments effectively disallowed tax losses sustained
through involvement in the scheme, and resulted in
substantial tax liability for the LLCs. The tax matters
partner for the funds that constituted the tax shelters
challenged the disallowance of losses.
an individual investor (Tom Gonzales) and his single-member
LLC (Birch Ventures), intervened in the action. The
partnership tax return at issue was filed on April 16, 2001.
Absent an extension on the statute of limitations, the IRS
had until April 16, 2004, to assess taxes with respect to
that return. Gonzales personally signed two consents to
extend the limitations period, and the IRS issued a FPAA
after the initial limitations period expired but within the
extension granted by the consents.
panel held that the statute of limitations extensions signed
by Gonzales were valid. The panel reasoned that an alleged
third-party conflict of interest, without more, does not
vitiate the individual consent personally executed by a
taxpayer and that, even crediting Gonzales's allegations
in this case, the alleged actions by the IRS do not
constitute legal duress warranting relief.
THOMAS, Chief Judge:
consider in this case whether consents to extend the statute
of limitations for the assessment of tax attributable to a
partnership item, signed by the taxpayer-partner, are invalid
because of a third party's alleged conflict of interest
or duress. Under the circumstances presented by this case, we