Plenty, if It Looks Like It Has Authority

This is about tax mutterers, not roses, but the punchline is the same. The name is material if people could think that the name carries authority.

And Judge Goeke thinks Eric Gjelde, man of many roles, has all the authority needed to extend the SOL in Summit Vineyard Holdings, LLC, Summit SV Holdings, LLC, Tax Matters Partner, 2015 T. C. Memo. 140, filed 8/4/15.

Eric was managing member of Summit, tax matterer in the year at issue, and managing member of Meridian, tax matterer when the Form 872-P was filed extending the TEFRA FPAA SOL.

Meridian replaced Summit between year at issue and year when SOL was extended. Eric signed the Form 872-P as managing member of Meridian, although for the year in question Summit was the tax matterer.

Vineyard now claims SOL has run, as wrong party signed the Form 872-P. But SOL against the government is strictly construed in favor of the government.

Judge Goeke starts with Sec. 301.6231(a)(7)-1(a), Proced. & Admin. Regs. Change of tax matterer can only take place as therein specified, and the incumbent remains until the appropriate event occurs.

So Vineyard argues that Meridian, even though tax matterer-designate, had no authority to act for Vineyard because only Summit could do so for the year at issue, even though Eric only signed the Form 872-P in the name of Meridian because his secretary typed in Meridian’s name.

IRS argues “apparent authority,” and that carries the day. Vineyard is headquartered in Washington State, and a canvass of that State’s law says if one could reasonably believe an individual had authority to bind an entity, the individual binds the entity.

Eric was managing member of both Summit and Meridian. Eric signed a POA to his CPA, who in turn dealt with IRS. The CPA sent the Form 872-P to Eric to sign, and he did. IRS was justified in believing Eric had authority to sign the Form 872-P.

Takeaway—If you look like the boss and act like the boss, you are the boss.