amounts of $ 7,760.23, $ 2,868.52, $ 3,884.12, $ 9,113.14, and $ 318.21 respectively.' (Total 23,942.22.) Each of these written offers in compromise provided that 'as a part of this offer, it is agreed that upon notice to the proponent of the acceptance of this offer in compromise of the liability aforesaid, the proponent shall have no right, in the event of default in payment of any installment of principal or interest due under the terms of the offer, to contest in court or otherwise the amount of the liability sought to be compromised, and that in the event of such default the Commissioner of Internal Revenue, at his option, (1) may proceed immediately by suit to collect the entire unpaid balance of the offer, or (2) may disregard the amount of such offer and apply all amounts previously paid thereunder against the amount of the liability sought to be compromised and may, without further notice of any kind, assess and/or collect by distraint or suit (the restrictions against assessment and/or collection being hereby specifically waived) the balance of such liability.' The $ 500 down payment referred to in the amended offer was received by the Internal Revenue Service and deposited on February 19, 1954, and by letter to the taxpayer dated May 11, 1954, the Acting Chief of the Compromise Branch of the Service accepted the amended offer in consideration of the undertakings therein contained and the execution by the taxpayer of a collateral agreement dated February 4, 1954 relating to payments out of annual income for calendar years ended December 31, 1954 through December 31, 1959. The taxpayer admits that he failed to pay any of the weekly installments referred to in the last amended offer in compromise and that by letter dated April 18, 1956, the Director of the Audit Division advised him that 'The arrangements looking to the compromise of your tax liability are therefore terminated.'
The Government contends that the effect of the foregoing efforts to compromise the taxpayer's liability was to extend the statute of limitations for an aggregate period of six years and 27 days, i.e., to July 3, 1959, and that because the present action was instituted on May 26, 1959, its commencement was well within the period of limitation as so extended.
It is the contention of the taxpayer, however, that immediately upon the acceptance of his second amended offer in compromise, i.e., on May 11, 1954, the running of the statute of limitations resumed, and that therefore the present action became barred in July of 1957. I am unable to concur in this view because of the language of the taxpayer's offers in compromise recited above, by which he expressly agrees that 'in the event of the default in payment of any installment of principal or interest due under the terms of the offer,' he shall have no right to contest the amount of the liability sought to be compromised and the Commissioner, at his option, may either proceed immediately by suit to collect the entire unpaid balance of the offer, or may disregard the amount of the offer entirely and apply all payments previously made thereunder against the liability sought to be compromised, and collect the remainder of the latter amount by distraint or suit. Moreover, the taxpayer further agreed that the running of the statute of limitations should be stayed for the period during which any installment remained unpaid and for one year thereafter. Therefore, the running of the statute of limitations did not resume until the termination of the compromise negotiations effected by the Director's letter of April 18, 1956.
Since the purpose of giving a waiver in connection with an offer in compromise is to enable the Government to consider the offer without suffering prejudice because of the running of the statute of limitations against collection of the tax while the offer is being considered, the courts, in construing such waivers generally give effect to the intention of the taxpayer and of the Government. Where successive waivers have been given for the purpose of tolling the statute, the parties are deemed to have intended that the suspension of the statute should extend over the entire period covered by the waivers. United States v. Havner, 8 Cir., 1939, 101 F.2d 161. Although the limitation contained in § 276(c) is to be construed liberally in favor of the taxpayer, United States v. Updike, 1930, 281 U.S. 489, 50 S. Ct. 367, 74 L. Ed. 984, where there is no ambiguity in the language of the taxpayer's agreement to waive the running of the statute, he will be held to have bound himself within the clear meaning of the terms employed.
During the argument of this motion, the taxpayer intimated that the acceptance of the offer in compromise worked an accord and satisfaction between the Government and the taxpayer with respect to the Government's tax claim. The taxpayer's offer to settle his tax liability by installment payments entitled the Government to rely upon the taxpayer's representation that such installments would be paid when due, and completely. The compromise agreement justified the Government in refraining from instituting suit for collection of the tax liability and while the compromise agreement remained in effect, the taxpayer remained estopped to assert that the statute of limitations continued to run. In this particular case, the taxpayer's default in payment of installments evoked the Government's notice of termination of the compromise agreement. The taxpayer cannot now be heard to contend that the Government's right to enforce the entire tax liability was prejudiced by the taxpayer's own breach of his undertaking embodied in his offer of compromise.
The Government contends that it is entitled to summary judgment for the amount of taxpayer's tax liability, giving credit to taxpayer for any payments made on account of that liability in connection with the offer of compromise. A summary judgment in this regard can be entered only in the absence of the existence of any genuine issue of material fact respecting the taxpayer's liability to the Government.
The question of the amount of the taxpayer's indebtedness to the Government must be determined. The complaint alleges said Wilson's tax indebtedness to the United States to be in the amount of $ 23,444.84, plus interest as allowed by law on the amounts assessed as described in the complaint. In the taxpayer's offer in compromise which was accepted by the Government on May 11, 1954, the aggregate of the amounts of unpaid income taxes was stated to be $ 23,944.22. Accompanying this offer was a payment on account of the proposed compromise of $ 500, receipt of which the Government acknowledges, reducing the aggregate in said offer to $ 23,444.22. Based upon these figures, I find the Government is entitled to summary judgment against Anthony J. J. A. Wilson in the aggregate sum of $ 39,829.65, computed as follows:
(Accrued to 3/14/60)
Year Tax Interest
1944 (Additional) $7,260.23 $6,801.84
1945 (Penalty) 2,868.52 883.64
1945 (Additional) 3,884.12 2,727.20
1946 (Additional) 9,113.14 5,771.23
1947 (Additional) 318.21 201.52
$23,444.22 $16,385.43 $39,829.65
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