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to dispute an underlying tax liability when the agent fails to
act or acts in a manner contrary to what is appropriate in the
principal-agent relationship.
We find it curious that Mr. Jacob would notify the client’s
ex-wife stating he was not representing her and then never
discuss the notice with the client. It would also be odd for the
client, whose established practice was to contact his trusted
adviser after receiving tax correspondence (and who socializes
with that adviser), not to discuss the deficiency notice
mentioned in a letter to his ex-wife.
Although Mr. Jacob testified that it was not his normal
practice to file a petition in the Tax Court on behalf of a
client without being asked by the client, we find his testimony
to be inconsistent with facts indicating that Mr. Jacob
exclusively represented petitioner before the IRS before the 1995
tax year. Moreover, Mr. Jacob’s statement is self-serving and
entitled to less weight, considering that at the time of the
trial in this case, Mr. Jacob continued to be embroiled in
litigation with petitioner. We also find incredible Mr. Jacob’s
contention that even though he had a power of attorney on file
with the IRS, he was not obligated to act on behalf of his client
when he received correspondence from the IRS, particularly when
he knew that petitioner relied on him exclusively to resolve all
tax matters.
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