John and Louisa A. Hodel - Page 20

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          the Federal Government in its capacity as sovereign pursuant to             
          the Sixteenth Amendment to the U.S. Constitution.6  Consequently,           
          under the law as stated by the Court of Appeals for the Eleventh            
          Circuit, petitioners may not state a claim for equitable estoppel           
          because they are unable to establish that the United States,                
          acting through the IRS and its agents, was acting in a private or           
          proprietary capacity.  Id. at 1541.                                         
               Even if the Court of Appeals for the Eleventh Circuit were             
          to decide that affirmative misconduct, and not sovereign                    
          capacity, was the touchstone of the equitable estoppel defense,             
          petitioners' argument must fail because they have failed to                 
          demonstrate that the IRS, acting through its agents, engaged in             
          affirmative misconduct.  Assuming, arguendo, that we give credit            
          to the entirety of petitioner's testimony and allegations, we are           
          unable to find that the statements made by Ms. Van Der Heyden,              
          Mr. Caruso, and Ms. Morrison amount to affirmative misconduct.              
          The agents might have been mistaken, and they might have led                
          petitioners to believe their verbal requests for refunds                    
          constituted valid informal claims within the period of                      
          limitations, but this is not affirmative misconduct.  At most,              
          these statements indicate that the agents were negligent, perhaps           

          6    The Sixteenth Amendment provides:  "The Congress shall have            
          power to lay and collect taxes on incomes, from whatever source             
          derived, without apportionment among the several States, and                
          without regard to any census or enumeration."  U.S. Const. amend.           

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