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attorney William Garofalo (Garofalo), and Dorchester and Frank
Wheaton were represented by attorneys William Gilson (Gilson) and
Gary Wodlinger (Wodlinger). No question has been raised as to
Frank Wheaton's authority to act on behalf of Dorchester, of
which he was president and sole shareholder. Frank Wheaton and
Dorchester do question, however, the authority of Gilson to enter
into any settlement agreement on their behalf.
Whether an attorney has authority to act on behalf
of a taxpayer is a factual question to be decided
according to the common law principles of agency.
Adams v. Commissioner, 85 T.C. 359, 369-372 (1985);
Kraasch v. Commissioner, 70 T.C. 623, 627-629 (1978).
Under common law principles of agency, authority may be
granted by express statements or may be derived by
implication from the principal's words or deeds. Dahl
v. Commissioner, T.C. Memo. 1995-179; DiSanza v.
Commissioner, T.C. Memo. 1993-142, affd. 9 F.3d 1538
(2d Cir. 1993); Casey v. Commissioner, T.C. Memo. 1992-
672; John Arnold Executrak Systems, Inc. v.
Commissioner, T.C. Memo. 1990-6.
Estate of Quirk v. Commissioner, T.C. Memo. 1995-234.
We have no doubt that Gilson received express authority from
Frank Wheaton to settle the cases at docket Nos. 20515-93, 20572-
93, 27121-93, and 23092-94 (the docketed cases) on the basis
presented by the Government. Indeed, Frank Wheaton conceded at
the hearing that he authorized Gilson and Wodlinger to enter into
an agreement with the Internal Revenue Service (IRS). Frank
Wheaton testified:
They [Gilson and Wodlinger] said they had talked to
Mr. Riley and they all agreed that the best thing for
us to do was to agree to the statements of the IRS and
that would amount to a $40 million fine * * *. But I
said as long as Mr. Riley and you two [Gilson and
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