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into a binding settlement agreement with respondent. Underlying
that question is whether the period of limitations for making an
assessment may have run.
Settlement Agreements in TEFRA Proceedings
General principles of contract law govern the settlement of
tax cases. Dorchester Indus. Inc. v. Commissioner, 108 T.C. 320,
329-330 (1997). A prerequisite to the formation of a contract is
an objective manifestation of mutual assent to its essential
terms. Manko v. Commissioner, T.C. Memo. 1995-10. Mutual assent
generally requires an offer and an acceptance. Id. "'An offer
is the manifestation of willingness to enter into a bargain, so
made as to justify another person in understanding that his
assent to that bargain is invited and will conclude it.'"
Dorchester Indus. Inc. v. Commissioner, supra at 330 (quoting 1
Restatement, Contracts 2d, sec. 24 (1981)). Settlements offers
made and accepted by letters are enforced as binding agreements.
Dorchester Indus. Inc. v. Commissioner, supra at 330-333; Haiduk
v. Commissioner, T.C. Memo. 1990-506.
Respondent argues that only a properly executed Form 870-P
or a closing agreement (Form 906) constitutes a settlement
agreement for purposes of sections 6224(c) and 6231(b)(1)(C).10
10
Neither the Code nor respondent's regulations define
what constitutes a "settlement agreement" for purposes of secs.
6224(c) and 6231(b)(1)(C). A closing agreement (Form 906),
statutorily authorized by secs. 7121 and 7122 has been used to
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