- 11 -
In re Miller, 174 Bankr. 791, 796 (9th Cir. BAP 1994), affd.
without published opinion 81 F.3d 169 (9th Cir. 1996); Zaentz v.
Commissioner, 90 T.C. 753, 760-761 (1988). Closing agreements
may not be annulled, modified, set aside, or disregarded in any
suit or proceeding unless there is a showing of fraud,
malfeasance, or misrepresentation of a material fact. Wolverine
Petroleum Corp. v. Commissioner, 75 F.2d 593, 595 (8th Cir.
1935), affg. 29 B.T.A. 1236 (1934); H Graphics/Access, Ltd.
Pship. v. Commissioner, T.C. Memo. 1992-345.
In a prior opinion involving petitioner and the same closing
agreement at issue in this case, Hopkins v. United States (In re
Hopkins) 146 F.3d 729 (9th Cir. 1998), the Court of Appeals for
the Ninth Circuit held that these same principles applied to
preclude petitioner’s assertion of a claim for relief from joint
and several liability under section 6013(e). The Court of
Appeals held:
We now hold that a taxpayer may not avoid tax
liabilities arising out of a valid closing agreement by
asserting an innocent spouse defense where that defense
has not been preserved in the text of the closing
agreement. Closing agreements are meant to insure the
finality of liability for both the taxpayer and the
IRS. This is why courts have strictly enforced closing
agreements, finding them binding and conclusive on the
parties even if the tax at issue is later declared to
be unconstitutional or in conflict with other internal
revenue sections. * * * In signing the closing
agreement, Ms. Hopkins explicitly agreed to have her
tax liability determined by the closing agreement. If
Ms. Hopkins wished to try later to avoid the tax
consequences flowing from that agreement, she had a
duty to preserve any possible defenses to personal
liability in that agreement. Having failed to do so,
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