Boulez v. C.I.R.

Pierre Boulez (plaintiff) was a French composer and conductor. In 1971 Boulez contracted with Beacon Concerts, Ltd. (Beacon) to work with the New York Philharmonic Symphony and the Cleveland Orchestra. In 1971 and 1972, Beacon paid Boulez approximately $188,000. Boulez filed nonresident-alien tax returns for those years but did not include the money from Beacon in his gross income. He also failed to include his income from Beacon in his 1973 and 1974 income-tax returns. In 1975 the Internal Revenue Service (IRS) (defendant) launched an investigation into Boulez’s tax obligations. Boulez made an oral agreement with the IRS’s director of international operations (the Director) whereby Boulez would amend his 1973 and 1974 income-tax returns to include the money he received from Beacon. In exchange, Boulez would not have to pay his tax liability from 1971 or 1972. In 1977 the IRS audited Boulez’s 1975 tax return, discovered the unpaid tax liabilities from 1971 and 1972, and assessed a tax deficiency. Boulez challenged the deficiency before the United States Tax Court, asserting that the oral agreement he had made with the Director settled his tax liabilities from 1971 and 1972. The tax court held that the Director lacked authority to make the oral agreement because Treasury Regulation § 301.7122-1(d) (the treasury regulation) required all compromise agreements to be in writing. Boulez appealed, arguing that the treasury regulation was invalid.