Holof v. Commissioner

Harry and Normal Holof (plaintiffs) executed IRS Form 872-A (872-A), which waived the statute of limitations for the Internal Revenue Service (IRS) to assess their taxes for 1976 and1977. The 872-A stated that it would remain in effect unless the IRS mailed a Form 872-T (872-T) terminating it, issued a deficiency notice, or the IRS office auditing the Holofs’ return received an 872-T from the Holofs. The 872-A further stated that the IRS could assess tax on or before the ninetieth day after the mailing or receipt by the IRS of an 872-T and that if the IRS sent a deficiency notice, the limitations period would be further extended by the number of days the assessment was previously prohibited, plus 60 days. In October 1982, the IRS mailed deficiency notices to the Holofs for 1976 and 1977, but the IRS sent the notices to the wrong address. The Holofs did not receive the notices until January 1984. The IRS withdrew the 1982 notices and issued new ones in June 1984. The Holofs sued the IRS commissioner (defendant) in the United States Tax Court, arguing that the 1984 notices were time-barred because the 1982 notices terminated their waivers. The Tax Court ruled that per the 872-A’s literal terms, the IRS’s mailing of the notices terminated the waivers, which thus terminated in January 1984. The commissioner appealed, arguing that the 872-A must be interpreted in the context of the Internal Revenue Code (code). The Holofs responded that an 872-A must be interpreted according to its plain meaning.