                                                                F I L E D
                                                          United States Court of Appeals
                                                                  Tenth Circuit
                 UNITED STATES COURT OF APPEALS
                                                                  NOV 2 1999
                               TENTH CIRCUIT
                                                            PATRICK FISHER
                                                                      Clerk

LADD T. TUCEK; PHILAMENA
TUCEK,

      Petitioners - Appellants,
                                                 No. 98-9016
v.
                                            (T. C. No. 22346-88)
                                         (Appeal from U.S. Tax Court)
COMMISSIONER OF INTERNAL
REVENUE,

      Respondent - Appellee.




VULCAN OIL TECHNOLOGY
PARTNERS, “Ray C. & Helen W.
Koernig, Jr.; James R. & Sally M.
Brusenhan; Floyd & Selwyn Wilson
and James D. Fisher, as partners”;
VANGUARD OIL TECHNOLOGY
PARTNERS, “Johnny & Emalou Gaz,                  No. 98-9017
as partners”; DRAKE OIL                      (T.C. No. 21530-87)
TECHNOLOGY PARTNERS,                     (Appeal from U.S. Tax Court)
“Frederick J. & Kren A. Buckwald, as
partners”; DILLON OIL
TECHNOLOGY PARTNERS, “Ladd
T. Tucek, as a partner”,

      Petitioners - Appellants,
and

DERRINGER OIL TECHNOLOGY
PARTNERS 181; DERRINGER OIL
TECHNOLOGY PARTNERS 1982;
CROWNE OIL TECHNOLOGY
PARTNERS; CARLTON OIL
TECHNOLOGY PARTNERS, LTD;
AMERICAN ENERGY RESOURCES,
INC.; TAX MATTERS PARTNER,

       Petitioners,

v.

COMMISSIONER OF INTERNAL
REVENUE,

       Respondent - Appellee.




VULCAN OIL TECHNOLOGY
PARTNERS, “Floyd & Selwin Wilson;
David C. & Barbara J. Jonson; Ray C.
& Helen W. Koernig, Jr.; James R. &
Sally M. Brusenhan, as partners”;
DILLON OIL TECHNOLOGY
                                                     No. 98-9018
PARTNERS, “Ladd T. Tucek and
                                                 (T.C. No. 16768-88)
James D. Fisher, as partners”,
                                             (Appeal from U.S. Tax Court)
       Petitioners - Appellants,

 and




                                       -2-
VANGUARD OIL TECHNOLOGY
PARTNERS; DRAKE OIL
TECHNOLOGY PARTNERS;
DERRINGER OIL TECHNOLOGY
PARTNERS 1981; DERRINGER OIL
TECHNOLOGY PARTNERS 1982;
CROWNE OIL TECHNOLOGY
PARTNERS; CARLTON OIL
TECHNOLOGY PARTNERS, LTD;
AMERICAN ENERGY RESOURCES,
INC.; TAX MATTERS PARTNER,

       Petitioners,

v.

COMMISSIONER OF INTERNAL
REVENUE,

       Respondent - Appellee.




VULCAN OIL TECHNOLOGY
PARTNERS; VANGUARD OIL
TECHNOLOGY PARTNERS;
DERRINGER OIL TECHNOLOGY
PARTNERS 1981; DERRINGER OIL
TECHNOLOGY PARTNERS 1982;
CROWNE OIL TECHNOLOGY                         No. 98-9019
PARTNERS; CARLTON OIL                     (T.C. No. 16768-88)
TECHNOLOGY PARTNERS, LTD;             (Appeal from U.S. Tax Court)
AMERICAN ENERGY RESOURCES,
INC.; TAX MATTERS PARTNER,

       Petitioners,

 and


                                -3-
DRAKE OIL TECHNOLOGY
PARTNERS, “Stewart & Shirley
Shaft, as partners”; DILLON OIL
TECHNOLOGY PARTNERS, “Robert
A. & Vernice A. Turner, as partners”,

       Petitioners - Appellants,

v.

COMMISSIONER OF INTERNAL
REVENUE,

       Respondent - Appellee.




VULCAN OIL TECHNOLOGY
PARTNERS; VANGUARD OIL
TECHNOLOGY PARTNERS;
DERRINGER OIL TECHNOLOGY
PARTNERS 1981; DERRINGER OIL
TECHNOLOGY PARTNERS 1982;
CROWNE OIL TECHNOLOGY
PARTNERS; CARLTON OIL
TECHNOLOGY PARTNERS, LTD;                             No. 98-9020
AMERICAN ENERGY RESOURCES,                        (T.C. No. 21530-87)
INC.; TAX MATTERS PARTNER,                    (Appeal from U.S. Tax Court)

       Petitioners,

 and

DRAKE OIL TECHNOLOGY
PARTNERS, “Stewart & Shirley
Shart, as partners”; DILLON OIL,




                                        -4-
“Robert A. & Vernice A. Turner, as
partners”,

      Petitioners - Appellants,

v.

COMMISSIONER OF INTERNAL
REVENUE,

      Respondent - Appellee.




EDWARD R. CHASE and SANDRA
CHASE,

      Petitioners - Appellants,
                                                   No. 98-9022
v.                                             (T.C. No. 21147-87)
                                           (Appeal from U.S. Tax Court)
COMMISSIONER OF INTERNAL
REVENUE,

      Respondent - Appellee.




JOHN J. NERNEY; EMMIE P.
NERNEY; EDWARD R. CHASE;
SANDRA CHASE; THOMAS L.
                                                   No. 98-9023
MCCAFFREY; KAY V.
                                               (T.C. No. 16768-88)
MCCAFFREY; WILLIAM T.
                                           (Appeal from U.S. Tax Court)
MINTER; SUSAN MINTER; LARRY
REEDER; ELLEN REEDER; DILLON
OIL TECHNOLOGY



                                     -5-
PARTNERS; CARLTON OIL
TECHNOLOGY PARTNERS, LTD,

       Petitioners - Appellants,

 and

VULCAN OIL TECHNOLOGY
PARTNERS; VANGUARD OIL
TECHNOLOGY PARTNERS;
DRAKE OIL TECHNOLOGY
PARTNERS; DERRINGER OIL
TECHNOLOGY PARTNERS 1981;
DERRINGER OIL TECHNOLOGY
PARTNERS 1982; CROWN OIL
TECHNOLOGY PARTNERS;
AMERICAN ENERGY RESOURCES,
INC.; TAX MATTERS PARTNER,

       Petitioners,

v.

COMMISSIONER OF INTERNAL
REVENUE,

       Respondent - Appellee.




THOMAS L. MCCAFFREY; KAY V.
MCCAFFREY; and DILLON OIL
TECHNOLOGY PARTNERS,                             No. 98-9024
                                             (T.C. No. 21530-87)
       Petitioners - Appellants,         (Appeal from U.S. Tax Court)

 and



                                   -6-
 VULCAN OIL TECHNOLOGY
 PARTNERS; VANGUARD OIL
 TECHNOLOGY PARTNERS;
 DRAKE OIL TECHNOLOGY
 PARTNERS; DERRINGER OIL
 TECHNOLOGY PARTNERS 1981;
 DERRINGER OIL TECHNOLOGY
 PARTNERS 1982; CROWNE OIL
 TECHNOLOGY PARTNERS;
 CARLTON OIL TECHNOLOGY
 PARTNERS, LTD; AMERICAN
 ENERGY RESOURCES, INC.; TAX
 MATTERS PARTNER,

          Petitioners,

 v.

 COMMISSIONER OF INTERNAL
 REVENUE,

          Respondent - Appellee.




                           ORDER AND JUDGMENT *


Before BRORBY, and LUCERO, Circuit Judges and WEST, Senior District
Judge **.



      *
        This order and judgment is not binding precedent, except under the
doctrines of law of the case, res judicata, and collateral estoppel. This court
generally disfavors the citation of orders and judgments; nevertheless, an order
and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.
      **
        The Honorable Lee R. West, Senior Judge, U.S. District Court for the
Western District of Oklahoma, sitting by designation.

                                        -7-
      Appellants Vulcan Oil Technology Partners and other related partnerships

(hereinafter “Vulcan Oil Partners”) brought challenges in federal tax court to

settlements offered to them by the Internal Revenue Service (“IRS”) pursuant to a

failed late-1970s and 1980s tax-shelter scheme. Vulcan Oil Partners challenged

the IRS’s notice procedures for settlements. The tax court denied relief in two

opinions, one dealing with tax years 1979 through 1982 and the other dealing with

tax years 1983 through 1985. See Estate of Campion v. Comm’r, 110 T.C. 165

(1998); Vulcan Oil Tech. Partners v. Comm’r, 110 T.C. 153 (1998). On appeal,

Vulcan Oil Partners raise essentially two claims: (1) the tax court erred in holding

the IRS had not violated duties to inform Vulcan Oil Partners of, and allow them

to untimely participate in, earlier, more favorable settlements offered to related

partnerships in the 1980s, pursuant to the Tax Equity and Fiscal Responsibility

Act of 1982 (“TEFRA”), Pub. L. No. 97-248, 96 Stat. 324 (codified as amended

in scattered sections of 26 U.S.C.), Tax Court Rule 248, and “general standards;”

and (2) the tax court erred in holding the IRS had not committed fraud,

malfeasance, or misrepresentation in not offering Vulcan Oil Partners the earlier,

more favorable settlements. We exercise jurisdiction pursuant to 26 U.S.C. §

7482 and affirm the decision of the tax court.

                                          I


                                         -8-
      Vulcan Oil Partners invested in an enterprise to extract oil from tar sands

using unproven technologies, a scheme promising a $4 tax benefit for every $1

invested. This enterprise lasted from 1979 to 1985. But the IRS caught on. It

offered settlements to Vulcan Oil Partners and the other related partnerships in

lieu of filing suit against them, settlements which became progressively less

favorable to Vulcan Oil Partners.

      Some members of related partnerships accepted more favorable settlements

from the IRS in 1986, 1987, and 1988. The IRS’s more favorable settlements

allowed partners to deduct all of their cash investments in the tax shelter but

imposed interest penalties on unpaid taxes. None of the members of Vulcan Oil

Partners settled at this time. In a test case decided in 1992, the tax court held that

other tax shelter partnerships that had invested in the oil recovery scheme lacked

a profit objective and therefore would not be allowed to claim tax benefits. See

Krause v. Comm’r, 99 T.C. 132 (1992), aff’d sub nom. Hildebrand v. Comm’r, 28

F.3d 1024 (10th Cir. 1994). In Acierno v. Comm’r, 74 T.C.M. (CCH) 738 (1997),

aff’d, 185 F.3d 861 (3d Cir. 1999), the tax court applied the holding in Krause to

one of the partnerships in this action.

      Following Hildebrand, almost all the members of Vulcan Oil Partners

settled under less favorable terms, whereby the IRS allowed them no deductions




                                          -9-
for their cash investments and imposed interest penalties. One member of Vulcan

Oil Partners did not settle at all.

       When those members of Vulcan Oil Partners decided to settle under less

favorable terms, the IRS did not inform them of the previous, more favorable

settlements it had offered in the 1980s to related partnerships. The IRS also did

not allow Vulcan Oil Partners to participate in those more favorable settlements

once Vulcan Oil Partners learned of the previous settlements.

                                          II

       We review tax court decisions “in the same manner and to the same extent

as decisions of the district courts in civil actions tried without a jury.” 26 U.S.C.

§ 7482(a)(1). We review the tax court’s factual findings under the clearly

erroneous standard and review its legal conclusions de novo. We review mixed

questions of law and fact either under the clearly erroneous standard or de novo,

depending on whether the mixed question is primarily factual or legal. See

Anderson v. Comm’r, 62 F.3d 1266, 1270 (10th Cir. 1995).

       In claiming the IRS violated duties to inform them of and allow them to

participate in the earlier settlements, appellants allege procedural duties under the

TEFRA, Tax Court Rule 248, and “general standards.”

       First, with regard to TEFRA, all partners have a right—for a limited period

of time—to participate in settlements offered to other partners. See 26 U.S.C.


                                         -10-
§ 6224(c)(2). But the IRS has no statutory duty to inform all partners of

settlement offers. TEFRA states that “the Secretary shall offer to any other

partner who so requests settlement terms for the partnership taxable year which

are consistent with those contained in such settlement agreement.” Id. (emphasis

added). Partners are assumed to have knowledge of settlement offers because,

pursuant to TEFRA, the IRS informs designated contact-persons at

partnerships—called Tax Matters Partners (“TMPs”)—of all offers. See 26

U.S.C. § 6223(a) & (b); 26 C.F.R. § 301.6223(a)-1T & (b)-1T. Once the IRS

notifies the TMPs of the settlement offer, it is the TMPs’ responsibility, and not

the responsibility of the IRS, to inform all of the other partners. See 26 U.S.C. §

6223(g); 26 C.F.R. § 301.6223(g)-1T; see also Kaplan v. United States, 133 F.3d

469, 475 (7th Cir. 1998) (explaining that “[t]his manner of notifying small-share

partners . . . reflects a congressional decision to ease the administrative burden on

the IRS. Section 6223(b) provides actual—but not personal—notice to all

partners in light of the common-law principle of partnership law that notice to one

general partner constitutes notice to all partners.”).

      After the IRS mails notice of the settlement offer—the “final partnership

administrative adjustment” (“FPAA”)—to the TMPs, all partners can participate

in the offer until either “[t]he 150th day after the day on which the notice of

[FPAA] is mailed to the TMP, or . . . [t]he 60th day after the day on which the


                                          -11-
settlement was entered into,” whichever comes later. 26 C.F.R. § 301.6224(c)-

3T.

      The tax court found that Vulcan Oil Partners had presented no evidence

that the IRS had improperly failed to notify them through their TMPs of the

earlier, more favorable settlements, pursuant to TEFRA, 26 U.S.C. § 6223(a).

See Vulcan Oil Tech. Partners, 110 T.C. at 161. The court instead found that

Vulcan Oil Partners had failed to participate in those settlements in timely fashion

under TEFRA regulations, 26 C.F.R. § 301.6224(c)-3T, waiting a period of years

before seeking to participate. See id. at 162. After thoroughly reviewing the

record, we conclude that the tax court properly denied appellants’ claim: The IRS

did not breach its duties pursuant to TEFRA of informing appellants of, and

allowing them to participate in, the earlier, more favorable settlements. In

addition, the tax court was correct in holding that the consistent settlement

provision of TEFRA did not apply to settlements involving partnership taxable

years before Sept. 3, 1982. See TEFRA, Pub. L. No. 97-248, § 407(a)(1), 96 Stat.

324, 670; Estate of Campion, 110 T.C. at 169-70.

      With regard to Tax Court Rule 248(c), the IRS is required under the rule to

inform the TMP of the fact and terms of a settlement if the non-settling partners

have not consented to the settlement agreement. But as the tax court pointed out,

see Vulcan Oil Tech. Partners, 110 T.C. at 160-61, Rule 248 did not come into


                                         -12-
effect until September 1, 1988, almost a year-and-a-half after the last cash

settlements had been entered into. See 88 Tax Notes Today 116-43 (June 1,

1988). Thus, the IRS was under no obligation to comply with the rule for

settlements entered into before that date. Moreover, based on our examination of

the record, we agree with the tax court’s finding that “there is no credible

evidence that respondent [IRS] failed to comply with Rule 248(c)(2) after that

date.” Vulcan Oil Tech. Partners, 110 T.C. at 161.

      Finally, with regard to IRS duties arising from “general standards,”

Vulcan Oil Partners argue that the “defective settlement procedure” followed by

the IRS creates “an implied agreement which keeps the settlement offer open for

curative ratification by the proper parties.” (Appellants’ Br. at 38). However, in

the present case, even if Vulcan Oil Partners are correct that a “defective”

procedure creates such an “implied agreement,” Vulcan Oil Partners have failed

to show any colorable “defective” IRS procedures, rendering inapposite their

reference to the doctrine of “prior implied consent.” Id. at 39.

                                         III

      As for the claim of fraud, malfeasance, and misrepresentation by the IRS,

there is simply no evidence cited in appellants’ briefs for these allegations.

Appellants cite “a pattern of IRS delaying tactics, avoidance, miscommunication,

poor coordination, and double-talk concerning the existence of, the terms of, and


                                         -13-
the applicability of the earlier global settlement offer.” (Appellants’ Br. at 56).

As evidence of this “pattern,” appellants cite “correspondence, inadequate

response to discovery, evasive answers in later depositions and in the evidentiary

hearing before the Court.” Id. The tax court did not find evidence of any of these

misdeeds, see Vulcan Oil Tech. Partners, 110 T.C. at 164; Estate of Campion, 110

T.C. at 171-72, and we likewise unearthed no such perfidies in our examination of

the record. We find the appellants’ assertions in this regard to be wholly

conclusory and therefore meritless.

      Because nothing in the record leads us to believe the IRS has breached its

statutory or regulatory duties toward the appellants or has committed fraud,

malfeasance, or misrepresentation, we find the appellants’ claims to be meritless.

The judgment of the tax court is AFFIRMED.

                                        ENTERED FOR THE COURT



                                        Carlos F. Lucero
                                        Circuit Judge




                                         -14-
