                          T.C. Memo. 2007-4



                       UNITED STATES TAX COURT



         JEAN MATHIA AND ESTATE OF DOYLE V. MATHIA, DECEASED,
         JEAN MATHIA, PERSONAL REPRESENTATIVE, Petitioners v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16483-05L.              Filed January 8, 2007.



     Mark W. Curnutte, for petitioners.

     Ann L. Darnold, for respondent.



                          MEMORANDUM OPINION


     MARVEL, Judge:    This matter is before the Court on

respondent’s Motion for Relief From Stipulations pursuant to Rule

91(e)1.



     1
      All section references are to the Internal Revenue Code,
and all Rule references are to the Tax Court Rules of Practice
and Procedure.
                               - 2 -

                             Background

     Petitioner Jean Mathia resided in Grove, Oklahoma, when she

petitioned this Court on her own behalf and as personal

representative of the Estate of Doyle V. Mathia, her deceased

husband.   Doyle V. Mathia (Mr. Mathia) and petitioner were

married and filed joint income tax returns for all relevant tax

years.   Mr. Mathia died on February 19, 2000.

     Mr. Mathia was a limited partner in Greenwich Associates

(Greenwich), a New York limited partnership subject to the

unified audit and litigation procedures of the Tax Equity and

Fiscal Responsibility Act of 1982 (TEFRA), Pub. L. 97-248, sec.

402(a), 96 Stat. 648, for the relevant tax years.   He owned an

8.484-percent limited partnership interest in Greenwich at all

relevant times.   Kevin Smith was the general partner and tax

matters partner (the TMP) of Greenwich.2

     On August 3, 1990, the Commissioner issued Greenwich a

Notice of Final Partnership Administrative Adjustment for 1982

through 1984.   The TMP timely filed a petition for review in this

Court pursuant to section 6226 (the Greenwich litigation).3     On



     2
      Sec. 6224(c)(3) authorizes the tax matters partner of a
partnership, as defined by the Code, to enter into a settlement
agreement that is binding on all partners who are not notice
partners or members of a notice group, i.e., those partners not
entitled to notice of administrative proceedings with respect to
the partnership.
     3
      Docket No. 24102-90.
                               - 3 -

August 31, 2001, the parties submitted a decision document, which

we filed as a Stipulation of Settlement Between the TMP and

Respondent (the Greenwich settlement).   On January 17, 2002, we

entered an order and decision resolving the Greenwich litigation.

     On January 27, 2003, respondent assessed against petitioners

income tax deficiencies and interest attributable to the

Greenwich settlement.   On October 27, 2003, petitioners paid all

of the tax, but not the interest, attributable to the Greenwich

settlement.   On February 6, 2004, petitioners mailed to

respondent Forms 843, Claim for Refund and Request for Abatement

(interest abatement claims), with respect to the accrued interest

attributable to the Greenwich settlement.

     On February 10, 2004, respondent issued to petitioners a

Final Notice--Notice of Intent to Levy and Notice of Your Right

to a Hearing for 1982 through 1984, and petitioners timely

requested a section 6330 hearing.   On April 2, 2004, respondent

issued to petitioners a Notice of Federal Tax Lien Filing and

Your Right to a Hearing Under IRC 6320, for 1983 and 1984, and

petitioners timely requested a section 6320 hearing.   On April 7,

2004, respondent denied petitioners’ interest abatement claims.

On May 5, 2004, petitioners submitted a request to respondent’s

Appeals Office to review the denial of their interest abatement

claims.
                               - 4 -

     On August 5, 2005, respondent issued to petitioners a notice

of determination with respect to the Notice of Intent to Levy and

a second notice of determination with respect to the Notice of

Federal Tax Lien Filing.   On August 18, 2005, respondent issued a

notice of final determination denying petitioner’s interest

abatement claims.   Petitioners timely filed a petition contesting

each of respondent’s determinations.   Petitioners contend that

the period of limitations on assessment had expired before

respondent had assessed petitioners’ 1982-84 tax liabilities.

Petitioners further contend that respondent improperly denied

their interest abatement claims.

     This case was scheduled for trial during the trial session

of the Court beginning March 6, 2006, at Oklahoma City, Oklahoma.

On March 6, 2006, the parties filed a Stipulation of Facts

(Stipulation) and a Joint Motion for Leave to Submit Case Under

Rule 122, which motion we granted that same day.   The

Stipulation, which was signed by both parties, contains 21 pages

and states that “the parties agree to this Stipulation of Facts”

and “All stipulated facts shall be conclusive.”    We established a

posttrial briefing schedule that required the parties to submit

their opening briefs on or before May 5, 2006.

     On April 27, 2006, approximately 1 week before opening

briefs were due, we had a conference call with the parties at the

request of respondent’s counsel.   During that conference call,
                               - 5 -

respondent’s counsel stated that she wanted to move for relief

from two of the previously agreed stipulations because she

believed that the stipulations were in error.   After ascertaining

from petitioners’ counsel that he objected to respondent’s

request for relief, we suspended the briefing schedule to permit

respondent to file a motion for relief from the stipulations by

order dated April 27, 2006.

     On May 5, 2006, respondent filed a Motion for Relief from

Stipulations (motion), requesting relief from paragraphs 22 and

34 of the Stipulation (the disputed stipulations) pursuant to

Rule 91(e) but did not file a motion to vacate the March 6, 2006,

order granting the parties’ Joint Motion for Leave To Submit Case

Under Rule 122 (March 6, 2006, order).4   Paragraph 22 of the

Stipulation states that Mr. Mathia was not a notice partner or a

member of a notice group of Greenwich.    Paragraph 34 of the

Stipulation provides that Mr. Smith, as the TMP, had the

authority to bind all of Greenwich’s partners to the stipulation

of settlement.   Respondent now contends that Mr. Mathia was a

notice partner and, therefore, was not automatically bound by the

stipulation of settlement under section 6224(c)(3).    Respondent


     4
      Rule 91(e) provides that a stipulation shall be treated as
a conclusive admission by the parties, “unless otherwise
permitted by the Court or agreed upon by those parties.” Rule
91(e) also provides that “The Court will not permit a party to a
stipulation to qualify, change, or contradict a stipulation in
whole or in part, except that it may do so where justice
requires.”
                                - 6 -

moves for relief from the disputed stipulations because they

“include legal conclusions which are erroneous” and “so that the

record is consistent and accurate”.     On June 5, 2006, petitioners

filed a response opposing the motion.     Neither party requested a

hearing on respondent’s motion, and we are satisfied that a

hearing is not necessary to rule on the motion.

                             Discussion

     The stipulation process is considered “the bedrock of Tax

Court practice” and acts “as an aid to the more expeditious trial

of cases”.    Branerton Corp. v. Commissioner, 61 T.C. 691, 692

(1974).   Stipulations eliminate burdensome and unnecessary

discovery and result in “an orderly trial with a full and fair

exposition of the facts.”    Teller v. Commissioner, T.C. Memo.

1992-402.    Stipulations narrow controversies to their essential

issues of dispute, Estate of Quirk v. Commissioner, 928 F.2d 751,

759 (6th Cir. 1991), affg. in part and remanding in part T.C.

Memo. 1988-286, and materially assist a court in managing its

caseload, see Stamos v. Commissioner, 87 T.C. 1451, 1456 (1986).

     Generally, a stipulation of fact is binding on the parties,

and the Court is bound to enforce it.     Rule 91; Stamos v.

Commissioner, supra at 1454.    Rule 91(e) provides an exception by

permitting relief from the binding effect of a stipulation where

justice so requires.   Courts generally enforce stipulations

unless “manifest injustice” would result.     Bokum v. Commissioner,
                               - 7 -

992 F.2d 1132, 1135-1136 (11th Cir. 1993), affg. 94 T.C. 126

(1990); Bail Bonds by Marvin Nelson, Inc. v. Commissioner, 820

F.2d 1543, 1547 (9th Cir. 1987), affg. T.C. Memo. 1986-23;

Clendenen v. Commissioner, T.C. Memo. 2003-32, affd. 345 F.3d 568

(8th Cir. 2003).

     Given the importance of the stipulation process to this

Court, our reluctance to relieve a party of a stipulation it

negotiated and executed is understandable.   Permitting challenges

to otherwise binding stipulations of fact undermines the

stipulation process and injects uncertainty into our litigation

process, often after the record is closed.   See, e.g., La. Land &

Exploration Co. v. Commissioner, 90 T.C. 630, 649 (1988); Logsdon

v. Commissioner, T.C. Memo. 1997-8 (relief from stipulation

denied where the taxpayer sought to introduce evidence not in the

record to support his motion and the Commissioner would be

prejudiced by the lack of opportunity to develop the stipulated

position at trial); Grasso v. Commissioner, T.C. Memo. 1994-479

(relief from stipulation denied when taxpayer contended for the

first time in his posttrial brief that he mistakenly agreed to

the stipulation).   Although we have discretion to modify or set

aside a stipulation of fact that is clearly contrary to the facts

established by the record, Cal-Maine Foods, Inc. v. Commissioner,

93 T.C. 181, 195 (1989), we do not set aside a stipulation of

fact that is consistent with the record simply because one party
                                - 8 -

claims the stipulation is erroneous, see Rule 91(e); Logsdon v.

Commissioner, supra.

     Respondent argues that the disputed stipulations contain

erroneous legal conclusions and requests that we remove them.

Although we are not bound by stipulations of law, see Bokum v.

Commissioner, 94 T.C. at 143, respondent’s argument fails to

acknowledge that stipulations of law may bind the parties to the

stipulation as a matter of contract law, see Stamos v.

Commissioner, supra at 1455.    In Estate of Quirk v. Commissioner,

supra at 759, the Court of Appeals for the Sixth Circuit

explained that the stipulation process allows the parties to

concede both factual and legal issues that they might otherwise

have litigated, noting that “In fact, narrowing disputes to the

essential disputed issues is the primary function of

stipulations.”    A court is not required to relieve a party from

erroneous stipulations of law, particularly when the stipulation

is part of a negotiated settlement.     See, e.g., Stanley v.

Commissioner, T.C. Memo. 1991-20.

     We also disagree with respondent’s characterization of the

disputed stipulations as containing stipulations of law.      At

most, the stipulations in question contain mixed statements of

fact and law.    As petitioners point out in their response

opposing respondent’s motion,

     even if the Court determines that stipulations 22 and
     34 do “include legal conclusions” as asserted by
                               - 9 -

     Respondent, this should not be a basis for relief for
     Respondent, because at most, stipulation[s] 22 and 34
     are applications of law to fact, which is expressly
     permitted under Tax Court Rule 91(a).

The truth of petitioners’ statement can be seen by examining the

disputed stipulations.

     Stipulation 22 provides that “Neither the Petitioner nor

Doyle V. Mathia, deceased, was a notice partner in Greenwich or a

member of a notice group as described in I.R.C. §6223(b)(2).”

Stipulation 34 provides that “At all times relevant to the

pending matter, Smith possessed the authority to bind both

Greenwich and all of its partners, including Doyle V. Mathia,

deceased, to a settlement agreement with the Respondent.”

Implicit in each of the stipulations is a set of facts and the

application of law to those facts.     Stipulation 22 refers to

“notice partner” and “notice group”, two terms that are defined

by sections 6231(a)(8) and 6223(b)(2), respectively.     Section

6231(a)(8) defines a notice partner as “a partner who, at the

time in question, would be entitled to notice under subsection

(a) of section 6223 (determined without regard to subsections

(b)(2) and (e)(1)(B) thereof).”   Section 6223 provides the rules

governing when and how notices of the beginning and completion of

administrative partnership-level proceedings must be given by the

Secretary to the partners.   Section 6223(b) provides a special

notice rule for partnerships with more than 100 partners.

Section 6223(b)(2) requires the Secretary to give the notice
                              - 10 -

required by section 6223(a) to a notice group defined as “a group

of partners in the aggregate having a 5 percent or more interest

in the profits of a partnership” if the notice group has

requested such notice and designated one of its members to

receive the notice.   In order to find that Mr. Mathia and/or

petitioner were members of a notice group, the record would have

to contain evidence that Greenwich was a partnership with more

than 100 partners, that a notice group was properly formed and

that petitioner and Mr. Mathia were members of it, and that a

member of the notice group was properly and timely designated in

accordance with section 6223(b)(2) and applicable regulations.

In order to enable us to find that petitioner and/or Mr. Mathia

were notice partners, the record would have to establish they

were entitled to notice under section 6223(a) without regard to

the provisions of section 6223(b)(2) (dealing with notice to a

notice group involving a partnership of more than 100 partners)

and section 6223(e)(1)(B) (dealing with the effect of the

Secretary’s failure to give notice involving a partnership of

more than 100 partners).   Petitioner and/or Mr. Mathia would be

entitled to notice only if their names and addresses, as well as

information sufficient to enable the Secretary to determine that

they were entitled to receive notice under section 6223(a), had

been furnished timely to the Secretary.
                               - 11 -

     The above discussion illustrates the heart of the problem

presented by respondent’s motion.    At the present time, this case

is fully stipulated under Rule 122.     If respondent’s motion were

granted, this Court’s March 6, 2006, order directing that this

case proceed as a fully stipulated case would have to be vacated,

a period for discovery related to the disputed stipulations would

have to be set, and a trial, in all likelihood, would have to be

held to develop the facts regarding whether the TMP had the

authority, on the date he executed the stipulation of settlement,

to bind all of Greenwich’s partners to the Greenwich settlement.

Respondent has not requested that the Court’s March 6, 2006,

order be vacated.    However, petitioners dispute respondent’s

factual allegations in support of his motion, and, as a matter of

fundamental fairness, petitioners would be entitled to a trial.

     By submitting this case fully stipulated pursuant to Rule

122, the parties waived their respective rights to introduce

evidence at trial.   Granting respondent relief from the disputed

stipulations would undoubtedly prejudice petitioners, because

petitioners can no longer introduce evidence supporting those

stipulations absent an order vacating our March 6, 2006, order

and setting this case for trial.    See Korangy v. Commissioner,

T.C. Memo. 1989-2, affd. 893 F.2d 69 (4th Cir. 1990).

     If we grant respondent’s motion, we would be compelled to

set this case for trial, and the parties would have to expend
                              - 12 -

considerable time and effort developing and presenting evidence

on the issue of whether Mr. Mathia was bound by the TMP’s

execution of the Greenwich settlement.   Resetting this case for

trial would prejudice petitioners, see Stamm Intl. Corp. v.

Commissioner, 90 T.C. 315, 321 (1988), who would be forced to

prepare for trial and litigate factual issues resolved in the

Stipulation, see Korangy v. Commissioner, supra.     Such a

substantial change in the procedural setting of this case would

burden this Court’s resources and those of the parties.       See id.

“‘These unnecessary burdens on the system are unreasonable and

unfair from the standpoint of everyone involved.’”     Id. (quoting

Brooks v. Commissioner, 82 T.C. 413, 430 (1984), affd. without

published opinion 772 F.2d 910 (9th Cir. 1985)).

     It is reasonable to assume that respondent had or could have

had access to his administrative file before he entered into the

disputed stipulations and that respondent had or should have had

all of the necessary facts to determine whether petitioners were

bound by the Greenwich settlement between the TMP and the

Commissioner in the Greenwich litigation before he entered into

the disputed stipulations.   See Tate & Lyle, Inc. & Subs. v.

Commissioner, T.C. Memo. 1996-80, revd. on other grounds 87 F.3d

99 (3d Cir. 1996).   Respondent has not alleged any exceptional

circumstances in this case justifying respondent’s sudden change

in position and explaining why respondent did not conduct a
                              - 13 -

proper investigation before he executed the Stipulation.    Under

the circumstances of this case, we believe that justice is best

served by holding the parties to the terms of the Stipulation.

See id.

     Respondent also moves for relief from the referenced

stipulations “so that the record is consistent and accurate”.

However, we do not agree that our denial of relief would lead to

an inconsistent or inaccurate result.   The only evidence offered

by respondent to demonstrate that the disputed stipulations are

wrong consists of an undated copy of Form 886-Z, Partners’ or S

Corporation Shareholders’ Shares of Income, bearing the name

“Greenwich Associates” and references to taxable years 8212,

8312, and 8412 (48 pages), and a letter dated August 3, 1990,

which appears to be a transmittal letter but which does not refer

to Form 886-Z.   The documents are not authenticated, are not

stipulated to by the petitioners, and are not sufficient to

establish that the disputed stipulations are erroneous.

Moreover, respondent does not allege that the documents are newly

discovered or that the documents were not available to him before

the Stipulation was executed and the motion to submit the case

under Rule 122 was filed.

     Because the parties agreed in their joint motion, which we

granted, to submit the case under Rule 122, the record in this

case is limited to the pleadings and the Stipulation.   At this
                                - 14 -

late date, we shall not consider documents outside those

submitted with the pleadings or Stipulation.   The disputed

stipulations are consistent with each other and with the rest of

the evidentiary record.   The parties entered into the disputed

stipulations on their own accord; there is no evidence of any

fraud or duress.

     Respondent claims that he mistakenly agreed to the disputed

stipulations.   If respondent erred, however, his mistake was

unilateral.    Responsibility rested with respondent’s counsel to

understand the significance of the disputed stipulations and to

examine his case thoroughly before agreeing to the disputed

stipulations.   See Korangy v. Commissioner, supra.   We perceive

no injustice in holding the parties to the terms of the

Stipulation.

     For the reasons described, we shall deny respondent’s Motion

for Relief from Stipulations.


                                               An appropriate order

                                          will be issued.
