The Tax Times: Accountant's Forged Signatures On Form 872 Extended the SOL

Wednesday, September 14, 2022

Accountant's Forged Signatures On Form 872 Extended the SOL - Really?

According to Law360, a New York City couple asked the Second Circuit to scrap a U.S. Tax Court decision holding them liable for more than $800,000 in taxes and penalties, saying their signatures were forged on documents used to hold them accountable.

Om and Anjali Soni told the appeals court that $158,000 in penalties and fines for their 2004 tax return would have been barred by the Internal Revenue Service's statute of limitations if not for documents forged by their accountant giving the IRS extensions to assess taxes, according to a brief filed on August 29, 2022.

Further, they argued, the Tax Court wrongly approved a $643,000 tax deficiency on their 2004 joint tax return when it ruled that even though Anjali Soni didn't sign the return, she was bound by the doctrine of "tacit consent," which confirms the validity of a joint tax return signed by only one spouse in certain situations.

When The Tax Court Additionally Ruled That Anjali Soni
Gave Tacit Consent For Her Signature On Legal Documents Even Beyond The Tax Return, Including The Extension Documents The Couple Claims Were Forged, It Went Outside The Traditional Boundaries Of Law, The Couple Argued.

The Tax Court ruled against the Sonis in January, deciding they were liable for an income deficiency of $643,000 for 2004, plus a $29,000 late fee and a $129,000 penalty for underreporting income.

The couple claimed the deficiency stemmed from using tax preparers who wrongly advised them to claim a $1.7 million loss on an investment, eradicating any 2004 tax liability, according to the brief. However, they claim the deficiency is moot because while the return shows the couple's signatures, neither Om nor Anjali Soni signed for Anjali, and they don't know who did, according to the brief.

The couple said the new accountant they used after the IRS began investigating their return did prison time after pleading guilty in 2016 to other forgery and fraud charges, according to the brief.

During the couple's Tax Court trial in 2019, the accountant admitted to signing the couple's names to a document giving him power of attorney in 2008, and signing ensuing documents over the next decade giving the IRS more time to assess taxes on the Sonis, without telling the couple, "for expediency's sake," according to the brief.

The accountant said he was acting as a friend of the Sonis because he had been the accountant on the $1.7 million investment deal that drew the attention of the IRS, according to the brief.

In addition to the power of attorney document, the accountant signed nine 872 forms consenting to give the IRS more time to assess tax, according to the brief.

Without The Forged Signatures, Any Assessments Made After 2008, Three Years After The Original Return Was Filed, Would Be Time-Barred, The Couple Argued In Their Brief.

They said the Tax Court was wrong to find that they had given their accountant "implied" authority and that their subsequent actions treating the accountant as their representative throughout the IRS appeals and litigation process essentially "ratified" the documents.

The Couple Said They Were Unaware The Accountant
Had Signed Documents For Them Until They
Were Preparing For The 2019 Tax Court Trial.

J. Mark Lane of Lane Crowell LLP, who represents the Sonis, told Law360 he found it unbelievable that the IRS won the case at trial.

"If you read the transcript of the trial in this case, I think you'll see that there was insufficient evidence to support the Tax Court's decision," Lane said. "All of the evidence essentially went the other way."

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