## Facts

- Pierre Boulez, a French citizen and internationally known conductor, performed services in the United States through a foreign “loan-out” arrangement.
- In 1971, Boulez contracted with Beacon Concerts, Ltd. (a U.K. corporation), which in turn contracted to provide Boulez’s conducting services to U.S. orchestras, including the New York Philharmonic Symphony and the Cleveland Orchestra.
- For 1971–1972, Beacon received $207,473 for Boulez’s U.S. performances and paid Boulez $188,495 after expenses and commissions.
- Boulez filed nonresident alien U.S. tax returns but did not report the amounts paid to Beacon or paid to him for these U.S. services; he continued performing in the U.S. and again failed to report similar income for 1973–1974.
- In 1975, the IRS began investigating Boulez’s U.S. tax obligations for the monies flowing through Beacon.
- Boulez’s counsel negotiated with the IRS and claimed to have reached an oral compromise with the IRS Director of International Operations under which Boulez would file amended 1973–1974 returns including the U.S.-service amounts paid to Beacon, and the IRS would (among other terms) forego adjustments and payments for years before 1973 and forego penalties.
- The Tax Court held the alleged oral compromise ineffective because the IRS official lacked authority to enter into it, and Boulez appealed.

## Issues

1. Whether an alleged oral agreement with an IRS official purportedly compromising a taxpayer’s federal income tax liability is valid and binding on the United States.
2. Whether a compromise is enforceable when the IRS official lacked delegated authority under 26 U.S.C. § 7122 and the compromise did not comply with required formalities (including written execution and approvals).
3. Whether contract doctrines such as apparent authority or estoppel can bind the government to an informal tax settlement outside the statutory compromise process.

## Decision

- The D.C. Circuit affirmed the Tax Court.
- The court held the alleged oral compromise ineffective and not binding on the IRS.
- Because compromises of tax liability are controlled by statute and regulation, an oral understanding with an unauthorized IRS official could not bar assessment of tax and penalties.

## Legal Principles

- Compromises of federal tax liabilities are governed exclusively by 26 U.S.C. § 7122 and implementing regulations.
- Only officials with properly delegated authority, acting within that authority and following required procedures (including specified forms, writing, and approvals), may bind the United States to a tax compromise.
- Government agents cannot bind the United States beyond their actual authority; taxpayer reliance, apparent authority, and estoppel theories do not cure noncompliance with statutory limits and required formalities for compromise.

## Conclusion

The court enforced the statutory limits on compromising federal tax liabilities, ruling that the taxpayer could not enforce an alleged oral settlement because the IRS official lacked authority and the compromise did not satisfy the mandated procedures, leaving the IRS free to assess the disputed liabilities and penalties.


Boulez v. C.I.R., 810 F.2d 209 (D.C. Cir. 1987)