## Facts

- Jens and Jane Houlberg filed joint federal income tax returns for tax years 1976–1979.
- The IRS examined their returns and sought to extend the limitations periods for assessment using Forms 872 and 872-A (consents to extend time to assess tax).
- The Houlbergs signed multiple consents extending the assessment periods for 1976–1978; later they declined to sign an additional Form 872-A for 1978.
- The Houlbergs consulted an accountant before signing; they believed signing would result in an IRS “prenotice”/Appeals conference before any notice of deficiency.
- A revenue official testified prenotice conferences were commonly offered when taxpayers signed extensions, but no explicit promise of a conference was made to the Houlbergs.
- In 1982, the IRS issued statutory notices of deficiency for 1976–1979 without holding a prenotice conference.
- The Houlbergs petitioned the Tax Court, asserting the 1976 and 1977 deficiencies were time-barred because the IRS failed to satisfy an alleged condition of their consents.

## Issues

1. Whether the Forms 872 and 872-A consents extending the limitations periods for 1976 and 1977 were invalid or unenforceable because the IRS did not provide a prenotice Appeals conference allegedly contemplated by the taxpayers.
2. Whether consent-form language stating the extension would not “deprive” taxpayers of “any appeal rights to which [they] would otherwise be entitled” created an enforceable obligation to provide a prenotice conference.

## Decision

- The Tax Court held the consents were valid and effective to extend the limitations periods.
- The court rejected the argument that the extensions were conditioned on the IRS providing a prenotice Appeals conference.
- The notices of deficiency for 1976 and 1977 were held timely within the extended periods, and the limitations defense failed.

## Legal Principles

- A properly executed limitations-period consent generally remains effective absent proof of fraud, duress, mutual mistake, or a comparable defect.
- Language in a consent stating it will not “deprive” taxpayers of “appeal rights” preserves whatever rights exist under governing law and procedure; it does not create additional procedural entitlements.
- An alleged condition precedent to a consent must rest on an objective, enforceable agreement; a taxpayer’s subjective expectation or an adviser’s misunderstanding does not alter the consent’s legal effect.
- Evidence of common administrative practice (e.g., routinely offering prenotice conferences) does not, without an explicit commitment or legal requirement, convert a discretionary practice into a binding condition that nullifies a consent.

## Conclusion

The Tax Court sustained the IRS’s extended assessment periods based on the taxpayers’ signed Forms 872 and 872-A, holding that the IRS’s failure to provide a prenotice Appeals conference did not invalidate the consents or bar timely deficiency notices for 1976 and 1977.


Houlberg v. Comm’r, T.C. Memo. 1985-497 (1985)