Acceptance

Acceptance page2

FINDINGS OF FACT

1. Antone Construction Company was incorporated in the State of South Carolina in March, 1977. The attorney who prepared the articles of incorporation was Thomas B. Pollard, Jr., a South Carolina attorney, who listed himself as the initial registered agent and his professional office address, 1200 First National Bank Building, Columbia, South Carolina, as the initial registered office of the corporation. South Carolina law required that every corporation have an in-state registered agent and registered office. Mr. Pollard was also named in the articles of incorporation as the director and incorporator of Antone.

2. Antone was incorporated at the behest of Anthony J. Frank upon the recommendation of his brother Frederick Frank.

3. At the time of incorporation of Antone and at all times thereafter Anthony J. Frank was a resident of Hermitage, Pennsylvania . Frederick Frank was a resident of Columbia , South Carolina .

4. Anthony J. Frank was also the President and sole stockholder of Brimar Construction Company at the time of Antone's incorporation. Brimar Construction Company (hereinafter "Brimar") had its principal executive office, at all times pertinent to this action, at 155 Snyder Road , Sharon , Pennsylvania .

5. Soon after the incorporation of Antone, Thomas B. Pollard resigned as the director of Antone. He was replaced by Anthony J. Frank, Frederick Frank, and Bernard Rosen as the directors and officers of Antone. At that time Bernard Rosen was also an employee of Brimar. Mr. Pollard continued as the registered agent of and his professional office continued to be the registered office of Antone in South Carolina until he resigned that position in September, 1980.

6. Antone was involved, as a subcontractor, in construction projects in the states of Georgia , Florida , Ohio , South Carolina , Virginia and West Virginia . The first project it undertook was in Columbia , South Carolina , at the time of its incorporation or immediately thereafter. Antone maintained an office at each construction site while engaged in the particular project. Each project office was responsible for keeping records related to its project. Antone also maintained checking accounts at a bank located in the vicinity of each project, during its involvement thereon, from which suppliers and employees were paid.

7. Antone also maintained checking accounts at the McDowell National Bank, Sharon , Pennsylvania . The business or mailing address for Antone for these accounts was P.O. Box 1278 , Sharon , Pennsylvania .

8. All payments by the general contractor for work done by Antone on the construction project at Columbia , South Carolina , were received at the local office but were forwarded to Anthony J. Frank in Pennsylvania .

9. Frederick Frank was in charge of supervising the day-to-day field activities of all the construction projects for Antone. He maintained an office at the construction site in Columbia , South Carolina , and in the basement of his home in that same city while he was an employee of Antone.

10. Anthony J. Frank was responsible for deciding what projects Antone would submit bids on and for negotiating the final contracts when it was the successful bidder.

11. Frederick Frank left the employ of Antone in October, 1978, at which time he discontinued maintaining an office for Antone in his home.

12. Antone never conducted any business from nor maintained any records of employees at 1200 First National Bank Building, Columbia , South Carolina .

13. A meeting of the Board of Directors of Antone was held on October 9, 1978 , at 155 Snyder Road , Sharon , Pennsylvania . (That address is also the address of the offices of Brimar.) At that meeting, Frederick Frank and Bernard Rosen were replaced as directors and officers of Antone. Mary Frank and Christine Bell, the wife and mother-in-law respectively of Anthony J. Frank, became directors of, and Mary Frank became an officer of, Antone.

14. The tax return for Antone for the tax year ending January 31, 1978 , was prepared by the certified public accounting firm of Black, Bashor and Porsch of Sharon, Pennsylvania. That return was filed as a consolidated return with Brimar and it listed Antone as a subsidiary of Brimar. Antone's address on the return was shown as Box 1278 , Sharon , Pennsylvania . The information and records upon which the return was based were supplied to the accounting firm by Anthony J. Frank.

15. Employer's Monthly Federal Tax Returns filed by Antone with the Internal Revenue Service in February, March and April, 1979, show Antone's address as P.O. Box 1278, Sharon, Pennsylvania.

16. Antone in December, 1978, filed an application for a certificate of authority to operate as a foreign corporation with the Commonwealth of Pennsylvania . The address of its proposed registered office in the state was given as 155 Snyder Road , Sharon (Hermitage), Pennsylvania .

17. Between October and November, 1978, the plaintiff made three loans totalling $92,000.00 to Anthony J. Frank for the use by the latter in his construction business. These loans were eventually secured by a promissory note from Brimar and by the personal guarantees of Anthony J. and Mary Frank.

18. The plaintiff made a fourth loan of $23,000.00 on April 5, 1979 . This loan was made to Antone and was secured by a promissory note from Antone and by the personal guarantees of Anthony J. and Mary Frank.

19. On April 5, 1979 , Antone also executed a document guaranteeing the repayment of all monies loaned by the plaintiff to Brimar (Anthony J. Frank) and Antone. Antone also assigned to the plaintiff an interest in a mechanic's lien action it had pending in the Cabell County Circuit Court. Plaintiff's interest, or share, in the lawsuit amounted to $115,000.00 plus interest at twelve per cent per annum. That assignment was recorded with the Cabell County Clerk on April 30, 1979 . The plaintiff has never received any repayment of the principal or interest on any of these loans.

20. The Internal Revenue Service has made the following tax delinquency assessments against Antone for employment (F.I.C.A.) taxes:

Quarter  Date of   Amount of    Lien

Ending  Assessment Assessment   Filed

                              
11/22/78

 12/78     
2/5/79
  $67,269.70 
3/1/79

21. The Internal Revenue Service has made a tax delinquency assessment against Antone for unemployment taxes for the year 1978 as follows:

 Date of   Amount of   Lien

Assessment Assessment Filed

  
2/5/79
   $3,999.06  
3/1/79

22. All the tax liens against Antone involved herein were filed with the Prothonotary of Mercer County, Pennsylvania. The cities of Sharon and Hermitage are located within that county.

23. In April, 1983, Anthony J. Frank made offers to compromise the tax liabilities owed by himself personally, by Brimar and by Antone for the aggregate sum of $250,000.00. The offers were made on an Internal Revenue Service form, number 656.

24. Robert C. Quigley, an employee of the Internal Revenue Service, was assigned to investigate these offers of compromise made by Anthony J. Frank. Mr. Quigley had numerous meetings with Mr. Frank regarding the offers. After one of these meetings, he became suspicious that Mr. Frank was attempting to bribe him in order to obtain approval and acceptance of the offers.

25. On June 28, 1983 , as part of the investigation of the suspected bribery, Mr. Quigley delivered to Mr. Frank a letter signed by the District Director of the Pittsburgh District of the Internal Revenue Service. The letter stated that the District Director accepted the offers to compromise the tax liabilities of Frank, Brimar, and Antone for the sum of $250,000.00.

26. Anthony J. Frank delivered a check made out to the Internal Revenue Service for $250,000.00 to Mr. Quigley on July 12, 1983 . Mr. Frank was later arrested and indicted for attempting to bribe Mr. Quigley. He was subsequently acquitted of the charge.

27. The Internal Revenue Service sent a letter to Anthony J. Frank, on behalf of Antone, on February 22, 1984 , rejecting the offer to compromise the tax liabilities of Antone and demanding full payment thereof. By letter dated March 9, 1984 , the Internal Revenue Service informed Anthony J. Frank that it would retain the proceeds of the $250,000.00 settlement check because it was made by him for fraudulent and illegal purposes. Furthermore, the proceeds would be applied against the tax liabilities of Mr. Frank personally and Brimar.

28. As of April 30, 1985 , the total tax liabilities of Antone, including penalties and interest, were $303,724.12.

CONCLUSIONS OF LAW

1. This court has jurisdiction to decide the issue of priority of the liens asserted by the United States pursuant to 26 U.S.C.A. §7426 and 28 U.S.C.A. §2410.

2. The tax liabilities of Antone to the United States became liens upon its property, both real and personal, from the time the assessments thereof were made. 26 U.S.C.A. §§6321 and 6322 (1967).

3. The general rule in determining the priority of liens is that the first in time is first in right. Mantovani v. Fast Fuel Corp. [80-2 USTC ¶9468 ], 494 F.Supp. 72, 75 (S.D.N.Y. 1980). Under this rule the tax liens of the United States would have priority because the assessments were all made prior to Antone's assignment to the plaintiff in April, 1979, of an interest in its lawsuit. However, the common law rule is modified by 26 U.S.C.A. §6323(a) (1967)--Mantovani, at 75--which states that "[t]he lien imposed by section 6321 shall not be valid as against any purchaser, holder of a security interest, mechanic's lienor, or judgment lien creditor until notice thereof which meets the requirements of subsection (f) has been filed by the Secretary of his delegate." Subsection (f) reads as follows:

(f) Place for filing notice; form.--

(1) Place for filing.--The notice referred to in subsection (a) shall be filed--

(A) Under State laws.--

(i) Real property.--In the case of real property, in one office within the State (or the county, or other governmental subdivision) as designated by the laws of such State, in which the property subject to the lien is situated; and

(ii) Personal property.--In the case of personal property, whether tangible or intangible, in one office within the State (or the county, or other governmental subdivision), as designated by the laws of such State, in which the property subject to the lien is situated; or

(B) With the clerk of district court.--In the office of the clerk of the United States district court for the judicial district in which the property subject to the lien is situated, whenever the State has not by law designated one office which meets the requirements of subparagraph (A); or

* * *

(2) Situs of property subject to lien.--For purposes of paragraphs (1) and (4), property shall be deemed to be situated--

(A) Real property.--In the case of real property, at its physical location; or

(B) Personal property.--In the case of personal property, whether tangible or intangible, at the residence of the taxpayer at the time the notice of lien is filed.

For purposes of paragraph (2)(B), the residence of a corporation or partnership shall be deemed to be the place at which the principal executive office of the business is located, and the residence of a taxpayer whose residence is without the United States shall be deemed to be in the District of Columbia.

26 U.S.C.A. §6323(f) (1967 and 1986 Cum. Supp.).

The tax liens of the United States for employment taxes for the quarters ending 09/78 and 12/78 and for unemployment taxes for 1978 would continue to have priority under subsection (f) because they were filed prior to the assignment in April, 1979, to the plainfiff of part of Antone's interest in the mechanic's lien suit. However, the plaintiff maintains that the filing of the liens in Mercer County, Pennsylvania was incorrect, and thus invalid, because either: (a) the mechanic's lien lawsuit, an interest of which was assigned to him, was real property and, therefore, the liens against it had to be filed in Cabell County, West Virginia, §6323(f)(2)(A) (1986 Cum. Supp.); or, (b) if the lawsuit were personal property, the liens had to be filed in Columbia, South Carolina because that was the residence of Antone. §6323(f)(2)(B) (1986 Cum. Supp.).

First of all, this court believes that Antone's mechanic's lien and the suit it brought to enforce the lien were a chose in action. Young v. Garred, 90 W.Va. 767, 112 S.E. 181, 184 (1922); W.Va. Code §38 -2-2 & -34 (1985 Replacement Vol). As such they were intangible personal property of Antone. See, Perrin & Martin, Inc. v. United States [64-2 USTC ¶9694 ], 233 F. Supp. 1016, 1020 (E.D.Va. 1964); Johnston Memorial Hospital v. Hess, 44 Bankr. 598, 600 (W.D.Va. 1984). Consequently, the situs of the property for filing tax liens is the residence of Antone. 26 U.S.C.A. §6323(f)(2)(B) (1986 Cum. Supp.).

Plaintiff argues that Antone's residence was Columbia , South Carolina , because that was where its principal executive office, §6323(f)(2)(B) , was located inasmuch as that was where Antone was incorporated. However, the place of incorporation is not necessarily the principal executive office of a corporation. See, D'Antoni, Inc. v. Great Atlantic & Pacific Tea Co. [74-2 USTC ¶9552 ], 496 F.2d 1378 (5th Cir. 1974). The principal executive office "is the headquarters of the business--the office at which the major executive decisions affecting the business are made." Id. at 1383; accord, Dimmitt & Owens Financial, Inc. v. Unique Industries, Inc. [84-1 USTC ¶9228 ], 589 F. Supp. 14, 16 (N.D.Ill. 1983).

In the case at bar, Antone never conducted any of its activities at the address given on its application for incorporation--1200 First National Bank Building --in South Carolina . It did have an office and bank accounts at the construction project it was engaged in at Columbia ; but it had these at each project in various other states. To hold that the construction site offices were the principal executive office could mean that at any one time Antone might have several, or no, residence for filing tax liens, depending on the health of its business at a particular time. We think that this would run counter to the intent of Congress in enacting §6323 . But see, Corwin Consultants, Inc. v. Interpublic Groups of Companies, Inc. [75-1 USTC ¶9299 ], 512 F.2d 605, 609-11 (2d Cir. 1975). This court does not believe that the office maintained by Frederick Frank in the basement of his home was the residence of Antone; especially after October, 1978, when he left Antone's employ--which was before any of the liens in question arose.

This court holds that the principal executive office of Antone was in Sharon (Hermitage) Pennsylvania . Anthony J. Frank, the driving force behind Antone, had his offices there and conducted substantially all of his business from there. He made all the decisions about what projects Antone would become involved in. The financial records of Antone were kept by Anthony J. Frank in Pennsylvania . Its Federal tax returns showed a Sharon , Pennsylvania address and were filed in Pennsylvania . After its incorporation, all of its directors and officers, except for Frederick Frank, were residents of Pennsylvania . According to its own records, any meetings of the board of directors of Antone were held in Sharon , Pennsylvania . The overwhelming weight of the evidence shows that the major business decisions regarding Antone were made in Sharon , Pennsylvania . Therefore, the tax liens of the United States were filed at the residence of Antone. ³

4. The liens of the United States on the funds in dispute herein for employment taxes for the quarters ending 09/78 and 12/78 and for unemployment taxes for the year 1978 have priority over plaintiff's interest in the mechanic's lien suit brought by Antone because the former were filed before the latter was assigned to plaintiff. However, plaintiff's claim to the money sub judice would have priority over the tax lien for employment taxes for the quarter ending 03/79 because the latter was not filed until after plaintiff had obtained assignment of an interest in the chose in action.

5. Plaintiff has contended that even if the United States had valid priority liens such liens were extinguished by the Internal Revenue Service's acceptance, by the letter of June 28, 1983 , of Antone's offer to compromise its tax liability. Alternatively, the United States should be estopped to deny that it has settled those tax liabilities due to the fact that it has retained the $250,000.00 paid by Anthony J. Frank in settlement of all tax liabilities after it rejected the compromise offers.

Settlement of disputed tax liabilities are governed by 26 U.S.C.A. §7121 & 7122 (1967). These statutes authorize the Secretary of the Treasury or his delegate to compromise claims against taxpayers for unpaid taxes. They are strictly construed in that the procedures set forth therein for settling disputes must be precisely followed in order to form a binding agreement. Botany Worsted Mills v. United States [1 USTC ¶348 ], 278 U.S. 282, 288-89 (1929); Country Gas Service, Inc. v. United States [69-1 USTC ¶9178 ], 405 F.2d 147 (1st Cir. 1969).

The letter of acceptance cited by the plaintiff was purportedly signed by the Pittsburgh District Director of the Internal Revenue Service. However, the authority to accept an offer to compromise a tax liability of the amount Antone owed was delegated only to regional commissioners or regional counsels. Delegation Order 11 (Rev. 13), 1982-1 C.B. 333. Therefore, because the District Director did not have the authority to accept Antone's offer of compromise, that acceptance was not binding on the United States . Bowling v. United States [75-1 USTC ¶9333 ], 510 F.2d 112 (5th Cir. 1975) (per curiam); Dorl v. Commissioner of Internal Revenue [74-2 USTC ¶9826 ], 507 F.2d 406 (2nd Cir. 1974) (per curiam); Country Gas Service, supra; McGee v. United States [83-1 USTC ¶9245 ], 566 F. Supp. 960 (M.D.Fla. 1982). The Internal Revenue Service's later rejection of the offers of compromise were valid since there was no binding settlement agreement.

Plaintiff's theory of estoppel seems to be grounded on the argument that the Internal Revenue Service's stated reason for retaining the $250,000.00--fraud by the payor, Anthony J. Frank--was invalid because Mr. Frank was acquitted of the charge of attempting to bribe Agent Quigley. Consequently, since the United States retained the benefits of the offers to compromise it should be bound by the same.

First of all, there is some question whether the plaintiff has standing to raise the issue of estoppel since he is a stranger to the transaction. See, Phillips v. Commissioner of Internal Revenue [50-1 USTC ¶9102 ], 178 F.2d 270 (3rd Cir. 1949) (per curiam), cert. denied, 339 U.S. 932 (1950); I.R.S. v. Blais [85-2 USTC ¶9684 ], 612 F. Supp. 700, 704 (D.Mass. 1985). But even if he does have standing, his claim of estoppel fails. The acquittal of Anthony J. Frank on the criminal charge of bribery is not res judicata in a civil tax case. Helvering v. Mitchell [38-1 USTC ¶9152 ], 303 U.S. 391, 397 (1938). The Internal Revenue Service, therefore, was not foreclosed from asserting fraud as a ground for retaining the $250,000.00. The controlling reason for denying plaintiff's claim of estoppel, however, is the exclusiveness of the statutory manner of settling tax liability disputes. Bowling, supra; United States v. Saladoff [64-2 USTC ¶9698 ], 233 F. Supp. 255, 258-59 (E.D.Pa. 1964), aff'd sub nom., United States v. Feinberg [67-1 USTC ¶9176 ], 372 F.2d 352 (3rd Cir. 1965), reh'g denied, id. Because the statutory requirements were not followed, there can be no estoppel, Saladoff, supra, even though the Internal Revenue Service retained the money paid in regard to the rejected offer. Bowling, supra.

6. The court holds that the United States' tax liens against Antone for employment (F.I.C.A.) taxes for the quarters ending 09/78 and 12/78 and for unemployment taxes for the year 1978 are valid and give it a priority claim to the funds being held by Fidelity over the plaintiff's interest, by way of assignment from Antone, in such funds. The plaintiff's interest, however, has priority over the United States ' tax lien against Antone for employment taxes for the quarter ending 03/79.

The court is not prepared at this time to order disbursal of the funds being held by the defendant Fidelity because we do not have current accountings of the amounts claimed by the United States and the plaintiff nor the amount of the fund held by Fidelity. We will, therefore, withhold entering judgment pending submissions within thirty days of entry of this opinion of affidavits; (1) by the United States setting forth the current assessment against Antone for each tax period involved in this litigation; (2) by the plaintiff of the amounts of principal and interest outstanding on the loans to Brimar and Antone which are secured by the funds being held by Fidelity; and (3) by Fidelity of the present value of the funds held by it that are the subject of this action.

¹ In his memorandum of law, plaintiff presents his arguments regarding the facts, the applicable law and the standard the court should use in viewing the evidence as though the case were being decided on a motion for summary judgment. However, it is perfectly clear from the order of October 26, 1984, that the case has been submitted to the court for full adjudication on the evidence developed by the parties.

² The court notes that we originally included in our time frame schedule a date for oral argument by counsel. However, that date was passed over due to continuances requested by both parties. Since counsel for neither party has asked the court to reschedule oral argument, we deem that it has been waived.

³ Plaintiff has not challenged the propriety of the filings of the tax liens as to the officer with whom they were filed or the county in which they were filed.

79-2 USTC ¶9731] United States of America , Plaintiff v. Gene and Frances Hamm, Defendants

U. S. District Court, West. Dist. Ky. , at Louisville , Civil Action No. C 76-1447 L(A), 10/20/79

[Code Sec. 7122]

Statute of limitations: Compromise of taxes: Rejection of offer by IRS : Failure to deny liability as to amount owed.--A taxpayer's offer of compromise that contained a waiver of limitations was rejected by the IRS , and, therefore, the IRS could not assert that it accepted the portion of the offer containing the waiver. However, the taxpayer's failure to deny liability for the amount claimed by the IRS in the requests for admissions sent to the taxpayers operated as a waiver of any defense based on the statute of limitations.

George J. Long, United States Attorney, Louisville, Ky. 40202, Mikal H. Frey, Department of Justice, Washington, D. C. 20530, for plaintiff. Quinn F. Pearl, Jr., Pearl , Pearl & Pearl , 632 Knox Blvd. , Radcliff , Ky. 40160 , for defendants.

Memorandum Opinion

ALLEN, District Judge:

This matter is before the Court on plaintiff's motion for summary judgment. Defendants have not responded.

In 1973, prior to the filing of the instant suit, defendants submitted to plaintiff an offer of compromise, on a form containing a waiver of the defense of limitations. This offer was rejected by plaintiff, although plaintiff now argues that it accepted that portion of the offer containing the waiver of limitations. We must reject the notion that an offer of settlement can be accepted piecemeal and unilaterally.

However, we also note that requests for admission, submitted to the defendants in January, 1979, were not answered in any form. Included is a request for admission that there is due the entire amount claimed by the plaintiff. The language of Federal Rule of Civil Procedure 36 clearly states that requests submitted pursuant thereto are admitted unless answer or objection is made within 30 days. Thus, we must conclude that failure to deny liability for the total amount claimed due operated as a waiver of any defense based on the statute of limitations. Accordingly, all issues raised herein having been established by failure to deny, plaintiff is entitled to summary judgment as a matter of law.

A judgment in accordance herewith has this day been entered.

[79-2 USTC ¶9524]James P. Kehoe, Plaintiff v. United States of America , Defendant

U. S. District Court, So. Dist. N. Y., 75 Civ. 3842 ( CHT ), 7/19/79

[Code Secs. 6402 and 7122]

Compromises: Acceptance of offer: Counteroffer distinguished: Credit of overpayment against tax liability of another year.--The Commissioner effectively accepted an offer to compromise a refund claim when he mailed the taxpayer's attorney a letter accepting the offer and informing the taxpayer that the refund settlement would be credited against the unpaid tax liability of a later tax year. The court rejected the taxpayer's argument that the IRS letter constituted a counteroffer rather than an acceptance because it materially altered the terms of the offer. Nothing in the offer limited the government's right under Code Sec. 6402 to offset the settlement against other outstanding tax liabilities.

Morton L. Ginsberg, 666 Fifth Avenue , New York , N. Y. 10019, for plaintiff. Robert B. Fiske, Jr., United States Attorney, Peter R. Paden, Assistant United States Attorney, New York , N. Y. 10007, for defendant.

Opinion

TENNEY, District Judge:

James P. Kehoe commenced this action in 1975 to seek a refund of $24,700.32 that had allegedly been wrongfully assessed against him as personal income tax owing for the 1970 tax year. The parties subsequently corresponded about settling this action. Contending that the parties did reach such a settlement, the Government now moves for an order enforcing the alleged settlement and dismissing the complaint. For the reasons given below, the Government's motion is granted and the complaint is dismissed.

Background

In his complaint, Kehoe alleged that his gross income for 1970 was $66,730.00 and that the tax properly due was $32,875.00, but that the Internal Revenue Service (" IRS ") had wrongfully determined that his gross income was $100,200.00 and wrongfully seized $57,020.75. In its answer, the Government denied the material allegations of the complaint. One month later Kehoe offered a compromise settlement. His attorney wrote that "I have been authorized by Mr. Kehoe to settle this action for the sum of $18,000 plus interest according to law." Letter from Morton L. Ginsberg to Paul H. Silverman, dated Dec. 31, 1975, Exh. C to Notice of Motion. The Government acknowledged receipt of Kehoe's offer, stating in part: "As we understand the terms of your offer they are as follows: Taxpayer, in full settlement of the above-entitled case, will accept a refund of $18,000, plus interest according to law." Letter from Scott P. Crampton to Ginsberg, dated Jan. 20, 1976, id. Exh. D. The Government subsequently accepted the offer. It wrote that Kehoe would receive a check if he sent the Government the proper stipulation discontinuing the action and "[s]ubject to the final paragraph of this letter." The final paragraph provided: "If the taxpayer has any unpaid liability in respect of an internal revenue tax, the overpayment resulting from this settlement may be credited thereon in accordance with the provisions of Section 6402, Internal Revenue Code of 1954." ¹ Letter from Crampton to Ginsberg, dated Mar. 2, 1976, id. Exh. E. Several months later, the Government informed Kehoe that the settlement amount had been credited by the IRS to his outstanding tax liability for 1971, see id. Exh. K, and sent him a stipulation of discontinuance asking him to execute and return it. Letter from Silverman to Ginsberg, dated Nov. 11, 1976, id. Exh. F. Rather than doing so, Kehoe protested the application of his 1970 overpayment, stating that he did not offer a settlement on the terms expressed in the Government's November 11 letter. He suggested that the parties "inform the Court that no settlement has been reached and that this action should be activated forthwith," and he reiterated the terms of the compromise offer. He also stated: "If the Department wishes to commence an action for the year 1971 we will be prepared to litigate the same independently." Letter from Ginsberg to Silverman, dated Nov. 16, 1976, id. Exh. G. In response, the Government reiterated its belief that the parties had reached a compromise settlement and explained the use of the section 6402 offset of the settlement amount against Kehoe's 1971 tax liability. Letter from Silverman to Ginsberg, dated Nov. 23, 1976, id. Exh. H. Subsequent correspondence indicated that the parties had reached a stalemate.

The Government argues, in summary, that the parties entered a binding agreement to settle the dispute, that the Government has fully performed under that agreement, and that the IRS had statutory authority, to credit the settlement amount to Kehoe's outstanding tax liability for 1971. Kehoe responds that the parties never reached an enforceable agreement because there was no meeting of the minds as to the manner of payment and because the Government's use of the term "overpayment" rather than "refund" or "sum" constituted not an acceptance of the offer, but rather a counteroffer. Allegedly, "sum" or "refund" refers to an actual return of the settlement amount whereas "overpayment" refers to money that may be set off against any existing tax liability. Kehoe also contends that the offer did not contemplate IRS discretion to use the sum as a credit and that, if it intends to so use the money, it must do so pursuant to 31 U. S. C. §227 by immediately commencing a separate action to collect for any 1971 liability and not by an administrative setoff pursuant to 26 U. S. C. §6402.

Discussion

"A district court has the power to enforce summarily, on motion, a settlement agreement reached in a case that [is] pending before it." Meetings & Expositions, Inc. v. Tandy Corp., 490 F. 2d 714, 717 (2d Cir. 1974). Although the facts in some cases may be so complex that summary enforcement is inappropriate, see id., the instant case can be resolved on the documents. To resolve the case, the Court must determine whether the parties reached a binding settlement agreement and, if so, whether the Government performed its part of the agreement, entitling it to relief. These questions are governed by general contract principles. United States v. Lane [62-1 USTC ¶9467], 303 F. 2d 1, 4 (5th Cir. 1962); Walker v. Alamo Foods Co. [1 USTC ¶207], 16 F. 2d 694, 697 (5th Cir. 1927).

After reviewing the documents, the Court concludes that the parties did reach a compromise settlement of their dispute over Kehoe's 1971 income tax liability. Kehoe offered "to settle this action for the sum of $18,000 plus interest according to law." Letter from Ginsberg to Silverman, dated Dec. 31, 1975 , Exh. C to Notice of Motion. The Government subsequently accepted the offer. Letter from Crampton to Ginsberg, dated Mar. 2, 1976 , id. Exh. E.

Kehoe argues, however, that the Government's response was not an acceptance, but rather a counteroffer, because it materially altered the manner of payment provided for in the offer, first, by referring to a credit against any unpaid liability rather than to an outright return of the money and, second--essentially the same as the first--by altering the terms "sum" and "refund" to "overpayment." In regard to the first point, however, the paragraph in the acceptance letter, id., referring to a credit under section 6204 was neither part of the acceptance nor a counteroffer; it never became a term in the agreement, nor was it suggested as such. Rather, it was a gratuitous statement of the law. ²

In regard to the second point, the constructions Kehoe puts on the terms used in the offer and acceptance do not avail him. He argues that the use of the word "sum" in the offer meant that the "term of such payment was to be in cash." Memorandum at 5-6. He offers, however, no support, either in the correspondence between the parties or otherwise, for this restrictive and inaccurate interpretation of "sum," and the Court is aware of no such support. He also argues that the Government made a counteroffer by using "overpayment" in its acceptance, id. para. 1, rather than "refund," the term the Government used in acknowledging and restating Kehoe's offer. ³ This change of terms does not alter the meaning of the agreement in this case. First, the term "refund," allegedly restricted to a direct return of money, was neither used nor suggested in either the offer or the acceptance; it could not in this case have become part of the agreement. The offeri