supposed reservation of rights for tax years 1983 and 1984, the Tokers now seek to recover those sums.
I. The 1982 Tax Year
Before this Court can rule on the merits of a claim, this Court must have subject matter jurisdiction over that claim. See Scheuer v. Rhodes, 416 U.S. 232, 236, 40 L. Ed. 2d 90, 94 S. Ct. 1683 (1974) (noting that "when a federal court reviews the sufficiency of a complaint, before the reception of any evidence by affidavit or admissions, its task is necessarily a limited one. The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence in support of the claims."). In determining whether such jurisdiction exists, the Court assumes the truth of plaintiff's factual allegations. See Atlantic Mut. Ins. v. Balfour Maclaine Intern., 968 F.2d 196, 198 (2d Cir. 1992). The Tokers, however, have the burden of establishing that this Court possesses subject matter jurisdiction over their claims. See Myles v. United States, 810 F. Supp. 390, 393 (N.D.N.Y. 1990) ("The burden of proving the existence of subject matter jurisdiction lies with the party alleging jurisdiction"). This is a burden which the Tokers cannot meet.
"It is elementary, although not well known to the layman, that the filing of a timely petition with the United States Tax Court gives that court exclusive jurisdiction, . . . thereby barring a refund suit in the district court." Dorl v. Commissioner of Internal Revenue, 507 F.2d 406, 407 (2d Cir. 1974); see also Monjar v. Higgins, 132 F.2d 990 (2d Cir. 1943). Indeed, as codified in 26 U.S.C. § 6512(a), once a taxpayer files a petition with the Tax Court, one taxpayer is precluded from recovering any part of the disputed tax in another court. See also First Nat. Bank of Chicago v. United States, 792 F.2d 954, 955-56 (9th Cir. 1986) (holding that the filing of a petition with the Tax Court precludes the filing of a refund suit in a district court with regard to taxes over which the Tax Court had jurisdiction). Moreover, also according to statute, the United States of Appeals has exclusive jurisdiction to review Tax Court decisions. See 26 U.S.C. § 7482.
By petitioning the Tax Court in connection with their 1982 taxes, the Tokers divested this Court of jurisdiction over the subject matter of this dispute. Plaintiffs cannot escape this holding, as they attempt to do, by contending that instead of seeking to relitigate the 1988 Tax Court decision, they are bringing an action based upon an oral agreement that the "IRS would refund those amounts if a court later determined in a separate action that disputed Term Associates deductions were proper." (See Pl.'s Nov. 7, 1996 Mem. of Law in Sup. of Pl.'s Cross-Mot. for Summ. J. at 16.) Even with their select phrasing, plaintiffs cannot avoid that their present claim is tied to the propriety of their 1982 deductions. Any oral agreement between the Tokers and the IRS was inextricably linked to their liability for tax year 1982. The Tax Court, however, has ruled with respect to this liability, and without suggesting that its decision was contingent on any future administrative or judicial developments. This Court simply lacks the subject matter jurisdiction to revisit that determination. See Berkery v. United States, 767 F. Supp. 660 (E.D. Pa. 1990) (finding no jurisdiction after previous Tax Court judgment, despite the IRS basing assessments on subsequently dismissed criminal charges, wrong assessments, and a government witness who committed perjury).
As the Court has already suggested, it is significant not only that the Tax Court asserted its jurisdiction over the question of plaintiffs' 1982 tax liability, but that it also entered a decision finally resolving that question. Principles of res judicata preclude this Court from disrupting the Tax Court's judgment of the extent of the Toker's liability. See Commissioner v. Sunnen, 333 U.S. 591, 598-99, 92 L. Ed. 898, 68 S. Ct. 715 (1948) ("if a claim of liability or non-liability relating to a particular year is litigated, a judgment on the merits is res judicata as to any subsequent proceeding involving the same claim and the same tax year."); see also United States v. International Bldg. Co., 345 U.S. 502, 506, 97 L. Ed. 1182, 73 S. Ct. 807 (1953) (holding that res judicata applies to a Tax Court judgment based on a compromise settlement). The Tax Court has entered a final judgment as to the Tokers 1982 tax year liability, and it is not for this Court to revisit the question, even if on the basis of supposed oral understandings and subsequent developments.
Id.; see also Elbert v. Johnson, 164 F.2d 421, 424 (2d Cir. 1947) ("It is immaterial that the issue sought to be litigated in the District Court was not presented to the Tax Court, or could not have been presented because based on subsequent events.").
II. The 1983 and 1984 Tax Years
Because the Tokers did not previously petition the United States Tax Court on the question of their 1983 and 1984 tax liability, there is no issue as to this Court's subject matter jurisdiction with respect to plaintiffs' claims for deductions claimed for these years.
There is an issue, however, whether plaintiffs accepted the settlement terms set forth in the Forms 870-P provided to them by the IRS, and thereby entered into a final and binding agreement with the IRS.
A. Parole Evidence
The interpretation of waivers and agreements between taxpayers and the IRS must be in accordance with general principles of contract law. See Goldman v. Commissioner, 39 F.3d 402, 405 (2d Cir. 1994). According to these general principles, "parole evidence may be admitted to explain a writing only when the terms of the writing are ambiguous." Investors Ins. Co. of America v. Dorinco Reinsurance, 917 F.2d 100, 104 (2d Cir. 1990); see also Greco v. Department of the Army, 852 F.2d 558, 560 (Fed. Cir. 1988)("Only if there is ambiguity should parole evidence be considered"). Thus, to the extent that the Forms 870-P constitute "integrated" agreements, the Court can not consider plaintiffs' extrinsic evidence allegedly modifying and effectively neutralizing the clear and unambiguous terms of those forms. See Nicholson v. United States, 29 Fed. Cl. 180, 194 (1993) (citing 4 Samuel Willison, A Treatise on the Law of Contracts, § 631, at 948 (3d ed. 1961)).
Plaintiffs argue that the Court must view the agreement between the IRS and the Tokers to encompass not only the terms of the Forms 870-P, but the language of the cover letter Mr. Toker sent with those forms, as well. In that Feb. 21, 1993 letter, Mr. Toker explained that he had already satisfied his 1983 and 1984 liability, and that it had been his understanding that there would be no need for him to sign the Forms 870-P. He claims, however, that he was subsequently informed, during a phone call to the IRS, that his signature would be required "just for the purpose of closing [his] file." (See Pl.'s Nov. 6, 1996 Aff. at Ex. 6.) Mr. Toker therefore submitted the signed forms so that the IRS could "close [his] account for the years 1983 and 1984 without any further liability on [his] part." (Id.) Even accepting plaintiffs' position that the cover letter must be considered part of the agreement between the Tokers and the IRS, the Court detects no ambiguity in that agreement, and certainly no ambiguity lending any evidentiary support to plaintiffs' interpretation of the agreement as a virtual nullity.
In several places, and in clear terms, it was indicated that plaintiff's signature on the Forms 870-P -- if accepted by the IRS -- would constitute a final settlement of the claims relating to tax years 1983 and 1984. Specifically, Form 870-P provides that the matter "will not be reopened in the absence of fraud, malfeasance, or misrepresentation of fact"; the Notice provides that "the settlement will be binding and will not be affected by any later judicial determination"; and section 6224, referenced in the Forms 870-P further confirms that the agreements are "binding." (See Def.'s Sept. 18, 1996 Mot. for Dis. of the Compl. at Ex. F.) The February 21 letter, for all of its apparent hedging, embraces this notion by requesting confirmation from the IRS that the Tokers' case would be "closed" and that Mr. Toker's check would constitute "full" payment. Moreover, Mr. Toker's language concerning the administrative nature of the forms nowhere suggests his supposed intention to reserve rights expressly forfeited pursuant to the terms of the signed Forms 870-P. Mr. Toker may have written his cover letter in the hopes of providing himself a loophole in the event of a subsequent Tax Court decision upholding the Term Associates deductions. If this was his intention, however, the language he chose reveals that Mr. Toker meant to secure this loophole with language subtle enough that it would not draw the attention of the IRS before making its final acceptance of the settlement. Whatever his intentions, Mr. Toker simply failed to introduce any real ambiguity into the plain terms of the agreement he accepted. See Andersen Consulting v. United States, 959 F.2d 929, 934 (Fed. Cir. 1992) ("'proposals must be evaluated on the basis of what they contain, not what their author intended that they contain"')(citation omitted).
The Second Circuit has identified additional considerations which contribute to this Court's unwillingness to credit plaintiffs' position. See Stair v. United States, 516 F.2d 560, at 565 (2d Cir. 1975). The Stair Court cautioned against arming taxpayers "with both a shield and a sword":
The [plaintiffs], if allowed to proceed, could fare no worse than the compromise they have already succeeded in negotiating. If victorious on the merits, they would be freed from the obligation of sustaining their half of that bargain. Given such a state of affairs, it would be an imprudent taxpayer indeed who did not resort to litigation even after compromise.