Are IRS Agents Fiduciaries?

Posted on: March 15, 2009 by: admin
United States Supreme Court
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The issue in these cases is whether a trustee in the course of administering its fiduciary obligations is entitled to rely on a directly relevant decision of this Court which has neither been overruled nor questioned. The Court of Claims ruled that the United States breached its fiduciary duty by failing to resist payment of Oklahoma’s estate tax on certain trust property held by the United States acting as trustee for the benefit of the Osage Indians. The Court of Claims recognized that this Court, in West v. Oklahoma Tax Comm’n, 334 U.S. 717 (1948), had squarely upheld the validity of Oklahoma’s inheritance tax as applied to restricted Osage Indians. But the lower court believed that West had been so undermined by later decisions of this and other courts that the United States had an obligation to challenge its continuing validity. Since the court also believed that such a challenge would have been successful, it upheld both the plaintiffs’ claim against the United States for the amount of the tax and the United States’ third-party claim against Oklahoma for indemnification. We reverse. We hold that the United States was entitled to rely on West in paying the tax and thus did not breach its fiduciary obligations. United States v. Mason, 93 S. Ct. 2202, 412 U.S. 391 (1973).

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