Ratification may fix signature problems.

• Author: Urban, Michael A.
• Position: Tax returns regulation

In various circumstances, the validity of an act performed by a taxpayer or by an IRS employee may be challenged on the basis that the person who performed the act did not have authority to do so. In many cases, the act is the signing of a document, such as a tax return, a petition to the U.S. Tax Court, or another financial or business document.

Concerns regarding the validity of an act often can be resolved by having an authorized person ratify the act that his or her agent performed. Ratification is defined as the confirmation or affirmation by a person with proper authority of a prior act performed by another person who lacked authority. The Tax Court has described ratification as the acquiescence of, or some act by, a principal that has the legal effect of binding the principal to the otherwise unauthorized prior act by an agent.

As a general rule, ratification is retroactive, relating back to when the agent performed the unauthorized act and is equivalent to original authority. In other words, ratification operates upon the act ratified precisely as though the authorized person had previously given the agent authority to do the act or had performed the act.

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Such retroactivity, however, is subject to a qualification that the intervening rights of third persons cannot be defeated by the ratification. For example, if an individual purporting to be the agent of another enters into a contract to sell land belonging to the principal, the latter cannot ratify the contract if, between the contract date and the attempted ratification, the principal had himself or herself disposed of the property. The principal cannot defeat the authorized intermediate sale made by himself or herself and validate the prior unauthorized sale made by the agent because, at the time of the attempted ratification, the principal no longer had power to contract for sale of the land (Cook v. Tullis, 85 U.S. 332 (1873)).

Therefore, the ratifying party must have authority to perform the act both at the time the act was done and at the time of the attempted ratification. In Federal Election Commission v. NRA Political Victory Fund, 513 U.S. 88 (1994), this requirement led the Supreme Court to hold that an "after-the-fact" authorization by the solicitor general did not relate back to the date of an unauthorized filing by the Federal Election Commission (FEC) so as to make it timely. In that case, the FEC had filed in its own name a timely petition...