T.C. Memo. 2000-141
UNITED STATES TAX COURT
ROBERT BANAT, Petitioner v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2237-97. Filed April 14, 2000.
P filed a petition for a determination that R’s
failure to abate interest under sec. 6404(e), I.R.C.,
with respect to petitioner’s 1985, 1986, and 1987
taxable years was an abuse of discretion and for an
abatement order.
Held: P has not established any erroneous or
dilatory ministerial acts by R giving rise to the
assessment of interest after P was first contacted in
writing about the deficiency and before interest was
assessed.
Hedy P. Forspan, for petitioner.
Thomas J. Kerrigan, for respondent.
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MEMORANDUM OPINION
HALPERN, Judge: This case is before the Court for review of
respondent’s failure to abate interest.1 By notice dated
November 8, 1996, respondent made his final determination not to
abate interest with respect to petitioner’s 1985, 1986, and 1987
taxable (calendar) years.
Unless otherwise indicated, all section references are to
the Internal Revenue Code in effect at the time the petition was
filed, and all Rule references are to the Tax Court Rules of
Practice and Procedure.
At the time the petition was filed, petitioner resided in
Brooklyn, New York.
This case was submitted for decision without trial. See
Rule 122. The parties have agreed to a stipulation of facts (the
stipulation). The stipulation, with attached exhibits, is
incorporated herein by this reference. Certain other exhibits
were received into evidence. We shall not here repeat the
stipulation or recite the contents of the other exhibits. We
shall, however, summarize certain facts as an aid to
understanding our discussion.
1
A prior report in this case appears at Banat v.
Commissioner, 109 T.C. 92 (1997).
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Background
Petitioner filed his Federal income tax returns for 1985,
1986, and 1987 on May 15, 1986, August 16, 1987, and April 15,
1988, respectively.
Petitioner was contacted in writing with respect to a
deficiency in his 1985 Federal income tax liability no later than
July 22, 1986. He was contacted in writing with respect to a
deficiency in his 1986 Federal income tax liability no later than
November 1, 1988. He was contacted in writing with respect to a
deficiency in his 1987 Federal income tax liability no later than
June 13, 1990.
On March 19, 1992, with respect to petitioner’s 1985 taxable
year, respondent assessed an additional tax of $21,121 and
interest of $21,946.11. Also, on March 19, 1992, with respect to
petitioner’s 1986 taxable year, respondent assessed an additional
tax of $6,418 and interest of $5,662.08. On April 5, 1993, with
respect to petitioner’s 1987 taxable year, respondent assessed an
additional tax of $8,715 and interest of $6,617.74.
On August 13, 1995, petitioner submitted three Forms 843,
Claim for Refund and Request for Abatement (the Forms 843), to
respondent, one each for his taxable years 1985, 1986, and 1987
each claiming an abatement of interest. None of the Forms 843
specifies the amount of interest to be abated or the period
during which the interest to be abated accrued. Respondent
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treated the Forms 843 as claims for abatement of interest as
follows:
Claims for Abatement of Interest
Taxable Year
of Deficiency Interest Accrual Period Amount
1985 4/15/86 to 3/19/92 $21,946
1986 4/15/87 to 3/19/92 5,662
1987 4/15/88 to 4/05/93 6,618
On November 8, 1996, respondent made his final determination
not to abate interest with respect to petitioner’s 1985, 1986,
and 1987 taxable (calendar) years.
The petition was filed on February 5, 1997.
Discussion
In certain circumstances, the Secretary is authorized to
abate interest. Section 6404(e)(1), prior to its amendment by
the Taxpayer Bill of Rights 2 (TBOR 2), Pub. L. 104-168,
sec. 301, 110 Stat. 1452, 1457 (1996), read as follows:
SEC. 6404(e). Assessments of Interest Attributable
to Errors and Delays by Internal Revenue Service.--
(1) In general.--In the case of any assessment
of interest on--
(A) any deficiency attributable in whole or
in part to any error or delay by an officer or
employee of the Internal Revenue Service (acting
in his official capacity) in performing a
ministerial act, or
(B) any payment of any tax described in
section 6212(a) to the extent that any * * * error
or delay in such payment is attributable to such
officer or employee being erroneous or dilatory in
performing a ministerial act,
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the Secretary may abate the assessment of all or any
part of such interest for any period. For purposes of
the preceding sentence, an error or delay shall be
taken into account only if no significant aspect of
such error or delay can be attributed to the taxpayer
involved, and after the Internal Revenue Service has
contacted the taxpayer in writing with respect to such
deficiency or payment.
Among the amendments made to section 6404(e)(1) by the
TBOR 2 was the replacement in paragraph (1)(A) and (B) of the
expression “in performing a ministerial act” with the expression
“in performing a ministerial or managerial act”. TBOR 2 sec.
301(a)(2). (Emphasis added). That amendment, however, applies
only to interest accruing with respect to deficiencies or
payments for tax years beginning after July 30, 1996. See TBOR 2
sec. 301(c). It is inapplicable to this case; therefore, the
Secretary’s authority to abate interest in this case is limited
to interest on any deficiency attributable in whole or in part to
any error or delay by any officer or employee of the Internal
Revenue Service (the Service) in performing a ministerial act.
See Woodral v. Commissioner, 112 T.C. 19, 25 n.8 (1999).
Section 6404(g)2 authorizes this Court to determine whether
the Secretary’s failure to abate interest under section
2
Sec. 6404(g) is now sec. 6404(i).
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6404(e)(1) was an abuse of discretion and, if the Court so
determines, to order an abatement.3
Under section 6404(e)(1)(A), the Secretary has no authority
to abate an assessment of interest on a deficiency unless that
assessment is attributable in whole or in part to some error or
delay by an officer or employee (without distinction, employee)
of the Service in performing a ministerial act. Unless the
Secretary has the authority under section 6404(e)(1)(A) to abate
an assessment of interest on a deficiency, we have no authority
under section 6404(g) to review his failure to abate such
interest. The regulations interpreting section 6404(e) define
the term “ministerial act” as “a procedural or mechanical act
that does not involve the exercise of judgment or discretion, and
that occurs during the processing of a taxpayer's case after all
3
In pertinent part, sec. 6404(g) provides:
SEC. 6404(g). Review of Denial of Request for
Abatement of Interest.--
(1) In general. The Tax Court shall have
jurisdiction over any action brought by a taxpayer who
meets the requirements referred to in section
7430(c)(4)(A)(ii) to determine whether the Secretary’s
failure to abate interest under this section was an
abuse of discretion, and may order an abatement, if
such action is brought within 180 days after the date
of the mailing of the Secretary’s final determination
not to abate such interest.
Petitioner meets the requirements of sec. 7430(c)(4)(A)(ii),
and the action was timely brought.
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prerequisites to the act, such as conferences and review by
supervisors, have taken place.” Sec. 301.6404-2T(b)(1),
Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 (Aug. 13,
1987).4 Therefore, as a prerequisite to our reviewing the
Commissioner’s failure to abate an assessment of interest on a
deficiency, the taxpayer must show that such assessment is
attributable to some error or delay by an employee of the Service
in performing a ministerial act. See sec. 6401(e)(1). Moreover,
pursuant to the specific language of the last sentence of section
6404(e)(1), any such error or delay must be disregarded unless it
occurred after the taxpayer was first contacted in writing about
the deficiency. Since, with respect to the assessment of
interest on a deficiency, the Secretary’s authority is to abate
the portion of the interest assessment attributable to such error
or delay, the error or delay must, of necessity, occur before the
assessment of the interest on the deficiency. See sec.
6404(e)(1). Therefore, for each taxable year for which the
taxpayer claims the Commissioner abused his discretion in failing
to abate the assessment of interest on a deficiency, the taxpayer
must show not only the assessment of interest attributable to
4
The final regulation under sec. 6404, as issued on
Dec. 18, 1998, contains the same definition of ministerial act.
The final regulation generally applies to interest accruing on
deficiencies or payments of tax for taxable years beginning after
July 30, 1996. See sec. 301.6404-2(b)(2), Proced. & Admin. Regs.
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some error or delay of an employee in performing a ministerial
act but also that such error or delay occurred after the taxpayer
was first contacted in writing about the deficiency and before
the interest was assessed. Petitioner has not made that
preliminary showing for any of the years here in question.5
Petitioner’s brief contains a statement of facts that
reiterates the stipulation. Petitioner has failed to establish
concrete incidences of error or delay in performing ministerial
acts that gave rise to any assessment of interest. Petitioner
argues that the length of time from the start of respondent’s
examination of 1985 until the conclusion of respondent’s
examination of 1985, 1986, and 1987 automatically establishes
that there was an erroneous or dilatory ministerial act or acts.
We disagree. See Lee v. Commissioner, 113 T.C. 145, 150 (1999)
("The mere passage of time in the litigation phase of a tax
dispute does not establish error or delay by the Commissioner in
performing a ministerial act."). The length of time required by
petitioner's case was largely a function of the expansion of
5
For each of the taxable years in question, the relevant
periods during which petitioner must show error or delay in
performing a ministerial act (i.e., the period from first written
contact to assessment of the interest) are as follows:
Taxable Year Period
1985 7/22/86 to 3/19/92
1986 11/01/88 to 3/19/92
1987 6/13/88 to 4/05/93
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respondent’s examination to other years, third-party summonses
made necessary by petitioner’s difficulties in supplying
documentation, respondent’s suspicion of civil fraud, and the
reopening of the examination at petitioner’s request after it was
settled in 1992. None of those actions, which extended the time
of the examination, involve ministerial acts by respondent. See,
e.g., Taylor v. Commissioner, 113 T.C. 206 (1999) (the
Commissioner's decision not to proceed with civil case during
criminal fraud investigation and prosecution was not a
ministerial act).
Petitioner points to a misaddressed letter from respondent
to one of petitioner’s representatives as evidence of an error in
performing a ministerial act. There was no error by respondent;
the letter was mailed to an incorrect address provided by
petitioner’s representative to respondent. The letter was
remailed once respondent determined the correct address.
Since petitioner has not established any erroneous or
dilatory ministerial acts, giving rise to the assessment of
interest, during the relevant timeframes, we conclude that
respondent’s failure to abate interest was not an abuse of his
discretion.
Decision will be entered
for respondent.