T.C. Memo. 2001-80
UNITED STATES TAX COURT
ROBERT COCO AND LAUREEN COCO, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 9460-00. Filed April 2, 2001.
Ronald J. Cohen, for petitioners.
Robin L. Peacock, for respondent.
MEMORANDUM OPINION
GERBER, Judge: This case was assigned to Chief Special
Trial Judge Peter J. Panuthos pursuant to the provisions of
section 7443A(b)(5) and Rules 180, 181, and 183.1 The Court
1
Unless otherwise indicated, all section references are
to the Internal Revenue Code in effect for the years in issue,
and all Rule references are to the Tax Court Rules of Practice
(continued...)
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agrees with and adopts the opinion of the Special Trial Judge,
which is set forth below.
OPINION OF THE SPECIAL TRIAL JUDGE
PANUTHOS, Chief Special Trial Judge: This case is before
the Court on respondent’s Motion to Dismiss for Failure to State
a Claim Upon Which Relief Can be Granted filed pursuant to Rule
40. Respondent asserts that petitioners failed to state a claim
in their amended petition seeking review of a denial of a request
for abatement under section 6404(e). The amended petition was
filed with this Court pursuant to section 6404(i). The premise
of the motion is that section 6404(e) does not provide authority
for respondent to abate interest assessed against petitioners for
tax year 1978. Accordingly, respondent asserts that there is no
factual or legal basis for the Court to grant the requested
relief.
Petitioners resided in Monroe, New York, at the time they
filed their petition.
Background
Petitioners filed a petition with this Court in 1983 to
contest deficiencies for tax years 1978 and 1979 (docket No.
21670-83). The parties filed a stipulation of settled issues in
that case, and an agreed decision was entered on June 15, 1985.
1
(...continued)
and Procedure.
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The decision reflected that petitioners were liable for a
deficiency of $13,690 for 1978 and $10,209.07 for 1979.
Petitioners contacted respondent during the latter part of
1985 and early part of 1986 to obtain a notice of assessment or
statement of tax due. In March 1986, respondent apparently
indicated that he would notify petitioners as to the tax
liability due, and petitioners should await such notification.
Approximately 7 years later, respondent advised petitioners of
his intention to levy for the amounts due and owing for 1978 and
1979. Petitioners paid the tax, interest, and penalty in October
1996.
Petitioners filed a Claim for Refund and Request for
Abatement (Form 843). On November 27, 1998, respondent sent a
letter to petitioners in which respondent approved an abatement
of interest of $26,275.65 for tax year 1979. The letter stated
that an abatement for tax year 1979 was justified because
respondent delayed in notifying petitioners of the 1978 and 1979
tax liabilities between February 27, 1986, and February 8, 1993.
The letter further indicated that interest could not be abated
for the tax year 1978 because “I.R.C. 6064(e)(1) empowers I.R.S.
to abate interest for tax years after 1978. Therefore, tax year
1978 is excluded from any actions.”
On March 2, 2000, respondent mailed to petitioners a Final
Determination disallowing petitioners claim for abatement of
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interest under section 6404(e)(1) for the tax year 1978.
Respondent noted that section 6404(e)(1) “authorizes interest
abatement only for tax years beginning after 1978”.
Petitioners filed a timely petition and amended petition for
review of respondent’s denial of their request for abatement of
interest. In their amended petition, petitioners allege that
respondent should have abated interest because of respondent’s 7-
year delay in providing petitioners with a notice of assessment
or statement of tax for 1978.
Respondent filed the instant motion,2 asserting that the
abatement of interest for tax year 1978 was properly denied on
the ground that respondent lacks the authority to abate interest
for the tax year 1978.
Petitioners filed an opposition to respondent’s motion.
Petitioners contend that this Court has absolute authority to
consider any refusal of abatement of interest under section
6404(e). Further, petitioners argue that Congress did not intend
to deny a taxpayer the opportunity for an abatement of interest
for taxable years ending before January 1, 1979.
Discussion
Rule 40 provides that a party may file a motion to dismiss
for failure to state a claim upon which relief can be granted.
2
The Court granted leave to file respondent’s Motion to
Dismiss for Failure to State a Claim.
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Generally, we may dismiss a petition for failure to state a claim
upon respondent’s motion when it appears beyond doubt that
petitioners can prove no set of facts in support of their claim
which would entitle them to relief. See Conley v. Gibson, 355
U.S. 41, 45-46 (1957); Price v. Moody, 677 F.2d 676, 677 (8th
Cir. 1982); Boyce v. Commissioner, T.C. Memo. 1996-439, affd. 122
F.3d 1069 (9th Cir. 1997); Arredondo v. Commissioner, T.C. Memo.
1996-185.
Section 6404(g) (redesignated as subsection 6404(i)),
enacted by section 302(a) of the Taxpayer Bill of Rights 2
(TBOR2), Pub. L. 104-168, 110 Stat. 1457 (1996), provides the Tax
Court with authority to review the Commissioner’s denial of a
taxpayer’s request for abatement of interest. The Tax Court has
jurisdiction to review whether the Commissioner’s refusal to
abate interest was an abuse of discretion. See sec. 6404(i)(1).
Petitioners’ request for abatement of interest is based upon
section 6404(e)(1). Section 6404(e)(1) provides that the
Commissioner may abate interest attributable to unreasonable
error or delay by an officer or employee of the Internal Revenue
Service in performing a ministerial act.3 Section 6404(e) was
3
In 1996, sec. 6404(e) was amended under sec. 301 of
TBOR2, Pub. L. 104-168, 110 Stat. 1457 (1996), to permit the
Commissioner to abate interest with respect to an “unreasonable”
error or delay resulting from “managerial” and ministerial acts.
This amendment, however, applies to interest accruing with
respect to deficiencies or payments for tax years beginning after
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enacted under the Tax Reform Act of 1986 (TRA 1986), Pub. L. 99-
514, sec. 1563(a), 100 Stat. 2762, and applies to interest
accruing with respect to deficiencies or payments for tax years
beginning after December 31, 1978. See TRA 1986 sec. 1563(b),
100 Stat. 2762.
Petitioners argue that Congress did not intend to deny
abatement of interest applications for taxable years prior to
1979. To the contrary, the statutory history of section 6404(e)
is clear that the Commissioner does not have the authority to
grant a request for abatement of interest under section 6404(e)
for tax years ending prior to 1979. This Court, as well as
several other courts, has held that section 6404(e) applies only
to taxable years beginning after December 31, 1978. See Magnone
v. United States, 902 F.2d 192 (2d Cir. 1990); Goettee v.
Commissioner, T.C. Memo. 1997-454; Mounts v. United States, 76
AFTR 2d 5608, 95-2 USTC par. 50399 (S.D. W.Va. 1995); McMullen v.
United States, 21 Cl. Ct. 248, 250 (1990). Respondent did not
have the authority to grant a request for abatement made pursuant
to section 6404(e) for the taxable year 1978, and, accordingly,
respondent did not abuse his discretion in denying the request
for abatement.
3
(...continued)
July 30, 1996. Therefore, the amendment is inapplicable to the
instant case. See Woodral v. Commissioner, 112 T.C. 19, 25 n.8
(1999).
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Conclusion
For the reasons set forth above, we hold that petitioners
have failed to state a claim for which relief can be granted, and
we shall grant respondent’s motion. In so holding, we have
carefully considered remaining arguments made by petitioners for
a result contrary to that expressed herein, and, to the extent
not discussed above, we consider those arguments to be without
merit.
To reflect the foregoing,
An appropriate order and
decision will be entered.