CAMERATO v. COMMISSIONER

T.C. Memo. 2002-28

UNITED STATES TAX COURT

THOMAS R. CAMERATO, Petitioner v. COMMISSIONER OF
INTERNAL REVENUE, Respondent

Docket No. 2262-00. Filed January 25, 2002.

Thomas R. Camerato, pro se.

Margaret S. Rigg, for respondent.

MEMORANDUM OPINION

BEGHE, Judge: On August 23, 1999, respondent issued a

notice of final determination denying petitioner’s claim for

abatement of interest for the tax years 1992 and 1993.

Petitioner timely filed a petition and amended petition under
 - 2 -

section 6404(i)1 and Rule 281 with this Court, and respondent

timely filed an answer to the amended petition. Petitioner was a

resident of California at the times he filed his petition and

amended petition.

The case is before us on respondent’s motion for summary

judgment, as supplemented. We conclude, on the undisputed facts

before us, that petitioner is not entitled to abatement of

interest.2 We therefore grant respondent’s motion for summary

judgment.

Background

The following facts have been admitted or established by

uncontroverted documentary evidence.

In 1993, petitioner moved from California to Pittsburgh,

Pennsylvania, to attend the Carnegie-Mellon graduate school of

business. He used his Pittsburgh residence address on his 1993

Federal income tax return.

1
Unless otherwise indicated, section references are to the
Internal Revenue Code as in effect for the tax years for which
petitioner claims abatement of interest, and Rule references are
to the Tax Court Rules of Practice and Procedure.
2
Petitioner argues in his opposition to respondent’s motion
for summary judgment that he is also entitled to an abatement of
interest for tax year 1997. Petitioner did not request in his
petition or amended petition an abatement of interest with
respect to 1997. Moreover, respondent’s determination denying
abatement relates only to tax years 1992 and 1993. Therefore,
any issue relating to tax year 1997 is not properly before us.
 - 3 -

On or about September 7, 1994, respondent sent a notice to

petitioner at his Pittsburgh residence address that respondent

would audit petitioner’s 1992 Federal income tax return.

On September 9, 1994, petitioner telephoned respondent’s

Pittsburgh, Pennsylvania, office to demand that the audit be

postponed until May 1995 and transferred at that time to

California, because petitioner’s business expense records were

stored in California and it would be inconvenient and expensive

for petitioner to retrieve them. Petitioner indicated that he

intended to graduate from school and move back to California in

May 1995. Respondent refused to delay the audit until May 1995.

On October 25, 1994, respondent notified petitioner that

petitioner’s 1993 Federal income tax return would also be

audited.

Between September and November 1994, petitioner had several

further telephone conversations with respondent’s personnel.

Petitioner demanded that respondent stop sending him

“threatening” letters, indicated that he would not cooperate with

the scheduled audits, and again indicated that he wanted to have

the audits delayed to May 1995 and transferred to California.

Because petitioner did not appear for an examination or

submit documentary evidence to support his deductions, respondent

on April 4, 1995, sent petitioner, at his Pittsburgh residence

address, by certified mail, a notice of deficiency for 1992 and
 - 4 -

1993, disallowing deductions claimed on his 1992 and 1993

returns. The notice of deficiency was returned to respondent

because petitioner failed to claim it. The deficiencies were

assessed on August 4, 1995.

Petitioner claims that in May 1995 he received the “run

around” when he tried to resolve his tax liabilities. He claims

to have walked into the Oakland, California, branch of the

Internal Revenue Service, with his records but without a prior

appointment, demanding an immediate audit, but was turned away.

But in a letter dated December 28, 1998, petitioner admitted that

he did not actively pursue the matter until June 1997, when

respondent applied a later year refund to his assessed income tax

deficiencies:

Since my primary concern was finding a job in order to
pay for living expenses as well as paying back my debt
of $35,500 [for student loans], resolving this matter
with the IRS took a back seat because it was not going
to be as easy and straight forward as it should be [to
find a job] * * * As a taxpayer ignorant of the
bureaucratic gridlock that is pervasive throughout the
IRS, I became frustrated and gave up (until June 1997),
not having either the time or the energy to figure out
the ways of the IRS, I knew that I did not owe any
taxes and that sometime the IRS would contact me.

Petitioner filed a request for reconsideration of the

deficiencies on November 17, 1997.

Because petitioner had failed to attach documentation to his

request for reconsideration, respondent on January 29, 1998,
 - 5 -

issued a decision abating a portion of the 1993 deficiency, but

denying any abatement of the 1992 deficiency.

On April 7, 1998, petitioner filed a second request for

reconsideration. In May 1998, petitioner contacted the IRS

problem resolution program and was advised of the need to provide

records to support his request for reconsideration. Respondent

received records from petitioner on June 9, 1998. On September 3,

1998, respondent called petitioner to schedule an appointment to

review petitioner’s records. Petitioner requested that the

appointment be delayed until October 1998 because of a conflict

with petitioner’s vacation plans. On October 6, 1998, petitioner

met with respondent, and respondent and petitioner agreed upon

substantially reduced deficiencies.3 In addition to reducing the

deficiencies, respondent waived all penalties. Respondent

refused to abate interest on the substantially reduced

3
The parties have failed to provide the Court with the text
or terms of the agreement. According to petitioner, respondent
in the notice of deficiency originally sought to assess
deficiencies for 1992 and 1993 totaling approximately $20,000.
Respondent voluntarily reduced the deficiencies to approximately
$1,600 after respondent granted petitioner’s request for a new
audit and accepted petitioner’s documentation of most of his
deductions. Because petitioner’s time to seek Tax Court review
of the notice of deficiency had expired by the time of his
request for reconsideration, petitioner would have had to pay the
tax, file a claim for refund with respondent, and after denial
sue respondent for a refund if respondent had, in his discretion,
refused petitioner’s request for a new audit. Petitioner shows
no appreciation for respondent’s twice granting petitioner’s
requests for reconsideration, or for voluntarily agreeing to
reduce the assessed deficiencies without first requiring payment.
 - 6 -

deficiencies from the time they were due until they were paid.

Petitioner seeks review of respondent’s refusal to abate

interest.4

Discussion

Petitioner argues that the interest on the reduced

deficiencies should be abated because respondent wrongfully

refused to postpone and transfer the initial audit to May 1995 in

California, and because respondent is responsible for all delays

after May 1995 in reconsidering the assessment.

Petitioner also objects in his responses to respondent’s

motion for summary judgment, contending that summary judgment is

an unfair procedure because it is “not a mechanism for presenting

my case and on top of that it is not a forum I ever agreed to.”

Petitioner wants a trial so that he can call or force respondent

to call as witnesses various Internal Revenue Service employees

with whom he had contact both in Pennsylvania and California, and

can compel respondent to produce a “short list” of 20 categories

of documents, including personal records of respondent’s

auditors, respondent’s auditor and employee hiring guidelines and

training programs, the results of all customer satisfaction

4
The parties have not made clear what is the amount in
dispute. It appears to us that the total amount in dispute is
less than $1,000, consisting of interest on the agreed
deficiencies of approximately $1,600 from, at the earliest, May
1995 (when petitioner first wanted the audit to be held) until
petitioner paid the deficiencies in 2000.
 - 7 -

surveys carried out by respondent, and all policy changes made by

respondent in handling audits from 1994 to the present.

I. Standard for Summary Judgment

Contrary to petitioner’s objections, summary judgment is not

a novel procedure to be employed only with the consent of both

parties. We stated in Smith v. Commissioner, T.C. Memo.

1996-292:

Summary judgment is intended to expedite litigation and
avoid unnecessary and expensive trials of phantom
factual issues. Kroh v. Commissioner, 98 T.C. 383, 390
(1992); Florida Peach Corp. v. Commissioner, 90 T.C.
678, 681 (1988). Summary judgment may be granted with
respect to all or any part of the legal issues in
controversy "if the pleadings, answers to
interrogatories, depositions, admissions, and any other
acceptable materials, together with the affidavits, if
any, show that there is no genuine issue as to any
material fact and that a decision may be rendered as a
matter of law." Rule 121(b); Sundstrand Corp. v.
Commissioner, 98 T.C. 518, 520 (1992), affd. 17 F.3d
965 (7th Cir. 1994); Zaentz v. Commissioner, 90 T.C.
753, 754 (1988). * * *

Our Rule 121 provides for summary judgment in appropriate

cases and follows the basic structure of rule 56 of the Federal

Rules of Civil Procedure applied by Federal courts nationwide.

The rules permitting summary judgment recognize that trials

are necessary when there is a disputed issue of material fact

that can properly be resolved only by hearing live testimony.

Holding a trial serves no valid purpose when the issues can be

resolved as a matter of law on undisputed facts established by

affidavits, party admissions and other appropriate evidence. In
 - 8 -

an appropriate case, summary judgment saves both party and

judicial resources and results in the expeditious and efficient

resolution of controversies.

The party moving for summary judgment need not negate with

evidence every allegation made by the opposing party. As we

stated in Toushin v. Commissioner, T.C. Memo. 1995-573:

In Celotex [Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986)], the Supreme Court held that the
moving party in a summary judgment action need not in
all cases introduce evidence negating an essential
element of the opponent's claim in order to prevail on
the motion. If the moving party, after adequate time
for discovery, can make a "showing" from the record of
"a complete failure of proof concerning an essential
element of the nonmoving party's case" and on which the
nonmoving party will bear the burden of proof at trial,
there can be "’no genuine issue as to any material
fact,’" with respect to that claim. Id. at 322-323.
[Toushin v. Commissioner, T.C. Memo. 1995-573; fn. ref.
omitted.]

Once the opposing party presents evidence to support its claims,

we must draw all inferences from that evidence in favor of the

party opposing summary judgment. United States v. Diebold, Inc.,

369 U.S. 654, 655 (1962). But any inference must be drawn from

evidence submitted in connection with the summary judgment

motion, and not from mere allegations in the pleadings. Celotex

Corp. v. Catrett, supra at at 324.
 - 9 -

II. Standard for Tax Court Review of Commissioner’s Refusal To
Abate Interest

Section 6404(e)5 authorizes the Commissioner to abate the

assessment of interest on any deficiency or payment of tax if

there is a delay in such payment attributable in whole or in part

to any error or delay by an officer or employee of the Internal

Revenue Service in performing a ministerial act. The statute

specifically provides that 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”. Sec. 6404(e)(flush

language). In addition, an error or delay is taken into account

only “after the Internal Revenue Service has contacted the

taxpayer in writing with respect to such deficiency or payment.”

Id. Thus, abatement of interest for the period of time between

the date a taxpayer files a return and the date respondent

commences an audit is not permitted under section 6404(e). Sims

v. Commissioner, T.C. Memo. 1999-414 (citing H. Rept. 99-426, at

844 (1985), 1986-3 C.B. (Vol. 2) 1, 844).

5
Sec. 6404(e) was amended in 1996 by sec. 301 of the
Taxpayer Bill of Rights 2, Pub. L. 104-168, 110 Stat. 1452, 1457
(1996), to permit the Commissioner to abate interest with respect
to an “unreasonable” error or delay resulting from “managerial or
ministerial acts.” This amendment applies to interest accruing
with respect to deficiencies or payments for tax years beginning
after July 30, 1996. Woodral v. Commmissioner, 112 T.C. 19, 25
n.8 (1999). Accordingly, the amendment is not applicable to
petitioner’s 1992 and 1993 tax years.
 - 10 -

Interest abatement is not a routine matter; the taxpayer has

had the use of the unpaid taxes, and the Treasury has not had the

use of the taxes to which it was entitled. As we recently

observed in Smith v. Commissioner, T.C. Memo. 2002-1, quoting the

legislative history:

Section 6404(e) is not intended to be “used routinely
to avoid payment of interest”, but rather is to be
“utilized in instances where failure to abate interest
would be widely perceived as grossly unfair.” H. Rept.
99-426, at 844 (1985), 1986-3 C.B. (Vol. 2) 1, 844; S.
Rept. 99-313, at 208 (1985), 1986-3 C.B. (Vol. 3) 1,
208.

A ministerial act is a nondiscretionary procedural act that

the Commissioner is required to perform. According to the

legislative history:

The committee intends that the term "ministerial act"
be limited to nondiscretionary acts where all of the
preliminary prerequisites, such as conferencing and
review by supervisors, have taken place. Thus, a
ministerial act is a procedural action, not a decision
in a substantive area of tax law. For example, a delay
in the issuance of a statutory notice of deficiency
after the IRS and the taxpayer have completed efforts
to resolve the matter could be grounds for abatement of
interest. The IRS may define a ministerial act in
regulations. [S. Rept. 99-313, supra at 209, 1986-3
C.B. (Vol. 3) at 209; emphasis added.]

Similarly, the temporary regulations provide:

The term "ministerial act" means 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 prerequisites
to the act, such as conferences and review by
supervisors, have taken place. A decision concerning
the proper application of federal tax law (or other
federal or state law) is not a ministerial act. [Sec.
 - 11 -

301.6404-2T(b)(1), Temporary Proced. & Admin. Regs.,
52 Fed. Reg. 30163 (Aug. 13, 1987).]

Acts that are not ministerial are either managerial or arise out

of general administrative decisions. Abatement is not available

for managerial acts during the tax years in question and has

never been available for actions or nonactions attributable to

general administrative decisions. The House committee report on

the 1996 amendments made by the Taxpayer Bill of Rights 2 (TBOR

2)(under which relief was expanded prospectively to include

managerial acts as well as ministerial acts) explains:

The bill permits the IRS to abate interest with respect
to any unreasonable error or delay resulting from
managerial acts as well as ministerial acts. * * * On
the other hand, interest would not be abated for delays
resulting from general administrative decisions. For
example, the taxpayer could not claim that the IRS’s
decision on how to organize the processing of tax
returns or its delay in implementing an improved
computer system resulted in an unreasonable delay in
the Service’s action on the taxpayer’s tax return, and
so the interest on any subsequent deficiency should be
waived. [H. Rept. 104-506, at 27-28 (1996), 1996-3 C.B.
49, 75-76; emphasis added.]

Originally, the Commissioner had the discretion not to abate

interest even when the statutory requirements were met: “The

bill gives the IRS the authority to abate interest but does not

mandate that it do so”. S. Rept. 99-313 (1986), 1986-3 C.B.

(Vol. 3) 208-209. TBOR 2 gave the Tax Court authority under
 - 12 -

section 6404(i)6 to review the Commissioner’s denial of a

taxpayer’s request for abatement of interest. “The bill grants

the Tax Court jurisdiction to determine whether the IRS’s failure

to abate interest for an eligible taxpayer was an abuse of

discretion.” H. Rept. 104-506, supra at 28, 1996-3 C.B. at 76.

The Court may order abatement only where the Commissioner’s

failure to abate interest was an abuse of discretion. Sec.

6404(i). The taxpayer has the burden of proof to demonstrate

that the Commissioner, in failing to abate interest, “exercised

his discretion arbitrarily, capriciously, or without sound basis

in fact or law.” Woodral v. Commissioner, 112 T.C. 19, 23

(1999); see also Hanks v. Commissioner, T.C. Memo. 2001-319.

III. Petitioner Has Not Shown Any Genuine Issue of Material Fact.

After being advised by this Court to review our Rules on

summary judgment (which are available from the Clerk of Court and

on the Internet, to which petitioner indicated he has access),

petitioner failed to submit an affidavit or any other evidence to

support his allegations. Because petitioner would bear the

burden of proof at trial on all issues, summary judgment is

mandated here as a matter of procedure under the Supreme Court’s

Celotex standard. Celotex Corp. v. Catrett, 477 U.S. at 323.

6
Sec. 6404(i) was formerly designated sec. 6404(g), but was
redesignated sec. 6404(i) by the Internal Revenue Service
Restructuring & Reform Act of 1998, Pub. L. 105-206, secs.
3505(a), 3309(a), 112 Stat. 743, 745.
 - 13 -

In granting respondent’s motion, we do not rely on

petitioner’s procedural failures. Even if we should accept

petitioner’s unsupported allegations as true and properly

supported by evidence, we would still grant respondent’s motion

for summary judgment. As a matter of law, none of the five

grounds for abatement that petitioner has alleged is a valid

ground for relief.

First, petitioner alleges that respondent improperly refused

to grant his request made on September 9, 1994, to delay the

audit of his returns until he completed his graduate work in May

1995. Even if wrongful, respondent’s refusal to delay the audit

would not constitute a legal basis for the abatement of interest.

Respondent’s decision to refuse to delay the audit is not a

ministerial act; it is a managerial act involving the exercise of

discretion for which interest abatement is not available to

petitioner in this case.

Second, petitioner alleges that “I told the IRS auditor in

September & October 1994 that the best address to use for me was

my mailing address on the Carnegie Mellon University Campus.

* * * He apparently didn’t register that address change.”

Petitioner alleges that he therefore did not know about the April

4, 1995, notice of deficiency. Petitioner argues, in essence,

that if respondent had mailed the notice of deficiency to his

“better” Carnegie Mellon address, he would have received it,
 - 14 -

would have filed a petition for review with the Tax Court, would

have obtained an earlier determination of his deficiency, and

thereby could have avoided interest accruing on the deficiency

from the time the Tax Court would have ruled until the deficiency

was finally agreed upon.

Initially, we note that petitioner’s claim is flawed because

he has failed to show the specific period of time over which

interest should be abated as a result of this claimed “error or

delay.” See Donovan v. Commissioner, T.C. Memo. 2000-220.

Moreover, even ignoring this structural flaw, petitioner has

failed to establish that respondent committed any error, let

alone a ministerial one, in sending the notice of deficiency to

the address shown on his tax return, rather than to his school

address as he alleges he orally requested.

Respondent was required to mail the notice of deficiency to

petitioner’s “last known address.” Sec. 6212(b)(1). Neither

section 6212 nor the regulations promulgated thereunder and in

effect when the notice of deficiency was mailed7 define a

taxpayer's "last known address." We have defined it as the

address to which, in light of all the facts and circumstances,

respondent reasonably believed the taxpayer wished the notice of

7
Sec. 301.6212-2, Proced. & Admin. Regs, promulgated on Jan.
11, 2001, defines “last known address.” This new regulation was
not in effect when the notice of deficiency in the case at hand
was mailed, and by its terms is effective only to mailings on and
after Jan. 29, 2001. Sec. 301.6212-2(d), Proced. & Admin. Regs.
 - 15 -

deficiency to be sent. Frieling v. Commissioner, 81 T.C. 42

(1983). “Absent ‘clear and concise notification’ from the

taxpayer directing respondent to use a different address,

respondent is entitled to treat the address shown on the return

* * * as the taxpayer's ‘last known address.’” Id. at 49; see

also Abeles v. Commissioner, 91 T.C. 1019 (1988) (address on most

recently filed return).

Petitioner has not alleged that he communicated an address

change to respondent in a clear and concise way. Petitioner

alleges only that he orally offered a preferred alternative

address.

Moreover, it is clear from petitioner’s own admission that

respondent did not take account of the change: “He [respondent’s

employee] apparently didn’t register that address change”, says

petitioner. Petitioner has not alleged facts to show that

respondent took account of the address change, such as by sending

correspondence to his new address before the notice of deficiency

was mailed to the old address. See Frieling v. Commissioner,

supra; Weinroth v. Commissioner, 74 T.C. 430 (1980).

Given that petitioner: (1) Used his residential address

rather than his Carnegie Mellon University address on his most

recently filed tax return, (2) had not moved from his residential

address at the time he allegedly advised respondent that the
 - 16 -

“best address” to use was his Carnegie Mellon University address,

(3) gave no formal written notice to respondent of his change of

address, and (4) offered no evidence that respondent ever used or

acknowledged his change of address, we hold that respondent

committed no error, and in any event no error of a ministerial

nature, by mailing the notice of deficiency to the address on

petitioner’s most recently filed Federal income tax return.

In addition, even if petitioner had effected a change of

address, the evidence suggests that petitioner improperly refused

delivery of the notice of deficiency. Petitioner claims he did

not move to California until May 1995--long after the deficiency

notice was sent to him by certified mail on April 4, 1995, and

would have been delivered to him in the ordinary course, if

claimed by him. Respondent has submitted evidence that

petitioner was seeking to avoid receiving correspondence from

respondent. According to notes of respondent’s telephone calls

with petitioner on October 28, 1994 and November 16, 1994,

petitioner demanded that respondent stop sending him

correspondence regarding the deficiency. These telephone logs,

combined with proof that the certified letters were sent to

petitioner at a then-current address and were returned by the

Postal Service unclaimed, suggest that petitioner made a

conscious decision not to pick up from the Postal Service the

certified letter from respondent. Petitioner has not offered any
 - 17 -

explanation or justification for his failure to claim the

certified letter that respondent mailed to his then-current

residence address.

Third, petitioner alleges that he was not told that his

request to delay the audit until May 1995 and to transfer the

audit to California had been denied. The evidence submitted by

respondent shows that petitioner was repeatedly told that

respondent would not delay the audit until May 1995, and that he

would be advised only if his request for delay were to be

granted. Moreover, petitioner’s own letter to respondent dated

April 28, 1998, shows that he knew when the audit was scheduled.

Petitioner’s claim that he did not know about the audit appears

to be a recent afterthought. Petitioner states in his petition:

Since I could not afford the trip back to California
and the IRS auditor was being completely uncooperative-
-I was not trying to evade paying taxes, nor was I
being unreasonable or uncooperative with the IRS--I
missed the November 1994 audit.

The allegation in his petition--that petitioner did not attend

the audit because he could not afford to retrieve his records--is

inconsistent with petitioner’s new position that he missed the

audit because he was not informed of the date and time.

Finally, petitioner made it clear in his conversations with

respondent (evidenced by the contemporaneous notes of those

conversations attached to respondent’s affidavit), that he would

not participate in the audit unless it was delayed until after
 - 18 -

May 1995 and transferred to California, as he demanded. Had

respondent advised petitioner again that his request for

delay/transfer had been finally denied, petitioner’s own

statements indicate that he would not have participated in the

audit and that the same events would have happened.

Fourth, petitioner contends that the process by which IRS

customer service officers are trained constitutes a “ministerial

error” that resulted in the delay in paying his deficiency. “My

claim is that the process and procedure of recruiting, hiring and

training IRS customer service representatives is what was the

cause of the error or delay (a ministerial error not a managerial

error.” We disagree. The process of recruiting, hiring, and

training IRS customer service representatives is attributable to

respondent’s general administrative decisions, and not to a

ministerial act, and therefore no relief is available to

petitioner on account of these decisions.

Fifth, petitioner argues that respondent committed a

ministerial error or delay by failing to audit petitioner’s

records on-the-spot when he walked into respondent’s Oakland

office in September 1995, without an appointment, and demanded an

immediate audit of his returns. Petitioner has, of course, cited

no authority for his position that respondent is required to

perform audits-on-demand for taxpayers who walk in to

respondent’s offices, and we are aware of no such requirement.
 - 19 -

Respondent’s decision to grant or deny an immediate audit is not

a ministerial act; it is a managerial act involving the exercise

of discretion.

Petitioner has failed to allege any ministerial error or

delay by respondent that caused an increase in petitioner’s

interest obligation. Moreover, the evidence alleged by

petitioner is replete with acts by petitioner causing delay,

including his initial demand that the audit be delayed until he

completed his schooling, his demand that a subsequent audit be

delayed until he returned from vacation, his failure to pursue

review of respondent’s decisions for many months due to his busy

schedule, his unwillingness to listen to respondent’s positions

or to cooperate with respondent in an effort to accommodate his

requests, and his rude and insulting statements to respondent’s

customer service representatives (which are evidenced in the

customer service notes of petitioner’s conversations with

respondent’s customer service representatives, in petitioner’s

letters to respondent, and in the papers petitioner filed with

this Court). The record in this case shows clearly that a

significant aspect of the delay, if not all of the delay, in

finally determining the correct amount of petitioner’s

deficiencies is attributable to petitioner.

We find no error in respondent’s determination that

petitioner is not entitled to an abatement of interest in excess
 - 20 -

of the reductions that have already occurred as a result of

respondent’s reconsideration and reduction of the assessed

deficiencies. Respondent’s motion for summary judgment will be

granted as supplemented.

To reflect the foregoing,

An appropriate order and

decision will be entered granting

respondent’s motion for summary

judgment as supplemented.