T.C. Memo. 2005-150
UNITED STATES TAX COURT
THOMAS AND JULIA BO, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 10657-03. Filed June 23, 2005.
Thomas and Julia Bo, pro se.
Michael D. Zima, for respondent.
MEMORANDUM FINDINGS OF FACT AND OPINION
COLVIN, Judge: Respondent issued a final determination
disallowing petitioners’ claim under section 6404(e) for
abatement of interest related to their income tax liabilities for
1991-95 that accrued from March 18, 1999, to October 8, 2002.
Respondent concedes that petitioners are entitled to
abatement of interest that accrued from June 26 to November 7,
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2001. The issue for decision is whether respondent’s denial of
petitioners’ remaining claim for abatement of interest relating
to petitioners’ 1991-95 tax years was an abuse of discretion. We
hold that it was with respect to the time from July 3 to July 23,
2002.1
Section references are to the Internal Revenue Code as
amended. Rule references are to the Tax Court Rules of Practice
and Procedure. References to petitioner are to Thomas Bo.
FINDINGS OF FACT
Some of the facts have been stipulated and are so found.
A. Petitioners
Petitioners are married and lived in Malabar, Florida, when
they filed the petition. They have four children.
Petitioner operated a business through which he sold,
leased, and installed security, monitoring, and alarm systems.
Petitioner wife did the office work for the business including
compiling data needed to prepare petitioners’ tax returns. At a
1
Respondent filed a motion for summary judgment which we
granted with respect to whether petitioners are entitled to
relief under sec. 6404(e)(1)(A), which applies to any deficiency
attributable to any ministerial delay by respondent. We did so
because respondent determined no deficiencies with respect to the
years in issue. We denied respondent’s motion for summary
judgment with respect to sec. 6404(e)(1)(B) and the flush
language of sec. 6404(e)(1) as to whether petitioners’ delay in
paying their 1991-95 taxes was attributable to erroneous or
dilatory performance of a ministerial act by an officer or
employee of the Internal Revenue Service, and, if so, whether
petitioners caused any significant aspect of the delay.
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time not specified in the record, petitioner wife had serious
medical conditions which prevented her from compiling that tax
data.
Petitioner suffered substantial personal injuries in an
automobile accident on December 13, 1996, which left him
permanently 20 percent disabled. During the 4 years after the
accident, petitioners struggled financially, were evicted from
two homes, and had one vehicle repossessed.
B. Petitioners’ Federal Income Tax Returns and Payments
Petitioners requested and received an extension of time to
October 15, 1992, to file their 1991 Federal income tax return.
Petitioners submitted $1,000 with that request. They later
reported a tax liability of $2,794 for 1991.
Petitioners did not request or receive extensions of time in
which to file their Federal income tax returns for 1992-94.
Petitioners requested and received an extension of time to
October 15, 1996, to file their 1995 return. Petitioners
submitted $435 with this request. They later reported a tax
liability of $544 for 1995.
Petitioners untimely filed their 1991-95 Federal income tax
returns on April 17, 1997. H & R Block prepared those returns.
On those returns, petitioners reported the following income tax
liabilities:
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Year Tax
1991 $2,794
1992 1,144
1993 859
1994 1,527
1995 544
Total 6,868
Petitioners did not pay any tax with their returns for 1991-95.
Respondent assessed the tax which petitioners reported on
their return for 1995 on May 19, 1997, for 1991 and 1994 on May
26, 1997, and for 1992 and 1993 on June 30, 1997. Respondent
also assessed additions to tax for failure to timely file under
section 6651(a)(1) and failure to pay the tax shown on the return
under section 6651(a)(2) as follows:
Additions to tax
Year Sec. 6651(a)(1) Sec. 6651(a)(2)
1991 $403.65 $448.50
1992 257.40 286.00
1993 193.28 167.51
1994 343.58 198.51
1995 100.00 28.63
Total 1,297.91 1,129.15
On June 2, 1997, petitioners gave respondent a check in the
amount of $584.36 to be applied to their balance due for 1996.
The issuing bank did not honor this check.
C. Events Occurring From April 17, 1997, to March 18, 1999
Petitioners filed their returns for 1991-95 on April 17,
1997. Petitioner knew in 1997 and early in 1998 that petitioners
had not paid the taxes they reported were due on those returns.
He believed that petitioners had not correctly reported their tax
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liabilities on their returns for the years in issue because he
thought they had not deducted enough for telecommunication
expenses (cell phones and pagers).
In 1997 and early 1998, petitioner told Annette Davis
(Davis), an employee of respondent,2 that he believed petitioners
had reported owing more tax than they owed. Davis recommended
that petitioners submit an offer in compromise.
D. Events From March 18, 1999,3 to October 8, 2001
1. March 18, 1999
Petitioner mailed a letter to Davis on March 18, 1999, in
which he referred to a conversation he had had with her. In that
conversation, petitioner had told Davis that he believed that
petitioners’ returns were incorrect because they did not include
deductions for telecommunication costs of about $5,000 per year.
On March 13, 2000, petitioner wrote to respondent and asked
respondent to consider petitioners’ situation as an economic
hardship case. In that letter, petitioner said that his accident
on December 13, 1996, had caused severe physical injuries to him
and substantial financial losses to his business.
2
Annette Davis’s position with respondent at that time is
not in the record. She later became a group manager.
3
Petitioners contend that interest on their underpayment
for 1991-95 that accrued from Mar. 18, 1999, to the present
should be abated.
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Petitioners submitted an offer in compromise to respondent
in late April or early May 2000. Respondent returned it to
petitioners on May 3, 2000, because petitioners had not filed a
return for 1998. Petitioners resubmitted their offer in
compromise on May 13, 2000, with their tax return for 1998. In
the resubmitted offer in compromise, petitioners proposed to pay
$2,500 to settle their 1991-95 tax liabilities.
On a date not stated in the record, petitioner called Davis
to ask about the status of petitioners’ case. He learned that
Davis was on maternity leave and that Phyllis McLaughlin
(McLaughlin) was responsible for petitioners’ case. Petitioner
spoke with McLaughlin many times.
One of respondent’s employees (not identified in the record)
told petitioner that respondent was returning petitioners’ offer
in compromise because petitioner had apparently included his
business gross receipts in his personal income. The employee
told petitioner to separate his personal and business items so
that respondent’s evaluators would not assume that petitioner’s
income included his business gross receipts. McLaughlin
suggested to petitioners that they seek help from an accountant
to separate those items. Petitioners retained John Holder
(Holder).
R. Chambers (Chambers), a member of respondent’s collection
division in Melbourne, Florida, faxed to petitioners on July 27,
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2000, a letter that Chambers had prepared for petitioners to
sign. The letter stated (without explanation) that petitioners
requested to withdraw their pending offer in compromise for 1991-
95. Petitioner signed the letter and returned it to Chambers on
July 27, 2000. Davis told petitioners that their offer in
compromise to settle their liability for 1991-95 was considered
withdrawn on July 28, 2000.
2. Administrative Proceedings Under Section 6330(b)
Respondent filed a notice of Federal tax lien with respect
to petitioners’ 1991-95 Federal income tax liabilities 2 days
after petitioners withdrew their offer in compromise. The lien
adversely affected petitioner’s credit, including his ability to
buy alarm equipment on credit to install for his customers.
On August 2, 2000, petitioners timely filed a request for a
collection due process hearing.
On dates not stated in the record: (a) Petitioner asked
respondent’s employees (not identified in the record) why
respondent had filed a Federal tax lien; (b) petitioner was told
that he had not resubmitted an offer in compromise; (c)
petitioners submitted to respondent a offer in compromise that
Holder had helped to prepare; (4) respondent did not accept it
because petitioners had not filed all tax returns that were due;
and (5) petitioners prepared returns that were due and submitted
them with the offer in compromise.
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On October 18, 2000, petitioners filed amended returns in
response to respondent’s assessment of petitioners’ tax
liabilities for 1991-95. Petitioners reported lower tax
liabilities for 1991-95 in those amended returns than they had
reported in their original returns for those years.
Respondent assigned petitioners’ collection due process case
to Appeals Officer Vivian Watson (Watson) on April 26, 2001.
Watson attended job-related training from April 30 to May 11,
2001.
On May 22, 2001, Watson wrote to petitioners to schedule a
collection due process hearing for June 7, 2001. Watson enclosed
a Form 433-A, Collection Information Statement for Individuals,
that she asked petitioners to complete and return to her by June
6, 2001. Petitioners completed the Form 433-A and returned it to
Watson on June 6, 2001.
At petitioners’ request, Watson conducted the collection due
process hearing on June 6, 2001. Immediately after the hearing,
Watson wrote a letter to petitioners in which she enclosed a Form
433-B, Collection Information Statement for Businesses, to be
returned by June 20, 2001. Watson also asked for a copy of
petitioners’ original 1991-95 returns, spreadsheets used to
prepare the amended 1991-95 returns, and telecommunication bills
for expenses claimed on the amended 1991-95 returns. Petitioner
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worked on the spreadsheets every night for 2 weeks, then
submitted them to Watson.
Petitioner telephoned Watson on June 20, 2001, and told her
that he had found canceled checks for the telecommunication
expenses. Watson then agreed to withhold a decision on whether
the filing of a lien was proper until respondent’s examination
division reviewed petitioners’ telecommunication expense
deductions for the years in issue. Watson incorrectly told
petitioner on June 26, 2001, that petitioners’ file would be sent
to the examination division in Melbourne, Florida. Instead, it
was sent to PSP, an internal address of respondent not further
identified in the record.
On November 5, 2001, petitioner asked Watson to expedite
consideration of petitioners’ case because the lien was hurting
his credit. Petitioner told Watson that he could not obtain a
car loan while their case was pending. Watson told petitioner
that petitioners’ file was supposed to be in Melbourne and that
she had been unable to find it. Petitioner brought records to
Watson on November 7, 2001, but personnel in respondent’s
Melbourne examination division could not work on petitioners’
case because they did not have petitioners’ file. Watson began
looking for petitioners’ file on November 7, 2001. Watson
learned that Arthur Washburn (Washburn), an employee of
respondent in PSP, had signed a transmittal document for
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petitioners’ file. Watson called Washburn, and he found
petitioners’ file on November 7, 2001.
Petitioner called Watson on November 7, 2001, to ask her to
give him a statement that respondent was trying to resolve his
case.
Washburn delivered the file to Watson on November 8, 2001.
On that day, Watson called respondent’s examination division and
asked for an expedited audit of petitioners’ returns when she
received them. Watson did not work on petitioners’ case during
unspecified dates between November 9, 2001, and January 17, 2002,
because she was busy working on cases calendared for trial that
month and because she took annual leave that she would otherwise
have lost. Watson received petitioners’ original and amended
returns from an employee of respondent on December 5, 2001.
Watson resumed working on petitioners’ case on January 17,
2002. On January 24, 2002, using some of the checks petitioner
had provided, Watson showed him that the amounts that petitioners
had reported on their original returns for telecommunications
expenses were correct. Petitioner agreed that Watson was
correct.
Watson told petitioner that petitioners must pay taxes they
owed to remove the lien. On January 24, 2002, petitioner told
Watson that petitioners wanted to file an offer in compromise
because they did not have enough money to pay the tax and
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interest. Watson told petitioners that they needed to file
returns for 2000 and 2001 that had not been filed. Watson sent
offer in compromise forms to petitioners, closed the case on
January 24, 2002, and so informed petitioners.
Petitioners submitted an offer in compromise on May 24,
2002. In it, petitioners did not check the box to indicate
whether the offer was on account of doubt as to liability or as
to collectibility and did not state an amount to settle their
case. Respondent returned the offer in compromise because
petitioners had not filed their 2000 or 2001 return.
Petitioners submitted another offer in compromise on June 3,
2002, in which they offered to pay $850 to satisfy their
liabilities for the years in issue. They also submitted a Form
433-B for their business in which they separated petitioner’s
personal income and gross business receipts. Petitioners did not
check the box on the form to indicate whether the offer was on
account of doubt as to liability or as to collectibility.
3. The Taxpayer Advocate Service
On June 10, 2002, petitioners wrote to respondent’s Taxpayer
Advocate Service office in Jacksonville, Florida, and asked it to
expedite the processing of their offer in compromise and to
release the lien. Petitioners wanted their offer in compromise
to be considered by an office near their home. On June 13, 2002,
Diane Wilkes (Wilkes), an employee in respondent’s Taxpayer
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Advocate Service office, wrote to petitioners to tell them that
she was working on their case and would contact them by June 28,
2002.
Around June 17, 2002, Wilkes asked petitioner to provide
letters from his creditors stating that they would not sell
products to him because of the tax lien. On June 18, 2002,
Wilkes spoke to Watson, who said that petitioners’ case had not
been released from Appeals as required to begin processing
petitioners’ offer in compromise and that she would check to see
what had to be done to release it. Watson called Wilkes later
that day and said that she had been unable to identify who to
contact to release petitioners’ case from Appeals.
Petitioner called Wilkes on June 18, 2002, and asked what
her office could do for petitioners. Wilkes told petitioner she
could monitor the processing of petitioners’ offer in compromise,
which normally takes 6 to 12 months. Wilkes also told petitioner
that only respondent’s collections office could release the tax
lien. Wilkes told petitioner that he had 2 weeks to send letters
to her from his creditors stating that they would not do business
with him because of the tax lien.
On June 20, 2002, petitioner faxed to Wilkes a letter from a
creditor stating that, because of the lien, petitioner’s
purchases had to be cash on delivery. Wilkes told petitioner
that the letter was not enough to justify releasing the lien. On
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June 25, 2002, petitioner faxed three more letters to Wilkes from
third parties stating that the lien and petitioner’s credit
reports showing the lien had caused them to eliminate or limit
their line of credit to petitioner’s business.
On July 1, 2002, respondent’s Brookhaven Service Center in
Holtsville, New York, received a note from petitioner marked
“URGENT” stating that the tax lien was causing him to lose
business. Petitioner attached the three letters he had provided
to Wilkes from third parties. Around that time, petitioner lost
the Godfather Pizza account (17 stores), which was his largest
account. On July 1, 2002, respondent’s Brookhaven Service Center
received an offer in compromise from petitioners in which they
proposed to settle their 1991-95 tax liability for $900.
On July 2, 2002, petitioners filed their income tax returns
for 2000 and 2001 with the Taxpayer Advocate Service office. In
them, petitioners reported net losses for petitioner’s business
of $15,180 for 2000 and $18,064 for 2001 and net income from
renting equipment of $44,727 for 2000 and $50,699 for 2001.
Petitioner told Wilkes on July 2, 2002, that he had called
the offer in compromise unit daily and had spoken with Laura
Greco (Greco). Wilkes told petitioner that she could not
intervene in the offer in compromise process, but that she would
call Greco.
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On July 3, 2002, Wilkes called Greco. Greco told her that
she could not work on petitioners’ offer in compromise because
petitioners’ account had a collection due process code on it and
the code to release it was not present in their account. Wilkes
tried to find which Internal Revenue Service (IRS) office could
provide the collection due process release code for petitioners’
account. She told petitioner on July 5, 2002, that she was
trying to correct the codes entered into petitioners’ account so
that respondent could process petitioners’ offer in compromise.
Wilkes discussed petitioners’ case with her group manager on
July 8, 2002, and prepared a letter to petitioners stating that
the lien was not causing a hardship to petitioners because the
lien was not preventing petitioner from doing business. The
group manager said that she could enter the appropriate code in
respondent’s computer system to release petitioners’ case so that
petitioners’ offer in compromise could be considered if Wilkes
would fax her the collection due process “closing letter” (not
otherwise described in the record). Wilkes could not find the
closing letter in the file. Wilkes called Watson, and Watson
faxed a copy of the closing letter to Wilkes on July 9, 2002.
Wilkes then faxed the letter to the group manager on July 9,
2002.
On July 23, 2002, Wilkes wrote petitioners and said (a)
respondent would not release the Federal tax lien and that it
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would remain in effect until petitioners’ taxes were paid in
full, their liability was satisfied through an offer in
compromise, or the statute of limitations prevented collection;
(b) she had transferred petitioners’ offer in compromise to the
Jacksonville office for processing; and (c) she was closing her
file on petitioners.
On September 5, 2002, Watson gave petitioners written payoff
figures for their taxes dues for 1991-95 if paid by September 16,
2002. On September 24, 2002, Watson gave petitioners written
payoff figures for their taxes due for their taxes due for 1991-
95 if paid by September 30, 2002.
4. Payment of Tax and Interest
Petitioners borrowed money using their residence as
collateral and, on October 8, 2002, paid their taxes due in full
as follows: $2,780.56 for 1991, $3,455.85 for 1992, $2,417.09
for 1993, $3,946.01 for 1994, and $991.77 for 1995. Petitioners
paid interest of $1,320.14 for 1991, $1,323.04 for 1992, $868.18
for 1993, $1,296.73 for 1994, and $288.69 for 1995.
Petitioners sent Wilkes a letter on October 9, 2002, and
enclosed a copy of a Form 843, Claim for Refund and Request for
Abatement, in which they requested abatement of interest that had
accrued for their 1991-95 tax years.
On March 21, 2003, respondent abated the additions to tax
for failure to timely file under section 6651(a)(1) and for
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failure to pay tax shown on the return under section 6651(a)(2)
for 1991-95, and abated interest on these additions to tax.
On March 28, 2003, petitioner telephoned the Taxpayer
Advocate Service office and spoke with Christy Elliott (Elliott).
Petitioner also wrote to Elliott on that date to confirm that he
told her that he had submitted Form 843 on October 9, 2002.
On March 31, 2003, respondent refunded the overpayments
resulting from the abatement of additions to tax and related
interest on March 21, 2003.
On April 16, 2003, respondent returned petitioners’ Form 843
because petitioners had not indicated why respondent should abate
interest for petitioners. On April 21, 2003, petitioner sent
Elliott copies of some of petitioners’ correspondence to and from
respondent.
On May 13, 2003, Diane Elm (Elm), accounts management,
respondent’s Ogden, Utah, Service Center, wrote to tell
petitioners that the Service Center had not completed the
processing necessary to resolve petitioners’ case. Elm said that
the IRS would contact petitioners within 60 days.
OPINION
A. Contentions of the Parties and Background
Petitioners contend that interest should be abated from
March 18, 1999 (when petitioners sent a letter to Davis stating
that their returns were wrong), through October 8, 2002, (when
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petitioners fully paid their taxes and interest for 1991-95)
because respondent’s employees had: (1) Erroneously advised
petitioners to seek relief through an offer in compromise; and
(2) delayed working on petitioners’ case because they lost
petitioners’ files, took maternity leave, regular leave, and job-
related training and delayed it to work on other cases.
Respondent contends that respondent’s denial of petitioners’
request to abate interest was not an abuse of discretion.
The Commissioner may abate interest assessed on any
deficiency or payment of tax to the extent that any error or
delay in payment of the tax is attributable to erroneous or
dilatory performance of a ministerial act by an officer or
employee of the Commissioner, and the taxpayer caused no
significant aspect of the delay. Sec. 6404(e)(1).4 A
4
Sec. 6404(e)(1), as enacted in 1986 and as applicable
here, provides:
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
(continued...)
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ministerial act is a procedural or mechanical act that does not
involve the exercise of judgment or discretion by the
Commissioner. Sec. 301.6404-2T(b)(1), Temporary Proced. & Admin.
Regs., 52 Fed. Reg. 30163 (Aug. 13, 1987).
We apply an abuse of discretion standard in reviewing the
Commissioner's determination not to abate interest. Lee v.
Commissioner, 113 T.C. 145, 149 (1999); Krugman v. Commissioner,
112 T.C. 230, 239 (1999). To be eligible for relief under
section 6404(e), the taxpayer must establish a correlation
between the alleged error or delay by the Commissioner and a
4
(...continued)
(B) any payment of any tax
described in section 6212(a) to the
extent that any delay in such
payment is attributable to such
officer or employee being dilatory
in performing a ministerial act,
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.
In 1996, Congress amended sec. 6404(e) to permit abatement
of interest that accrues as a result of an “unreasonable” error
or delay in performing a ministerial or “managerial” act. Sec.
6404(e)(1)(A) and (B); Taxpayer Bill of Rights 2 (TBOR 2), Pub.L.
104-168, sec. 301(a), 110 Stat. 1457 (1996). The 1996 amendment
applies to deficiencies or payments for tax years beginning after
July 30, 1996, TBOR 2 sec. 301(c), 110 Stat 1457, and thus does
not apply here.
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specific period for which interest should be abated as a result
of that error or delay. Palihnich v. Commissioner, T.C. Memo.
2003-297; Donovan v. Commissioner, T.C. Memo. 2000-220; Douponce
v. Commissioner, T.C. Memo 1999-398.
B. March 18, 1999, to June 25, 2001
1. Alleged Erroneous Advice by Davis
Petitioners contend that Davis erred in recommending that
they file an offer in compromise and that she should have instead
recommended that they address issues concerning telecommunication
expenses when petitioner told her on March 18, 1999, that they
did not include all telecommunication expenses in their original
returns for 1991-95. We disagree that this is an appropriate
basis to consider relief for petitioners because Davis’s advice
(the merit of which we need not consider) requires judgment and
thus was not ministerial. Sec. 301.6404-2T(b)(1), Temporary
Proced. & Admin. Regs., supra.
2. Maternity Leave
Petitioners contend that respondent delayed working on their
case during an unspecified period between March 18, 1999, and
June 25, 2001, because Davis was on maternity leave. We disagree
that this is an appropriate basis to consider relief for
petitioners. Granting maternity leave to an employee of the
Commissioner assigned to the taxpayer’s case without reassigning
the case is not a ministerial act under section 6404(e)(1). Sec.
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301.6404-2T(b)(1) and (2), Example (4), Temporary Proced. &
Admin. Regs., supra.
3. Job-Related Training
Petitioners point out that Watson attended job-related
training from April 30 to May 11, 2001, and contend that this
delay is due to a ministerial act. We disagree.
The decision to send Watson to job-related training and to
not reassign the case is not a ministerial act under section
6404(e)(1). Durham v. Commissioner, T.C. Memo. 2004-125; Goettee
v. Commissioner, T.C. Memo. 2003-43; Jean v. Commissioner, T.C.
Memo. 2002-256; Camerato v. Commissioner, T.C. Memo. 2002-28;
Jacobs v. Commissioner, T.C. Memo. 2000-123; sec.
301.6404-2T(b)(2), Example (4), Temporary Proced. & Admin. Regs.,
supra.
C. June 26 to November 7, 2001
Respondent lost petitioners’ file from June 26 to November
7, 2001. The Commissioner’s loss of a taxpayer’s file is a
ministerial act. Palihnich v. Commissioner, supra. Respondent
concedes that interest that accrued during this period should be
abated.
Petitioners contend that respondent lost petitioners’ files
many other times. However, petitioners have not identified those
times, and the record does not support that conclusion.
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D. November 8, 2001, to January 23, 2002
Watson did not work on petitioners’ case during unspecified
periods between November 8, 2001, and to January 17, 2002,
because she was working on other cases and she took annual leave.
Petitioners contend that Watson’s caseload and her annual leave
were ministerial acts which caused a delay in working on
petitioners’ case.
Deciding how and when to work on cases, on the basis of an
evaluation of the entire caseload and workload priorities, is not
a ministerial act. Bartelma v. Commissioner, T.C. Memo. 2005-64;
Mekulsia v. Commissioner, T.C. Memo. 2003-138, affd. 389 F.3d 601
(6th Cir. 2004). Granting annual leave is not a ministerial act.
See Scott v. Commissioner, T.C. Memo. 2000-369. There is no
evidence that a ministerial act delayed respondent’s
consideration of petitioners’ case from November 9, 2001, to
January 23, 2002.
E. January 24 to July 23, 2002
We next decide whether respondent’s failure to enter the
code to release petitioners’ file from CDP status from January 24
to July 23, 2002, was a ministerial act for which they are
entitled to relief under section 6404(e). The code releasing
petitioners’ case from CDP status should have been entered on
January 24, 2002, when Watson closed their CDP file. The record
is silent as to when the code was entered. On July 23, 2002,
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Wilkes wrote petitioners and said she had transferred
petitioners’ offer in compromise to the Jacksonville office for
processing. We infer that the CDP release code was entered on
July 23, 2002, because respondent was able to work on
petitioners’ case on that date. Everything in the record
relating to entering the CDP release code in petitioners’ file
suggests that the delay in doing so was a ministerial act, sec.
301.6404-2T(b)(1), Temporary Proced. & Admin. Regs., supra, and
that the delay was an error, see Palihnich v. Commissioner, T.C.
Memo. 2003-297 (failure to pay tax attributed to the
Commissioner’s loss of file); Jacobs v. Commissioner, T.C. Memo.
2000-123 (lack of evidence held against the Commissioner because
the Commissioner is in the best position to know what actions
were taken by IRS officers and employees during the period for
which the taxpayers’ abatement request was made); Douponce v.
Commissioner, supra (failure to pay tax attributed to the
Commissioner’s failure to provide correct payoff amount).
However, petitioners are not entitled to relief under
section 6404(e) from January 24 to July 2, 2002, because they did
not file their tax returns for 2000 and 2001, as required by
respondent before considering their offer in compromise, until
July 2, 2002. Thus, a significant aspect of respondent’s delay
was due to petitioners.
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We consider next whether respondent’s failure to enter the
proper code from July 3 to July 23, 2002, delayed petitioners’
payment of tax. Petitioners fully paid their taxes and interest
for 1991-95 when respondent finished working on their case. We
believe that they would have fully paid earlier if respondent had
acted more promptly, and that failure to enter the proper code
delayed petitioners’ payment of tax.
The decision whether to abate interest may take into account
an error or delay only where no significant aspect can be
attributed to the taxpayer. Sec. 6404(e)(1) (flush language).
Petitioners had no role in respondent’s failure to enter the
proper CDP release code.
We conclude that respondent’s failure to abate interest from
July 3 to July 23, 2002, was an abuse of discretion.
F. July 24 to October 8, 2002
Petitioners fully paid the taxes and interest due for 1991-
95 on October 8, 2002. On a date not specified in the record
between July 24 and October 8, 2002, petitioners decided to
borrow money to fully pay their 1991-95 taxes and interest.
Watson gave petitioners payoff figures for those years in early
and late September 2002. We conclude that no ministerial act by
respondent caused petitioners to delay paying their taxes from
July 24 to October 8, 2002.
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G. Conclusion
Respondent’s decision not to abate interest for the period
from July 3 to July 23, 2002, was an abuse of discretion.
Respondent’s decision not to abate interest for any remaining
period, not previously conceded, was not an abuse of discretion.
To reflect the foregoing,
Decision will be
entered under Rule 155.