Interest Abatement

OIC Cases - Interest Abatement

General Instructions for Form 843 – Abatement of Interest

Table of Contents

Purpose of Form

Use Form 843 to file a claim for refund of certain overpaid taxes, interest, penalties, and additions to tax. For example, if on your employment tax return you reported and paid more Federal income tax than you actually withheld from an employee, use this form to claim a refund. Also, use Form 843 to claim a refund of excess tier 2 RRTA tax withheld and to request a refund under section 6715 for misuse of dyed fuel.

Also use Form 843 to request abatement of an overassessment (or the unpaid portion of an overassessment) if more than the correct amount of tax (except income, estate, and gift tax), interest, additions to tax, or penalties have been assessed.

  Generally, you must file a separate Form 843 for each tax period and each type of tax. Exceptions are provided for certain claims in the Line 4 instructions on this page.

Do not use Form 843 to claim:

·         A refund or to request an abatement of your income tax. Individuals must use Form 1040X, Amended U.S. Individual Income Tax Return. Corporations that filed Form 1120 or 1120-A must use Form 1120X, Amended U.S. Corporation Income Tax Return. Other income tax filers should file a claim on the appropriate amended tax return.

·         A refund relating to excise taxes reported on Forms 11-C, 720, 730, or 2290. See Form 720X, Amended Quarterly Federal Excise Tax Return; Form 4136, Credit for Federal Tax Paid on Fuels; Form 8849, Claim for Refund of Excise Taxes; Schedule C of Form 720, Quarterly Federal Excise Tax Return; Pub. 378, Fuel Tax Credits and Refunds; and Pub. 510, Excise Taxes, for information on the appropriate forms to use to claim the various excise tax refunds. However, use Form 843 to request refund of the penalty under section 6715 for misuse of dyed fuel and to request abatement or refund of interest or penalties under section 6404(e) or 6404(f) relating to excise taxes.

·         A refund of the required payment under section 7519. Instead, file Form 8752, Required Payment or Refund Under Section 7519.

Specific Instructions

SSN or ITIN.   Enter your social security number ( SSN ) or IRS individual taxpayer identification number (ITIN). If you are filing Form 843 relating to a joint return, enter SSNs or ITINs for both you and your spouse.

Line 3

Line 3a.   Check the appropriate box to show the type of tax, penalty, or addition to tax. If you are filing a claim for refund or request for abatement of an assessed penalty, check the box and enter the applicable Internal Revenue Code (IRC) section. Generally, you can find the IRC section on the Notice of Assessment you receive from the service center.

Excess tier 2 RRTA tax.   Complete lines 1 and 2. On line 3a, check the box for Employment tax. Skip lines 3b, 4a, and 4b. In the space for line 5, identify the claim as “Excess Tier 2 RRTA” and show your computation of the refund. You must also attach copies of your Forms W-2 for the year to Form 843. See the worksheet in Pub. 505, Tax Withholding and Estimated Tax, to help you figure the excess amount.

Line 3b.   Check the appropriate box to show the type of return, if any, that you filed.   

  You must attach Form 941c, Supporting Statement To Correct Information, or an equivalent statement, if you are claiming a refund of taxes reported on Form 941, 941-M, 941-SS, 943, or 945.

Line 4

Requesting Abatement or Refund of Interest Under Section 6404(e)

Section 6404(e) gives the IRS the authority to abate interest when the additional interest is attributable to IRS errors or delays.

Section 6404(e) applies only if there was an unreasonable error or delay in performing a managerial or ministerial act (defined below) and only relates to taxes for which a notice of deficiency is required by section 6212(a) and in which no significant aspect of the error or delay was caused by the taxpayer. This includes income taxes, generation-skipping transfer taxes, estate and gift taxes, and certain excise taxes imposed by chapter 41, 42, 43, 44, or 45. Section 6404(e) does not allow abatement of interest for employment taxes or other excise taxes. See Pub. 556, Examination of Returns, Appeal Rights, and Claims of Refund, for more information.

Managerial act.   The term “managerial act” means an administrative act that occurs during the processing of your claim involving the temporary or permanent loss of records or the exercise of judgment or discretion relating to management of personnel. A decision regarding the proper application of Federal tax law is not a managerial act. See Regulations section 301.6404 -2 for more information.

Ministerial act.   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 your case after all prerequisites of the act, such as conferences and review by supervisors, have taken place. A decision regarding the proper application of Federal tax law is not a ministerial act. See Regulations section 301.6404 -2 for more information.

How To Request an Abatement of Interest

Request an abatement of interest by writing “Request for Abatement of Interest Under Section 6404(e)” at the top of Form 843.

Complete lines 1 through 3. Check the first box on line 4a. On line 4b, show the dates of any payment of interest or tax liability for the tax

On line 5 state:

·         The type of tax involved,

·         When you were first notified by the IRS in writing about the deficiency or payment,

·         The specific period for which you are requesting abatement of interest,

·         The circumstances of your case, and

·         The reasons why you believe that failure to abate the interest would result in grossly unfair treatment.

Multiple tax years.   File only one Form 843 if the interest assessment resulted from the IRS 's error or delay in performing a single managerial or ministerial act affecting a tax assessment for multiple tax years or types of tax (for example, where 2 or more tax years were under examination).

Where to file.   File Form 843 with the Internal Revenue Service Center where you filed your return.

Requesting Abatement or Refund of a Penalty or Addition to Tax as a Result of Written Advice

Section 6404(f) gives the IRS the authority to abate any portion of a penalty or addition to tax attributable to erroneous advice furnished to you in writing by an officer or employee of the IRS , acting in his or her official capacity.

The IRS will abate the penalty or addition to tax only if:

1.      You reasonably relied on the written advice,

2.      The written advice was in response to a specific written request you made for advice, and

3.      The penalty or addition to tax did not result from your failure to provide the IRS with adequate or accurate information.

How To Request an Abatement or Refund of a Penalty or an Addition to Tax

Request an abatement or refund of a penalty or addition to tax because of erroneous written advice by writing “Request for Abatement of Penalty or Addition to Tax Under Section 6404(f)” at the top of Form 843.

Complete lines 1 through 3. Check the appropriate box on line 4a. On line 4b, enter the date of payment if the penalty or addition to tax has period involved.

been paid.

You must attach copies of the following information to Form 843:

1.      Your written request for advice;

2.      The erroneous written advice you relied on that was furnished to you by the IRS ; and

3.      The report, if any, of tax adjustments identifying the penalty or addition to tax, and the item(s) relating to the erroneous advice.

When to file.   An abatement of any penalty or addition to tax under this section will be allowed only if you submit the request for abatement within the period allowed for collection of the penalty or addition to tax or, if you paid the penalty or addition to tax, within the period allowed for claiming a credit or refund of such penalty or addition to tax.

Where to file.   If the erroneous advice received relates to an item on a Federal tax return, send Form 843 to the Internal Revenue Service Center where your return was filed. If the erroneous advice does not relate to an item on a tax return, Form 843 should be sent to the service center where your return was filed for the tax year you relied on the advice.

Line 5

Explain in detail your reasons for filing this claim and show your computation for the credit, refund, or abatement. If you attach an additional sheet(s), include your name and SSN , ITIN, or EIN on it. Also, attach appropriate supporting evidence.

http://www.irs.gov/pub/irs-pdf/f843.pdf   Form 843 – Fill-in-Form

http://www.irs.gov/pub/irs-pdf/i843.pdf  Form 843 Instructions

Internal Revenue Manual

Part 20. Penalty and Interest

Chapter 2. Interest

Section 7. Abatement and Suspension of Interest: IRC 6404 and 7508

20.2.7  Abatement and Suspension of Interest: IRC 6404 and 7508

20.2.7.1  (07-31-2001)
Interest Abatement and Suspension Overview

1.      This chapter includes procedures for abatement or suspension of interest if that interest is:

·         erroneously or illegally assessed

·         attributable to certain errors or delays by the IRS [IRC section 6404(e)(1)]

·         on an erroneous refund [IRC section 6404(e)(2)]

·         due on a deficiency that was not identified by the IRS in a timely manner [IRC Section 6404(g)]

·         due on an account for a taxpayer located in a disaster area [IRC 6404 (h)]

·         due on an account for a participant in a military combat zone [IRC Section 7508]

Caution:

Reasonable cause is never a basis for abating interest.

2.      An abatement may be requested for interest that is incorrectly computed, or that is overassessed based on current tax laws, policy, and/or procedure, or that is assessed after the expiration of the period of limitations, or is erroneously or illegally assessed.

3.      The Tax Reform Act of 1986 introduced IRC section 6404(e)(1), (effective for taxable years beginning after 12/31/1978 ) which allows abatement of interest on deficiencies or payments when the Service makes an error or delay in the performance of a ministerial act. As originally enacted, IRC section 6404(e)(1) allows the Service discretionary authority to abate interest when an IRS employee fails to perform a ministerial act in a timely manner or makes an error in the performance of that act. See Section 6 of this Chapter for instruction.

Note:

The Taxpayer Bill of Rights 2 (July 30, 1996) amended IRC section 6404(e)(1) to add "unreasonable" before each reference to "error" in the statute and to replace each reference to "performing a ministerial act" with a reference to performing a "ministerial or managerial act" for tax periods beginning after July 30, 1996 .

4.      IRC section 6404(e)(2) provides for the abatement of interest on any erroneous refund under Section 6602 until the date of demand unless the taxpayer has in any way caused such erroneous refund or such erroneous refund exceeds $50,000. See Section 7 of this Chapter for instructions. The Internal Revenue Service Restructuring and Reform Act of 1998, enacted on July 22, 1998 , provided additions to Section 6404—

A.                 IRC section 6404(g) provides for a suspension of interest if the Secretary fails to notify the taxpayer regarding a liability within an 18 month period (12 month period for taxable years beginning on or after January 1, 2004 ) from the later of the return filing date (without regard to extensions) or the date of a timely filed return. This section is effective for timely filed individual tax returns for taxable years ending after July 22, 1998 . See Section 8 of this Chapter for instructions.

B.                 IRC section 6404(h) provides for the abatement of interest on underpayments by taxpayers in presidentially declared disaster areas. See Section 10 of this Chapter for instructions.

5.      IRC section 7508 provides for a suspension of interest for participants in a combat zone. See Section 9 of this Chapter for instructions.

6.      Generally, the term "claim" relates to items that have been fully paid, and "request for abatement" refers to unpaid, assessed and/or accrued amounts.

20.2.7.2  (07-31-2001)
Interest Abatement Requests and Claims

1.      Although, in many instances, the taxpayers are instructed to file requests for abatement of interest on Form 843, all written requests should be considered. If necessary information is missing, the claim may be returned informing the taxpayer that additional information must be submitted before a determination can be made.

2.      Contact the Interest Abatement Coordinator (IAC) regarding any interest abatement requests that are not addressed in this IRM .

20.2.7.5  (07-31-2001)
Not Legally Due, IRC 6404(a)

1.      The provisions of IRC section 6404(a) authorize the Secretary to abate the unpaid portion (request for abatement) of any tax or any liability in respect thereof which is excessive in amount; assessed after the statutory period of limitations has expired or is erroneously or illegally assessed.

20.2.7.6  (07-31-2001)
Unreasonable Errors or Delays in Performing a Ministerial or Managerial Act, IRC section 6404(e)(1)

1.      Criteria for errors or delays under IRC section 6404(e)(1) are as follows:

A.     If the interest has been paid, the statutory period of limitations on filing a claim per IRC section 6511 has not expired, and

B.     The claim or request is for tax years beginning after December 31, 1978 , and

C.     The claim or request relates to interest on taxes described in section 6212(a), i.e., income, estate, gift, certain excise taxes [Employment taxes are specifically excluded.], and

D.     An unreasonable error or delay occurred in relation to the performance of a ministerial or managerial act [See definitions and chart for effective date below.], and

E.      The error or delay occurred after the taxpayer was contacted in writing with respect to the examination, deficiency, or payment, and

F.      No significant aspect of the error or delay can be attributed to the taxpayer.

The authority to abate interest under IRC section 6404(e)(1) can be further explained by the following chart:

2.      If it is determined that the Service will abate interest due to an error or delay, interest on the tax and on any penalties or additions to the tax should be abated.

3.      For interest abatement requests pertaining to IRC section 6404(e)(1), all claims or requests for those accounts assessed, preassessed, unpaid, and fully paid will be considered.

Note:

There is no authority to abate unagreed, unassessed interest.

4.      The definitions of ministerial act and managerial act are as follows:

A.     A "ministerial act" is a procedural or mechanical act that does not involve the exercise of judgement 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 is not a ministerial act.

B.     A "managerial act" is an administrative act that occurs during the processing of a taxpayer's case involving the temporary or permanent loss of records or the exercise of judgment or discretion relating to management of personnel. Interest attributable to a general administrative decision, such as the IRS 's decision on how to organize the processing of tax returns, can not be abated. Further, a decision concerning the proper application of federal tax law is not a managerial act. [See Treas. Regulation Section 301.6404 –2]

Caution:

The Service has the authority to abate only the amount of interest that accrued during the period attributable to an unreasonable error or delay in performing a ministerial or managerial act. Section 6404(e)(1) applies only to an error or delay that occurs after the date the Service contacts the taxpayer in writing with respect to the deficiency or payment. Accordingly, there is no abatement of interest applicable under this provision from the return due date to the date the Service first contacts the taxpayer in writing. (See Section 8 for suspension provisions under IRC section 6404(g).)

5.      TEFRA/Partnerships

Section 6404(e)(1) applies to partnership/TEFRA examinations:

A.     If a request for abatement alleges an error or delay during the examination of the partnership return, the criteria above will be applied and the determination may be applicable to every partner.

B.     If a request for abatement alleges an error or delay after the close of the partnership examination, the criteria will be applied to each partner's claim individually and any allowable abatement will be determined on a case by case basis.

6.      When an error or delay is identified by the Service or by the taxpayer during the course of an examination, before interest has been assessed, when there is sufficient time remaining on the statutory period for assessment and the criteria for interest abatement under IRC section 6404(e)(1) are present:

A.     Contact the field Examination IAC;

B.     Secure a completed Form 843, Claim for Refund and Request for Abatement or an equivalent informal statement;

C.     Record the action in the workpapers; and

D.     When the case is ready for assessment, forward the case to the lAC with an explanation attached and include special handling instruction on the Form 3198.

7.      When the taxpayer raises the issue of error or delay in the course of an examination and there is not sufficient time on the statutory period for assessment, the examiner should secure an extension or notify the taxpayer to file a claim once the liability is assessed. Action on the case should take place after the tax case closes from the group and without regard to the closing determination.

8.      If the abatement of interest issue is first raised in Appeals, and the alleged error or delay occurred in Examination, Appeals, CID , or Counsel, the claim and relevant case information will be sent to the Examination IAC to issue a determination to the taxpayer. The claim will be returned to Appeals to be closed with the tax case, and any abatement will be entered with the tax assessment. Abatement of interest claims concerning actions of Appeals employees will be worked by Correction if the claim involves a payment.

9.      All IRS employees are responsible for identifying significant errors or delays associated with the ministerial and managerial acts occurring during work in progress, and for forwarding relevant information to the area or Service Center IAC. Collection employees (area and Service Center ) are responsible for making recommendations to the IAC with regard to withholding collection if a taxpayer's account is under a collection employee's control.

20.2.7.8  (07-31-2001)
Section 6404(g) Suspension of Interest - Taxpayer Notification of Tax Liability

1.      IRC section 6404(g) provides for the suspension of interest when the IRS fails to provide a taxpayer timely and adequate notice of a tax liability. IRC section 6404(g) applies only to timely filed individual income tax returns for taxable years ending after July 22, 1998 .

2.      The provision applies to an increase in liabilities for FICA tax, excise tax, or household employee taxes on a Schedule H, reportable in a Form 1040. The provision also applies to an individual's additional liability, which results from a pass-through entity.

20.2.7.8.1  (07-31-2001)
Liabilities Subject to Section 6404(g) Interest Suspension

1.      Section 6404(g) refers to the suspension of interest, penalties, and additions to tax. However, its practical effect is only on the suspension of interest.

2.      Section 6404(g) specifically excludes:

·         suspension of any penalty imposed under section 6651;

·         any interest, penalty, addition to tax, or additional amount in a case involving fraud;

·         any interest, penalty, addition to tax, or additional amount with respect to any tax liability shown on a return; and

·         any criminal penalty.

3.      There are not any current penalties or additions to tax, which would be suspended by IRC section 6404(g). Interest on the tax and interest on penalties (except as described above) would be suspended if the conditions of 6404(g) occur.

20.2.7.8.2  (07-31-2001)
Section 6404(g) Notification Time Period

1.      For taxable years ending after July 22, 1998 , and prior to January 1, 2004 , the IRS must provide adequate notice of a liability before the close of the 18-month period which begins on the later of the following:

·         the due date of the return, if filed on or before the return due date, or

·         the filing date of the return, if filed timely under a valid extension

2.      The date adequate notice is provided is the section 6404(g) notice date. If the section 6404(g) notice date is not within the prescribed time period, interest is suspended beginning on the day after the close of the 18-month period. Interest resumes on the 21st day after the notice stating the liability and basis for the liability is sent to the taxpayer. In determining the 21st day after the notice date, no consideration is given to grace periods.

3.      For a 1998 calendar year return filed by April 15, 1999 , notification must be provided on or before October 16, 2000 (since the 18-month period closes at the end of the day on October 14, a Saturday, the IRS has the following Monday to provide notice). For a 1998 calendar year return filed on May 15, 1999 , with a valid extension of time to file, notification must be provided on or before November 14, 2000 . For a 1998 return filed on October 15, 1999 , with a valid extension of time to file, notification must be made on or before April 16, 2001 (since April 14, 2001 , is on a Saturday).

Note:

For taxable years beginning on or after January 1, 2004 , the 18-month notification period changes to a 12-month period.

20.2.7.8.3  (07-31-2001)
Section 6404(g) Notices

·         A notice provided within the prescribed time period prevents the suspension of interest if it adequately states the amount of the liability and the basis for the liability. A notice should be written and contain enough information regarding the adjustment to enable the taxpayer to challenge the adjustment. In general, math error notices, URP notices, 30-day letters, and statutory notices of deficiency provide sufficient notice. Examination reports, such as Form 4549 and Form 1902-B, are sufficient notice if they contain an explanation of each item of adjustment.

20.2.7.8.7  (07-31-2001)
Section 6404(g) Interest Computation

1.      A tax module that is otherwise unrestricted and has only one section 6404(g) notice date is not restricted from computation by Master File. However, all section 6404(g) cases require special instructions on Form 3198, Special Handling Notice (or equivalent), to ensure the accurate input of section 6404(g) notification dates. Examining officers must note in the " Special Instructions" section on Form 3198 (or equivalent), whether or not section 6404(g) applies. If it applies, the notification date must be entered in that section.

2.      A transcript must be reviewed to determine if there is or will be more than one section 6404(g) notification date (more than one TC 971 with Action Code 64). When more than one date is applicable, a manual restricted interest computation must be made. A restricted interest computation is necessary because the 6404(g) notice date applies separately to each item or adjustment. Interest is separately computed for the amounts determined in each notice taking into consideration any applicable suspension period. The total interest determined is input with TC 340.

3.      When there is more than one section 6404(g) notification date, the examining officer must notify the interest examiner of the applicable dates on Form 3198 or its equivalent, and that restricted interest applies stating IRC section 6404(g). In addition, the examining officer should refer the interest examiner to the "Other Information" section of the RAR that indicates the notification dates and the portion of the liability attributable to each notification date.

4.      If the account involves "self-assessed" tax, IRC 6404(g) does not apply.

Because of different notification dates and the potential for "self-assessed" tax adjustments, the second adjustment made after an untimely notification date will create an unpostable condition if20.2.7.13  (07-31-2001)
Appeals Rights

1.      The taxpayer may agree to any interest determination with a closing agreement, Form 906

2.      The taxpayers will have appeal rights on all claims (regardless of account status). The taxpayer may appeal denials of interest abatement by writing a brief statement explaining why they think their request should be considered.

3.      The written protest should be sent to the office that issued the determination letter.

4.      Refer to Appeals Interest Abatement Manual at IRM 8.5.

20.2.7.14  (07-31-2001)
Taxpayer Advocate

1.      If during a taxpayer contact it appears there may be a hardship situation, complete Form 911, Applicatio for Taxpayer Assistance Order, and refer the taxpayer to the Taxpayer Advocate Service (TAS). See IRM Part 13 or IRM 21.1.3.17 for more information.

2.      There are no special provisions for abating or reducing interest for cases involving the Taxpayer Advocate.

20.2.7.15  (07-31-2001)
Disputes as to Amount

1.      If there is a disagreement as to the amount of restricted and/or complex interest to be assessed, abated, and/or refunded resulting from:

A.     an interpretation of a Internal Revenue Code Section, Revenue Ruling, Revenue Procedure, court case, etc. and/or

B.     the method of computing the correct interest amount

2.      Prepare a memorandum along with supporting documentation and route this memorandum to the immediate supervisor for resolution.

SEC . 6404. ABATEMENTS.

6404(a) GENERAL RULE. --The Secretary is authorized to abate the unpaid portion of the assessment of any tax or any liability in respect thereof, which –

6404(a)(1) is excessive in amount, or

6404(a)(2) is assessed after the expiration of the period of limitations properly applicable thereto, or

6404(a)(3) is erroneously or illegally assessed.

6404(b) NO CLAIM FOR ABATEMENT OF INCOME, ESTATE, AND GIFT TAXES. --No claim for abatement shall be filed by a taxpayer in respect of an assessment of any tax imposed under subtitle A or B.

6404(c) SMALL TAX BALANCES. --The Secretary is authorized to abate the unpaid portion of the assessment of any tax, or any liability in respect thereof, if the Secretary determines under uniform rules prescribed by the Secretary that the administration and collection costs involved would not warrant collection of the amount due.

6404(d) ASSESSMENTS ATTRIBUTABLE TO CERTAIN MATHEMATICAL ERRORS BY INTERNAL REVENUE SERVICE. --In the case of an assessment of any tax imposed by chapter 1 attributable in whole or in part to a mathematical error described in section 6213(g)(2)(A), if the return was prepared by an officer or employee of the Internal Revenue Service acting in his official capacity to provide assistance to taxpayers in the preparation of income tax returns, the Secretary is authorized to abate the assessment of all or any part of any interest on such deficiency for any period ending on or before the 30th day following the date of notice and demand by the Secretary for payment of the deficiency.

6404(e) ABATEMENT OF INTEREST ATTRIBUTABLE TO UNREASONABLE ERRORS AND DELAYS BY INTERNAL REVENUE SERVICE. --

6404(e)(1) IN GENERAL. --In the case of any assessment of interest on --

6404(e)(1)(A) any deficiency attributable in whole or in part to any unreasonable error or delay by an officer or employee of the Internal Revenue Service (acting in his official capacity) in performing a ministerial or managerial act, or

6404(e)(1)(B) any payment of any tax described in section 6212(a) to the extent that any unreasonable error or delay in such payment is attributable to such officer or employee being erroneous or dilatory in performing a ministerial or managerial 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.

6404(e)(2) INTEREST ABATED WITH RESPECT TO ERRONEOUS REFUND CHECK. --The Secretary shall abate the assessment of all interest on any erroneous refund under section 6602 until the date demand for repayment is made, unless --

6404(e)(2)(A) the taxpayer (or a related party) has in any way caused such erroneous refund, or

6404(e)(2)(B) such erroneous refund exceeds $50,000.

6404(f) ABATEMENT OF ANY PENALTY OR ADDITION TO TAX ATTRIBUTABLE TO ERRONEOUS WRITTEN ADVICE BY THE INTERNAL REVENUE SERVICE. --

6404(f)(1) IN GENERAL. --The Secretary shall abate any portion of any penalty or addition to tax attributable to erroneous advice furnished to the taxpayer in writing by an officer or employee of the Internal Revenue Service, acting in such officer's or employee's official capacity.

6404(f)(2) LIMITATIONS. --Paragraph (1) shall apply only if --

6404(f)(2)(A) the written advice was reasonably relied upon by the taxpayer and was in response to a specific written request of the taxpayer, and

6404(f)(2)(B) the portion of the penalty or addition to tax did not result from a failure by the taxpayer to provide adequate or accurate information.

6404(f)(3) INITIAL REGULATIONS. --Within 180 days after the date of the enactment of this subsection, the Secretary shall prescribe such initial regulations as may be necessary to carry out this subsection.

6404(g) SUSPENSION OF INTEREST AND CERTAIN PENALTIES WHERE SECRETARY FAILS TO CONTACT TAXPAYER. --

6404(g)(1) SUSPENSION. --

6404(g)(1)(A) IN GENERAL. --In the case of an individual who files a return of tax imposed by subtitle A for a taxable year on or before the due date for the return (including extensions), if the Secretary does not provide a notice to the taxpayer specifically stating the taxpayer's liability and the basis for the liability before the close of the 18-month period beginning on the later of --

6404(g)(1)(A)(i) the date on which the return is filed; or

6404(g)(1)(A)(ii) the due date of the return without regard to extensions,

the Secretary shall suspend the imposition of any interest, penalty, addition to tax, or additional amount with respect to any failure relating to the return which is computed by reference to the period of time the failure continues to exist and which is properly allocable to the suspension period.

6404(g)(1)(B) SEPARATE APPLICATION. --This paragraph shall be applied separately with respect to each item or adjustment.

6404(g)(2) EXCEPTIONS. --Paragraph (1) shall not apply to --

6404(g)(2)(A) any penalty imposed by section 6651;

6404(g)(2)(B) any interest, penalty, addition to tax, or additional amount in a case involving fraud;

6404(g)(2)(C) any interest, penalty, addition to tax, or additional amount with respect to any tax liability shown on the return;

6404(g)(2)(D) any interest, penalty, addition to tax, or additional amount with respect to any gross misstatement;

6404(g)(2)(E) any interest, penalty, addition to tax, or additional amount with respect to any reportable transaction with respect to which the requirement of section 6664(d)(2)(A) is not met and any listed transaction (as defined in 6707A(c)); or

6404(g)(2)(F) any criminal penalty.

6404(g)(3) SUSPENSION PERIOD. --For purposes of this subsection, the term "suspension period" means the period --

6404(g)(3)(A) beginning on the day after the close of the 18-month period under paragraph (1); and

6404(g)(3)(B) ending on the date which is 21 days after the date on which notice described in paragraph (1)(A) is provided by the Secretary.

6404(h) REVIEW OF DENIAL OF REQUEST FOR ABATEMENT OF INTEREST. –

6404(h)(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.

6404(h)(2) SPECIAL RULES. --

6404(h)(2)(A) DATE OF MAILING. --Rules similar to the rules of section 6213 shall apply for purposes of determining the date of the mailing referred to in paragraph (1).

6404(h)(2)(B) RELIEF. --Rules similar to the rules of section 6512(b) shall apply for purposes of this subsection.

6404(h)(2)(C) REVIEW. --An order of the Tax Court under this subsection shall be reviewable in the same manner as a decision of the Tax Court, but only with respect to the matters determined in such order.

6404(i) CROSS REFERENCE. --

For authority to suspend running of interest, etc. by reason of Presidentially declared disaster or terroristic or military action, see section 7508A.

Cynthia A. Bell, Petitioner v. Commissioner, Respondent.

Dkt. No. 14945-04 , T.C. Memo. 2005-87, April 14, 2005 .
                                                                               

Discussion

Under section 6404(e)(1), the Commissioner may abate part or all of an assessment of interest on any deficiency or payment of income, gift, estate, and certain excise tax to the extent that any error or delay in payment is attributable to erroneous or dilatory performance of a ministerial or managerial act by an officer or employee of the Commissioner if (a) the Commissioner contacted the taxpayer in writing about the deficiency or payment, and (b) the taxpayer did not contribute significantly to the error or delay. Congress intended for the Commissioner to abate interest under section 6404(e) "where failure to abate interest would be widely perceived as grossly unfair" and did not intend abatement to "be used routinely to avoid payment of interest". H. Rept. 99-426, at 844 (1985), 1986-3 C.B. (Vol. 2) 1, 844; S. Rept. 99-313, at 208 (1986), 1986-3 C.B. (Vol. 3) 1, 208.

 
D. Jean Bartelma and Dan F. Bartelma, Petitioners v. Commissioner, Respondent; Cynthia C. Bartelma and James Richard Bartelma, Petitioners v. Commissioner, Respondent.

Dkt. Nos. 19477-02 , 19478-02 , T.C. Memo. 2005-64, March 30, 2005 .
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OPINION

Under section 6404(e)(1), the Commissioner may abate the assessment of interest on any deficiency if the interest is attributable to an error or delay by an officer or employee of the IRS (acting in his official capacity) in performing a ministerial act. (Amendments to section 6404(e) in 1996 do not apply to this case because they apply only to interest accruing with respect to deficiencies or payments for tax years beginning after July 30, 1996 . Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 301, 110 Stat. 1457 (1996).) A "ministerial act" is 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 have taken place. Sec. 301.6404 -2T(b)(1), Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 ( Aug. 13, 1987 ). The "mere passage of time" during a tax dispute does not establish error or delay in performing a ministerial act. Lee v. Commissioner, 113 T.C. 145, 150 (1999). The Court may order abatement where the Commissioner abuses his discretion by failing to abate interest. Sec. 6404(h)(1). In order to prevail, a taxpayer must prove that the Commissioner exercised this discretion arbitrarily, capriciously, or without sound basis in fact or law. Lee v. Commissioner, supra at 149; Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

Petitioners argue that there were a number of delays and errors throughout the protest and appeals process. At trial of these cases, however, petitioners failed to identify any specific instances that would qualify, under the statute, as an error or delay by an officer or employee of the IRS in performing a ministerial act during the processing of their various protests, appeals, and Tax Court cases. Only broad allegations regarding a lack of timeliness and accuracy were put forth. Petitioners made reference to lengthy periods during which they would hear nothing from the IRS . However, with the exception of McKenney's inability to get AIMS controls in 2001 (for which an interest abatement had previously been allowed), a review of the work history and correspondence shows that IRS personnel were engaged in a managerial, decision-making process during these times and that there was no ministerial delay. Sec. 301.6404 -2T(b)(1), Temporary Proced. & Admin. Regs., supra. Acts that are either managerial or arise out of general administrative decisions are not ministerial. See Mekulsia v. Commissioner, T.C. Memo. 2003-138, affd. 389 F.3d 601 (6th Cir. 2004). Deciding how and when to work on cases, based on an evaluation of the entire caseload and workload priorities, is not a ministerial act. See id. of a ministerial error by respondent.

Because petitioners presented neither authority nor evidence to support their claim that there were ministerial errors and delays above and beyond those that had already been identified and remedied, there was no abuse of discretion in denying an additional abatement of interest in these cases.

Abatements: Delays in resolving tax matters

A taxpayer who claimed losses from a tax shelter partnership was unable to prove that the IRS abused its discretion in denying his claim for abatement of interest. The passage of a considerable amount of time in the litigation phase of the tax dispute did not establish error or delay by the IRS in performing a ministerial act for purposes of Code Sec. 6404. The taxpayer's contention that the IRS committed ministerial errors when it allegedly failed to communicate relevant information and communicated misinformation to him was also rejected.

W.G. Lee, 113 TC 145, Dec. 53,508.

A pro se attorney who pled guilty to criminal tax evasion was not entitled to an abatement of interest that accrued on his tax deficiency as a result of the IRS 's suspension of civil proceedings against him during its criminal investigation and prosecution. The refusal to continue the civil investigation was the result of a litigation strategy, not the result of a ministerial act.

J.R. Taylor, 113 TC 206, Dec. 53,541. Aff'd, CA-9 (unpublished opinion), 2001-1 USTC ¶50,441.

The IRS 's denial of a request by a tax preparer and his wife to abate interest on their deficiency did not constitute an abuse of discretion. Although the taxpayers claimed that too much time had elapsed from the commencement of an audit until the IRS issued a deficiency notice nearly two years later, they failed to show that any agent of the IRS committed an error or delay in performing a ministerial act. Any delay in transferring the taxpayers' petition from the U.S. Embassy in Mexico City to the Tax Court had no effect on the pace of the settlement of the case and, thus, interest that accrued during that period was not subject to abatement. Further, there was no prohibited delay with respect to an IRS Appeals officer's issuance of a settlement offer to the taxpayers. The IRS properly refused to abate interest that accrued solely due to the taxpayer's failure to pay their agreed tax liability, and it did not have to apply a refund that arose in a subsequent tax year to pay the deficiency for the year at issue. Finally, since the taxpayers failed to maintain proper records, interest was not abated to offset expenses they incurred hiring an accountant and traveling to Mexico to obtain records.

G. Mankita, 78 TCM 1216, Dec. 53,673(M), TC Memo. 1999-420.

The IRS 's failure to abate interest that accrued on married taxpayers' deficiencies was not an abuse of discretion since the taxpayers did not show that the interest was attributable to any error or delay of an IRS employee acting in an official capacity in performing a ministerial act. The taxpayers failed to support their claim that they attempted to schedule an earlier meeting with an Appeals officer than actually occurred. Thus, they were not entitled to abate interest that accrued from the date they received their first letter from the Appeals office until they reached a settlement with the IRS regarding the amount of their deficiencies. Moreover, their claim that the IRS took unreasonable legal positions did not implicate a ministerial act since decisions regarding whether to settle a case and the application of tax laws involve discretion and judgment.

R. Dundore, 79 TCM 1479, Dec. 53,747(M), TC Memo. 2000-45.

It was an abuse of discretion for the IRS to refuse to abate interest during the period in which the examination of a partnership's return was delayed by the IRS 's Quality Review branch since the IRS failed to clearly explain its basis for refusal. The abuse of discretion standard requires the IRS to explain why it has exercised its discretion in a given manner, so that the court is not required to speculate as to the basis of its actions. However, the IRS did not abuse its discretion in refusing to abate interest that accrued during the initial and final stages of the examination while IRS agents were reviewing the partners' expense deductions and considering the imposition of penalties. Further, the IRS 's decision not to reassign the case while the assigned Appeals Officer was in training, and the officer's subsequent decision to give precedence to cases on which the statute of limitations was near expiration, were not ministerial acts. Finally, the version of Code Sec. 6404 that was in effect for the tax year at issue did not provide for abatement of interest that accrued due to delays in performing managerial acts.

L.L. Jacobs, 79 TCM 1835, Dec. 53,840(M), TC Memo. 2000-123.

An individual was not entitled to an abatement of interest on his deficiency because he failed to prove that the interest accrued due to any ministerial acts on the part of IRS employees. The fact that his examination took several years to complete did not prove that an erroneous or dilatory act occurred, especially since delays were caused by the expansion of his case, his difficulty in supplying records, the IRS 's suspicions of fraud, and the reopening of the examination at the taxpayer's request. A misaddressed letter from the IRS to one of his representatives also was not an error in performing a ministerial act because the letter was mailed to the address provided by the representative, and was remailed once the IRS determined the correct address.

R. Banat, 79 TCM 1941, Dec. 53,858(M), TC Memo. 2000-141. Aff'd, CA-2 (unpublished opinion), 2001-1 USTC ¶50,296.

The IRS 's refusal to abate interest that had accrued on an individual's tax liability was not an abuse of discretion since any delay in the proceeding was not due to a ministerial act of the IRS . The Service responded in a timely manner to the taxpayer's correspondence in connection with his unpaid tax liability; however, the taxpayer canceled scheduled appointments and failed to supply requested information. Thus, any error or delay was attributable to the taxpayer. Moreover, his arguments that hardship prevented him from complying with tax laws, that the IRS failed to include vital information in the stipulation of facts and that the IRS 's attorney attempted to coerce him into dropping his claim were not proper grounds on which to base an order to abate interest.

J.B. Cosgriff, 80 TCM 156, Dec. 53,983(M), TC Memo. 2000-241.

The IRS did not abuse its discretion in denying a request by a sole proprietor and his wife for an abatement of interest for tax deficiencies that arose, in part, as the result of disallowed business expense deductions and adjustments to the proprietorship's cost of goods sold. The taxpayers could not avail themselves of the exceptions that would otherwise entitle them to an interest abatement in the instant case. They did not identify any specific delay or conduct by the IRS that would constitute a ministerial act or support their claim. Moreover, the time that transpired during the examination, appeals and settlement processes did not constitute error or unreasonable delay in performing a ministerial act.

L.D. Scott, 80 TCM 800, Dec. 54,143(M), TC Memo. 2000-369.

The IRS did not abuse its discretion by denying a couple's request for an abatement of interest accrued on deficiencies assessed against the husband's wholly-owned travel agency. The IRS agent's inability to work on the taxpayers' file for more than six months due to his workload did not constitute a ministerial act.

R.A. Strang, 81 TCM 1566, Dec. 54,325(M), TC Memo. 2001-104.

A long civil and criminal investigation process, which spanned several years and included use of third-party summonses, did not establish error or delay in the government's performance of a ministerial act. Also, the revenue agent responsible for the civil examination did not fail to return to the taxpayer records obtained during the examination, as most of the documents were photocopies obtained by the use of third-party recordkeeper summonses and any original documents were returned.

K.D. Hanks, 82 TCM 1003, Dec. 54,574(M), TC Memo. 2001-319.

The IRS did not abuse its discretion in refusing to abate interest that accrued over several years during an investigation of a limited partnership's returns. The taxpayer's dissatisfaction with the length of time it took to resolve his case did not establish a correlation between a specific error or delay in the performance of a ministerial act and a specific time period for which interest should have been abated as a result of the error or delay.

W.B. Berry, 83 TCM 1013, Dec. 54,580(M), TC Memo. 2001-323.

An individual who was responsible for a significant part, if not all, of the delay in the determination of his tax liability was not entitled to an interest abatement in excess of the amount abated following the IRS 's reconsideration of his assessed deficiencies. The individual had protracted the audit by demanding that it be delayed while he completed college and until he returned from a vacation, by failing to pursue review of the IRS 's decisions in a timely manner, by refusing to cooperate with the IRS , and by making rude and insulting statements to IRS customer service representatives.

T.R. Camerato, 83 TCM 1147, Dec. 54,632(M), TC Memo. 2002-28.

A tax shelter investor's contention that the IRS exhibited unreasonable delay in signing a decision document pertaining to his case was not supported. Other theories also did not show that accrual of interest on his tax deficiency was attributable to an erroneous or dilatory performance of a ministerial duty by an IRS agent.

T.E. Vanstone, 83 TCM 1751, Dec. 54,762(M), TC Memo. 2002-133.

An IRS delay in assessing a married couple's interest due and owing was not unreasonable and did not justify abatement. A significant portion of the delay was due to various aspects of a related audit and the remainder was not a ministerial error, which required the abatement of additional amounts.

IRS Letter Ruling 200213009 (Technical Advice Memorandum), December 7, 2001 .

The IRS did not abuse its discretion in failing to abate interest for specified periods with respect to married taxpayers' disallowed investment credits and losses arising out of a partnership in which they held a limited interest. The delays identified by the taxpayers were not attributable to the IRS's error or delay in performing any ministerial act; rather, they were attributable to the IRS's reasonable prioritization decisions with respect to its caseload. For a second period, however, the IRS conceded that it abused its discretion in failing to abate interest attributable to an unjustified delay. The delay appeared to have occurred in the performance of a ministerial act by the IRS, which was the IRS agent's signing of a stipulation and causing it to be delivered to the Tax Court.

J.G. Goettee, Jr., 85 TCM 867, Dec. 55,049(M), TC Memo. 2003-43. Motion for reconsideration denied in 87 TCM 808, Dec. 55,510(M), TC Memo. 2004-9, below.

Married taxpayers who failed to establish the existence of unusual circumstances or substantial error in the Tax Court's decision involving their entitlement to interest abatements (Dec. 55,049(M), above) were not entitled to reconsideration of that ruling. Their allegation that the IRS erred in computing the amount of interest due was rejected because the prior opinion called for the correction of calculation errors. Also, reconsideration was not the appropriate forum for offering new legal theories or reiterating previously rejected arguments. Further, the record supported the IRS's prioritization decisions, and there was no delay in the assessment of liabilities because the taxpayers had waived restrictions on assessment.

J.G. Goettee, Jr., 87 TCM 808, Dec. 55,510(M), TC Memo. 2004-9.

The passage of a considerable amount of time in the litigation phase of a tax shelter dispute did not establish error or delay by the IRS in performing a ministerial act. The passage of a large period time in the tax shelter litigation was due to the large number of such cases being filed and the court's subsequent attempt to efficiently manage the burden.

A.M. Beagles, 85 TCM 995, Dec. 55,075(M), TC Memo. 2003-67.

A taxpayer who claimed losses from a tax shelter partnership was unable to prove that the IRS abused its discretion in denying his claim for abatement of interest covering four tax years. The taxpayer's contention that the IRS delayed issuing two final partnership administrative adjustments (FPAAs) until several years after it had sufficient information to issue them did not establish error or delay by the IRS in performing a ministerial act. Further, the record revealed that the IRS's difficulty in obtaining accurate records during the audits hindered the audit process.

J.M. Mekulsia, 85 TCM 1303, Dec. 55,152(M), TC Memo. 2003-138.

Married taxpayers who, in the underlying Tax Court proceeding, were held liable for deficiencies and interest computed during Tax Court Rule 155 proceedings, failed to establish that any erroneous or dilatory performance of a ministerial duty by an IRS agent contributed to a delay or error in the payment of the deficiency interest. The mere passage of time since the inception of an audit did not establish that the IRS delayed in performing ministerial acts. Also, errors relating to the audit did not entitle the taxpayers to abatement; the IRS's classification and evaluation of information required judgment or discretion and did not contribute to errors or delays in the couple's payment of their tax liabilities.

W. Landvogt, 86 TCM 104, Dec. 55,236(M), T.C. Memo. 2003-217.

Married taxpayers were not entitled to an abatement of interest that resulted from the denial of their deductions for donations of whale meat and whaling expenses. The taxpayers failed to establish that the accrual of interest was attributable to an error or delay by an official or employee of the IRS. In their opening brief, the taxpayers admitted that the delay resulted from a suspension of their case to allow for the enactment of pertinent proposed federal legislation. Moreover, a death in the family of the taxpayers' attorney did not provide a basis for an abatement of interest.

G.N. Ahmaogak, 86 TCM 124, Dec. 55,240(M), TC Memo. 2003-220.

The taxpayers failed to establish that any unreasonable error or delay in the performance of a ministerial duty by an IRS agent contributed to the nonpayment of interest on their tax deficiency. The record indicated that the interest accruals were merely the result of the taxpayers' failure to pay the entire balance owed, and not the result of an IRS employee's erroneous or dilatory performance of a ministerial or managerial act.

J.D. Hinterleitner, 86 TCM 206, Dec. 55,250(M), TC Memo. 2003-228.

An abatement of interest was denied because the delay was significantly attributable to the taxpayer. Although the IRS agent working on their case was hospitalized and later died, the case was quickly reassigned, thus, any delay resulted from the taxpayers' continual failure to provide requested documentation.

R.M. Jean, 84 TCM 436, Dec. 54,902(M), TC Memo. 2002-256.

An IRS Appeals officer did not abuse his discretion in issuing a Collection Due Process (CDP) determination permitting the collection of the trust fund recovery penalty and interest from a corporate treasurer/responsible person. While the federal district court determined that it had jurisdiction under Code Sec. 6404(h) to review the IRS's refusal to abate interest on the trust fund recovery penalty, it found that the treasurer did not qualify for an abatement. The record did not show, and the treasurer did not identify, any specific acts attributable to the IRS that would constitute ministerial or managerial acts entitling him to an interest abatement. The mere passage of time did not establish that the IRS erred or delayed in performing a ministerial act.

J.A.P. Leiter , DC Kan. , 2004-1 USTC ¶50,162.

A married couple, who invested in a multi-level tax shelter partnership, was entitled to an abatement of interest during the periods that the IRS's inaction delayed the resolution of their case. Since the IRS was unable to explain a six-month delay in sending out the taxpayer's settlement agreement, they were entitled to an abatement of interest for those months. Further, the IRS waited another 3-1/2 months to countersign the document, which was an unreasonable delay. Since the IRS drafted the settlement agreement, its countersignature on the document did not require an act of discretion; it was a ministerial act. Therefore, the taxpayers were entitled to an abatement of interest for those months also.

T.F. Dadian, 87 TCM 1344, Dec. 55,641(M), TC Memo. 2004-121.

The IRS did not abuse its discretion in denying a taxpayer's request for abatement of interest on his tax deficiencies. The taxpayer invested in a partnership that was a limited partner in a tax shelter and claimed losses with respect to his investments. Following an investigation of the tax shelter, the IRS reached a settlement agreement with it and with the taxpayer, resulting in adjustment of the taxpayer's returns, assessment of deficiencies, and payment of those deficiencies by the taxpayer. The IRS denied the taxpayer's request for abatement of interest accrued during the investigation, however, holding the statute of limitation for the assessment was not violated, and all of the delays in the case resulted from discretionary, rather than ministerial, acts by the IRS, and so abatement was not required by statute.

R.J. Jaffe, 87 TCM 1349, Dec. 55,642(M), TC Memo. 2004-122.

The IRS did not abuse its discretion by rejecting taxpayer's interest abatement claim. IRS issued notice of deficiency determining fraud penalties. Delay caused by suspension of civil action to allow for the criminal prosecution of the taxpayer, including the delay in the issuance of the notice of deficiency, was not a delay in the performance of a ministerial act. Taxpayer's contention that IRS also abused its discretion by failing to disclose the basis for its denial of the claim for abatement was also rejected. Investigation of the taxpayer's case and the criminal proceedings were adequate reasons and did not constitute a delay in the performance of a ministerial act.

R.B. Kemp, Jr., 87 TCM 1406, Dec. 55,661(M), TC Memo. 2004-139.

Married owners of a scrap metal business were not entitled to an abatement of interest. The taxpayers failed to pay the tax liability reported on their tax return for the year at issue, and the liability was outstanding until a third party's bankruptcy trustee paid the IRS on the taxpayers' behalf. Moreover, the taxpayers failed to show that any interest that accrued after the bankruptcy trustee's payment was due to the IRS's error or delay.

J.F. Enos, 123 TC --, No. 17, Dec. 55,757.

The Tax Court properly denied taxpayers an abatement of interest. An abatement of interest is generally not available when the taxpayer files a return but does not pay the taxes due, regardless of how long the IRS takes to contact the taxpayer and demand payment. Abatement of interest is also not appropriate where the evidence shows that the taxpayers lacked the assets to pay the taxes, suggesting that their failure to pay was due to inability. In either case the delay in resolving the matter is not the fault of the IRS.

J.N. Wright, CA-5, 2005-1 USTC ¶50,223. 

Richard Dundore and Virginia D'Anna-Dundore v. Commissioner

Docket No. 10934-98., TC Memo. 2000-45, 79 TCM 1479, Filed February 10, 2000

COUVILLION, Special Trial Judge: Respondent issued a notice of final determination denying petitioners' claim to abate interest for their 1989 and 1990 tax years. Petitioners The Commissioner's authority to abate an assessment of interest involves the exercise of discretion, and this Court gives due deference to the Commissioner's discretion. See Woodral v. Commissioner [Dec. 53,206 ], 112 T.C. 19, 23 (1999); Mailman v. Commissioner [Dec. 45,218 ], 91 T.C. 1079, 1082 (1988). However, this Court may order abatement where the Commissioner abuses his discretion. See sec. 6404(g) ; ³ Woodral v. Commissioner, supra.

Pursuant to section 6404(e)(1) , the Commissioner may abate part or all of an assessment of interest on any deficiency or payment of income tax to the extent that any delay in payment is attributable to any error or delay caused by an officer or employee of the IRS (acting in an official capacity) in performing a ministerial act. ⁴ However, an error or delay is taken into account only if it occurs after the IRS has contacted the taxpayer in writing with respect to such deficiency or payment, and as long as no significant aspect of such error or delay can be attributed to the taxpayer. See sec. 6404(e)(1) . Congress intended the Commissioner to abate interest under section 6404(e) "where failure to abate interest would be widely perceived as grossly unfair" but not that it "be used to routinely avoid payment of interest." H. Rept. 99-426, at 844 (1985), 1986-3 C.B. (Vol. 2) 844; S. Rept. 99-313, at 208 (1985), 1986-3 C.B. (Vol. 3) 208.

Petitioners claim that the delay in the consideration of their case was due to error or delay by employees of IRS , acting in their official capacity, in performing various ministerial acts.

The regulations provide, in pertinent part, that the term "ministerial act" means a procedural or mechanical act that does not involve the exercise of judgment or discretion. See sec. 301.6404-2T(b)(1) , Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 ( Aug. 13, 1987 ). ⁵ The regulations issued by the Secretary provide several examples of what does and does not constitute a ministerial act.

A decision concerning the proper application of Federal tax law is not a ministerial act. See sec. 301.6404-2T(b)(1) , Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 ( Aug. 13, 1987 ). Petitioners had not provided respondent with any documentary evidence relating to the adjustments to their 1989 and 1990 returns before the meeting on January 24, 1994 .

A decision concerning the proper application of Federal tax law is not a ministerial act. See sec. 301.6404-2T(b)(1) , Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 ( Aug. 13, 1987 ). The agent, the Appeals officer, and respondent's attorney continually attempted to settle petitioners' case. The positions they took regarding the issues in petitioners' case were based on their application of Federal tax law to the facts and circumstances surrounding petitioners' case. These actions required the exercise of discretion and judgment. Moreover, petitioners' lack of cooperation and failure to respond to IRS counsel's requests for discovery necessitated that respondent resort to this Court for an order compelling petitioners to produce documentation and show cause why proposed stipulations should not be accepted. Any delays caused by petitioners' decision to retain an attorney and to continue their case were attributable to petitioners. There was no erroneous or dilatory performance of a ministerial act by an officer or employee of respondent during this period and any delays perceived by petitioners during this period were of petitioners' own making. Therefore, on this record, the Commissioner's refusal to abate interest was not an abuse of discretion under section 6404(e) . Respondent's determination is sustained.

Decision will be entered for respondent.

¹ All Rule references are to the Tax Court Rules of Practice and Procedure.

² Unless otherwise indicated, all section references are to the Internal Revenue Code in effect for the periods involved.

³ Sec. 6404(g) was redesignated sec. 6404(i) by the Internal Revenue Service Restructuring & Reform Act of 1998, Pub. L. 105-206, secs. 3305(a) , 3309(a) , 112 Stat. 743, 745.

⁴ In 1996, sec. 6404(e) was amended by sec. 301 of the Taxpayer Bill of Rights 2, Pub. L. 104-168, 110 Stat. 1452, 1457 (1996), to permit the Secretary to abate interest attributable 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 July 30, 1996 . This case involves petitioners' 1989 and 1990 tax years. Therefore, the amendment is inapplicable to the case at bar. See Woodral v. Commissioner [Dec. 53,206 ], 112 T.C. 19, 25 n.8 (1999).

⁵ The final Treasury regulation under sec. 6404 was issued on Dec. 18, 1998 . The final regulation contains the same definition of ministerial act as the temporary regulation. See sec. 301.6404-2(b)(2) , Proced. & Admin. Regs. The final regulation generally applies to interest accruing on deficiencies or payments of tax described in sec. 6212(a) for tax years beginning after July 30, 1996 . See sec. 301.6404-2(d)(1) , Proced. & Admin. Regs

D. Boyd, 79 TCM 1361, Dec. 53,717(M), TC Memo. 2000-16.

Interest that accrued on an individual's income tax liabilities prior to the IRS 's application of the his carryback losses was attributable to the taxpayer's own conduct; thus, the IRS did not abuse its discretion by denying his request for an abatement of interest. The taxpayer failed to file Form 1045, Application for Tentative Refund, although he conceded that he knew he had to file the form in order to carry back the loss. He also was not entitled to abate interest on his liabilities for self-employment taxes and civil penalties that continued to accrue after the carryback losses eliminated his income tax deficiency. He failed to show that any IRS employee was erroneous or dilatory in performing a ministerial act because his self-serving testimony was insufficient to prove that a revenue officer erroneously advised him not to file a Form 1045 or promised him that the carryback would eliminate his entire deficiency. Finally, the Tax Court lacked jurisdiction to review the IRS 's failure to abate his penalties for failure to pay tax.

H.R. Gross, 79 TCM 1476, Dec. 53,746(M), TC Memo. 2000-44.

Married taxpayers failed to establish that any erroneous or dilatory performance of a ministerial duty by an IRS agent contributed to a delay or error in the payment of interest on their tax deficiency. Consequently, the IRS did not abuse its discretion in denying their request for abatement of interest. The taxpayers' contentions that the examining IRS agent improperly evaluated their joint returns, that the deficiency determinations were improper, and that inadequate consideration was given to their arguments by the appeals officer were insufficient to support abatement under Code Sec. 6404(e). The conduct of the IRS and appeals officer concerning the proper application of federal tax laws involved judgment and discretion and, thus, did not qualify as a ministerial act.

E. Brown, 79 TCM 1561, Dec. 53,766(M), TC Memo. 2000-61.

The IRS 's refusal to abate interest owed by married taxpayers did not constitute an abuse of discretion because no ministerial acts on the part of IRS employees or officers caused delay. Its decisions to examine three tax years, to conduct a bank deposits analysis of the taxpayers' accounts, to suspend the audit until a related audit of the husband's employer was completed, and to refer the case for criminal investigation all involved the exercise of judgment and discretion. The IRS did not engage in "ministerial acts," which are procedural or mechanical acts that do not involve the exercise of judgment or discretion and that occur during the processing of a case after all prerequisites to the act have taken place. Moreover, the record established that the taxpayers were largely responsible for any delays in the proceedings.

F.J. Gorgie, 79 TCM 1628, Dec. 53,790(M), TC Memo. 2000-80.

Jurisdiction existed over an IRS appeals officer's determination that statutory interest had accrued on an individual's tax liability because the taxpayer's contention that interest should not have accrued during his bankruptcy case was viewed as a request for abatement of interest. However, the taxpayer did not allege that the assessment of interest was attributable to a ministerial error within the meaning of Code Sec. 6404(e) and the evidence did not establish that the IRS committed a ministerial error. Thus, no abatement was permitted.

S.W. Katz, 115 TC 329, Dec. 54,081.

The IRS 's denial of an individual's request for an abatement of interest did not constitute an abuse of discretion absent proof of its erroneous or dilatory performance of a ministerial act. The IRS 's alleged loss of some of the taxpayer's records that were seized in conjunction with the arrest of his former representative did not entitle him to abatement because the seizure did not qualify as a ministerial act. Moreover, any error or delay that arose with respect to the seizure could also be attributed to the taxpayer, who did not respond to IRS correspondence and notices, produce requested documentation, or pursue litigation opportunities.

D.B. Hawksley, 80 TCM 705, Dec. 54,124(M), TC Memo. 2000-354.

An individual, whose former spouse was granted innocent spouse relief under former Code Sec. 6013(e), did not qualify for an abatement of interest. The taxpayer did not allege that the assessment of interest was attributable to a ministerial error within the meaning of Code Sec. 6404(e).

C.W. Miller, 115 TC 582, Dec. 54,164. Aff'd, CA-4 (unpublished opinion), 2001-2 USTC ¶50,713, 21 FedAppx 160.

The IRS properly denied an accountant's request for an abatement of interest accrued on deficiencies resulting from his investment in a general partnership. The denial of abatement did not constitute an abuse of discretion in the performance of a ministerial act by an IRS agent. The agent's decision whether and when to work on the partnership's case involved the exercise of judgment based on an evaluation of his entire caseload and, thus, could not be characterized as a procedural or mechanical act.

S. Leffert, 81 TCM 1093, Dec. 54,229(M), TC Memo. 2001-23.

The government was entitled to summary judgment in a refund suit brought by a trust that sought a marital deduction in connection with a lump sum payment to the trust beneficiary, the settlor's surviving spouse. The beneficiary, as a surviving spouse, did not, prior to the settlement, have an enforceable right under state ( Maine ) law to an interest deductible under Code Sec. 2056. As a result, the trust was not entitled to an abatement of interest on the grounds of IRS ministerial or managerial acts that resulted in unreasonable error or delay.

J.A. Davies , DC Me. , 2001-1 USTC ¶50,175.

The IRS 's denial of a married couple's request for an abatement of interest that arose in connection with certain partnership investments did not constitute an abuse of its discretion because they did not identify any specific delay or errors by the IRS in performing a ministerial act. The Tax Court declined to characterize the IRS 's processing of the taxpayer's refund claim, the proceeds from which they anticipated would cover their outstanding tax liabilities, as the cause for any delay in payment of their outstanding tax liability. The IRS committed no errors or delays in determining or assessing their tax deficiency.

R. Wish, 81 TCM 1279, Dec. 54,269(M), TC Memo. 2001-57.

The IRS did not abuse its discretion by denying a couple's request for an abatement of interest accrued on deficiencies attributable to unreported gambling income and the husband's social security income. The IRS agent's decision to review only the two tax years assigned to him despite the couple's desire to have all tax years resolved at the same time did not constitute a ministerial act. Even if it did, his failure to resolve those tax year issues could not be considered because the taxpayers had not yet received corresponding deficiency notices. Consequently, they did not establish that the accrual of interest on their tax underpayments was due to an error or delay in the performance of a ministerial act. In addition, erroneous advice they received from an IRS employee was not furnished in writing, and their Appeals officer had informed them that it was incorrect.

H. Kupersmit, 82 TCM 440, Dec. 54,456(M), TC Memo. 2001-221. Aff'd, CA-3 (unpublished opinion), 2002-1 USTC ¶50,442.

An individual was not entitled to an abatement of interest that accrued on deficiencies caused by disallowed charitable deductions for gifts made to family members. The IRS 's failure to detect her erroneous tax treatment of the cash gifts, which she deducted as a result of a good faith misunderstanding of the $10,000 annual exclusion, was not a ministerial error. Moreover, the IRS properly refused to abate interest that accrued as a result of the taxpayer's failure to sign a proposed stipulated decision with regard to the deficiency assessed for the first tax year. Likewise, the IRS 's refusal to abate interest that accrued for the remaining tax years because of the taxpayer's failure to promptly pay the assessed deficiencies and interest was correct.

N.H. Pettyjohn, 82 TCM 461, Dec. 54,462(M), TC Memo. 2001-227.

The IRS 's denial of an individual's request for an abatement of interest did not constitute an abuse of discretion absent proof of its erroneous or dilatory performance of a ministerial act. The taxpayer's contention that the IRS failed to properly credit an overpayment to the subsequent year's tax liability, thereby overstating his interest for the following tax year and depriving him of an opportunity to pay the interest in full, was rejected as meritless. He introduced no credible evidence showing that he relied on the overstated amount as his true unpaid liability or that he had the financial resources to pay his true liability.

D.B. Hawksley, 80 TCM 705, Dec. 54,124(M), TC Memo. 2000-354.

The sole owner of an S corporation was not entitled to an abatement of interest that accrued on deficiencies caused by the disallowance of certain office expenses and from his failure to report capital gains and dividend income from his business. He contended that the IRS 's erroneous determination that his company was a personal holding company prevented him from settling earlier with the IRS and thereby caused the accrual of interest. However, nothing in the record indicated that the individual made any attempt to pay or acknowledge the deficiencies in tax attributable to his failure to report taxable income from his business.

K.S. Chan, 82 TCM 727, Dec. 54,511(M), TC Memo. 2001-268.

Taxpayers were not entitled to an abatement of interest on deficiencies that accrued over the period during which they submitted seven offers in compromise to the IRS . A revenue officer's application of the local standards for housing and utility costs in determining the differential between their monthly income and necessary living expenses, which resulted in a finding that the payment offered was inadequate, was a not "ministerial error." Application of the local standards was only one step in the process of investigating and evaluating the offers in compromise --a process that repeatedly called for the exercise of judgment and discretion.

R.A. Spurgin, 82 TCM 841, Dec. 54,535(M), TC Memo. 2001-290.

An attorney failed to establish that the accrual of interest on his tax deficiency was attributable to an erroneous or dilatory performance of a ministerial duty by an IRS agent. It was not unreasonable for the IRS to send the taxpayer's file to his last known address rather than to his office in another state, and the taxpayer knew of the substance of the file and that he owed tax before the file was sent to his last known address.

J.K. Gaudet, 82 TCM 948, Dec. 54,558(M), TC Memo. 2001-309.

The IRS did not abuse its discretion in denying an individual's request to abate and refund interest accrued on her tax liability after the IRS classified it as uncollectible. Because classifying it as such required the exercise of discretion and judgment, the determination was not a ministerial act. The taxpayer's delayed payment also did not result from the IRS classifying it as uncollectible.

M. Smith, 83 TCM 1041, Dec. 54,602(M), TC Memo. 2002-1.

An individual failed to show that the delay in her payment was attributable to erroneous or dilatory actions by the IRS in performing a ministerial act. Moreover, the taxpayer had the ability to stop the accrual of interest for each of the three tax years in issue by paying her liability.

S. Joye, 83 TCM 1091, Dec. 54,616(M), TC Memo. 2002-14.

A tax shelter investor was not entitled to an abatement of interest based on denial of his request for a transfer of his appeal to another IRS office because this was not a ministerial act. Any oral or written statements by the IRS with respect to application of the federal tax laws required the exercise of judgment and did not constitute a ministerial act. No statute mandated an abatement of interest on tax deficiencies in order to treat similarly situated taxpayers alike, including deficiencies that are the result of a partnership level proceeding under the TEFRA provisions.

M.C. Sainte-Yves, 83 TCM 1891, Dec. 54,794(M), TC Memo. 2002-158.

Jurisdiction existed over an IRS Appeals officer's assessment of interest based on the Tax Court's determination that the issue of interest abatement was raised by the taxpayer during the Collection Due Process (CDP) hearing. Testimony provided by the taxpayer and the Appeals officer established the claim. However, the taxpayer was not entitled to an abatement of interest in amounts greater than those abated or conceded by the IRS because he did not allege that the assessment of interest was attributable to a ministerial error within the meaning of Code Sec. 6404(e)and the evidence did not establish that the IRS committed a ministerial error.

R. Wright, 84 TCM 675, Dec. 54,970(M), TC Memo. 2002-312.

The IRS did not abuse its discretion in failing to abate interest for specified periods with respect to married taxpayers' disallowed investment credits and losses arising out of a partnership in which they held a limited interest. The delays identified by the taxpayers were not attributable to the IRS 's error or delay in performing any ministerial act; rather, they were attributable to the IRS 's reasonable prioritization decisions with respect to its caseload. For a second period, however, the IRS conceded that it abused its discretion in failing to abate interest attributable to an unjustified delay. The delay appeared to have occurred in the performance of a ministerial act by the IRS , which was the IRS agent's signing of a stipulation and causing it to be delivered to the Tax Court.

J.G. Goettee, Jr., 85 TCM 867, Dec. 55,049(M), TC Memo. 2003-43. Motion for reconsideration denied in 87 TCM 808, Dec. 55,510(M), TC Memo. 2004-9, below.

Married taxpayers who failed to establish the existence of unusual circumstances or substantial error in the Tax Court's decision involving their entitlement to interest abatements (Dec. 55,049(M), were not entitled to reconsideration of that ruling. Their allegation that the IRS erred in computing the amount of interest due was rejected because the prior opinion called for the correction of calculation errors. Also, reconsideration was not the appropriate forum for offering new legal theories or reiterating previously rejected arguments. Further, the record supported the IRS 's prioritization decisions, and there was no delay in the assessment of liabilities because the taxpayers had waived restrictions on assessment.

J.G. Goettee, Jr., 87 TCM 808, Dec. 55,510(M), TC Memo. 2004-9.

The passage of a considerable amount of time in the litigation phase of a tax shelter dispute did not establish error or delay by the IRS in performing a ministerial act.

A.M. Beagles, 85 TCM 995, Dec. 55,075(M), TC Memo. 2003-67.

Married taxpayers who, in the underlying Tax Court proceeding, were held liable for deficiencies and interest computed during Tax Court Rule 155 proceedings, failed to establish that any erroneous or dilatory performance of a ministerial duty by an IRS agent contributed to a delay or error in the payment of the deficiency interest. Thus, the IRS did not abuse its discretion in denying their request for an abatement of the interest. The IRS 's application of the law regarding the tax assessment did not qualify as a ministerial act. Also, errors relating to the audit did not entitle the taxpayers to abatement; the IRS 's classification and evaluation of information required judgment or discretion and was not a ministerial act.

W. Landvogt, 86 TC 104, Dec. 55,236(M), TC Memo. 2003-217.

A divorced taxpayer was not entitled to an abatement of interest because the IRS ' decision to re-allocate the majority of an estimated tax payment to his ex-wife's return was not a ministerial error.

M.W. Spiegel, 84 TCM 444, Dec. 54,905(M), TC Memo. 2002-259.

The IRS properly denied a married couple an abatement of interest for two distinct time periods because the delays did not result from a ministerial act, and were significantly attributable to the taxpayers' conduct. Under the law in effect for the period at issue, managerial error did not permit an abatement, and the IRS manager's decision to assign the taxpayers' audit case to an agent who first had to attend training classes was not a ministerial error.

R.M. Jean, 84 TCM 436, Dec. 54,902(M), TC Memo. 2002-256.

The IRS did not abuse its discretion in denying an individual's request for abatement of interest. The taxpayer submitted her returns but failed to pay the taxes due. Her delay in payment was due solely to her failure to pay such tax when due, and was not attributable to the erroneous or dilatory performance of a ministerial act by an official or employee of the IRS . The IRS 's determination of her employee status for the year in issue was not a ministerial act because it involved the exercise of judgment and proper application of law.

B.S. Cannon, 84 TCM 199, Dec. 54,845(M), TC Memo. 2002-205.

The IRS 's loss of married partnership investors' amended returns for nearly 11 years was a ministerial act within the meaning of Code Sec. 6404(e). The loss of the returns was a procedural or mechanical act that did not involve the exercise of discretion or judgment by the IRS .

N.J. Palihnich, 86 TCM 488, Dec. 55,328(M), TC Memo. 2003-297.

The IRS did not abuse its discretion by denying married taxpayers' request for an abatement of interest for a period of five months. Interest accruing during that period was attributed to the couple's inability to pay on a installment agreement and not to any unreasonable error or delay in the performance of a ministerial duty by an IRS agent. However, the IRS did abuse its discretion in refusing to abate interest that accrued on the taxpayers' liabilities for a period after they began to pay pursuant to the installment agreement. The IRS did not clarify to the taxpayers that unassessed interest would continue to accrue during the installment period, but instead confirmed the taxpayers' mistaken belief that their total tax liabilities would be extinguished after making the required payments.

S.R. Harbaugh, 86 TCM 596, Dec. 55,348(M), TC Memo. 2003-316.

An IRS Appeals officer did not abuse his discretion in issuing a Collection Due Process (CDP) determination permitting the collection of the trust fund recovery penalty and interest from a corporate treasurer/responsible person. While the federal district court determined that it had jurisdiction under Code Sec. 6404(h) to review the IRS 's refusal to abate interest on the trust fund recovery penalty, it found that the treasurer did not qualify for an abatement. The record did not show, and the treasurer did not identify, any specific acts attributable to the IRS that would constitute ministerial or managerial acts entitling him to an interest abatement. The mere passage of time did not establish that the IRS erred or delayed in performing a ministerial act.

J.A.P. Leiter , DC Kan. , 2004-1 USTC ¶50,162.

Married taxpayers who submitted multiple offers in compromise with respect to their reported but unpaid federal income tax liabilities for two tax years failed to establish that any delay in their payment was attributable to any action or inaction on the part of IRS personnel in processing their offers. The taxpayers failed to show that the IRS unreasonably delayed the processing of their offers in compromise, all of which the IRS rejected. The taxpayers could have commenced their tax payments at any time. Consequently, interest was not abatable under Code Sec. 6404(e) and the IRS did not abuse its discretion in rejecting the taxpayers' request for abatement.

J.N. Wright, 87 TCM 1103, Dec. 55,580(M), TC Memo. 2004-69.

The IRS did not abuse its discretion in denying a request by an individual to abate interest on his tax deficiency. The deficiency stemmed from the taxpayer's investment in a coal mining partnership. The Tax Court rejected the taxpayer's claim that the IRS improperly imposed interest for a period beginning after he received a letter by a representative of the partnership indicating that pending litigation between the partnership and the IRS had been settled. The court noted that the IRS is not bound by a letter that was not sent by it. Further, the passage of time from the receipt of the letter until a final judgment had been issued in the case was attributable to the complexity and extent of the coal litigation and not due to ministerial error.

D. Deverna, 87 TCM 1139, Dec. 55,592(M), TC Memo. 2004-80.

A married couple, who invested in a multi-level tax shelter partnership, was entitled to an abatement of interest during the periods that the IRS 's inaction delayed the resolution of their case. After the tax matters partner signed a settlement agreement, the IRS waited 3-1/2 months to countersign the document, which was an unreasonable delay. Since the IRS drafted the settlement agreement, its countersignature on the document did not require an act of discretion; it was a ministerial act. Therefore, the taxpayers were entitled to an abatement of interest for those months.

T.F. Dadian, 87 TCM 1344, Dec. 55,641(M), TC Memo. 2004-121.

The IRS did not abuse its discretion in denying a taxpayer's request for abatement of interest on his tax deficiencies. The taxpayer invested in a partnership that was a limited partner in a tax shelter and claimed losses with respect to his investments. Following an investigation of the tax shelter, the IRS reached a settlement agreement with it and with the taxpayer, resulting in adjustment of the taxpayer's returns, assessment of deficiencies, and payment of those deficiencies by the taxpayer. The IRS denied the taxpayer's request for abatement of interest accrued during the investigation, however, holding that all of the delays in the case resulted from discretionary, rather than ministerial, acts by the IRS , and so abatement was not required by statute.

R.J. Jaffe, 87 TCM 1349, Dec. 55,642(M), TC Memo. 2004-122.

The IRS was not equitably estopped from assessing interest for one tax year because the taxpayer did not prove that she reasonably relied on misrepresentations made by the IRS regarding the full amount of her tax liability. The record reflected that the lump-sum payoff figure given to the taxpayer represented the amount of her tax liability, exclusive of additions to tax, penalties or interest. Further, the correspondence sent by the IRS to the taxpayer repeatedly indicated that further adjustments could be made.

C.A. Dormer, 88 TCM 27, Dec. 55,694(M), TC Memo. 2004-167.

The IRS 's failure to assess tax liabilities and issue notice and demand were ministerial acts. The liabilities arose out of a 1985 settlement agreement that was entered into in connection with tax shelter litigation. The assessment was made in 1999, the year the litigation was completed. Although litigation decisions are not ministerial, the tax year at issue was not the subject of the litigation.

T. Corson, 123 TC 202, Dec. 55,716.

The IRS did not abuse its discretion in denying a married couple's claim for abatement of interest on their tax deficiency during the period that the IRS conducted a criminal investigation of the partnerships in which the couple had invested. The IRS 's disorganization and loss of partnership books and records and failure to return to books and records did not constitute a ministerial act under Code Sec. 6404(e) prior to its amendment. On remand from CA-5, 2003-2 USTC ¶50,551.

R.W. Beall , DC Tex. , 2004-2 USTC ¶50,380.

Abatements: Ministerial or managerial acts

The IRS did not abuse its discretion in denying an individual's request for an abatement of interest on her tax deficiencies. The taxpayer failed to support her claim that the assessments of interest erroneously accrued on assessments that she claimed to have paid since she did not provide sufficient evidence that she had made any payments on the balance due. She also failed to show that her delay in paying the liabilities was attributable to any ministerial act performed by an IRS agent in an erroneous or dilatory manner. Moreover, her claim that the IRS erroneously denied her earned income tax credits for subsequent tax years did not present a cognizable claim under Code Sec. 6404(a) or (e) since such a determination did not require the exercise of judgment of discretion.

D. Boyd, 79 TCM 1361, Dec. 53,717(M), TC Memo. 2000-16.

Interest that accrued on an individual's income tax liabilities prior to the IRS 's application of the his carryback losses was attributable to the taxpayer's own conduct; thus, the IRS did not abuse its discretion by denying his request for an abatement of interest. The taxpayer failed to file Form 1045, Application for Tentative Refund, although he conceded that he knew he had to file the form in order to carry back the loss. He also was not entitled to abate interest on his liabilities for self-employment taxes and civil penalties that continued to accrue after the carryback losses eliminated his income tax deficiency. He failed to show that any IRS employee was erroneous or dilatory in performing a ministerial act because his self-serving testimony was insufficient to prove that a revenue officer erroneously advised him not to file a Form 1045 or promised him that the carryback would eliminate his entire deficiency. Finally, the Tax Court lacked jurisdiction to review the IRS 's failure to abate his penalties for failure to pay tax.

H.R. Gross, 79 TCM 1476, Dec. 53,746(M), TC Memo. 2000-44.

Married taxpayers failed to establish that any erroneous or dilatory performance of a ministerial duty by an IRS agent contributed to a delay or error in the payment of interest on their tax deficiency. Consequently, the IRS did not abuse its discretion in denying their request for abatement of interest. The taxpayers' contentions that the examining IRS agent improperly evaluated their joint returns, that the deficiency determinations were improper, and that inadequate consideration was given to their arguments by the appeals officer were insufficient to support abatement under Code Sec. 6404(e). The conduct of the IRS and appeals officer concerning the proper application of federal tax laws involved judgment and discretion and, thus, did not qualify as a ministerial act.

E. Brown, 79 TCM 1561, Dec. 53,766(M), TC Memo. 2000-61.

The IRS 's refusal to abate interest owed by married taxpayers did not constitute an abuse of discretion because no ministerial acts on the part of IRS employees or officers caused delay. Its decisions to examine three tax years, to conduct a bank deposits analysis of the taxpayers' accounts, to suspend the audit until a related audit of the husband's employer was completed, and to refer the case for criminal investigation all involved the exercise of judgment and discretion. The IRS did not engage in "ministerial acts," which are procedural or mechanical acts that do not involve the exercise of judgment or discretion and that occur during the processing of a case after all prerequisites to the act have taken place. Moreover, the record established that the taxpayers were largely responsible for any delays in the proceedings.

F.J. Gorgie, 79 TCM 1628, Dec. 53,790(M), TC Memo. 2000-80.

Jurisdiction existed over an IRS appeals officer's determination that statutory interest had accrued on an individual's tax liability because the taxpayer's contention that interest should not have accrued during his bankruptcy case was viewed as a request for abatement of interest. However, the taxpayer did not allege that the assessment of interest was attributable to a ministerial error within the meaning of Code Sec. 6404(e) and the evidence did not establish that the IRS committed a ministerial error. Thus, no abatement was permitted.

S.W. Katz, 115 TC 329, Dec. 54,081.

The IRS 's denial of an individual's request for an abatement of interest did not constitute an abuse of discretion absent proof of its erroneous or dilatory performance of a ministerial act. The IRS 's alleged loss of some of the taxpayer's records that were seized in conjunction with the arrest of his former representative did not entitle him to abatement because the seizure did not qualify as a ministerial act. Moreover, any error or delay that arose with respect to the seizure could also be attributed to the taxpayer, who did not respond to IRS correspondence and notices, produce requested documentation, or pursue litigation opportunities.

D.B. Hawksley, 80 TCM 705, Dec. 54,124(M), TC Memo. 2000-354.

An individual, whose former spouse was granted innocent spouse relief under former Code Sec. 6013(e), did not qualify for an abatement of interest. The taxpayer did not allege that the assessment of interest was attributable to a ministerial error within the meaning of Code Sec. 6404(e).

C.W. Miller, 115 TC 582, Dec. 54,164. Aff'd, CA-4 (unpublished opinion), 2001-2 USTC ¶50,713, 21 FedAppx 160.

The IRS properly denied an accountant's request for an abatement of interest accrued on deficiencies resulting from his investment in a general partnership. The denial of abatement did not constitute an abuse of discretion in the performance of a ministerial act by an IRS agent. The agent's decision whether and when to work on the partnership's case involved the exercise of judgment based on an evaluation of his entire caseload and, thus, could not be characterized as a procedural or mechanical act.

S. Leffert, 81 TCM 1093, Dec. 54,229(M), TC Memo. 2001-23.

The government was entitled to summary judgment in a refund suit brought by a trust that sought a marital deduction in connection with a lump sum payment to the trust beneficiary, the settlor's surviving spouse. The beneficiary, as a surviving spouse, did not, prior to the settlement, have an enforceable right under state ( Maine ) law to an interest deductible under Code Sec. 2056. As a result, the trust was not entitled to an abatement of interest on the grounds of IRS ministerial or managerial acts that resulted in unreasonable error or delay.

J.A. Davies , DC Me. , 2001-1 USTC ¶50,175.

The IRS 's denial of a married couple's request for an abatement of interest that arose in connection with certain partnership investments did not constitute an abuse of its discretion because they did not identify any specific delay or errors by the IRS in performing a ministerial act. The Tax Court declined to characterize the IRS 's processing of the taxpayer's refund claim, the proceeds from which they anticipated would cover their outstanding tax liabilities, as the cause for any delay in payment of their outstanding tax liability. The IRS committed no errors or delays in determining or assessing their tax deficiency.

R. Wish, 81 TCM 1279, Dec. 54,269(M), TC Memo. 2001-57.

The IRS did not abuse its discretion by denying a couple's request for an abatement of interest accrued on deficiencies attributable to unreported gambling income and the husband's social security income. The IRS agent's decision to review only the two tax years assigned to him despite the couple's desire to have all tax years resolved at the same time did not constitute a ministerial act. Even if it did, his failure to resolve those tax year issues could not be considered because the taxpayers had not yet received corresponding deficiency notices. Consequently, they did not establish that the accrual of interest on their tax underpayments was due to an error or delay in the performance of a ministerial act. In addition, erroneous advice they received from an IRS employee was not furnished in writing, and their Appeals officer had informed them that it was incorrect.

H. Kupersmit, 82 TCM 440, Dec. 54,456(M), TC Memo. 2001-221. Aff'd, CA-3 (unpublished opinion), 2002-1 USTC ¶50,442.

An individual was not entitled to an abatement of interest that accrued on deficiencies caused by disallowed charitable deductions for gifts made to family members. The IRS 's failure to detect her erroneous tax treatment of the cash gifts, which she deducted as a result of a good faith misunderstanding of the $10,000 annual exclusion, was not a ministerial error. Moreover, the IRS properly refused to abate interest that accrued as a result of the taxpayer's failure to sign a proposed stipulated decision with regard to the deficiency assessed for the first tax year. Likewise, the IRS 's refusal to abate interest that accrued for the remaining tax years because of the taxpayer's failure to promptly pay the assessed deficiencies and interest was correct.

N.H. Pettyjohn, 82 TCM 461, Dec. 54,462(M), TC Memo. 2001-227.

The IRS 's denial of an individual's request for an abatement of interest did not constitute an abuse of discretion absent proof of its erroneous or dilatory performance of a ministerial act. The taxpayer's contention that the IRS failed to properly credit an overpayment to the subsequent year's tax liability, thereby overstating his interest for the following tax year and depriving him of an opportunity to pay the interest in full, was rejected as meritless. He introduced no credible evidence showing that he relied on the overstated amount as his true unpaid liability or that he had the financial resources to pay his true liability.

D.B. Hawksley, 80 TCM 705, Dec. 54,124(M), TC Memo. 2000-354.

The sole owner of an S corporation was not entitled to an abatement of interest that accrued on deficiencies caused by the disallowance of certain office expenses and from his failure to report capital gains and dividend income from his business. He contended that the IRS 's erroneous determination that his company was a personal holding company prevented him from settling earlier with the IRS and thereby caused the accrual of interest. However, nothing in the record indicated that the individual made any attempt to pay or acknowledge the deficiencies in tax attributable to his failure to report taxable income from his business.

K.S. Chan, 82 TCM 727, Dec. 54,511(M), TC Memo. 2001-268.

Taxpayers were not entitled to an abatement of interest on deficiencies that accrued over the period during which they submitted seven offers in compromise to the IRS . A revenue officer's application of the local standards for housing and utility costs in determining the differential between their monthly income and necessary living expenses, which resulted in a finding that the payment offered was inadequate, was a not "ministerial error." Application of the local standards was only one step in the process of investigating and evaluating the offers in compromise --a process that repeatedly called for the exercise of judgment and discretion.

R.A. Spurgin, 82 TCM 841, Dec. 54,535(M), TC Memo. 2001-290.

An attorney failed to establish that the accrual of interest on his tax deficiency was attributable to an erroneous or dilatory performance of a ministerial duty by an IRS agent. It was not unreasonable for the IRS to send the taxpayer's file to his last known address rather than to his office in another state, and the taxpayer knew of the substance of the file and that he owed tax before the file was sent to his last known address.

J.K. Gaudet, 82 TCM 948, Dec. 54,558(M), TC Memo. 2001-309.

The IRS did not abuse its discretion in denying an individual's request to abate and refund interest accrued on her tax liability after the IRS classified it as uncollectible. Because classifying it as such required the exercise of discretion and judgment, the determination was not a ministerial act. The taxpayer's delayed payment also did not result from the IRS classifying it as uncollectible.

M. Smith, 83 TCM 1041, Dec. 54,602(M), TC Memo. 2002-1.

An individual failed to show that the delay in her payment was attributable to erroneous or dilatory actions by the IRS in performing a ministerial act. Moreover, the taxpayer had the ability to stop the accrual of interest for each of the three tax years in issue by paying her liability.

S. Joye, 83 TCM 1091, Dec. 54,616(M), TC Memo. 2002-14.

A tax shelter investor was not entitled to an abatement of interest based on denial of his request for a transfer of his appeal to another IRS office because this was not a ministerial act. Any oral or written statements by the IRS with respect to application of the federal tax laws required the exercise of judgment and did not constitute a ministerial act. No statute mandated an abatement of interest on tax deficiencies in order to treat similarly situated taxpayers alike, including deficiencies that are the result of a partnership level proceeding under the TEFRA provisions.

M.C. Sainte-Yves, 83 TCM 1891, Dec. 54,794(M), TC Memo. 2002-158.

Jurisdiction existed over an IRS Appeals officer's assessment of interest based on the Tax Court's determination that the issue of interest abatement was raised by the taxpayer during the Collection Due Process (CDP) hearing. Testimony provided by the taxpayer and the Appeals officer established the claim. However, the taxpayer was not entitled to an abatement of interest in amounts greater than those abated or conceded by the IRS because he did not allege that the assessment of interest was attributable to a ministerial error within the meaning of Code Sec. 6404(e)and the evidence did not establish that the IRS committed a ministerial error.

R. Wright, 84 TCM 675, Dec. 54,970(M), TC Memo. 2002-312.

The IRS did not abuse its discretion in failing to abate interest for specified periods with respect to married taxpayers' disallowed investment credits and losses arising out of a partnership in which they held a limited interest. The delays identified by the taxpayers were not attributable to the IRS 's error or delay in performing any ministerial act; rather, they were attributable to the IRS 's reasonable prioritization decisions with respect to its caseload. For a second period, however, the IRS conceded that it abused its discretion in failing to abate interest attributable to an unjustified delay. The delay appeared to have occurred in the performance of a ministerial act by the IRS , which was the IRS agent's signing of a stipulation and causing it to be delivered to the Tax Court.

J.G. Goettee, Jr., 85 TCM 867, Dec. 55,049(M), TC Memo. 2003-43. Motion for reconsideration denied in 87 TCM 808, Dec. 55,510(M), TC Memo. 2004-9, below.

Married taxpayers who failed to establish the existence of unusual circumstances or substantial error in the Tax Court's decision involving their entitlement to interest abatements (Dec. 55,049(M), were not entitled to reconsideration of that ruling. Their allegation that the IRS erred in computing the amount of interest due was rejected because the prior opinion called for the correction of calculation errors. Also, reconsideration was not the appropriate forum for offering new legal theories or reiterating previously rejected arguments. Further, the record supported the IRS 's prioritization decisions, and there was no delay in the assessment of liabilities because the taxpayers had waived restrictions on assessment.

J.G. Goettee, Jr., 87 TCM 808, Dec. 55,510(M), TC Memo. 2004-9.

The passage of a considerable amount of time in the litigation phase of a tax shelter dispute did not establish error or delay by the IRS in performing a ministerial act.

A.M. Beagles, 85 TCM 995, Dec. 55,075(M), TC Memo. 2003-67.

Married taxpayers who, in the underlying Tax Court proceeding, were held liable for deficiencies and interest computed during Tax Court Rule 155 proceedings, failed to establish that any erroneous or dilatory performance of a ministerial duty by an IRS agent contributed to a delay or error in the payment of the deficiency interest. Thus, the IRS did not abuse its discretion in denying their request for an abatement of the interest. The IRS 's application of the law regarding the tax assessment did not qualify as a ministerial act. Also, errors relating to the audit did not entitle the taxpayers to abatement; the IRS 's classification and evaluation of information required judgment or discretion and was not a ministerial act.

W. Landvogt, 86 TC 104, Dec. 55,236(M), TC Memo. 2003-217.

A divorced taxpayer was not entitled to an abatement of interest because the IRS ' decision to re-allocate the majority of an estimated tax payment to his ex-wife's return was not a ministerial error.

M.W. Spiegel, 84 TCM 444, Dec. 54,905(M), TC Memo. 2002-259.

The IRS properly denied a married couple an abatement of interest for two distinct time periods because the delays did not result from a ministerial act, and were significantly attributable to the taxpayers' conduct. Under the law in effect for the period at issue, managerial error did not permit an abatement, and the IRS manager's decision to assign the taxpayers' audit case to an agent who first had to attend training classes was not a ministerial error.

R.M. Jean, 84 TCM 436, Dec. 54,902(M), TC Memo. 2002-256.

The IRS did not abuse its discretion in denying an individual's request for abatement of interest. The taxpayer submitted her returns but failed to pay the taxes due. Her delay in payment was due solely to her failure to pay such tax when due, and was not attributable to the erroneous or dilatory performance of a ministerial act by an official or employee of the IRS . The IRS 's determination of her employee status for the year in issue was not a ministerial act because it involved the exercise of judgment and proper application of law.

B.S. Cannon, 84 TCM 199, Dec. 54,845(M), TC Memo. 2002-205.

The IRS 's loss of married partnership investors' amended returns for nearly 11 years was a ministerial act within the meaning of Code Sec. 6404(e). The loss of the returns was a procedural or mechanical act that did not involve the exercise of discretion or judgment by the IRS .

N.J. Palihnich, 86 TCM 488, Dec. 55,328(M), TC Memo. 2003-297.

The IRS did not abuse its discretion by denying married taxpayers' request for an abatement of interest for a period of five months. Interest accruing during that period was attributed to the couple's inability to pay on a installment agreement and not to any unreasonable error or delay in the performance of a ministerial duty by an IRS agent. However, the IRS did abuse its discretion in refusing to abate interest that accrued on the taxpayers' liabilities for a period after they began to pay pursuant to the installment agreement. The IRS did not clarify to the taxpayers that unassessed interest would continue to accrue during the installment period, but instead confirmed the taxpayers' mistaken belief that their total tax liabilities would be extinguished after making the required payments.

S.R. Harbaugh, 86 TCM 596, Dec. 55,348(M), TC Memo. 2003-316.

An IRS Appeals officer did not abuse his discretion in issuing a Collection Due Process (CDP) determination permitting the collection of the trust fund recovery penalty and interest from a corporate treasurer/responsible person. While the federal district court determined that it had jurisdiction under Code Sec. 6404(h) to review the IRS 's refusal to abate interest on the trust fund recovery penalty, it found that the treasurer did not qualify for an abatement. The record did not show, and the treasurer did not identify, any specific acts attributable to the IRS that would constitute ministerial or managerial acts entitling him to an interest abatement. The mere passage of time did not establish that the IRS erred or delayed in performing a ministerial act.

J.A.P. Leiter , DC Kan. , 2004-1 USTC ¶50,162.

Married taxpayers who submitted multiple offers in compromise with respect to their reported but unpaid federal income tax liabilities for two tax years failed to establish that any delay in their payment was attributable to any action or inaction on the part of IRS personnel in processing their offers. The taxpayers failed to show that the IRS unreasonably delayed the processing of their offers in compromise, all of which the IRS rejected. The taxpayers could have commenced their tax payments at any time. Consequently, interest was not abatable under Code Sec. 6404(e) and the IRS did not abuse its discretion in rejecting the taxpayers' request for abatement.

J.N. Wright, 87 TCM 1103, Dec. 55,580(M), TC Memo. 2004-69.

The IRS did not abuse its discretion in denying a request by an individual to abate interest on his tax deficiency. The deficiency stemmed from the taxpayer's investment in a coal mining partnership. The Tax Court rejected the taxpayer's claim that the IRS improperly imposed interest for a period beginning after he received a letter by a representative of the partnership indicating that pending litigation between the partnership and the IRS had been settled. The court noted that the IRS is not bound by a letter that was not sent by it. Further, the passage of time from the receipt of the letter until a final judgment had been issued in the case was attributable to the complexity and extent of the coal litigation and not due to ministerial error.

D. Deverna, 87 TCM 1139, Dec. 55,592(M), TC Memo. 2004-80.

A married couple, who invested in a multi-level tax shelter partnership, was entitled to an abatement of interest during the periods that the IRS 's inaction delayed the resolution of their case. After the tax matters partner signed a settlement agreement, the IRS waited 3-1/2 months to countersign the document, which was an unreasonable delay. Since the IRS drafted the settlement agreement, its countersignature on the document did not require an act of discretion; it was a ministerial act. Therefore, the taxpayers were entitled to an abatement of interest for those months.

T.F. Dadian, 87 TCM 1344, Dec. 55,641(M), TC Memo. 2004-121.

The IRS did not abuse its discretion in denying a taxpayer's request for abatement of interest on his tax deficiencies. The taxpayer invested in a partnership that was a limited partner in a tax shelter and claimed losses with respect to his investments. Following an investigation of the tax shelter, the IRS reached a settlement agreement with it and with the taxpayer, resulting in adjustment of the taxpayer's returns, assessment of deficiencies, and payment of those deficiencies by the taxpayer. The IRS denied the taxpayer's request for abatement of interest accrued during the investigation, however, holding that all of the delays in the case resulted from discretionary, rather than ministerial, acts by the IRS , and so abatement was not required by statute.

R.J. Jaffe, 87 TCM 1349, Dec. 55,642(M), TC Memo. 2004-122.

The IRS was not equitably estopped from assessing interest for one tax year because the taxpayer did not prove that she reasonably relied on misrepresentations made by the IRS regarding the full amount of her tax liability. The record reflected that the lump-sum payoff figure given to the taxpayer represented the amount of her tax liability, exclusive of additions to tax, penalties or interest. Further, the correspondence sent by the IRS to the taxpayer repeatedly indicated that further adjustments could be made.

C.A. Dormer, 88 TCM 27, Dec. 55,694(M), TC Memo. 2004-167.

The IRS 's failure to assess tax liabilities and issue notice and demand were ministerial acts. The liabilities arose out of a 1985 settlement agreement that was entered into in connection with tax shelter litigation. The assessment was made in 1999, the year the litigation was completed. Although litigation decisions are not ministerial, the tax year at issue was not the subject of the litigation.

T. Corson, 123 TC 202, Dec. 55,716.

The IRS did not abuse its discretion in denying a married couple's claim for abatement of interest on their tax deficiency during the period that the IRS conducted a criminal investigation of the partnerships in which the couple had invested. The IRS 's disorganization and loss of partnership books and records and failure to return to books and records did not constitute a ministerial act under Code Sec. 6404(e) prior to its amendment. On remand from CA-5, 2003-2 USTC ¶50,551.

R.W. Beall , DC Tex. , 2004-2 USTC ¶50,380.

Abatements: Delays in resolving tax matters

A taxpayer who claimed losses from a tax shelter partnership was unable to prove that the IRS abused its discretion in denying his claim for abatement of interest. The passage of a considerable amount of time in the litigation phase of the tax dispute did not establish error or delay by the IRS in performing a ministerial act for purposes of Code Sec. 6404. The taxpayer's contention that the IRS committed ministerial errors when it allegedly failed to communicate relevant information and communicated misinformation to him was also rejected.

W.G. Lee, 113 TC 145, Dec. 53,508.

A pro se attorney who pled guilty to criminal tax evasion was not entitled to an abatement of interest that accrued on his tax deficiency as a result of the IRS 's suspension of civil proceedings against him during its criminal investigation and prosecution. The refusal to continue the civil investigation was the result of a litigation strategy, not the result of a ministerial act.

J.R. Taylor, 113 TC 206, Dec. 53,541. Aff'd, CA-9 (unpublished opinion), 2001-1 USTC ¶50,441.

The IRS 's denial of a request by a tax preparer and his wife to abate interest on their deficiency did not constitute an abuse of discretion. Although the taxpayers claimed that too much time had elapsed from the commencement of an audit until the IRS issued a deficiency notice nearly two years later, they failed to show that any agent of the IRS committed an error or delay in performing a ministerial act. Any delay in transferring the taxpayers' petition from the U.S. Embassy in Mexico City to the Tax Court had no effect on the pace of the settlement of the case and, thus, interest that accrued during that period was not subject to abatement. Further, there was no prohibited delay with respect to an IRS Appeals officer's issuance of a settlement offer to the taxpayers. The IRS properly refused to abate interest that accrued solely due to the taxpayer's failure to pay their agreed tax liability, and it did not have to apply a refund that arose in a subsequent tax year to pay the deficiency for the year at issue. Finally, since the taxpayers failed to maintain proper records, interest was not abated to offset expenses they incurred hiring an accountant and traveling to Mexico to obtain records.

G. Mankita, 78 TCM 1216, Dec. 53,673(M), TC Memo. 1999-420.

The IRS 's failure to abate interest that accrued on married taxpayers' deficiencies was not an abuse of discretion since the taxpayers did not show that the interest was attributable to any error or delay of an IRS employee acting in an official capacity in performing a ministerial act. The taxpayers failed to support their claim that they attempted to schedule an earlier meeting with an Appeals officer than actually occurred. Thus, they were not entitled to abate interest that accrued from the date they received their first letter from the Appeals office until they reached a settlement with the IRS regarding the amount of their deficiencies. Moreover, their claim that the IRS took unreasonable legal positions did not implicate a ministerial act since decisions regarding whether to settle a case and the application of tax laws involve discretion and judgment.

R. Dundore, 79 TCM 1479, Dec. 53,747(M), TC Memo. 2000-45.

It was an abuse of discretion for the IRS to refuse to abate interest during the period in which the examination of a partnership's return was delayed by the IRS 's Quality Review branch since the IRS failed to clearly explain its basis for refusal. The abuse of discretion standard requires the IRS to explain why it has exercised its discretion in a given manner, so that the court is not required to speculate as to the basis of its actions. However, the IRS did not abuse its discretion in refusing to abate interest that accrued during the initial and final stages of the examination while IRS agents were reviewing the partners' expense deductions and considering the imposition of penalties. Further, the IRS 's decision not to reassign the case while the assigned Appeals Officer was in training, and the officer's subsequent decision to give precedence to cases on which the statute of limitations was near expiration, were not ministerial acts. Finally, the version of Code Sec. 6404 that was in effect for the tax year at issue did not provide for abatement of interest that accrued due to delays in performing managerial acts.

L.L. Jacobs, 79 TCM 1835, Dec. 53,840(M), TC Memo. 2000-123.

An individual was not entitled to an abatement of interest on his deficiency because he failed to prove that the interest accrued due to any ministerial acts on the part of IRS employees. The fact that his examination took several years to complete did not prove that an erroneous or dilatory act occurred, especially since delays were caused by the expansion of his case, his difficulty in supplying records, the IRS 's suspicions of fraud, and the reopening of the examination at the taxpayer's request. A misaddressed letter from the IRS to one of his representatives also was not an error in performing a ministerial act because the letter was mailed to the address provided by the representative, and was remailed once the IRS determined the correct address.

R. Banat, 79 TCM 1941, Dec. 53,858(M), TC Memo. 2000-141. Aff'd, CA-2 (unpublished opinion), 2001-1 USTC ¶50,296.

The IRS 's refusal to abate interest that had accrued on an individual's tax liability was not an abuse of discretion since any delay in the proceeding was not due to a ministerial act of the IRS . The Service responded in a timely manner to the taxpayer's correspondence in connection with his unpaid tax liability; however, the taxpayer canceled scheduled appointments and failed to supply requested information. Thus, any error or delay was attributable to the taxpayer. Moreover, his arguments that hardship prevented him from complying with tax laws, that the IRS failed to include vital information in the stipulation of facts and that the IRS 's attorney attempted to coerce him into dropping his claim were not proper grounds on which to base an order to abate interest.

J.B. Cosgriff, 80 TCM 156, Dec. 53,983(M), TC Memo. 2000-241.

The IRS did not abuse its discretion in denying a request by a sole proprietor and his wife for an abatement of interest for tax deficiencies that arose, in part, as the result of disallowed business expense deductions and adjustments to the proprietorship's cost of goods sold. The taxpayers could not avail themselves of the exceptions that would otherwise entitle them to an interest abatement in the instant case. They did not identify any specific delay or conduct by the IRS that would constitute a ministerial act or support their claim. Moreover, the time that transpired during the examination, appeals and settlement processes did not constitute error or unreasonable delay in performing a ministerial act.

L.D. Scott, 80 TCM 800, Dec. 54,143(M), TC Memo. 2000-369.

The IRS did not abuse its discretion by denying a couple's request for an abatement of interest accrued on deficiencies assessed against the husband's wholly-owned travel agency. The IRS agent's inability to work on the taxpayers' file for more than six months due to his workload did not constitute a ministerial act.

R.A. Strang, 81 TCM 1566, Dec. 54,325(M), TC Memo. 2001-104.

A long civil and criminal investigation process, which spanned several years and included use of third-party summonses, did not establish error or delay in the government's performance of a ministerial act. Also, the revenue agent responsible for the civil examination did not fail to return to the taxpayer records obtained during the examination, as most of the documents were photocopies obtained by the use of third-party recordkeeper summonses and any original documents were returned.

K.D. Hanks, 82 TCM 1003, Dec. 54,574(M), TC Memo. 2001-319.

The IRS did not abuse its discretion in refusing to abate interest that accrued over several years during an investigation of a limited partnership's returns. The taxpayer's dissatisfaction with the length of time it took to resolve his case did not establish a correlation between a specific error or delay in the performance of a ministerial act and a specific time period for which interest should have been abated as a result of the error or delay.

W.B. Berry, 83 TCM 1013, Dec. 54,580(M), TC Memo. 2001-323.

An individual who was responsible for a significant part, if not all, of the delay in the determination of his tax liability was not entitled to an interest abatement in excess of the amount abated following the IRS 's reconsideration of his assessed deficiencies. The individual had protracted the audit by demanding that it be delayed while he completed college and until he returned from a vacation, by failing to pursue review of the IRS 's decisions in a timely manner, by refusing to cooperate with the IRS , and by making rude and insulting statements to IRS customer service representatives.

T.R. Camerato, 83 TCM 1147, Dec. 54,632(M), TC Memo. 2002-28.

A tax shelter investor's contention that the IRS exhibited unreasonable delay in signing a decision document pertaining to his case was not supported. Other theories also did not show that accrual of interest on his tax deficiency was attributable to an erroneous or dilatory performance of a ministerial duty by an IRS agent.

T.E. Vanstone, 83 TCM 1751, Dec. 54,762(M), TC Memo. 2002-133.

An IRS delay in assessing a married couple's interest due and owing was not unreasonable and did not justify abatement. A significant portion of the delay was due to various aspects of a related audit and the remainder was not a ministerial error, which required the abatement of additional amounts.

IRS Letter Ruling 200213009 (Technical Advice Memorandum), December 7, 2001 .

The IRS did not abuse its discretion in failing to abate interest for specified periods with respect to married taxpayers' disallowed investment credits and losses arising out of a partnership in which they held a limited interest. The delays identified by the taxpayers were not attributable to the IRS's error or delay in performing any ministerial act; rather, they were attributable to the IRS's reasonable prioritization decisions with respect to its caseload. For a second period, however, the IRS conceded that it abused its discretion in failing to abate interest attributable to an unjustified delay. The delay appeared to have occurred in the performance of a ministerial act by the IRS, which was the IRS agent's signing of a stipulation and causing it to be delivered to the Tax Court.

J.G. Goettee, Jr., 85 TCM 867, Dec. 55,049(M), TC Memo. 2003-43. Motion for reconsideration denied in 87 TCM 808, Dec. 55,510(M), TC Memo. 2004-9, below.

Married taxpayers who failed to establish the existence of unusual circumstances or substantial error in the Tax Court's decision involving their entitlement to interest abatements (Dec. 55,049(M), above) were not entitled to reconsideration of that ruling. Their allegation that the IRS erred in computing the amount of interest due was rejected because the prior opinion called for the correction of calculation errors. Also, reconsideration was not the appropriate forum for offering new legal theories or reiterating previously rejected arguments. Further, the record supported the IRS's prioritization decisions, and there was no delay in the assessment of liabilities because the taxpayers had waived restrictions on assessment.

J.G. Goettee, Jr., 87 TCM 808, Dec. 55,510(M), TC Memo. 2004-9.

The passage of a considerable amount of time in the litigation phase of a tax shelter dispute did not establish error or delay by the IRS in performing a ministerial act. The passage of a large period time in the tax shelter litigation was due to the large number of such cases being filed and the court's subsequent attempt to efficiently manage the burden.

A.M. Beagles, 85 TCM 995, Dec. 55,075(M), TC Memo. 2003-67.

A taxpayer who claimed losses from a tax shelter partnership was unable to prove that the IRS abused its discretion in denying his claim for abatement of interest covering four tax years. The taxpayer's contention that the IRS delayed issuing two final partnership administrative adjustments (FPAAs) until several years after it had sufficient information to issue them did not establish error or delay by the IRS in performing a ministerial act. Further, the record revealed that the IRS's difficulty in obtaining accurate records during the audits hindered the audit process.

J.M. Mekulsia, 85 TCM 1303, Dec. 55,152(M), TC Memo. 2003-138.

Married taxpayers who, in the underlying Tax Court proceeding, were held liable for deficiencies and interest computed during Tax Court Rule 155 proceedings, failed to establish that any erroneous or dilatory performance of a ministerial duty by an IRS agent contributed to a delay or error in the payment of the deficiency interest. The mere passage of time since the inception of an audit did not establish that the IRS delayed in performing ministerial acts. Also, errors relating to the audit did not entitle the taxpayers to abatement; the IRS's classification and evaluation of information required judgment or discretion and did not contribute to errors or delays in the couple's payment of their tax liabilities.

W. Landvogt, 86 TCM 104, Dec. 55,236(M), T.C. Memo. 2003-217.

Married taxpayers were not entitled to an abatement of interest that resulted from the denial of their deductions for donations of whale meat and whaling expenses. The taxpayers failed to establish that the accrual of interest was attributable to an error or delay by an official or employee of the IRS. In their opening brief, the taxpayers admitted that the delay resulted from a suspension of their case to allow for the enactment of pertinent proposed federal legislation. Moreover, a death in the family of the taxpayers' attorney did not provide a basis for an abatement of interest.

G.N. Ahmaogak, 86 TCM 124, Dec. 55,240(M), TC Memo. 2003-220.

The taxpayers failed to establish that any unreasonable error or delay in the performance of a ministerial duty by an IRS agent contributed to the nonpayment of interest on their tax deficiency. The record indicated that the interest accruals were merely the result of the taxpayers' failure to pay the entire balance owed, and not the result of an IRS employee's erroneous or dilatory performance of a ministerial or managerial act.

J.D. Hinterleitner, 86 TCM 206, Dec. 55,250(M), TC Memo. 2003-228.

An abatement of interest was denied because the delay was significantly attributable to the taxpayer. Although the IRS agent working on their case was hospitalized and later died, the case was quickly reassigned, thus, any delay resulted from the taxpayers' continual failure to provide requested documentation.

R.M. Jean, 84 TCM 436, Dec. 54,902(M), TC Memo. 2002-256.

An IRS Appeals officer did not abuse his discretion in issuing a Collection Due Process (CDP) determination permitting the collection of the trust fund recovery penalty and interest from a corporate treasurer/responsible person. While the federal district court determined that it had jurisdiction under Code Sec. 6404(h) to review the IRS's refusal to abate interest on the trust fund recovery penalty, it found that the treasurer did not qualify for an abatement. The record did not show, and the treasurer did not identify, any specific acts attributable to the IRS that would constitute ministerial or managerial acts entitling him to an interest abatement. The mere passage of time did not establish that the IRS erred or delayed in performing a ministerial act.

J.A.P. Leiter , DC Kan. , 2004-1 USTC ¶50,162.

A married couple, who invested in a multi-level tax shelter partnership, was entitled to an abatement of interest during the periods that the IRS's inaction delayed the resolution of their case. Since the IRS was unable to explain a six-month delay in sending out the taxpayer's settlement agreement, they were entitled to an abatement of interest for those months. Further, the IRS waited another 3-1/2 months to countersign the document, which was an unreasonable delay. Since the IRS drafted the settlement agreement, its countersignature on the document did not require an act of discretion; it was a ministerial act. Therefore, the taxpayers were entitled to an abatement of interest for those months also.

T.F. Dadian, 87 TCM 1344, Dec. 55,641(M), TC Memo. 2004-121.

The IRS did not abuse its discretion in denying a taxpayer's request for abatement of interest on his tax deficiencies. The taxpayer invested in a partnership that was a limited partner in a tax shelter and claimed losses with respect to his investments. Following an investigation of the tax shelter, the IRS reached a settlement agreement with it and with the taxpayer, resulting in adjustment of the taxpayer's returns, assessment of deficiencies, and payment of those deficiencies by the taxpayer. The IRS denied the taxpayer's request for abatement of interest accrued during the investigation, however, holding the statute of limitation for the assessment was not violated, and all of the delays in the case resulted from discretionary, rather than ministerial, acts by the IRS, and so abatement was not required by statute.

R.J. Jaffe, 87 TCM 1349, Dec. 55,642(M), TC Memo. 2004-122.

The IRS did not abuse its discretion by rejecting taxpayer's interest abatement claim. IRS issued notice of deficiency determining fraud penalties. Delay caused by suspension of civil action to allow for the criminal prosecution of the taxpayer, including the delay in the issuance of the notice of deficiency, was not a delay in the performance of a ministerial act. Taxpayer's contention that IRS also abused its discretion by failing to disclose the basis for its denial of the claim for abatement was also rejected. Investigation of the taxpayer's case and the criminal proceedings were adequate reasons and did not constitute a delay in the performance of a ministerial act.

R.B. Kemp, Jr., 87 TCM 1406, Dec. 55,661(M), TC Memo. 2004-139.

Married owners of a scrap metal business were not entitled to an abatement of interest. The taxpayers failed to pay the tax liability reported on their tax return for the year at issue, and the liability was outstanding until a third party's bankruptcy trustee paid the IRS on the taxpayers' behalf. Moreover, the taxpayers failed to show that any interest that accrued after the bankruptcy trustee's payment was due to the IRS's error or delay.

J.F. Enos, 123 TC --, No. 17, Dec. 55,757.

Joe Nathan Wright and Lola H. Wright, Petitioners-Appellants v. Commissioner of Internal Revenue, Respondent-Appellee.

U.S. Court of Appeals, 5th Circuit; 04-60549, March 14, 2005 .

]

 

Section 6404 of the Internal Revenue Code gives the IRS discretion to abate interest assessments in limited circumstances. ² Because the Wrights reported their tax liability due on their 1993 and 1994 returns, this is not a deficiency case, in which unpaid taxes are identified by the IRS . Accordingly, § 6404(e)(1)(A) does not apply. Section 6404(e)(1)(B) allows abatement only if any error or delay in payment is caused by the IRS error or being dilatory in performing a ministerial act, that occurred after the IRS contacted the taxpayer in writing about the payment and where the taxpayer did not significantly contribute to the error or delay. For the taxpayer to prevail, he must also show "that the Commissioner exercised this discretion arbitrarily, capriciously, or without sound basis in fact or law." Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

The Wright's case fails on all counts. First, it is not clear that the IRS was erroneous or dilatory in performing a ministerial act. Treasury regulations define a ministerial act as "a procedural or mechanical act that does not involve the exercise of discretion, and that occurs during the processing of a taxpayer's case after all prerequisites to the act, such as conferences, have taken place. A decision concerning the proper application of federal tax law (or other federal or state law) is not a ministerial act." Treas. Reg. § 301.6404-2T(b)(1). Although neither party cites any case law on this point, it is clear to us that deciding whether to accept or how to respond to an offer in compromise is not a "procedural or mechanical act that does not involve the exercise of discretion."

Second, it is not clear that the Wrights did not contribute to the error or delay. The taxpayers reported their own tax liability. They made partial payments of approximately $30,000 that did not come close to satisfying the approximately $120,000 originally due. Nothing the IRS did prevented the Wrights from paying the balance. As stated in Cannon v. Comm'r, T.C. Memo 2002-205, "Generally, the relief provided by section 6404 is not available under those circumstances [taxpayer reported but unpaid tax liability]. As noted in the legislative history of that section, 'if a taxpayer files a return but does not pay the taxes due, [ section 6404] would not permit abatement of this interest regardless of how long the IRS took to contact the taxpayer and request payment.' S. Rept. 99-313 (1985), 1986-3 C.B. (Vol. 3) 1, 208; see also Smith v. Comm'r, T.C. Memo 2002-1."

In addition, as noted by the Tax Court, the taxpayers' proposed findings of fact state that they had net assets of about $20,000 on given dates in 1996 and substantially less in 1998, supporting the Tax Court's conclusion that the petitioners delayed paying their 1993 and 1994 tax liabilities as a result of their own inability to pay, not as a result of any fault of the IRS .

AFFIRMED.

¹ Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5th Cir. R. 47.5.4.

² Sec. 6404(e)(1), as applicable at the time of these events --

(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 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.

DAVID JACKSON AND BETTY S. JACKSON, Petitioners v. COMMISSIONER OF INTERNAL REVENUE, Respondent  

T.C. Summary Opinion 2005-12  

Docket No. 525-04S.

Filed February 14, 2005 .   Internal Revenue Service Restructuring and Reform Act of 1998, Pub. L. 105-206, sec. 3401(d), 112 Stat. 750.  

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(1) Whether respondent abused his discretion in failing to abate interest for the years in issue that had accrued from March 27 through November 30, 2003 . We hold that he did to the extent provided herein.  

(2) Whether respondent improperly refused to abate assessment for the addition to tax for failure to timely pay under section 6651(a)(2) for the years in issue. We hold that he did not.

(3) Whether respondent abused his discretion in denying petitioners’ claim for damages for respondent’s unnecessary filing of a lien. We hold that the Court lacks jurisdiction to consider this claim.  

Discussion

A. Abatement of Interest

We have jurisdiction over petitioners’ request for abatement of interest because such request was made as part of a section 6330 proceeding. See Katz v. Commissioner , 115 T.C. 329, 340-341 (2000).  

This Court may order an abatement of interest if the Commissioner abuses his discretion in failing to abate interest. Sec. 6404(h)(1). ⁵ The taxpayer must prove that the Commissioner exercised his discretion arbitrarily, capriciously, or without sound basis in fact or law. See Rule 142(a); Woodral v. Commissioner , 112 T.C. 19, 23 (1999).  

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⁵   Sec. 6404(h), formerly sec. 6404(g), is applicable to requests for abatement after July 30, 1996 . Taxpayer Bill of Rights 2, Pub. L. 104-168, sec. 302, 110 Stat. 1457 (1996).  

As applicable to 1995 and 1996, preamendment section 6404(e)(1) permits the Commissioner to abate all or any part of an assessment of interest on any payment of tax if an error or delay in such payment is attributable to an officer or employee of the IRS being “erroneous or dilatory in performing a ministerial act”, and the taxpayer caused no significant aspect of the delay.  

As applicable to 1998 through 2001, section 6404(e) permits the Commissioner to abate interest with respect to any “unreasonable” error or delay resulting from “managerial” or ministerial acts. See Taxpayer Bill of Rights 2, sec. 301(a)(1) and (2), Pub. L. 104-168, 110 Stat. 1457 (1996), effective for interest accruing with respect to tax years beginning after July 30, 1996 .  

Section 301.6404 -2T(b)(1), Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 (Aug. 13, 1987), defines a “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 prerequisites to the act, such as conferences and review by supervisors, have taken place.” The final regulations under section 6404(e) provide the same definition. See sec. 301.6404 -2(b)(2), Proced. & Admin. Regs. ⁶ The final regulations define a “managerial act” as “an administrative act that occurs during the processing of a taxpayer’s case involving the temporary or permanent loss of records or the exercise of judgment or discretion relating to management of personnel.” Sec. 301.6404 -2(b)(1), Proced. & Admin. Regs.  

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⁶   The final regulations were issued on Dec. 18, 1998 , generally effective with respect to interest accruing on deficiencies or payments of tax for tax years beginning after July 30, 1996 .  

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Petitioners do not dispute that they are liable for the interest that had accrued on their outstanding tax liabilities. Petitioners contend, however, that respondent abused his discretion in not abating interest that had accrued since March 27, 2003 , the earliest date that petitioners requested an escrow demand letter. Petitioners argue that had respondent provided them with the escrow demand letter at that time, then petitioners would have been able to refinance their home and to pay in full their tax liabilities. Thus, petitioners contend that respondent’s failure to send them the escrow demand letter on March 27, 2003 , was an unreasonable ministerial delay.  

On or about March 27, 2003 , petitioners requested a payoff amount to refinance their home to pay their tax liabilities. Respondent sent petitioners a computer printout for each year disclosing their total outstanding tax liabilities, including interest and additions to tax. Petitioners, however, did not submit a loan application for the refinancing of their home until almost 4 months later on or about July 14, 2003 , which was rejected on July 16, 2003 , because of petitioners’ poor performance with World Savings. ⁷ From March 27 until on or about July 16, 2003 , there was no erroneous or dilatory performance of a ministerial act by respondent, nor was there any unreasonable error or delay resulting from any managerial or ministerial act that contributed to a delay in the payment of petitioners’ tax liabilities. Under these circumstances, respondent did not abuse his discretion to refuse to abate interest that accrued for that period.  

Based on the entirety of the record, we conclude that there was dilatory performance of a ministerial act by respondent that contributed to an unreasonable delay in the payment of petitioners’ tax liabilities from July 31 to November 30, 2003 . Accordingly, respondent abused his discretion in refusing to abate interest that had accrued for the years in issue for that period.  

D. Jackson, February 15, 2005 , T.C. Summary Opinion 2005-12

C. Petitioners' Section 6330 Hearing

 
Discussion



A. Abatement of Interest

We have jurisdiction over petitioners' request for abatement of interest because such request was made as part of a section 6330 proceeding. See Katz v. Commissioner, 115 T.C. 329, 340-341 (2000).

This Court may order an abatement of interest if the Commissioner abuses his discretion in failing to abate interest. Sec. 6404(h)(1).⁵ The taxpayer must prove that the Commissioner exercised his discretion arbitrarily, capriciously, or without sound basis in fact or law. See Rule 142(a); Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

As applicable to 1995 and 1996, preamendment section 6404(e)(1) permits the Commissioner to abate all or any part of an assessment of interest on any payment of tax if an error or delay in such payment is attributable to an officer or employee of the IRS being "erroneous or dilatory in performing a ministerial act", and the taxpayer caused no significant aspect of the delay.

As applicable to 1998 through 2001, section 6404(e) permits the Commissioner to abate interest with respect to any "unreasonable" error or delay resulting from "managerial" or ministerial acts. See Taxpayer Bill of Rights 2, sec. 301(a)(1) and (2), Pub. L. 104-168, 110 Stat. 1457 (1996), effective for interest accruing with respect to tax years beginning after July 30, 1996 .

Section 301.6404-2T(b)(1), Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 (Aug. 13, 1987), defines a "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 prerequisites to the act, such as conferences and review by supervisors, have taken place." The final regulations under section 6404(e) provide the same definition. See sec. 301.6404-2(b)(2), Proced. & Admin. Regs.⁶ The final regulations define a "managerial act" as "an administrative act that occurs during the processing of a taxpayer's case involving the temporary or permanent loss of records or the exercise of judgment or discretion relating to management of personnel." Sec. 301.6404-2(b)(1), Proced. & Admin. Regs.


Based on the entirety of the record, we conclude that there was dilatory performance of a ministerial act by respondent that contributed to an unreasonable delay in the payment of petitioners' tax liabilities from July 31 to November 30, 2003 . Accordingly, respondent abused his discretion in refusing to abate interest that had accrued for the years in issue for that period.

B. Additions to Tax

The income tax assessments against petitioners include additions to tax under section 6651(a)(1) for 1996, 1998, and 1999, and sections 6651(a)(2) and 6654 for all the years in issue. Petitioners did not have an opportunity to dispute the additions to tax relating to their income tax liabilities; therefore, they can challenge them during the section 6330 proceeding. Sec. 6330(c)(2)(B). We review de novo respondent's determination with respect to these additions to tax. See Goza v. Commissioner, 114 T.C. 176, 181-182 (2000).