                          T.C. Memo. 2001-23



                      UNITED STATES TAX COURT



          SEYMOUR AND BEATRICE LEFFERT, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 18802-98.                      Filed January 31, 2001.


     Seymour Leffert, pro se.

     Thomas J. Kerrigan, for respondent.



            MEMORANDUM FINDINGS OF FACT AND OPINION

     MARVEL, Judge:   On September 18, 1998, respondent issued a

notice of final determination disallowing petitioners’ claim for

abatement of interest relating to petitioners’ 1982 and 1983

taxable years.   Petitioners timely filed a petition under section

6404(g)1 and Rule 280.2   The only issue for decision is whether


     1
      Sec. 6404(g) was redesignated sec. 6404(i) by the Internal
                                                   (continued...)
                                - 2 -

respondent’s denial of petitioners’ claim for abatement of

interest that accrued from December 31, 1988, through August 1997

for petitioners’ 1982 and 1983 taxable years was an abuse of

discretion.

                          FINDINGS OF FACT

     Some of the facts have been stipulated and are so found.

The stipulation of facts is incorporated herein by this

reference.    Petitioners resided in Woodbury, New York, when they

filed their petition in this case.      They filed joint individual

income tax returns for 1982 and 1983.     During 1982 and 1983, Mr.

Leffert was a certified public accountant, and Mrs. Leffert was a

teacher.

Mr. Leffert’s Investment in Blue Gem Associates

     In or about 1982, Mr. Leffert invested in 7201 Associates, a

general partnership that acquired a limited partnership interest

in Blue Gem Associates (Blue Gem), a coal mining limited

partnership that was subject to the unified audit and litigation

provisions of the Tax Equity & Fiscal Responsibility Act of 1982

(TEFRA), Pub. L. 97-248, sec. 402(a), 96 Stat. 324, 648.




     1
      (...continued)
Revenue Service Restructuring & Reform Act of 1998, Pub. L. 105-
206, secs. 3305(a), 3309(a), 112 Stat. 685, 743, 745.
     2
      Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended. All Rule references are to
the Tax Court Rules of Practice and Procedure.
                                - 3 -

     On June 25, 1985, Blue Gem’s Forms 1065, U.S. Partnership

Return of Income, for 1982 and 1983 were selected for examination

by the Internal Revenue Service (IRS).    The examination of Blue

Gem’s partnership returns for 1982 and 1983 was assigned to

Revenue Agent Charles Vassalo and was conducted from

approximately July 1985 through February 1988.

     On July 22, 1985, Revenue Agent Vassalo sent an appointment

letter to John Herbst, the tax matters partner of Blue Gem (the

Blue Gem TMP).3    On July 26, 1985, the appointment letter was

returned to the sender as undeliverable.    On August 5, 1985,

Revenue Agent Vassalo attempted to contact the Blue Gem TMP by

telephone and left a message for him at his place of business.

That same day, Revenue Agent Vassalo received a telephone call

from Irving Kratz, a certified public accountant who had prepared

Blue Gem’s 1982 and 1983 partnership returns, concerning the Blue

Gem examination.    Revenue Agent Vassalo continued to deal

primarily with Mr. Kratz during the Blue Gem examination.




     3
      Under the TEFRA unified audit and litigation provisions, a
properly functioning tax matters partner (TMP) is critical to an
efficient and fair partnership audit since the TMP bears
responsibility for notifying partners of developments and
ensuring that partners have a meaningful opportunity to
participate in the partnership proceeding. In keeping with a
TMP’s statutory and regulatory responsibilities, the TMP acts as
a fiduciary whose actions will affect the rights of all partners
in the partnership. See Phillips v. Commissioner, 114 T.C. 115,
120-121 (2000).
                                   - 4 -

       On August 9, 1985, Revenue Agent Vassalo requested approval

to begin a TEFRA flowthrough examination with respect to Blue

Gem.       His request was approved by the IRS District Director on

August 23, 1985.       On September 4, 1985, the IRS sent a notice of

the beginning of an administrative proceeding (NBAP) to the Blue

Gem TMP.       On November 20, 1985, NBAP’s were sent to all notice

partners of Blue Gem, including 7201 Associates.

       Revenue Agent Vassalo held meetings, conducted interviews,

arranged for the preparation of an IRS engineering report, and

otherwise continued his examination of Blue Gem through November

1986.

       On November 5, 1986, representatives of the IRS and the Blue

Gem TMP executed Forms 872-O, Special Consent to Extend the Time

to Assess Tax Attributable to Items of a Partnership (special

consents), which extended the period of limitations on assessment

for Blue Gem’s 1982 and 1983 years indefinitely.       Although the

special consents could have been terminated if Blue Gem had

submitted to the IRS a Form 872-N, Notice of Termination of

Special Consent to Extend the Time to Assess Tax Attributable to

Items of a Partnership, none was ever submitted.4      The special

consents were still in effect when respondent issued notices of


       4
      If a Form 872-N, Notice of Termination of Special Consent
to Extend the Time to Assess Tax Attributable to Items of a
Partnership, had been submitted, respondent would have had 90
days to issue a notice of final partnership administrative
adjustment.
                                - 5 -

final partnership administrative adjustment (FPAA) to the Blue

Gem TMP and notice partners for the partnership’s 1982 and 1983

years.

      From November 5, 1986, when the special consents were

signed, to January 1988, the record is silent regarding what, if

anything, was done by Revenue Agent Vassalo or by any other IRS

representative in connection with the Blue Gem examination.     On

January 25, 1988, the Blue Gem Associates case was transferred

from Revenue Agent Vassalo to Revenue Agent Melquiades Bravo for

purposes of closing the case.   On February 10, 1988, Revenue

Agent Bravo forwarded the 60-day package, consisting of Letter

1827, 60-day letter, Form 870-L, Agreement to Assessment and

Collection of Deficiencies in Tax for Partnership Adjustments,

Additions to Tax, and Affected Items, and Form 4605-A, Revenue

Agent Report (collectively, the 60-day letter), to the Brookhaven

Service Center for mailing to the Blue Gem TMP and all notice

partners.

     On August 22, 1988, the IRS mailed a 60-day letter to the

Blue Gem TMP and notice partners of Blue Gem, proposing to adjust

the partnership’s 1982 and 1983 returns.

     On September 20, 1988, the Brookhaven Service Center

received a protest from 7201 Associates contesting the proposed

adjustments in the 60-day letter and requesting an Appeals

conference.   Mr. Leffert filed the protest on behalf of 7201
                                 - 6 -

Associates.    Neither the Blue Gem TMP nor any other notice

partner filed a protest.    On October 18, 1988, the protest was

forwarded to the Manhattan District Office of the IRS for

consideration.

December 31, 1988, Through March 13, 1990

     On March 30, 1989, a case manager in the Manhattan District

Office reviewed the protest and concluded that the protest was

acceptable for processing by the IRS’s Appeals Office in New York

City.   On June 5, 1989, the Blue Gem case was assigned to Appeals

Officer Stephen Koniarski.

     On June 20, 1989, Appeals Officer Koniarski sent a letter to

the Blue Gem TMP advising him that the Blue Gem case had been

referred to the New York City Appeals Office for consideration.

A copy of the letter was not sent to either 7201 Associates or to

Mr. Leffert.     In the letter, Mr. Koniarski also stated he would

contact the Blue Gem TMP by July 5, 1989, to schedule a mutually

convenient Appeals conference regarding the case.

     On June 20, 1989, Appeals Officer Koniarski called Mr. Kratz

to discuss the Blue Gem case.    Mr. Kratz, however, advised Mr.

Koniarski he was no longer representing Blue Gem.    On July 5,

1989, Appeals Officer Koniarski called Mr. Leffert and advised

him that the Blue Gem case had been referred to the New York City

Appeals Office for consideration.
                                 - 7 -

     On October 26, 1989, Appeals Officer Koniarski sent letters

to all Blue Gem notice partners, including 7201 Associates,

scheduling an Appeals conference for November 16, 1989, and

advising the partners of their right to participate in the

proceedings.   None of the notice partners responded to Mr.

Koniarski’s letters.   Mr. Leffert has no record of receiving the

letter Mr. Koniarski sent to 7201 Associates.

     On February 2, 1990, Appeals Officer Koniarski scheduled a

March 12, 1990, conference with Mr. Leffert to discuss a possible

settlement of the Blue Gem case.    On March 1, 1990, Mr. Koniarski

sent a letter to the Blue Gem TMP, scheduling a March 13, 1990,

conference.

     On March 12, 1990, Appeals Officer Koniarski and Mr. Leffert

attended the scheduled conference.       At the conference, Mr.

Leffert proposed a “cash-out-of-pocket” settlement that would

have required the IRS to allow Mr. Leffert the partnership losses

claimed for 1982 and 1983 attributable to Blue Gem to the extent

of his actual cash investment.    On March 13, 1990, Appeals

Officer Koniarski sent a letter to Mr. Leffert rejecting the

settlement proposal Mr. Leffert had submitted at their March 12,

1990, conference.   Mr. Koniarski’s letter stated in pertinent

part:

          Please find enclosed copy of Engineering Report
     that you requested at our March 12, 1990 conference.         I
     have given consideration to your proposal for
     settlement made at the conference based on out of
                               - 8 -

     pocket cash and have deemed that settlement
     inappropriate. Based on analysis of the facts in the
     case as well as a review of the relevant court cases, I
     have decided to maintain the position that a full
     concession of all losses claimed by the partnership is
     warranted. The one area that I may be able to offer a
     concession is regarding the assertion of the Section
     6661 penalty.[5] If you have any additional information
     to submit or would like to discuss this matter further,
     please contact me at the above number.

Mr. Leffert has no record of receiving this letter.

     No conference between Appeals Officer Koniarski and the Blue

Gem TMP regarding the Blue Gem case was held on March 13, 1990.

March 14, 1990, Through October 22, 1995

     After March 13, 1990, Appeals Officer Koniarski made several

unsuccessful attempts to contact the Blue Gem TMP to schedule a

conference.   On May 8, 1992, Appeals Officer Koniarski sent a

letter to the Blue Gem TMP requesting that the TMP contact him to

discuss potential settlement of the Blue Gem case.    The May 8,

1992, letter stated, in pertinent part:

          I have made several unsuccessful attempts to
     contact you regarding the above-named partnership. I
     have scheduled several appointments which you have not
     appeared as well as you have not returned numerous
     telephone calls. In order that we may consider a
     potential settlement of this case, it is necessary that
     we hold a conference in order to explore potential
     settlements. Please contact me at the address and
     telephone number shown above.



     5
      During the examination, the revenue agent, among other
things, had learned that, contrary to what had been represented
in the Blue Gem offering materials, the mining geologist whose
report was included in those materials had not actually visited
the partnership’s mining property.
                                - 9 -

On March 8, 1994, Appeals Officer Koniarski sent the Blue Gem TMP

another letter, requesting the TMP contact him to discuss

potential settlement of the Blue Gem case.      The March 8, 1994,

letter was substantially similar to Mr. Koniarski’s earlier May

8, 1992, letter to the TMP.

     During the period from March 14, 1990, through October 22,

1995, Appeals Officer Koniarski also attempted to telephone the

Blue Gem TMP.   The dates of the telephone calls do not appear in

the record.   The Blue Gem TMP did not respond to any of the

contacts made by Mr. Koniarski.   With the exception of the

letters and telephone calls described above, Mr. Koniarski did

not work actively on the Blue Gem case during this period.

Instead, he worked on other unrelated cases.

October 23, 1995, Through August 1997

     On October 23, 1995, Appeals Officer Koniarski began

preparing FPAA’s and related documents with respect to Blue Gem’s

1982 and 1983 partnership returns.      In addition, Mr. Koniarski

prepared a supporting statement recommending the issuance of the

proposed FPAA and submitted it to supervisory personnel in the

New York City Appeals Office.   In his supporting statement, Mr.

Koniarski recommended that most of the adjustments and penalties

proposed by the examining agent with respect to Blue Gem and its

partners should be included in the FPAA.      He recommended,

however, that the substantial understatement penalty proposed by
                                 - 10 -

the examining agent should not be asserted against the Blue Gem

investors.   His supporting statement stated, in pertinent part:

          This case is being forwarded for the issuance of
     an FPAA. This case involves a protest filed by one of
     the partnership investors. No protest was filed by the
     TMP who has not been cooperative.

                *    *      *    *    *    *      *

     II. Proposals For Settlement:

          No settlement of the issues was possible. It is
     therefore recommended that a FPAA be issued sustaining
     the Government’s position in full with respect to all
     issues with the exception of the Section 6661 penalty
     issue. It is recommended that this penalty be
     conceded.

                *    *      *    *    *    *      *

                         Issue 3 - Section 6661

          At issue is whether the individual partners should
     be subject to the substantial understatement of tax
     liability penalty pursuant to IRC Section 6661.
     Although the Government’s position with respect to the
     partnership was strong where no cash offer was deemed
     appropriate, the tax shelter was not deemed egregious
     from the point of view of the individual partners. A
     review of the correspondence between the partnership
     and its investors give the appearance that the venture
     had much greater economic viability than it actually
     had. It is therefore recommended that the issue be
     conceded.

     On January 16, 1996, respondent issued FPAA’s to the Blue

Gem TMP and all notice partners with respect to Blue Gem’s 1982

and 1983 taxable years.     Neither the Blue Gem TMP nor any notice

partner filed a petition contesting the FPAA’s in this Court or

any other appropriate court.     As a result, on June 16, 1996, the

period for filing such a petition expired, and the Blue Gem case
                               - 11 -

was “defaulted”.6    See generally secs. 6225(a) and 6226(a)(1) and

(b)(1).

     On September 24, 1996, Appeals Officer Koniarski prepared

“the FPAA default package” and forwarded it, along with the

administrative file, to the Associate Chief of Appeals for

approval.   On October 11, 1996, the Brookhaven Service Center

received the FPAA default package for processing.

     On February 3, 1997, the Brookhaven Service Center prepared

examination work papers relating to Mr. Leffert’s claimed

deductions from Blue Gem for 1982 and 1983.    On February 27,

1997, Forms 4549-A, Income Tax Examination Changes, were issued

to petitioners for 1982 and 1983.

     On March 9, 1997, Mr. Leffert sent a letter to the Problem

Resolution Office at the Brookhaven Service Center, objecting to

the Forms 4549-A he had received and the large amount of interest

that was to be assessed against petitioners.    Mr. Leffert

complained that the IRS had inordinately delayed responding to

his protest letter.    He maintained that, until receiving the

Forms 4549-A, he had received no other correspondence from the

IRS concerning the Blue Gem case for more than 8 years since

filing his appeal.    Mr. Leffert claimed that the delay led him to


     6
      Although the parties stipulated that the Blue Gem case was
defaulted, they did not define the term “defaulted”. We
understand the term to refer to the process of preparing to
assess a proposed tax deficiency after a taxpayer fails timely to
pursue available preassessment judicial remedies.
                              - 12 -

assume the IRS had closed the Blue Gem case without adjusting

Blue Gem’s 1982 and 1983 returns, thus confirming that the Blue

Gem coal mining venture was a legitimate investment.

     On March 24, 1997, the IRS made an assessment against

petitioners of tax and interest attributable to the disallowance

of Mr. Leffert’s distributive share of Blue Gem losses for 1982

and 1983.

     On April 3, 1997, the IRS sent a letter to Mr. Leffert

responding to his March 9, 1997, letter.   Though disagreeing with

Mr. Leffert’s claim that there had been an inordinate delay, the

IRS advised him that he could file a Form 843, Claim for Refund

and Request for Abatement, if he wished to dispute the interest

assessed against him.   The letter further advised Mr. Leffert

that his request for abatement would be denied by the Service

Center but that he could appeal that decision administratively.

     On April 16, 1997, Mr. Leffert sent a letter to the IRS

reiterating that he had never received notice of the IRS’s

decision concerning his earlier protest letter until about March

1997, when he had received the Forms 4549-A.   He asked that some

compromise be made allowing petitioners to pay interest only

through December 31, 1988.

     On August 11, 1997, petitioners filed their request for

abatement of interest for 1982 and 1983.   Their Form 843 stated

in pertinent part:
                             - 13 -

     In August, 1988 we were first notified of a proposed
     disallowance of Blue Gem. We are requesting an
     abatement of interest from December, 1988 to present
     for the following reasons:

     Our 1988 Appeal from the proposed disallowance was
     taken to the Tax Court and it took eight years for the
     overburdened court, after putting it on the docket, to
     issue a 1996 decision.[7]

     The decision was issued in favor of the government’s
     position since the TMP of Blue Gem was uncooperative.

     In that ensuing eight year period we heard nothing from
     the Internal Revenue Service and had no idea of this
     inordinate length it would take to reach a decision.
     Had we known, we surely would have deposited the tax
     liability in 1988 to stop the running of interest.

     We are in dispute as to the timely assessment of
     interest due to the inordinate delay of eight years and
     we respectfully request an abatement from December 31,
     1988. We have no way of calculating the interest due
     to December 31, 1988 and have therefore left Item 2
     [i.e., the amount of interest to be abated] blank.

     Surely the Internal Revenue Service should not penalize
     a taxpayer for an eight year Tax Court delay in
     rendering a decision. It would seem that this case
     would fall under the term “Ministerial Act”.

               *    *    *    *    *    *    *

     Had we not appealed the IRS decision we would have paid
     the tax and interest to December 31, 1988. Because we
     appealed we are being penalized for an eight year delay



     7
      Contrary to petitioners’ explanation, neither the TMP nor
any notice partner filed a petition in this Court for
redetermination of the partnership adjustments proposed in the
FPAA’s issued with respect to Blue Gem. In fact, the Blue Gem
case was “defaulted” administratively because a timely judicial
proceeding was not filed in any court following the mailing of
the FPAA’s. We also note that petitioners’ claim that they
“heard nothing from the Internal Revenue Service” during an 8-
year period was not accurate, as our findings of fact reflect.
                             - 14 -

     in processing our appeal.   It seems both unfair and
     undue hardship.

     On September 18, 1998, respondent issued to petitioners a

notice of final determination denying their request for abatement

of interest for 1982 and 1983.   In his notice, respondent stated

that he had not found any errors or delay in the period from

December 1988 through August 1997 relating to the performance of

a ministerial act.

                             OPINION

     Under 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 error or delay in payment is

attributable to erroneous or dilatory performance of a

ministerial act by an officer or employee of the IRS.8   A

ministerial act means a procedural or mechanical act that does

not involve the exercise of judgment or discretion and occurs

during the processing of a taxpayer’s case after all the

prerequisites to the act, such as conferences and review by

supervisors, have taken place.   See Lee v. Commissioner, 113 T.C.

145 (1999); sec. 301.6404-2T(b)(1), Temporary Proced. & Admin.



     8
      Sec. 6404(e) was amended by the Taxpayer Bill of Rights 2,
Pub. L. 104-168, sec. 301(a)(1) and (2), 110 Stat. 1452, 1457
(1996), to permit the Commissioner to abate interest with respect
to an “unreasonable” error or delay resulting from “managerial”
or ministerial acts. The amendment applies to interest accruing
with respect to deficiencies for taxable years beginning after
July 30, 1996, and is inapplicable to the instant case.
                               - 15 -

Regs., 52 Fed. Reg. 30163 (Aug. 13, 1987).9   In contrast, a

decision concerning the proper application of Federal tax law, or

other applicable Federal or State laws, is not a ministerial act.

See sec. 301.6404-2T(b)(1), Temporary Proced. & Admin. Regs., 52

Fed. Reg. 30163 (Aug. 13, 1987).   The mere passage of time does

not establish error or delay in performing a ministerial act.

See Cosgriff v. Commissioner, T.C. Memo. 2000-241 (citing Lee v.

Commissioner, supra at 150).

     When Congress enacted section 6404(e), it did not intend the

provision to be used routinely to avoid payment of interest.

Rather, Congress intended abatement of interest only where

failure to do so “would be widely perceived as grossly unfair.”

H. Rept. 99-426, at 844 (1985), 1986-3 C.B. (Vol. 2) 1, 844; S.

Rept. 99-313, at 208 (1986), 1986-3 C.B. (Vol. 3) 1, 208.

Section 6404(e) affords a taxpayer relief only if no significant

aspect of the error or delay can be attributed to the taxpayer.

In addition, interest may be abated only after the Commissioner




     9
      The final regulations under sec. 6404 were issued on Dec.
18, 1998. The final regulations generally apply to interest
accruing with respect to deficiencies or payments of tax
described in sec. 6212(a) for taxable years beginning after July
30, 1996. See sec. 301.6404-2(d)(1), Proced. & Admin. Regs. As
a result, sec. 301.6404-2T, Temporary Proced. & Admin. Regs., 52
Fed. Reg. 30163 (Aug. 13, 1987), applies and is effective for
interest accruing with respect to deficiencies for those taxable
years beginning after Dec. 31, 1978, but before July 30, 1996.
See id. at par. (c).
                              - 16 -

has contacted the taxpayer in writing about the deficiency or

payment in question.   See sec. 6404(e).

     Petitioners requested that respondent abate interest for the

period from December 31, 1988, through August 1997.   Respondent

denied petitioners’ request, claiming that the record does not

disclose any erroneous or dilatory performance of a ministerial

act by an officer or employee of the IRS, and issued a notice of

final determination to petitioners.    Petitioners filed a timely

petition to contest respondent’s determination.   We have

jurisdiction to decide whether respondent abused his discretion

in determining that no interest abatement was appropriate.    We

shall organize and conduct our analysis by segmenting it into the

relevant time periods.

December 31, 1988, Through March 13, 1990

     Following the receipt of Mr. Leffert’s protest letter by the

Brookhaven Service Center, a case manager in the Manhattan

District Office determined, on March 30, 1989, that the letter

should be processed by the New York City Appeals Office.    As a

result, Appeals Officer Koniarski was assigned the Blue Gem case

on June 5, 1989.   Mr. Koniarski then attempted to schedule

conferences with the Blue Gem TMP and any interested notice

partners, including 7201 Associates (on whose behalf Mr. Leffert

had filed the protest letter).
                               - 17 -

     As indicated in his March 13, 1990, letter to Mr. Leffert,

Appeals Officer Koniarski reviewed the administrative file on the

Blue Gem case and considered applicable law before rejecting the

settlement proposal that Mr. Leffert had submitted to him at

their conference on March 12, 1990.10   Mr. Koniarski’s action in

interpreting and applying applicable legal principles to the

facts of the Blue Gem case is not a ministerial act.   See sec.

301.6404-2T(b)(1), Temporary Proced. & Admin. Regs., 52 Fed. Reg.

30163 (Aug. 13, 1987).   In addition, it appears that Mr.

Koniarski, after considering his caseload and the requirements

imposed by the TEFRA unified audit and litigation provisions to

afford the Blue Gem TMP and other notice partners an opportunity

to participate in the administrative appeals process, acted

expeditiously in scheduling and holding the March 12, 1990,

conference with Mr. Leffert.   Moreover, we can identify no error

or delay on the part of Mr. Koniarski or any other officer or

employee of the IRS in performing a ministerial act that would

provide a basis for abating interest accruing during this time

period.




     10
      The parties have stipulated that, on Mar. 13, 1990,
Appeals Officer Koniarski sent the Mar. 13, 1990, letter to Mr.
Leffert at Mr. Leffert’s then accounting office address. The
record does not disclose, however, whether the letter was
actually delivered to Mr. Leffert’s office or why Mr. Leffert has
no record of receiving the letter.
                              - 18 -

March 14, 1990, Through October 22, 1995

     The record discloses only sporadic and inattentive IRS

activity in the Blue Gem case with respect to the period from

March 14, 1990, through October 22, 1995.   During this 5-year

period, Appeals Officer Koniarski appears to have worked on the

Blue Gem case only intermittently for brief amounts of time.

Indeed, in his testimony at trial, Mr. Koniarski acknowledged

that no further factual development of the case was needed during

this period because all necessary factual development had been

completed during the revenue agent’s earlier examination.

     The record further reveals that neither the Blue Gem TMP nor

any of the notice partners except 7201 Associates chose to

participate in the administrative appeal of the Blue Gem case.

As Appeals Officer Koniarski stated in his supporting statement

recommending issuance of FPAA’s with respect to Blue Gem’s 1982

and 1983 taxable years, the Blue Gem TMP never filed any protest;

the only protest filed was Mr. Leffert’s protest letter on behalf

of 7201 Associates.

     In his testimony, Appeals Officer Koniarski claimed the Blue

Gem TMP had been uncooperative, and Mr. Koniarski attributed his

inability to close out and conclude the Blue Gem case sooner, in

part, to this lack of cooperation by the Blue Gem TMP.   The Blue

Gem TMP had postponed the Appeals conference originally scheduled

by Mr. Koniarski.   According to Mr. Koniarski, his subsequent
                               - 19 -

attempts to reschedule an Appeals conference were unsuccessful

because the Blue Gem TMP ignored and never responded to his

telephone messages and letters regarding the scheduling of a

conference.11

     Appeals Officer Koniarski explained his remarkable patience

and occasional persistence during this time period by pointing

out that he was attempting to evaluate what additions to tax and

penalties, if any, should be imposed in the Blue Gem case.

According to Mr. Koniarski, information from the Blue Gem TMP may

have had a material impact on his decision-making process, and he

did not want to deprive the Blue Gem investors of a fully

developed record regarding the additions to tax and penalties.

Mr. Koniarski also testified that, during this time period, he

was working on other cases when he was not working on the Blue

Gem case.

     Reduced to its essence, the record discloses that Appeals

Officer Koniarski made a few attempts to contact the Blue Gem TMP

during this time period.    The rest of the time Mr. Koniarski

worked his other cases.    In short, what we must examine in the

context of section 6404 is Mr. Koniarski’s management of his

caseload.



     11
      Appeals Officer Koniarski testified that, in addition to
his May 8, 1992, and March 8, 1994, letters to the Blue Gem TMP,
he made a number of telephone calls to the Blue Gem TMP during
this period that were never returned.
                                - 20 -

     Under section 6404(e), petitioners must demonstrate that an

officer or employee of the IRS erred or was dilatory in

performing a ministerial act.    By definition, a ministerial act

is one that is procedural or mechanical; it does not involve the

exercise of managerial discretion or judgment.   See Lee v.

Commissioner, 113 T.C. 145 (1999); sec. 301.6404-2T(b)(1),

Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 (Aug. 13,

1987).

     Our review of the record in this case convinces us that the

decision of Appeals Officer Koniarski to order his work affairs

based on his caseload priorities was not a ministerial act as

that term is defined in section 6404.12   See Jacobs v.

Commissioner, T.C. Memo. 2000-123; see also sec. 301.6404-

2T(b)(2), Example (5), Temporary Proced. & Admin Regs., 52 Fed.


     12
      At trial, the Court questioned Appeals Officer Koniarski
and his supervisor closely as to whether the IRS had established
any specific time limits by which an Appeals officer should have
completed his consideration of a case. They testified that there
were no specific time limits and that the processing of a case
was a matter largely left to the judgment and discretion of the
individual Appeals officer. The supervisor further testified
that periodic reviews were conducted to monitor the progress made
on the cases assigned to an Appeals officer and that an Appeals
officer’s caseload work priorities sometimes were readjusted,
particularly where some of the assigned cases were docketed in
court. An examination of the Internal Revenue Manual’s
provisions pertaining to the Appeals function disclosed no
specific time limits for closing out a case. Although the stated
mission of the Appeals Office, among other things, includes
affording a taxpayer a prompt conference and a prompt final
decision by the IRS, how and when a case is worked is left, in
large part, to the judgment and discretion of the Appeals
officer.
                               - 21 -

Reg. 30163 (Aug. 13, 1987).    Mr. Koniarski’s decision whether and

when to work on the Blue Gem case involved the exercise of

judgment based on an evaluation of his entire caseload and his

workload priorities.    As unfortunate as his decision may have

been in hindsight, it did not involve the erroneous or dilatory

performance of a ministerial act.13

October 23, 1995, Through August 1997

     From October 23, 1995, through August 1997, we are satisfied

that Appeals Officer Koniarski and other IRS employees were

working steadily on the Blue Gem case to bring the matter to a

close.    Beginning October 23, 1995, Mr. Koniarski prepared the

proposed FPAA’s and other related documents to be issued to Blue

Gem and its partners.    Following appropriate review by

supervisory personnel in the New York City Appeals Office, the

FPAA’s were issued on January 16, 1996.    On June 16, 1996, the

Blue Gem case was defaulted after the TMP and the notice partners

failed to file a timely petition in the Tax Court or any other

appropriate court.    The default package was then prepared and



     13
      The sparse record of activity by the IRS in the Blue Gem
case during the period from Mar. 14, 1990, through Oct. 22, 1995,
is difficult to justify. Because an unlimited consent extending
the period of limitations on assessment was executed on behalf of
Blue Gem, no time pressure was placed on the IRS to complete its
consideration of the Blue Gem case. And, because neither the
Blue Gem TMP nor an authorized representative of Blue Gem was
involved in the Blue Gem administrative appeal, there was no one
in a position of authority with respect to Blue Gem to press for
a resolution.
                             - 22 -

processed, petitioners were mailed examination workpapers for

1982 and 1983, and assessments of additional tax and interest for

those years were made against petitioners on March 24, 1997.

From about March through August 1997, petitioners and the IRS

corresponded with respect to that tax liability.

     On the basis of the foregoing, we conclude that there were

no errors or delay in the performance of ministerial acts by

respondent’s officers or employees from October 23, 1995, through

August 1997.

Conclusion

     A careful review of the record in this case fails to

disclose any erroneous or dilatory performance of a ministerial

act by an officer or employee of respondent with respect to

respondent’s processing of adjustments to petitioners’ 1982 and

1983 individual income tax returns.    Consequently, we hold that

respondent’s denial of petitioners’ claim for abatement of

interest that accrued from December 31, 1988, through August 1997

with respect to deficiencies resulting from the Blue Gem

partnership audit was not an abuse of discretion.

     To reflect all of the above,


                                           Decision will be entered

                                      for respondent.
