                        T.C. Memo. 2011-181



                       UNITED STATES TAX COURT



ESTATE OF NICHOLAS TELESMANICH, DECEASED, KRESIMIR TELESMANICH,
                     EXECUTOR, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 24129-09.               Filed August 1, 2011.



     Kresimir Telesmanich, pro se.

     Robert W. Mopsick, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     VASQUEZ, Judge:    Pursuant to section 6404(h),1 the Estate of

Nicholas Telesmanich, Deceased (the estate), Kresimir

Telesmanich, Executor, challenged respondent’s Full


     1
        Unless otherwise indicated, all section references are to
the Internal Revenue Code as amended, and all Rule references are
to the Tax Court Rules of Practice and Procedure.
                                - 2 -

Disallowance--Final Determination letter denying the estate’s

claim for abatement of interest for income tax liabilities for

2001, 2002, and 2004 through 2006.      The issues for decision are:

(1) Whether the estate is entitled to an abatement of interest of

$2,816.19 under section 6404(e); and (2) whether the doctrine of

equitable estoppel prevents respondent from assessing the

interest.

                         FINDINGS OF FACT

     There are no written stipulations.     However, joint exhibits

1-J through 5-J were received in evidence and are incorporated

herein by this reference.

     On September 14, 2000, Nicholas Telesmanich (decedent) died.

Decedent’s nephew, Kresimir Telesmanich (Mr. Telesmanich), was

named executor of the estate.   The estate included $438,572 held

in accounts with Fidelity Investments (Fidelity).2

     At the time of his death decedent resided in Croatia.     Mr.

Telesmanich attempted to have decedent’s will probated in New

Jersey, but the New Jersey court required that the will be

probated in Croatia.   The Croatian court refused to issue letters

testamentary or to recognize the executor, and Mr. Telesmanich

was unable to gain access to the estate’s funds until February




     2
        Although it is unclear from the record, it appears that
this was the sole asset, or at least the only substantial asset,
of the estate.
                                 - 3 -

2008.3    Mr. Telesmanich resided in New Jersey when the petition

was filed.

Conversation With the IRS

     In 2002 Mr. Telesmanich contacted the Internal Revenue

Service (IRS) to obtain an employer identification number for the

estate.    Soon after, Mr. Telesmanich received a letter from the

IRS stating that he was required to file a Form 1041, U.S. Income

Tax Return for Estates and Trusts, for 2001.    Mr. Telesmanich

called the IRS and explained that he was unable to pay the taxes

because he could not gain access to the estate’s funds.    Mr.

Telesmanich is unable to name the person with whom he spoke or

the exact date on which the call took place.    The unidentified

IRS employee instructed Mr. Telesmanich to pay the taxes when he

gained access to the funds and to send a letter to the IRS

explaining his situation, which Mr. Telesmanich promptly did.

The IRS employee told Mr. Telesmanich that he would not owe

anything other than the taxes.    After that conversation, Mr.

Telesmanich was under the impression that interest would not

accrue on the underlying tax liabilities, although the IRS

employee did not specifically mention whether interest would be

assessed.


     3
        After Croatia completed the probate process in 2006,
Fidelity obtained its own attorney in Croatia and required
affidavits from the 36 beneficiaries recognizing Mr. Telesmanich
as executor before allowing Mr. Telesmanich access to the funds.
                               - 4 -

Filing and Payment of Taxes

     Once Mr. Telesmanich gained access to the estate’s funds in

2008, he promptly filed the estate’s Forms 1041 for years 2001

through 2006 and paid the corresponding tax liabilities.    Upon

receipt of the returns respondent assessed late-filing and

failure to pay additions to tax, along with interest on the

additions to tax and underlying tax liabilities.4   Respondent

abated the additions to tax and interest thereon at Mr.

Telesmanich’s request, but not the interest on the underlying tax

liabilities.   Respondent subsequently issued a Full

Disallowance--Final Determination letter, denying Mr.

Telesmanich’s request for abatement of interest because there is

no “provision in the Internal Revenue Code that permits the

abatement of interest when taxes are not paid timely.”

                              OPINION

I.   Interest Abatement

     We review the Commissioner’s determination not to abate

interest for abuse of discretion.   Sec. 6404(h)(1).   The Court

will direct the Commissioner to abate interest only if the

Commissioner’s exercise of discretion was arbitrary, capricious,

or without sound basis in fact or law.   See Woodral v.

Commissioner, 112 T.C. 19, 23 (1999); Mathia v. Commissioner,


     4
        Additions to tax and interest were not assessed for 2003
because no tax was owed for that year.
                                - 5 -

T.C. Memo. 2009-120; Kincaid v. Commissioner, T.C. Memo. 1999-

419.

       Section 6404(e)(1) provides that the Secretary may abate the

assessment of interest on any payment of tax to the extent that

any unreasonable error or delay in such payment is attributable

to an officer or employee of the IRS being erroneous or dilatory

in performing a ministerial or managerial act.5      The Secretary

may abate the assessment of interest only when no significant

aspect of the error or delay is attributable to the taxpayer.

Sec. 6404(e)(1) (flush language).       A ministerial act is 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, 149-150 (1999); sec. 301.6404-

2(b)(2), Proced. & Admin. Regs.    In contrast, a decision

concerning the proper application of Federal tax law is not a

ministerial act.    Sec. 301.6404-2(b), Proced. & Admin. Regs.

       Mr. Telesmanich contends that he is entitled to interest

abatement because the IRS employee with whom he spoke told him no


       5
        A managerial act is an administrative act that involves a
temporary or permanent loss of records or the exercise of
judgment or discretion relating to personnel management during
the processing of a taxpayer’s case. Sec. 301.6404-2(b)(1),
Proced. & Admin. Regs. Mr. Telesmanich does not argue that the
IRS employee erred in performing a managerial act.
                                - 6 -

additional payments would be required if he paid the taxes when

the funds became available.    Respondent counters that this cannot

be grounds for abatement because it involves the proper

application of Federal tax law and thus is not a ministerial act.

See sec. 301.6404-2(b), Proced. & Admin. Regs.

       Section 6601(a) requires that a taxpayer pay interest on any

assessed Federal income tax that is not paid “on or before the

last date prescribed for payment” and that such interest be

computed for “the period from such last date to the date paid.”

See also Hinck v. United States, 550 U.S. 501, 503 (2007).       It is

well settled that an IRS employee’s giving incorrect advice on

the proper application of Federal tax law is not a ministerial

act.    See Nelson v. Commissioner, T.C. Memo. 2004-34 (concluding

that IRS employee’s incorrect advice to taxpayer on consequence

of individual retirement account distribution was not

ministerial act); Sainte-Yves v. Commissioner, T.C. Memo. 2002-

158 (concluding that IRS employee’s alleged advice on

deductibility of losses did not constitute ministerial act).

Therefore, any incorrect advice as to whether the estate would be

assessed interest would constitute advice on the proper

application of Federal tax law and not a ministerial act.

       Furthermore, Mr. Telesmanich has not shown that the IRS

employee’s error caused him to delay the payment of taxes.     See

sec. 6404(e)(1)(B).    Even if the IRS employee had told Mr.
                               - 7 -

Telesmanich about the accrual of interest, there is nothing to

suggest that the taxes would have been paid any earlier than when

the funds became available.   Mr. Telesmanich testified that had

he known of the interest he would have accounted for it in the

estate’s expenses just as he did for the taxes, implying the

taxes still would not have been paid until 2008.    Thus,

respondent was not responsible for the delay in payment, with or

without any alleged error by the IRS employee.

      Accordingly, respondent did not abuse his discretion when

denying the estate’s request for abatement of interest assessed

on the underlying tax liabilities.

II.   Equitable Estoppel

      “Equitable estoppel is a judicial doctrine that ‘precludes a

party from denying his own acts or representations which induced

another to act to his detriment.’”     Hofstetter v. Commissioner,

98 T.C. 695, 700 (1992) (quoting Graff v. Commissioner, 74 T.C.

743, 761 (1980), affd. 673 F.2d 784 (5th Cir. 1982)).    The

doctrine of equitable estoppel is applied against the

Commissioner “with utmost caution and restraint”.    Schuster v.

Commissioner, 312 F.2d 311, 317 (9th Cir. 1962), affg. 32 T.C.

998 (1959), affg. in part and revg. in part First W. Bank & Trust

Co. v. Commissioner, 32 T.C. 1017 (1959).

      The traditional elements of equitable estoppel--all of which

must be satisfied to invoke the doctrine--are:    (1) A false
                                - 8 -

representation or misleading silence by the party against whom

the doctrine is to be invoked; (2) an error in a statement of

fact and not an opinion or statement of law; (3) ignorance of the

fact by the representee; (4) reasonable reliance on the act or

statement by the representee; and (5) detriment to the

representee.   See Norfolk S. Corp. v. Commissioner, 104 T.C. 13,

60 (1995), affd. 140 F.3d 240 (4th Cir. 1998).

     In addition to the traditional elements of equitable

estoppel, the Court of Appeals for the Third Circuit, to which

this case is appealable, requires the party seeking to apply to

the doctrine against the Government to prove affirmative

misconduct on the part of the Government officials.      Fredericks

v. Commissioner, 126 F.3d 433, 438 (3d Cir. 1997) (citing United

States v. Asmar, 827 F.2d 907, 911 n.4, 912 (3d Cir. 1987)),

revg. T.C. Memo. 1996-222.   Not every form of official misconduct

constitutes affirmative misconduct.     See id.   Affirmative

misconduct requires more than negligence or even reckless

negligence.    Hodel v. Commissioner, T.C. Memo. 1996-348 (citing

Schweiker v. Hansen, 450 U.S. 785 (1981)).    A Government agent’s

providing inaccurate information does not constitute affirmative

misconduct.    See Socop-Gonzalez v. INS, 272 F.3d 1176, 1184 (9th

Cir. 2001) (stating that the Government employee negligently

providing misinformation or incorrect advice was not affirmative

misconduct); United States v. Manning, 787 F.2d 431, 437 (8th
                                 - 9 -

Cir. 1986) (stating that the Government employee’s arguably

misleading or inaccurate statements did not rise to the level of

affirmative misconduct).

     The IRS employee did not tell Mr. Telesmanich that interest

would be assessed if the taxes were not paid on time.       There is

no evidence, however, that the IRS employee omitted this

information knowingly or intentionally.       Accordingly, the IRS

employee’s omission does not constitute affirmative misconduct.

     Because Mr. Telesmanich has not proven affirmative

misconduct on the part of the IRS employee, we need not address

the traditional conditions for application of equitable estoppel.

See Miller v. Commissioner, T.C. Memo. 2001-55 (citing Purcell v.

United States, 1 F.3d 932, 939 (9th Cir. 1993)).       Accordingly,

petitioner has not met the burden of proving each of the elements

of equitable estoppel.

     To reflect the foregoing,


                                              Decision will be entered

                                         for respondent.
