                                       CHARLES M. CORBALIS AND LINDA J. CORBALIS, PETITIONERS
                                         v. COMMISSIONER OF INTERNAL REVENUE, RESPONDENT
                                                    Docket No. 8220–13.                      Filed January 27, 2014.

                                                  Petitioners seek judicial review of Letters 3477 denying
                                               their claim for interest suspension under I.R.C. sec. 6404(g)
                                               and stating that the determinations are not subject to judicial
                                               review under I.R.C. sec. 6404(h). Respondent has moved to
                                               dismiss for lack of jurisdiction. Held: The Court has jurisdic-
                                               tion under I.R.C. sec. 6404(h) to review denials of interest
                                               suspension under I.R.C. sec. 6404(g). Held, further, the Let-
                                               ters 3477 were final determinations for purposes of I.R.C. sec.
                                               6404(h) even though petitioners’ concurrent claims for abate-
                                               ment under I.R.C. sec. 6404(e) were still pending.

                                      Cory Stigile, Sharyn M. Fisk, Della J. Bauserman, and
                                     Charles Paul Rettig, for petitioners.
                                      Najah J. Shariff, for respondent.

                                                                                  OPINION

                                       COHEN, Judge: This case is before the Court on respond-
                                     ent’s motion to dismiss for lack of jurisdiction. The primary
                                     issue for decision is whether section 6404(h) applies to
                                     denials of interest suspension under section 6404(g). If so, we
                                     46




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                                     must decide whether the notice from which petitioners seek
                                     review is a final determination for purposes of section
                                     6404(h)(1). All section references are to the Internal Revenue
                                     Code in effect at all relevant times, and all Rule references
                                     are to the Tax Court Rules of Practice and Procedure.

                                                                               Background
                                       The operative facts are set forth in respondent’s motion to
                                     dismiss and have not been disputed. Petitioners resided in
                                     California at the time they filed the petition. Petitioners seek
                                     review of four separate Letters 3477 issued by the Internal
                                     Revenue Service (IRS) on October 11, 2012, in which the IRS
                                     concluded that interest suspension under section 6404(g)
                                     does not apply with respect to taxable years 1996, 1997,
                                     1998, and 1999 because of the effective date and because it
                                     does not apply with respect to a liability reported on a
                                     return. The explanation attached to each of the letters states
                                     that examination of petitioners’ returns followed petitioners’
                                     having filed two Forms 1045, Application for Tentative
                                     Refund. The consequent examination of the returns encom-
                                     passed 1996, 1997, 1998, 1999, 2001, 2002, 2003, and 2004.
                                       Petitioners assert that the amounts in issue for 1996, 1997,
                                     1998, and 1999 resulted from disallowance of a loss carried
                                     back from 2001 and that, therefore, 2001 is also a year in
                                     issue and is the year of the relevant tax return for deter-
                                     mining whether section 6404(g) applies. Petitioners allege
                                     jurisdiction under section 6404(h) and Rule 280. In addition,
                                     petitioners allege that they meet the requirements of section
                                     7430(c)(4)(A)(ii) and that a final determination has been
                                     made not to abate interest under section 6404.
                                       Each of the Letters 3477 sent to petitioners states: ‘‘The
                                     judicial review provisions of IRC section 6404(h) do not apply
                                     to IRC section 6404(g). Therefore, you do not have appeal
                                     rights, nor may you petition the Tax Court for judicial review
                                     regarding this letter.’’
                                       Also on October 11, 2012, the IRS sent to petitioners two
                                     separate Letters 2289 disallowing in full petitioners’ claim
                                     for abatement of interest for taxable years 1996, 1997, 1998,
                                     and 1999 under section 6404(e). Each of these Letters 2289
                                     states: ‘‘This is not the IRS’s final determination’’. On
                                     November 9, 2012, petitioners filed a protest to the deter-




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                                     48                  142 UNITED STATES TAX COURT REPORTS                                      (46)


                                     minations set forth in the Letters 3477 and 2289 dated
                                     October 11, 2012.
                                     Deferred Disputes
                                        Respondent asserts that petitioners have not shown that
                                     they meet the net worth requirements of section
                                     7430(c)(4)(A)(ii) that are incorporated into section 6404(h).
                                     Exhibits concerning petitioners’ net worth were identified in
                                     the response to respondent’s motion but were inadvertently
                                     omitted from the filed response. The exhibits were made part
                                     of the record by a supplemental filing by petitioners. The
                                     exhibits consist of separate affidavits and net worth state-
                                     ments for each petitioner compiled by their accountant and
                                     based upon acquisition costs of assets that petitioners pro-
                                     vided to the accountant. Although we comment on that dis-
                                     pute below, we do not resolve it at this time.
                                        Respondent’s motion to dismiss presents those documents
                                     and arguments on which we decide whether the Court has
                                     jurisdiction in this case. For further understanding of the
                                     context, however, and to indicate which arguments will nec-
                                     essarily be addressed if we conclude that the Court has juris-
                                     diction, we mention here additional contentions of the parties
                                     that appear from the Letters 3477 that the IRS sent to peti-
                                     tioners.
                                        The amounts in dispute for 1996, 1997, 1998, and 1999
                                     apparently arise from settlement of disallowed carrybacks to
                                     those years of losses claimed for 2001. The IRS letters state,
                                     among other things, that section 6404(g) does not apply to
                                     years before 1998 and that interest suspension does not
                                     apply with respect to any tax liability reported on a return.
                                     The record here is inadequate to decide how section 6404(g)
                                     applies to petitioners’ loss carrybacks, and the parties have
                                     not addressed that issue in their filings. We therefore do not
                                     opine on that dispute in this Opinion.
                                        Petitioners have asserted before the IRS various grounds
                                     for abatement of interest under section 6404(e) and continue
                                     to pursue those claims administratively. They do not dispute
                                     that the denial of their section 6404(e) claims was not a final
                                     determination. Their petition, however, deals only with
                                     interest suspension under section 6404(g).




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                                                                                 Discussion
                                     Statutory Terms
                                           Section 6404(a), (b), (e), and (f) provides:
                                           SEC. 6404. ABATEMENTS.
                                             (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—
                                               (1) is excessive in amount, or
                                               (2) is assessed after the expiration of the period of limitations prop-
                                             erly applicable thereto, or
                                               (3) is erroneously or illegally assessed.
                                             (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.

                                                                  *   *     *   *   *    *   *
                                             (e) ABATEMENT OF INTEREST ATTRIBUTABLE TO UNREASONABLE 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
                                                unreasonable error or delay by an officer or employee of the Internal
                                                Revenue Service (acting in his official capacity) in performing a min-
                                                isterial or managerial act, or
                                                   (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.
                                                (2) INTEREST ABATED WITH RESPECT TO ERRONEOUS REFUND CHECK.—
                                             The Secretary shall abate the assessment of all interest on any erro-
                                             neous refund under section 6602 until the date demand for repayment
                                             is made, unless—
                                                  (A) the taxpayer (or a related party) has in any way caused such
                                                erroneous refund, or
                                                  (B) such erroneous refund exceeds $50,000.
                                             (f) ABATEMENT OF ANY PENALTY OR ADDITION TO TAX ATTRIBUTABLE
                                           TO ERRONEOUS WRITTEN ADVICE BY THE INTERNAL REVENUE SERVICE.—
                                                (1) IN GENERAL.—The Secretary shall abate any portion of any pen-
                                             alty or addition to tax attributable to erroneous advice furnished to
                                             the taxpayer in writing by an officer or employee of the Internal Rev-
                                             enue Service, acting in such officer’s or employee’s official capacity.
                                                (2) LIMITATIONS.—Paragraph (1) shall apply only if—




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                                     50                  142 UNITED STATES TAX COURT REPORTS                                      (46)


                                                 (A) the written advice was reasonably relied upon by the taxpayer
                                              and was in response to a specific written request of the taxpayer,
                                              and
                                                 (B) the portion of the penalty or addition to tax did not result from
                                              a failure by the taxpayer to provide adequate or accurate informa-
                                              tion.
                                              (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.

                                       Section 6404(g) was added by the Internal Revenue Service
                                     Restructuring and Reform Act of 1998 (RRA 1998), Pub. L.
                                     No. 105–206, sec. 3305(a), 112 Stat. at 743, effective for tax
                                     years ending after July 22, 1998. Section 6404(g) provides:
                                            SEC. 6404(g). SUSPENSION OF INTEREST AND CERTAIN PENALTIES
                                           WHERE SECRETARY FAILS TO CONTACT TAXPAYER.—
                                               (1) SUSPENSION.—
                                                  (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 36-
                                               month period beginning on the later of—
                                                    (i) the date on which the return is filed; or
                                                    (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.
                                                 (B) SEPARATE APPLICATION.—This paragraph shall be applied
                                               separately with respect to each item or adjustment.
                                            If, after the return for a taxable year is filed, the taxpayer provides
                                            to the Secretary 1 or more signed written documents showing that the
                                            taxpayer owes an additional amount of tax for the taxable year, clause
                                            (i) shall be applied by substituting the date the last of the documents
                                            was provided for the date on which the return is filed.
                                            (2) EXCEPTIONS.—Paragraph (1) shall not apply to—
                                              (A) any penalty imposed by section 6651;
                                              (B) any interest, penalty, addition to tax, or additional amount in a
                                            case involving fraud;
                                              (C) any interest, penalty, addition to tax, or additional amount with
                                            respect to any tax liability shown on the return;
                                              (D) any interest, penalty, addition to tax, or additional amount with
                                            respect to any gross misstatement;
                                              (E) any interest, penalty, addition to tax, or additional amount with
                                            respect to any reportable transaction with respect to which the




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                                     (46)                          CORBALIS v. COMMISSIONER                                          51


                                              requirement of section 6664(d)(2)(A) is not met and any listed trans-
                                              action (as defined in 6707A(c)); or
                                                (F) any criminal penalty.
                                              (3) SUSPENSION PERIOD.—For purposes of this subsection, the term
                                           ‘‘suspension period’’ means the period—
                                                (A) beginning on the day after the close of the 36-month period
                                              under paragraph (1); and
                                                (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.

                                       The provision for Tax Court review of interest abatement
                                     requests was first adopted as part of the RRA 1998. The rel-
                                     evant subsection now provides:
                                             SEC. 6404(h). REVIEW              OF   DENIAL    OF   REQUEST      FOR   ABATEMENT      OF
                                           INTEREST.—
                                               (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.
                                               (2) SPECIAL RULES.—
                                                  (A) DATE OF MAILING.—Rules similar to the rules of section 6213
                                               shall apply for purposes ofdetermining the date of the mailing
                                               referred to in paragraph (1).
                                                  (B) RELIEF.—Rules similar to the rules of section 6512(b) shall
                                               apply for purposes of this subsection.
                                                  (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.

                                       When enacted in 1996 as part of the Taxpayer Bill of
                                     Rights 2 (TBOR 2), Pub. L. No. 104–168, sec. 302(a), 110
                                     Stat. at 1457–1458 (1996) (as amended by TBOR 2 sec.
                                     701(a) and (c)(3), 110 Stat. at 1463, 1464), then section
                                     6404(g), now section 6404(h), for the first time gave this
                                     Court jurisdiction to review requests for abatement of
                                     interest in the case of proceedings commenced after July 30,
                                     1996. Before the enactment of that provision, the Court gen-
                                     erally lacked jurisdiction over issues involving interest. See
                                     Yuen v. Commissioner, 112 T.C. 123, 126–127 (1999); 508
                                     Clinton St. Corp. v. Commissioner, 89 T.C. 352, 354–355
                                     (1987).




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                                     52                   142 UNITED STATES TAX COURT REPORTS                                      (46)


                                        Respondent relies on the historic limitations on our juris-
                                     diction over interest and the use of the terms ‘‘suspension’’
                                     and ‘‘shall’’ in section 6404(g) rather than ‘‘abatement’’ and
                                     ‘‘may’’ in sections such as 6404(e) in arguing that section
                                     6404(h) does not apply to petitioners’ claims under section
                                     6404(g). Petitioners respond that ‘‘abatement’’ in the title and
                                     context of section 6404 includes ‘‘suspension’’ and that
                                     ‘‘decisions under Section 6404(g) are not in the absolute
                                     discretion of Respondent and are more susceptible to Tax
                                     Court review than decisions under Section 6404(e)(1).’’ The
                                     parties agree only that the legislative history of section
                                     6404(g) is silent on the subject of this dispute.
                                        Respondent also cites Rev. Proc. 2005–38, sec. 2.05, 2005–
                                     2 C.B. 81, 81, without quoting the applicable text. That text,
                                     and the related section 3.03, are as follows:
                                           SECTION 2. BACKGROUND
                                                                  *   *    *    *   *   *   *
                                              .05 Section 6404(h) provides the United States Tax Court with juris-
                                           diction over any action brought by a taxpayer who meets the require-
                                           ments of section 7430(c)(4)(A)(ii) to determine whether the Secretary’s
                                           failure to abate interest was an abuse of discretion, and to order an
                                           abatement. The action must be brought within 180 days after the date
                                           of mailing of the Secretary’s final determination not to abate interest.
                                              The judicial review provisions of section 6404(h) apply where the
                                           Service has abused its discretion by failing to abate interest as provided
                                           by section 6404. These provisions do not apply where the Service has
                                           failed to suspend interest under section 6404(g), except as provided in
                                           paragraph 3.03 below.

                                           SECTION 3. ADMINISTRATIVE REVIEW PROCEDURE
                                                                  *   *   *    *  *     *   *
                                              .03 If a taxpayer asserts that the Service failed to suspend interest
                                           under section 6404(g) as a result of an unreasonable error or delay in
                                           performing a ministerial or managerial act within the meaning of section
                                           6404(e), the taxpayer may submit a claim for abatement on Form 843.
                                           The Service will consider the claim and issue a notice of final determina-
                                           tion. If the Service denies the taxpayer’s claim in whole or in part, tax-
                                           payers who meet the requirements referred to in section 7430(c)(4)(A)(ii)
                                           may petition the Tax Court under section 6404(h) to determine whether
                                           the denial was an abuse of discretion. Pursuant to section 6404(b), a
                                           claim may not be submitted under this section 3.03 asserting only that
                                           interest was assessed for periods during which interest should have been
                                           suspended under section 6404(g).




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                                     (46)                           CORBALIS v. COMMISSIONER                                         53


                                       Petitioners argue that Rev. Proc. 2005–38, sec. 2.05, states
                                     an exception to a general rule in section 3.03. Respondent
                                     replies that petitioners have ignored the last sentence of the
                                     revenue procedure and that
                                           [a] more intuitive interpretation of the revenue procedure, which is pre-
                                           sented in the Motion at paragraphs 31–32, is that paragraph 3.03 pro-
                                           vides guidance for circumstances where the elements of both I.R.C.
                                           § 6404(e) and I.R.C. § 6404(g) are met. In that special case, taxpayers
                                           may file a claim for abatement under I.R.C. § 6404(e) of interest that
                                           rightfully should have been suspended under I.R.C. § 6404(g), but for
                                           unreasonable error or delay on behalf of an officer or employee of
                                           respondent in the performance of a managerial or ministerial function.

                                     Respondent does not argue that the revenue procedure is
                                     entitled to deference or provide an explanation of the rea-
                                     soning behind it. There is no explanation of why section
                                     6404(b) precludes section 6404(h) judicial review of section
                                     6404(g) determinations while not conflicting with judicial
                                     review of section 6404(e) determinations. The apparent pur-
                                     pose of the subsections of section 6404 is to lay out specific
                                     exceptions to and extensions of the general rule in section
                                     6404(a). Otherwise section 6404(b) would seem to contradict
                                     section 6404(e) and (f) to the same extent that respondent
                                     suggests that it restricts section 6404(g).
                                       In many cases, we have discussed the deference due to
                                     pronouncements of the IRS. See, e.g., Taproot Admin. Servs.,
                                     Inc. v. Commissioner, 133 T.C. 202, 208–210 (2009) (dealing
                                     with a disputed revenue ruling), aff ’d, 679 F.3d 1109 (9th
                                     Cir. 2012). Revenue rulings are ‘‘an official interpretation by
                                     the Service’’. Sec. 601.601(d)(2)(i)(a), Statement of Procedural
                                     Rules. By contrast, section 601.601(d)(2)(i)(b), Statement of
                                     Procedural Rules, states that ‘‘[a] ‘Revenue Procedure’ is a
                                     statement of procedure that affects the rights or duties of
                                     taxpayers or other members of the public under the Code and
                                     related statutes or information that, although not necessarily
                                     affecting the rights and duties of the public, should be a
                                     matter of public knowledge.’’ A statement of procedure does
                                     not purport to be an official interpretation, and respondent
                                     does not argue here that the procedure is entitled to def-
                                     erence as an interpretation of section 6404. The revenue
                                     procedure, in respondent’s terms, ‘‘provides guidance for cir-
                                     cumstances’’ in which taxpayers may file a claim for abate-
                                     ment of interest that should have been suspended.




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                                     54                   142 UNITED STATES TAX COURT REPORTS                                      (46)


                                     Respondent argues only ‘‘an intuitive interpretation’’ of the
                                     procedural guidance.
                                        There is no reasoning in support of the conclusion stated
                                     in the revenue procedure, and we discern none for distin-
                                     guishing between section 6404(e) requests and section
                                     6404(g) requests. Thus, the revenue procedure is not entitled
                                     to deference. See Exxon Mobil Corp. v. Commissioner, 689
                                     F.3d 191, 200 (2d Cir. 2012), aff ’g 136 T.C. 99, 117 (2011).
                                     A procedural pronouncement cannot restrict or revise section
                                     6404(h). See Commissioner v. Schleier, 515 U.S. 323, 336 n.8
                                     (1995); Estate of Kunze v. Commissioner, 233 F.3d 948, 952
                                     (7th Cir. 2000), aff ’g T.C. Memo. 1999–344. The wording and
                                     context of the statute, supplemented by more general legal
                                     principles, control.
                                        First, we agree with petitioners that all of section 6404
                                     deals with abatement, of which suspension is a category. A
                                     claim that interest should have been suspended for a period
                                     is the logical equivalent of a claim for abatement of interest
                                     that has been assessed for that period. As petitioners
                                     explain:
                                           Under Section 6404(g), interest begins to accrue on a liability from the
                                           due date of the return until Respondent issues a notice stating a liability
                                           and the basis for that liability within 18-months [currently 36-months]
                                           of the later of due date of the return or the date the return was filed.
                                           See IRC § 6404(g). If Respondent fails to issue the notice by the time
                                           prescribed, the interest accrued on the liability during the suspension
                                           period is abated. If Respondent issues the notice within the time period
                                           prescribed, the accrued interest remains assessed. That the Code pro-
                                           vides for the specific term ‘‘suspension period’’ does not mean that the
                                           later elimination of interest for that period is not in fact an abatement.

                                     We agree with petitioners’ explanation. Although the factual
                                     record is incomplete, it appears from the Letters 3477 that
                                     the interest in dispute has been assessed. If the assessment
                                     is erroneous because part of the interest should have been
                                     suspended, abatement would be the remedy.
                                        The Court has stated, without limitation, that ‘‘section
                                     6404(h) authorizes the Court to review for an abuse of discre-
                                     tion the Commissioner’s refusal to abate interest under sec-
                                     tion 6404.’’ Urbano v. Commissioner, 122 T.C. 384, 390
                                     (2004) (citing Woodral v. Commissioner, 112 T.C. 19, 22–23
                                     (1999)). We see no persuasive reason why, as suggested by
                                     respondent, petitioners should have to seek recourse on their




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                                     (46)                          CORBALIS v. COMMISSIONER                                         55


                                     suspension of interest claim in another court. See Hinck v.
                                     United States, 550 U.S. 501, 506–508 (2007) (discussing
                                     congressional intent to provide exclusive jurisdiction to the
                                     Tax Court in interest abatement cases).
                                        We see no persuasive reason why interest suspension,
                                     when enacted in the RRA 1998, was to be treated separately
                                     from interest abatement for purposes of judicial review.
                                     When the interest suspension provision was adopted in 1998,
                                     the judicial review provision was redesignated by the RRA
                                     1998 from section 6404(g) to section 6404(i); it was changed
                                     to section 6404(h) in 2002 by the Victims of Terrorism Tax
                                     Relief Act of 2001, Pub. L. No. 107–134, sec. 112(d)(1), 115
                                     Stat. at 2434. In each version of the statute, the provision for
                                     judicial review follows the types of determinations subject to
                                     review. We are cognizant of section 7806(b), which provides
                                     in part that ‘‘[n]o inference, implication, or presumption of
                                     legislative construction shall be drawn or made by reason of
                                     the location or grouping of any particular section or provision
                                     or portion of this title’’. However, we can consider the simi-
                                     larity of terms and provisions within the Code as an aid to
                                     interpretation. See Pen Coal Corp. v. Commissioner, 107 T.C.
                                     249, 256, 258 (1996). What subsections (e), (f), and (g) of sec-
                                     tion 6404 have in common is that they are relief provisions
                                     for taxpayers affected by errors or omissions of the IRS. We
                                     see no reason to characterize differently the effect of the
                                     grant of jurisdiction to review denials of abatement under
                                     these subsections.
                                        Second, we agree with petitioners that nondiscretionary
                                     acts, suggested by the use of ‘‘shall’’ in a statute, are more
                                     susceptible of judicial review than discretionary acts. Histori-
                                     cally, clear indications of congressional intent to subject
                                     discretionary administrative action to judicial review have
                                     been required. See Citizens to Preserve Overton Park, Inc. v.
                                     Volpe, 401 U.S. 402, 410 (1971) (interpreting 5 U.S.C. sec.
                                     701(a)(2), which exempts discretionary administrative action
                                     from judicial review), abrogated on other grounds by Califano
                                     v. Sanders, 430 U.S. 99 (1977); Argabright v. United States,
                                     35 F.3d 472, 475 (9th Cir. 1994); Selman v. United States,
                                     941 F.2d 1060, 1064 (10th Cir. 1991); Horton Homes, Inc. v.
                                     United States, 936 F.2d 548, 551–552 (11th Cir. 1991). The
                                     enactment of section 6404(h), initially as section 6404(g), ren-
                                     dered obsolete cases such as Argabright, Selman, and Horton




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                                     56                  142 UNITED STATES TAX COURT REPORTS                                      (46)


                                     Homes, which denied judicial review of IRS discretionary
                                     denials of abatement of interest. See Miller v. Commissioner,
                                     310 F.3d 640, 643 (9th Cir. 2002), aff ’g T.C. Memo. 2000–
                                     196. Cases mentioning but not applying the interest suspen-
                                     sion provisions of section 6404(g) were deficiency cases that
                                     did not involve a final determination not to suspend interest
                                     that had been assessed or involved years before the effective
                                     date of section 6404(h). None held that we lack jurisdiction
                                     under section 6404(g). See, e.g., Fields v. Commissioner, T.C.
                                     Memo. 2008–207, slip op. at 10 n.4; Matthews v. Commis-
                                     sioner, T.C. Memo. 2008–126; Goode v. Commissioner, T.C.
                                     Memo. 2006–48. Comments in factually distinguishable
                                     situations are not controlling and, in any event, could be
                                     interpreted as implying that section 6404(h) applied to
                                     claims for suspension of interest in other circumstances, i.e.,
                                     where the interest had been assessed and for years after the
                                     effective date. To the extent that respondent relies on his-
                                     tory, we conclude that the history relied on has been under-
                                     mined by the enactment of judicial review provisions now
                                     found in section 6404(h). See Miller v. Commissioner, 310
                                     F.3d at 643.
                                        We see no merit in respondent’s reliance on the use of
                                     ‘‘shall’’ in section 6404(g) to argue against reviewability of
                                     the IRS decision with respect to suspension of interest. The
                                     use of ‘‘shall’’ in section 6404(e)(2), for example, does not pre-
                                     clude review in this Court of administrative decisions under
                                     that section. See Allcorn v. Commissioner, 139 T.C. 53, 66
                                     (2012); Pettyjohn v. Commissioner, T.C. Memo. 2001–227.
                                        Third, respondent’s position ignores a strong presumption
                                     that the actions of an administrative agency are subject to
                                     judicial review. See United States v. Winthrop Towers, 628
                                     F.2d 1028, 1032, 1035 (7th Cir. 1980); Roski v. Commis-
                                     sioner, 128 T.C. 113, 122 (2007); Estate of Gardner v.
                                     Commissioner, 82 T.C. 989, 994 (1984).
                                        In Estate of Gardner, we held that the Court has jurisdic-
                                     tion to review denial of an extension of time for filing an
                                     estate tax return under section 6081(a). We first looked to
                                     the overall statutory scheme to see whether it disclosed any
                                     basis for inferring ‘‘nonreviewability’’. Estate of Gardner v.
                                     Commissioner, 82 T.C. at 996. We see no such basis in sec-
                                     tion 6404. Second, we concluded that there were ascertain-
                                     able standards upon which to base our review. Id. at 997.




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                                     Section 6404(g) sets out specific guidelines for suspension of
                                     interest. The Court is well equipped to make the factual
                                     determinations required under that provision. Next, in Estate
                                     of Gardner, we concluded that the action of the IRS with
                                     respect to requests for extensions of time for filing were a
                                     suitable subject for judicial review because ‘‘[t]here is nothing
                                     to suggest that respondent’s exercise of discretion * * *
                                     involves any agency expertise beyond the competence of
                                     courts.’’ Id. at 997–998. We see no special factors with
                                     respect to suspension of interest distinguishing it from other
                                     issues over which this Court has jurisdiction. Finally, we
                                     commented that our review of an IRS action denying the
                                     request of the taxpayer would not impair the Commissioner’s
                                     ability to carry out congressionally assigned duties. Id. at
                                     998. The same comment applies in this case.
                                       For the foregoing reasons, we hold that denials of interest
                                     suspension under section 6404(g) are not excluded from
                                     judicial review in this Court under section 6404(h).
                                     Final Determination
                                        Respondent’s moving papers refer to the statements in Let-
                                     ters 2289 that the letters were not the IRS’ final determina-
                                     tion and that the administrative proceedings involving peti-
                                     tioners’ claim for abatement under section 6404(e) are
                                     ongoing. Thus, respondent argues petitioners’ petition is pre-
                                     mature.
                                        Petitioners cite Gray v. Commissioner, 138 T.C. 295 (2012),
                                     aff ’d, 723 F.3d 790 (7th Cir. 2013), for the holding that a
                                     final determination need not be made by a formal letter
                                     stating that it is a final determination. The Court dismissed
                                     as meritless respondent’s suggestion that there was no final
                                     determination ‘‘because it did not occur in connection with a
                                     stand-alone request for interest abatement under section
                                     6404 or because it was not made on a Letter 3180, Final
                                     Determination Letter for Fully Disallowing an Interest
                                     Abatement Claim’’. Id. at 304; see also Cooper v. Commis-
                                     sioner, 135 T.C. 70, 75 (2010) (holding that jurisdiction is
                                     established when the Commissioner issues a written notice
                                     embodying a determination without regard to the name or
                                     label of the document).




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                                     58                  142 UNITED STATES TAX COURT REPORTS                                      (46)


                                        The Letters 3477 sent to petitioners denied their claim to
                                     interest suspension and took the position that petitioners
                                     could not petition this Court for judicial review. Thus, if
                                     upheld by the Court, the IRS denial of interest suspension
                                     and disavowal of the right to judicial review under section
                                     6404(h) would leave petitioners with no further recourse,
                                     which is a final determination. Although the contempora-
                                     neous Letters 2289 anticipated further proceedings with
                                     respect to the claim for abatement under section 6404(e) for
                                     unreasonable errors and delays by the IRS, the claim based
                                     on section 6404(g) is severable to the extent that it relies
                                     only on the periods established for the IRS to contact the tax-
                                     payer with regard to a tax liability. See Gray v. Commis-
                                     sioner, 138 T.C. at 305. If petitioners had delayed filing a
                                     petition under section 6404(g), respondent might argue that
                                     the petition was untimely under section 6404(h)(1) because it
                                     was not brought within 180 days of the letters rejecting their
                                     claim for interest suspension. See sec. 6404(h)(l). We conclude
                                     that the Letters 3477 were final determinations for jurisdic-
                                     tional purposes under section 6404(h).
                                     Section 7430(c)(4)(A)(ii)
                                        Respondent’s motion argues that there is ‘‘no evidence’’ to
                                     support petitioners’ allegations that they meet the net worth
                                     requirements of section 7430(c)(4)(A)(ii) or that they are a
                                     ‘‘prevailing party’’ entitled to bring an action under section
                                     6404(h). Respondent thus asserts that the petition is pre-
                                     mature.
                                        Respondent’s reference to ‘‘prevailing party’’ is anomalous
                                     in this context, because there would be no interest accruing
                                     on a tax liability to the extent that taxpayers prevail on an
                                     underlying issue. We infer, therefore, that the incorporation
                                     into section 6404(h) of section 7430(c) requirements refers
                                     only to net worth requirements set forth in 28 U.S.C. sec.
                                     2412(d). See Estate of Kunze v. Commissioner, T.C. Memo.
                                     1999–344.
                                        Respondent also contends that we should disregard the
                                     affidavits and net worth statements of petitioners as unreli-
                                     able. Respondent acknowledges that in the case of a husband
                                     and wife, the net worth test is applied to each separately. See
                                     Hong v. Commissioner, 100 T.C. 88, 91 (1993). Respondent




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                                     (46)                           CORBALIS v. COMMISSIONER                                        59


                                     also ‘‘acknowledges that the current state of the law is to use
                                     acquisition cost, adjusted for depreciation, rather than fair
                                     market value to compute net worth.’’ See Swanson v.
                                     Commissioner, 106 T.C. 76, 94–97 (1996). However,
                                     respondent asserts that fair market value is the better
                                     standard to use rather than acquisition cost, citing Powers v.
                                     Commissioner, 100 T.C. 457, 483–484 (1993) (accepting fair
                                     market values which had declined significantly from acquisi-
                                     tion costs), aff ’d in part, rev’d in part, 43 F.3d 172 (5th Cir.
                                     1995), and section 301.7430–5(g)(1), Proposed Income Tax
                                     Regs., 74 Fed. Reg. 61589–01, 61595–61596 (Nov. 25, 2009).
                                     Neither Powers, a case decided before Swanson, nor a pro-
                                     posed regulation changes the existing law on this subject. We
                                     decline to do so in a case in which the relevant facts have
                                     not been determined.
                                        The petition alleges that petitioners meet the requirements
                                     of section 7430(c)(4)(A)(ii). Such an allegation is required in
                                     the petition and is inherently subject to proof, but ‘‘evidence’’
                                     is not appropriately included in a petition. See Rule 281(b)(5).
                                     Petitioners’ net worth and other qualifications to maintain an
                                     action under section 6404 are better decided in subsequent
                                     proceedings in which evidence may be taken. See Gray v.
                                     Commissioner, 138 T.C. at 306. We decline to disregard the
                                     pleading and affidavits on the present record.
                                        Although petitioners’ entitlement to bring this action and
                                     to suspension of interest may be subject to further obstacles,
                                     we conclude that the Court has jurisdiction under section
                                     6404(h) to review denials of interest suspension under sec-
                                     tion 6404(g) and that the IRS Letters 3477 contained final
                                     determinations sufficient to give the Court jurisdiction in
                                     this case.
                                                                     An order denying respondent’s motion to
                                                                   dismiss will be issued.

                                                                               f




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