                        T.C. Memo. 2004-80



                      UNITED STATES TAX COURT



                 CHARLES DEVERNA, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 7870-02.                 Filed March 22, 2004.



     Donald Jay Pols, for petitioner.

     Patricia A. Riegger, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     COHEN, Judge:   The petition in this case was filed in

response to a notice of determination denying petitioner’s

request to abate interest on income tax liabilities for 1982,

1983, and 1984 pursuant to section 6404(e).     The issue for

decision is whether the failure to abate interest between
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October 12, 1993, and September or October 1998 was an abuse of discretion.

     Unless otherwise indicated, all section references are to

the Internal Revenue Code, and all Rule references are to the Tax

Court Rules of Practice and Procedure.

                         FINDINGS OF FACT

     Some of the facts have been stipulated, and the stipulated

facts are incorporated in our findings by this reference.

Petitioner resided in Garden City, New York, at the time the

petition in this case was filed.

     During 1982 through 1984, petitioner was an investor in

Manhattan Associates, a coal mining partnership.   Petitioner’s

former wife, Barbara Deverna (B. Deverna), filed a joint Federal

tax return with petitioner.   B. Deverna was granted relief from

joint and several liability for the assessments resulting from

investments in Manhattan Associates for 1982 through 1984.

     Manhattan Associates was a partnership subject to the

procedures of the Tax Equity & Fiscal Responsibility Act of 1982,

Pub. L. 97-248, 96 Stat. 324 (TEFRA), provisions found in

sections 6221-6233.   Robert Brown (Brown) was the tax matters

partner (TMP) for Manhattan Associates.

     Thirty coal mining partnerships were promoted by Norman

Swanton (Swanton) prior to 1982, and 20, including Manhattan

Associates, were formed subsequent to the effective date of TEFRA

(TEFRA partnerships).   Test cases involving pre-TEFRA
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partnerships were selected for litigation of the Swanton coal

programs in the Tax Court.   The remaining 20 TEFRA partnerships

agreed to be bound by the outcome of the test cases.     Matthew

D. Lerner (Lerner) of Zapruder & Odell represented 17 of the

TEFRA partnerships associated with Swanton, but did not represent

Manhattan Associates.   Lerner agreed to act for Manhattan

Associates in a limited capacity in reviewing and signing

decision documents and Forms 906, Closing Agreement on Final

Determination Covering Specific Matters.

     On May 18, 1984, the Internal Revenue Service (IRS) sent a

letter to petitioner to notify him that Manhattan Associates was

selected for examination (notice).     The notice stated that the

IRS was not required to notify partners individually of

conferences or other events during the TEFRA proceeding.     The

notice further stated that the TMP was “responsible for notifying

partners of the more important events during the proceeding, but

the results of the proceeding generally apply to all partners

even if the tax matters partner does not provide that

information.”   The IRS and the TMP were unable to reach a

settlement for Manhattan Associates.

     On August 3, 1990, the IRS sent to Manhattan Associates and

Brown a Notice of Final Partnership Adjustment (FPAA).     On

August 20, 1990, the IRS sent to petitioner an FPAA.
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On October 26, 1990, Brown filed a petition in response to the

FPAA, and the case was docketed in the Tax Court at docket No.

24099-90.

Settlement Negotiations

       In September 1991, while waiting for the decisions of the

Court in the earlier test cases, the legal representatives of the

20 TEFRA partnerships reached a basis for settlement with the

IRS.    The parties agreed to general settlement terms which then

had to be applied individually to each of the 20 TEFRA

partnerships and then to each limited partner within each

partnership.    The general basis of settlement, in part, was as

follows:

            (a) taxpayers would be entitled to deduct 1/2 of
       the out of pocket cash paid to the partnership in the
       year the cash was paid;

            (b) the Internal Revenue Service agreed to waive
       any penalties asserted in the FPAA; and

            (c) the I.R.C. section 6621(c) rate of interest
       would apply to any deficiency.

       The basis of the settlement for all of the TEFRA

partnerships was the same.    For the IRS to credit nearly 1,000

limited partners in the TEFRA partnerships with the proper

settlement, individual computations were necessary first at the

partnership level.    Each of the TEFRA partnership’s tax returns

was different from the other partnerships’ returns, and each of

the limited partner’s deductions on their individual tax returns
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was different.   As a result of these differences, each

partnership, and then each limited partner, was addressed one at

a time.

     Before the individual computations could be done, the IRS

had to determine:   (a) How much cash was contributed by each

limited partner; (b) in which tax years the contributions were

made; (c) whether the limited partners received any

distributions; (d) in which tax years any distributions were

made; (e) whether each limited partner contributed cash towards a

“Note Settlement Agreement” in 1987; (f) and how much cash, if

any, was contributed by each limited partner towards the Note

Settlement Agreement in 1987.   The answer to each of the six

questions was needed to determine the deficiencies and/or credits

for each of the nearly 1,000 limited partners in the 20 TEFRA

partnerships.    After the above was determined, a computation had

to be prepared by an Appeals officer from the Manhattan Appeals

Office before a proposed decision document could be submitted to

the Court.

     On October 12, 1993, Lerner sent to “All Swanton TEFRA

Partners” a letter notifying them of the settlement with the IRS

(October 1993 letter).   The letter, in part, stated that the IRS

would begin sending decision documents and closing agreements to

the partners within 1 to 2 months after October 1993.     The letter

further stated that, within 1 year after the partnership’s
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decision document is “filed”, the IRS would send the partner a

“bill” for any additional tax due.     The letter mentioned several

additional steps to be taken before individual computations could

be completed.

     In July 1994, the Manhattan Appeals Office (Manhattan

Appeals) prepared computations for the settlement.    A proposed

decision document based on the computations had to be prepared by

IRS District Counsel attorney Moira Sullivan (Sullivan).

Proposed computations and a proposed decision document were sent

to Lerner on September 9, 1995, and Lerner returned the signed

decision document to District Counsel on November 7, 1996.    On

September 11, 1995, the IRS sent to Brown his first set of

closing agreements to be sent to the individual partners in

Manhattan Associates.   Brown had the opportunity to send the

computations to the limited partners for their approval of the

settlement as reflected in the computations.    The closing

agreements included a request that Brown’s wife also sign the

documents.   On June 27, 1996, Brown returned the closing

agreements, but his wife did not sign them.    On November 26,

1996, a second package of closing agreements was sent to Brown,

with a request that both he and his wife sign the documents.

After Brown received the second package of closing agreements, he

informed District Counsel that he was not married to his wife in

1982 and 1983.   On January 3, 1997, revised closing agreements
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were sent to Brown and his wife.   Between January 3 and

November 24, 1997, Brown signed the revised closing agreements

and returned them to District Counsel’s office.    The agreements

had to be signed by Manhattan Appeals, however, and not by

District Counsel.   The closing agreements were countersigned by

Manhattan Appeals and then returned to District Counsel’s office.

     On November 24, 1997, after District Counsel’s office

received the signed closing agreements from Manhattan Appeals,

the Manhattan Associates decision document was sent to the Tax

Court.   On December 2, 1997, a decision was entered in the

Manhattan Associates case by the Court under Rule 248(a) for 1982

through 1984.   On March 2, 1998, the decision became final under

section 7481.   The Manhattan Associates case was sent to

Manhattan Appeals for closing and assessment.    The case was sent

to the controlling IRS service center for the Swanton coal

programs for processing and forwarded to the TEFRA unit of the

IRS service center where the taxpayers filed their returns so

that the taxpayers could be assessed.

     On September 9, 1998, Forms 4549-A, Income Tax Examination

Changes, were sent to petitioner for 1984.   On October 13, 1998,

Forms 4549-A were sent to petitioner for 1982.    On October 29,

1998, Forms 4549-A were sent to petitioner for 1983.

     As a result of the changes to petitioner’s account due to

the Manhattan Associates TEFRA proceedings, the IRS assessed
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$22,773 on November 16, 1998, $29,485 on January 11, 1999, and

$3,063 on October 5, 1998, for 1982, 1983, and 1984,

respectively.    Petitioner failed fully to pay the Federal income

tax liabilities for 1982 through 1984.

Request for Abatement of Interest

     On December 17, 1998, C. Edmonds Allen (Allen) sent a letter

to Nancy L. Jones at the IRS Kansas City Service Center

requesting a correction in the calculation of petitioner’s

interest.    The letter erroneously claimed that the TEFRA

partnership settlement stated that the partnerships were not

subject to the tax-motivated penalty under section 6621(c).

Further, the letter argued that interest was overassessed for

1982.   The letter suggested that Sullivan be contacted for

documentation and verification of the settlement.    Sullivan was

contacted and confirmed that section 6621(c) interest applied.

     On January 12, 1999, Tax Examining Assistant Fred Fuqua

(Fuqua) responded in a letter to petitioner stating that Allen

was not an authorized representative to handle petitioner’s tax

matters.    On February 4, 1999, Fuqua sent to petitioner an

additional letter notifying petitioner that interest based on

tax-motivated transactions was correct but that the amount of the

interest for 1982 would be adjusted because it was overassessed.

     On July 12, 1999, the IRS sent to petitioner a Final Notice

of Intent to Levy and Notice of Your Right to a Hearing.     On
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July 27, 1999, petitioner filed Form 12153, Request for a

Collection Due Process Hearing (request).   The request states:

“The taxes were assessed based upon an information return (1065)

[sic].   My deposition [sic] was agreed to many years ago.     The

tax assessments were not billed until recently.    The interest

should be abated based upon Rev. Proc. 87-42.”    Petitioner’s

request was assigned to Appeals Officer Warren Vogel (Vogel) of

the Long Island Appeals Office.   Vogel handled petitioner’s

request from August 6, 1999, through October 17, 2000.    On

October 17, 2000, petitioner’s request was transferred to Appeals

Settlement Officer Gerard Ohrtman (Ohrtman).

     On October 25, 1999, John R. Serpico sent to Vogel a letter

setting forth petitioner’s position.   The letter enclosed a

Form 2848, Power of Attorney and Declaration of Representative,

dated December 30, 1998, giving power of attorney to

John R. Serpico, John G. Serpico, and Jeffrey S. Ehrlich

(Ehrlich).   In particular, the letter stated:

     His matter was settled several years prior to the
     issuance of RARs. There were other partnerships that
     went to Tax Court and the IRS failed to perform the
     ministerial act of issuing an RAR to Mr. Deverna until
     all the cases were settled. Cases that had no
     relationship to Mr. Deverna’s settlement in the early
     1990s [sic].

No documentary support for the alleged settlement was provided.

     On March 27, 2001, Ohrtman sent to petitioner’s

representative a letter informing him that the issue petitioner
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raised was not relevant for inclusion in a collection due process

hearing.    Ohrtman further stated that he would maintain

jurisdiction over the case but that he had arranged for another

Appeals officer to conduct a hearing on the interest abatement

issue.    He suggested that proof of the items stated in the claim

should be made available when the Appeals officer made contact.

     On August 1, 2001, an Appeals officer called to speak to

John R. Serpico.    Ehrlich stated that John R. Serpico had passed

away.    Ehrlich requested that the Appeals officer refrain from

working on petitioner’s case until the law firm could determine

which of the representatives would handle petitioner’s case.    As

a result of the destruction of the World Trade Center on

September 11, 2001, both the administrative and legal files

regarding the Manhattan Associates case were destroyed.

     On October 25, 2001, the Appeals officer called Ehrlich

because he had not yet been contacted by a member of Ehrlich’s

firm.    Ehrlich informed the Appeals officer that the firm still

had not decided who would handle petitioner’s case.    The Appeals

officer informed Ehrlich that, if the firm did not call him back,

he would make a determination on petitioner’s case based on the

information in the file.    Ehrlich did not call the Appeals

officer.    The Appeals officer reviewed petitioner’s case file,

including the transcripts of petitioner’s tax accounts.
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     On January 8, 2002, the IRS sent to petitioner a Full

Disallowance - Final Determination disallowing petitioner’s claim

for interest abatement.    The request for abatement was denied

because the IRS “did not find any errors or delays on our part

that merit abatement of interest in our review of available

records and other information.”

                               OPINION

     Under section 6404(e)(1), the Commissioner may abate the

assessment of interest on any deficiency if the interest is

attributable to an error or delay by an officer or employee of

the IRS (acting in his official capacity) in performing a

ministerial act.   (Amendments to section 6404(e) in 1996 do not

apply to this case because they apply only to interest accruing

with respect to deficiencies or payments for tax years beginning

after July 30, 1996.)    A “ministerial act” is a procedural or

mechanical act that does not involve the exercise of judgment or

discretion and that occurs during the processing of a taxpayer’s

case after all prerequisites to the act have taken place.      Sec.

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

30163 (Aug. 13, 1987).    The “mere passage of time” during a tax

dispute does not establish error or delay in performing a

ministerial act.   Lee v. Commissioner, 113 T.C. 145, 150 (1999).

The Court may order abatement where the Commissioner abuses his

discretion by failing to abate interest.    Sec. 6404(h)(1).    In
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order to prevail, a taxpayer must prove that the Commissioner

exercised this discretion arbitrarily, capriciously, or without

sound basis in fact or law.   Lee v. Commissioner, supra at 149;

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

     Petitioner contends that respondent “failed to perform the

ministerial act of issuing an RAR to Mr. Deverna until all cases

were settled.”   Specifically, petitioner argues that, when he

received the October 1993 letter from Lerner, the case was

settled and assessments should have been made at that time.

Petitioner argues that interest should be abated from the date of

the October 1993 letter until the dates of the assessments in

1998.   Petitioner testified at trial that he received the October

1993 letter and thought that, based on the letter’s contents, the

case was settled with the IRS.

     The letter, however, was prepared by Lerner, a

representative of some of the TEFRA partnerships, but not a

representative of Manhattan Associates.   It is unclear from the

record whether the October 1993 letter was sent in response to a

specific correspondence between respondent and Lerner.   There is

no evidence that petitioner did any of the things described in

the letter as prerequisites to assessments against individual

partners.   The letter was not presented to Vogel or Ohrtman as a

basis for petitioner’s allegations that he had settled his case.

The letter was not presented to respondent for consideration
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until after preparation for trial commenced, on May 5, 2003.     As

a result, Vogel and Ohrtman did not review the letter on which

petitioner allegedly relied and had no information regarding the

settlement of petitioner’s case any earlier than when documents

were sent to Brown in 1995.     Moreover, respondent is not bound

by a letter that was not sent by the IRS.

     In any event, the passage of time from October 1993 until

September or October 1998 was attributable to the complexity and

the extent of the Swanton coal programs and not due to a

ministerial error.   Sullivan testified during trial as to the

complex issues and lengthy procedures involved in settling the

Swanton coal programs.   After lengthy settlement negotiations, in

1994, the Appeals Office prepared computations, and District

Counsel prepared proposed decision documents for all partnerships

involved.   During 1995 and 1996, the computations and decision

documents were sent to the TMPs.

     Part of the responsibility for the delay falls on

petitioner’s representatives.    Sullivan testified that Brown was

generally uncooperative with the IRS, and Sullivan was forced to

speak through intermediaries when dealing with Brown.    Sullivan

also needed to send multiple decision documents to Brown before

he signed and returned the documents.
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     In 1997, the decision documents were sent to the Court, and

the decision was entered.    The decision became final in 1998, and

the assessments followed.

     Petitioner also argues that there was an abuse of discretion

in denying petitioner’s request without considering “pertinent

evidence”, examining “relevant factors”, and articulating “a

satisfactory explanation”.   Petitioner relies on Beagles v.

Commissioner, T.C. Memo. 2003-67, in arguing that the

Commissioner allowed a partial abatement of interest in a

different partnership associated with the Swanton coal programs.

In Beagles, however, the partner became terminally ill and the

surviving spouse presented relevant documents to the Appeals

officer.   Here, petitioner did not provide any evidence during

the administrative process to support his claim that he settled

his case several years prior to the assessments.   His spouse was

given relief under section 6015.    In any event, as in Beagles, we

conclude that the delays involved in this case were not

attributable to ministerial acts.   Relief given administratively

in different circumstances does not establish abuse of

discretion.   See Fargo v. Commissioner, T.C. Memo. 2004-13;

Mekulsia v. Commissioner, T.C. Memo. 2003-138.

     Petitioner also complains that Vogel and Ohrtman did not

contact Sullivan regarding the Swanton coal programs.

Petitioner and his representatives failed to contact Ohrtman
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during his review of the interest abatement request and did not

comply with the requests of the Appeals officer with whom Ohrtman

was coordinating the case.   They did not provide the letter on

which petitioner claims reliance.   Thus, the Appeals officer and

Ohrtman relied on the information that remained in petitioner’s

file after the destruction of the World Trade Center.    Nothing in

Sullivan’s trial testimony supported petitioner’s arguments, and

the failure to contact her would not have affected the

determination.

     We have considered petitioner’s other arguments.    They are

unpersuasive.    We therefore uphold respondent’s determination not

to abate interest in this case.

     To reflect the foregoing,

                                          An appropriate order

                                     and decision will be entered.
