                     T.C. Summary Opinion 2011-24



                       UNITED STATES TAX COURT



    JOHN J. MALONE, SR., AND KAREN R. MALONE, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 27815-07S.               Filed March 8, 2011.



     John J. Malone, Sr., and Karen R. Malone, pro se.

     Lisa K. Hunter, for respondent.



     PARIS, Judge:    This case was heard pursuant to section 74631

of the Internal Revenue Code in effect when the petition was

filed.   Pursuant to section 7463(b), the decision to be entered

is not reviewable by any other court, and this opinion shall




     1
      Subsequent section references are to the Internal Revenue
Code of 1986, as amended, unless otherwise indicated.
                               - 2 -

not be treated as precedent for any other case.    The issues

before this Court are:   (1) Whether respondent can proceed with

collection of petitioners’ 2001 tax liability2 via lien and levy;

(2) whether respondent’s assessment with respect to the

mischaracterization of petitioners’ capital gain as ordinary

income and petitioners’ omission of the Social Security number

needed for a dependency exemption deduction was valid under

section 6213; and (3) whether respondent abused his discretion by

denying petitioners’ request for an abatement of interest for

2001 and 20023 under section 6404(e).

     The Court holds the following:     (1) Because a portion of the

assessment of petitioners’ 2001 tax liability (the 2001

assessment) was invalid, respondent cannot proceed to collect the

tax attributable to the mathematical error for that tax year via

lien or levy; and (2) the Appeals officer did not abuse his

discretion in denying petitioners’ request for abatement of

interest for 2001 and 2002 under section 6404(e).




     2
      Although petitioners raised in the petition the issue of
whether respondent can proceed to collect the 2002 tax liability
via lien or levy, this issue is moot. On May 7, 2007, their 2002
tax liability was satisfied after respondent had applied the
credits from 2001 and 2003.
     3
      Although petitioners’ 2002 tax liability has been
satisfied, this Court still has jurisdiction over petitioners’
request for an abatement of interest for 2002. See Greene-
Thapedi v. Commissioner, 126 T.C. 1, 12-13 (2006); Bucaro v.
Commissioner, T.C. Memo. 2009-247.
                               - 3 -

                            Background

Petitioners

     John J. Malone, Sr. (petitioner husband), and Karen R.

Malone (petitioner wife) are husband and wife.   Petitioners

resided in Nebraska when the petition was filed.

Tax Returns

     Petitioners timely filed two requests to extend the time to

file their 2001 joint Federal income tax return (2001 tax return)

to August 15, 2002, and then, to October 15, 2002, respectively.

Yet they did not file their 2001 tax return until May 19, 2006.

     Petitioners also filed a request to extend the time to file

their 2002 joint Federal income tax return (2002 tax return) due

on April 15, 2003, to August 15, 2003.   However, petitioners did

not file their 2002 tax return until May 19, 2006, when they

filed their 2001 tax return.

     Before filing their tax returns petitioners executed Form

2848, Power of Attorney and Declaration of Representative (POA),

on January 1, 2006, authorizing their certified public accountant

(C.P.A.), Martin D. Hocevar, to receive and inspect confidential

tax information and to perform any and all acts that petitioners

could perform with respect to any matter relating to the 2001 and

2002 tax returns.   Their C.P.A. prepared the returns for those

years.
                               - 4 -

     Petitioners reported on their 2001 tax return $69,806 of

Federal income tax.   They did not include a payment with this tax

return but reported the withholding from their wage income for

that year and an estimated payment from a previous tax year.

Petitioners reported on their 2002 tax return $13,945 of Federal

income tax.   Petitioners did not include a payment with this tax

return but reported $6,521 of withholding from their wage income

for 2002.

Assessment of Petitioners’ 2001 and 2002 Tax Liabilities

     On September 11, 2006, the Internal Revenue Service (IRS)

recorded the 2001 assessment indicating that petitioners owed

$76,179 of Federal income tax, a $15,704.77 late-filing addition

to tax, and a $15,856.50 failure to timely pay addition to tax

for 2001.   On the same day, the Internal Revenue Service also

assessed Federal income tax of $13,945 and additions to tax of

$224, $1,670.40, and $1,521.92 for failure to pay estimated tax,

failure to timely file, and failure to timely pay tax,

respectively, for 2002 (the 2002 tax assessment).

14-Month Period Following Assessment

     September 29, 2006, to December 2006:   Request for Abatement

     On September 29, 2006, petitioners and their C.P.A. sought

advice from the Taxpayer Advocate Service (TAS) concerning

abatement of the additions to tax for 2001 and 2002.   TAS advised

petitioners to submit a written request for abatement of those
                               - 5 -

additions to tax for those tax years, and petitioners did so by

October 13, 2006.

     On October 26, 2006, Revenue Officer Sharon Barber (RO

Barber) met with petitioners and orally denied their requests for

abatement of the additions to tax for 2001 and 2002.   RO Barber

gave Publication 1660, Collection Appeal Rights, to petitioners,

explained the appeal process, and informed them of their right to

appeal her decision by November 30, 2006.   Last, RO Barber

informed petitioners that if they did not pay their 2001 and 2002

tax liabilities on or before November 30, 2006, a Federal tax

lien would be filed for each year.

     By letter dated October 30, 2006, RO Barber denied

petitioners’ requests for abatement of the additions to tax for

2001 and 2002 because petitioners failed to prove reasonable

cause for their failure to timely file their tax returns and pay

their tax liabilities.   Additionally, the letter informed

petitioners that they owed Federal income tax and interest of

$81,968.23 and $9,401.08 for 2001 and 2002, respectively.     Last,

RO Barber indicated that a discrepancy existed as to the amount

of the tax liability petitioners reported on their original 2001

tax return and the amount the IRS assessed.   RO Barber explained

further that once she had identified the reason for this

discrepancy an explanatory notice would be issued to petitioners
                                 - 6 -

and their representative.   No prior notice or explanation of

adjustment had been issued.

     On November 3, 2006, petitioners filed Form 1040X, Amended

U.S. Individual Income Tax Return (2001 amended return), to amend

their 2001 tax return.   On November 6, 2006, RO Barber sent to

petitioners the transcript relating to their 2001 assessment.     No

notice of deficiency was issued.    The only notice petitioners

received relating to their 2001 assessment was Letter 474C dated

November 28, 2006, stating “per your request * * * [the IRS has]

processed your Amended Return.    There was an error in your

figures. * * * [IRS has] adjusted your account.”    This letter did

not notify petitioners that the amount of tax in excess of that

shown on the 2001 tax return was due and such an amount due was

computed on the basis of a mathematical or clerical error

appearing on the return, did not specify the mathematical or

clerical error alleged, and did not render an explanation other

than “an error in your figures”.    This notice reflected

petitioners’ taxable income and the tax liability as reported on

their 2001 amended return and the IRS’ corrected entries thereof.

     By November 30, 2006, petitioners did not appeal RO Barber’s

decision and did not make any payment of their 2001 and 2002 tax

liabilities.

     On December 1, 2006, petitioners’ C.P.A., who held a POA,

challenged the 2001 assessment by a faxed letter stating that the
                               - 7 -

income reported on petitioners’ Schedule D, Capital Gains and

Losses, was correctly characterized as capital gain, not ordinary

income, and should be taxed at a capital gain rate.   In addition,

petitioners’ C.P.A. stated:   “also that your [assessed amount of

petitioners’] income is $1,160 higher than the tax return.    I

don’t see why that is the case”.

     By letter dated December 4, 2006, petitioner husband

provided the reasons the additions to tax for 2001 and 2002

should be abated but did not appeal RO Barber’s decision.

     On December 13, 2006, RO Barber issued a Notice of Federal

Tax Lien Filing and Your Right to a Hearing to petitioners

indicating that Federal tax liens were filed on or about December

13, 2006, to collect the tax liabilities of $96,519.30 and

$12,697.23 for 2001 and 2002,4 respectively.   The IRS filed the

2001 and 2002 Federal tax liens on December 19, 2006.   By

December 30, 2006, petitioners timely submitted a request for a

collection due process hearing (CDP hearing) challenging the

liens.




     4
      Before the filing of the lien to collect the entire amount
of the 2002 tax liability, most of petitioners’ 2002 tax
liability had been satisfied when respondent had applied credits
from 2001 and 2003. Respondent allocated $4,907.86, $126.08, and
$224 on June 12, July 3, and Sept. 11, 2006, respectively, from
2003, and $1.23 on Dec. 8, 2006, from 2001.
                               - 8 -

     January to March 2007: CDP Hearing and the Appeal of the
     Denial of the Abatement

     By fax dated January 12, 2007, petitioner husband belatedly

submitted to Revenue Officer Randall Smith (RO Smith), the

collection group manager, an appeal of RO Barber’s denial of

their request for abatement of the additions to tax for 2001 and

2002.   By that same fax petitioner husband reminded RO Smith “to

call * * * [him] this week to set an appointment to discuss

* * * [the] matter * * * [they] had spoke about on the telephone

before the New Year”, because petitioner husband had “misplaced

* * * [RO Smith’s] telephone number, and there * * * [was] no way

to reach * * * [RO Smith] or rediscover it.”   Although petitioner

husband and petitioners’ C.P.A. scheduled with Mr. Smith a

meeting on an unknown date, that meeting did not occur because

the parties had a miscommunication as to the time.   On January

19, 2007, petitioner husband and petitioners’ C.P.A. attended

another meeting scheduled with RO Smith, who left them a message

upon their arrival that he would be late because of a

teleconference with his superior.   After waiting for “50 or 70

minutes” petitioner husband and petitioners’ C.P.A. left.    They

immediately sought assistance from Mary Hickey of TAS,

complaining about RO Smith’s “cancellation of the meeting” and

“the difficulties * * * [petitioner husband] had reaching RO

Smith either via telephone or in person.”   Ms. Hickey was able to

contact RO Smith immediately, and RO Smith assured her that he
                               - 9 -

would contact petitioner husband and reschedule the appointment.

By January 22, 2007, petitioner husband informed TAS that RO

Smith did return his call and he would call RO Smith to

reschedule the appointment.

     Because the Letter 474C did not provide any reasons for the

excessive amount of their 2001 assessment, petitioner husband

requested further that Ms. Hickey review the adjustments.    Ms.

Hickey soon determined that the 2001 assessment was made for two

reasons:   (1) There was a mathematical error based on the

omission of the Social Security number required for the

dependency exemption deduction; and (2) the IRS incorrectly

assumed that an ordinary tax rate applied to a capital gain

petitioners reported on their Schedule D.   Petitioner husband

then asked Ms. Hickey to determine the proper amount of the tax,

the additions to tax, and the accumulated interest for that year.

     Although petitioners had timely challenged the 2001

assessment under the mathematical error procedure of section 6213

and no notice of deficiency was issued, Officer Gary Herman (RO

Herman) proceeded to collect by levy and issued a Final Notice--

Notice of Intent to Levy and Notice of Your Right (notice of

levy) on February 15, 2007, indicating that on that date,

petitioners had “Unpaid Amount from Prior Notices” of $96,525.30

and $5,273.23 for 2001 and 2002, respectively.   The notice of

levy also notified petitioners that their additional interest was
                              - 10 -

$1,406.26 and $313.16 for 2001 and 2002, respectively.    On that

same day petitioner husband did not attend a scheduled meeting

with RO Herman because of flight problems, and the meeting was

later rescheduled for February 14, 2007.   On February 13, 2007,

RO Herman informed TAS that petitioner husband failed to prove

reasonable cause that would justify abatement of the additions to

tax for 2001 and 2002 and failed to submit a timely appeal.

     On February 14, 2007, petitioner husband met with RO Smith

and RO Herman with the expectation of appealing RO Barber’s

denial of the additions to tax abatements for 2001 and 2002.

Petitioner husband said that RO Barber “hated him” and was

uncooperative.   In response RO Smith and RO Herman reiterated

their reasons for the denial and served him a summons ordering

petitioners to appear and provide financial records on or before

March 8, 2007.   Petitioner husband believed the meeting was a

“scheme” to serve him the summons, and he stated that the IRS had

been treating him unfairly.   He also challenged the accuracy of

the 2001 assessment and requested that the IRS provide an

accurate accounting of petitioners’ 2001 tax liability.   The

revenue officers responded that the 2001 assessment was accurate.

On February 21, 2007, petitioners timely submitted a Request for

a Collection Due Process Hearing to challenge the notice of

collection via levy on the basis that “the IRS collection

personnel have been wrong about the tax amount due and abusive”.
                                - 11 -

On February 27, 2007, Ms. Hickey informed the revenue officers of

her view that respondent’s conclusion regarding the amount of

petitioners’ 2001 assessment was incorrect and the assessment

should be reduced.

     On March 5, 2007, a TAS case advocate sent an operation

assistance request to the IRS functional unit for an adjustment

of $5,961 because petitioners’ capital gain for the tax year 2001

was mischaracterized as ordinary income and taxed at an improper

rate.     That same day petitioner husband sent to TAS a $58,723

payment, and TAS forwarded that payment to the IRS on March 6,

2007, to be applied toward petitioners’ 2001 tax liability,

leaving unpaid a balance of the remaining assessment and the

additions to tax.     By March 6, 2007, the summons was withdrawn,

and petitioners’ request for a CDP hearing was forwarded to the

Office of Appeals.

     April to August 2007:    The Office of Appeals

        On April 2, 2007, the IRS recharacterized the ordinary

income as capital gain for 2001 and abated $5,961 of tax,

$1,341.23 of the late-filing addition to tax, $1,490.25 of the

late-payment addition to tax, and $2,414 of interest.     A letter

of abatement for that tax year was never issued to petitioners or

their C.P.A., who held a POA, nor was a notice of deficiency

issued after the abatement and reassessment.
                              - 12 -

     Also, in April 2007 petitioners’ case was assigned to

Settlement Officer Dan Van Grunsven (SO Van Grunsven), who

immediately contacted TAS in regard to a face-to-face hearing.

On April 30, 2007, TAS informed SO Van Grunsven that petitioners

would most likely want a face-to-face conference because they had

paid most of the 2001 tax liability on March 6, 2007.   That same

day SO Van Grunsven emailed RO Herman requesting copies of the

correspondence between the revenue officers and petitioners.

     By letter dated May 2, 2007, SO Van Grunsven informed

petitioners of the issues that would be addressed during the CDP

hearing and requested that petitioners call to schedule the

hearing.   By May 7, 2007, petitioners’ 2002 tax liability was

satisfied after respondent applied credits from 2001 and 2003.

On May 30, 2007, a TAS representative contacted SO Van Grunsven

notifying him that petitioner wife was undergoing cancer

treatment.   SO Van Grunsven responded to a TAS representative

that a final response letter would be issued, stating that

petitioners had to contact SO Van Grunsven by June 13, 2007.     SO

Van Grunsven sent the final response letter that day.

     On June 4, 2007, petitioner husband called SO Van Grunsven

and became upset, stating that he had received “incorrect or

slanderous” information from the Omaha collection department.

Petitioner husband further informed SO Van Grunsven of petitioner

wife’s cancer treatment and TAS’ assurance of no “further action
                              - 13 -

taken by Mr. Van Grunsven”.   SO Van Grunsven informed petitioner

husband that TAS never advised or made a request to defer the CDP

hearing, so he allowed petitioner husband to reschedule the

hearing.

     On July 11, 2007, petitioner husband called SO Van Grunsven

to raise the issue of the abatement of the additions to tax for

2001 and 2002, complained how the Omaha collection department had

taken actions to ruin his life, and requested that Ms. Hickey be

the sole TAS employee on the conference call.   Pursuant to this

conversation, petitioner husband and SO Van Grunsven decided that

the CDP hearing would be conducted by telephone.     However,

petitioner husband never scheduled the conference call.     By email

dated July 18, 2007, a TAS representative informed SO Van

Grunsven that a CDP hearing should be scheduled for July 25,

2007.   Petitioners failed to attend that meeting.    On July 26,

2007, a TAS representative informed SO Van Grunsven that

petitioner husband had taken pain medicine, causing him to

oversleep and therefore miss the July 25, 2007, meeting.     The CDP

hearing was rescheduled for August 16, 2007.

     At the hearing SO Van Grunsven allowed petitioners to appeal

the denial of the abatement of the additions to tax for 2001 and

2002, even though it was not properly in issue, with the hearing

on the abatement denial to be conducted separately from the CDP

hearing.   Petitioners also asserted that the revenue officers
                              - 14 -

failed to provide the accurate amount of their 2001 tax liability

and therefore petitioners had to obtain the amount from TAS.

During the hearing petitioners for the first time requested an

abatement of interest for 2001 and 2002.   Petitioners complained

that the amount of tax due the revenue officers provided for 2001

was overstated by $8,000.   Petitioners also requested that the

liens to collect the 2001 and 2002 tax liabilities be withdrawn

to allow petitioners to obtain a loan to pay the balance.

Petitioners added that they were facing economic hardship because

they did not have health insurance to defray the medical costs

incurred from petitioner wife’s cancer treatment and therefore

had used most of their funds to pay those bills.   Consequently,

SO Van Grunsven informed petitioners that he would decide only

the issues relating to the liens and levies used to collect the

2001 and 2002 tax liabilities and the abatement of interest for

those tax years.

     On August 27, 2007, Appeals Officer David L. Torrison (AO

Torrison) conducted a telephone hearing concerning petitioners’

second request for abatement of the additions to tax for 2001 and

2002.   AO Torrison issued a determination sustaining the denial

of that abatement.   AO Torrison reasoned that petitioners failed

to prove reasonable cause for their failure to timely file their

tax returns and pay their tax liabilities that would justify

abatement.
                                - 15 -

Notices of Determination

     Two notices of determination (notices) were issued on

November 6, 2007.    The notices stated that the 2002 tax liability

had been satisfied and the IRS would not proceed to collect such

a liability via lien or levy.    The first notice stated that

respondent would not withdraw the lien filed to collect the 2001

tax liability because all applicable laws and administrative

procedure were followed and the filing of the lien was not

premature.   According to the first notice, petitioners could not

raise the underlying liability as an issue.    That notice further

stated that petitioners failed to pay the tax due for the tax

year 2001 after receiving other notices demanding payment of the

2001 tax liability in a timely manner.    According to that notice,

the abatement of interest for 2001 and 2002 was denied because

the interest was primarily attributable to petitioners’ failure

to address the liabilities and not due to any unreasonable delays

or errors attributable to an IRS officer in performing either a

managerial or ministerial act.    The second notice stated that

respondent could collect by levy the tax petitioners owed for the

tax year 2001 and that all applicable laws and administrative

procedures had been satisfied.

Tax Court Petition

     On December 3, 2007, petitioners timely filed a petition

with this Court, stating:
                               - 16 -

          We are entitled to 100% relief from the claims by
          the IRS. * * * Specifically, IRS personnel refused
          to afford us proper administrative appeals not
          only in the additions to tax process, for which
          this unjust debt is claimed by the IRS, but failed
          to give due consideration to the way we as earners
          and therefore taxpayers make our living.

                             Discussion

I. Appeals Officer’s Determinations To Proceed With the
   Collection of Petitioners’ Tax Liability by Lien and Levy

     A. Collection Principles and Procedure

     In 1998 Congress enacted sections 6320 and 6330 to protect

certain taxpayer rights and to ensure that the IRS uniformly

follows those prescribed procedures.      See S. Rept. 105-174, at

67, 73 (1998), 1998-3 C.B. 537, 603, 609.      Section 6320 affords

taxpayers the right to a fair hearing upon the filing of a notice

of lien while section 6330 provides the same right when a notice

of levy has been issued.   This Court has jurisdiction under

section 6330(d)(1) to review the Appeals officer’s

determinations.

     A lien arises after a taxpayer’s tax liability has been

properly assessed and a notice and demand has been made.      Sec.

6321.   A taxpayer must request a CDP hearing within the

statutorily prescribed period.   Sec. 6320(a)(3), (b)(1).     The IRS

can also issue a notice to collect the tax owed by levy after the

tax liability has been properly assessed and a notice and demand

has been made.    Section 6330(c) governs the CDP hearing where a

taxpayer disputes the notice of a filing of a lien and the notice
                              - 17 -

of intent to collect tax by levy.    Pursuant to section

6330(c)(1), the Appeals officer must verify whether the

requirements of the applicable law or administrative procedure

have been met.

     B. Verification Under Section 6330(c)(1)

     This Court has authority to review an issue relating to the

verification requirement of section 6330(c)(1) regardless of

whether a taxpayer raised that issue at the CDP hearing.    See

Hoyle v. Commissioner, 131 T.C. 197, 200-203 (2008); Marlow v.

Commissioner, T.C. Memo. 2010-113.     When a dispute pertains to an

error of law, as it does here, the abuse of discretion standard

should be applied.   See Freije v. Commissioner, 125 T.C. 14, 36

(2005); Marlow v. Commissioner, supra.    For the reasons set forth

below, this Court holds that the Appeals officer’s determination

to proceed with collection of petitioners’ 2001 tax liability via

a lien and levy was an error of law and thus, an abuse of

discretion.

          1. Applicable Law

     Section 6501(a) generally provides that a valid assessment

of income tax liability may not be made more than 3 years after

the later of the date the tax return was filed or the due date of

the tax return.   However, section 6213 provides that for an

assessment of a deficiency to be valid a notice of deficiency

must first be mailed to a taxpayer at his last known address once
                              - 18 -

the Secretary determines a deficiency in respect of the tax owed.

See also Hoyle v. Commissioner, supra at 205.   Section 6211(a)

defines a deficiency as the amount by which the correct tax

imposed under the Code exceeds the amount of tax shown on the

return plus the amount of tax previously assessed less any

rebates.   Once a notice of deficiency is issued and a taxpayer

timely files a petition with this Court, the Tax Court has

jurisdiction over the redetermination of the deficiency.    Sec.

6213(a).

     Where an assessment arises from a mathematical or clerical

error appearing on the return, no notice of deficiency is

required under section 6213(b).   However, with an exception not

relevant here, a notice of mathematical error generally should be

issued notifying the taxpayer that, on account of a mathematical

or clerical error appearing on the return, an amount of tax in

excess of that shown on the return is due and that an assessment

of the tax has been or will be made on the basis of what would

have been the correct amount of tax but for the mathematical or

clerical error.   That notice must set forth the error alleged and

an explanation thereof.   Sec. 6213(b)(1); see also Ron Lykins,

Inc. v. Commissioner, 133 T.C. 87, 98 (2009).   Section 6213(b)(1)

must be read in conjunction with section 6213(g)(2), which

specifies different types of mathematical errors, including an

incorrect use of any table the IRS provides with respect to any
                                - 19 -

return if such incorrect use is apparent from the existence of

other information on the return, or an omission of a correct tax

identification number as required under section 151 for a

personal exemption deduction.    Under section 6213(b) this notice

of mathematical error is not considered a notice of deficiency,

and therefore a taxpayer who receives such a notice cannot file a

petition with the Tax Court.    Nonetheless, within 60 days after a

taxpayer is sent a mathematical error notice the taxpayer may

request an abatement of the tax liability attributable to the

mathematical error and the Secretary shall abate the assessment.

Sec. 6213(b)(2).   A reassessment of the tax with respect to the

abatement shall be subject to the deficiency procedure.     Id.   No

levy or proceeding for the collection of such an assessment shall

be made, begun, or prosecuted during the period in which the

assessment may be abated.   Sec. 6213(b)(2)(B).   If a petition is

timely filed, the Tax Court has jurisdiction over the

redetermination of that deficiency arising from that

reassessment.   Sec. 6213(b)(2)(A).

          2. Parties’ Contentions

     Petitioners contend that the 2001 assessment was invalid and

therefore respondent improperly verified the applicable law.

Petitioners argue that respondent failed to issue a notice of

deficiency notwithstanding that petitioners’ 2001 tax liability

constituted a deficiency under section 6211.
                              - 20 -

      Although respondent concedes that no notice of deficiency

was issued, respondent argues that petitioners’ tax liability as

determined does not constitute a deficiency and arose out of the

mathematical errors on the return.     This Court disagrees.

           3. Validity of Assessment

     This Court has no quarrel over the portion of the assessment

attributable to the tax petitioners reported due on their 2001

tax return.   However, this Court holds the following:    (1) The

portion of the assessment attributable to respondent’s

mischaracterization of the capital gain is not at issue,

nothwithstanding the fact that the lien was filed to collect the

entire amount of petitioners’ tax liability, and (2) the other

portion attributable to petitioners’ omission of the Social

Security number needed for the dependency exemption deduction is

invalid.

      Respondent’s mischaracterization of petitioners’ capital

gain as ordinary income is not a mathematical error under section

6213(g).   This adjustment falls squarely within the definition of

deficiency under section 6211(a) and required respondent to issue

a notice of deficiency.   Under section 6213 the issuance of the

notice of deficiency would have afforded petitioners the right to

have an opportunity to petition for redetermination of the

deficiency in this Court.   See Freije v. Commissioner, 125 T.C.
                              - 21 -

at 35-36.   However, this portion of petitioners’ 2001 tax

liability is no longer at issue because respondent has abated it.

     The portion of the assessment attributable to the omission

of the dependent’s Social Security number is invalid.

Although the omission of the dependent’s Social Security number

needed to claim a dependency exemption deduction is considered a

mathematical error under section 6213(g)(2), Letter 474C issued

to petitioners was improper on its face under section 6213(b)(1).

That letter did not notify petitioners that the amount of tax due

in excess of the amount of tax petitioners reported on their Form

1040X and their adjusted total tax liability were based on a

mathematical error, did not set forth the specific error alleged,

and did not adequately explain such an error.    Furthermore,

contrary to the fact that petitioners’ representative timely

challenged the assessment and requested an abatement of the

assessment, respondent failed to follow the procedure under

section 6213(b)(2) by instituting the collection of the

assessment via levy while the abatement process relating to “the

supposed mathematical errors” was occurring.    Respondent’s

failures derogate from petitioners’ rights under section 6213,

thereby compelling this Court to void the portion of the

assessment attributable to the omission of the dependent’s Social

Security number.   See Freije v. Commissioner, supra at 35-36.
                               - 22 -

II. Abatement of Interest

     Petitioners requested abatement of the interest accrued from

the due dates of their 2001 and 2002 tax returns until the

assessment of their tax.    Under section 6404(e)(1), the

Commissioner may abate part or all of an assessment of interest

on any payment of income, gift, estate, and certain excise taxes

to the extent that any error or delay in payment is attributable

to erroneous or dilatory performance of a ministerial or

managerial act by an officer or employee of the Commissioner.    A

taxpayer is entitled to this relief if no significant aspect of

such an error or delay can be attributed to the taxpayer

involved.   Id.   A taxpayer can make such a request for abatement

of interest only after the IRS has contacted him in writing with

respect to such a deficiency or payment.    Id.

     The term “ministerial act” means a procedural or mechanical

act that does not involve the exercise of judgment or discretion

and that occurs during the processing of a taxpayer’s case after

all prerequisites to the act, such as conferences and review by

supervisors, have taken place.    Sec. 301.6404-2(b)(2), Proced. &

Admin. Regs.   In contrast, the term “managerial act” means an

administrative act that occurs during the processing of a

taxpayer’s case involving the temporary or permanent loss of

records or the exercise of judgment or discretion relating to

management of personnel.    Sec. 301.6404-2(b)(1), Proced. & Admin.
                                  - 23 -

Regs.       Any decision concerning the proper application of Federal

tax law, State law, or administrative procedure cannot be

considered a managerial or a ministerial act.      Sec. 301.6404-

2(b), Proced. & Admin. Regs.

     Congress did not intend section 6404(e) to be used routinely

to avoid payment of interest but intended its application where

the 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.

This Court has jurisdiction under section 6404(h) to review

respondent’s decision as to whether petitioners are entitled to

an abatement of interest for the tax year 2001.5      To prevail a

taxpayer must prove that the Commissioner abused his discretion

by exercising it arbitrarily, capriciously, or without sound

basis of fact or law.       Woodral v. Commissioner, 112 T.C. 19, 23

(1999).       In its review the Court must give due deference to the

Commissioner’s determination.       See id.

        There is no basis on which to find that any unreasonable

error or delay in petitioners’ payments of interest for 2001 and

2002 is attributable to an officer or employee of respondent

being erroneous or dilatory in performing a managerial or

ministerial act.       It is undisputed that petitioners filed their


        5
      The Court does not have jurisdiction to review respondent’s
determination for abatement of the additions to tax. See sec.
6404(f).
                              - 24 -

2001 tax return approximately 3 years and 2 months late and their

2002 tax return approximately 2 years and 4 months late.    They

did not submit any payment when they filed those returns.    Even

when petitioners amended their 2001 return on November 5, 2007,

they still did not submit any payment.   Petitioners knew of the

actual self-assessed amounts of tax liabilities for those tax

years but chose not to pay.   Petitioners and their C.P.A. could

have on their own calculated the exact amount of the tax and the

interest for 2001 and 2002.   More specifically, petitioners did

not wait for the revenue officers to calculate the interest they

owed for the tax year 2001 and quickly proceeded to pay most of

the liability, including the interest, without providing the

revenue officers an opportunity to do so.

     Petitioners also contend that the invalid 2001 assessment

would be a sufficient reason for abatement of interest for that

year.   Nonetheless, the improper assessment of petitioners’ tax

liability would be considered neither a managerial nor a

ministerial act under section 6404(e) because any assessment of

tax liability would require the application of Federal law.

     Petitioners further argue that an error was attributable to

RO Barber’s failing to notify petitioners of their rights to

appeal her decision.   Petitioners’ argument is baseless because

RO Barber properly sent a notice letter on October 30, 2006.

Petitioners also argue that the review of RO Barber’s decision
                              - 25 -

was delayed due to RO Smith’s “unavailability and * * * [failure]

to attend meetings he scheduled”.   The record does not support

petitioners’ assertions but indicates that petitioners

contributed significantly to the delay in meeting RO Smith.

Petitioner husband was the one who misplaced RO Smith’s telephone

number, he and his C.P.A. would not wait for RO Smith’s arrival

after RO Smith explained his tardiness was based on a prior

commitment, and petitioner husband himself missed a scheduled

meeting.   Furthermore, even if RO Smith failed to attend those

meetings, the failure did not cause unreasonable delay in payment

of the tax since it took only 1 month for RO Smith to review RO

Barber’s decision and inform petitioner husband of his decision.

     For reasons stated, this Court holds that the settlement

officer did not abuse his discretion by denying petitioners’

request for abatement of interest under section 6404(e).

                            Conclusion

     Although petitioners seek equitable relief from the interest

accrued from the due date of the 2001 tax return until the

payment of their tax liability, this Court is a court of limited

jurisdiction where no such remedy is available.   See Commissioner

v. McCoy, 484 U.S. 3, 7 (1987).   Thus, the Court holds that

respondent did not abuse his discretion when he denied

petitioners’ request for abatement of interest under section

6404(e).   This Court further holds that the Appeals Officer
                             - 26 -

abused his discretion in issuing the notices of determination to

proceed with the collection of the 2001 tax liability via lien

and levy, because portions of the assessment attributable to the

mathematical error on petitioners’ 2001 tax return were invalid

under section 6213.

     To reflect the foregoing,



                                        An appropriate decision

                                   will be entered.
