                        T.C. Memo. 2002-205



                      UNITED STATES TAX COURT



                BILLYE S. CANNON, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13033-00.             Filed August 15, 2002.



     Billye S. Cannon, pro se.

     Charles Pillitteri, for respondent.


             MEMORANDUM FINDINGS OF FACT AND OPINION


     DAWSON, Judge:   This case was assigned to Special Trial

Judge Lewis R. Carluzzo pursuant to section 7443A(b)(5) and Rules

180, 181, and 183.1   The Court agrees with and adopts the opinion



     1
        Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended and in effect at the
time that the petition was filed. Rule references are to the Tax
Court Rules of Practice and Procedure.
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of the Special Trial Judge, which is set forth below.

               OPINION OF THE SPECIAL TRIAL JUDGE

     CARLUZZO, Special Trial Judge: In this case, filed pursuant

to section 6404(i),2 petitioner claims that respondent’s failure

to abate interest with respect to her 1990 Federal income tax

liability is an abuse of discretion.

                        FINDINGS OF FACT

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

the time that the petition was filed, petitioner resided in

Biloxi, Mississippi, and her net worth did not exceed $2 million.

     Petitioner filed a timely 1990 Federal income tax return.

Attached to that return are several Forms W-2, Wage and Tax

Statement, from the following employers in the following amounts:

             Employer                      Amount

          Solo Serve Corp.                 $  530
          Wolf Camera Inc.                  1,020
          PCA National, Inc.                1,409
          Temporaries, Inc.                 1,477
            Total                           4,436

     Petitioner also worked as a paralegal for the law firm of

Smith, Currie & Hancock (the law firm) during 1990.   At the time

she filed her return, she could not locate any yearend earnings

statements from the law firm, so she estimated those earnings to



     2
        After the petition was filed in this case, sec. 6404(i)
was redesignated sec. 6404(h) by the Victims of Terrorism Tax
Relief Act of 2001, Pub. L. 107-134, sec. 112(d)(1)(B), (f), 115
Stat. 2434-2435.
                               - 3 -

be $11,767, as indicated by a calculator tape attached to her

return.

     The $16,204 reported as “wages, salaries, tips, etc.” on

petitioner’s 1990 return is the sum of the wages reported on the

Forms W-2 listed above, plus petitioner’s estimate of her

earnings from the law firm.   Taking into account unchallenged

deductions, her 1990 return lists her Federal income tax

liability as $1,639.   Federal income tax withholdings of $449 are

applied against this liability resulting in a Federal income tax

of $1,190 to be paid with her return.   No income tax payment,

however, was submitted with petitioner’s return.    Statements

contained in a letter attached to petitioner’s 1990 return

suggest that petitioner might have been experiencing financial

difficulties at the time her 1990 return was filed.

     On May 20, 1991, respondent assessed the income tax

liability of $1,639 reported on petitioner’s 1990 return, plus a

late payment penalty of $11.90, and interest of $11.47.    The late

payment penalty and interest take into account the Federal income

tax withholdings reported on petitioner’s return.

     As it turned out, petitioner underestimated and

underreported her 1990 earnings from the law firm.    On November

27, 1992, respondent, reacting to information received from the

law firm, sent petitioner a notice of proposed changes to her

1990 return.   In that notice, respondent proposed to increase
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petitioner’s income by $12,846, the amount reported on a Form

1099-Misc., Nonemployee Compensation, issued to petitioner by the

law firm.   Respondent further proposed that the increased income

constituted net earnings from self-employment.

     By letter dated December 22, 1992, petitioner disagreed with

the adjustments proposed by respondent.   In that letter

petitioner indicated that the income from the law firm was “still

in dispute” and challenged respondent’s claim that she was self-

employed during 1990.   Attached to her letter is a copy of a Form

SS-8, Information for Use in Determining Whether a Worker is an

Employee for Federal Employment Taxes and Income Tax Withholding.

     No deficiency has been determined with respect to

petitioner’s 1990 Federal income tax.   Although the timing is not

entirely clear, at some point after receipt of petitioner’s

December 22, 1992, letter, respondent recognized that $11,767 of

the $12,846 reported on the above-mentioned Form 1099 had been

included in the wages reported on petitioner’s 1990 return.

After further examination, respondent also accepted petitioner’s

claim that she was an employee of the law firm during 1990 and

therefore not liable for any self-employment tax.   Petitioner was

notified of respondent’s decision as to her employment status by

letter dated May 4, 1993.
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     Thereafter, in a Form 1040X, Amended U.S. Individual Income

Tax Return, dated April 11, 1994, petitioner reported an increase

in taxable income of $1,088 (which includes the difference

between her actual and estimated earnings from the law firm) and

a resultant additional income tax liability of $157.    No payment

was submitted with the amended return.

     On June 30, 1999, petitioner filed a Form 843, Claim for

Refund and Request for Abatement, requesting abatement of

interest on her 1990 Federal income tax liability.    Respondent

concluded that the delay in payment of petitioner’s 1990 Federal

income tax liability was not attributable to a ministerial error

on respondent’s part and therefore denied petitioner’s claim in a

notice of final determination dated July 25, 2000.

                                OPINION

     Subject to exceptions not relevant here, interest on an

underpayment of income tax begins to accrue on the due date of

the return for such tax and continues to accrue, compounding

daily, until payment is made.    Secs. 6601(a), 6622(a).

     The Commissioner may abate the assessment of interest with

respect to a taxpayer’s Federal income tax liability if: (1) The

delay in a payment of such tax is attributable to an official or

employee of the Internal Revenue Service being erroneous or

dilatory in performing a ministerial act after the Internal

Revenue Service has contacted the taxpayer in writing with
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respect to the tax; and (2) no significant aspect of such delay

can be attributed to the taxpayer involved.    Sec. 6404(e)(1).3

In accordance with the provisions of section 6404(i), a taxpayer

whose claim for abatement under section 6404(e) has been denied

may petition this Court for a determination whether the

Commissioner’s failure to abate interest was an abuse of

discretion.

     In this case petitioner seeks abatement of interest with

respect to a Federal income tax liability assessed pursuant to

amounts reported on her 1990 original and amended returns.

Generally, the relief provided by section 6404 is not available

under those circumstances.   As noted in the legislative history

of that section, “if a taxpayer files a return but does not pay

the taxes due, * * * [section 6404] would not permit abatement of

this interest regardless of how long the IRS took to contact the

taxpayer and request payment.”    S. Rept. 99-313 (1985), 1986-3

C.B. (Vol. 3) 1, 208; see also Smith v. Commissioner, T.C. Memo.

2002-1.

     Moreover, petitioner has failed to demonstrate that the


     3
        In 1996, sec. 6404(e) was amended by sec. 301 of the
Taxpayer Bill of Rights 2, Pub. L. 104-168, 110 Stat. 1457
(1996), to permit the Secretary to abate interest with respect to
“unreasonable” error or delay resulting from “managerial” and
ministerial acts. This amendment, however, applies to interest
accruing with respect to deficiencies or payments for tax years
beginning after July 30, 1996. This case involves petitioner’s
1990 tax year; therefore, the amendment is inapplicable here.
Woodral v. Commissioner, 112 T.C. 19, 25 n.8 (1999).
                               - 7 -

delay in payment of her 1990 Federal income tax liability is

attributable to anything other than her own conduct.   She

certainly has not demonstrated that the delay is attributable to

an official or employee of respondent being erroneous or dilatory

in performing a ministerial act.   To the extent that petitioner

suggests that the relevant “delay” is measured by the time it

took for respondent to resolve the dispute involving her

employment status, we note that the determination of employee

status involves the exercise of judgment and the proper

application of Federal tax and common law.   Sec. 3121(d); Ewens

and Miller, Inc. v. Commissioner, 117 T.C. 263 (2001).     As such,

it is not a ministerial act and cannot provide the requisite

basis for abating interest under section 6404(e).    Sec. 301.6404-

2T(b)(1), Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163

(Aug. 13, 1987).

     As we view the matter, the interest that accrued on

petitioner’s 1990 Federal income tax as a result of any delay in

the payment of that tax is, simply put, attributable to her

failure, for financial or other undisclosed reasons, to pay such

tax when due.   Consequently, petitioner is not entitled to an

abatement of interest under section 6404 with respect to her 1990

Federal income tax.   It follows that respondent’s failure to

abate such interest is not an abuse of discretion.
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To reflect the foregoing,

                                        Decision will be

                                    entered for respondent.
