                  T.C. Memo. 2004-69



                UNITED STATES TAX COURT



 JOE NATHAN WRIGHT and LOLA H. WRIGHT, Petitioners v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 8200-02.             Filed March 18, 2004.



     Ps submitted multiple offers in compromise with
respect to their reported but unpaid Federal income tax
liabilities for 1993 and 1994. R did not accept any of
Ps’ offers. Ps requested abatement of interest under
sec. 6404(e), I.R.C., on the ground that R unreasonably
delayed the processing of their offers in compromise.
R rejected Ps’ request for interest abatement.

     Held: Ps have failed to establish that any delay
in their payment of their 1993 and 1994 tax liabilities
is attributable to any action or inaction on the part
of IRS personnel in processing Ps’ offers in
compromise; therefore, interest is not abatable under
sec. 6404(e), I.R.C., and R did not abuse his
discretion in rejecting Ps’ request for abatement.
                                - 2 -


     Joe Nathan Wright and Lola H. Wright, pro sese.

     Alvin A. Ohm, for respondent.


               MEMORANDUM FINDINGS OF FACT AND OPINION

     HALPERN, Judge:    This case is before the Court for review of

respondent’s failure to abate interest.      Unless otherwise noted,

all section references are to the Internal Revenue Code of 1986,

as amended.

                          FINDINGS OF FACT

     Some facts are stipulated and are so found.     The stipulation

of facts, with accompanying exhibits, is incorporated herein by

this reference.   At the time they filed the petition, petitioners

resided in Richardson, Texas.

Petitioners’ 1993 and 1994 Federal Income Tax Returns

     Petitioners timely filed Federal income tax returns for

their 1993 and 1994 taxable (calendar) years (the 1993 return and

the 1994 return, respectively).   On the 1993 return, petitioners

reported tax of $66,451 and prior payments of $2,000.

Petitioners made an additional $2,000 payment when they filed the

1993 return.   On the 1994 return, petitioners reported tax of

$60,325 and prior payments of $2,000.   Petitioners made an

additional $1,000 payment when they filed the 1994 return.

Petitioners’ Offers in Compromise

     On or before September 18, 1995, respondent received an

offer in compromise from petitioners dated August 30, 1995,
                               - 3 -

regarding their 1993 and 1994 tax liabilities.   By that time,

petitioners had made additional payments of $20,000 in respect of

their 1993 tax liability and $500 in respect of their 1994 tax

liability.   Respondent rejected petitioners’ initial offer in

compromise in March 1996.   During the period from March 1996 to

October 1998, petitioners submitted several additional and

revised offers in compromise, none of which respondent accepted.1

During that same period, petitioners made aggregate payments of

$4,500 in respect of their 1993 tax liability and received an

additional $1,476 credit with respect thereto.

Petitioners’ Requests for Abatement

     In a letter addressed to Revenue Officer Melvin Chappell

dated September 13, 1997, petitioners requested abatement of

additions to tax asserted by respondent with respect to their

1993 and 1994 taxable years.

     On October 8, 1998, petitioners filed separate Forms 843,

Claim for Refund and Request for Abatement, with respect to their

1993 and 1994 taxable years.   On the Forms 843, petitioners

requested abatement of both interest and additions to tax.     In a

letter submitted with the Forms 843, petitioners claimed that

such interest and additions to tax resulted from unreasonable



     1
        Petitioners maintain that they submitted a total of five
offers in compromise. Respondent maintains that petitioners
submitted three offers in compromise and two revised or amended
offers. For the sake of clarity, we treat petitioners’
submissions as five separate offers in compromise.
                               - 4 -

delays on the part of the Internal Revenue Service (IRS) in

processing their offers in compromise.2    By a notice of final

determination dated October 31, 2001, respondent rejected in full

petitioners’ 1998 requests for abatement.

Filings and Proceedings in This Court

      Petitioners timely petitioned this Court for review of

respondent’s failure to abate interest.     In the petition,

petitioners also requested the Court to review respondent’s

failure to abate additions to tax.     By order dated August 15,

2002, the Court granted respondent’s motion to dismiss for lack

of jurisdiction and to strike insofar as the petition relates to

respondent’s failure to abate additions to tax.     The Court

conducted a trial with respect to the interest abatement issue at

its trial session in Dallas, Texas, on February 25, 2003.

                              OPINION

I.   Law

      A.   Section 6404

      As applicable to the years for which petitioners seek

relief, section 6404(e)(1) provided as follows:3


      2
        Petitioners also complained of erroneous advice provided
by the Internal Revenue Service that resulted in an increased tax
liability for their 1993 taxable year. At trial, petitioners did
not rely on that allegation as a ground for interest abatement.
      3
        Congress amended sec. 6404(e)(1) in 1996 to apply to
“unreasonable” errors and delays and to “managerial” as well as
ministerial acts. Taxpayer Bill of Rights 2, Pub. L. 104-168,
sec. 301(a), 110 Stat. 1457 (1996). Those amendments apply to
                                                   (continued...)
                               - 5 -

          SEC. 6404(e). Assessments of Interest
     Attributable to 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 error or delay
              by an officer or employee of the
              Internal Revenue Service (acting in his
              official capacity) in performing a
              ministerial act, or

                  (B) any payment of any tax described
              in section 6212(a) to the extent that
              any error or delay in such payment is
              attributable to such officer or
              employee being erroneous or dilatory in
              performing a ministerial 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.

Section 6404(h) authorizes this Court to determine whether the

Secretary’s failure to abate interest under section 6404(e)(1)

was an abuse of discretion and, if the Court so determines, to

order an abatement.   “In order to prevail, the taxpayer must

demonstrate that in not abating interest the Secretary exercised




     3
      (...continued)
interest accruing with respect to deficiencies and payments for
tax years beginning after July 30, 1996. Id. sec. 301(c).
Hereafter, all references to sec. 6404(e)(1) will be to that
section prior to its amendment by the Taxpayer Bill of Rights 2.
                                 - 6 -

his discretion arbitrarily, capriciously, or without sound basis

in fact or law.”    Lee v. Commissioner, 113 T.C. 145, 149 (1999).

      B.   Application to This Case

      As noted above, petitioners reported the tax amounts that

are generating the interest at issue.    Accordingly, there are no

deficiencies involved in this case, see sec. 6211(a), and

petitioners can seek interest abatement only pursuant to section

6404(e)(1)(B).    Respondent is authorized to abate interest under

section 6404(e)(1)(B) in this case only to the extent any delay

in petitioners’ payment of their 1993 and 1994 tax liabilities is

attributable to the erroneous or dilatory performance of a

ministerial act by an officer or employee of the IRS.

II.   Petitioners’ Allegations

      At trial, petitioners identified numerous instances of what

they allege to be erroneous or dilatory performance of

ministerial acts by IRS employees during the processing of their

offers in compromise and requests for abatement.   Specifically,

petitioners allege that various IRS personnel: (1) Failed to

notify petitioners of the rejection of their second offer in

compromise, (2) ignored petitioners’ request for a report listing

the factors underlying the rejection of their third offer in

compromise, (3) temporarily refused to grant petitioners a

requested Appeals conference following the rejection of their

third offer in compromise, (4) directed petitioners to submit
                                  - 7 -

their fourth offer in compromise by facsimile letter, only to

inform them several months later that such offer was not in

proper form and therefore could not be considered, (5) took 6

months to deliver copies of requested transcripts of account,

(6) failed to provide petitioners a copy of their “master file”,

as requested in their fourth offer in compromise, (7) did not

accept petitioners’ proposal for an installment agreement, which

called for a monthly payment based on petitioners’ excess monthly

income, as previously determined by IRS personnel, (8) failed to

respond to petitioners’ 1997 letter requesting abatement of

additions to tax, (9) failed to grant petitioners a requested

Appeals conference following the rejection of their fifth offer

in compromise, and (10) ignored petitioners’ requests for copies

of their transcripts of account and an Appeals conference

following the rejection of their 1998 request for abatement of

interest and additions to tax.

III.    Analysis

       A.    Allegations 8-10

       We begin with petitioners’ allegations numbered 8, 9, and 10

above.      Petitioners did not raise any of those allegations in

their request for interest abatement; indeed, allegations 9 and

10 involve acts and omissions that could not have predated

petitioners’ filing of that request.      Furthermore, the record is

devoid of any evidence that petitioners subsequently advised
                                 - 8 -

respondent, during his consideration of their request, that they

were relying on allegations 8, 9, and 10 as additional grounds

for relief.   As we are charged with determining whether

respondent abused his discretion in denying petitioners’ request

for interest abatement, allegations petitioners failed to bring

to respondent’s attention during that consideration process

generally cannot be relevant to our inquiry.   See Stewart v.

Commissioner, T.C. Memo. 2003-106 n.5; cf. Magana v.

Commissioner, 118 T.C. 488, 493 (2002) (“it would be anomalous

and improper for us to conclude that respondent’s Appeals Office

abused its discretion under section 6330(c)(3) [collection due

process determination] in failing to grant relief, or in failing

to consider arguments, issues, or other matter not raised by

taxpayers or not otherwise brought to the attention of

respondent’s Appeals Office”).    Accordingly, we need not further

evaluate those allegations.

     B.   Allegations 1-7

     Accepting arguendo the veracity of the allegations numbered

1-7 above and that such allegations involve “ministerial acts”

for purposes of section 6404(e), we conclude that petitioners

have failed to demonstrate that respondent abused his discretion

in refusing to abate interest with respect to petitioners’ 1993

and 1994 tax liabilities.   We reach that conclusion primarily

because petitioners have failed to establish that they were
                               - 9 -

delayed in making any payment of those tax liabilities on account

of an act or omission of IRS personnel.   With respect to interest

occasioned by a late payment of tax, the essence of section

6404(e)(1)(B) is that the Secretary may abate that interest if,

but for some act or omission of IRS personnel in performing a

ministerial act, such payment probably would have been made

sooner.   If, notwithstanding that act or omission, no earlier

payment would have been made, then no abatement is called for.

We have applied that principle by upholding the Secretary’s

discretion not to abate interest where the taxpayer failed to

establish that he had the financial resources to satisfy the tax

liability when the claimed error occurred.   See Harbaugh v.

Commissioner, T.C. Memo. 2003-316; Spurgin v. Commissioner, T.C.

Memo. 2001-290; Hawksley v. Commissioner, T.C. Memo. 2000-354.

     Certainly, petitioners cannot claim that the IRS caused any

delay in the payments contemplated in their various offers;

petitioners could have commenced those payments at any time.4

Regarding the balance of their 1993 and 1994 tax liabilities,

petitioners have made no showing that they would have (or could

have) paid those amounts sooner if respondent had rejected their

offers sooner.   Among petitioners’ proposed findings of fact are

proposed findings that they had net assets of about $20,000


     4
        As noted earlier, petitioners indeed made a series of
nine $500 payments in 1998 prior to submitting their final offer
in compromise.
                                - 10 -

(including only $5,000 in cash) on each of March 18 and July 19,

1996, and $8,600 (including only $2,100 in cash) on October 8,

1998.     Apparently, petitioners did not even have enough cash to

pay the amounts they had offered in compromise.     Indeed, there is

no evidence that petitioners ever paid the balances of their 1993

and 1994 tax liabilities.     Petitioners have obviously delayed

paying their 1993 and 1994 tax liabilities in full, but the fault

lies with them, not with respondent.

IV.   Conclusion

        Because the interest at issue is not abatable under section

6404(e), respondent necessarily did not abuse his discretion in

rejecting petitioners’ request for abatement thereof.

        To reflect the foregoing,


                                           Decision will be entered

                                      for respondent.
