                         T.C. Memo. 2003-228



                       UNITED STATES TAX COURT



         JOHN D. AND KIM M. HINTERLEITNER, Petitioners v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 9562-02.              Filed July 31, 2003.



     John Harrison Wegge, for petitioners.1

     Donna L. Pahl, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     LARO,   Judge:   Petitioners petitioned the Court under

section 6404(h) to review the Commissioner’s determination not to

abate interest for 1995 through 1997.   Following respondent’s



     1
      John D. Hinterleitner (Mr. Hinterleitner) and Kim M.
Hinterleitner petitioned the Court on July 15, 2002. John
Harrison Wegge entered his appearance on May 9, 2003, at trial.
                                   - 2 -

concession that the Commissioner will abate all interest accruing

after May 31, 2000, we determine whether the Commissioner abused

his discretion under section 6404 by not abating more of the

interest.    We hold he did not.    Unless otherwise indicated,

section references are to the applicable versions of the Internal

Revenue Code.    Rule references are to the Tax Court Rules of

Practice and Procedure.

                          FINDINGS OF FACT

     Most facts were stipulated.      We incorporate herein by this

reference the parties’ stipulation of facts and the exhibits

submitted therewith.    We find the stipulated facts accordingly.

Petitioners resided in Phillips Ranch, California, when their

petition was filed with the Court.

     Petitioners filed their 1995 Form 1040, U.S. Individual

Income Tax Return, on October 21, 1996, claiming an overpayment

of $286.    A notice of deficiency for 1995 was issued to them

listing a deficiency of $11,073 (plus a penalty).      They did not

petition the Court with respect to this notice.      On April 13,

1998, the Commissioner assessed the deficiency, penalties, and

interest.    On August 31, 1998, a Notice of Federal Tax Lien

(NFTL) was filed with respect to this assessment.

     Petitioners filed their 1996 Form 1040 on October 16, 1997,

with a balance due of $4,732.      They did not submit this balance

with their return.    On November 17, 1997, the Commissioner
                                - 3 -

assessed petitioners’ unpaid liability for 1996 (including a

penalty and interest).   An NFTL was filed on August 31, 1998,

with respect to this assessment.

     Petitioners filed their 1997 Form 1040 on April 15, 1998,

with a balance due of $4,395.   Petitioners did not submit this

balance with their return.   On May 18, 1998, the Commissioner

assessed petitioners’ unpaid tax liability for 1997 (including

penalties and interest).   An NFTL was filed on November 24, 1998,

with respect to this assessment.

     Mr. Hinterleitner had unpaid employment taxes for 1994.

These taxes (including interest) were assessed on February 3,

1997.   An NFTL was filed on July 29, 1998, with respect to this

assessment.

     In 1999, petitioners entered into an installment agreement

to make payments on their 1995 through 1997 income tax

liabilities and on Mr. Hinterleitner’s employment tax liabilities

for 1994.

     In June 2000, petitioners wanted to refinance some real

property but were unable to do so without addressing the

outstanding NFTLs.   Petitioners met with Revenue Agent Ruben

Villareal (Mr. Villareal) on June 1, 2000, to discuss the

refinancing and NFTLs.   Pursuant to Mr. Villareal’s suggestion,

petitioners filed with the Commissioner Forms 843, Claims for

Refund and Request for Abatement, for 1995, 1996, and 1997.
                              - 4 -

These forms were signed by petitioners on June 12, 2000, and

received by the Commissioner on July 12, 2001.2   On April 4,

2002, respondent issued a Notice of Final Determination

disallowing these claims.

                             OPINION

     As applicable to 1995 and 1996, section 6404(e)(1) permits

the Commissioner to abate the assessment of interest on:   (1) Any

deficiency attributable to any error or delay by an officer or

employee of the Internal Revenue Service in performing a

ministerial act, or (2) any payment of any tax described in

section 6212(a) to the extent that any error or delay in payment

is attributable to the officer’s or employee’s being erroneous or

dilatory in performing a ministerial act.   As applicable to 1997,

section 6404(e) permits the Commissioner to abate interest with

respect to any “unreasonable” error or delay resulting from

managerial or ministerial acts.   See sec. 301(a)(1) and (2) of

the Taxpayer Bill of Rights 2, Pub. L. 104-168, 110 Stat. 1457

(1996), effective for interest accruing with respect to

deficiencies for taxable years beginning after July 30, 1996.

     The temporary regulations interpreting section 6404(e)

define a “ministerial act” as “a procedural or mechanical act

that does not involve the exercise of judgment or discretion, and



     2
       The record does not explain why these forms were received
by the Commissioner 13 months after petitioners signed them.
                               - 5 -

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. 301.6404-2T(b)(1),

Temporary Proced. & Admin. Regs., 52 Fed. Reg. 30163 (Aug. 13,

1987).   The final regulations under section 6404(e), which were

issued on December 18, 1998, generally effective with respect to

interest accruing on deficiencies or payments of tax for taxable

years beginning after July 30, 1996, provide the same definition.

Sec. 301.6404-2, Proced. & Admin. Regs.   The final regulations

note that a managerial act is “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. Regs.

     We review for abuse of discretion the Commissioner’s

determination denying an abatement of interest.   See sec.

6404(i); Lee v. Commissioner, 113 T.C. 145, 149 (1999).      We find

no abuse of discretion here.   Petitioners have not established

any unreasonable error or delay on behalf of the Commissioner in

performing a ministerial or managerial act that occurred before

June 1, 2000.   In fact, the record indicates that the interest

accruals before June 1, 2000, were merely the result of

petitioners’ failure to pay the entire balance owed, and not the
                              - 6 -

result of an employee of the IRS being erroneous or dilatory in

performing a ministerial or managerial act.

     Given that petitioners have not established that respondent

abused his discretion as to his determination of the disputed

interest, we sustain that determination.    To reflect respondent’s

concession,


                                           Decision will be entered

                                      under Rule 155.
