                       T.C. Memo. 2003-312



                     UNITED STATES TAX COURT



          EDWARD H. AND ANNE G. HARRELL, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent*



     Docket No. 4063-02L.            Filed November 12, 2003.



          R filed a motion for reconsideration of our
     opinion in Harrell v. Commissioner, T.C. Memo. 2003-
     271, arguing that our disposition of this case
     constitutes both substantial error and unusual
     circumstances. R claims that the language in our
     opinion was ambiguous as to whether respondent’s
     decision to issue the notice of determination was an
     abuse of discretion.

          Held: We reaffirm our holding in Harrell v.
     Commissioner, supra, that R’s decision to issue the
     notice of determination was an abuse of discretion.
     R’s motion for reconsideration is denied.




     *
      This opinion supplements our opinion in Harrell v.
Commissioner, T.C. Memo. 2003-271.
                                  - 2 -

      Guy C. Crowgey, for petitioners.

      Mary Ann Waters, for respondent.



                     SUPPLEMENTAL MEMORANDUM OPINION


      NIMS, Judge:    Respondent moves the Court for reconsideration

of its Memorandum Opinion at T.C. Memo. 2003-271.      See Rule 161.

Unless otherwise indicated, all section references are to the

Internal Revenue Code in effect at all relevant times, and all

Rule references are to the Tax Court Rules of Practice and

Procedure.

      In Harrell v. Commissioner, T.C. Memo. 2003-271, we held

that Appeals Officer Martin (AO Martin) was an impartial officer

at the time she conducted the section 6330 hearing at issue in

this case.   We further held that AO Martin did not abuse her

discretion in determining that the communications between Appeals

Officer Barbara Petrohovich and Deborah Stanley, an attorney in

respondent’s counsel’s office, did not violate petitioners’

rights.   We also remanded this case to the Commissioner for the

sole purpose of permitting petitioners to reconsider their

rejection of AO Martin’s suggested installment agreement, which

was based in part on petitioners’ required concession of their

1991, 1992, and 1993 tax liabilities, or to offer another

collection alternative pursuant to section 6330(c)(2)(A)(iii).

Id.
                               - 3 -

     In his motion to reconsider our decision in Harrell,

respondent argues that the “Court’s disposition of this case

constitutes both substantial error and unusual circumstances.”

                            Background

     We adopt the findings of fact in our prior memorandum

opinion, Harrell v. Commissioner, supra.   For convenience we

repeat the facts necessary to elucidate the ensuing discussion.

     Respondent issued to petitioners a “NOTICE OF DETERMINATION

CONCERNING COLLECTION ACTION(S) UNDER SECTION 6320 and/or 6330”

dated January 22, 2002 (Notice of Determination).   The Notice of

Determination dealt with petitioners’ income tax liabilities for

tax years 1991, 1992, 1993, and 1999.

     Petitioner Edward H. Harrell filed for chapter 11 bankruptcy

on October 24, 1995.   Petitioner Anne G. Harrell filed for

chapter 11 bankruptcy on December 18, 1996.   Petitioners’ chapter

11 bankruptcy cases were consolidated on February 27, 1997.

Their consolidated chapter 11 bankruptcy case was dismissed on

June 30, 1997.

     On the same day as the dismissal of their chapter 11

bankruptcy case, petitioners filed a petition for chapter 7

bankruptcy relief.   Petitioners were granted a discharge in their

chapter 7 bankruptcy case on June 11, 1998.
                               - 4 -

     On August 29, 1998, notices of Federal tax lien were filed

for petitioners’ income tax liabilities for tax years 1991, 1992,

and 1993.

     On December 25, 2000, the IRS issued to petitioners a “Final

Notice - Notice of Intent to Levy” (Notice of Intent to Levy)

with regard to income tax liabilities for tax years 1991, 1992,

1993, and 1999.

     On January 23, 2001, petitioners requested a hearing

pursuant to section 6330 with respect to the Notice of Intent to

Levy.

     On April 13, 2001, petitioners’ case with respect to the

Notice of Intent to Levy was assigned to AO Martin.

     Before the issuance of the Notice of Intent to Levy,

petitioners had submitted an offer in compromise for their 1991-

93 tax years based on “doubt as to liability”, taking the

position that their liability for these years was discharged

under chapter 7 of the Bankruptcy Code.    They theorized that the

returns for those years were filed outside the 3-year lookback

period contained in the Bankruptcy Code.   See 11 U.S.C. sec.

507(a)(8)(A)(i) (2000).   At the section 6330 hearing, petitioners

contended that collection by levy was not appropriate because

their 1991-93 liabilities were discharged in their chapter 7

bankruptcy proceeding.
                                - 5 -

     On January 22, 2002, respondent issued the Notice of

Determination, which dealt with petitioners’ income tax

liabilities for tax years 1991, 1992, 1993, and 1999.   The Notice

of Determination found that collection action by levy was proper

and appropriate.   Attached to the Notice of Determination is a

memorandum that states, in part:   “The tax liabilities will not

be abated as the collection statute was tolled during the period

of the prior bankruptcy.”

                             Discussion

     Reconsideration under Rule 161 permits us to correct

manifest errors of fact or law, or to allow newly discovered

evidence to be introduced that could not have been introduced

before the filing of an opinion even if the moving party had

exercised due diligence.    See Estate of Quick v. Commissioner,

110 T.C. 440, 441 (1998); see also Traum v. Commissioner, 237

F.2d 277, 281 (7th Cir. 1956), affg. T.C. Memo. 1955-127.   The

granting of a motion for reconsideration rests within the

discretion of the Court, and we do not grant a motion for

reconsideration unless the party seeking reconsideration shows

unusual circumstances or substantial error.   See Alexander v.

Commissioner, 95 T.C. 467, 469 (1990), affd. without published

opinion sub nom. Stell v. Commissioner, 999 F.2d 544 (9th Cir.

1993); Estate of Halas v. Commissioner, 94 T.C. 570, 573 (1990);

Vaughn v. Commissioner, 87 T.C. 164, 166-167 (1986); Estate of
                               - 6 -

Bailly v. Commissioner, 81 T.C. 949, 951 (1983).   Reconsideration

is not the appropriate forum for rehashing previously rejected

legal arguments or tendering new legal theories to reach the end

result desired by the moving party.    See Estate of Quick v.

Commissioner, supra at 441-442; Stoody v. Commissioner, 67 T.C.

643, 644 (1977).

     Respondent’s main contention in support of his motion for

reconsideration is that this Court was ambiguous in Harrell v.

Commissioner, T.C. Memo. 2003-271, as to whether the issuance of

the Notice of Determination, without awaiting the Supreme Court’s

opinion in Young v. United States, 535 U.S. 43 (2002), was an

abuse of discretion.   For the sake of clarity, we deem it

necessary to discuss our rationale in greater detail than we did

previously.

     As of January 22, 2002, the date of the Notice of

Determination upon which this case is based, the Supreme Court

had not as yet decided Young, which had been argued on January 9,

2002, but was not decided until March 4, 2002.   In this case, the

Supreme Court held that the 3-year lookback period in bankruptcy

cases is automatically tolled during the pendency of an earlier

proceeding under the Bankruptcy Code.

     In Harrell v. Commissioner, supra, we stated that we were

“reluctant to label respondent’s issuance of the Notice of

Determination an abuse of discretion based upon a somewhat
                               - 7 -

technical reason for doing so”.   Despite this reluctance, we

nevertheless found that under the circumstances of this case, it

was an abuse of discretion to issue the Notice of Determination.

     We acknowledge that the circumstances surrounding this case

are highly unusual.   In large part because of the uncertainty as

to how the Supreme Court would resolve the equitable tolling

issue, petitioners were unwilling to accept a collection

alternative that required them to agree with respondent that

their 1991-93 tax liabilities were not discharged.   As we stated

in Harrell v. Commissioner, supra,

     at the time petitioners rejected AO Martin’s suggested
     installment agreement, and at the time the Notice of
     Determination was issued, there was sufficient reason
     to raise a doubt as to petitioners’ tax liabilities for
     1991, 1992, and 1993, so as to justify petitioners’
     rejection of an installment agreement based in part
     upon a concession of the 1991-93 liabilities.

     By issuing the Notice of Determination at that time,

respondent effectively denied petitioners the opportunity to

present or consider collection alternatives that they might have

presented or accepted had they known the outcome of Young v.

United States, supra, before the issuance of the Notice of

Determination.   If, under this alternative scenario, petitioners

had presented a collection alternative during the section 6330

hearing that was then rejected by respondent, petitioners would

have been able to petition this Court pursuant to section
                                 - 8 -

6330(d)(1) for review of that determination.       Consequently, this

Court finds it appropriate to retain jurisdiction over this case.

     We have considered each of the remaining arguments of

respondent and to the extent they are not discussed herein, find

them to be either not germane or unconvincing.

     Accordingly, we will deny respondent’s motion for

reconsideration.

     To reflect the foregoing,


                                         An appropriate order denying

                                 respondent’s motion for

                                 reconsideration will be issued.
