                        T.C. Memo. 2010-183



                      UNITED STATES TAX COURT



         BILLY D. AND BETTY J. MCGAUGHY, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16684-06.                 Filed August 11, 2010.



     Harris H. Barnes, III, for petitioners.

     John F. Driscoll, for respondent.



                        MEMORANDUM OPINION


     RUWE, Judge:   This case is before the Court on respondent’s

motion for summary judgment and petitioners’ cross-motion for

summary judgment pursuant to Rule 121.1    The proceeding arises



     1
      Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure, and all section
references are to the Internal Revenue Code as amended.
                               - 2 -

from a petition for judicial review of the Commissioner’s failure

to abate interest under section 6404.     See also Rule 280.   The

issue for decision is whether respondent’s determination not to

abate interest with respect to petitioners’ 1993 and 1994 Federal

income tax liabilities was an abuse of discretion.

                             Background

     The record consists of the parties’ pleadings, their

respective cross-motions for summary judgment, and various

responses, declarations, and memoranda in support of or

opposition to the motions.   At the time the petition was filed,

petitioners resided in Mississippi.

     Petitioners’ 1993 and 1994 joint Federal income tax returns

were filed on April 15, 1994 and 1995, respectively.

Petitioners’ 1993 and 1994 returns were selected for examination

on June 6, 1996.   No written communication by respondent was sent

to petitioners with respect to either their 1993 or 1994 taxable

year before that date.2

     Betty J. McGaughy (Mrs. McGaughy) was the majority

shareholder and controlling officer of Tel-Eye International,

Inc. (Tel-Eye), a C corporation.   In July 1996, and as a result



     2
      In their cross-motion for summary judgment petitioners
allege that they were first contacted by respondent on Mar. 5,
1996, when they received a notice of audit prepared by Agent
Monica Jones. In his amended response, respondent has shown that
the Mar. 5, 1996, written correspondence relates to Tel-Eye
International, Inc.’s tax returns and not petitioners’.
                               - 3 -

of an ongoing civil examination of Tel-Eye’s taxable periods

ended September 30, 1993, and March 31, 1994, the Internal

Revenue Service (IRS) Examination Division (ED) formally referred

the examination for Tel-Eye’s tax years ending September 30, 1993

and 1994, and petitioners’ 1993 and 1994 taxable years to the IRS

Criminal Investigation Division (CID) for additional

investigation.   During the criminal investigation all civil

examination activity in regard to petitioners’ 1993 and 1994 tax

years was suspended.

     Activity records indicate that from July 1996 until August

14, 2000, petitioners’ 1993 and 1994 returns were under criminal

investigation.   In this regard, an IRS ED agent worked with a CID

agent until criminal prosecution referrals were made by the IRS

to the U.S. Department of Justice (DOJ) in June 2000 recommending

the prosecution of Mrs. McGaughy for three section 7206(1)

counts.   On August 14, 2000, the DOJ determined that prosecution

of the criminal charges against Mrs. McGaughy was inappropriate

and declined to prosecute them.

     From the date of the DOJ criminal declination letter,

respondent took approximately 14 months to complete the civil

examination for petitioners’ 1993 and 1994 tax years.   During the

approximately 6-month period between August 14, 2000, and

February 23, 2001, the DOJ gathered files in its possession and

returned them to the IRS, the CID took appropriate steps to
                                 - 4 -

formally close the criminal aspects of petitioners’ case and made

a recommendation of further action to a civil fraud coordinator,

the civil fraud coordinator reviewed the information received and

determined that a civil fraud examination would be appropriate,

and the case was returned to the examination group for assignment

to a revenue agent.   The civil matter was assigned on February

23, 2001, to Revenue Agent John Lockley, who began work on

petitioners’ case on February 26, 2001.   Mr. Lockley was engaged

in meetings with petitioners’ representatives, coordinated

development of the case with IRS officials, and gathered and

analyzed relevant information.    Mr. Lockley performed more than

123 hours of work on petitioners’ case until it was

administratively closed in November 2001, when Mr. Lockley sent

petitioners’ case to the review staff for issuance of a notice of

deficiency.

     In January 2002, approximately 2 months after Mr. Lockely

sent petitioners’ case to the review staff, the review staff

completed their review of petitioners’ case and prepared a notice

of deficiency.   The notice of deficiency was then forwarded to

the Office of Chief Counsel in Birmingham, Alabama, for approval

of the assertion of a civil fraud penalty.   By March 7, 2002, the

Birmingham, Alabama, Office of Chief Counsel approved the

assertion of the civil fraud penalty and returned the case to the

review staff for issuance of the notice of deficiency.   On April
                               - 5 -

4, 2002, respondent issued a notice of deficiency to petitioners

in regard to their 1993 and 1994 tax years.

     On June 13, 2002, petitioners filed a petition with this

Court at docket No. 9985-02 contesting the notice of deficiency

issued with respect to their 1993 and 1994 tax years.   On

February 13, 2003, a decision was entered wherein it was

determined that petitioners owed deficiencies and section 6663

penalties for tax years 1993 and 1994.   On April 3, 2003, payment

credits were applied to fully satisfy petitioners’ account with

the IRS.   No additional interest accrued after the application of

the credits.

     On or about May 26, 2004, petitioners filed separate Forms

843, Claim for Refund and Request for Abatement, with the

Internal Revenue Service (IRS) requesting abatements of interest

of $38,547.96 for 1993 and $15,958.01 for 1994.

     On the basis of the facts set forth in the declaration

attached to the motion for summary judgment, the dates relevant

to petitioners’ request for review of the Commissioner’s failure

to abate interest are as follows.

     A.    From April 15, 1994, to June 6, 1996.--April 15,
           1994, is the date petitioners filed their 1993
           Federal income tax return. June 6, 1996, is the
           date that the 1993 return was selected by
           respondent for examination. (The period before
           the first written contact.)

     B.    From April 15, 1995, to June 6, 1996.--April 15,
           1995, is the date petitioners filed their 1994
           Federal income tax return. June 6, 1996, is the
                              - 6 -

          date that the 1994 return was selected by
          respondent for examination. (The period before
          the first written contact.)

     C.   From July 1996 to August 14, 2000.--In July 1996
          petitioners’ 1993 and 1994 returns were initially
          referred for criminal investigation and the
          criminal aspects of the investigation were not
          closed until August 14, 2000. (The period during
          the criminal investigation.)

     D.   From August 14, 2000, to November 2001.--On August
          14, 2000, the DOJ issued a letter formally
          declining to prosecute Mrs. McGaughy. In November
          2001 respondent’s examining agent completed the
          examination for petitioners’ 1993 and 1994 tax
          years with a referral to the relevant review staff
          for the issuance of a notice of deficiency.

     E.   From November 2001 to April 4, 2002.--April 4,
          2002, is the date of issuance of the notice of
          deficiency.

     F.   From April 4, 2002, to April 3, 2003.--April 3,
          2003, is the date after which no further interest
          accrued because payments and credits were applied
          to fully satisfy petitioners’ account.

     By letter dated October 21, 2004, the IRS disallowed

petitioners’ claims for interest abatement and advised them of

the procedure for requesting reconsideration of the determination

with the IRS Office of Appeals.   On November 11, 2004,

petitioners responded with a request for reconsideration.

     In late July 2005 respondent’s Appeals Officer Gayla Owens

was assigned to review, consider, and make a determination

regarding petitioners’ request for reconsideration.   Appeals

Officer Owens gathered information and records, held a conference

with petitioners’ representative, reviewed available information
                                 - 7 -

and records, and prepared a final determination letter.    On

February 23, 2006, a Full Disallowance-Final Determination letter

was issued to petitioners on the grounds that no error or delay

relating to ministerial acts merited abatement of interest.

                              Discussion

I.   Summary Judgment

      Rule 121(a) permits a party to move “for a summary

adjudication in the moving party’s favor upon all or any part of

the legal issues in controversy.”    Rule 121(b) directs that a

decision on such a motion shall be rendered “if the pleadings,

answers to interrogatories, depositions, admissions, and any

other acceptable materials, together with the affidavits, if any,

show that there is no genuine issue as to any material fact and

that a decision may be rendered as a matter of law.”    The moving

party bears the burden of demonstrating that no genuine issue of

material fact exists and that he or she is entitled to judgment

as a matter of law.     Sundstrand Corp. v. Commissioner, 98 T.C.

518, 520 (1992), affd. 17 F.3d 965 (7th Cir. 1994).    Facts are

viewed in the light most favorable to the nonmoving party.      Id.

When a motion for summary judgment has been properly made and

supported by the moving party, the opposing party may not rest

upon mere allegations or denials contained in that party’s

pleadings but must by affidavits or otherwise set forth specific
                                - 8 -

facts showing that there is a genuine issue for trial.    Rule

121(d).

II.   Abatement of Interest

      A.   Section 6404

      Section 6404(e), as in effect for the years at issue,

provided, in pertinent part, as follows:

           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.[3]


      3
      In 1996 sec. 6404(e) was amended by the Taxpayer Bill of
Rights 2 (TBOR 2), Pub. L. 104-168, sec. 301, 110 Stat. 1457
(1996), to permit abatement with respect to “unreasonable” error
or delay in performing a “ministerial or managerial” act. The
amendment is effective for tax years beginning after July 30,
                                                   (continued...)
                                 - 9 -

     For purposes of section 6404(e), the term “ministerial act”

is defined as “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. 301.6404-2T(b)(1),

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

1987).4    “A decision concerning the proper application of federal

tax law (or other federal or state law) is not a ministerial

act.”     Id.

     Section 6404(h)(1) provides the Tax Court with jurisdiction

to review denials of requests for abatement of interest under an

abuse of discretion standard.5    An action constitutes an abuse of


     3
      (...continued)
1996, and is thus inapplicable to the instant case.    See Woodral
v. Commissioner, 112 T.C. 19, 25 n.8 (1999).
     4
      Temporary regulations are entitled to the same weight as
final regulations. Peterson Marital Trust v. Commissioner, 102
T.C. 790, 797 (1994), affd. 78 F.3d 795 (2d Cir. 1996). Final
regulations were promulgated under sec. 6404 after the years at
issue and contain a definition of “ministerial act” that does not
differ from that set forth in the temporary regulations. Sec.
301.6404-2(b)(2), Proced. & Admin. Regs.
     5
      The provision for Tax Court review of interest abatement
determinations was enacted as sec. 6404(g). TBOR 2 sec. 302(a),
110 Stat. 1457. The provision was then redesignated after the
years at issue, first as sec. 6404(i) by the Internal Revenue
Service Restructuring and Reform Act of 1998, Pub. L. 105-206,
secs. 3305(a), 3309(a), 112 Stat. 743, 745, and then as sec.
6404(h) by the Victims of Terrorism Tax Relief Act of 2001, Pub.
L. 107-134, sec. 112(d)(1)(B), 115 Stat. 2435 (2002). The
                                                   (continued...)
                               - 10 -

discretion if performed in a manner that is arbitrary,

capricious, or without sound basis in fact or law.     Woodral v.

Commissioner, 112 T.C. 19, 23 (1999).   “Congress originally

intended by section 6404(e) to sanction abatement of interest

only where failure to do so ‘would be widely perceived as grossly

unfair’, not to provide a remedy enabling taxpayers ‘routinely to

avoid payment of interest’.”   Matthews v. Commissioner, T.C.

Memo. 2008-126 (quoting H. Rept. 99-426, at 844 (1985), 1986-3

C.B. (Vol. 2) 1, 844, and S. Rept. 99-313, at 208 (1986), 1986-3

C.B. (Vol. 3) 1, 208).

     B.   Abatement for Periods Before First Contact

     The flush language of section 6404(e)(1) expressly limits

the periods for which abatement under that provision is

available, providing that “an error or delay shall be taken into

account only * * * after the Internal Revenue Service has

contacted the taxpayer in writing with respect to such deficiency

or payment.”   This restriction has been the subject of repeated

judicial interpretation and, without exception, applied in

instances where taxpayers have sought abatement for a period

preceding written notification from the IRS.   Matthews v.

Commissioner, supra (citing Krugman v. Commissioner, 112 T.C.


     5
      (...continued)
provision as enacted and redesignated applies to requests for
abatement after July 30, 1996. TBOR 2 sec. 302(b), 110 Stat.
1458. To avoid confusion, references herein will be to the
current designation.
                              - 11 -

230, 239 (1999), Hawksley v. Commissioner, T.C. Memo. 2000-354,

Banat v. Commissioner, T.C. Memo. 2000-141, affd. 5 Fed Appx. 36

(2d Cir. 2001), and Nerad v. Commissioner, T.C. Memo. 1999-376).

     Congressional pronouncements and action both at the time of

enactment of section 6404(e) and upon amendment of section 6404

after the years at issue strongly buttress adherence to the plain

meaning of the text.   Matthews v. Commissioner, supra.    The

legislative history accompanying the 1986 enactment of section

6404(e) notes that section 6404(e)(1) “does not therefore permit

the abatement of interest for the period of time between the date

the taxpayer files a return and the date the IRS commences an

audit, regardless of the length of that time period.”     H. Rept.

99-426, supra at 844, 1986-3 C.B. (Vol. 2) at 844; S. Rept. 99-

313, supra at 208, 1986-3 C.B. (Vol. 3) at 208.

     Petitioners acknowledge the timing restrictions in the flush

language of section 6404(e)(1), as well as the judicial and

legislative authorities cited above.   Petitioners contend,

however, that the strict interpretation signaled by the statute

must be balanced against, and moderated by, the statement

contained in the legislative history and often repeated in case

law that Congress did “not intend that this provision be used

routinely to avoid payment of interest; rather, it intends that

the provision be utilized in instances where failure to abate

interest would be widely perceived as grossly unfair.”    H. Rept.
                             - 12 -

99-426, supra at 844, 1986-3 C.B. (Vol. 2) at 844; S. Rept. 99-

313, supra at 208, 1986-3 C.B. (Vol. 3) at 208.    Petitioners

maintain that, taking into account both clauses of the foregoing

statement:

     it is obvious that a “grossly unfair” standard must be
     considered in evaluating each unique set of facts and
     circumstances. In other words, the statute should be
     interpreted based on strict construction of the
     language regarding dates, amounts, etc.; however, this
     strict interpretation is limited to producing an
     equitable result that is not “grossly unfair.”

Petitioners contend that the “notion of limiting the strict

construction of I.R.C. § 6404 with a subjective equitable

standard (‘grossly unfair’) is also reflected in an evolving

policy trend of both the IRS and Congress.”   In support

petitioners cite various revenue procedures and statutory

enactments.

     Petitioners argue that the “assessment of interest * * * for

a period of over nine (9) years, clearly runs contrary to the

trend set forth by both the IRS and Congress.”    Petitioners

conclude:

          In the present matter, the assessment of compound
     interest for such a long period of time clearly defeats
     any notion of fair play and runs contrary to the
     evolving policy demonstrated by the IRS and Congress.
     Such “grossly unfair” acts are the limiting standard to
     which Congress was clearly referring in H. Rept. 99-
     426, at 844 (1985). Furthermore, this case far exceeds
     the scope of “routine” in consideration of the
     abatement of interest.

          The present case sets forth unique circumstances
     where, in lieu of the trend enhancing the Petitioners’
                             - 13 -

     ability to eliminate and/or minimize interest charges,
     upholding the interest charges against the Petitioners
     would produce a result that is “grossly unfair” and in
     direct conflict with the application of the statue as
     intended by Congress. * * *

     In Matthews v. Commissioner, supra, this Court disagreed

with a similar argument that a failure to abate interest would be

“grossly unfair”, stating:

          We disagree for several reasons. First are the
     fundamental and closely related tenets of statutory
     construction that (1) a statute is to be interpreted so
     as to give effect to its plain and ordinary meaning
     unless to do so would produce an absurd or futile
     result, and (2) a statute clear and unambiguous on its
     face must be regarded as conclusive absent an
     unequivocal expression of legislative intent to the
     contrary. E.g., Am. Tobacco Co. v. Patterson, 456 U.S.
     63, 68 (1982); United States v. Am. Trucking
     Associations, Inc., 310 U.S. 534, 543-544 (1940); Fla.
     Hosp. Trust Fund v. Commissioner, 103 T.C. 140, 152
     (1994), affd. 71 F.3d 808 (11th Cir. 1996). In the
     instant case, the text in issue is a brief statement of
     temporal limitation, a relatively routine feature of
     many taxing statutes. We are hard pressed to see any
     absurdity, futility, or ambiguity that would permit the
     text of the statute to be overridden by legislative
     history, especially by the legislative expression on
     which petitioners rely, which falls far short of an
     unequivocal repudiation of the statutory language.
     Rather, we believe that the two would appear to reflect
     a harmony of purpose.

          Although petitioners attempt to characterize the
     “grossly unfair” clause as a liberalization, the
     restrictive nature of the language would seem more
     rationally to be interpreted as reiterating the general
     narrowness of the relief afforded by the statute. In
     the legislative history, the “grossly unfair” clause is
     followed immediately by statements reprising specific
     limits imposed by section 6404(e)(1) on the period for
     which relief may be available, including the rule of
     IRS contact. See H. Rept. 99-426, supra at 844, 1986-3
     C.B. (Vol. 2) at 844; S. Rept. 99-313, supra at 208,
     1986-3 C.B. (Vol. 3) at 208. Likewise, the clause is
                              - 14 -

     immediately preceded by the statement cautioning
     against routine use to avoid payment. In that
     configuration, we find it particularly difficult to
     read the “grossly unfair” clause in the legislative
     history as an exception arising from the midst of what
     is otherwise a description of the narrowness of the
     remedy.

     Petitioners have added nothing to the taxpayers’ argument in

Matthews v. Commissioner, T.C. Memo. 2008-126, that persuades us

to reach a contrary result.   Accordingly, with respect to each of

the tax years at issue, petitioners are not entitled to an

abatement of interest for any period before the first written IRS

contact (June 6, 1996) regarding liabilities for that year.

     C.   Abatement During Criminal Investigation

     The parties agree that petitioners’ 1993 and 1994 tax years

were referred to the IRS’s CID in July 1996 and that a criminal

investigation was ongoing until August 14, 2000.

     Courts have long recognized the general policy within the

IRS to suspend resolution of a civil examination pending

completion of a criminal examination.   See, e.g., Badaracco v.

Commissioner, 464 U.S. 386, 399 (1984); United States v. LaSalle

Natl. Bank, 437 U.S. 298, 311-313 (1978); Matthews v.

Commissioner, supra.   In Badaracco v. Commissioner, supra at 399,

the Supreme Court stated:   “As a practical matter, therefore, the

Commissioner frequently is forced to place a civil audit in

abeyance when a criminal prosecution is recommended.”
                                - 15 -

     While a tax fraud investigation comprises both civil and

criminal aspects, the criminal aspects dominate insofar as the

investigation is controlled by the IRS CID.     Taylor v.

Commissioner, 113 T.C. 206, 211-212 (1999), affd. 9 Fed. Appx.

700 (9th Cir. 2001); Gorgie v. Commissioner, T.C. Memo. 2000-80.

“Such a policy is intended to avoid the conflicts between civil

and criminal discovery rules, the issues related to witness

testimony and self-incrimination, and the problems of inherent

confusion that could result if civil and criminal proceedings

were allowed to take place concurrently.”     Matthews v.

Commissioner, supra (citing Taylor v. Commissioner, supra at

212).

     The foregoing and related considerations must be weighed and

applied by the IRS in deciding how to proceed.     Taylor v.

Commissioner, supra at 212-213.    In Taylor v. Commissioner, supra

at 213, this Court explained:    “The timing of the decision to

defer the civil proceedings until resolution of the criminal

aspects does not detract from the fact that the exercise of

judgment is required in making such a decision.”     Such a decision

is not “considered a ‘ministerial act.’”    Id.; Hanks v.

Commissioner, T.C. Memo. 2001-319; Gorgie v. Commissioner, supra.

     Although petitioners acknowledge and do not appear to raise

any direct challenge to the above rule, they posit “that while

the decision to suspend civil activity in itself may not be a
                               - 16 -

ministerial duty, actions prior to and subsequent to the making

of the actual decision may be defined as ministerial.”    We

disagree with their argument as applied to the circumstances of

this case.    See Gorgie v. Commissioner, supra (“The time spent

investigating whether to impose civil or criminal fraud

penalties, regardless of petitioners’ guilt or innocence, is not

a ground under section 6404(e) that would allow respondent to

abate interest.”).

     Accordingly, we conclude that petitioners are not entitled

to interest abatement for the period during which they were under

criminal investigation.

     D.    Abatement for Periods From August 14, 2000, to April 3,
           2003

     Petitioners acknowledge and cite relevant judicial authority

that the mere passage of time does not establish error or delay

in performance of a ministerial act.    Petitioners’ primary

argument for relief, however, mirrors the argument made by the

taxpayers and rejected by this Court in Matthews v. Commissioner,

supra.    In their cross-motion for summary judgment petitioners

quote extensively from provisions of the Internal Revenue Manual

and express their position as follows:

          Since the IRS has produced a number of records
     that are vague, uninformative, and fail to comply with
     its own procedures, the Petitioners have been unable to
     specifically allege whether specific ministerial errors
     or acts actually occurred. Due to the IRS’s failure to
     provide detailed records that would allow Petitioners
     to make such evaluation, Petitioners claim that they
                                - 17 -

     are entitled, as a matter of law, to have such acts
     deemed favorably to the Petitioners, and regarded by
     the Court as being ministerial in nature. The IRS has
     the burden to follow its own procedures and the law.
     Otherwise, the presumption must be that the IRS did not
     follow its own procedures and the law.

     It is a well-settled principle that the Internal Revenue

Manual does not have the force of law, is not binding on the IRS,

and confers no rights on taxpayers.      Matthews v. Commissioner,

supra (citing Fargo v. Commissioner, 447 F.3d 706, 713 (9th Cir.

2006), affg. T.C. Memo. 2004-13, Carlson v. United States, 126

F.3d 915, 922 (7th Cir. 1997), Tavano v. Commissioner, 986 F.2d

1389, 1390 (11th Cir. 1993), affg. T.C. Memo. 1991-237, and Marks

v. Commissioner, 947 F.2d 983, 986 n.1 (D.C. Cir. 1991), affg.

T.C. Memo. 1989-575).    Furthermore, even if some duty of

documentation incumbent upon the IRS could be inferred from the

Internal Revenue Manual or other pertinent law, petitioners’

contentions as applied to the instant case fail under the

circumstances.

          1.     Period From August 14, 2000, to November 2001

     By letter dated August 14, 2000, the DOJ formally declined

to prosecute Mrs. McGaughy in regard to petitioners’ 1993 and

1994 Federal income tax years.     During the approximately 6-month

period between August 14, 2000, and February 23, 2001, the DOJ

gathered files in its possession and returned them to the IRS,

the CID took appropriate steps to formally close the criminal

aspects of petitioners’ case and made a recommendation of further
                                - 18 -

action to a civil fraud coordinator, the civil fraud coordinator

reviewed the information received and determined that a civil

fraud examination would be appropriate, and the case was returned

to the examination group for assignment to a revenue agent.      The

revenue agent’s activity record reveals consistent activity

including meetings with petitioners’ representatives, meeting and

coordinating development of the case with IRS officials, and

gathering and analyzing relevant information.    The revenue agent

performed more than 123 hours of work on petitioners’ case until

it was administratively closed in November 2001, at which time

the revenue agent sent petitioners’ case to the review staff for

issuance of a notice of deficiency.

     Petitioners have not pointed to any specific ministerial

error or delay during this period, and we perceive nothing during

this period that would suggest that ministerial errors or delays

occurred.

            2.   Period From November 2001 to April 4, 2002

     In January 2002, approximately 2 months after the revenue

agent sent petitioners’ case to the review staff, the review

staff completed their review of petitioners’ case and prepared a

notice of deficiency.    The notice of deficiency was then

forwarded to the Office of Chief Counsel in Birmingham, Alabama,

for approval of the assertion of a civil fraud penalty.       By March

7, 2002, the Birmingham, Alabama, Office of Chief Counsel
                                 - 19 -

approved the assertion of the civil fraud penalty and returned

the case to the review staff for issuance of the notice of

deficiency.      On April 4, 2002, respondent issued to petitioners a

notice of deficiency in regard to their 1993 and 1994 tax years.

     Petitioners have likewise failed to identify or allege any

specific ministerial error or delay during this period, and we

perceive nothing during this period that would suggest that

ministerial error or delay occurred.

            3.    Period From April 4, 2002, to April 3, 2003

     On June 13, 2002, petitioners filed a petition with this

Court at docket No. 9985-02 contesting the notice of deficiency

issued with respect to petitioners’ 1993 and 1994 tax years.     On

February 13, 2003, a stipulated decision was entered wherein it

was determined that petitioners owed deficiencies and section

6663 penalties for tax years 1993 and 1994.     On April 3, 2003,

payment credits were applied to fully satisfy petitioners’

account with the IRS.     No additional interest accrued after the

application of the credits.

     Petitioners have failed to identify any specific ministerial

error or delay during this period, and we perceive nothing during

this period that would suggest that a ministerial error or delay

occurred.
                               - 20 -

     E.   Conclusion

     We conclude that respondent committed no abuse of discretion

in determining that petitioners were not entitled to abatement of

interest pursuant to section 6404(e)(1) with respect to either of

the years at issue.    Respondent’s motion for summary judgment

will be granted, and petitioners’ cross-motion for summary

judgment will be denied.

     To reflect the foregoing,

                                          An appropriate order and

                                     decision for respondent will

                                     be entered.
