                        T.C. Memo. 2002-133



                      UNITED STATES TAX COURT



              THOMAS EDWARD VANSTONE, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16335-99.              Filed May 30, 2002.



     Thomas Edward Vanstone, pro se.

     Kevin M. Murphy, for respondent.



                        MEMORANDUM OPINION


     DAWSON, Judge:   This case was assigned to Special Trial

Judge Daniel J. Dinan pursuant to the provisions of section

7443A(b)(5) and Rules 180, 181, and 183.1     The Court agrees with



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

and adopts the opinion of the Special Trial Judge, which is set

forth below.

                 OPINION OF THE SPECIAL TRIAL JUDGE

     DINAN, Special Trial Judge:    Respondent determined that

petitioner is not entitled to an abatement of interest with

respect to petitioner’s 1982 taxable year.    The only issue for

decision is whether respondent abused his discretion in failing

to abate the assessment of interest.

                             Background

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

The stipulations of fact and the attached exhibits are

incorporated herein by this reference.    On the date the petition

was filed in this case, petitioner resided in Fairport, New York.

Petitioner’s individual net worth does not exceed $2 million.

     Petitioner filed a Federal income tax return for taxable

year 1982 on March 15, 1988.    On this return, petitioner claimed

a loss of $14,389 from a tax shelter partnership known as Neptune

Associates.    With respect to his overall tax liability,

petitioner claimed an overpayment due to excess withholding of

$3,734.66, and he requested that the overpayment be applied to

his 1983 estimated tax.    Petitioner attached a written statement

to his return further explaining that he wanted the “refund” to

be applied to his “1983 tax deficiency”.
                               - 3 -

     In May 1988, respondent notified petitioner that the correct

amount of the overpayment was $3,721.66.   This notice further

stated that respondent was considering petitioner’s claim for an

overpayment, but that the period of limitations might have

expired.   In October 1989, respondent applied a portion of the

1982 overpayment as follows:   $1,300.34 to petitioner’s

outstanding 1981 tax liability and $1,421.07 to petitioner’s

outstanding 1980 tax liability.   In November 1989, respondent

issued but immediately canceled a refund check to petitioner in

the amount of $1,160.52.   This amount reflects the $1,000.25

which was remaining from the 1982 overpayment, as well as $160.27

of accrued interest.   Petitioner never received this check.

     In the meantime, Golden Gate Associates, an entity related

to Neptune Associates, had been under examination by respondent

and had been involved in litigation before this Court.     Golden

Gate Associates agreed to a stipulated decision which was entered

by this Court on August 20, 1996.   On June 30, 1997, as a result

of the stipulated decision, petitioner was assessed, as a

computational adjustment, an additional tax liability of $4,210

for 1982, plus $17,166 in accrued interest.

     Petitioner requested that respondent abate the interest with

respect to his 1982 taxable year.   The explanation for his claim

was as follows:

          This claim for refund of interest is being filed as the
     result of a 1982 tax shelter recently concluded. A 1982
                              - 4 -

     overpayment was applied against a 1983 tax liability. The
     tax was filed in March 1988. Interest was not applied to
     the overpayment of $3,734.66. Consequently, interest should
     be refunded for the period 4-5-83 to 3-4-88 and interest on
     the accrued interest from 3-4-88 to present. Apply proceeds
     to 1982 deficiency.

Further explanation was provided as follows:

          A 1983 tax liability was partially offset by a 1982 tax
     overpayment of $3,734.66. Since the 1983 tax was filed on
     3-4-88, interest should have accrued from 4-15-83 to 3-4-88.
     The attached 1983 1040 reflects the amount applied from the
     1982 1040 return and the filing dates. Interest is due to
     the taxpayer on $3,734.66 from 4-15-83 to 3-4-88 and on the
     accrued interest from 3-4-88 to present. This claim is
     being filed at this time since the account has been frozen
     as the result of a 1982 tax shelter recently concluded. All
     proceeds will apply to the 1982 deficiency.

Respondent made a final determination that petitioner was not

entitled to the abatement of interest.

                            Discussion

     In his petition to this Court, petitioner argued in relevant

part:

          The Petition for Review of Failure to Abate Interest
     under Code Section 6404 covers tax year 1982 for which a
     Notice of Determination was issued and tax years 1980 and
     1981 to which 1982 overpayment funds were erroneously
     transferred. The Commissioner of Internal Revenue abused
     discretion through actions in violation of IRC Section 6404
     in the tax year directly at issue (1982) as well as in tax
     years 1980 and 1981 which were recipients of erroneous funds
     transfers, erroneous deficiency and interest calculations
     and unreasonable delays.

The remainder of the petition contained factual and legal

allegations meant to provide examples of “erroneous actions,

calculations and delays”.
                                 - 5 -

     Pursuant to section 6404(e)(1), as it applies in this case,

the Commissioner may 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 such

payment is attributable to such officer or employee being

erroneous or dilatory in performing a ministerial act.   An error

or delay is taken into account only (1) if no significant aspect

of such error or delay can be attributed to the taxpayer, and (2)

after the IRS has contacted the taxpayer in writing with respect

to such deficiency or payment.    Sec. 6404(e)(1).2

     The Department of the Treasury has interpreted a ministerial

act to be:

     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. A decision concerning the proper
     application of federal tax law (or other federal or state
     law) is not a ministerial act.




     2
        In 1996, sec. 6404(e) was amended by sec. 301(a) of the
Taxpayer Bill of Rights 2, Pub. L. 104-168, 110 Stat. 1457
(1996), to permit the Commissioner to abate interest with respect
to “unreasonable” errors or delays resulting from “managerial”
acts as well as from ministerial acts. This amendment applies to
interest accruing with respect to deficiencies or payments for
tax years beginning after July 30, 1996. Id. sec. 301(c);
Woodral v. Commissioner, 112 T.C. 19, 25 n.8 (1999). The
amendment therefore is inapplicable in this case.
                                 - 6 -

Sec. 301.6404-2T(b)(1), Temporary Proced. & Admin. Regs., 52 Fed.

Reg. 30162, 30163 (Aug. 13, 1987).3

     Even where errors or delays are present, the decision to

abate interest remains discretionary.    Sec. 6404(e)(1).   This

Court may order an abatement only where the Commissioner’s

failure to abate interest was an abuse of that discretion.     Sec.

6404(h)(1).4   The Commissioner’s exercise of discretion is

entitled to due deference; in order to prevail, the taxpayer must

demonstrate that in not abating interest, the Commissioner

exercised his discretion arbitrarily, capriciously, or without

sound basis in fact or law.   Woodral v. Commissioner, 112 T.C.

19, 23 (1999).

     Like all Federal courts, the Tax Court is a court of limited

jurisdiction, and we may exercise our jurisdiction only to the

extent authorized by Congress.    Sec. 7442; Naftel v.

Commissioner, 85 T.C. 527, 529 (1985).    In proceedings brought by

taxpayers under section 6404(h), as is the case before us, the

jurisdiction of this Court is limited to a determination as to




     3
        The final regulations under sec. 6404 contain the same
definition of a ministerial act as the temporary regulations.
Sec. 301.6404-2(b)(2), Proced. & Admin. Regs. However, the final
regulations do not apply in this case because they apply only to
interest accruing with respect to deficiencies or payments for
taxable years beginning after July 30, 1996. Id. par. (d).
     4
        Sec. 6404(h) was formerly designated as sec. 6404(i), and
before that as sec. 6404(g).
                                 - 7 -

whether the Commissioner abused his discretion in declining to

abate any portion of the interest under section 6404.   Sec.

6404(h)(1).

     None of petitioner’s assertions provide a basis for

respondent to have abated the assessment of interest under

section 6404 with respect to petitioner’s taxable year 1982.

Petitioner’s primary argument in the request for an abatement

seems to have been that he should be credited with interest on a

1982 overpayment from the time the tax was due until the time he

filed his return showing an overpayment, delinquent by nearly 5

years.   This argument does not directly address the abatement

issue.   We note, however, that a taxpayer is never entitled to

the payment of interest on an overpayment with respect to the

time period preceding the filing of an untimely return.    Sec.

6611(b)(3).

     Most of petitioner’s other assertions concern the accuracy

of respondent’s deficiency calculations for taxable years 1980,

1981, and 1982, and the appropriateness of respondent’s crediting

a portion of the 1982 overpayment to 1980 and 1981.   First, the

accuracy of any deficiency determined by respondent for any such

year is not before this Court.    Second, even if respondent should

not have credited the 1982 withholding overpayment to the prior

years because the period of limitations for crediting or

refunding that overpayment has expired, see secs. 6402(a),
                               - 8 -

6511(b)(2)(A), this would not be grounds for abatement of

interest under section 6404.   Petitioner argues that the

crediting was in error because the 1980 and 1981 deficiencies,

and corresponding interest calculations, were in error.     However,

we infer that respondent was applying Federal tax law with

respect to the determination of the deficiencies and interest

thereon, and with respect to the decision concerning the

applicable period of limitations.   Respondent’s decisions

concerning the proper application of Federal tax law are not

ministerial acts.   Sec. 301.6404-2T(b)(1), Temporary Proced. &

Admin. Regs., 52 Fed. Reg. 30162, 30163 (Aug. 13, 1987).

     The only remaining relevant assertion by petitioner with

respect to the 1982 taxable year is the following, contained in

the petition:

          The Secretary exhibited “unreasonable delay” in signing
     a Decision Document (1982 tax year) on August 13, 1996 after
     the Tax Matters Partner had signed the Decision Document
     thirteen months earlier on July 6, 1995.

This is the only assertion in which petitioner has made a

correlation between a specific time period and an alleged error

or delay in the performance of a ministerial act.   See Berry v.

Commissioner, T.C. Memo. 2001-323; Donovan v. Commissioner, T.C.

Memo. 2000-220.   However, there is no evidence in the record

supporting this assertion; even the dates the decision document

was signed have not been shown.   Such a naked assertion cannot be

the basis for finding an abuse of discretion.
                                 - 9 -

     Accordingly, we conclude that there is no abuse of

discretion in respondent’s failure to abate interest in this

case.

     To reflect the foregoing,

                                         Decision will be entered

                                 for respondent.
