                        T.C. Memo. 2001-309



                      UNITED STATES TAX COURT



                 JAMES K. GAUDET, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 12832-00.                    Filed December 7, 2001.


     James K. Gaudet, pro se.

     Linda A. Neal, for respondent.



                        MEMORANDUM OPINION


     DAWSON, Judge:   This case was assigned to Special Trial

Judge Carleton D. Powell pursuant to section 7443A(b)(5) and

Rules 180, 181, and 183.    All section references are to the

Internal Revenue Code applicable for the period involved, and all

Rule references are to the Tax Court Rules of Practice and
                                 - 2 -

Procedure.    The Court agrees with and adopts the opinion of the

Special Trial Judge, which is set forth below.

                 OPINION OF THE SPECIAL TRIAL JUDGE

     POWELL, Special Trial Judge:     This case involves the denial

of a request by petitioner to respondent to abate interest under

section 6404(e).   On February 9, 2000, petitioner submitted a

Form 843, Claim for Refund and Request for Abatement, to

respondent.   The request pertained to the interest due on the

deficiency for the taxable year 1996.    By letter dated June 23,

2000, respondent determined that petitioner was not entitled to

the requested abatement, and the request was denied by

respondent’s Appeals Office.    On December 8, 2000, petitioner

filed a petition for review of that determination with this

Court.   At the time the petition for review was filed, petitioner

resided in Gretna, Louisiana.

     The facts may be summarized as follows.    Petitioner prepared

a joint 1996 Federal income tax return with his then wife,

Virginia.    Before or during 1996, Virginia’s parents had died,

and Virginia had received inheritances that she invested with

Legg Mason, a brokerage firm.    Petitioner, an attorney, had

settled the estates of Virginia’s parents and was aware that she

had received the inheritances.    Legg Mason sent Virginia a Form

1099 showing income of $14,248 for 1996.    The Form 1099 was not

received until around April 20, 1997, after petitioner and
                               - 3 -

Virginia had filed their 1996 tax return.   Virginia gave

petitioner a Form 1099 that he filed away for their 1997 tax

return.   Petitioner claims that Virginia told him that the Form

1099 pertained to the 1997 taxable year.    Petitioner apparently

never looked at the form.   Virginia received monthly statements

from Legg Mason, but petitioner did not review the statements in

preparing their 1996 tax return.   Petitioner did not include any

income from Legg Mason in the 1996 tax return.

     On July 20, 1998, respondent sent a Notice CP-2000, Proposed

Changes to Income or Withholding Tax, a so-called CP-2000 letter,

to petitioner and Virginia notifying them that they had

unreported interest and/or dividend income of $14,248.    By letter

dated July 21, 1998, petitioner wrote respondent to “contest any

and all interest charges because your office should have notified

me during calander [sic] year 1996 and no later than the month of

August of 1996.”   At least by July 1998, petitioner knew that the

deficiency had been proposed, but he wanted to “investigate it

before * * * [he replied].”   By the end of September 1998,

petitioner knew that the proposed deficiency was correct.1

     On February 5, 1999, respondent sent a notice of deficiency

to petitioner’s and Virginia’s last known address determining a



     1
        Petitioner later testified that he concluded that he owed
the tax only after the file was sent to New Orleans, Louisiana.
For reasons discussed infra, we believe that his earlier
testimony more accurately reflected what happened.
                               - 4 -

deficiency of $3,990 on the unreported income from Legg Mason.

The notice was sent by certified mail, and respondent’s file

indicates that the notice was not returned.   Petitioner claims

that he did not receive the notice, and no petition for a

redetermination was filed with this Court.    By letter dated May

14, 1999, however, petitioner wrote respondent stating: “we do

not admit that the Legg Mason interest amounts are due”.    He

further stated that he disputed the interest and penalties

because “the IRS did not notify us in a timely manner thereby

causing us to be infected [sic] with the said penalties and

interest.”

     On or about August 23, 1999, petitioner sent a Form 843,

Claim for Refund and Request for Abatement, to respondent

requesting that the $3,990 deficiency, penalties, and interest be

abated.   He alleged that the interest was caused by respondent’s

“errors or delays” and that the “penalty or addition to tax * * *

[was the] result of erroneous advice from the IRS.”

     Although the record does not reveal the date, apparently at

some time subsequent, respondent assessed the deficiency.    On

February 9, 2000, petitioner sent another Form 843 to respondent

seeking an abatement of the penalties and interest only.    By

letter dated April 6, 2000, petitioner was notified by the

District Director that his request for abatement had been
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denied.2       Petitioner paid the deficiency of $3,990 on May 4,

2000.    Petitioner sought review of his interest abatement request

by the Appeals Office.       The Appeals Office denied petitioner’s

request by letter dated June 23, 2000.

     Section 6404(e) provides in relevant part:

          (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, * * *

           *         *       *       *       *       *       *

     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 * * *.

Section 6404(i)(1) provides further that the “Tax Court shall

have jurisdiction over any action brought by a taxpayer * * * to

determine whether the Secretary's failure to abate interest * * *

was an abuse of discretion, and may order an abatement”.3

     The Internal Revenue Code does not define a ministerial act.




     2
        Respondent apparently did abate an addition to tax under
sec. 6651 for failure to timely pay the tax.
     3
        Sec. 6404(i) also contains jurisdictional requirements to
bring such an action. Respondent has not raised any
jurisdictional bar, and the Court is satisfied that these
prerequisites have been satisfied.
                              - 6 -

The Report of the Senate Finance Committee accompanying the Tax

Reform Act of 1986, Pub. L. 99-514, 100 Stat. 2085, states:

     The committee does 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.
     The interest abatement only applies to the period of time
     attributable to the failure to perform the ministerial act.

        *       *       *       *       *       *       *

          The committee intends that the term “ministerial act”
     be limited to nondiscretionary acts where all of the
     preliminary prerequisites, such as conferencing and review
     by supervisors, have taken place. Thus, a ministerial act
     is a procedural action, not a decision in a substantive area
     of tax law. For example, a delay in the issuance of a
     statutory notice of deficiency after the IRS and the
     taxpayer have completed efforts to resolve the matter could
     be grounds for abatement of interest. The IRS may define a
     ministerial act in regulations. [S. Rept. 99-313, at 208-
     209 (1986), 1986-3 C.B. (Vol. 3) 1, 208-209.]

The regulations provide:

     The term “ministerial act” means 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. [Sec. 301.6404-2T(b)(1), Temporary Proced. & Admin.
     Regs., 52 Fed. Reg. 30163 (Aug. 13, 1987).]

     While petitioner's original application for abatement

encompasses the deficiency and all the interest due for the 1996

taxable year, his subsequent request relates only to interest,

and at the hearing, petitioner narrowed the scope of his request

for abatement to the period between July 1998 (when he alleges

that he orally requested that the file be sent from the Internal
                                 - 7 -

Revenue Service Center in Chamblee, Georgia, to respondent’s

offices in New Orleans, Louisiana) to the date of payment.      To

fit within the ambit of section 6404(e), petitioner must prove

that the accrual of interest during that period was the result of

a delay by employees of the Internal Revenue Service, acting in

their official capacity, in performing ministerial acts.     See

sec. 6404(e)(1)(A).    Respondent contends that the delay, if

indeed there was any delay, was not the result of a ministerial

act, and, therefore, section 6404(e)(1)(A) does not apply.

     At the hearing, the following exchange occurred:

          THE COURT:    Where is the ministerial act that you
     complain about?

          THE WITNESS [petitioner]: It’s not a ministerial act.
     It’s an error, and it’s primarily a delay in transporting
     this case from Atlanta–-whatever–-to New Orleans.

We disagree with petitioner that there was an error or delay by

an employee of the Internal Revenue Service in performing a

ministerial act within the meaning of section 6404(e).

     Congress did amend section 6404(e) in 1996 to permit

abatement of interest for “unreasonable” error and delay in

performing a “ministerial or managerial” act.    Taxpayer Bill of

Rights 2 (TBOR 2), Pub. L. 104-168, sec. 301(a)(1) and (2), 110

Stat. 1457 (1996).    That standard, however, applies to tax years

beginning after July 30, 1996.     Id. subsec. (c).   Petitioner’s

taxable year here began January 1, 1996, and the TBOR 2 amendment

does not apply.
                               - 8 -

     Furthermore, even if the amended section 6404(e) were

applicable, we seriously doubt whether under these circumstances

there was an “unreasonable error” in not sending the file to New

Orleans.   The initial CP-2000 letter was issued from the Internal

Revenue Service Center in Chamblee, Georgia, and we would not

find that, by not sending petitioner’s file to New Orleans,

respondent unreasonably erred in performing a ministerial or

managerial act.   Petitioner has failed to demonstrate how or why

that inaction would be unreasonable.

     Finally, it should be noted that we are by no means

convinced that any delay, to which the accrued interest would be

attributable, was due to respondent’s action.   Petitioner knew

his wife had assets inherited from her parents, but, when

preparing the tax return, he never bothered to determine what

income she had received from those assets.   After the initial CP-

2000 letter from respondent, petitioner knew precisely what Legg

Mason had reported to respondent.   Petitioner testified initially

that he knew he owed the tax in September 1998, and later he

changed his testimony.   His second version was that he did not

know until the file was sent to New Orleans in April or May of

2000.   But he had contacted Legg Mason in August 1998.   His later

explanation that he did not know what information respondent had

before the file was sent to New Orleans has a decidedly hollow

ring.   Realistically, the accrued interest was due to
                              - 9 -

petitioner’s failure to pay the tax, and not to any error or

delay by respondent in performing a ministerial act.

                                           Decision will be entered

                                      for respondent.
