                        T.C. Memo. 2000-61



                      UNITED STATES TAX COURT



               EDGAR & DORIS BROWN, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



          Docket No. 8538-98.              Filed February 28, 2000.



     Edgar Brown and Doris Brown, pro sese.

     Charles Pillitteri, for respondent.



                        MEMORANDUM OPINION


     THORNTON, Judge:   Respondent issued a final determination

denying petitioners’ claim for abatement of interest pursuant to

section 6404(e).1   Petitioners timely filed a petition pursuant




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

to section 6404(g) and Rule 280.2    The sole issue for decision is

whether respondent’s denial of petitioners’ request to abate

interest was an abuse of discretion.

Background

     The parties have stipulated some of the facts, which are

incorporated in our findings by this reference.    When they

petitioned this Court, petitioners resided in Lucedale,

Mississippi.

     Petitioners timely filed joint Federal income tax returns

for taxable years 1989 and 1990.    On June 6, 1991, respondent’s

examining agent mailed petitioners a letter informing them that

their 1989 return had been selected for examination.    During the

examination, the examining agent solicited petitioners’ consent

to extend the period of limitations to assess tax with respect to

taxable year 1989, and they agreed.

     On November 18, 1992, respondent mailed petitioners a 30-day

letter, proposing deficiencies of $14,088 and $14,417, and

accuracy-related penalties of $2,818 and $2,883, for taxable

years 1989 and 1990, respectively.    On December 10, 1992,

petitioners responded by filing a protest, requesting

consideration of their case by respondent’s Appeals Office.    By



     2
       Sec. 6404(g) was redesignated sec. 6404(i) by the Internal
Revenue Service Restructuring & Reform Act of 1998, Pub. L. 105-
206, secs. 3305(a), 3309(a), 112 Stat. 743, 745, with respect to
taxable years beginning after Dec. 31, 1997.
                                - 3 -

letter dated January 20, 1993, respondent advised petitioners

that their case was being forwarded to respondent’s Appeals

Office for consideration.

     On February 22, 1993, petitioners’ case was received in the

Birmingham, Alabama, Appeals Office and assigned to Appeals

officer Dennis Smith, who worked out of respondent’s Jackson,

Mississippi, suboffice.   Shortly thereafter, Smith mailed

petitioners two letters advising them that the case had been

referred to the Appeals Office and requesting they schedule an

appointment.    On April 21, 1993, Smith met with petitioner wife

as scheduled.   On November 12, 1993, Smith mailed petitioners a

letter asking their consent to extend indefinitely the period of

limitations to assess tax with respect to both taxable years 1989

and 1990.   On November 20, 1993, petitioners executed a Form 872-

A, Special Consent to Extend the Time to Assess Tax.     On

November 30, 1993, Smith mailed petitioners a letter transmitting

a copy of the executed Form 872-A.

     On June 23, 1994, after attempting unsuccessfully to settle

the case, respondent mailed petitioners a notice of deficiency

from the Birmingham Appeals Office.     In the notice, respondent

determined that petitioners were liable for deficiencies of

$14,088 and $16,610, and accuracy-related penalties of $2,818 and

$3,322, for taxable years 1989 and 1990, respectively.     The

notice was sent by certified mail to petitioners’ last known
                                - 4 -

address.    Petitioners, however, never actually received the

notice.    On August 1, 1994, the notice of deficiency was returned

to the Birmingham Appeals Office.    The envelope containing the

notice had been stamped with a notation indicating that it was

returned to sender because it was “unclaimed”.

     The 90-day period for filing a Tax Court petition with

respect to petitioners’ notice of deficiency expired on

September 21, 1994, without petitioners’ having filed a Tax Court

petition.   On November 2, 1994, the deficiencies and accuracy-

related penalties determined by respondent, as well as interest

accrued thereon, were assessed.    Also on November 2, 1994,

respondent mailed petitioners a separate Notice of Tax Due on

Federal Tax Return for each of the taxable years 1989 and 1990.

On November 10, 1994, respondent’s Memphis Service Center

received from petitioners copies of these notices, each bearing

petitioner husband’s handwritten notation, “I don’t agree with

this finding and am appealing it to tax court.”

     Respondent’s Memphis Service Center mailed petitioners

subsequent notices, culminating in the issuance of notices of

intent to levy dated May 8, 1995.    By letter dated May 10, 1995,

petitioners responded that they were still seeking to appeal

their case, but had learned that it would be necessary to file a

court petition.
                               - 5 -

     On May 29, 1997, respondent received $11,622 pursuant to a

notice of levy on petitioners’ bank account.   This amount was

applied to petitioners’ balance due for taxable year 1989.    On

June 3, 1997, petitioners paid in full the balances due for

taxable years 1989 and 1990, including interest of $14,687 for

1989 and $13,483 for 1990.

     On June 21, 1997, petitioners filed Form 843, Claim for

Refund and Request for Abatement, for taxable years 1989 and

1990.   Petitioners requested abatement of interest in the amounts

of $10,038 for taxable year 1989 and $11,039 for taxable year

1990.   On July 7, 1997, petitioners also filed Forms 843

requesting refunds approximating the total tax, penalties, and

interest assessed for taxable years 1989 and 1990.

     On April 13, 1998, respondent issued a notice of final

determination disallowing petitioners’ June 21, 1997, claim for

abatement of interest.   On August 26, 1998, respondent issued a

notice disallowing petitioners’ July 7, 1997, claims for refunds.

Discussion

     In seeking abatement of respondent’s assessment of interest,

petitioners have alleged that respondent erred in the

determination, assessment, and collection of their Federal income

taxes, and that they were improperly denied their right to

petition this Court to review respondent’s deficiency
                                  - 6 -

determination because they never received their statutory notice

of deficiency.

         We construe petitioners’ claim for interest abatement as

arising under section 6404(e)(1), which authorizes the Treasury

Secretary to abate interest on any deficiency or payment of

income, gift, estate, and certain excise taxes to the extent that

any error or delay in payment is attributable to any error or

delay by an officer or employee of the Internal Revenue Service

acting in his or her official capacity and performing a

ministerial act.     Such an error or delay in performing a

ministerial act is taken into account only if it is in no

significant aspect attributable to the taxpayer and only if it

occurs after the IRS has contacted the taxpayer in writing

regarding the deficiency or payment.3


     3
         Sec. 6404(e) provides:

                  Abatement 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
                                                      (continued...)
                                   - 7 -

       The temporary regulations define “ministerial act” 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).]

       Section 6404(e) is not intended to be “used routinely to

avoid payment of interest”, but rather is to be “utilized in

instances where failure to abate interest would be widely

perceived as grossly unfair.”      H. Rept. 99-426 (1985), 1986-3

C.B. (Vol. 2) 844; S. Rept. 99-313 (1985), 1986-3 C.B. (Vol. 3)

208.

       For interest abatement claims made after July 30, 1996, the

Tax Court has jurisdiction to determine whether the



       3
        (...continued)
                         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.

     In 1996, sec. 6404(e) was amended to permit abatement of
interest for “unreasonable” error or delay resulting from the
performance of ministerial or “managerial” acts. Taxpayer Bill
of Rights 2, Pub. L. 104-168, sec. 301(a)(1) and (2), 110 Stat.
1452, 1457 (1996). The amended provision applies to tax years
beginning after July 30, 1996. See id., sec. 301(c). Therefore,
the amendment is inapplicable to the instant case.
                                - 8 -

Commissioner’s failure to abate interest under section 6404 was

an abuse of discretion.    See sec. 6404(g)(1); Woodral v.

Commissioner, 112 T.C. 19, 23 (1999).     Section 6404 does not

authorize the Treasury Secretary to abate assessments of taxes

and does not confer jurisdiction on this Court to review the

denial of such requests.

     Petitioners cannot point to, nor does the record credibly

suggest, any erroneous or dilatory performance of a ministerial

act by an officer or employee of the Commissioner that

contributed to a delay or error in the payment of the interest

which has accrued on petitioners’ outstanding tax liabilities.

Cf. Douponce v. Commissioner, T.C. Memo. 1999-398.

     Petitioners argue generally that respondent’s agent

improperly performed the examination of their tax returns, that

respondent’s determinations in the statutory notice were

improper, and that the Appeals officer gave inadequate

consideration to their protest.    The actions of respondent’s

agent and Appeals officer in applying Federal tax law to

petitioners’ facts and circumstances required the exercise of

discretion and judgment.    A decision concerning the proper

application of Federal tax law is not a ministerial act, see

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

Reg. 310163 (Aug. 13, 1987), and hence cannot provide a basis for

abating interest under section 6404(e).
                               - 9 -

     Petitioners also suggest that respondent’s error or delay

caused them not to receive their notice of deficiency and thus to

be denied their right to petition this Court regarding

respondent’s determination of their tax liability.   We do not

believe, however, that the interest which petitioners seek to

have abated was attributable to ministerial errors or delays in

respondent’s processing their unclaimed statutory notice.    It is

undisputed that the notice of deficiency was mailed to

petitioners’ last known address.   Respondent was under no

statutory obligation to remail a notice of deficiency that had

been properly mailed to a taxpayer and returned unclaimed.    See

King v. Commissioner, 857 F.2d 676, 681 (9th Cir. 1988), affg. 88

T.C. 1042 (1987); Monge v. Commissioner, 93 T.C. 22, 33 (1989).

     As in effect when the notice of deficiency was issued in

this case, the Internal Revenue Manual directs that an unclaimed

notice of deficiency should be returned to the Appeals officer

and states that “if the appeals officer wishes” and there is

enough time remaining before the period of limitations runs, the

Appeals officer may direct additional checks of respondent’s

computer files to verify the taxpayer’s last known address.

8 Appeals, Internal Revenue Manual (CCH), sec. 363(2), at

8114-20.   The Internal Revenue Manual states:

     If, after checking all possible sources, another address
     cannot be found, and the appeals officer determines that
                              - 10 -

     the notice was sent to the last known address, he/she
     should initial the statutory notice and no further action
     need be taken to try to deliver the notice. [Id.]

     Because further action with regard to the unclaimed

statutory notice was left to the Appeals officer’s discretion and

judgment, his inaction in this regard did not constitute error or

delay in performing a ministerial act for purposes of applying

section 6404(e).

     Petitioners further suggest that after their taxes were

assessed by default on November 2, 1994, they were led to believe

that the notice of deficiency would be forthcoming or reissued,

at which time they could contest the deficiency in the Tax Court,

or that respondent intended to take other action in response to

their protest.   Again, however, the record does not credibly

suggest any basis for concluding that petitioners’ delay in

paying the assessed taxes after receiving the notice of tax due

on November 2, 1994, was attributable to ministerial errors or

delays by respondent’s officers or employees.

     Accordingly, we conclude that respondent’s failure to abate

petitioners’ interest under section 6404 was not an abuse of

discretion.

      To reflect the foregoing,


                                    Decision will be entered

                               for respondent.
