                  T.C. Memo. 2004-167



                UNITED STATES TAX COURT



          CHRISTINE A. DORMER, Petitioner v.
     COMMISSIONER OF INTERNAL REVENUE, Respondent



Docket No. 10231-03.            Filed July 14, 2004.


     During June of 2002, P and R executed a Form
12257, Summary Notice of Determination, Waiver of Right
to Judicial Review of a Collection Due Process
Determination, and Waiver of Suspension of Levy Action,
with respect to P’s 1998 taxable year. The document
specified that P’s tax liability would be decreased by
a certain amount and that an accuracy-related penalty
would be abated in full. P paid the remaining income
tax liability, and R later issued to P a notice of
balance due pertaining to interest and an addition to
tax owing for 1998.

     Held: R’s failure to abate interest for 1998 was
not an abuse of discretion.



Sudhir R. Patel, for petitioner.

James Brian Urie, for respondent.
                                 - 2 -



                MEMORANDUM FINDINGS OF FACT AND OPINION


     WHERRY, Judge:     On May 22, 2003, respondent issued a notice

of final determination disallowing petitioner’s claim for

abatement of interest with respect to her 1998 taxable year.

Petitioner timely filed a petition with this Court under section

6404(h) and Rule 280 for review of respondent’s denial.1    The

issue for decision is whether respondent’s failure to abate

interest for the year in issue was an abuse of discretion.

                           FINDINGS OF FACT

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

The stipulations of the parties, with accompanying exhibits, are

incorporated herein by this reference.    At the time the petition

was filed in this case, petitioner resided in Pottsville,

Pennsylvania.

     During 1997, petitioner received an offer of employment that

was subsequently revoked.    The revocation led to petitioner’s

assertion of various claims against the prospective employer,

which were resolved by means of a settlement agreement dated




     1
       Unless otherwise indicated, section references are to the
Internal Revenue Code of 1986, as amended, and Rule references
are to the Tax Court Rules of Practice and Procedure.
                                - 3 -

April 27, 1998.   Pursuant to that agreement, petitioner received

during 1998 a settlement payment of $30,000.2

     On April 15, 1999, petitioner filed her Federal income tax

return for 1998 and, through withholding, paid the full amount of

the tax shown thereon.   On the basis of the advice of her then

counsel, who represented her in the dispute with the prospective

employer, petitioner did not report the settlement payment on her

1998 return.

     Subsequently, the Internal Revenue Service (IRS) took the

position that petitioner had underreported her income tax for

1998.    Petitioner at that point terminated her former counsel and

employed her present attorney, Sudhir R. Patel (Mr. Patel).

Although the record contains no information on the course or

manner of resolution of any ensuing examination, on May 21, 2001,

respondent assessed additional tax and a penalty under section

6662 for 1998 in the respective amounts of $10,602 and $1,399.

Respondent also on that date assessed interest due for 1998 in

the amount of $1,705.41.   Petitioner was sent notices of balance

due on May 21 and June 25, 2001.




     2
       Although documents and testimony contained in the record
are inconsistent as to whether the settlement payment was $30,000
or $35,000, the settlement agreement itself and other
contemporaneous material recite the $30,000 figure. In any
event, the discrepancy is immaterial to the issues we consider in
this proceeding.
                                - 4 -

     Thereafter, for reasons not otherwise elucidated, respondent

on July 23, 2001, abated $3,605 of the assessed tax and $579.93

of the interest, leaving a balance of tax due in the amount of

$6,997.   Respondent at the same time assessed an addition to tax

pursuant to section 6651(a) of $69.97.    A further notice of

balance due was also sent on that date.

     In September of 2001, respondent issued to petitioner

notices of intent to levy with respect to the 1998 year.    A face-

to-face hearing was then held on April 11, 2002, between

petitioner, Mr. Patel, and Appeals Officer Judith Hornstein

(Ms. Hornstein).    At the conference, the parties discussed a

potential resolution of the collection dispute, which involved a

proposed 25-percent reduction in the tax due from petitioner for

1998 and an abatement in full of the section 6662 penalty.

Significantly, neither interest nor the addition to tax under

section 6651 was ever discussed at the hearing.

     The parties did not agree to a settlement at the April 11,

2002, hearing, but on May 20, 2002, Mr. Patel sent to

Ms. Hornstein a letter advising that petitioner wished to resolve

the matter for the amount discussed at the April 11 meeting.     The

letter continued:

          Ms. Dormer has borrowed the funds necessary to pay
     the amount in a lump sum payment. However, before we
     make the payment, we will need you to confirm that the
     $300.00 refund authorized by President Bush as well as
     Ms. Dormer’s 2001 refund has been garnished and applied
     by the Internal Revenue Service. We will then need to
                              - 5 -

     hear from you as to whom the balance payment should be
     made payable to and where the payment should be sent.
     We will also need a release executed by the appropriate
     representatives of the Internal Revenue Service
     confirming that once Ms. Dormer makes the lump sum
     payment that this matter will be resolved in its
     entirety and that Ms. Dormer will receive no further
     notices and no further collection attempts or lien
     efforts will be taken by the service.

     Thereafter, according to the stipulation filed in the

instant proceeding (and thereby incorporated into our findings):

          8.   On May 29, 2002, the parties agreed to a
     resolution of the Collection Due Process dispute
     whereby the Service would reduce the tax due from
     petitioner for the taxable year 1998 by 25%
     ($1,749.25), from $6,997.00 to $5,247.75, and after
     subtracting $1,003.00 in credits, the balance of tax
     due from petitioner for the taxable year 1998 was in
     the amount of $4,244.75.

          9.   The agreement also included abatement of the
     entire amount of penalty due from petitioner under
     I.R.C. § 6662 for the taxable year 1998.

     On the May 29, 2002, date, Ms. Hornstein mailed to

Mr. Patel, as petitioner’s representative, a letter enclosing

copies of Form 12257, Summary Notice of Determination, Waiver of

Right to Judicial Review of a Collection Due Process

Determination, and Waiver of Suspension of Levy Action, with the

following explanation:

     Enclosed are three copies of the Summary Notice of
     Determination. Our agreed settlement is on the bottom
     of page two. Please sign and return two copies of the
     Form 12257 to me by June 20, 2002.

     The taxpayer’s 1998 account was credited with $300 on
     8/27/01. Her $703 overpayment from her 2001 tax return
     was credited to the 1998 year on 4/1/02.
                               - 6 -

     After Appeals closes the case it will be sent to the
     Service Center for the agreed changes to be processed.
     The Service center will then send an adjustment notice
     to the taxpayer with the exact amount due.

The Form 12257 stated that “The determination of Appeals is:    It

has been determined to decrease the tax liability from $6,997 to

$5,247.75.   The $1,399 penalty will be abated in full.   The

taxpayer will pay the balance due after receipt of the adjustment

from the Service Center.”

     On June 13, 2002, Mr. Patel and Ms. Hornstein held a

telephone conversation during which Ms. Hornstein confirmed that

the tax due would be $4,244.75, and on June 14, 2002, Mr. Patel

mailed to Ms. Hornstein a letter enclosing Forms 12257 executed

by petitioner and a check in the amount of $4,244.75.

Mr. Patel’s letter read:

          Per our recent discussion, enclosed please find
     two executed form 12257 forms and Christine Dormer’s
     check made payable to the Department of the Treasury in
     the amount of $ 4,244.75. As we discussed, the
     $ 4,244.75 figure was arrived at by taking the
     decreased tax liability amount of $ 5,247.75 and
     subtracting $ 1,003.00 ($ 300.00 President Bush refund
     plus $ 703.00 2001 tax year overpayment).

          Please mark Ms. Dormer’s record with the Service
     to reflect payment and resolution of this matter.
     Should you have any further questions, please do not
     hesitate to contact me.

     Petitioner’s account for 1998 was credited with the

$4,244.75 payment on June 25, 2002, and on June 27, 2002, William

A. Katzmar (Mr. Katzmar), Acting Office of Appeals Team Manager,

countersigned the Form 12257 and thereby accepted the settlement
                               - 7 -

agreement set forth in the document.   Mr. Katzmar then sent

petitioner a letter dated July 9, 2002, verifying approval of the

agreement and enclosing a copy of the executed Form 12257.     The

letter stated in part:

     The agreement we reached has been approved and we will
     complete our processing of your case.

     We will adjust your account and figure the interest.
     If you haven’t paid the full amount due, the IRS Center
     will send a bill for any additional amount you owe. If
     you are due a refund, the IRS Center will mail it to
     you.

     On October 7, 2002, respondent processed the executed Form

12257, abating tax of $1,749.25 and the $1,399 section 6662

penalty.   A notice of balance due was issued on that date for

amounts still outstanding.   Also on October 7, 2002, Mr. Patel

sent to Ms. Hornstein a letter which opened as follows:   “This is

quickly turning into the case that won’t go away.   I received a

telephone call from Paula Lane, Appeals Officer, on October 1,

2002.   Ms. Lane claims that Christine still owes $2,026.91.”

After recounting various events in petitioner’s dealings with

Ms. Hornstein, the letter continued:   “During the times we spoke,

it was clear to both me and the taxpayer that the dollar amounts

we were discussing were the full and total dollar amounts due and

owing by the taxpayer”.

     Mr. Patel thereafter, on petitioner’s behalf, prepared a

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

November 22, 2002.   The IRS received and filed this document on
                                 - 8 -

December 4, 2002.     The Form 843 requested abatement of interest

and penalty for the year 1998 in the amount of $2,026.91.

Petitioner’s request was assigned to Appeals Officer Michael

Bibb, and on April 24, 2003, an Appeals conference was held to

discuss petitioner’s Form 843.      On May 22, 2003, respondent

issued a Full Disallowance--Final Determination, denying

petitioner’s request for abatement.       Petitioner’s petition

seeking review of respondent’s failure to abate interest under

section 6404 was filed with this Court on June 30, 2003.       The

petition claims that respondent’s determination is based on the

following error:     “The Petitioner and the Internal Revenue

Service agreed upon and reached a full and final settlement of

all disputed issues, as a consequence of which the Internal

Revenue Service’s attempts to collect additional interest are

erroneous.”

                                OPINION

I.   General Rules

      A.   Section 6404 Generally

      Section 6404(e) provides, in relevant part, as follows:

           SEC. 6404(e). Abatement of Interest Attributable
      to Unreasonable 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 unreasonable error or delay
                 by an officer or employee of the Internal
                              - 9 -

               Revenue Service (acting in his official
               capacity) in performing a ministerial or
               managerial act, or

                    (B) any payment of any tax described in
               section 6212(a) to the extent that any
               unreasonable error or delay in such payment
               is attributable to such an officer or
               employee being erroneous or dilatory in
               performing a ministerial or managerial 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.

     Regulations promulgated under section 6404 define

“managerial act” as “an administrative act that occurs during the

processing of a taxpayer’s case involving the temporary or

permanent loss of records or the exercise of judgment or

discretion relating to management of personnel.”   Sec. 301.6404-

2(b)(1), Proced. & Admin. Regs.   A “ministerial act” is “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.

301.6404-2(b)(2), Proced. & Admin. Regs.   The regulations further

specify that “A decision concerning the proper application of

federal tax law (or other federal or state law)” is neither a
                                - 10 -

managerial nor a ministerial act.    Sec. 301.6404-2(b)(1) and (2),

Proced. & Admin. Regs.

     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.    Action constitutes an abuse of

discretion where arbitrary, capricious, or without sound basis in

fact or law.   Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

Therefore, the question here before the Court is whether this

case reveals a managerial or ministerial error such that

respondent’s failure to abate interest reflects abused

discretion.

     Petitioner’s position is that payment of the $4,244.75

resolved her liabilities for 1998 in full, including interest.

Thus, petitioner is essentially arguing that the settlement

represented a compromise of her 1998 tax year for $4,244.75.      If

in fact petitioner reached an enforceable agreement to settle all

liabilities for 1998, including interest, with a payment of

$4,244.75, failure by IRS employees properly to communicate this

information to the Service Center and/or failure by Service

Center personnel properly to take into account and input this

information in computing any final balance on petitioner’s

account was a mere ministerial error.    No judgment or discretion

would have remained to be exercised once such an enforceable

agreement had come into being.
                               - 11 -

     B.   Settlement of Tax Controversies

     There exist two principal contexts in which this Court is

called upon to consider the consequences of a settlement or

purported settlement between parties to a tax controversy.

Questions have arisen concerning the effect of a settlement

allegedly reached either (1) during the administrative process

prior to the docketing of a Tax Court case or (2) after the

filing of a Tax Court petition, and the standards we have

employed in the two scenarios are not identical.

           1.   Prepetition Settlements

     This Court has summarized the rules generally applicable to

prepetition settlements as follows:

          The law regarding administrative settlement offers
     is well established. Regulations issued by the
     Internal Revenue Service conclusively establish the
     procedures for closing agreements and compromises
     pursuant to sections 7121 and 7122. Secs. 301.7121-1,
     301.7122-1, Proced. & Admin. Regs. These procedures
     are exclusive and must be satisfied in order to
     effectuate a compromise or settlement which will be
     binding on both the taxpayer and the Government. * * *
     [Rohn v. Commissioner, T.C. Memo. 1994-244.]

See also Urbano v. Commissioner, 122 T.C. ___, ___ (2004) (slip

op. at 15-16) (“it is firmly established that section 7121 sets

forth the exclusive means by which an agreement between the

Commissioner and a taxpayer concerning the latter’s tax liability

may be accorded finality”); Estate of Meyer v. Commissioner, 58

T.C. 69, 70 (1972) (“Section 7121 of the Internal Revenue Code of

1954 sets forth the exclusive procedure under which a final
                              - 12 -

closing agreement as to the tax liability of any person can be

executed.”); Harbaugh v. Commissioner, T.C. Memo. 2003-316 (“It

is well settled that section 7122 and the regulations thereunder

provide the exclusive method of effectuating a valid compromise

of assessed tax liabilities.”); Ringgold v. Commissioner, T.C.

Memo. 2003-199 (“The law regarding compromises is well

established.   The regulations and procedures under section 7122

provide the exclusive method of effectuating a compromise.”).

     For instance, pertinent regulations require that any closing

agreement or offer-in-compromise be submitted and/or executed on

or in the specific form prescribed by the IRS.   Secs. 301.7121-

1(d), 301.7122-1(d), Proced. & Admin. Regs.3

     The above principle of exclusivity derives from the early

ruling by the U.S. Supreme Court in Botany Worsted Mills v.

United States, 278 U.S. 282 (1929).    In construing a predecessor

of section 7122, the Supreme Court opined that “Congress intended



     3
       Sec. 301.7122-1, Proced. & Admin. Regs., contains an
effective date provision stating that the section applies to
offers-in-compromise pending on or submitted on or after July 18,
2002. Sec. 301.7122-1(k), Proced. & Admin. Regs. Previous
temporary regulations by their terms apply to offers-in-
compromise submitted on or after July 21, 1999, through July 19,
2002. Sec. 301.7122-1T(j), Temporary Proced. & Admin. Regs., 64
Fed. Reg. 39027 (July 21, 1999). The final and temporary
regulations do not differ materially in substance in any way
relevant here, and temporary regulations are entitled to the same
weight and binding effect as final regulations. Peterson Marital
Trust v. Commissioner, 102 T.C. 790, 797 (1994), affd. 78 F.3d
795 (2d Cir. 1996). For simplicity and convenience, citation is
to the final regulations.
                               - 13 -

by the statute to prescribe the exclusive method by which tax

cases could be compromised” and noted that specification of a

particular mode “includes the negative of any other mode.”     Id.

at 288-289.

     As one example of this general foreclosure of nonstatutory

alternatives, it has been explained:

     the provisions for compromising tax cases are found in
     §§ 7121 and 7122 of the Internal Revenue Code. These
     provisions are exclusive and strictly construed. See
     Botany Worsted Mills v. United States, 1928, 278 U.S.
     282, 49 S.Ct. 129, 73 L.Ed. 379. Because of this
     exclusive method, no theory founded upon general
     concepts of accord and satisfaction can be used to
     impute a compromise settlement, Moskowitz v. United
     States, 285 F.2d 451, 453, 152 Ct.Cl. 412 (1961), and
     therefore none resulted from the government’s
     acceptance and cashing of appellant’s check. * * *
     [Bowling v. United States, 510 F.2d 112, 113 (5th Cir.
     1975).]

See also Urbano v. Commissioner, supra at ___ (slip op. at 17).

     However, the Supreme Court in Botany Worsted Mills v. United

States, supra at 289, left open the question of whether in

limited circumstances equitable estoppel might be applied in the

context of an otherwise unenforceable agreement, as follows:

     And, without determining whether such an agreement,
     though not binding in itself, may when executed become,
     under some circumstances, binding on the parties by
     estoppel, it suffices to say that here the findings
     disclose no adequate ground for any claim of estoppel
     by the United States.

Accordingly, this and other courts have considered estoppel

arguments.    See, e.g., Smith v. United States, 328 F.3d 760, 765-

766 (5th Cir. 2003) (and cases cited thereat); Boulez v.
                                - 14 -

Commissioner, 76 T.C. 209, 214-217 (1981), affd. 810 F.2d 209

(D.C. Cir. 1987).

           2.    Postpetition Settlements

     Once a case becomes docketed in this Court, a different

framework of rules is typically applied.    Specifically, “‘it “is

not necessary that the parties execute a closing agreement under

section 7121 in order to settle a case pending before this Court,

but, rather, a settlement agreement may be reached through offer

and acceptance made by letter, or even in the absence of a

writing.”’”     Dorchester Indus. Inc. v. Commissioner, 108 T.C.

320, 330 (1997) (quoting Manko v. Commissioner, T.C. Memo. 1995-

10) (quoting Lamborn v. Commissioner, T.C. Memo. 1994-515)),

affd. without published opinion 208 F.3d 205 (3d Cir. 2000).

     In this connection, a settlement is a contract, and general

principles of contract law govern whether a settlement has been

reached.   Id.; Robbins Tire & Rubber Co. v. Commissioner, 52 T.C.

420, 435-436 (1969), supplemented by 53 T.C. 275 (1969).    To wit,

a prerequisite to the formation of a contract is mutual assent to

its essential terms, arrived at through offer and acceptance.

Dorchester Indus. Inc. v. Commissioner, supra at 330.

           3.    Interpretation and Invalidation of Settlements

     Under either the prepetition or the postpetition rubric,

interpretation, or invalidation, of the settlement thereby

reached will again rest largely on contract law.     Dutton v.
                              - 15 -

Commissioner, 122 T.C. 133, 138 (2004); Robbins Tire & Rubber Co.

v. Commissioner, supra at 435-436.     In general, such settlements

will not be set aside in absence of fraud or mutual mistake.

Dutton v. Commissioner, supra at 138; Dorchester Indus. Inc. v.

Commissioner, supra at 330; Stamm Intl. Corp. v. Commissioner, 90

T.C. 315, 320-321 (1988); Korangy v. Commissioner, T.C. Memo.

1989-2, affd. 893 F.2d 69 (4th Cir. 1990); see also sec.

301.7122-1(e)(5), Proced. & Admin. Regs.    A unilateral mistake is

not enough to justify relief from an otherwise valid settlement.

Stamm Intl. Corp. v. Commissioner, supra at 320-321; Korangy v.

Commissioner, supra.   As noted by this Court in quoting 3 Corbin

on Contracts, section 608 (1960):

           “If the mistake of one party to a written
      instrument is in thinking that it contains a larger
      promise by the other party than in fact it does, and
      the other party has no reason to know of this mistake,
      of course the mistaken party cannot hold the other to
      the large promise that he did not make, by getting
      reformation or otherwise. * * * ” [Korangy v.
      Commissioner, supra.]

II.   Analysis

      The petition in the instant case was filed on June 30, 2003.

The parties had agreed to the $4,244.75 figure at issue here on

May 29, 2002, and had executed the pertinent Form 12257 in June

of 2002.   Hence, we deal in this scenario with the import of a

prepetition administrative settlement.

      As previously mentioned, petitioner’s argument here rests on

the idea that she settled or compromised her 1998 liabilities in
                             - 16 -

full with payment of the $4,244.75.   However, even if the parties

had in fact agreed to such a resolution, a point which we will

address infra, the agreement would not be legally binding.

     Petitioner does not contend, nor is there evidence, that the

parties complied with the procedures specified under section 7121

or 7122 for either a closing agreement or an offer-in-compromise.

Rather, petitioner admitted at trial that she did not sign an

offer-in-compromise or closing agreement form, and petitioner’s

counsel conceded that petitioner was not relying on any argument

that an agreement under section 7122 had been reached.

Furthermore, because the relevant negotiations took place in a

prepetition setting, any other general theories, such as accord

and satisfaction, would be insufficient to create a legally

binding settlement.

     Nonetheless, the conclusion that the facts here could not

support the existence of a legally binding compromise for

$4,244.75 does not end the inquiry.   Petitioner submits on brief

that respondent “must be equitably estoppel [sic] from pursuing

any further assessments against Ms. Dormer after the June 2002

agreement was reached and Ms. Dormer’s settlement check

received.”

     Equitable estoppel is a judicial doctrine that operates to

preclude a party from denying its own acts or representations

that induced another to act to his or her detriment.     Wilkins v.
                              - 17 -

Commissioner, 120 T.C. 109, 112 (2003); Hofstetter v.

Commissioner, 98 T.C. 695, 700 (1992).   In tax contexts,

equitable estoppel will be applied against the Government only

with the utmost caution and restraint and upon the establishment

of prerequisite elements:   (1) A false representation or

wrongful, misleading silence by the party against whom the

estoppel is claimed; (2) an error in a statement of fact and not

in an opinion or statement of law; (3) ignorance of the true

facts by the taxpayer; (4) reasonable reliance by the taxpayer on

the acts or statements of the one against whom estoppel is

claimed; and (5) adverse effects suffered by the taxpayer from

the acts or statements of the one against whom estoppel is

claimed.   Wilkins v. Commissioner, supra at 112; Norfolk S. Corp.

v. Commissioner, 104 T.C. 13, 60 (1995), supplemented by 104 T.C.

417 (1995), affd. 140 F.3d 240 (4th Cir. 1998); see also Lignos

v. United States, 439 F.2d 1365, 1368 (2d Cir. 1971).

     Here, the record fails to show the existence of the required

elements for equitable estoppel.   Petitioner claims:

“Respondent, in giving Ms. Dormer a final payoff figure of

$4,244.75, made a misrepresentation to Ms. Dormer.”     The

difficulty with this statement is that the evidence does not

establish that the $4,244.75 amount was ever represented as a

“final payoff figure” by respondent.
                                - 18 -

     Specifically, the record does not reflect that the $4,244.75

figure was ever represented as other than the “payoff” amount for

petitioner’s income tax liability, exclusive of penalties,

additions to tax, or interest.    Each of the foregoing four items

appears to have been considered and treated independently by

respondent throughout the administrative process.    At the

hearing, for instance, resolution of the tax liability by means

of a 25-percent reduction was discussed, while resolution of the

accuracy-related penalty focused on abatement in full.    A

separate basis for settlement was thus proposed for the two items

broached at the conference.

     Conversely, both a section 6651(a) addition to tax and

interest were assessed as of the date of the hearing, but neither

was addressed.   Moreover, since these items are not penalties,

there exist no grounds for claiming that respondent represented

they would be abated in full.    Likewise, because the $4,244.75

figure was computed by reducing petitioner’s $6,997 tax liability

(which amount did not include interest, etc.) by 25 percent and

then crediting 2001 refunds of $1,003, respondent by this

calculation would not have represented, and would in fact have

countered any notion, that the addition to tax or interest was

incorporated in the liabilities to be settled by the 75-percent

“payoff” amount.
                              - 19 -

     This distinction among the various components of

petitioner’s 1998 liabilities was consistently maintained by

respondent in the Form 12257 memorializing the agreement.     The

document stated:   “It has been determined to decrease the tax

liability from $6,997 to $5,247.75.    The $1,399 penalty will be

abated in full.”

     In addition, rather than implying that a final payment

amount had been calculated, the correspondence sent by respondent

repeatedly indicated that further adjustments could be

forthcoming.   The May 29, 2002, letter accompanying the Form

12257 explained:   “After Appeals closes the case it will be sent

to the Service Center for the agreed changes to be processed.

The Service center will then send an adjustment notice to the

taxpayer with the exact amount due.”    The Form 12257 itself noted

that “The taxpayer will pay the balance due after receipt of the

adjustment from the Service Center.”    The July 9, 2002, letter

confirming respondent’s approval of the settlement and sent after

receipt of petitioner’s $4,244.75 check is even more explicit:

“We will adjust your account and figure the interest.    If you

haven’t paid the full amount due, the IRS Center will send a bill

for any additional amount you owe.     If you are due a refund, the

IRS Center will mail it to you.”

     Moreover, Ms. Hornstein’s testimony at trial reflects that

she at no time considered interest, or settlement thereof, to be
                               - 20 -

one of the issues before her at the collection hearing.   For

instance, when questioned at trial regarding the letter that

accompanied petitioner’s $4,244.75 check and requested the

marking of petitioner’s account “to reflect payment and

resolution of this matter”, Ms. Hornstein explained:

          A    * * * As far as I’m concerned, payment of the
     tax is resolution. The interest is calculated as of
     the date payment is made and it’s done by the Service
     Center, not by the appeals office.

          Q    I’m sorry. One more time. As far as you
     were concerned, receipt of the check resolved the
     matter--

          A    Result [sic] of the check resolved the tax
     matter and I do not--as far as I’m concerned, it closed
     my case and it was then closed out of the appeals
     office to go to the Service Center for the computation
     of the interest up until the date that it was paid.

Hence, Ms. Hornstein explained that her references in

conversations with Mr. Patel to the $4,244.75 were to the amount

of “the tax”; i.e., the income tax liability reflected in

transcripts of petitioner’s account for 1998.

Accordingly, while Mr. Patel and/or petitioner may have had a

different understanding of the meaning of “tax”, the evidence

does not show that Ms. Hornstein at any time affirmatively

misrepresented that $4,244.75 was a “final payoff figure” in the

sense intended by Mr. Patel.

     It is also noteworthy that each letter from petitioner that

used language such as “resolved” or “resolution” in reference to

petitioner’s case was followed by one of the above-described
                              - 21 -

written communications from respondent that alerted petitioner to

the possibility of future adjustments.   Thus, the Court would be

hard pressed to find even misleading silence, much less

affirmative misconduct.   The statements regarding adjustments

likewise call into question whether reliance by petitioner on

$4,244.75 as a “final payoff figure” was reasonable in any event.

The Court concludes that the circumstances of this case are not

such as to warrant application of equitable estoppel.

     The matter at bar presents a scenario where the objective

evidence and the governing settlement document show that the

parties reached agreement as to the resolution of specified

components of petitioner’s liabilities for the 1998 taxable year.

Petitioner’s understanding that the bargain encompassed all

amounts due for 1998 was at most a unilateral mistake, a belief

that the agreement contained a larger promise by respondent than

in fact it did, which would not support a reformation or other

form of relief.   Although we sympathize with petitioner’s

position, controlling law affords no basis upon which we may

enforce a complete settlement of petitioner’s 1998 liabilities

for $4,244.75.

     Accordingly, in absence of an enforceable settlement of all

1998 liabilities, it cannot be said that an error, ministerial or

otherwise, was committed in computing the balance due on

petitioner’s account.   Furthermore, petitioner has not so much as
                             - 22 -

alleged any other managerial or ministerial errors or delays that

occurred in the processing of her case, and our review of the

record has likewise revealed none.    Accordingly, section 6404(e)

would not authorize an abatement of interest in these

circumstances, and the Court must uphold respondent’s

determination.

     To reflect the foregoing,


                                          Decision will be entered

                                     for respondent.
