                        T.C. Memo. 2008-277



                      UNITED STATES TAX COURT



  ALAN LEE KUYKENDALL AND DEBI MARIE KUYKENDALL, Petitioners v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 16232-06L.          Filed December 10, 2008.



     Alan Lee Kuykendall and Debi Marie Kuykendall, pro sese.

     Shirley D. Chin, for respondent.



                         MEMORANDUM OPINION


     HAINES, Judge:   Pursuant to section 6330(d),1 petitioners

seek review of respondent’s determination to proceed with the

collection of petitioners’ unpaid 1999 Federal income tax

liability.   The issue is whether petitioners are entitled to an


     1
      Unless otherwise indicated, section references are to the
Internal Revenue Code, as amended.
                                 -2-

abatement of interest under section 6404(e) with respect to their

1999 tax liability.

                             Background

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

The stipulation of facts, the exhibits attached thereto, and the

stipulation of settled issues are incorporated herein by this

reference.    Petitioners resided in California at the time their

petition was filed.

     After receiving a Final Notice of Intent to Levy and Notice

of Your Right to a Hearing from respondent, petitioners timely

requested a hearing.   Petitioners sought to dispute their 1999

tax liability.   However, respondent’s Appeals officer determined

that petitioners were not entitled to challenge the underlying

liability because they had received a notice of deficiency.

     Under section 6330(c)(2)(B) a taxpayer may challenge the

underlying liability during a section 6330 hearing only if the

taxpayer did not receive a notice of deficiency or otherwise have

an opportunity to dispute the tax liability.   However, the

regulations clarify that receipt of a notice of deficiency means

receipt in time to petition this Court for redetermination of the

deficiency.   Sec. 301.6330-1(e)(3), Q&A-E2, Proced. & Admin.

Regs.

     In fact, petitioners received the notice of deficiency with

only 12 days remaining to petition this Court.    Petitioners
                                 -3-

sought review of respondent’s determination not to allow a

challenge to the underlying liability.    In Kuykendall v.

Commissioner, 129 T.C. 77, 82 (2007), we determined that 12 days

was insufficient to allow petitioners to petition for

redetermination of the deficiency, and therefore petitioners were

entitled to challenge the underlying liability during their

hearing.    We then remanded the case to respondent’s Office of

Appeals to give petitioners the opportunity to dispute the

liability.    Id.

     As a result of the hearing, the parties agreed that

petitioners’ 1999 tax liability should be reduced from $4,695 to

$2,695.2    However, petitioners objected to the assessment of

interest on the deficiency, and they requested an abatement of

interest.    The parties subsequently filed a stipulation of

settled issues resolving all issues with the exception of

interest owed on the deficiency.

                             Discussion

     Section 6404(e)(1) provides that the Secretary may abate the

assessment of interest that accrued as the result of any

unreasonable error or delay by an officer or employee of the




     2
      Petitioners reported tax due of $104 on their return.
Respondent determined a $4,591 deficiency.
                                -4-

Internal Revenue Service in performing a ministerial or

managerial act.3   A ministerial act means a procedural or

mechanical act that does not involve the exercise of judgment or

discretion and occurs during the processing of a taxpayer’s case

after all the prerequisites to the act, such as conferences and

review by supervisors, have taken place.   See Lee v.

Commissioner, 113 T.C. 145, 149-150 (1999); sec. 301.6404-

2(b)(2), Proced. & Admin. Regs.   A managerial act means an

administrative act that involves a temporary or permanent loss of

records or the exercise of judgment or discretion relating to

personnel management during the processing of a taxpayer’s case.

Sec. 301.6404-2(b)(1), Proced. & Admin. Regs.   In contrast, a

decision concerning the proper application of Federal tax law is

not a ministerial or managerial act.   Sec. 301.6404-2(b), Proced.

& Admin. Regs.

     Petitioners contend they are entitled to an abatement of

interest beginning on August 17, 2004, when the Appeals officer

first decided that they could not challenge the underlying

liability.   Petitioners argue that because we held in Kuykendall

v. Commissioner, supra at 82, that they were entitled to

challenge the underlying liability, the Appeals officer’s


     3
      Where a taxpayer makes a request for abatement of interest
during a sec. 6330 hearing, the Court has jurisdiction over the
request for abatement of interest that is the subject of the
Commissioner’s collection activities. Katz v. Commissioner, 115
T.C. 329, 340-341 (2000).
                                 -5-

decision was an error, and interest that accrued after that error

should be abated.

     The issue is whether the Appeals officer’s decision not to

allow petitioners’ challenge to the underlying liability was a

managerial or ministerial error.   It was neither.   Before our

Opinion in Kuykendall, to our knowledge no court had addressed

whether a taxpayer, upon receipt of a notice of deficiency, had

sufficient time to petition this Court for redetermination of the

deficiency so as to be precluded from challenging the underlying

liability during a section 6330 hearing.     Respondent’s Appeals

officer decided that 12 days was sufficient.    This was a decision

concerning the proper application of Federal tax law:    how

section 6330(c)(2)(B) and section 301.6330-1(e)(3), Q&A-E2,

Proced. & Admin. Regs., applied to petitioners’ situation.

Therefore, it was not a ministerial or managerial error, and

petitioners are not entitled to an abatement of interest.

     To reflect the foregoing,


                                       Decision will be entered for

                                 respondent.
