                        T.C. Memo. 2000-241



                      UNITED STATES TAX COURT



                 JOHN B. COSGRIFF, Petitioner v.
          COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket No. 13247-98.                     Filed August 4, 2000.


     John B. Cosgriff, pro se.

     Charles B. Burnett, for respondent.



             MEMORANDUM FINDINGS OF FACT AND OPINION


     RUWE, Judge:   On May 23, 1998, respondent issued a notice of

final determination denying petitioner’s claim to abate interest

on his 1992 Federal income tax liability.     Petitioner timely

filed a petition to this Court under section 6404(g)1 and Rule


     1
      Sec. 6404(g) was redesignated sec. 6404(i) by the Internal
Revenue Service Restructuring & Reform Act of 1998, Pub. L. 105-
                                                   (continued...)
                                   - 2 -

280.       The sole issue for decision is whether respondent abused

his discretion by denying petitioner’s request to abate interest.

                             FINDINGS OF FACT

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

The stipulation of facts and the accompanying exhibits are

incorporated herein by this reference.       Petitioner resided in Las

Vegas, Nevada, at the time he filed his petition.

       For the year 1992, petitioner worked as a bartender at the

Las Vegas Hilton and conducted an auto sales business.

Petitioner filed his 1992 Form 1040, U.S. Individual Income Tax

Return, on May 24, 1993.       Petitioner reported a business loss of

$16,504 related to auto sales for his business “Whole Sale Auto”.

On September 12, 1994, respondent notified petitioner in writing

that his 1992 Federal income tax return had been selected for

examination and requested that petitioner arrange an appointment

and produce records substantiating his tip income and certain

items from his Schedule C, Profit and Loss From Business.         On

November 14, 1994, petitioner provided respondent with his tip

diary but did not provide any information supporting his Schedule

C.   On November 23, 1994, respondent notified petitioner of

proposed changes to his 1992 return.       The proposed changes


       1
      (...continued)
206, secs. 3305(a), 3309(a), 112 Stat. 685, 743, 745. Unless
otherwise indicated, all section references are to the Internal
Revenue Code and all Rule references are to the Tax Court Rules
of Practice and Procedure.
                               - 3 -

included the disallowance of petitioner’s Schedule C business

loss, the inclusion of certain royalties in income, and the

imposition of late-filing and accuracy-related penalties.

Thereafter, two appointments were scheduled between petitioner

and respondent’s agent to discuss the 1992 return, but petitioner

canceled both appointments.   On April 19, 1995, respondent

notified petitioner that respondent’s previous proposed

determinations had not changed.   On July 26, 1995, a notice of

deficiency was sent to petitioner determining a $2,483

deficiency, a $42 late-filing penalty, and a $497 accuracy-

related penalty.   Petitioner did not file a petition with this

Court seeking a redetermination of the deficiency and penalties,

and the amounts determined in the notice of deficiency were

assessed.

     On October 31, 1995, petitioner requested reconsideration of

respondent’s determination, but the request was denied because

petitioner had failed to timely contest the notice of deficiency.

On February 13, 1996, petitioner called a problem resolution

officer at the Ogden Service Center to request a review of his

1992 tax liability.   The Problem Resolution Office in the Ogden

Service Center reviewed the matter and, in a letter to petitioner

dated May 3, 1996, informed petitioner that a review of his

account for 1992 indicated that the balance due was correct.    In

June of 1996, petitioner sent a letter to Senator Bryan of Nevada
                                - 4 -

requesting assistance in resolving his disagreement with the

Internal Revenue Service.   Senator Bryan inquired about

petitioner’s situation.   As a result, respondent reopened

petitioner’s case in August of 1996 and reconsidered the 1992

return.   This time, petitioner provided receipts and information

concerning his 1992 Schedule C automotive business.   On the basis

of the information provided, respondent abated $1,125 of the

deficiency, $539 in penalties, and $56.81 in interest.     On

October 7, 1996, respondent denied petitioner’s subsequent

request for appellate consideration.

     On April 2, 1997, petitioner filed a Form 843, Claim for

Refund and Request for Abatement.   On August 15, 1997, respondent

notified petitioner than no penalties would be imposed but that

interest would not be abated.   This notice invited petitioner to

request consideration with respondent’s Appeals Office within 30

days.   On September 15, 1997, petitioner requested that his claim

for interest abatement be reconsidered by the Phoenix Appeals

Office.   On April 23, 1998, the Appeals Office denied

petitioner’s claim for abatement of interest but notified him

that the case would be held open for 2 weeks to allow him an

opportunity to provide additional information.   On May 23, 1998,

respondent issued a notice of final determination denying

petitioner’s claim for abatement of interest.    Petitioner timely
                                 - 5 -

filed a petition to this Court seeking review of respondent’s

failure to abate interest.

                                OPINION

     This Court may order an abatement of interest only where

there is an abuse of discretion by the Commissioner in refusing

to abate interest.    See sec. 6404(i).   In order to show an abuse

of discretion, petitioner must establish that respondent

exercised his discretion arbitrarily, capriciously, or without

sound basis in fact or law.     See Rule 142(a); Woodral v.

Commissioner, 112 T.C. 19, 23 (1999).

     Section 6404(e)(1) provides, in pertinent part, that the

Commissioner has discretionary authority to abate part or all of

an assessment of interest on:    (1) Any deficiency attributable to

any error or delay by the Commissioner’s officers or employees in

performing a ministerial act; or (2) any payment of tax to the

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

officers or employees being erroneous or dilatory in performing a

ministerial act.2    An error or delay by the Commissioner can be

taken into account only if it occurs after the Commissioner has

contacted the taxpayer in writing with respect to the deficiency


     2
      In 1996, sec. 6404(e)(1) was amended by the Taxpayer Bill
of Rights 2, Pub. L. 104-168, sec. 301, 110 Stat. 1452, 1457
(1996), to allow the Commissioner to abate interest for an
“unreasonable” error or delay resulting from “managerial” and
ministerial acts. The amendment is in effect for tax years
beginning after July 30, 1996, and thus is not applicable in this
case. See Woodral v. Commissioner, 112 T.C. 19, 25 n.8 (1999).
                                 - 6 -

or payment and if no “significant aspect” of the error or delay

is attributed to the taxpayer.    Sec. 6404(e)(1); Nerad v.

Commissioner, T.C. Memo. 1999-376.       Because Congress did not

intend for section 6404(e) to be used routinely, we will order

abatement only “where failure to abate interest would be widely

perceived as grossly unfair.”     Lee v. Commissioner, 113 T.C. 145,

149 (1999); H. Rept. 99-426, at 844 (1985), 1986-3 C.B. (Vol. 2)

1, 844; S. Rept. 99-313, at 208 (1986), 1986-3 C.B. (Vol. 3) 1,

208.

       Petitioner argues that interest should be abated because:

(1) Hardships beyond his control prevented him from complying

with Federal income tax laws; (2) respondent failed to include

vital evidence in the stipulation of facts; (3) just before

trial, respondent’s attorney attempted to coerce petitioner into

dropping his abatement claim; and (4) respondent delayed

proceedings when petitioner was willing to settle his income tax

liabilities.    Petitioner’s hardships, the content of the

stipulation of facts, and the coercion allegation are not proper

grounds for us to order interest abatement.      Additionally, we

find these allegations to be unsupported by the evidence.

       In order for petitioner to prevail, there must be an error

or delay in performing a ministerial act that is attributable to

respondent.    A “ministerial act” does not involve the exercise of

judgment or discretion.    Sec. 301.6404-2T(b)(1), Temporary
                                 - 7 -

Proced. & Admin. Regs., 52 Fed. Reg. 30163 (Aug. 13, 1987).3      It

is a procedural or mechanical act that occurs during the

processing of the taxpayer’s case after all prerequisites to the

act, such as conferences and review by supervisors, have taken

place.   See id.    The mere passage of time does not establish

error or delay in performing a ministerial act.     See Lee v.

Commissioner, supra at 150.

     For purposes of section 6404(e), an error or delay cannot be

considered for the period before September 12, 1994, because that

is when respondent first contacted petitioner in writing

regarding the deficiency.     See sec. 6404(e)(1); Nerad v.

Commissioner, supra.     Petitioner argues that respondent

incorrectly determined his income tax liabilities for 1992 and

that respondent failed to timely answer his correspondence or

meet with him.     Regardless of whether respondent correctly

determined petitioner’s 1992 income tax liabilities, “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., supra.     Although

petitioner contacted respondent numerous times in connection with

his 1992 return, the evidence in the record shows that respondent

replied to petitioner’s correspondence in a timely manner that


     3
      On Dec. 18, 1998, the final regulation under sec. 6404 was
issued. “Ministerial act” is defined in the same manner in the
final regulation as in the temporary regulation.
                                - 8 -

was not arbitrary, capricious, or without sound basis in fact or

law.    See Woodral v. Commissioner, supra at 23.

       Respondent reconsidered petitioner’s 1992 tax liability

despite his failure to file a petition contesting the notice of

deficiency.    Thereafter, respondent exercised discretion in

abating a substantial portion of the prior assessment.    Any

errors or delays were attributable to petitioner’s cancellation

of scheduled appointments and his failure to timely produce

requested information.    Accordingly, we hold that respondent’s

denial of petitioner’s claim to abate interest was not an abuse

of discretion.


                                        Decision will be entered for

                                respondent.
