                           T.C. Memo. 2007-104



                         UNITED STATES TAX COURT



                      TAN XUAN BUI, Petitioner v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



        Docket No. 3233-06.                Filed April 30, 2007.



        Warren Nemiroff, for petitioner.

        Guy H. Glaser, for respondent.



                           MEMORANDUM OPINION

        MARVEL, Judge:   This case is before the Court on

respondent’s motion for summary judgment, filed pursuant to Rule

121.1




        1
       All Rule references are to the Tax Court Rules of Practice
and Procedure, and all section references are to the Internal
Revenue Code.
                               - 2 -

                            Background

     This case involves an appeal from respondent’s determination

that petitioner is not entitled to an abatement of interest under

section 6404(e)(1).   When the petition in this case was filed,

petitioner resided in Fountain Valley, California.

     Petitioner timely filed his 1997 and 1998 Federal income tax

returns.   Respondent selected the returns for examination.   After

examining the returns, respondent concluded that petitioner had

unreported income and had improperly deducted travel expenses.

Accordingly, on March 21, 2001, respondent issued a notice of

deficiency to petitioner in which he determined deficiencies of

$48,206 and $11,672 for 1997 and 1998, respectively.

Additionally, respondent determined that petitioner was liable

for penalties under section 6662(a) of $9,513.40 and $2,224 for

1997 and 1998, respectively.

     On June 11, 2001, petitioner filed a petition seeking a

redetermination of the deficiencies and penalties set forth in

the notice of deficiency.   Trial was set for January 28, 2002.

On February 1, 2002, a decision reflecting a settlement between

petitioner and respondent (settlement) was entered by the Court.

Under the terms of the settlement, respondent conceded the

deduction for travel expenses, and petitioner conceded the

unreported income and the section 6662(a) penalties.   The

decision contained a stipulation that interest would be assessed

on the deficiencies and penalties due from petitioner as required
                               - 3 -

by law.

     On August 6, 2002, petitioner submitted a Form 656, Offer in

Compromise, to respondent based on doubt as to liability in which

petitioner offered to pay the deficiencies but not any penalties

or statutory interest.   On September 18, 2003, respondent sent

petitioner a letter rejecting the offer.

     On February 6, 2005, petitioner submitted a Form 843, Claim

for Refund and Request for Abatement (request), with respect to

the section 6662(a) penalties and the accrued interest.   On

August 31, 2005, respondent sent a letter to petitioner stating

that respondent would not review the portion of the request

relating to the abatement of the assessed penalties.   On October

17, 2005, respondent sent petitioner a 30-day letter stating that

petitioner’s request had been denied on the grounds that “There

was no unreasonable error or delay relating to the performance of

a ministerial or managerial act in processing the examination of

your return.”   Petitioner did not respond to the 30-day letter.

On a date that cannot be ascertained precisely from the record,

but which the parties allege was either December 1 or December 5,

2005, respondent issued a notice of final determination denying

petitioner’s request under section 6404(e)(1).




     On February 13, 2006, petitioner timely filed a petition
                               - 4 -

under section 6404(h)2 seeking review of respondent’s

determination.   Petitioner asserted that the manner in which

respondent conducted his examination prevented petitioner from

divulging information relating to his tax liability.3   Petitioner

argued that if he had trusted respondent and had felt comfortable

in disclosing the necessary information, petitioner would have

settled his case years ago without penalties and with far less

accrued interest.

     On August 10, 2006, respondent’s motion for summary judgment

was filed.   In his motion, respondent asserts that the Court does

not have jurisdiction under section 6404(h) to decide whether

respondent properly assessed the section 6662(a) penalties.

Respondent also argues that petitioner failed to produce evidence

that respondent was unreasonably dilatory in performing a

ministerial or managerial act as required by section 6404(e)(1).

Respondent urges us to sustain respondent’s determination denying

petitioner’s request.



     On September 8, 2006, petitioner’s response opposing


     2
       Sec. 6404 was amended by the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, sec.
3305(a), 112 Stat. 743. One of the changes redesignated former
sec. 6404(g) as sec. 6404(h), effective for tax years ending
after July 22, 1998.
     3
       Petitioner chose not to disclose information because he
feared that disclosure of the information would cause various
members of his family to be audited.
                                 - 5 -

respondent’s motion was filed.    Petitioner concedes the section

6662(a) penalties4 but maintains that the request was improperly

denied with respect to interest.    Petitioner also argues that the

manner in which respondent conducted his examination unreasonably

delayed the settlement of petitioner’s case and prolonged the

period during which interest accrued.    Petitioner asserts that

his testimony at trial would establish the impropriety of the

audit conducted by respondent, but petitioner did not submit an

affidavit in support of his position in opposition to

respondent’s motion.

      On February 5, 2007, the Court held a hearing on

respondent’s summary judgment motion.    Representatives for both

parties were present and were heard.

                            Discussion

I.   Summary Judgment

      Summary judgment is a procedure designed to expedite

litigation and avoid unnecessary, time-consuming, and expensive

trials.   Fla. Peach Corp. v. Commissioner, 90 T.C. 678, 681

(1988).   Summary judgment may be granted with respect to all or

any part of the legal issues presented “if the pleadings, answers

to interrogatories, depositions, admissions, and any other

acceptable materials, together with the affidavits, if any, show


      4
       In his opposition to the motion for summary judgment,
petitioner explicitly states that he will not contest the
imposition of the sec. 6662(a) penalties.
                                 - 6 -

that there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law.”    Rule 121(a) and

(b); Sundstrand Corp. v. Commissioner, 98 T.C. 518, 520 (1992),

affd. 17 F.3d 965 (7th Cir. 1994); Zaentz v. Commissioner, 90

T.C. 753, 754 (1988).   The moving party bears the burden of

proving that there is no genuine issue of material fact, and

factual inferences will be drawn in a manner most favorable to

the party opposing summary judgment.     Dahlstrom v. Commissioner,

85 T.C. 812, 821 (1985); Jacklin v. Commissioner, 79 T.C. 340,

344 (1982).   The nonmoving party, however, cannot rest upon the

allegations or denials in his pleadings but must “set forth

specific facts showing that there is a genuine issue for trial.”

Rule 121(d); Dahlstrom v. Commissioner, supra at 820-821.

II.   Abatement of Interest Under Section 6404(e)(1)

      Under section 6404(e)(1), the Commissioner may abate part or

all of an assessment of interest on any deficiency to the extent

that any unreasonable error or delay in payment is attributable

to erroneous or dilatory performance of a ministerial or

managerial act by an officer or employee of the Internal Revenue

Service.   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 reviews by

supervisors, have taken place.     Lee v. Commissioner, 113 T.C.
                               - 7 -

145, 150 (1999); sec. 301.6404-2(b)(2), Proced. & Admin. Regs.         A

managerial act is an administrative act that involves a temporary

or permanent loss of records or the exercise of judgment or

discretion relating to management of personnel during the

processing of a taxpayer’s case.    Sec. 301.6404-2(b)(1), Proced.

& Admin. Regs.   A decision concerning the proper application of

Federal tax law is neither a ministerial nor a managerial act.

Sec. 301.6404-2(b)(1) and (2), Proced. & Admin. Regs.    A request

for an abatement of interest will not be granted if a significant

aspect of the delay is attributable to the taxpayer.    Sec.

6404(e)(1).

     When Congress enacted section 6404(e), it did not intend the

provision to be used routinely to avoid payment of interest.

Rather, Congress authorized abatement of interest only where

failure to do so “would be widely perceived as grossly unfair.”

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.      Under

section 6404(h)(1), we have jurisdiction to determine whether

respondent abused his discretion in denying petitioner’s request.

Because the Commissioner’s abatement authority involves the

exercise of discretion, however, we must give due deference to

the Commissioner’s determination.    Woodral v. Commissioner, 112

T.C. 19, 23 (1999); Mailman v. Commissioner, 91 T.C. 1079, 1082

(1988).   In order to prevail, petitioner must prove that
                               - 8 -

respondent abused his discretion by exercising it arbitrarily,

capriciously, or without sound basis in fact or law.     Woodral v.

Commissioner, supra at 23; Mailman v. Commissioner, supra at

1084; see also sec. 6404(h)(1); Rule 142(a).

      In his response in opposition to respondent’s motion,

petitioner asserted that he was the subject of an abusive,

duplicitous, bad faith, and racist audit conducted to intimidate

him and to discover assets belonging to his family.    However,

petitioner did not set forth specific facts in or attach any

documents to his response that showed a genuine issue of material

fact for trial.   Instead, petitioner rested on the allegations in

his petition and in his response.   Such allegations are simply

not enough to withstand a motion for summary judgment.    See Rule

121(d).

     Petitioner’s factual assertions do not establish that there

is any dispute about a material fact in this interest abatement

proceeding.   At best, petitioner’s allegations reflect a concern

that his audit was improperly motivated.    However, petitioner

does not make any allegation of improper motivation regarding

respondent’s attempt to collect interest.    In fact, petitioner

agreed to the deficiency and stipulated that interest would be

assessed on the deficiency.   Petitioner has not alleged any facts

to support a finding of unreasonable error or delay in payment

that is attributable to an officer or employee of respondent’s
                               - 9 -

being erroneous or dilatory in performing a ministerial or

managerial act.   On the contrary, the record indicates that any

delay that may have occurred was attributable to petitioner.5

Section 6404(e)(1) prohibits abatement of interest if a

significant aspect of the error or delay is attributable to the

taxpayer.

     Finally, petitioner cannot successfully argue that

respondent’s action enforcing the terms of the settlement between

petitioner and respondent was an abuse of discretion.   The

decision resolving petitioner’s deficiency case included the

parties’ stipulation acknowledging that statutory interest would

be assessed on both the deficiencies and penalties for the years

at issue as required by law.   See sec. 6601(a), (e)(2).

Respondent assessed interest in accordance with the stipulation

of the parties.   Petitioner has failed to demonstrate that there




     5
       Petitioner, who was represented by both a tax attorney and
a certified public accountant, failed to cooperate with
respondent during the audit in that petitioner refused to provide
information requested by respondent.
                             - 10 -

is a genuine issue as to any material fact or that respondent is

not entitled to a decision as a matter of law.6

III. Conclusion

     We shall grant respondent’s summary judgment motion with

respect to petitioner’s abatement claim under section 6404(e)(1).

     To reflect the foregoing,


                                        An appropriate order and

                                   decision will be entered.




     6
       Petitioner’s claim that the settlement in his deficiency
case does not speak to the issue of interest is remarkably
disingenuous given the clarity of the language used in the
decision: “It is further stipulated that interest will be
assessed as provided by law on the deficiencies and penalties due
from the petitioner.”
