George Kiourtsis - Page 12

                                                 - 12 -                                                   
            the part of the Commissioner, Edens v. Commissioner, T.C. Memo.                               
            1974-309, affd. 549 F.2d 798 (4th Cir. 1976).  The Government has                             
            the power to correct mistakes of law because "'Whoever deals with                             
            the government does so with notice that no agent can, by neglect                              
            or acquiescence, commit it to an erroneous interpretation of the                              
            law.'"  Graff v. Commissioner, 74 T.C. at 762 (quoting Schafer v.                             
            Helvering, 83 F.2d 317, 320 (D.C. Cir. 1936)).  Interpreting                                  
            section 104(a)(4) so as to exclude petitioner's pension payments                              
            from income was a mistake of law.                                                             
                  Petitioner contends that the Commissioner should be bound by                            
            the 1990 closing letter.  However, a "closing letter" is to be                                
            sharply distinguished from a "closing agreement" under section                                
            7121, entered into by both the taxpayer and the Commissioner                                  
            which is binding in accordance with its terms.  The "closing                                  
            letter" is nothing more than the Commissioner's acceptance of a                               
            return as filed.  And the prior practice of the IRS or the                                    
            Commissioner's acceptance of a prior year's return does not bar                               
            the Commissioner as to later years.  Caldwell v. Commissioner,                                
            202 F.2d 112, 115 (2d Cir. 1953), affg. in part a Memorandum                                  
            Opinion of this Court; Rose v. Commissioner, 55 T.C. 28, 31-32                                
            (1970); Tollefsen v. Commissioner, 52 T.C. 671, 681 (1969), affd.                             
            431 F.2d 511 (2d Cir. 1970); Meneguzzo v. Commissioner, 43 T.C.                               
            824, 836 (1965); cf. Dixon v. United States, 381 U.S. 68, 72-75                               
            (1965); Niles Bement Pond Co. v. United States, 281 U.S. 357,                                 






Page:  Previous  1  2  3  4  5  6  7  8  9  10  11  12  13  Next

Last modified: May 25, 2011