- 20 -
such a liability without first attempting to contact
petitioner.12
In view of the foregoing, we conclude that it was
unreasonable for respondent, in the context of this case and
without further investigation, to determine a million dollar
adjustment to petitioner's income. We therefore hold that
respondent's position was not substantially justified at the time
that the notice of deficiency was issued.
(2) The Court Proceeding
We also hold that respondent's position was not
substantially justified at the time that the answer was filed.
Again, our holding is based on the totality of the facts and
circumstances present in this case. In addition to the factors
that we have already discussed, the facts and circumstances that
support our holding are as follows:
Shortly after receiving the notice of deficiency, petitioner
contacted an IRS representative at the "800" number set forth on
the notice of deficiency and explained that the amounts reported
on the Forms 1099-G referred to a single debt and that such debt
was discharged in a bankruptcy proceeding in September 1986.
12 In any event, we suspect that if respondent had processed
petitioner's 1994 income tax return more promptly, petitioner
would have received and responded to the 30-day letter. Here it
should be recalled that petitioner listed the Hobbs address on
her 1994 income tax return, and that respondent did not post the
Hobbs address to respondent's computer records until after the
1994 return had been processed.
Page: Previous 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 NextLast modified: May 25, 2011