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The IRS representative told petitioner that petitioner needed to
"respond" to the notice of deficiency in order to "correct the
problem".
In May 1996, petitioner's counsel spoke with Ms. Ramirez and
advised her that the notice of deficiency erroneously determined
income for 1993 in respect of a debt that had been discharged in
bankruptcy in September 1986. Petitioner's counsel also
transmitted by facsimile: (1) A power of attorney authorizing him
to represent petitioner before the IRS; and (2) the Final Decree
from petitioner's bankruptcy proceeding. Ms. Ramirez took no
action, but waited instead for petitioner's counsel to furnish
additional evidence.
Despite the foregoing contacts and the information furnished
by petitioner and petitioner's counsel, as well as the
infirmities evident on the face of the Forms 1099-G, and
notwithstanding the fact that the statute of limitations on
assessment for 1993 had not yet even begun to run, see sec.
6501(c)(3), respondent did not offer to rescind the notice of
deficiency. See sec. 6212(d).
After petitioner filed the petition but before respondent
filed the answer, petitioner's counsel transmitted to Ms. Kish a
copy of the Discharge of Debtor that the bankruptcy court had
issued in September 1986 and a copy of the bankruptcy schedule on
which petitioner had set forth all of her liabilities,
specifically including the Moncor Bank debt. Petitioner's
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