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Leaving aside any question as to the sufficiency of
petitioners' assertion by way of the stipulated, self-serving
testimony of Mrs. Keel as to what she was told by an IRS
representative, such erroneous advice does not bar the correction
by respondent of a mistake of law on the ground of equitable
estoppel. Automobile Club of Michigan v. Commissioner, 353 U.S.
180 (1957); Miller v. United States, 949 F.2d 708, 712 (4th Cir.
1991); Norfolk S. Corp. v. Commissioner, 104 T.C. 13, 59-61
(1995), supplemented by 104 T.C. 417 (1995).
Likewise, the granting of a refund does not preclude
respondent from issuing a notice of deficiency.3 Gordon v.
United States, 757 F.2d 1157, 1160 (11th Cir. 1985); Beer v.
Commissioner, 733 F.2d 435, 437 (6th Cir. 1984), affg. T.C. Memo.
1982-735; Warner v. Commissioner, 526 F.2d 1, 2 (9th Cir. 1975),
affg. T.C. Memo. 1974-243. The taxpayers in Gordon v. United
States, supra, and in Warner v. Commissioner, supra, made the
same argument as petitioners; i.e., that respondent should not be
able to make refunds and then demand repayment. To this the
Courts of Appeals replied: "Alas, the Commissioner, confronted
by millions of returns and an economy which repeatedly must be
nourished by quick refunds, must first pay and then look. This
necessity cannot serve as the basis of an 'estoppel.'" Gordon v.
3 Respondent also has the option of pursuing recovery of an
erroneous refund in a civil action brought within, generally, 2
years of making the refund. Secs. 7405, 6532(b).
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