Wilton Earl and Dorothy M. Keel - Page 6

                                                - 6 -                                                 
                  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).                                         

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

Last modified: May 25, 2011