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This is not a formal closing agreement under Section
7121 * * *. However, we will not reopen this return
unless: (1) There is evidence of fraud, malfeasance,
collusion or misrepresentation of a material fact; (2)
a substantial error, based upon an established service
position, existing at the time of the prior closing; or
(3) other circumstances exist which indicate that a
failure to reopen would result in a serious
administrative omission.
A clerk at the Ogden Service Center issued the closing
letter without referring to the transcript of petitioner’s
account which would have revealed that an examination was in
progress and a closing letter should not be issued.
On May 20, 1996, petitioner sold 2360 Chestnut. Neither
petitioner nor its counsel contacted Mr. Samuelson or any other
IRS employee to seek an explanation of the closing letter before
selling 2360 Chestnut.
Unaware of the erroneous closing letter, on June 24, 1996,
Mr. Samuelson sent petitioner’s counsel a letter informing him
that the IRS was still in the process of hiring an appraiser.
On July 2, 1996, petitioner’s counsel responded and stated that
the continuing audit was contrary to the closing letter. On
August 19, 1996, the IRS notified petitioner of its intent to
reopen the examination of decedent’s estate tax return on the
grounds that a serious administrative omission had occurred which
“would result in criticism, undesirable precedent, or
inconsistent treatment.”
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Last modified: May 25, 2011