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administrative omission” had occurred and failure to reopen the
case “would result in criticism, undesirable precedent, or
inconsistent treatment.”
Failure to reopen the audit, herein, would mean that a
potential $1,373,797 of estate tax could go uncollected. The
loss of such revenue could result in criticism of the IRS’
administration of the tax laws and inconsistent treatment among
taxpayers. We believe that respondent complied with the Manual’s
procedures and the closing letter’s description of circumstances
for reopening an audit. Further, this Court has stated numerous
times that procedural rules of this sort are “merely directory,
not mandatory, ‘and compliance with them is not essential to the
validity of a notice of deficiency.’” Collins v. Commissioner,
61 T.C. 693, 701 (1974)(quoting Luhring v. Glotzbach, 304 F.2d
560, 563 (4th Cir. 1962)).
We are also not convinced that the traditional elements of
equitable estoppel are satisfied. We doubt whether petitioner’s
reliance on the closing letter was reasonable. On October 10,
1995, Mr. Samuelson notified petitioner’s counsel that the IRS
intended to hire an appraiser to value the properties which would
take at least 3 months, and Mr. Samuelson would contact
petitioners’ counsel when the expert was hired. On December 14,
1995, the Ogden Service Center issued the closing letter.
Neither petitioner’s counsel nor a representative of petitioner
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