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On November 21, 1995, petitioners sent a letter to the
Problem Resolution Office of the Internal Revenue Service
concerning the status of their request for refund on their
additional amended income tax return filed for 1994. The Problem
Resolution caseworker replied, in a letter dated June 11, 1996,
that the refund had been allowed and indicated that it would be
used to offset petitioners' 1995 tax account. The letter further
indicated that "Since only $1,314 of the $1,682 [refund] from
1994 was needed to full pay the 1995 account, you will also
receive a refund for 1995 of $371.54."
OPINION
We must decide whether the letter from respondent's
caseworker estops respondent from determining a deficiency for
petitioners' 1995 Federal income tax. Petitioners assert that
because the letter indicated that only $1,314 was needed to "full
pay" petitioners' 1995 Federal tax liability, respondent has
forfeited the right to determine a deficiency for petitioners'
1995 Federal income tax. Respondent contends that the doctrine
of equitable estoppel should not be applied in this case. We
agree with respondent.
The doctrine of equitable estoppel is applied against the
Government only with utmost caution and restraint. See Kronish
v. Commissioner, 90 T.C. 684, 695 (1988). Taxpayers must prove
at least the following elements before courts will apply
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