John Allen and Glenna A. Lyle - Page 3

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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."                                      
               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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