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Form 4549-CG and the check. Respondent applied the payment to
petitioners’ 1993 account, allocating $8,031 to the income tax
deficiency and $2,301 to accrued interest.
On March 5, 1997, petitioners filed a claim for refund and
request for abatement of interest assessed and paid with respect
to their 1993 income tax deficiency. In their claim, petitioners
explained that, when their 1993 return was prepared and filed,
existing legal precedent supported the position taken on their
return. Petitioners argued that it was only after the Supreme
Court decided Schleier on June 14, 1995, that the precedent on
which they reasonably relied was overruled. Since, in their
view, they complied with the law as it existed when their 1993
return was filed, petitioners asserted that the income tax
deficiency was not their fault, and they should not have to pay
interest on the deficiency for the period prior to June 14, 1995,
when Schleier was decided.
Respondent disallowed petitioners’ claim in a Notice of
Final Determination dated March 19, 1999, and this proceeding
followed.
Discussion
Section 6404(e), as in effect for 1993, authorizes
respondent to abate all or any part of an assessment of interest
on (1) any deficiency attributable in whole or in part to any
error or delay by an employee of the Internal Revenue Service,
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