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acts were not ministerial.
Petitioners are particularly upset by the initiation of the
criminal fraud investigation because the CID ultimately rejected
the instant case as a criminal fraud case.4 Petitioners also
believe that Agent Mazon relied too heavily on the
unsubstantiated allegations of fraud by an IRS informant. At the
time, however, Agent Mazon found inconsistencies that she
believed were badges of fraud, causing her to suspect petitioner
of criminal wrongdoing. Moreover, the decision to initiate the
fraud investigation was not hers alone. After she consulted with
her supervisors, the agreed course was to send the case to the
CID, which was within Agent Mazon's province to do and was
certainly not a ministerial act.
The time spent investigating whether to impose civil or
criminal fraud penalties, regardless of petitioners' guilt or
innocence, is not a ground under section 6404(e) that would allow
respondent to abate interest. Moreover, this Court has held, in
Taylor v. Commissioner, 113 T.C. 206, 211-213 (1999), that the
Service's decision not to proceed with a civil tax examination
while a criminal tax investigation is pending is not a
ministerial act that would warrant the abatement of interest.
In short, the decision to examine petitioners' 1986, 1987,
and 1988 taxable years, to conduct a bank deposits analysis on
4 Referral of the case to CID extended the audit by 3
months.
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Last modified: May 25, 2011