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letter also asserted that two criteria applied in respondent’s
decision “to reopen Ms. Miller’s case for re-examination”:
First, there had “been a substantial error both in amount and in
relation to total tax liability” and, second, “other
circumstances exist indicating that failure to reopen the case
would be a serious administrative omission”.
On October 2, 1996, petitioner signed another Consent to
Extend the Time to Assess Tax (Form 872), which extended the
period of limitations on assessment for the 1992 tax year until
April 30, 1998.
On January 16, 1997, petitioner’s counsel mailed
respondent’s Riverside, California, Appeals Office a 9-page
memorandum arguing two grounds on which the no change letter
should stand. The first ground was that there was no justifiable
basis for reopening the case under Rev. Proc. 94-68, 1994-2 C.B.
803, and section 4023 of the Internal Revenue Manual (the
Manual), which in his view were binding on the Internal Revenue
Service. The second ground was that respondent had conducted a
second investigation of petitioner’s 1992 return, without
notifying her of the need thereof, in violation of section
7605(b).
On June 16, 1997, the Chief, Examination Division, Laguna
Niguel, California, mailed petitioner a letter stating, with
regard to the 1992 tax year:
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