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ii. Respondent Did Not Violate His Reopening Procedures in
Reopening Petitioner’s 1992 Tax Year.
Whether respondent was justified under Rev. Proc. 94-68 and
section 4023 of the Manual, supra, in reopening petitioner’s
“closed” case would depend upon whether respondent’s original
position (1) was attributable to taxpayer or Service misconduct,
(2) constituted “substantial error,” or (3) whether respondent’s
failure to change the position would have constituted “a serious
administrative omission”. Satisfaction of any of these three
tests would justify reopening under the Service’s own policy
pronouncements. See supra p. 16.
We focus on the third test, whether “failure to reopen
would” have been “a serious administrative omission.” Reopening
because of a “serious administrative omission” covers situations
in which a failure to reopen could:
(1) result in serious criticism of the Service’s
administration of the tax laws;
(2) establish a precedent that would seriously
hamper subsequent attempts by the Service to take
corrective action;
(3) result in inconsistent treatment of similarly
situated taxpayers who have relatively free access to
knowledge as to how the Service treated items on other
taxpayers’ returns. [1 Audit, Internal Revenue Manual
(CCH), sec. 4023.5, at 7065.]
With regard to “serious administrative omission”, we
conclude that respondent is on firm ground. Whatever doubt there
might have been about the clarity of respondent’s established
position in 1994, those doubts were laid to rest and the position
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