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the liability.’” Purer v. United States, 872 F.2d 277, 278 (9th
Cir. 1989) (quoting Wagner v. Director, Fed. Emergency Mgmt.
Agency, 847 F.2d 515, 519 (9th Cir. 1988)). Affirmative
misconduct requires “ongoing active misrepresentations” or a
“pervasive pattern of false promises,” as opposed to an isolated
act of providing misinformation. Watkins v. United States Army,
875 F.2d 699, 708 (9th Cir. 1989). Affirmative misconduct is a
threshold issue to be decided before determining whether the
traditional elements of equitable estoppel are present. See
Purcell v. United States, supra at 939.
Before beginning the inquiry into whether the no change
letter satisfied the conditions for invoking equitable estoppel
against respondent, we must isolate and characterize the
representation, if any, made by the no change letter. The letter
says two things: “We examined your * * * return * * * and made
no changes to the tax year reported”, and it alerts the taxpayer
to the possibility of a later change if the Service makes a
change on examination of an S corporation, trust, or partnership
of which the taxpayer is a shareholder, beneficiary, or partner.
The letter thereby creates an impression that the return will not
be changed in any other circumstances, but this is more a
possible inference from silence than an affirmative
representation. In this respect, the letter is different from
the estate tax closing letters that were considered in Estate of
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