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period respondent misplaced petitioners’ offer in compromise was
an abuse of discretion. We disagree.
The conference committee report for the Tax Reform Act of
1986 states in pertinent part as follows: “If a taxpayer files a
return but does not pay the taxes due, this provision would not
permit abatement of this interest regardless of how long the IRS
took to contact the taxpayer and request payment.” H. Conf.
Rept. 99-841 (Vol. II), at II-811 (1986), 1986-3 C.B. (Vol. 4) 1,
811. Thus, if the taxpayer files a return but does not pay the
tax owed, section 6404(e) does not apply to interest that accrues
on the unpaid tax before the Commissioner contacts the taxpayer
in writing with respect to the tax. Petitioners filed their 1995
income tax return but paid nothing and proposed to pay only
$5,000 of the $32,561 due. They seek an abatement of the
interest that accrued on the unpaid tax before the Commissioner
first contacted them in writing with regard to it. Section
6404(e) does not permit such an abatement in this case. Thus, we
hold that respondent’s failure to abate interest from April 15,
1996 (the date respondent misplaced petitioners’ offer in
compromise), to April 16, 1997 (the date respondent returned
petitioners’ $5,000 offer in compromise payment to them), was not
an abuse of discretion.
Petitioners contend that respondent delayed in providing
information about housing, utilities, and transportation expenses
to be used in computing the offer in compromise. Petitioners
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