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interest. The parties have stipulated that the May 31, 1999,
refund to petitioner W. August Hillenbrand and the June 7, 1999,
refund to petitioner Nancy K. Hillenbrand are erroneous nonrebate
refunds (hereinafter the erroneous refunds). The erroneous
refunds were made with respect to petitioners’ 1998 Federal gift
tax module accounts, which were the same module accounts to which
respondent posted petitioners’ February 12, 1999, remittances.
Petitioners neither solicited the refunds nor recognized that the
erroneous refunds represented the agreed-upon amounts, plus
interest, sent to respondent in the February 12, 1999,
remittances.
Subsequent correspondence between respondent and
petitioners’ counsel revealed that respondent believed that
petitioners still owed the deficiencies determined in the
December 30, 1998, notices of deficiency, even after petitioners
sent respondent the February 12, 1999, remittances. On November
21, 2001, respondent informed petitioners’ counsel that
respondent had made the January 4, 1999, refunds, and that
petitioners were still liable for the deficiencies determined on
December 30, 1998.
On December 3, 2001, petitioners’ counsel informed
respondent that petitioners sent the February 12, 1999,
remittances to cover the deficiencies determined in the December
30, 1998, notices of deficiency. In the December 3, 2001,
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