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respondent’s Philadelphia office, and that she assured him that
respondent would “abate” the section 72(t) additional tax if
petitioners immediately paid the deficiency shown in the March
31, 1999, letter. Petitioner was unaware of the extent of Ms.
Flanagan’s authority to compromise their tax liability, and
petitioners never received any correspondence from Ms. Flanagan.
On or about April 6, 1999, petitioners paid $11,818.
On February 9, 2000, respondent issued another notice of
deficiency relating to petitioners’ 1996 Federal income tax. The
second notice, at issue here, asserted that petitioners’ 1996
retirement account distributions were subject to the section
72(t) additional tax. Petitioners timely filed a petition
contesting respondent’s determination.
Petitioners contend (1) that the second notice is invalid;
(2) that all matters relating to their 1996 taxable year were
settled; and (3) that the IRA distributions are not subject to
the section 72(t) additional tax.
Discussion
1. Validity of the Second Notice of Deficiency
Section 6212(a) authorizes respondent to issue a notice of
deficiency if there is a deficiency in respect to income taxes.
Section 6212(c)(1) provides that respondent “shall have no right
to determine any additional deficiency of income tax for the same
taxable year * * * except in the case of fraud” if respondent has
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