H&H Trim & Upholstery Co., Inc. - Page 4




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               In reliance on the payoff figures provided by respondent’s             
          employee, petitioner believed that, as of January 15, 1997, all             
          of its then-outstanding employment tax liabilities, including its           
          liability for the fourth quarter of 1993, had been completely               
          satisfied.  As it turned out, respondent’s employee had provided            
          Mr. Halse with the wrong payoff amount for the fourth quarter of            
          1993; the amount did not include interest and additions to tax              
          that had accrued but had not been assessed as of the time the               
          employee provided the information.  This mistake went unnoticed             
          for some time.  Eventually, doubt arose as to whether                       
          petitioner’s liability for the fourth quarter of 1993 had been              
          extinguished.  As a result of discussions between respondent and            
          petitioner, it was clear to petitioner as of June 30, 1998, that            
          its employment tax liability for the fourth quarter of 1993 had             
          not been completely satisfied.  The outstanding liability was               
          attributable to interest and additions to tax that had accrued              
          prior to January 15, 1997, but had not been assessed as of that             
          date.  After learning of this balance, petitioner requested that            
          respondent abate the unpaid interest and additions to tax for the           
          fourth quarter of 1993.  Petitioner’s request for abatement was             
          considered and denied by respondent’s Appeals Office by letter              
          dated September 24, 1999.  Nevertheless, on October 25, 1999,               
          respondent partially abated an addition to tax assessed pursuant            
          to section 6651(a)(2).                                                      






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