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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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