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liability for the unpaid 1995 tax balance was assessed and on
June 10, 1996, respondent made notice and demand on petitioner to
pay his outstanding 1995 income tax liability. On April 15,
1997, and April 15, 1998, petitioner filed his 1996 and 1997
income tax returns on each of which he entered zeros in all
pertinent boxes for the reporting of income.
On April 22, 1998, respondent mailed a Notice of Deficiency
to petitioner determining a $16,402 income tax deficiency for
1996, based on petitioner’s Form W-2, Wage and Tax Statement, and
Form 1099-R, Distributions from Pensions, Annuities, Retirement
or Profit Sharing Plans, IRAs, Insurance Contracts, etc.,
reflecting income from third-party sources. Respondent also
determined a $3,280.40 penalty under section 6662(a) for
petitioner’s 1996 tax year. Petitioner acknowledged receipt of
the deficiency notice in a July 18, 1998, letter to respondent
and, among other similar protester statements, indicated, as
follows:
I have attached to this letter an excerpt from the
Supreme Court decision FEDERAL CROP INSURANCE CORP. v
A.A. MERRILL, 332 U.S. 380. Note that the Court held
in that case that:
Anyone entering into an arrangement with the
government takes a risk of having accurately
ascertained that he who purports to act for
the government stays within the bounds of his
authority, even though the agent himself may
be unaware of the limitations upon his
authority. (emphasis added)
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