Nicholas J. and Diane L. Palihnich - Page 11

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          that agent’s cases, all of which are purposeful activities by the           
          Commissioner.  See, e.g., sec. 301.6404-2T(b)(2), Examples (3),             
          (4), and (5), Temporary Proced. & Admin. Regs., supra.                      
          Respondent has identified no purpose served by losing a                     
          taxpayer’s returns, and we know of none.                                    
               In 1996, Congress amended section 6404(e) to provide for               
          abatement of interest that accrues as a result of an unreasonable           
          error or delay in performing a ministerial or managerial act.               
          Sec. 6404(e)(1)(A) and (B); Taxpayer Bill of Rights 2, Pub. L.              
          104-168, sec. 301(a), 110 Stat. 1457 (1996).  Respondent points             
          out that a regulation promulgated after enactment of that 1996              
          amendment, section 301.6404-2(b)(1), Proced. & Admin. Regs.,                
          provides:  “Managerial act means an administrative act that                 
          occurs during the processing of a taxpayer’s case involving the             
          temporary or permanent loss of records”.  Respondent also points            
          out that section 301.6404-2(c), Example (6), Proced. & Admin.               
          Regs. (Example (6)), provides as follows:                                   
                    Example 6.  A revenue agent has completed an                      
               examination of the income tax return of a taxpayer.                    
               There are issues that are not agreed upon between the                  
               taxpayer and the IRS.  Before the notice of deficiency                 
               is prepared and reviewed, a clerical employee misplaces                
               the taxpayer’s case file.  The act of misplacing the                   
               case file is a managerial act.  The Commissioner may                   
               (in the Commissioner’s discretion) abate interest                      
               attributable to any unreasonable delay resulting from                  
               the file being misplaced.                                              
               Respondent contends that Example (6) supports a holding here           
          that the loss of a taxpayer’s records is a managerial act.  We              





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