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Tax Return, reflecting a reduction in taxable income of $14,512.
Mr. Cool led petitioner to believe that she had overpaid her
income tax liability for 1996 and would be entitled to a refund.
On the basis of the discussions at the April 29, 1998,
meeting, respondent prepared a Form 1040X for petitioner
reflecting a reduction in taxable income of $14,512, which was
sent to petitioner for signature on June 30, 1998, and again on
July 24, 1998. Petitioner requested additional time to meet with
a tax attorney before signing the Form 1040X. Petitioner claimed
she returned the signed Form 1040X to respondent but respondent
did not file it.
On July 6, 1998, respondent assessed a tax of $53,760, a
late filing penalty of $12,096 pursuant to section 6651(a)(1), a
late payment penalty of $3,494 pursuant to section 6651(a)(2),
and accrued interest of $6,506. The late filing penalty of
$12,096 was abated on the same day.
Petitioner requested the assistance of the Taxpayer Advocate
and her congressional representatives to resolve her concerns
about the assessments of penalty and interest. After conducting
an investigation, the Taxpayer Advocate found that petitioner’s
filed 1996 Federal income tax return was accurate and that
reasonable cause existed for the late payment of petitioner’s
1996 income tax liability. As a result, on April 19, April 26,
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