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Petitioner did receive incorrect advice from the Internal
Revenue Service as to the application of the Federal tax law on
two occasions; i.e., in the telephone conversation confirming
that a rollover would cause the IRA distribution to be tax free,
and by Mr. Cool’s indication that a partial rollover would reduce
the taxable income and result in a refund. Section 408(d)(3)(C)
bars a rollover of an inherited account unless the account is
received by the surviving spouse of the contributor. However,
giving incorrect advice concerning the proper application of
Federal tax law is not a ministerial act allowing relief under
section 6404(e).4 See sec. 301.6404-2(b)(2), Proced. & Admin.
Regs.
The Court may order abatement if the Commissioner abuses his
discretion by failing to abate interest. Sec. 6404(h)(1).5 In
order to prevail, a taxpayer must prove the Commissioner
exercised his discretion arbitrarily, capriciously, or without
4 The first instance of incorrect advice, conveyed over the
telephone, also occurred before the IRS contacted petitioner in
writing about the payment of tax and is another ground for denial
of relief. See sec. 6404(e)(1).
5 For the tax year 1996, this provision was designated sec.
6404(g). However, it was subsequently designated sec. 6404(i) by
secs. 3305(a) and 3309(a) of the Internal Revenue Service
Restructuring and Reform Act of 1998, Pub. L. 105-206, 112 Stat.
743, 745, and then was redesignated sec. 6404(h) by sec.
112(d)(1)(B) of the Victims of Terrorism Tax Relief Act of 2001,
Pub. L. 107-134, 115 Stat. 2427, 2435. In order to avoid
confusion, we will refer to this provision using its current
designation, sec. 6404(h).
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