-10-
evidence does not persuade us that respondent’s action was beyond
the permissible limits of Rev. Proc. 94-68 regardless of whether
he based his decision to reopen petitioner’s 1998 case upon Rev.
Proc. 94-68, sec. 5.01(2) or (3).
Petitioner asserts that respondent is precluded from
performing a second inspection of petitioner’s records under
section 7605(b). Section 7605(b) provides:
SEC. 7605(b). Restrictions on Examination of Taxpayer.--
No taxpayer shall be subjected to unnecessary
examination or investigations, and only one inspection
of a taxpayer’s books of account shall be made for each
taxable year unless the taxpayer requests otherwise or
unless the Secretary, after investigation, notifies the
taxpayer in writing that an additional inspection is
necessary.
The purpose of section 7605(b) is not to limit the number of
examinations, but to shift the discretion for a reexamination of
the taxpayer’s books to higher management personnel from the
field agent; this serves “to emphasize the responsibility of
agents to exercise prudent judgment in wielding the extensive
powers granted to them by the Internal Revenue Code.” United
States v. Powell, 379 U.S. 48, 56 (1964); Miller v. Commissioner,
supra. Section 7605(b) was not meant to restrict the scope of
respondent’s legitimate power to protect the revenue. Section
7605(b) is not to be read so broadly as to defeat the powers
granted to respondent to examine the correctness of a taxpayer’s
return. See De Masters v. Arend, 313 F.2d 79, 87 (9th Cir.
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