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issued to the taxpayer, private letter rulings, technical advice
memoranda, and determination letters”. Sec. 7430(c)(4)(B)(iv).
The Internal Revenue Manual does not constitute “applicable
published guidance”, because it is not among the IRS
pronouncements enumerated under section 7430(c)(4)(B)(iv).
Moreover, the provisions of the Internal Revenue Manual govern
only the internal affairs of the IRS; they do not have the force
and effect of law. Valen Manufacturing Co. v. United States, 90
F.3d 1190, 1194 (6th Cir. 1996); United States v. Horne, 714 F.2d
206, 207 (1st Cir. 1983). See generally Reich v. Manganas, 70
F.3d 434, 437 (6th Cir. 1995) (“Internal operating manuals * * *
do not carry the force of law, bind the agency, or confer rights
upon the regulated entity.”). Procedures in the Internal Revenue
Manual do not confer rights on taxpayers. United States v.
Horne, supra; United States v. Mapp, 561 F.2d 685, 690 (7th Cir.
1977).
Accordingly, the fact that respondent did not complete his
examination of petitioner’s returns within 26 months as
recommended by Internal Revenue Manual pt. 4.10.2.2.2 (May 14,
1999), does not trigger a rebuttal presumption of no substantial
justification pursuant to section 7430(c)(4)(B)(iv).
The Court finds that respondent’s position on the
substantiation issue was reasonable and sufficiently supported by
the facts and circumstances in petitioner’s case and existing
legal precedent. See Pierce v. Underwood, 487 U.S. 552 (1988).
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