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status of constituting a binding agreement between petitioners
and respondent. Nor did these events provide the basis for an
estoppel that would have affected the parties’ rights. Section
71212 permits the Commissioner to enter into binding closing
agreements regarding the amount of a taxpayer’s income tax
liability. A closing agreement, as provided in section 7121, is
the prescribed method for the Commissioner to bind himself to a
particular tax liability, and other approaches are generally not
approved by the courts. See, e.g., Estate of Meyer v.
Commissioner, 58 T.C. 69 (1972); see also sec. 301.6213-1(b)(3),
Proced. & Admin. Regs.
Respondent’s error in the 30-day letter, followed by
petitioners’ payment, by itself did not result in a meeting of
the minds or formal agreement. This is especially so here, where
respondent clearly communicated the correct amount of the income
tax deficiency in subsequent, but contemporaneous, correspondence
and in the notice of deficiency. Accordingly, we hold that
respondent is not contractually bound to the lesser amount shown
on the first page of the 30-day letter.
Petitioners’ final argument, in essence, is that the
software manufacturer that produces and sells Turbotax is at
fault for any tax deficiency determined in this case.
2 Section references are to the Internal Revenue Code as
amended and in effect for the period under consideration.
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Last modified: May 25, 2011