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income on their return. Misplacing the Form 1099-R does not
constitute reasonable cause.
Third, petitioners argue they have been accurately filing
returns and paying their taxes for 55 years. While petitioners’
history of compliance is admirable, it does not explain why they
failed to report the retirement income shown on the Form 1099-R.
Finally, petitioners contend that respondent is estopped
from determining an accuracy-related penalty. After respondent
issued the notice of proposed adjustments in July 2003,
respondent sent petitioners a letter in December 2003 titled
“Statement of Account”, which indicated petitioners were owed a
$92.77 refund for 2001. Petitioners argue that the December 2003
letter precluded respondent from later issuing the notice of
deficiency.
Equitable estoppel is a judicial doctrine that precludes a
party from denying his own acts or representations which induced
another to act to his detriment. Hofstetter v. Commissioner, 98
T.C. 695, 700 (1992). It is well settled, however, that the
Commissioner cannot be estopped from correcting a mistake of law,
even where a taxpayer may have relied to his detriment on that
mistake. Norfolk S. Corp. v. Commissioner, 104 T.C. 13, 59-60
(1995), affd. 140 F.3d 240 (4th Cir. 1998). An exception exists
only in the rare case where a taxpayer can prove he or she would
suffer an unconscionable injury because of that reliance. Id.
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