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Fed. Cl. 267 (1998), affd. 215 F.3d 1343 (Fed. Cir. 1999); Rev.
Proc. 68-16, 1968-1 C.B. 770. Unlike a Form 866, however, the
parties here executed a closing agreement on Form 906. The Form
906 executed here covered only specific matters (i.e., the
treatment of the Comco items). The parties did not agree to the
total amount of petitioners’ liabilities for the years at issue.
Respondent argues that he merely computed the effect of the
Comco items agreed in the closing agreement on the amounts
petitioners reported on their returns. Respondent maintains that
in this circumstance, he is not required to issue a deficiency
notice before assessing the resulting liability. We disagree.
Respondent may not dispense with a deficiency notice in this
situation where petitioners were never allowed to challenge
respondent’s computations. See Commissioner v. Shapiro, 424 U.S.
at 616-617. By failing to issue petitioners a deficiency notice,
respondent deprived petitioners of the opportunity of filing a
deficiency suit to dispute these computations and to argue that
other adjustments should be made to their liabilities for the
years at issue. See sec. 6213(a); Commissioner v. Shapiro, supra
at 616-617. Respondent unilaterally implemented the closing
agreement by applying the terms of the agreement to the amounts
6(...continued)
deficiency. Id. Accordingly, there would be nothing the
taxpayer could challenge. Marathon Oil Co. v. United States,
supra at 280.
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