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however, to settle all issues related to petitioners’ tax
liabilities for the years at issue.
We conclude that the closing agreement here, which covers
specific matters only, does not absolve respondent from issuing a
deficiency notice before assessing petitioners’ liabilities.
Accordingly, we hold that respondent may not proceed with
collection. See sec. 6213(a).
C. Our Holding Does Not Violate Section 7121(b)(2)
Respondent argues that section 7121(b) requires us to give
full effect to the closing agreement in this proceeding. Section
7121(b) provides that a closing agreement (or any assessment in
accordance with a closing agreement) shall not be annulled,
modified, set aside, or disregarded in any subsequent suit,
action or proceeding.
We hold that collection may not proceed because respondent
failed to follow the law regarding assessments, not because we
are disregarding the parties’ closing agreement. See secs. 6212
and 6213. We are not constrained to hold that respondent may
proceed with collection simply because the collection proceeding
is for a year in which there was a closing agreement between the
parties.
III. Conclusion
Respondent assessed petitioners’ tax liabilities without
first issuing petitioners the statutorily required deficiency
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Last modified: May 25, 2011