Morton and Anne Kwestel - Page 3




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               On October 29, 2002, because of the reversal of the                    
          conversion of his IRA account back into a traditional IRA and               
          because petitioner no longer had an obligation to report in his             
          2001 income the earnings from his IRA, petitioners filed with               
          respondent an amended 2001 joint Federal income tax return                  
          reflecting gross income less the $55,065 in 2001 IRA earnings.              
          This reduction in income created a $13,769 tax overpayment that             
          petitioners claimed as a refund (refund claim).                             
               On July 24, 2003, in response to questions about                       
          petitioners’ refund claim, petitioner met with respondent’s                 
          Compliance Division officer and her supervisor.  Both of                    
          respondent’s employees erroneously informed petitioner that                 
          petitioner’s reversal of his IRA account back into a traditional            
          IRA was untimely and therefore that petitioners’ refund claim               
          would be disallowed.                                                        
               Also on July 24, 2003, respondent’s Compliance Division                
          mailed to petitioners a claim disallowance letter disallowing               
          petitioners’ refund claim and stating that petitioners could                
          appeal the disallowance to respondent’s Appeals Office.                     
               On September 4, 2003, petitioners’ accountant requested from           
          respondent’s National Office of Chief Counsel a determination as            
          to whether petitioners, on their amended 2001 tax return, timely            

               2(...continued)                                                        
          due date (including extensions) for the year in which the                   
          conversion took place.                                                      






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