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Commissioner is not prevented from seeking interest for the
period a taxpayer’s bankruptcy proceeding is pending. Sec.
6658(a); see also, e.g., Woodward v. United States, 113 Bankr.
680, 684 (Bankr. D. Or. 1990). Under section 6404(a), the
Commissioner is granted the discretion to abate the assessment of
any tax or liability that is excessive in amount, assessed after
the expiration of the period of limitation, or erroneously
assessed. But see sec. 6404(b) (“No claim for abatement shall be
filed by a taxpayer in respect of an assessment of any tax
imposed under subtitle A or B.”). Section 6404(e) authorizes the
Commissioner to abate interest assessments that are attributable
to errors or delays by the IRS.
Petitioners do not argue that the interest is excessive or
was erroneously assessed under section 6404(a). Instead,
petitioners argue for abatement of interest because of the delay
in the distribution of funds from the bankruptcy. While in
certain circumstances interest may be abated because of an
unreasonable delay of the Commissioner, respondent was no more in
control over the distribution of the bankruptcy proceeds than
were petitioners. We find that the delay in the distribution of
proceeds by the bankruptcy trustee is not grounds for the
abatement of interest under section 6404 or for otherwise
relieving petitioners from liability for the interest.
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Last modified: March 27, 2008