Professional Tax Research Solutions from the Founder of Kleinrock. tax research
Parker Tax Pro Library
Accounting News Expert Tax Analysts professional tax research software Like us on Facebook Follow us on Twitter View our profile on LinkedIn Find us on Pinterest
CPA software
Professional Tax Software
tax and accounting
Tax Research Articles Parker's Federal Tax Bulletin CPA Sample Client Letters Tax Software Reviews - CPA Client Testimonials Tax Research Software Parker Research


Accounting Software for Accountants, CPA, Bookeepers, and Enrolled Agents

CPA Tax Software

Tax Court Had Jurisdiction to Review Denial of Interest Suspension.
(Parker Tax Publishing February 2014)

Letters 3477 sent by the IRS to a married couple denying their claim for suspension of interest on accruing tax liabilities were subject to review by the Tax Court, even though the couple's concurrent claims for abatement of interest attributable to unreasonable errors and delays by the IRS were still pending. Corbalis v. Comm'r., 142 T.C. No. 2 (1/27/14).

Following an audit of Charles and Linda Corbalis for the years 1999 through 2004, the IRS disallowed a loss carried back from 2001which resulted in the assessment of tax deficiencies. The couple requested an abatement of the interest accruing on those liabilities due to unreasonable errors and delays by the IRS. The IRS sent the couple four separate Letters 2289, Full Disallowance on Interest Abatement Claims, disallowing their claims because the claims did not apply to the liability reported on their returns. The IRS also sent separate Letters 3477, Letter to Address any IRC 6404(g) Interest Suspension Provisions, stating that interest suspension did not apply to the tax years in issue, the Corbalises did not have appeal rights, and they could not petition the Tax Court for judicial review regarding the letters. Charles and Linda subsequently filed a petition seeking judicial review of the Letters 3477.

Code Sec. 6404(e) provides for the abatement of interest attributable to unreasonable errors and delays by the IRS. Code Sec. 6404(g), which is effective for tax years ending after July 22, 1998, suspends the accrual of certain penalties and interest after a defined period after the filing of the tax return if the IRS has not sent the taxpayer a notice specifically stating the taxpayer's liability and the basis for the liability within the specified period. If certain requirements are met, Code Sec. 6404(h) provides for the review of a final determination by the IRS regarding the denial of an interest abatement request.

Besides the claim under Code Sec. 6404(g), the Corbalises also filed a claim for interest abatement under Code Sec. 6404(e) and no determination had been made by the IRS with respect to that claim.

The IRS argued that Code Sec. 6404(h) did not apply to the Corbalises' claims under Code Sec. 6404(g) because their claim involved the suspension of interest and not the abatement of interest. The Tax Court did not have jurisdiction to review the denial of an interest suspension claim, the IRS said. The IRS also argued that, because the Corbalises still had a claim for abatement under Code Sec. 6404(e) outstanding, Tax Court review was premature.

Charles and Linda argued that Code Sec. 6404 deals with abatement, of which suspension is a category and a claim that interest should have been suspended for a period was the equivalent to a claim for abatement of interest that had been assessed for that period. Thus, the denial was subject to review by the Tax Court.

The Tax Court held that the Charles and Linda were entitled to judicial review of their claims for interest suspension. In rejecting the IRS argument that the court only had jurisdiction over abatement of interest claims, the court explained that relief provisions of Code Sec. 6404 were for taxpayers who were affected by errors or omissions of the IRS, and the grant of jurisdiction to the Tax Court covered the suspension of interest.

The court also found that the Letters 3477, which denied the couple's claim to interest suspension and disallowed the right to judicial review, were final determinations for jurisdictional purposes. The court said that the IRS denial of the Corbalises' interest suspension claim and disavowal of judicial review, if upheld, would leave the couple with no further recourse, which is a final determination. Although the contemporaneous Letters 2289 anticipated further proceedings with respect to the claim for abatement for unreasonable errors and delay by the IRS, the claim was severable, the court noted.

For a discussion of the abatement of interest, see Parker Tax ΒΆ261,570. (Staff Contributor Parker Tax Publishing)

Parker Tax Pro Library - An Affordable Professional Tax Research Solution. www.parkertaxpublishing.com

Disclaimer: This publication does not, and is not intended to, provide legal, tax or accounting advice, and readers should consult their tax advisors concerning the application of tax laws to their particular situations. This analysis is not tax advice and is not intended or written to be used, and cannot be used, for purposes of avoiding tax penalties that may be imposed on any taxpayer. The information contained herein is general in nature and based on authorities that are subject to change. Parker Tax Publishing guarantees neither the accuracy nor completeness of any information and is not responsible for any errors or omissions, or for results obtained by others as a result of reliance upon such information. Parker Tax Publishing assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect information contained herein.

    ®2012-2017 Parker Tax Publishing. Use of content subject to Website Terms and Conditions.

IRS Codes and Regs
Tax Court Cases IRS guidance