CCA 9935005: Counsel discusses reversing an erroneous tax abatement

Plain-English summary

Taxpayers filed an amended return seeking a tax reduction and asked that a refund amount be credited to another tax year's liability. An IRS office requested a review of remedies for an erroneous abatement that resulted in credits to unpaid tax liabilities. The released memorandum leaves much of the facts and analysis blank. It says clerical errors can be reversed in appropriate cases and distinguishes such an error from a substantive reconsideration of tax liability. The text does not clearly disclose which remedy Counsel recommended for this case.

Ruling snapshot

• Question: What remedies are available after an erroneous abatement and related credits?
• Outcome: Advice given: clerical errors may be reversed in appropriate cases; the case-specific conclusion is not clear in the release.
• Key authorities: Matter of Bugge, 99 F.3d 740 (5th Cir. 1996); Crompton-Richmond Co. v. United States, 311 F. Supp. 1184 (S.D.N.Y. 1970).

Full text (IRS public release)

DEPARTMENT OF THE TREASURY
I N T E R N AL R E V E N U E S E R V I C E WASHINGTON, D.C. 20224
March 31, 1999

Number: 199935005
CC:EL:GL:Br2
Release Date: 9/3/1999
GL-710323-98

UILC: 28.00.00-00
9999.98-00

MEMORANDUM FOR ASSOCIATE DISTRICT COUNSEL, DISTRICT

FROM: Joseph W. Clark
Senior Technical Reviewer, Branch 2 (General Litigation)

SUBJECT: Remedies available for erroneous abatements and credits

By way of a memorandum dated
, you asked that we post-
review an advisory opinion from your office regarding the remedies available for erroneous abatement of tax that results in credits to unpaid tax liabilities in this case. This document is not to be cited as precedent.

FACTS
This is a case in which taxpayers filed in of an amended return for
with the
Service Center. The amended return requested a tax
decrease of $ . Since the taxpayers had not fully paid the tax for ,a refund of only $ was requested. The taxpayer requested this amount be applied to another tax year liability. The amended return was evaluated by a classifier in the Examination Branch of the Service Center. The classifier generally makes facial evaluations of the merits of refund claims, then determines whether the claim should be allowed or should be forwarded to the District Examination Division for further evaluation. In the instant case, the classifier forwarded the amended return to the District Examination Division.

2
GL-710323-98

By this time, the statute of limitations on assessment had expired.

CONCLUSION

Clerical errors can be reversed in appropriate cases. See Matter of Bugge, 99 F.3d 740 (5th Cir. 1996); Crompton-Richmond Co., Inc. v. United States, 311 F. Supp. 184 (S.D.N.Y. 1970). However, in Crompton-Richmond the court distinguished between “a substantive reconsideration of the taxpayer’s liability by the IRS and a clerical error committed by the IRS that has the same effect.” 311 F. Supp. 1184 (S.D.N.Y. 1970).

.

We have coordinated with Field Service, and they concur on both issues. If you have any further questions, please call the attorney assigned to this matter at (202) 622-3620.