Andrew Tabaka, Chris Tabaka, Next Friend

Opinion

United States Tax Court

T.C. Memo. 2026-70

ANDREW TABAKA, CHRIS TABAKA, NEXT FRIEND, Petitioner

v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

__________

Docket No. 16687-24. Filed August 18, 2026.

__________

Chris Tabaka (specially recognized), for petitioner.

Brian J. Bilheimer and Michael C. D’Aries, for respondent.

MEMORANDUM FINDINGS OF FACT AND OPINION

LAUBER, Judge: Petitioner seeks review pursuant to section 6404(h)(1)(A)(ii) 1 of his request for abatement of interest. The interest stems from a deficiency of $18,438 determined for tax year 2016 in a Stipulated Decision entered by this Court. See Tabaka v. Commissioner, No. 19916-18 (T.C. Aug. 6, 2019). We hold that the Internal Revenue Service (IRS) acted in accordance with the law in declining to grant petitioner ’s request to abate interest.

FINDINGS OF FACT

The following facts are derived from the pleadings, a Stipulation of Facts (as supplemented) with attached Exhibits, trial testimony, and

1 Unless otherwise indicated, statutory references are to the Internal Revenue

Code, Title 26 U.S.C. (Code), in effect at all relevant times, regulation references are to the Code of Federal Regulations, Title 26 (Treas. Reg.), in effect at all relevant times, and Rule references are to the Tax Court Rules of Practice and Procedure. We round all monetary amounts to the nearest dollar.

Served 08/18/26

[*2] several trial Exhibits. Petitioner resided in New Jersey when he timely petitioned this Court.

The IRS examined the 2016 Federal income tax return filed in March 2017 by petitioner and his wife, Henrietta (since deceased). On April 16, 2018, the IRS issued them a Letter CP2000 proposing for tax year 2016 a deficiency of $23,960 and an accuracy-related penalty of $4,792. The deficiency was attributable to unreported retirement income of $93,200, as evidenced by two Forms 1099–R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., issued by third-party payors. Having received no adequate response to that letter, the IRS issued a timely Notice of Deficiency on July 9, 2018, determining a deficiency and a penalty in the amounts stated above. Petitioner timely petitioned this Court on October 10, 2018. See Tabaka, No. 19916-18 (T.C. filed Oct. 10, 2018). That same day he made a payment of $10,590 toward his 2016 tax liability.

In December 2018 the IRS Independent Office of Appeals (Appeals ) informed petitioner that it had taken his case under consideration and had scheduled a conference call for January 2019. The Appeals officer explained that “interest continues to accrue while your case is open in Appeals. The IRS charges interest from the tax return due date until you pay the amount in full, as required by law.” In April 2019 Appeals informed petitioner that the case would be referred to IRS counsel for trial preparation because an agreement could not be reached.

By notice issued June 5, 2019, the Court scheduled a trial in Docket No. 19916-18 for October 28, 2019. On July 3, 2019, petitioner made a further payment of $7,848 for tax year 2016, bringing the total to $18,438. The following month the parties executed a Stipulated Decision in which they agreed that there was a deficiency of $18,438 for 2016, that no accuracy-related penalty would be imposed, and that “interest will be assessed as provided by law on the deficiency.” The Court entered a decision to that effect on August 6, 2019. See supra p. 1.

On November 18, 2019, the IRS mailed petitioner a letter informing him that he owed interest of $2,246 for tax year 2016. This calculation failed to account for the $18,438 that petitioner had paid in 2018 and 2019. Acknowledging those payments, the IRS promptly abated interest of $614 and made other minor adjustments to petitioner’s account. This yielded a net interest liability of $1,649 for 2016, which petitioner paid in December 2019.

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[*3] On June 5, 2020, petitioner submitted Form 843, Claim for Refund and Request for Abatement, requesting that the $1,649 of interest be refunded. He checked the box alleging that he was entitled to abatement because “interest was assessed as a result of IRS errors or delays.” In an attached letter he urged that abatement was justified because of “multiple significant delays and errors by [the] IRS” during a “two-year and seven-month period from April 15, 2017, to November 18, 2019.” He alleged that his 2016 tax case involved “a straightforward matter” and that resolution of the case “was unreasonably and unnecessarily prolonged for an inordinate amount of time.”

On April 30, 2021, the IRS Service Center in Holtsville, New York, sent petitioner a letter stating: “We can’t process your claim for the tax periods listed above,” viz, his interest abatement claim as stated in his June 5, 2020, letter. Petitioner evidently submitted a followup letter on June 6, 2024. On July 9, 2024, the IRS replied: “We’re required to charge interest on the unpaid tax from the due date of the return to the date you pay the tax in full.” The letter noted that the IRS had already abated interest totaling $614 and informed petitioner that he was required to pay the balance of the interest due. The IRS did not issue a formal denial of his claim by sending him a Final Determination. He petitioned this Court on October 19, 2024, seeking a refund of $1,649.

OPINION

I. Jurisdiction

Like all federal courts, this Court is a court of limited jurisdiction.

Ramey v. Commissioner, 156 T.C. 1, 11 (2021). We may exercise jurisdiction only to the extent expressly provided by statute. See § 7442; Ramey, 156 T.C. at 11. We have jurisdiction to determine whether we have jurisdiction. Stewart v. Commissioner, 127 T.C. 109, 112 (2006); Estate of Young v. Commissioner, 81 T.C. 879, 880–81 (1983); Brannon’s of Shawnee, Inc. v. Commissioner, 69 T.C. 999, 1002 (1978).

This Court’s jurisdiction must be affirmatively shown by the party seeking to invoke that jurisdiction. See David Dung Le, M.D., Inc. v. Commissioner, 114 T.C. 268, 270 (2000), aff’d, 22 F. App’x 837 (9th Cir. 2001); Romann v. Commissioner, 111 T.C. 273, 280 (1998); Fehrs v. Commissioner, 65 T.C. 346, 348 (1975). To meet this burden, that party “must establish affirmatively all facts giving rise to our jurisdiction.” David Dung Le, M.D., Inc., 114 T.C. at 270.

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[*4] In a case based upon failure of the IRS to abate interest, our jurisdiction depends, in part, upon the IRS’s issuance of a determination under section 6404(h) or its failure to issue such a determination within 180 days of a taxpayer’s filing a claim for abatement. 2 See § 6404(h)(1)(A); Rule 280(b). If the IRS issues a notice constituting a final determination denying the claim, the taxpayer has 180 days from the mailing of that notice to petition this Court. § 6404(h)(1)(A)(i), (B). If the IRS fails to issue such a notice, a taxpayer may file a petition “at any time” after waiting 180 days from the date he filed the claim. § 6404(h)(1)(A)(ii).

The IRS did not issue petitioner a Final Determination with respect to his claim for abatement of interest. He was thus free to petition this Court “at any time” after waiting the requisite 180 days, which he did. See § 6404(h)(1)(A). Alternatively, if we were to construe the Service Center’s July 9, 2024, letter as a Final Determination, petitioner filed his Petition within 180 days of that date, i.e., on October 19, 2024. See § 6404(h)(1)(A)(i). Either way we have jurisdiction to review his claim, a fact respondent does not dispute.

II. Governing Standards for Interest Abatement

Interest on a Federal income tax deficiency generally begins to accrue on the due date for the tax return and continues to accrue, compounding daily, until payment is made. See §§ 6151(a), 6601(a), 6622(a). Section 6621(a)(2) imposes interest at the Federal short-term rate, determined under subsection (b), plus three percentage points.

Petitioner in 2019 executed a Stipulated Decision agreeing that there was a deficiency of $18,438 for his 2016 taxable year. Because he did not pay the full tax owed by April 18, 2017, the due date for his 2016 return, underpayment interest began to accrue automatically as of that date. The interest then compounded daily until his tax year 2016 liability (including interest) was paid in full. See Treas. Reg. § 301.6622-1(c) (stating that interest compounds daily until all obligations are satisfied). The Stipulated Decision included a below-the-line stipulation in which petitioner acknowledged that “interest will be assessed as provided by

2 Section 6404(h)(1) grants us jurisdiction to review a failure to abate interest

only if the taxpayer satisfies section 7430(c)(4)(A)(ii), which pertains to the taxpayer’s net worth. See § 7430(c)(4)(A)(ii) (cross-referencing 28 U.S.C. § 2412(d) (1986), which establishes the net worth requirement). Respondent does not deny that petitioner meets this requirement. See Porter v. Commissioner, T.C. Memo. 2022-25, 123 T.C.M. (CCH) 1133, 1134 n.4.

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[*5] law on the deficiency.” He does not challenge the IRS’s calculation of the interest due, viz, $1,649. In any event, we generally lack jurisdiction to review the mathematical aspects of interest computations. See Urbano v. Commissioner, 122 T.C. 384, 390 (2004); see also Med James, Inc. v. Commissioner, 121 T.C. 147, 151 (2003).

The Code grants us jurisdiction “to determine whether the Secretary ’s failure to abate interest . . . was an abuse of discretion,” in which case we “may order an abatement.” § 6404(h)(1). Abuse of discretion occurs if the IRS bases its denial “on an erroneous view of the law or on a clearly erroneous assessment of the evidence.” King v. Fleming, 899 F.3d 1140, 1147 (10th Cir. 2018) (quoting Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405 (1990)); see also Woodral v. Commissioner, 112 T.C. 19, 23 (1999).

Section 6404(e)(1) provides that the IRS may abate the assessment of interest on any deficiency to the extent there has occurred an “unreasonable error or delay by an [IRS] officer or employee . . . (acting in his official capacity) in performing a ministerial or managerial act.” 3 A “[m]inisterial act means a procedural or mechanical act that does not involve the exercise of judgment or discretion, and that occurs during the processing of a taxpayer’s case after all prerequisites to the act, such as conferences and review by supervisors, have taken place.” Treas. Reg. § 301.6404-2(b)(2). A “[m]anagerial act means an administrative act that occurs during the processing of a taxpayer’s case involving the temporary or permanent loss of records or the exercise of judgment or discretion relating to management of personnel.” Id. subpara. (1). A decision concerning the proper application of Federal tax law is neither a managerial nor a ministerial act. Id. para. (b).

For purposes of section 6404(e), an error or delay is taken into account only if (i) no significant aspect of such error or delay can be attributed to the taxpayer and (ii) the error or delay occurs after the taxpayer has been contacted in writing by the IRS regarding the deficiency. See Lee v. Commissioner, 113 T.C. 145, 148–49 (1999). We consider only the arguments the taxpayer brought to the IRS’s attention when it was considering the abatement claim. See Wright v. Commissioner, T.C. Memo. 2004-69, 87 T.C.M. (CCH) 1103, 1105 (first citing Stewart v. Commissioner, T.C. Memo. 2003-106, 85 T.C.M. (CCH) 1164, 1166 n.5;

3 Section 6404(e)(1) grants this authority to the Secretary of the Treasury or

his delegate, see § 7701(a)(11)(B), and the Secretary of the Treasury has delegated interest abatement authority to the IRS, see Treas. Reg. § 301.6404-2(a)(1).

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[*6] and then citing Magana v. Commissioner, 118 T.C. 488, 493 (2002)), aff’d per curiam, 125 F. App’x 547 (5th Cir. 2005).

For two reasons, we conclude that the IRS did not abuse its discretion in declining to abate interest. First, there was no “unreasonable error or delay” by the IRS. It initially contacted petitioner about the 2016 deficiency on April 16, 2018. See supra p. 2; see also Lee, 113 T.C. at 148–49 (stating that an error or delay can occur only after the IRS has first contacted the taxpayer in writing). Because he made no adequate response to that letter, the IRS issued him a Notice of Deficiency on July 9, 2018, i.e., within three months. He petitioned this Court in Docket No. 19916-18 on October 10, 2018, i.e., 93 days after receiving the Notice.

Consistently with standard practice, petitioner’s case was referred to Appeals for consideration of possible settlement. See Rev. Proc. 2016-22, § 3.01, 2016-15 I.R.B. 577, 578 (outlining when cases docketed in the Tax Court are sent to Appeals for settlement consideration). Appeals notified him in December 2018 that it had the case and scheduled a hearing for the following month. Unable to reach agreement with petitioner , Appeals returned the case to IRS counsel three months later, in April 2019. Petitioner errs in asserting that the IRS delayed by “unnecessarily and unreasonably referring the matter to Area Counsel to prepare for trial.” Because the case was docketed in the Tax Court, and because Appeals was unable to reach agreement with petitioner, Appeals had no alternative but to return the case to IRS counsel for trial preparation.

On June 5, 2019, this Court issued a notice of trial, and the parties quickly reached agreement—a reduced deficiency of $18,438 and no penalty. On July 3, 2019, petitioner made an additional payment that brought his total payments to $18,438, the amount of the agreed-upon deficiency. On August 6, 2019, the Court issued a Stipulated Decision determining a deficiency of that amount. See supra p. 1.

In short, the time that elapsed between April 16, 2018 (when the IRS first contacted petitioner in writing about the deficiency), and August 6, 2019 (when the Court issued the Decision), was less than 16 months, including a trip to Appeals. Compared with the mine run of cases in this Court, petitioner’s case was resolved quite expeditiously. In any event, “[t]he mere passage of time in the litigation phase of a tax dispute does not establish error or delay” under section 6404(e). Lee,

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[*7] 113 T.C. at 150. For all these reasons, we discern no “unreasonable delay” on the IRS’s part.

Second, if delay were thought to have occurred, it was not delay “in performing a ministerial or managerial act.” § 6404(e)(1). A decision concerning the proper application of Federal tax law is neither a managerial nor a ministerial act. Treas. Reg. § 301.6404-2(b). From the commencement of the 2016 examination through ultimate settlement of the case, the IRS was attempting to determine petitioner’s correct tax liability for 2016. To do that, it was necessary to determine the accuracy of two Forms 1099–R issued by third-party payors to petitioner, each of which reported a “normal distribution” fully subject to tax. When IRS counsel received sufficient documentation from petitioner, the case quickly settled for a reduced deficiency of $18,438 and no penalty.

To reflect the foregoing,

Decision will be entered for respondent.