Overview
The IRS was examining A&W, Inc., a large corporation, for a number of issues. One agent began the examination, and for a while everything was handled in a timely and proper manner.
FACTS
1. A third appointment had been scheduled when the agent contacted A&W to tell the taxpayer that the company's case was being reassigned to another local agent because he was retiring from the IRS.
2. Six months went by before the new agent contacted A&W. When she said that she was taking over the examination and would like to schedule an appointment for two months later, A&W reluctantly agreed.
3. After the new agent went over the material that the first agent had already reviewed, she decided to expand the examination into other issues that the first agent had not considered.
a.The new agent scheduled a follow-up appointment and gave the taxpayer an information document request for information she wanted A&W to have available at its next appointment.
b.The taxpayer was frustrated, but it complied with the agent's requests.
4. The day before the appointment the agent informed the taxpayer that she had been assigned as an instructor to teach newly hired IRS agents and that their appointment would have to be postponed. Since A&W's case would not be reassigned and would remain in her case inventory, the agent said she would call to reschedule the appointment when she returned.
5. After an additional four months had passed, the taxpayer contacted the second agent's manager and learned that the agent was still assigned to training.
a.The manager told the taxpayer to be patient.
b.The manager also told the taxpayer that he was mailing a Form 872 extension to protect the statute of limitations for the IRS. He wanted the taxpayer to sign and return the document.
c.Although A&W was reluctant to do so, it signed the Form 872 and continued to wait.
6. One year after she postponed the appointment, the agent finally returned and was ready to examine cases.
a.She sent a letter apologizing for the delay and stating that she was anxious to resolve A&W's case as quickly as possible.
b.She scheduled a new appointment and discussed the material that the taxpayer should have available at the meeting.
7. The agent completed the examination at the next appointment. She told the taxpayer that there would be a sizable deficiency due to disallowed deductions and additional income that was determined through her examination.
8. The frustrated taxpayer did not agree with the agent's findings and told the agent that the company would be exercising its right to appeal.
9. The agent sent A&W a Form 4549 examination report that included an interest computation and asserted penalties.
10. A&W was extremely aggravated by all the IRS delays that resulted in the imposition of sizable interest and more debt for the company.
11. A&W also decided to appeal the deficiency and penalties the IRS had imposed, because if they were reduced, the interest would decrease proportionately.
QUESTIONS (specific issue)
1.Are there any provisions in the Internal Revenue Code and/or T.D. Regulations that can be used to have the interest abated? If so, what are they?
2.If so, under what circumstances will an abatement of interest be considered?
3.Does the taxpayer have a good case that appears to meet the requirements to have the interest abated? What is the support for your answer?