Taxing Lessons Case Summaries

Case — Abatement of Interest

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TL Case Summ


Is an Internal Revenue Service decision to not abate interest on a tax underpayment an abuse of discretion?


Taxpayer Says: Interest charged on a tax underpayment assessed by audit was excessive, caused mainly by the length of time taken to complete the audit, and the assessment should be abated.

Internal Revenue Service Says: No abatement of interest due should be granted because the taxpayer failed to show error or delay by IRS employees in performing a ministerial act.


From Internal Revenue Code Section 6601(a): If any amount of assessed federal income tax is not paid “on or before the last date prescribed for payment,” interest “shall be paid for the period from such last date to the date paid.”

From Internal Revenue Code Section 6404(e)(1): The Commissioner may abate part or all of an assessment of interest on any deficiency or payment of income taxes to the extent the deficiency in payment is attributable in whole or in part to any error or delay by an officer or employee of the IRS in performing a ministerial act. [Note: The law was amended in 1996 to permit the Commissioner to abate interest with respect to “unreasonable” error or delay resulting from “managerial” or ministerial acts.]

From Corson v Commissioner, 123 T.C. 202, 207 (2004): The term “ministerial act” means a procedural or mechanical act that does not involve the exercise of judgment or discretion and occurs during the processing of a taxpayer’s case after all the prerequisites to the act, such as conferences and review by supervisors, have taken place. A decision concerning the proper application of Federal tax law is not a ministerial act.


When you fail to pay tax you owe, or when you make a late payment of tax, the IRS charges you interest on the unpaid balance. The interest accrues on the amount you owe from the date the tax was supposed to be paid until the actual date you make payment. You can ask the IRS to forgive some or all of the interest assessed, and, in some circumstances, tax law grants the IRS the authority to agree. If the IRS denies your request for abatement, the Tax Court can decide whether the denial is an abuse of discretion.

In this case, the IRS audited the taxpayer over a period of three and a half years, and determined that additional tax was due on a prior year tax return.

The taxpayer paid the additional tax, but disagreed with the final determination of the amount of interest due, stating that the audit results were delayed due to IRS mistakes, including miscalculations on the audit report and loss of the IRS case file.

While admitting mathematical errors in the report and loss of the case file, the IRS contends the delay in completing the audit was due to disputes over tax law, not routine functions performed by the examiners that require no personal discretion (called ministerial acts). Since the ministerial act exception does not apply, the interest was properly assessed.


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HL Carpenter, an experienced investor and a CPA, specializes in reader friendly articles on taxes and investing for individuals and small businesses, and publishes two newsletters: Taxing Lessons and Top Drawer Ink. Visit and

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Right answer!
Sorry, wrong answer :(
For the taxpayer. Loss of the case file left the IRS unable to explain the reason for the length of the audit. Denial of abatement of interest was an abuse of discretion. The interest assessment was partially abated.