Tax Court in Brief | Tabaka v. Comm’r | Interest Abatement Under Section 6404 and What Counts as a Ministerial Act

Tabaka v. Commissioner, T.C. Memo. 2026-70 | August 18, 2026 | Lauber, J. | Dkt. No. 16687-24

Short Summary

The Tabakas omitted $93,200 of retirement income from their 2016 return. The IRS proposed a $23,960 deficiency and a $4,792 accuracy-related penalty. After Appeals consideration and a Tax Court petition, the parties settled on an $18,438 deficiency with no penalty — a good result on the merits.

Interest, of course, had been running the whole time. Mr. Tabaka asked the Service to abate $1,649 of it, pointing to what he characterized as IRS delays and errors. The Service declined, and the Court held that declining was not an abuse of discretion.

The opinion is brief, and it answers a question clients ask in almost every deficiency case that settles favorably.

Key Issues

Whether the IRS abused its discretion in denying a request to abate interest on a 2016 deficiency under section 6404(e)(1).

Primary Holdings

The Service did not abuse its discretion. There was no unreasonable error or delay in performing a ministerial or managerial act.

The case moved from first IRS contact in April 2018 to a stipulated decision in August 2019 — roughly sixteen months, which the Court characterized as expeditious.

The mere passage of time during the litigation phase does not establish error or delay within the meaning of the statute.

Substantive determinations about the merits of a taxpayer’s liability are neither ministerial nor managerial acts, and so fall outside the abatement authority entirely.

Key Points of Law

Interest on an underpayment runs from the due date of the return under section 6601(a) at the rate set by section 6621(a)(2). It is compensation for the use of money, not a sanction, and it accrues whether or not anyone did anything wrong.

Section 6404(e)(1) creates a narrow exception. The Secretary may abate interest attributable to unreasonable error or delay by an officer or employee of the Service in performing a ministerial or managerial act, but only where no material aspect of the error or delay is attributable to the taxpayer. Section 6404(h) supplies the Tax Court’s jurisdiction to review a denial, under an abuse of discretion standard.

The regulatory definitions do the limiting work. A ministerial act is a procedural or mechanical act that does not involve the exercise of judgment or discretion and that occurs during the processing of a case after all prerequisites to the act have taken place. Treas. Reg. § 301.6404-2(b)(2). A managerial act involves temporary personnel assignments or the management of personnel. Anything requiring judgment about the taxpayer’s liability — whether income is includible, whether a penalty applies, what a settlement should look like — is neither.

That distinction is why so few abatement requests succeed. Lee v. Commissioner, 113 T.C. 145 (1999). The delays taxpayers actually experience are usually deliberative: an examiner considering an argument, Appeals evaluating hazards, Counsel reviewing a proposed settlement. Those are exactly the acts Congress left outside section 6404(e)(1). The delays the statute does reach — a file that sat on a desk after every prerequisite was complete, a transfer that nobody processed — are harder to document and rarer than clients assume.

Sixteen months from initial contact to stipulated decision also gave the argument nowhere to stand. Compare the multi-year gaps that occasionally support abatement, and this timeline reads as diligence.

Insight

Tabaka is worth keeping because of the conversation it makes easier.

A client who cuts a $23,960 proposed deficiency to $18,438 and eliminates a $4,792 penalty has won. Then the bill arrives with interest attached, and the win starts to feel like a loss. The instinct is that interest ought to be negotiable in proportion to how well the merits went. It isn’t. Interest tracks the unpaid tax, and the tax was always owed — the settlement established how much, not whether.

Where abatement is worth pursuing, the case has to be built on the record rather than on frustration. What’s needed is a specific act, a specific date on which every prerequisite to that act was complete, and a specific stretch of time during which nothing happened for reasons having nothing to do with judgment. A transcript analysis and the administrative file will show that if it exists. General assertions that the process took too long generally will not, and a taxpayer whose own delay contributed to any material aspect of the problem is out under the statute’s own terms.

The better move in most cases is upstream. Interest stops accruing when the tax is paid, so a client who expects to lose part of a deficiency case can make a deposit under section 6603 and stop the meter while preserving the right to litigate. That option is worth raising early, because nobody has ever been glad to learn about it after the decision. Our brief in Porter v. Commissioner covers a claim for abatement of interest in a different posture, and our guide to the notice of deficiency walks through the 90-day decision point where the deposit question first arises.

The full opinion is posted at CourtListener. More weekly briefs are collected in The Tax Court in Brief archive.

This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. Tax outcomes turn on specific facts, and the law changes. Consult qualified counsel about your own situation.