The opinion of the court was delivered by: MANSFIELD
MANSFIELD, District Judge.
Vincent De Sousa, a third-party defendant, moves for summary judgment pursuant to Rule 56, F.R.Civ.P., claiming that a tax penalty against him has been abated and the Internal Revenue Service ("IRS") cannot therefore reinstate it against him. For the reasons stated below the motion is denied.
In April, 1964, the IRS assessed the penalty tax in question against Crompton-Richmond Co., Inc. ("Crompton-Richmond"), pursuant to 26 U.S.C. § 6672,
based on the failure of a bankrupt, Dynamic Techniques, Inc., to pay withholding income and employment taxes during the period from January 29, 1963, through March 31, 1963. Crompton-Richmond paid the assessment in May, 1965, and on October 31, 1966, instituted the present suit for a refund, claiming that it is not liable for Dynamic's failure to collect and pay the withholding taxes.
At the time when it assessed the full penalty tax against Crompton-Richmond the IRS believed that there were several other persons responsible for the bankrupt's dereliction, including Vincent De Sousa, Bernard Mondry, Anne Mondry and Philip Pushkin. Although each of these persons could have likewise been assessed the penalty tax under the terms of § 6672, IRS policy and practice has been to collect the 100% penalty assessment only once. However, when Crompton-Richmond sued for a refund and contested its liability, the Government, pursuant to a motion granted by Judge Frankel on August 7, 1967, Crompton-Richmond Co., Factors v. United States, 273 F. Supp. 219 (S.D.N.Y.1967), filed a third-party claim herein against De Sousa, the Mondrys and Pushkin, apparently for the purpose of protecting itself against the possibility that Crompton-Richmond might prevail. The third-party defendants then appeared and have since defended the third-party action against them.
On November 7, 1967, the District Director of the IRS for Brooklyn, who had the obligation to collect the penalty, requested an adjustment from the North Atlantic Region Service Center of the IRS to abate the assessment against De Sousa because Crompton-Richmond had already paid the penalty. His request was based on the already-mentioned IRS policy and practice to the effect that while the IRS has the power to assess the same tax penalty against several parties whose obligations the IRS considers to be like joint and several liability, see Kelly v. Lethert, 362 F.2d 629, 635 (8th Cir. 1966); cf. Phillips v. Commissioner of Internal Revenue, 283 U.S. 589, 51 S. Ct. 608, 75 L. Ed. 1289 (1931); Crompton-Richmond Co., Factors v. United States, supra, payment of the assessment by one party abates the obligation of all the others. On September 25, 1968, the District Director's request was rejected for the reason that an abatement could properly be granted only upon expiration of the statutory period for commencement of a refund suit or, if a refund suit is filed, upon final adjudication of the action. Since Crompton-Richmond's refund suit was still pending, the assessment against De Sousa could not be abated.
In the meantime, on September 9, 1968, the District Director, not having received a reply to his first request, addressed a second Request for Adjustment to the Service Center. On April 24, 1969, the latter notified De Sousa that the $8,703.83 assessment against him had been abated. It is clear that the District Director's second request and the Regional Service Center's issuance of the abatement represented plain ordinary clerical or bookkeeping errors arising out of the failure of some IRS office personnel to appreciate that there was a pending refund suit. When the IRS discovered the error, it immediately reversed its decision to abate and notified De Sousa of the reinstatement of the assessment on June 9, 1969.
The issue presented is under what circumstances the IRS may reinstate an assessment which has been mistakenly abated, once the running of the statute of limitations precludes a new assessment for the same tax liability.
Title 26 U.S.C. § 6404 authorizes the IRS to abate an unpaid assessment whenever it
"(1) is excessive in amount, or
"(2) is assessed after the expiration of the period of limitation properly applicable thereto, or
"(3) is erroneously or illegally assessed [or] * * *
"(c) * * * the Secretary or his delegate determines under uniform rules prescribed by the Secretary or his delegate that the administration and collection costs involved would not warrant collection of the amount due."
An assessment abated under (a) (1), supra, is thereby cancelled and cannot be resurrected if the IRS later decides that its decision was incorrect. United States v. Turk, 290 F. Supp. 588 (N.D.Ohio 1968); Carlin v. United States, 100 F. Supp. 451, 121 Ct.Cl. 643 (1951); McCutchen v. Commissioner, 16 B.T.A. 569 (1929); Carney Coal Co. v. Commissioner, 10 B.T.A. 1397 (1928). On the other hand, the IRS can revive an assessment abated under (c), supra, because the abatement of an uncollectible tax, according to IRS regulations, is not deemed to have cancelled the tax. In effect the IRS excuses its collector's obligation (in this case the Brooklyn District Director) to account for the tax liability, but does not excuse the taxpayer's liability. Since the assessment is thus not eliminated, the IRS can revive it if ...