-3-
respect to the 1996 tax liability. These payments continued
until July 2002.
A. Petitioners’ OIC
On November 16, 2002, petitioners submitted an OIC to the
Internal Revenue Service (IRS) in which they offered to pay a
total of $5,000 over a period of 24 months. The OIC related to
the 1996, 1997, 1999, 2000, and 2001 tax years. The offer was
submitted on the basis of doubt as to collectibility. Petitioner
Johnny Black (petitioner) explained in a written statement
attached to the OIC that he was formerly an insurance agent with
Allstate Ins. Co. As a result of expending personal funds to
support his agency, and decreases in company benefits, petitioner
left Allstate in 1999 with unpaid debts. At the time of trial,
petitioner drove a bus for senior citizens and earned $9 per
hour.
Petitioner M. Suzan Black has been permanently disabled
since 1982. She suffers from diabetes, had heart bypass surgery
in 1995, and has other serious medical issues. She is unable to
work.
By letter dated January 23, 2004, the IRS rejected
petitioners’ OIC. The basis for the rejection was that the
amount offered was less than petitioners’ reasonable collection
potential. The Asset/Equity Table, attached to the rejection
letter, reflected that petitioners’ assets included their house
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