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Also by letter dated October 24, 2001, respondent sent
petitioners a notice of intent to levy and a notice of their
right to a collection due process hearing with respect to their
1985 tax year, claiming unpaid tax, penalties, and interest for
that year of $110,676.
Collection Due Process Hearing
On November 20, 2001, respondent received timely requests
for collection due process hearings from Mrs. Kendricks for her
1982, 1983, 1984, and 1985 tax years and from petitioners for
their 1985 tax year. In attachments to the requests, petitioners
state that they dispute the liabilities underlying the unpaid
assessments (sometimes, the underlying liabilities) and have not
yet had an opportunity to contest those liabilities. They also
claim that any levy would cause them hardship.
In response to the requests, on September 18, 2002,
petitioners and their counsel were afforded a 2-hour, face-to-
face conference with Appeals Officer Allen D. Powell. At the
conference, petitioners admitted that they had received the
notices but, nevertheless, wished to dispute the underlying
liabilities. Appeals Officer Powell informed petitioners that
the Internal Revenue Code prohibited them from raising the
underlying liabilities when they had received a notice of
deficiency or otherwise had an opportunity to dispute the tax
liability. Appeals Officer Powell then asked whether petitioners
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