118 T.C. No. 2
UNITED STATES TAX COURT
BARRY R. DOWNING AND MARY A. DOWNING, Petitioners v.
COMMISSIONER OF INTERNAL REVENUE, Respondent
Docket No. 2217-00L. Filed January 7, 2002.
Petitioners (Ps) filed a return for 1995 in which
they correctly reported their tax liability but did not
pay the tax owed. Ps included $5,000 and an offer in
compromise in which they offered to pay that amount in
full settlement of the $32,561 tax they owed.
Respondent (R) misplaced Ps’ offer in compromise
for about 1 year. R did not accept that offer in
compromise or four similar offers in compromise made by
Ps because R believed R could collect a substantially
larger amount of Ps’ 1995 tax liability.
R issued to Ps a notice of intent to levy. Ps
requested and received a hearing on the proposed
collection action under sec. 6330, I.R.C. Ps contended
that they had reasonable cause for their failure to pay
tax and requested that interest be abated because R had
misplaced their offer in compromise for 1 year. R
issued a notice of determination to Ps stating that
interest would not be abated and that collection would
proceed.
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